<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 1998
REGISTRATION NO. 333-48821
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
PRE-EFFECTIVE
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
IMPAC GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2923682 2657
(State or other (I.R.S. Employer (Primary Standard
jurisdiction of Identification No.) Industrial Classification
incorporation or Code Number)
organization)
---------------
1950 North Ruby Street David C. Underwood
Melrose Park, Illinois 60160 Chief Financial Officer
(708) 344-9100 IMPAC Group, Inc.
(Address, including zip code, 1950 North Ruby Street
and telephone number, Melrose Park, Illinois 60160
including area code, (708) 344-9100
of Registrant's principal (Name, address, including
executive offices) zip code, and telephone
number, including area
code, of agent for
service)
---------------
with a copy to:
John R. Utzschneider, Esq.
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
(617) 951-8852
Facsimile No. (617) 951-8736
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") grants a
Delaware corporation the power to indemnify any director, officer, employee or
other agent if such person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. No
indemnification may be provided, however, for any person with respect to any
matter as to which he shall have been adjudicated in any proceeding not to
have acted in good faith in the reasonable belief that his action was in the
best interest of the corporation unless and only to the extent that the Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
With respect to indemnification of directors, Article 6 of the Amended and
Restated Certificate of Incorporation of the Company, a copy of which is filed
as Exhibit 3.1, provides as follows:
"The Company shall indemnify, and upon request shall advance expenses to, in
the manner and to the full extent permitted by law, any person (or the estate
of any person) who was or is a party to, or is threatened to be made a party
to, any threatened, pending or completed action, suit or proceeding, whether
or not by or in the right of the Company, and whether civil, criminal,
administrative, investigative or otherwise, by reason of the fact that such
person is or was a director or officer of the Company, or is or was serving at
the request of the Company as a director, officer, partner or trustee of
another company, partnership, joint venture, trust or other enterprise. The
Company may, to the fullest extent permitted by law, purchase and maintain
insurance on behalf of any such person against any liability which may be
asserted against him or her, whether or not the Company would have the power
to indemnify him or her against such liability pursuant to this Article 6. To
the fullest extent permitted by law, the indemnification and advances provided
for herein shall include expenses (including attorney's fees), judgments,
fines and amounts paid in settlement. The indemnification provided herein
shall not be deemed to limit the right of the Company to indemnify any other
person for any such expenses to the full extent permitted by law, nor shall it
be deemed exclusive of any other rights to which any person seeking
indemnification from the Company may be entitled under any agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
A director shall not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (a) for any breach of the director's duty of loyalty to the Company
or its stockholders, (b) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the Delaware General Corporation Law, or (d) for any
transaction from which the director derived an improper personal benefit."
With respect to indemnification, Article VII of each of the Amended and
Restated By-laws of the Company, a copy of which is filed as Exhibit 3.2,
provides as follows:
"Section 7.1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of being or having been a director
or officer
II-1
<PAGE>
of the Corporation or serving or having served at the request of the
Corporation as a director, trustee, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (an "Indemnitee"),
whether the basis of such proceeding is alleged action or failure to act in an
official capacity as a director, trustee, officer, employee or agent or in any
other capacity while serving as a director, trustee, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than permitted prior thereto) (as used in this
Article 7, the "Delaware Law"), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
Indemnitee in connection therewith and such indemnification shall continue as
to an Indemnitee who has ceased to be a director, trustee, officer, employee
or agent and shall inure to the benefit of the Indemnitee's heirs, executors
and administrators; provided, however, that, except as provided in (S)7.2
hereof with respect to Proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such Indemnitee in connection with a
Proceeding (or part thereof) initiated by such Indemnitee only if such
Proceeding (or part thereof) was authorized by the Board of Directors. The
right to indemnification conferred in this Article 7 shall be a contract right
and shall include the right to be paid by the Corporation the expenses
(including attorneys' fees) incurred in defending any such Proceeding in
advance of its final disposition (an "Advancement of Expenses"); provided,
however, that, if the Delaware Law so requires, an Advancement of Expenses
incurred by an Indemnitee shall be made only upon delivery to the Corporation
of an undertaking (an "Undertaking"), by or on behalf of such Indemnitee, to
repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal (a "Final
Adjudication") that such Indemnitee is not entitled to be indemnified for such
expenses under this Article 7 or otherwise.
Section 7.2. Right of Indemnitee to Bring Suit. If a claim under (S)7.1
hereof is not paid in full by the Corporation within sixty days after a
written claim has been received by the Corporation, except in the case of a
claim for an Advancement of Expenses, in which case the applicable period
shall be twenty days, the Indemnitee may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by the
Corporation to recover an Advancement of Expenses pursuant to the terms of an
Undertaking, the Indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (i) any suit brought by the Indemnitee
to enforce a right to indemnification hereunder (but not in a suit brought by
the Indemnitee to enforce a right to an Advancement of Expenses) it shall be a
defense that, and (ii) in any suit by the Corporation to recover an
Advancement of Expenses pursuant to the terms of an Undertaking the
Corporation shall be entitled to recover such expenses upon a Final
Adjudication that, the Indemnitee has not met the applicable standard of
conduct set forth in the Delaware Law. Neither the failure of the Corporation
(including the Board of Directors, its independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable standard of conduct set forth in
the Delaware Law, nor an actual determination by the Corporation (including
the Board of Directors, its independent legal counsel, or its stockholders)
that the Indemnitee has not met such applicable standard of conduct, shall
create a presumption that the Indemnitee has not met the applicable standard
of conduct or, in the case of such a suit brought by the Indemnitee, be a
defense to such suit. In any suit brought by the Indemnitee to enforce a right
to indemnification or to an Advancement of Expenses hereunder, or by the
Corporation to recover an Advancement of Expenses pursuant to the terms of an
Undertaking, the burden of proving that the Indemnitee is not entitled to be
indemnified, or to such Advancement of Expenses, under this Article 7 or
otherwise shall be on the Corporation.
II-2
<PAGE>
Section 7.3 Non-Exclusivity of Rights The rights to indemnification and to
the Advancement of Expenses conferred in this Article 7 shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, the Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 7.4. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such
expense, liability or loss under this Article 7 or under the Delaware Law.
Section 7.5. Indemnification of Employees and Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification, and to the Advancement of
Expenses, to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article 7 with respect to the indemnification and
Advancement of Expenses of directors and officers of the Corporation."
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a list of exhibits filed as a part of this Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- ----------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated February 19, 1998, between KFI
Holding Corporation (which subsequently changed its name to "IMPAC
Group, Inc." and is sometimes referred to below as "Holding"), AGI
Acquisition Corporation, Heritage, Klearfold, AGI, certain
stockholders of AGI, and certain stockholders of Holding.*
2.2 Investment Agreement, dated February 19, 1998, between Holding,
Heritage Fund I Investment Corporation ("Heritage"), certain
stockholders of Holding, certain stockholders of AGI and certain other
persons.*
3.1 Amended and Restated Certificate of Incorporation of IMPAC Group, Inc.
(the "Company").*
3.2 Amended and Restated By-laws of the Company.*
4.1 Indenture, dated as of March 12, 1998, by and among the Company, AGI
Incorporated ("AGI"), Klearfold, Inc. ("Klearfold"), KF--Delaware,
Inc. ("KFD"), KF--International, Inc. ("International" and,
collectively, with AGI, Klearfold, KFD and International, the
"Guarantors") and State Street Bank and Trust Company, as Trustee.*
4.2 Form of the Company's 10 1/8% Senior Notes due 2008.*
4.3 Registration Rights Agreement, dated as of March 12, 1998, by and
among the Company, the Guarantors, Goldman, Sachs & Co. ("Goldman")
and Donaldson, Lufkin, and Jenrette Securities Corporation ("DLJ").*
5.1 Opinion of Bingham Dana LLP, as to legality of securities being
registered.+
10.1 Purchase Agreement, dated as of March 5, 1998, by and among the
Company, Goldman and DLJ.*
10.2 Escrow Agreement, dated March 12, 1998, between AGI, the Company, the
Escrow Agent and the Escrowed Stockholder Representative.*
10.3 Stockholder Agreement, dated as of March 12, 1998, between the
Company, certain Holding stockholders, certain stockholders of AGI and
certain other persons.*
10.4 Labor Agreement between Klearfold and United Paperworker's
International Union Local 286, effective December 1, 1994, as extended
by amendment through November 30, 2002.*
10.5 Second Amendment to Lease dated September 30, 1994 between Norman
Levin and Evelyn F. Levin and Klearfold (Warrington, Pennsylvania).*
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- ----------------------------------------------------------------------
<C> <S>
10.6 Amended and Restated Lease, dated as of June 7, 1996, between Dena
Corp. and Klearfold (Louisa, Virginia).*
10.7 Amended and Restated Lease, dated as of June 7, 1996, between Melvin
B. Herrin and Klearfold (Warrington, Pennsylvania).*
10.8 Lease dated May 29, 1985 by and between Chicago Title and Trust
Company as Trustee under Trust Agreement dated February 1, 1977, and
known as Trust No. 1069185 and AGI re 256,629 sq. ft. at 1950 N. Ruby
Street.*
10.9 Amendment to Lease dated as of October 1, 1987 by and between Chicago
Title and Trust Company, as Trustee under a Trust Agreement dated
February 1, 1977, and known as Trust No. 1069185 and AGI re 256,629
sq. ft. at 1950 Ruby Street.*
10.10 Second Amendment to Lease dated as of April 30, 1992, by and between
Chicago Title and Trust Company as Trustee under a Trust Agreement
dated February 1, 1977 and known as Trust No. 1069185 and AGI re
256,629 sq. ft. at 1950 Ruby Street.*
10.11 Third Amendment to Lease dated July 2, 1997 by and between Chicago
Title and Trust Company as Trustee under Trust Agreement dated
February 1, 1997 and known as Trust No. 1069185 and AGI re 256,629 sq.
ft. at 1950 N. Ruby Street.*
10.12 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and David Underwood.*
10.13 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and James Oppenheimer.*
10.14 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Richard
Oppenheimer.*
10.15 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Dean Henkel.*
10.16 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and H. Scott Herrin.*
10.17 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Melvin Herrin.*
10.18 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Richard Block.*
10.19 Credit Agreement, dated as of March 12, 1998, between Bank of America
NT & SA ("BofA") and the Company.*
10.20 Form of the Company's $40,000,000 Revolving Note, dated as of March
12, 1998.*
10.21 Company Security Agreement, dated as of March 12, 1998 between the
Company and BofA.*
10.22 Borrowers Security Agreement, dated as of March 12, 1998 between AGI,
Klearfold and BofA.*
10.23 Klearfold Subsidiaries Security Agreement, dated as of March 12, 1998
between KFD and International (the "Klearfold Subsidiaries") and
BofA.*
10.24 Company Pledge Agreement, dated as of March 12, 1998 between the
Company and BofA.*
10.25 Borrowers Pledge Agreement, dated as of March 12, 1998 between AGI,
Klearfold and BofA.*
10.26 Klearfold Subsidiaries Pledge Agreement, dated as of March 12, 1998
between the Klearfold Subsidiaries and BofA.*
10.27 Company Guaranty, dated as of March 12, 1998, between the Company and
BofA.*
10.28 Borrowers Guaranty, dated as of March 12, 1998 between AGI, Klearfold
and BofA.*
10.29 Klearfold Subsidiaries Guaranty, dated as of March 12, 1998 between
the Klearfold Subsidiaries and BofA.*
10.30 Company Patent Assignment dated as of March 12, 1998 between the
Company and BofA.*
10.31 AGI Patent Assignment, dated as of March 12, 1998 between AGI and
BofA.*
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- ----------------------------------------------------------------------
<C> <S>
10.32 Klearfold Patent Assignment, dated as of March 12, 1998 between
Klearfold and BofA.*
10.33 International Patent Assignment, dated March 12, 1998, between
International and BofA.*
10.34 KFD Patent Assignment, dated March 12, 1998, between KFD and BofA.*
10.35 Company Trademark Assignment, dated as of March 12, 1998 between the
Company and BofA.*
10.36 AGI Trademark Assignment, dated as of March 12, 1998 between AGI and
BofA.*
10.37 Klearfold Trademark Assignment, dated as of March 12, 1998 between
Klearfold and BofA.*
10.38 International Trademark Assignment, dated March 12, 1998, between
International and BofA.*
10.39 KFD Trademark Assignment, dated March 12, 1998, between KFD and BofA.*
10.40 Company Copyright Assignment, dated as of March 12, 1998 between the
Company and BofA.*
10.41 AGI Copyright Assignment, dated as of March 12, 1998 between AGI and
BofA.*
10.42 Klearfold Copyright Assignment, dated as of March 12, 1998 between
Klearfold and BofA.*
10.43 International Copyright Assignment, dated March 12,, 1998, between
International and BofA.*
10.44 KFD Copyright Assignment, dated March 12, 1998, between KFD and BofA.*
10.45 Promissory Note--L/C Loan Note, dated March 12, 1998, from Klearfold
to BofA.*
10.46 Promissory Note--L/C Loan Note, dated March 12, 1998, from AGI to
BofA.*
10.47 AGI Pledge and Security Agreement, dated March 12, 1998, between AGI,
BofA, Bank One, Illinois, NA and William Blair & Co.*
10.48 Subrogation Agreement, dated March 11, 1998, between Mellon Bank, N.A.
("Mellon"), BofA, the Company and Klearfold.*
10.49 Letter of Credit and Reimbursement Agreement, dated August 1, 1997,
between Klearfold and Mellon.+
10.50 First Amendment to Reimbursement Agreement, dated March 11, 1998,
between Mellon, and Klearfold.*
10.51 AGI Letter of Credit, dated December 15, 1997.*
10.52 Mellon Bank, N.A. Letter of Credit, dated as of August 21, 1997.*
10.53 Back-Up Klearfold Letter of Credit, dated March 11, 1998.*
10.54 Loan Agreement, dated January 1, 1995, between AGI and City of
Jacksonville, Illinois.*
10.55 Loan Agreement, dated August 1, 1997, between Bucks County and
Klearfold.*
10.56 Klearfold Profit Sharing/401(K) Plan*
10.57 Klearfold Flexible Benefits Plan for Salaried Employees*
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges.**
21.1 List of Subsidiaries.*
23.1 Consent of Bingham Dana LLP, counsel to the Company (included in
Exhibit 5.1).+
23.2 Consent of Arthur Andersen LLP.**
23.3 Consent of KPMG Peat Marwick LLP.**
23.4 Consent of Price Waterhouse LLP.**
24.1 Power of Attorney (included in signature page to Registration
Statement).**
25.1 Statement re: Eligibility of Trustee.**
99.1 Form of Letter of Transmittal.+
99.2 Form of Notice of Guaranteed Delivery.+
99.3 Form of Exchange Agency Agreement between the Exchange Agent and the
Company.+
99.4 Form of Letter Regarding Eligibility for use of Form S-4.**
</TABLE>
- --------
* Filed herewith.
** Previously filed.
+ To be filed by amendment.
II-5
<PAGE>
(b) The following is a list of schedules filed as a part of this
Registration Statement:
<TABLE>
<C> <S>
Schedule II Valuation and Qualifying Accounts and Reserves for the Years Ended
December 31, 1995, 1996 and 1997.
</TABLE>
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
REGULATION SK ITEM 512(A)
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) ((S)2304.424(b) of this chapter) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
REGULATION SK ITEM 512(H)
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
the Registrant's counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by the Registrant is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
FORM S-4 ITEM 22(C)
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it went effective.
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MELROSE
PARK, STATE OF ILLINOIS, ON THIS 17TH DAY OF APRIL, 1998.
IMPAC Group, Inc.
/s/ David C. Underwood
By: _________________________________
DAVID C. UNDERWOODCHIEF FINANCIAL
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW ON BEHALF OF IMPAC
GROUP, INC. BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED:
<TABLE>
<S> <C>
SIGNATURE TITLE
DATE
* Chairman and April 17, 1998
- ------------------------------------- Director of IMPAC
MELVIN B. HERRIN Group, Inc.
* Chief Executive April 17, 1998
- ------------------------------------- Officer and
RICHARD BLOCK Director of IMPAC
Group, Inc.
(principal
executive officer)
* Director of IMPAC April 17, 1998
- ------------------------------------- Group, Inc.
H. SCOTT HERRIN
* Director of IMPAC April 17, 1998
- ------------------------------------- Group, Inc.
MICHEL REICHERT
* Director of IMPAC April 17, 1998
- ------------------------------------- Group, Inc.
MICHAEL GILLIGAN
/s/ David C. Underwood Chief Financial April 17, 1998
- ------------------------------------- Officer of IMPAC
DAVID C. UNDERWOOD Group, Inc.
(principal
financial and
accounting officer)
</TABLE>
II-7
<PAGE>
<TABLE>
<S> <C>
SIGNATURE TITLE
DATE
* Director of IMPAC April 17, 1998
- ------------------------------------- Group, Inc.
ZENAS BLOCK
* Director of IMPAC April 17, 1998
- ------------------------------------- Group, Inc.
DAVID HOROWITZ
/s/ David C. Underwood
*By:_________________________________
DAVID C. UNDERWOOD
ATTORNEY-IN-FACT
</TABLE>
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- ----------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated February 19, 1998, between KFI
Holding Corporation (which subsequently changed its name to "IMPAC
Group, Inc." and is sometimes referred to below as "Holding"), AGI
Acquisition Corporation, Heritage, Klearfold, AGI, certain
stockholders of AGI, and certain stockholders of Holding.*
2.2 Investment Agreement, dated February 19, 1998, between Holding,
Heritage Fund I Investment Corporation ("Heritage"), certain
stockholders of Holding, certain stockholders of AGI and certain other
persons.*
3.1 Amended and Restated Certificate of Incorporation of IMPAC Group, Inc.
(the "Company").*
3.2 Amended and Restated By-laws of the Company.*
4.1 Indenture, dated as of March 12, 1998, by and among the Company, AGI
Incorporated ("AGI"), Klearfold, Inc. ("Klearfold"), KF--Delaware,
Inc. ("KFD"), KF--International, Inc. ("International" and,
collectively, with AGI, Klearfold, KFD and International, the
"Guarantors") and State Street Bank and Trust Company, as Trustee.*
4.2 Form of the Company's 10 1/8% Senior Notes due 2008.*
4.3 Registration Rights Agreement, dated as of March 12, 1998, by and
among the Company, the Guarantors, Goldman, Sachs & Co. ("Goldman")
and Donaldson, Lufkin, and Jenrette Securities Corporation ("DLJ").*
5.1 Opinion of Bingham Dana LLP, as to legality of securities being
registered.+
10.1 Purchase Agreement, dated as of March 5, 1998, by and among the
Company, Goldman and DLJ.*
10.2 Escrow Agreement, dated March 12, 1998, between AGI, the Company, the
Escrow Agent and the Escrowed Stockholder Representative.*
10.3 Stockholder Agreement, dated as of March 12, 1998, between the
Company, certain Holding stockholders, certain stockholders of AGI and
certain other persons.*
10.4 Labor Agreement between Klearfold and United Paperworker's
International Union Local 286, effective December 1, 1994, as extended
by amendment through November 30, 2002.*
10.5 Second Amendment to Lease dated September 30, 1994 between Norman
Levin and Evelyn F. Levin and Klearfold (Warrington, Pennsylvania).*
10.6 Amended and Restated Lease, dated as of June 7, 1996, between Dena
Corp. and Klearfold (Louisa, Virginia).*
10.7 Amended and Restated Lease, dated as of June 7, 1996, between Melvin
B. Herrin and Klearfold (Warrington, Pennsylvania).*
10.8 Lease dated May 29, 1985 by and between Chicago Title and Trust
Company as Trustee under Trust Agreement dated February 1, 1977, and
known as Trust No. 1069185 and AGI re 256,629 sq. ft. at 1950 N. Ruby
Street.*
10.9 Amendment to Lease dated as of October 1, 1987 by and between Chicago
Title and Trust Company, as Trustee under a Trust Agreement dated
February 1, 1977, and known as Trust No. 1069185 and AGI re 256,629
sq. ft. at 1950 Ruby Street.*
10.10 Second Amendment to Lease dated as of April 30, 1992, by and between
Chicago Title and Trust Company as Trustee under a Trust Agreement
dated February 1, 1977 and known as Trust No. 1069185 and AGI re
256,629 sq. ft. at 1950 Ruby Street.*
10.11 Third Amendment to Lease dated July 2, 1997 by and between Chicago
Title and Trust Company as Trustee under Trust Agreement dated
February 1, 1997 and known as Trust No. 1069185 and AGI re 256,629 sq.
ft. at 1950 N. Ruby Street.*
10.12 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and David Underwood.*
10.13 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and James Oppenheimer.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- ----------------------------------------------------------------------
<C> <S>
10.14 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Richard
Oppenheimer.*
10.15 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Dean Henkel.*
10.16 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and H. Scott Herrin.*
10.17 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Melvin Herrin.*
10.18 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Richard Block.*
10.19 Credit Agreement, dated as of March 12, 1998, between Bank of America
NT &SA ("BofA") and the Company.*
10.20 Form of the Company's $40,000,000 Revolving Note, dated as of March
12, 1998.*
10.21 Company Security Agreement, dated as of March 12, 1998 between the
Company and BofA.*
10.22 Borrowers Security Agreement, dated as of March 12, 1998 between AGI,
Klearfold and BofA.*
10.23 Klearfold Subsidiaries Security Agreement, dated as of March 12, 1998
between KFD and International (the "Klearfold Subsidiaries") and
BofA.*
10.24 Company Pledge Agreement, dated as of March 12, 1998 between the
Company and BofA.*
10.25 Borrowers Pledge Agreement, dated as of March 12, 1998 between AGI,
Klearfold and BofA.*
10.26 Klearfold Subsidiaries Pledge Agreement, dated as of March 12, 1998
between the Klearfold Subsidiaries and BofA.*
10.27 Company Guaranty, dated as of March 12, 1998, between the Company and
BofA.*
10.28 Borrowers Guaranty, dated as of March 12, 1998 between AGI, Klearfold
and BofA.*
10.29 Klearfold Subsidiaries Guaranty, dated as of March 12, 1998 between
the Klearfold Subsidiaries and BofA.*
10.30 Company Patent Assignment dated as of March 12, 1998 between the
Company and BofA.*
10.31 AGI Patent Assignment, dated as of March 12, 1998 between AGI and
BofA.*
10.32 Klearfold Patent Assignment, dated as of March 12, 1998 between
Klearfold and BofA.*
10.33 International Patent Assignment, dated March 12, 1998, between
International and BofA.*
10.34 KFD Patent Assignment, dated March 12, 1998, between KFD and BofA.*
10.35 Company Trademark Assignment, dated as of March 12, 1998 between the
Company and BofA.*
10.36 AGI Trademark Assignment, dated as of March 12, 1998 between AGI and
BofA.*
10.37 Klearfold Trademark Assignment, dated as of March 12, 1998 between
Klearfold and BofA.*
10.38 International Trademark Assignment, dated March 12, 1998, between
International and BofA.*
10.39 KFD Trademark Assignment, dated March 12, 1998, between KFD and BofA.*
10.40 Company Copyright Assignment, dated as of March 12, 1998 between the
Company and BofA.*
10.41 AGI Copyright Assignment, dated as of March 12, 1998 between AGI and
BofA.*
10.42 Klearfold Copyright Assignment, dated as of March 12, 1998 between
Klearfold and BofA.*
10.43 International Copyright Assignment, dated March 12,, 1998, between
International and BofA.*
10.44 KFD Copyright Assignment, dated March 12, 1998, between KFD and BofA.*
10.45 Promissory Note--L/C Loan Note, dated March 12, 1998, from Klearfold
to BofA.*
10.46 Promissory Note--L/C Loan Note, dated March 12, 1998, from AGI to
BofA.*
10.47 AGI Pledge and Security Agreement, dated March 12, 1998, between AGI,
BofA, Bank One, Illinois, NA and William Blair & Co.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- ----------------------------------------------------------------------
<C> <S>
10.48 Subrogation Agreement, dated March 11, 1998, between Mellon Bank, N.A.
("Mellon"), BofA, the Company and Klearfold.*
10.49 Letter of Credit and Reimbursement Agreement, dated August 1, 1997,
between Klearfold and Mellon.+
10.50 First Amendment to Reimbursement Agreement, dated March 11, 1998,
between Mellon, and Klearfold.*
10.51 AGI Letter of Credit, dated December 15, 1997.*
10.52 Mellon Bank, N.A. Letter of Credit, dated as of August 21, 1997.*
10.53 Back-Up Klearfold Letter of Credit, dated March 11, 1998.*
10.54 Loan Agreement, dated January 1, 1995, between AGI and City of
Jacksonville, Illinois.*
10.55 Loan Agreement, dated August 1, 1997, between Bucks County and
Klearfold.*
10.56 Klearfold Profit Sharing/401(K) Plan*
10.57 Klearfold Flexible Benefits Plan for Salaried Employees*
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges.**
21.1 List of Subsidiaries.*
23.1 Consent of Bingham Dana LLP, counsel to the Company (included in
Exhibit 5.1).+
23.2 Consent of Arthur Andersen LLP.**
23.3 Consent of KPMG Peat Marwick LLP.**
23.4 Consent of Price Waterhouse LLP.**
24.1 Power of Attorney (included in signature page to Registration
Statement).**
25.1 Statement re: Eligibility of Trustee.**
99.1 Form of Letter of Transmittal.+
99.2 Form of Notice of Guaranteed Delivery.+
99.3 Form of Exchange Agency Agreement between the Exchange Agent and the
Company.+
99.4 Form of Letter Regarding Eligibility for use of Form S-4.**
</TABLE>
* Filed herewith.
** Previously filed.
+ To be filed by amendment.
<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") dated as of February
---------
19, 1998, is by and among KFI Holding Corporation, a Delaware corporation
("Holding"); AGI Acquisition Corporation, an Illinois corporation
-------
("Acquisition"); Klearfold, Inc., a Pennsylvania corporation ("Klearfold"); AGI
---------
Incorporated, an Illinois corporation (the "Company"); each of the holders of
-------
common stock and/or stock appreciation rights of the Company named on the
signature pages hereto as a "Principal Stockholder" (each, a "Principal
---------
Stockholder," and collectively, the "Principal Stockholders"); Heritage Fund I
- ----------- --------- ------------
Investment Corporation, a Delaware corporation ("Heritage"); Melvin B. Herrin;
--------
H. Scott Herrin; Matthew H. Kamens, not individually but as trustee under an
Indenture of Trust of Melvin B. Herrin dated June 4, 1996 (the "Herrin Family
------ ------
Trust"); and Arthur S. Keyser, not individually but as trustee under an
- -----
Irrevocable Deed of Trust dated August 12, 1992, f/b/o H. Scott Herrin (the
"Scott Trust") (collectively, Melvin B. Herrin, H. Scott Herrin, the Herrin
----- -----
Family Trust and the Scott Trust are sometimes referred to herein as the "Herrin
------
Stockholders").
- ------------
The parties desire that Acquisition be merged with and into the Company,
subject to the terms and conditions set forth in this Agreement.
Capitalized terms used and not otherwise defined upon first usage herein
are defined in Section 11.1 of this Agreement.
Accordingly, the parties hereby agree as follows:
1. THE MERGER.
1.1. CLOSING AND EFFECTIVE DATE OF MERGER. Subject to the provisions of
this Agreement, a closing (the "Closing") shall be held at the offices of Latham
-------
& Watkins, 885 Third Avenue, Suite 1000, New York, NY 10022 within five business
days after the satisfaction of the conditions precedent set forth in Sections 6
and 7, or on such other date before any termination of this Agreement pursuant
to Section 10 hereof, and/or at such other place, as may be agreed to by the
parties (the date on which the Closing actually occurs, the "Closing Date"). On
------- ----
the Closing Date, Acquisition and the Company shall execute Articles of Merger
(the "Articles of Merger") substantially in the form of the attached Exhibit 1.1
------------------ ------- ---
and file them with the Office of the Secretary of State of the State of
Illinois, in order to cause the merger of Acquisition with and into the Company
(the "Merger") in accordance with the laws of the State of Illinois. The Merger
------
shall be effective as of the time specified in the Articles of Merger (the
"Effective Time"). For all
--------- ----
<PAGE>
-2-
purposes, all of the document deliveries and other actions to occur at the
Closing shall be irrefutably presumed to have occurred at the same time,
immediately before the Effective Time.
1.2. EFFECT OF MERGER. At the Effective Time, automatically and without
further action:
(a) Acquisition shall be merged with and into the Company and the separate
existence of Acquisition shall cease.
(b) The Company shall continue as the Surviving Corporation, organized
under the laws of the State of Illinois, the authorized capital stock of which
shall be as set forth in the Articles of Incorporation of the Company as in
effect immediately before the Effective Time, as amended by the Articles of
Merger.
(c) The Company's Articles of Incorporation, as in effect immediately
before the Effective Time, shall be amended by the Articles of Merger (among
other things, to reduce the authorized number of shares of Company Common Stock
from 1,500,000 shares to 100 shares), and as so amended shall read in their
entirety as set forth in the attached Exhibit 1.2(c) and shall be the Articles
--------------
of Incorporation of the Surviving Corporation; and the Company's by-laws, as in
effect immediately before the Effective Time, shall be amended and restated in
their entirety and as so amended and restated shall read in their entirety as
set forth in the attached Exhibit 1.2(c)(i) and shall be the by-laws of the
-----------------
Surviving Corporation.
(d) Each share of Company Common Stock that was issued and outstanding
immediately before the Effective Time, other than any Dissenting Shares (as
defined in Section 1.2(f) below) and other than any shares held by Holding
(including shares, if any, acquired by Holding pursuant to the Investment
Agreement referred to in Section 1.3 hereof) or by the Company (subject to such
exclusions, all such shares, the "Converted Shares"), shall be converted into
--------- ------
and become the right to receive (subject to legal requirements with respect to
withholding for taxes) from the Surviving Corporation consideration in an amount
determined as follows:
(i) The aggregate consideration ("Aggregate Merger Consideration")
--------- ------ -------------
payable by the Surviving Corporation in respect of the Converted Shares,
the stock appreciation rights identified on Exhibit 1.2(d) hereto (the
-------------
"SARs") outstanding immediately prior to the Effective Time, and the
----
Horowitz Option, shall equal the sum of the Aggregate Share Consideration
and the Aggregate Rightholder Consideration, as determined herein.
<PAGE>
-3-
(ii) The "Aggregate Share Consideration" shall be the product of (A)
--------- ----- -------------
the sum (such amount also being referred to as the "Share Equity Value") of
----- ------ -----
(I) $69,170,000, minus (II) the aggregate principal amount of the Dividend
-----
Notes (as defined in Section 3.7(d) below) outstanding immediately before
the Effective Time, minus (III) the amount of compensation payable to Allen
-----
& Company Incorporated in connection with the transactions contemplated
hereby and by the Investment Agreement, minus (IV) the Aggregate
-----
Rightholder Consideration, multiplied by (B) a fraction, the numerator of
which is the sum of the aggregate number of Converted Shares outstanding
immediately prior to the Effective Time, and the denominator of which is
the sum of the aggregate number of shares of Company Common Stock
outstanding immediately prior to the Effective Time.
(iii) The "Aggregate Rightholder Consideration" shall mean the
--------- ----------- -------------
difference of (A) the product of (I) the quotient of (1) the Rightholder
Equity Value (as defined below) divided by (2) the number of SARs, the
number of shares of Company Common Stock issuable upon exercise of the
Horowitz Option, and the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time, such sum being
referred to herein as the "Fully Diluted Number of Shares", times (II) the
----- ------- ------ -- ------
sum of the number of SARs outstanding immediately prior to the Effective
Time and the number of shares of Company Common Stock issuable upon
exercise of the Horowitz Option, minus (B) $3,084,936 (being the sum of the
-----
aggregate "Base Value" of the SARs as set forth on Exhibit 1.2(d) and the
------- ------
aggregate exercise price of the Horowitz Option, and such sum being
referred to hereinafter as the "Aggregate Base Value"). The "Rightholder
--------- ---- ----- -----------
Equity Value" shall be the sum of (x) $69,170,000 plus (y) the Aggregate
------ ----- ----
Base Value minus (z) the amount of compensation payable to Allen & Company
-----
Incorporated in connection with the transactions contemplated hereby and by
the Investment Agreement.
(iv) Each Converted Share shall be converted into and exchanged
solely for the right to receive directly or in escrow, as set forth in
Section 1.3 below, the quotient of the Aggregate Share Consideration
divided by the sum of the number of Converted Shares outstanding
immediately prior to the Effective Time (the "Per Share Consideration").
--- ----- -------------
(v) Each SAR shall entitle the holder thereof to an amount equal to
the difference of (A) the quotient of (I) the Aggregate Rightholder
Consideration plus the Aggregate Base Value, divided by (II) the number of
----
SARs outstanding immediately prior to the Effective Time, minus (B) the
-----
"Base Value" of such SAR.
(vi) The Horowitz Option shall be converted into and exchanged solely
for the right to receive directly or in escrow, as set forth in Section 1.3
<PAGE>
-4-
below, an amount (the "Option Consideration") equal to the difference of
------ -------------
(A) the product of (I) 25,000 times (II) the quotient of (1) the Aggregate
Rightholder Consideration plus the Aggregate Base Value, divided by (2) the
----
Fully Diluted Number of Shares minus (B) $187,500 (being the aggregate
-----
exercise price of the Horowitz Option).
(e) Each share of Company Common Stock that, immediately before the
Effective Time, was held by Holding or the Company shall be canceled and no
consideration shall be payable in respect thereof.
(f) Each share of Company Common Stock that, immediately before the
Effective Time, was held by any Person (such persons, collectively, the
"Dissenting Stockholders", and each individually a "Dissenting Stockholder") who
---------- ------------ ---------- -----------
has duly exercised the rights afforded to dissenting stockholders pursuant to
Sections 11.65 and 11.70 of the Illinois Business Corporation Act (such shares,
collectively, "Dissenting Shares") shall be converted into the right to receive
---------- ------
the fair value of such shares as determined in accordance with the provisions of
such sections.
(g) Each share of the common stock, $0.01 par value per share, of
Acquisition that was issued and outstanding immediately before the Effective
Time shall be converted into and become one share of the common stock, $0.01 par
value, of the Surviving Corporation.
(h) From and after the Effective Time, the respective persons who were the
officers and directors of the Company immediately before the Effective Time
shall hold the same offices as officers and directors, respectively, of the
Surviving Corporation, each to hold such office(s), subject to the Articles of
Incorporation and the by-laws of the Surviving Corporation and to the
Stockholder Agreement, until the next annual meeting of directors or
stockholders, as the case may be, of the Surviving Corporation, and until his or
her successor is duly elected or appointed and qualified, or until his or her
earlier resignation, removal, incapacity, or death.
1.3. PAYMENT OF AGGREGATE MERGER CONSIDERATION. The Aggregate Merger
Consideration shall be payable as set forth below:
(a) At the Effective Time, Holding shall make available in cash, and each
Participating Stockholder listed on Exhibit 1.3(a) hereto (the Participating
------- ------
Stockholders so listed being referred to collectively as the "Escrowed
--------
Stockholders") shall be entitled to receive, upon surrender to the Surviving
- ------------
Company or its representatives of any Certificate of Certificates (as defined
below) evidencing such Participating Stockholder's Converted Shares for
cancellation in accordance with Section 2.1 hereof, an amount in cash equal to
the product of (i) the Per Share Consideration minus $3.3975 (the "Holdback
----- --------
Amount", being the
- ------
<PAGE>
-5-
Maximum AGI Indemnity Amount divided by the Fully Diluted Number of Shares)
times (ii) the number of Converted Shares represented by the Certificates so
surrendered. Further, at the Effective Time, Holding shall place into escrow
with the Escrow Agent, pursuant to the terms of the Escrow Agreement (each as
defined in Section 1.4(d) below), an amount equal to the product of the Holdback
Amount times the number of Converted Shares owned by each of the Escrowed
Stockholders immediately prior to the Effective Time, which amount otherwise
would be payable to the Escrowed Stockholders (the "Share Escrow Amount" and,
----- ------ ------
collectively with the Aggregate Option Holdback Amount, as defined in Section
1.3(d) hereof, the "Escrow Amount"). The Escrow Amount shall be held in escrow
------ ------
by the Escrow Agent and distributed to the Escrowed Stockholders pursuant to and
in accordance with the terms of the Escrow Agreement, for the purpose of
providing payment with respect to claims for indemnification made against the
Escrowed Stockholders pursuant to Article 8 hereof. Any amounts remaining in
escrow under the Escrow Agreement one year after the Closing shall be
distributed to the Escrowed Stockholders, in accordance with the terms of the
Escrow Agreement, pro rata in accordance with the number of Converted Shares
--- ----
held by each Escrowed Stockholder immediately prior to the Effective Time,
except that if there is outstanding any claim pursuant to Article 8 for
indemnity from the Escrowed Stockholders, then Holding shall have the right to
require the Escrow Agent to retain an amount which equals the amount of such
claim and if, upon final resolution of such claim, a portion shall be
distributed to the Escrowed Stockholders, such portion shall be distributed in
accordance with the terms of the Escrow Agreement, pro rata in accordance with
--- ----
the number of Converted Shares held by each Escrowed Stockholder immediately
prior to the Effective Time. In the event of any inconsistency between the
description contained in this Section 1.3(a) regarding the distribution of the
Escrow Amount and the terms of the Escrow Agreement, the terms of the Escrow
Agreement shall prevail.
(b) At the Effective Time, Holding shall make available, and each
Participating Stockholder listed on Exhibit 1.3(b) hereto (the Participating
------- ------
Stockholders so listed being referred to collectively as the "Non-Escrowed
------------
Stockholders") shall be entitled to receive, upon surrender to the Surviving
- ------------
Company or its representatives of any Certificates for cancellation in
accordance with Section 2.1 hereof, an amount equal to the product of (i) the
Per Share Consideration times (ii) the number of shares of Converted Stock
represented by the Certificates so surrendered, which amounts shall be payable
in cash or by set-off against any amounts outstanding under notes issued by such
Non-Escrowed Stockholder and payable to Holding pursuant to the Investment
Agreement.
(c) At the Effective Time, Holding shall pay to each holder of SARs
(collectively, the "SAR Holders") an amount, with respect to each SAR held by
--- -------
such SAR Holder, the amount determined in accordance with Section 1.2(d)(i)(E)
hereof, such amounts to be paid by the Company by set-off against any amounts
<PAGE>
-6-
outstanding under notes issued by such SAR Holder and payable to Holding
pursuant to the Investment Agreement.
(d) At the Effective Time, Holding shall make available, and the holder of
the Horowitz Option shall be entitled to receive, upon surrender to the
Surviving Corporation or its representative of the Horowitz Option for
cancellation in accordance with Section 2.1 hereof, an amount in cash equal to
the Option Consideration minus the product (the "Aggregate Option Holdback
--------- ------ --------
Amount") of (i) the Holdback Amount times (ii) 25,000. Further, at the Effective
- ------
Time, Holding shall place into escrow with the Escrow Agent, pursuant to the
terms of the Escrow Agreement, an amount equal to the Aggregate Option Holdback
Amount.
1.4. TRANSACTIONS AT OR BEFORE CLOSING. Concurrently with the execution and
delivery of this Agreement, Holding, the stockholders of Holding listed on
Schedule 1 hereto (the "Holding Stockholders"), certain of the Stockholders
- -------- - ------- ------------
listed on Schedule 2 hereto (the "Continuing AGI Stockholders") and certain
-------- - ---------- --- ------------
executive employees of the Company listed on Schedule 3 hereto (the "Other
-------- - -----
Investors") are executing and delivering an Investment Agreement (the
- ---------
"Investment Agreement") dated as of the date hereof. At or before the Closing,
---------- ---------
in addition to executing and delivering the other agreements and taking the
other actions contemplated by this Agreement:
(a) Subject to the terms and conditions of the Investment Agreement,
Holding, the Holding Stockholders, the Continuing AGI Stockholders and the Other
Investors shall consummate the transactions contemplated by the Investment
Agreement, pursuant to which, among other things, (i) the Holding Stockholders,
the Continuing AGI Stockholders and the Other Investors will acquire certain
securities of Holding, and (ii) Holding will acquire certain shares of Company
Common Stock from the Continuing AGI Stockholders, all as provided therein.
(b) Each of Holding, the Holding Stockholders, the Continuing AGI
Stockholders and the Other Investors shall execute and deliver a Stockholder
Agreement in the form of the attached Exhibit 1.4(b).
------- ------
(c) Holding, on the one hand, and each of Richard Block, David Underwood,
James Oppenheimer, Richard Oppenheimer, and Dean Henkel, on the other hand,
shall execute and deliver an Employment, Non-Competition and Stock Repurchase
Agreement substantially in the form of the attached Exhibit 1.4(c), with such
------- ------
modifications thereto as Holding and such employee shall mutually agree and
Holding, on the one hand, and each of Jacqueline Barry, Dennis McGuin and Mary
Frances Griffin on the other hand, shall execute and deliver an Employment, Non-
Competition and Stock Repurchase Agreement in the form mutually agreed between
Holding and such employee.
<PAGE>
-7-
(d) The Company, Holding, the Escrow Agent referred to therein (the
"Escrow Agent"), and Timothy M. Murray, who, in consultation with Richard Block,
------ -----
shall serve as the Escrowed Stockholder Representative (the "Escrowed
--------
Stockholder Representative"), shall execute and deliver an Escrow Agreement (the
- ----------- --------------
"Escrow Agreement") in the form of the attached Exhibit 1.4(d), pursuant to
------- ------
which the Escrow Amount shall be delivered to the Escrow Agent in accordance
with and subject to the terms and provisions thereof, and each of the Escrowed
Stockholders shall have appointed Timothy M. Murray as his attorney-in-fact to
act as the Escrowed Stockholder Representative, in consultation with Richard
Block, in connection with the transactions referred to in the Escrow Agreement
and herein .
(e) Holding shall have made available, and deposited in escrow, the cash
required to be made available or deposited pursuant to Section 1.3 hereof.
(f) David Horowitz shall have consented irrevocably in writing to the
treatment of the Horowitz Option pursuant to Sections 1.2, 1.3 and 2.1 hereof.
(g) The Company shall deliver to Holding the original minute books and
other corporate records of the Company.
(h) Each of the parties shall execute (if applicable) and deliver such
other customary closing certificates and other documents as any other party
shall have reasonably requested in writing not later than five business days
before the Closing.
2. PROCEDURES, ETC.
2.1. PROCEDURES.
(a) As of the Effective Time, each stock certificate representing one or
more shares of Company Common Stock issued and outstanding or held in the
Company's treasury immediately before the Effective Time (a "Certificate"),
-----------
shall cease to represent such Company Common Stock and shall represent only (i)
in the case of Dissenting Shares, the rights of the holder thereof under
Sections 11.65 and 11.70 of the Illinois Business Corporation Act, or (ii) in
all other cases, subject to the provisions of Section 1.2(d)(ii) hereof, the
right to receive the Per Share Consideration into which such shares have been
converted pursuant to Section 1.2(d)(i) hereof. At the Effective Time, the
Horowitz Option shall cease to represent a right to purchase Company Common
Stock and shall represent only the right to receive the Option Consideration.
(b) As promptly as practicable after the Effective Time, the Surviving
Corporation or its agent shall send transmittal materials to each Person (other
than Holding or the Company) who, immediately before the Effective Time, was the
record holder of Company Common Stock, for use in exchanging the Certificates
<PAGE>
-8-
formerly representing Company Common Stock for the Per Share Consideration to
which such holder is entitled pursuant to Section 1.2(d)(i) hereof. Upon
surrender of a Certificate to the Surviving Corporation or such transfer agent,
together with a duly executed letter of transmittal and any other required
documents, the record holder of such Certificate shall be entitled, subject to
the provisions of Section 1.2(d)(ii) hereof, to receive in exchange therefor in
cash, escrow, or by set-off of against any amount outstanding under notes issued
by such holder and payable to Holding pursuant to the Investment Agreement, the
consideration to which such holder is entitled in respect of the Company Common
Stock formerly represented by such Certificate pursuant to and in accordance
with Section 1.3 hereof, and such Certificate shall be canceled; provided, that
in the case of any Certificate representing Dissenting Shares, such Certificate
shall be returned to the presenting Person.
(c) After the Effective Time, no transfers of shares of Company Common
Stock shall be recorded in the stock transfer books of the Surviving Corporation
or its transfer agent. If, after the Effective Time, there is presented to the
Surviving Corporation or its transfer agent for transfer:
(i) any Certificate formerly representing shares of Company Common Stock
(other than Dissenting Shares or shares that, immediately before the
Effective Time, were held by Holding or the Company), such Certificate
shall be canceled and exchanged for the consideration payable in respect
thereof pursuant to Section 1.2(d)(i)(D) hereof and in accordance with
Section 1.3 hereof;
(ii) any Certificate representing Dissenting Shares, such Certificate
shall be returned to the presenting Person; and
(iii) any Certificate formerly representing shares of Company Common Stock
held by Holding or the Company, such Certificate shall be canceled and no
consideration shall be payable or deliverable in respect thereof.
(d) After the Effective Time, holders of shares of Company Common Stock
shall cease to be, and shall have no rights as, stockholders of the Surviving
Corporation, other than (i) in the case of Dissenting Shares, the rights of the
holders thereof under Sections 11.65 and 11.70 of the Illinois Business
Corporation Act, or (ii) in all other cases, subject to the provisions of
Section 1.2(d)(ii) hereof, the rights of the holders thereof to receive the
consideration to which the holders thereof are entitled pursuant to and in
accordance with Section 1.3 hereof.
(e) Neither the Surviving Corporation nor any other Person shall be liable
to any holder or former holder of shares of Company Common Stock for any such
shares or any dividends, distributions, or other payments or consideration in
<PAGE>
-9-
respect thereof that were properly delivered to a public official pursuant to
applicable abandoned property, escheat, or similar laws.
(f) In the event that any Certificate has been lost, stolen, or destroyed,
Holding shall issue in exchange for such lost, stolen or destroyed Certificate,
promptly following Holding's receipt of an affidavit as to that fact in form and
substance acceptable to Holding made by the registered owner of the shares
represented by such Certificate, as shown on the Company's stock records
immediately before the Effective Time, the consideration to which such
registered owner would be entitled to receive pursuant to and in accordance with
Section 1.3 hereof; provided, however, that Holding may, in its reasonable
-------- -------
discretion and as a condition precedent to the delivery of such consideration
require such registered owner of such lost, stolen or destroyed Certificate(s)
to execute a customary indemnification agreement against any claim that may be
made against Holding or the Surviving Corporation with respect to the
Certificate(s) alleged to have been lost, stolen or destroyed, and, to the
extent reasonably required by Holding, deliver a bond in an appropriate amount
as security therefor.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL
STOCKHOLDERS.
The Company and, solely as to any representations and warranties which
expressly relate to facts regarding any such individual or trust, each of the
Principal Stockholders, hereby severally and not jointly represent and warrant
to each of the Holding Stockholders, Holding and Acquisition, and, if the
transactions hereby are consummated, the Surviving Corporation, both as of the
date hereof and as of the Closing Date (immediately prior to the Closings
hereunder and under the Investment Agreement), as follows, subject to such
exceptions as are specifically contemplated by this Agreement or as are set
forth in (i) the attached Disclosure Schedule, or (ii) except as provided in the
final sentence of Section 5.15 hereof, the disclosure supplements contemplated
by that section, and provided that, notwithstanding the fact that the
representations and warranties in this Section 3 are made by the Company and, to
the limited extent applicable, the Principal Stockholders, the Company and the
Participating Stockholders shall indemnify against any and all Damages related
to or arising, directly or indirectly, out of or in connection with any breaches
of such representations and warranties to the extent, and subject to the
limitations, set forth in Section 8 hereof. Notwithstanding any other provision
of this Agreement (except the final sentence of Section 5.15), the Disclosure
Schedule, or any such disclosure supplement, each exception set forth in the
Disclosure Schedule or any such disclosure supplement shall be deemed to qualify
each representation and warranty set forth in this Agreement (x) that is
specifically identified (by cross-reference or otherwise) in the Disclosure
Schedule or such disclosure supplement as being qualified by such exception, or
(y) with respect to which the relevance of such exception is apparent on the
face of the
<PAGE>
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disclosure of such exception set forth in the Disclosure Schedule or such
disclosure supplement, provided, in either case, that the relevant facts are set
forth in reasonable detail in the Disclosure Schedule or such disclosure
supplement.
3.1. INCORPORATION; AUTHORITY. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Illinois
and has all requisite corporate power and authority to own or lease and operate
its properties and to carry on its business as now conducted. The Company has
delivered to Holding or its counsel complete and correct copies of the Company's
Articles of Incorporation and by-laws, in each case with all amendments thereto.
3.2. AUTHORIZATION AND ENFORCEABILITY. Each of the Company (subject only to
the approval of the Merger by the Company's stockholders as contemplated hereby)
and the Principal Stockholders has all requisite corporate or individual power,
as the case may be, power and full legal right and authority (including, in the
case of the Company, due approval of its Board of Directors) to enter into this
Agreement and all of the Other Agreements to which it or he is or is to be a
party as contemplated hereby, to perform all of its or his agreements and
obligations hereunder and thereunder, each in accordance with its respective
terms, and to consummate the transactions contemplated hereby and thereby. Each
of this Agreement and such Other Agreements to which the Company and/or any of
the Principal Stockholders is or is to be a party has been, or upon execution
and delivery as contemplated hereby, will be, duly executed and delivered by the
Company and/or such Principal Stockholder, as the case may be, and constitutes
or will constitute the legal, valid, and binding obligation of it and/or him, as
the case may be, enforceable against it and/or him, as the case may be, in
accordance with its respective terms, except to the extent that (i) enforcement
may be limited by or subject to any bankruptcy, insolvency, reorganization,
moratorium, or similar laws now or hereafter in effect relating to or limiting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief are subject to certain equitable
defenses and to the discretion of the court or other similar Person before which
any proceeding therefor may be brought.
3.3. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 1,500,000
shares of Company Common Stock, 909,714 shares of which are issued and
outstanding on the date hereof, and will be issued and outstanding as of the
Closing Date. All of the outstanding shares of the capital stock of the Company
are duly authorized, validly issued, fully paid, and non-assessable, and are
owned of record as set forth in Section 3.3 of the Disclosure Schedule
<PAGE>
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(b) All of the outstanding shares of Company Common Stock owned by the
Participating Stockholders are owned free and clear of all Liens, other than (i)
any restrictions on transfer arising under applicable securities laws solely by
reason of the fact that such shares were issued pursuant to exemptions from
registration under such securities laws, (ii) the rights of John Maranov to
purchase up to ____ shares of Company Common Stock owned by Richard Block (the
"Maranov Option"), and (iii) restrictions imposed pursuant to that certain
------- ------
Amended and Restated Shareholders Agreement, made as of July 1, 1993, by and
among the Company and the signatories thereto (the "Existing Shareholders
-------- ------------
Agreement"), which restrictions shall be terminated immediately before the
- ---------
Effective Time.
(c) Other than pursuant to the Existing Shareholders Agreement, the
Maranov Option and the Horowitz Option, there is no agreement or other
obligation on the part of the Company or any of the Participating Stockholders
to purchase or sell any shares of capital stock or other securities of the
Company. Other than as set forth in Section 3.3 of the Disclosure Schedule,
there are no options, warrants, or other rights to subscribe for or purchase
from the Company or any of the Principal Stockholders any shares of capital
stock or other securities of the Company.
3.4. QUALIFICATION. The Company is duly qualified and in good standing as a
foreign corporation in all jurisdictions in which the character of its owned or
leased properties or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified or admitted and in good
standing does not and is not reasonably likely to have a material adverse effect
on the business, financial condition, or results of operations of the Company (a
"Material Adverse Effect").
-------- ------- ------
3.5. SUBSIDIARIES. Except as described in Section 3.5 of the Disclosure
Schedule, the Company does not own any equity securities or other legal and/or
beneficial interests in any corporations, partnerships, limited liability
companies, business trusts, or joint ventures, or in any other unincorporated
trade or business enterprises.
3.6. FINANCIAL STATEMENTS. Included in Section 3.6 of the Disclosure
Schedule are copies of the balance sheets of the Company as of December 31 in
each of the years 1995 through 1997, inclusive (such balance sheet as of
December 31, 1997, the "Audited Balance Sheet"), and the related statements of
------- ------- -----
income, retained earnings, and cash flows of the Company for the fiscal years
ended on such dates, certified by Arthur Andersen LLP, in the case of the 1995
and 1996 financial statements and Price Waterhouse, L.L.P., in the case of the
1997 financial statements. Each of such financial statements is true and
complete in all material respects and has been prepared (a) from, and is
consistent with, the Company's books and records (which themselves are true and
complete and properly reflect all
<PAGE>
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transactions of the Company), and (b) in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods; each of
such balance sheets fairly presents the financial condition of the Company as of
its respective date; and each of such statements of income, retained earnings,
and cash flows fairly presents the results of operations, retained earnings, or
cash flows, as the case may be, of the Company for the period covered thereby.
3.7. ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 3.7 of the
Disclosure Schedule, or as expressly contemplated hereby and by the Investment
Agreement, since December 31, 1997, the Company has conducted its business only
in the ordinary course, and without limiting the foregoing, there has not been:
(a) any change in the assets, liabilities, sales, income, or business of the
Company, or in its relationships with suppliers, customers, or lessors, other
than changes that were both in the ordinary course of business and have not had,
either in any case or in the aggregate, a Material Adverse Effect; (b) except as
specifically contemplated by Section 3.7 of the Disclosure Schedule, any
acquisition or disposition by the Company of any asset or property (i) from or
to any Affiliate of the Company or (ii) other than in the ordinary course of
business, other than any acquisitions, on the one hand, or dispositions, on the
other hand, of assets the fair market value and book value of which do not in
the aggregate exceed $100,000, (c) any damage, destruction or loss, whether or
not covered by insurance, to the property of the Company which, after giving
effect to any insurance proceeds receivable in connection therewith, had or is
reasonably likely to have a Material Adverse Effect; (d) any declaration,
setting aside or payment of any dividend or any other distributions in respect
of any shares of capital stock of the Company, other than the declaration and
payment by the Company of a dividend (the "Note Dividend") payable to the
---- --------
holders of its Common Stock immediately prior to the Effective Date, in an
original principal amount not to exceed $23,000,000 and payable (other than an
amount not to exceed $150,000) in notes (collectively, the "Dividend Notes"),
-------- -----
and there has been no such declaration, setting aside or payment since June 30,
1997, other than the declaration by the Company of dividends payable in cash as
required pursuant to Section 3.03(a) of the Existing Shareholders Agreement (the
"Tax Dividends"); (e) any issuance of any shares of the capital stock of the
--- ---------
Company or any direct or indirect redemption, purchase, or other acquisition by
the Company of any such capital stock; (f) any increase in the compensation,
pension, or other benefits payable or to become payable by the Company to any of
its officers or employees, or any bonus payments or arrangements made to or with
any of them other than (i) increases occurring in the ordinary course of
business consistent with past practices or required by law and described in
Section 3.7 of the Disclosure Schedule, (ii) bonuses payable pursuant to the
Company's bonus plan in the ordinary course of business consistent with past
practices and described in Section 3.7 of the Disclosure Schedule, and, to the
extent required by Section 3.25 hereof, in Section 3.25 of the Disclosure
Schedule, and (iii) the accelerated vesting of the SARs in connection with the
<PAGE>
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transactions contemplated hereby; (g) any forgiveness or cancellation of any
material debt or claim by the Company or any waiver of which the Company has
knowledge of any right of material value, other than compromises of accounts
receivable in the ordinary course of business; (h) except as specifically
contemplated hereby, any entry by the Company into any transaction with any
Affiliate other than in the ordinary course of business; (i) any incurrence by
the Company of any obligations or liabilities, whether absolute, accrued,
contingent or otherwise (including without limitation liabilities as guarantor
or otherwise with respect to obligations of others), other than obligations and
liabilities incurred in the ordinary course of business with Persons other than
any Affiliate of the Company; (j) any incurrence or imposition of any material
Lien other than a Permitted Lien on any of the assets, tangible or intangible,
of the Company; (k) any discharge or satisfaction by the Company of any material
Lien or payment by the Company of any obligation or liability (fixed or
contingent) other than (i) current liabilities included in the Audited Balance
Sheet, and (ii) current liabilities to Persons other than any Affiliate of the
Company incurred since the date of the Audited Balance Sheet in the ordinary
course of business; (l) any material change in the credit practices of the
Company; (m) any employment contract or collective bargaining agreement, whether
written or oral, entered into by the Company or any material modification of the
terms of any existing such contract or agreement; or (n) a commitment, whether
oral or written, by or on behalf of the Company to do any of the matters
described in clauses (a) through (m) of this Section 3.7.
3.8. TITLE TO PROPERTY, REAL PROPERTY LEASES, ETC.
(a) Personal Property. Except as set forth in Section 3.8 of the
-----------------
Disclosure Schedule, (i) the Company has good and marketable title to, or a
valid leasehold interest in, the personal property and assets it uses regularly
in the conduct of its business (including, without limitation, those reflected
on the Company's Audited Balance Sheet, except to the extent such properties and
assets have been disposed of since the date of such balance sheet in the
ordinary course of business), and none of such properties or assets owned by the
Company is subject to any Liens other than Permitted Liens, and (ii) all of the
properties, plant and equipment which are material to the Company's business
are, in all material respects, in satisfactory condition (subject, in the case
of tangible property, to normal wear, tear and maintenance) and as such are, in
the aggregate, adequate to conduct the business of the Company as presently
conducted. Section 3.8 of the Disclosure Schedule sets forth a complete list of
all capital assets owned by the Company having a net book value in excess of
$100,000.
(b) Real Property. Section 3.8 of the Disclosure Schedule sets forth a
-------------
legal description of each parcel of real property owned by the Company
(including all improvements thereon, the "Owned Real Property") and all real
----- ---- --------
property leased by the Company (including all leased improvements thereon, the
"Leased Real
------ ----
<PAGE>
-14-
Property" and collectively with the Owned Real Property, the "Real Property").
- -------- ---- --------
The Real Property constitutes all of the real property owned, leased, occupied
or otherwise utilized in connection with the business of the Company (including,
without limitation, the Real Property reflected on the Company's Audited Balance
Sheet, except to the extent such Real Property has been disposed of since the
date of such balance sheet in the ordinary course of business). Except as set
forth in Section 3.8 of the Disclosure Schedule, (i) the Company has title to or
a valid leasehold interest in the Real Property, and none of the Real Property
is subject to any Liens other than Permitted Liens, (ii) other than the Company,
there are no parties in possession or parties having any current or future right
to occupy any of the Owned Real Property, (iii) the Company is in quiet
possession of the Leased Real Property, and (iv) the Real Property is adequate
to conduct the business of the Company as presently conducted. Except as set
forth in Section 3.8 of the Disclosure Schedule, the Company does not have
knowledge of (x) any proposed condemnation, requisition or other taking of any
of the Real Property by any public authority or (y) any public improvements
which may result in special assessments against or otherwise affecting any of
the Real Property.
(c) Leases. Section 3.8 of the Disclosure Schedule lists all lease and
------
other agreements affecting the rights or obligations of the Company with respect
to the Leased Real Property and any personal property and assets leased by the
Company, including without limitation, any master lease agreements, equipment
schedules, non-disturbance and recognition agreements, subordination agreements,
attornment agreements and agreements regarding the term or renewal of any of the
leases, and any amendments and modifications thereof (the "Leases"). Except as
------
set forth in Section 3.8 of the Disclosure Schedule all of the material Leases
are valid and enforceable and in full force and effect, except to the extent
that (i) enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar laws now or thereafter in effect relating
to or limiting creditors' rights generally, (ii) the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court or other Person
before which any proceeding therefor may be brought, or (iii) the enforcement
thereof may be contrary to public policy. Except as set forth in Section 3.8 of
the Disclosure Schedule, the Company is not, and to the knowledge of the
Company, no other party is, in default in any material respect, or in material
breach, of its obligations under any of the Leases, and the Company has neither
delivered nor received any notice of default under any such Lease, and, to the
Company's knowledge, no event has occurred which, with the giving of notice, the
passage of time or that, would constitute a default under any such Lease.
Complete and correct copies of all of the Leases have been delivered by the
Company to Holding or its counsel.
3.9. INDEBTEDNESS. The Company does not have any Indebtedness outstanding
except (a) the Dividend Notes (to the extent issued on or prior to the
<PAGE>
-15-
date upon which such representation is made or deemed made), and (b) as set
forth in Section 3.9 of the Disclosure Schedule. The Company is not in default
with respect to any outstanding Indebtedness or any agreement, instrument, or
other obligation relating thereto and no such Indebtedness or any agreement,
instrument, or other obligation relating thereto purports to limit the issuance
of any securities by the Company or the operation of its businesses. Complete
and correct copies of all agreements, instruments, and other obligations
(including all amendments, supplements, waivers, and consents) relating to any
Indebtedness of the Company have been furnished to Holding or its counsel.
3.10. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent (a)
reflected or reserved against in the Audited Balance Sheet, (b) incurred with
Persons other than Affiliates of the Company in the ordinary course of business
after the date of the Audited Balance Sheet, (c) incurred under contracts,
leases and instruments either (i) set forth in the Disclosure Schedule or (ii)
entered into in the ordinary course of the Company's business and otherwise not
required to be disclosed in any section of the Disclosure Schedule (but not, in
any such case, liabilities for breaches thereof), (d) of the Dividend Notes, or
(e) not included under clauses (a) - (d) above and aggregating not more than
$50,000, the Company does not have any liabilities or obligations of any nature,
whether accrued, absolute, contingent, or otherwise (including without
limitation liabilities, as guarantor or otherwise, in respect of obligations of
others).
3.11. TAXES.
(A) BASIS, ETC. Set forth in Section 3.11(a) of the Disclosure Schedule
are the net operating loss, net capital loss, credit, minimum tax, charitable
contribution, and other Tax carryforwards (by type of carryforward and
expiration date, if any) of the Company.
(B) ELECTIONS. All material elections with respect to Taxes (including
without limitation any elections under Sections 108(b)(5), 338(g), 565, 936(a),
or 936(e) of the Code, or Treasury Regulation Sections 1.1502-20(g) or 1.1502-
32(f)(2) (as in effect before January 1, 1995)) affecting the Company and/or
made by the Company, and in effect as of the date hereof, are described in
Section 3.11(b) of the Disclosure Schedule.
(C) FILING OF TAX RETURNS AND PAYMENT OF TAXES. The Company has timely
filed all Tax Returns required to be filed by it, each such Tax Return has been
prepared in compliance with all applicable laws and regulations, and all such
Tax Returns are true and accurate in all respects. All Taxes due and payable by
the Company have been paid, and the Company shall not be liable for any
additional Taxes in respect of any taxable period ending on or before the
Closing Date in an amount that exceeds the corresponding reserve therefor, if
any, reflected in the
<PAGE>
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accounting records of the Company at that date. The Company has delivered to
Holding correct and complete copies of all Tax Returns filed by or with respect
to it with respect to taxable periods ended on or after December 31, 1994, and
all relevant documents and information with respect thereto, including without
limitation work papers, records, examination reports, statements of deficiencies
assessed against or agreed to by the Company.
(D) AUDIT HISTORY. With respect to each taxable period of the Company
ended on or before December 31, 1991, either such taxable period has been
audited by the relevant taxing authority or the time for assessing or collecting
Tax with respect to each such taxable period has closed and such taxable period
is not subject to review by any relevant taxing authority.
(E) DEFICIENCIES. No deficiency or proposed adjustment in respect of
Taxes that has not been settled or otherwise resolved has been asserted,
assessed, or threatened in writing by any taxing authority against the Company.
(F) LIENS. There are no Liens for Taxes (other than current Taxes not
yet due and payable) on the assets of the Company.
(G) EXTENSIONS OF STATUTES OF LIMITATIONS ON ASSESSMENT OR COLLECTION OF
TAXES. The Company has not consented to extend the time in which any Tax may be
assessed or collected by any taxing authority.
(H) EXTENSIONS OF THE TIME FOR FILING TAX RETURNS. The Company has not
requested or been granted an extension of the time for filing any Tax Return to
a date on or after the Closing Date.
(I) PENDING PROCEEDINGS. There is no action, suit, taxing authority
proceeding, or audit with respect to any Tax now in progress, pending, or to the
Company's knowledge, threatened, against or with respect to (i) the Company, or
(ii) any Affiliated Group with respect to a taxable period during which the
Company was a member of such Affiliated Group.
(J) NO CLAIM OF FAILURE TO FILE TAX RETURNS. No claim has ever been
made by a taxing authority in a jurisdiction where the Company does not pay Tax
or file Tax Returns that the Company is or may be subject to Taxes assessed by
such jurisdiction.
(K) MEMBERSHIP IN AFFILIATED GROUPS, ETC. The Company has not been a
member of any Affiliated Group, or filed or been included in a combined,
consolidated, or unitary Tax Return.
(L) (INTENTIONALLY OMITTED)
<PAGE>
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(M) ADJUSTMENTS UNDER SECTION 481. The Company will not be required,
as a result of a change in method of accounting for any period ending on or
before the Closing Date, to include any adjustment under Section 481(c) of the
Code (or any similar or corresponding provision or requirement under any Tax
law) in taxable income for any period ending on or after the Closing Date.
(N) TAX SHARING, ALLOCATION, OR INDEMNITY AGREEMENTS. The Company is
neither a party to nor bound by any Tax sharing or allocation agreement, nor
does the Company have any current or potential contractual obligation to
indemnify any other Person with respect to Taxes.
(O) WITHHOLDING TAXES. The Company has withheld and paid all Taxes
required to have been withheld and paid by it in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other Person.
(P) FOREIGN PERMANENT ESTABLISHMENTS AND BRANCHES. The Company does
not have a "permanent establishment" in any foreign country, as defined in the
relevant tax treaty between the United States of America and such foreign
country, or otherwise operates or conducts business through any branch in any
foreign country.
(Q) U.S. REAL PROPERTY HOLDING CORPORATION. The Company has not been
a United States real property holding corporation within the meaning of Code
Section 897(c)(2), during the applicable period specified in Code Section
897(c)(1)(A)(ii).
(R) SAFE HARBOR LEASE PROPERTY. None of the property owned or used by
the Company is subject to a tax benefit transfer lease executed in accordance
with Section 168(f)(8) of the Internal Revenue Code of 1954, as amended by the
Economic Recovery Tax Act of 1981.
(S) TAX-EXEMPT USE PROPERTY. None of the property owned by the
Company is "tax-exempt use property" within the meaning of Section 168(h) of the
Code.
(T) SECURITY FOR TAX-EXEMPT OBLIGATIONS. Except with respect to the
Jacksonville IRBs, as defined in Section 6.7(b), none of the assets of the
Company directly or indirectly secures any indebtedness, the interest on which
is tax-exempt under Section 103(a) of the Code, and the Company is not directly
or indirectly an obligor or a guarantor with respect to any such indebtedness.
(U) SECTION 341(F) CONSENT. The Company has not filed a consent under
Code Section 341(f) concerning collapsible corporations.
<PAGE>
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(V) PARACHUTE PAYMENTS. The Company has neither made any payments,
nor is obligated to make any payments, nor is a party to any agreement that
under certain circumstances could obligate it to make any payments, that will
not be deductible under Code Sections 162(m) or 280G.
(W) VALID S CORP. ELECTION. The Company is, and at all times since
December 31, 1987 has been, qualified as a corporation for which a valid
election to be taxed under the provisions of Subchapter S, Chapter 1, Subtitle A
of the Code has been filed and is in effect under such Subchapter S. The
Company has, and has had, a corresponding election in effect under the laws of
the State of Illinois for each taxable period during the period since December
31, 1987.
3.12. LITIGATION. Except as set forth in Section 3.12 of the Disclosure
Schedule, no litigation, arbitration, action, suit, proceeding, or investigation
(whether conducted by any judicial or regulatory body, arbitrator, or other
Person) is pending or to the knowledge of the Company, threatened against the
Company (nor is there any basis therefor known to the Company) which, seeks
damages in excess of $50,000 in any individual instance of $100,000 in the
aggregate, or which seek any form of equitable or injunctive relief, including
without limitation, seeking to prohibit, restrict or delay the consummation of
the transactions contemplated hereby. Except as set forth in Section 3.12 of the
Disclosure Schedule, neither the Company nor its properties and assets are
subject to any judicial or administrative order, judgment or decree.
3.13. SAFETY AND ENVIRONMENTAL MATTERS.
(a) Except as set forth in Sections 3.13 and 3.28 of the
Disclosure Schedule:
(i) the Company and all real property owned, leased, operated or
controlled by the Company currently or within the last five years is now, and at
all times within the last five years has been, in material compliance with all
Environmental and Safety Laws;
(ii) the Company has obtained all material permits, licenses, and
authorizations required pursuant to all applicable Environmental and Safety Laws
with respect to its properties and operations;
(iii) the Company has not received any notice from any third party
asserting that it is or may be liable under any Environmental and Safety Laws,
including without limitation in connection with any release or threatened
release of any hazardous or regulated substances or wastes;
<PAGE>
-19-
(iv) Neither the Company nor, to the knowledge of the Company, any of its
predecessors or any other Person for which the Company may be obligated,
has disposed of or released any hazardous or regulated substance in a
manner that reasonably could be expected to result in any Person incurring
liability pursuant to Environmental and Safety Laws;
(v) there is no contamination from any hazardous or regulated substance,
or any other environmental defect, at, on, upon, or under the real property
currently owned, leased, operated, or controlled by the Company, or to the
Company's knowledge, any real property formerly owned, leased, operated, or
controlled by the Company, any of its predecessors or any other Person for
which the Company may be obligated, that reasonably could be expected to
result in any Person incurring any cleanup costs (including, without
limitation, any cost of investigation, abatement, removal, remediation, or
corrective action);
(vi) to the knowledge of the Company, there currently exist no conditions,
circumstances, or events that reasonably could be expected to result in the
Company, either now or with the passage of time, incurring any material
expenditure to comply with any Environmental and Safety Law or any permit
issued pursuant thereto; and
(vii) no environmental studies, reports, assessments, sampling results, or
audits with respect to real property owned, leased, operated or controlled
by the Company have been conducted during the period of its tenure at or
operation or control of such property or, to the Company's knowledge,
during any other time.
(b) For purposes of this Agreement, "Environmental and Safety Laws" means
all federal, state, local, and foreign statutes, regulations, ordinances, and
similar provisions having the force or effect of law, and all judicial and
administrative orders, judgments, decrees, and similar determinations,
concerning public health and safety, pollution, occupational health and safety,
and/or protection of the environment, including without limitation the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, and the Occupational
Safety and Health Act of 1970, as amended.
3.14. LABOR RELATIONS. The Company is and has been in compliance in all
material respects with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, and is not and has not been engaged in, or, to
<PAGE>
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the Company's knowledge, alleged to have been engaged in, any unfair labor
practice or any unlawful discrimination in employment practices. There is no
labor strike, dispute, concerted work slow-down, or concerted work stoppage
pending or, to the Company's knowledge, threatened against or involving the
Company. No one has petitioned within the last five years or is now petitioning
for union representation of any of the employees of the Company. None of the
employees of the Company is covered by any collective bargaining agreement, and
no collective bargaining agreement is currently being negotiated by or on behalf
of the Company or any of its employees. The Company has not experienced any
concerted work stoppage or other material labor difficulty during the last five
years. The Company has not implemented any plant closing or mass layoff of
employees that could implicate the Worker Adjustment Retraining and Notification
Act of 1988, as amended, or any similar state or local law or regulation.
3.15. CONTRACTS. Section 3.15 of the Disclosure Schedule sets forth a
complete and accurate list of all contracts to which the Company is a party or
by or to which it or any of its assets or properties is bound or subject and
which, with respect to any single contract or group of related contracts, call
for or potentially could call for payments to or from the Company in excess of
$50,000, or which grant exclusive dealing arrangements or which, in any manner,
restrict the Company's operations or business except (i) contracts (and related
correspondence and other documents) for the sale or purchase of goods and/or
services by the Company, entered into prior to the date hereof with customers or
suppliers in the ordinary course of business, (ii) contracts with Persons other
than any Affiliate of the Company, entered into in the ordinary course of
business after the date hereof and before the Closing, which will be identified
to Holding or its counsel before the Closing in a disclosure supplement pursuant
to Section 5.15 hereof, and (iii) contracts terminable by the Company upon 60
days' notice or less and without the payment of any termination fee or penalty.
As used in this Agreement, the word "contract" includes every agreement or
understanding of any kind, written or oral, that is legally enforceable by or
against or otherwise binding on the Company, and specifically includes: (a)
contracts and other agreements with any current or former officer, director,
employee, consultant, or stockholder, or any partnership, corporation, joint
venture, or any other entity in which any such Person has an interest; (b)
contracts and other agreements with any labor union or association representing
any employee; (c) contracts and other agreements for the provision of services
by or to the Company; (d) bonds or other security agreements provided by any
party in connection with the business of the Company; (e) contracts and other
agreements for the purchase or other acquisition or the sale or other
disposition of any of the assets or properties of the Company, in each case
other than in the ordinary course of business, or for the grant to any person of
any preferential rights to purchase any of such assets or properties; (f) joint
venture agreements relating to the assets, properties, or business of the
Company or by or to which the Company or any of its assets or properties are
bound or subject; (g) contracts and other
<PAGE>
-21-
agreements under which the Company agrees to indemnify any party, to share tax
liability of any party, or to refrain from competing with any party; (h)
contracts or other agreements with regard to Indebtedness; or (i) any other
contract or other agreement, whether or not made in the ordinary course of
business. All of the contracts listed in Section 3.15 of the Disclosure Schedule
are in full force and effect, and the Company is not in default in any material
respect under, or material breach of, any of them, nor to the knowledge of the
Company is any other party to any such contract in default in any material
respect thereunder or in material breach thereof; nor does any event or
condition exist that after notice or lapse of time or both could constitute a
default in any material respect thereunder or a material breach thereof on the
part of the Company, or to the knowledge of the Company, any other party
thereto. Except as set forth in Section 3.15 of the Disclosure Schedule, no
approval or consent of any Person that has not already been obtained is needed
in order that the contracts listed in Section 3.15 of the Disclosure Schedule
continue in full force and effect following the consummation of the transactions
contemplated by this Agreement, and no such contract includes any provision, the
effect of which may be to terminate such contract or enlarge or accelerate any
obligations of the Company thereunder or to give additional rights to any other
party thereunder upon consummation of the transactions contemplated by this
Agreement. The Company has delivered to Holding or its counsel true, correct,
and complete copies of all contracts listed in Section 3.15 of the Disclosure
Schedule, together with copies of all modifications and supplements thereto.
3.16. EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in Section 3.16 of the Disclosure Schedule,
neither the Company nor any of its Affiliates now maintains or contributes to,
or has in the current or preceding six calendar years maintained or contributed
to, any pension, profit-sharing, deferred compensation, bonus, stock option,
share appreciation right, severance, group or individual health, dental,
medical, life insurance, survivor benefit, or similar plan, policy, or
arrangement, whether formal or informal, for the benefit of any director,
officer, consultant or employee, whether active or terminated, of the Company or
any of its Affiliates. Each of the arrangements set forth in Section 3.16 of
the Disclosure Schedule is hereinafter referred to as an "Employee Benefit
-------- -------
Plan", except that any such arrangement which is a multi-employer plan shall be
- ----
treated as an Employee Benefit Plan only for purposes of Sections 3.16(d)(iv)
and (vi) and 3.16(g) below.
(b) The Company has delivered to Holding or its counsel true, correct,
and complete copies of each Employee Benefit Plan, and with respect to each such
Plan (i) any associated trust, custodial, insurance, or service agreements, (ii)
any annual report, actuarial report, or disclosure materials (including
specifically any summary plan descriptions) submitted to any governmental agency
or distributed to participants or beneficiaries thereunder in the current or any
of the three preceding
<PAGE>
-22-
calendar years, and (iii) the most recently received Internal Revenue Service
("IRS") determination letters and any governmental advisory opinions or rulings.
---
(c) Each Employee Benefit Plan is and has heretofore been maintained
and operated in all material respects in compliance with the terms of such Plan
and with the requirements prescribed (whether as a matter of substantive law or
as necessary to secure favorable tax treatment) by any and all statutes,
governmental or court orders, and governmental rules or regulations in effect
from time to time, including but not limited to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the Internal Revenue Code of
-----
1986, as amended (the "Code") and applicable to such Plan. Each Employee
----
Benefit Plan that is intended to qualify under Section 401(a) of the Code has
been determined by the IRS to be so qualified, and to the knowledge of the
Company nothing has occurred since the date of the last such determination that
has resulted or is likely to result in the revocation of such determination.
(d) (i) There is no pending, or to the knowledge of the Company,
threatened, legal action, proceeding, or investigation, other than routine
claims for benefits, concerning any Employee Benefit Plan, or, to the
knowledge of the Company, any fiduciary or service provider thereof, and,
to the knowledge of the Company, there is no basis for any such legal
action, proceeding, or investigation concerning any Employee Benefit Plan
or any such fiduciary or service provider.
(ii) No liability (contingent or otherwise) to the Pension Benefit
Guaranty Corporation ("PBGC") has been incurred by the Company or any of
----
its Affiliates (other than insurance premiums satisfied in due course). No
Employee Benefit Plan (other than any multi-employer plan) is a plan
subject to Title IV of ERISA.
(iii) No Employee Benefit Plan (other than any multi-employer plan) nor
any party in interest with respect thereto, nor, to the knowledge of the
Company, any Employee Benefit Plan that is a multi-employer plan or any
party in interest with respect thereto, has engaged in a prohibited
transaction that could subject the Company directly or indirectly to
liability under Section 409 or 502(i) of ERISA or Section 4975 of the Code.
(iv) No Employee Benefit Plan provides welfare benefits subsequent to
termination of employment to employees or their beneficiaries (except to
the extent required by applicable state insurance laws and Title I, Part 6
of ERISA).
(v) Except as set forth in Section 3.16 of the Disclosure Schedule, no
benefits due under any Employee Benefit Plan have been forfeited subject to
<PAGE>
-23-
the possibility of reinstatement (which possibility would still exist at or
after Closing).
(vi) The Company has not contracted or otherwise agreed to maintain or
contribute to any Employee Benefit Plan for any definite future period of
time, and each such Plan is terminable at the sole discretion of the
sponsor thereof, subject only to such constraints as may be imposed by
applicable law.
(e) With respect to each Employee Benefit Plan for which a separate fund
of assets is or is required to be maintained, full payment has been made of all
amounts that the Company is required, under the terms of each such Plan, to have
paid as contributions to that Plan, either as of the end of the most recently
ended plan year of that Plan or on all such amounts required to be paid through
the Closing. No Employee Benefit Plan is subject to Section 302 of ERISA or
Section 412 of the Code).
(f) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment (whether of
severance pay or otherwise) becoming due from any Employee Benefit Plan to any
current or former director, officer, consultant, or employee of the Company or
result in the vesting, acceleration of payment, or increases in the amount of
any benefit payable to or in respect of any such current or former director,
officer, consultant, or employee.
(g) No Employee Benefit Plan is a multi-employer plan.
(h) For purposes of this Section 3.16, "multi-employer plan," "party in
interest," "current value," "accrued benefit," "reportable event," and "benefit
liability" have the same meaning assigned such terms under Sections 3, 4043(b)
or 4001(a) of ERISA, and "affiliate" means any entity that under Section 414 of
the Code is treated as a single employer with the Company.
3.17. POTENTIAL CONFLICTS OF INTEREST.
(a) No officer, director, or stockholder of the Company (i) owns,
directly or indirectly, any interest (excepting not more than 1% stock holdings
for investment purposes in securities of publicly held and traded companies) in,
or is an officer, director, employee, or consultant of, any Person that is a
competitor, lessor, lessee, customer, or supplier of the Company; (ii) owns,
directly or indirectly, in whole or in part, any tangible or intangible property
that the Company is using or the use of which is necessary for the business of
the Company; or (iii) has any cause of action or other claim whatsoever against,
or owes any amount to, the Company, except for claims in the ordinary course of
<PAGE>
-24-
business, such as for accrued vacation pay, accrued benefits under Employee
Benefit Plans, and similar matters and agreements.
(b) To the knowledge of the Company, no officer, director, employee, or
consultant of the Company is presently obligated under or bound by any agreement
or instrument, or any judgment, decree, or order of any court of administrative
agency, that (i) conflicts or may conflict with his or her agreements and
obligations to use his or her best efforts to promote the interests of the
Company, (ii) conflicts or may conflict with the business or operations of the
Company as presently conducted or as proposed to be conducted in the short term,
or (iii) restricts or may restrict the use or disclosure of any information that
may be useful to the Company.
3.18. INTELLECTUAL PROPERTIES.
(a) Section 3.18 of the Disclosure Schedule lists all patents, patent
applications, trademarks, trade names, service marks, logos, copyrights,
technology, know-how, trade secrets, processes, formulas, techniques, and
licenses (other than for off-the-shelf software programs that have not been
customized for the Company's use) used in or necessary to the business of the
Company as now being conducted (collectively, the "Intellectual Properties").
------------ ----------
The Company owns or is licensed or otherwise has the full and unrestricted
exclusive right to use throughout the world, without the payment of royalties or
other further consideration except as indicated in Section 3.18 of the
Disclosure Schedule, all of the Intellectual Properties. No intellectual
property rights, privileges, licenses, contracts or other agreements,
instruments or evidences of interest, other than (i) the Intellectual
Properties, and (ii) off-the-shelf software programs that have not been
customized for the Company's use, are necessary to or used in the conduct of the
business of the Company as now being conducted. All of the patents, trademarks
and copyrights owned by the Company have been duly registered in, filed in or
issued by the United States Patent and Trademark Office or Register of
Copyrights or the corresponding offices of other countries as identified in
Section 3.18 of the Disclosure Schedule, and have been properly maintained and
renewed, consistent with commercially reasonable business practices, in
accordance with all applicable provisions of law and administrative regulations
in the United States and each such country.
(b) In any instance where the Company's rights to Intellectual
Properties arise under a license or similar agreement (other than for off-the-
shelf software programs that have not been customized for its use), this is
indicated in Section 3.18 of the Disclosure Schedule, and to the knowledge of
the Company, such rights are licensed exclusively to the Company, except as
indicated in Section 3.18 of the Disclosure Schedule. To the knowledge of the
Company, no other Person has an interest in or right or license to use any of
the Intellectual Properties. To the Company's knowledge, none of the
Intellectual Properties is being infringed by
<PAGE>
-25-
others, or is subject to any outstanding order, decree, judgment, or
stipulation. No litigation (or other proceedings in or before any court or other
governmental, adjudicatory, arbitral, or administrative body) relating to the
Intellectual Properties (other than any Intellectual Properties licensed by the
Company as licensee), or to the Company's knowledge, relating to any
Intellectual Properties licensed by the Company as a licensee, is pending, or to
the Company's knowledge, threatened, nor, to the knowledge of the Company, is
there any basis for any such litigation or proceeding. The Company maintains
reasonable security measures for the preservation of the secrecy and proprietary
nature of such of the Intellectual Properties as constitute trade secrets or
other confidential information.
(c) (i) Neither the Company nor, to the knowledge of the Company, any
employees of or consultants to the Company, has infringed or made unlawful use
of, or is infringing or making unlawful use of, any proprietary or confidential
information of any Person, including without limitation any former employer of
any past or present employee or consultant of the Company; and (ii) the
activities of the employees of or consultants to the Company in connection with
their employment do not violate any agreements or arrangements that any such
employees or consultants have with any former employer or any other Person.
Except as described in Section 3.18 of the Disclosure Schedule, no litigation
(or other proceedings in or before any court or other governmental,
adjudicatory, arbitral, or administrative body) charging the Company with
infringement or unlawful use of any license, patent, trademark, service mark,
trade name, logo, copyright, trade secret or other proprietary right is pending,
or, to the knowledge of the Company, threatened; nor, to the knowledge of the
Company, is there any basis for any such litigation or proceeding.
3.19. ACCOUNTS RECEIVABLE. All accounts and notes receivable reflected on
the Audited Balance Sheet, and all accounts and notes receivable arising
subsequent to the date of such Audited Balance Sheet, have arisen in the
ordinary course of business, represent valid obligations to the Company, and
have been collected or are collectible in the aggregate recorded amounts thereof
in accordance with their terms, net of (i) the reserve for uncollected accounts
set forth in the accounting records of the Company, as the case may be, and (ii)
the proceeds of credit insurance with respect thereto payable to the Company.
3.20. INSURANCE. Section 3.20 of the Disclosure Schedule lists the
policies of theft, fire, liability, workmen's compensation, life, property and
casualty, and other insurance owned or held by the Company. Such policies of
insurance are maintained with financially sound and reputable insurance
companies, funds, or underwriters, and are of the kinds, cover such risks, and
are in such amounts and with such deductibles and exclusions, as are consistent
with prudent business practice. All such policies are in full force and effect;
are sufficient for compliance by the Company with all requirements of law and of
all agreements to which the
<PAGE>
-26-
Company is a party; are valid, outstanding, and (subject to the qualifications
set forth in Sections 3.2(i) and (ii)) enforceable policies and provide that
they will remain in full force and effect through the respective dates set forth
in Section 3.20 of the Disclosure Schedule; and will not in any way be affected
by, or terminate or lapse by reason of, the transactions contemplated by this
Agreement. The Company has delivered to Holding or its representatives complete
and correct copies of all such policies together with all riders and amendments
thereto.
3.21. BANK ACCOUNTS, SIGNING AUTHORITY, POWERS OF ATTORNEY. Section 3.21
of the Disclosure Schedule sets forth a complete and accurate list of all bank,
brokerage, and other accounts, and all safe-deposit boxes, of the Company and
the Persons with signing or other authority to act with respect thereto. Except
as so listed, the Company does not have any account or safe deposit box in any
bank, and no Person has any power, whether singly or jointly, to sign any checks
on behalf of the Company, to withdraw any money or other property from any bank,
brokerage, or other account of the Company, or to act under any agency or power
of attorney granted by the Company at any time for any purpose. Section 3.21 of
the Disclosure Schedule also sets forth the names of all persons authorized to
borrow money or sign notes on behalf of the Company.
3.22. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS, NON-CONTRAVENTION, ETC.
Except for (i) the approval of the stockholders of the Company as required by
the Illinois Business Corporation Act, (ii) the filing of the Articles of
Merger, and (iii) the filing of the notifications required on the part of
Holding (or its "ultimate parent entity") and the Company under the Hart-Scott-
Rodino Antitrust Improvement Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act"), and any further information
--- ---
required in connection therewith (as referred to in Section 12.1 below), no
consent, approval, or authorization of or registration, designation,
declaration, or filing with any governmental authority, federal or other, or any
other Person, on the part of the Company or, to the knowledge of the Company,
any of the Participating Stockholders is required in connection with the
execution, delivery, and performance of this Agreement by any of them or the
consummation by any of them of the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement and the Other Agreements
executed and delivered or to be executed and delivered by the Company as
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, will not violate (a) any provision of the Articles of
Incorporation or by-laws of the Company, (b) any order, judgment, injunction,
award or decree of any court or state or federal governmental or regulatory body
applicable to the Company or any of the Participating Stockholders, or (iii) any
judgment, decree, order, statute, rule or regulation, or except as set forth in
Section 3.15 of the Disclosure Schedule any agreement, instrument, or other
obligation to which the Company or any of the
<PAGE>
-27-
Participating Stockholders is a party or by or to which any of them or any of
their respective assets is bound or subject.
3.23. INVENTORY. The inventory and supplies of the Company are adequate
for their present needs, and are, in all material respects, in usable or
saleable condition in the ordinary course of business, subject only to such
reserves for obsolescence, if any, as are reflected in the Company's accounting
records.
3.24. SUPPLIERS AND CUSTOMERS. Section 3.24 of the Disclosure Schedule
lists the five largest suppliers and ten largest customers of the Company during
the twelve months ended on the date of the Audited Balance Sheet. The
relationships of the Company with its suppliers and customers are good
commercial working relationships, and no supplier or customer of material
importance to the Company has canceled or otherwise terminated, or threatened in
writing to cancel or terminate, its relationship with the Company, or has during
the last 12 months decreased materially, or threatened to decrease or limit
materially, its services, supplies or materials to the Company, or its usage or
purchase of the services or products of the Company, except for normal cyclical
changes related to customers' businesses. To the Company's knowledge, no such
supplier or customer intends to cancel or otherwise substantially modify its
relationship with the Company or to decrease materially or limit its services,
supplies or materials to the Company, or its usage or purchase of the Company's
services or products, and the consummation of the transactions contemplated
hereby will not, to the knowledge of the Company, adversely affect the
relationship of the Company with any such supplier or customer.
3.25. EMPLOYMENT OF OFFICERS, EMPLOYEES. Section 3.25 of the Disclosure
Schedule lists the name and total annual compensation payable by the Company for
the calendar year ended December 31, 1997 to each exempt non-hourly employee (a)
whose base salary for the calendar year ended December 31, 1997 was $200,000 or
more, or (b) who received bonuses for the calendar year ended December 31, 1997
of $50,000 or more.
3.26. MINUTE BOOKS. The copies of the minute books of the Company made
available to Holding or its counsel for inspection accurately record therein all
material actions taken by the Board of Directors and stockholders of the
Company.
3.27. BROKERS. Except for Allen & Company Incorporated, no finder,
broker, agent, or other intermediary has acted for or on behalf of the Company
or any of the Principal Stockholders in connection with the negotiation,
preparation, execution, or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
<PAGE>
-28-
3.28. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Except with respect
to the matters that are the subject of the specific representations and
warranties set forth in Section 3.13 hereof ("Safety and Environmental
Matters"), the Company has complied with, and is in compliance with, (a) all
laws, statutes, governmental regulations and all judicial or administrative
tribunal orders, judgments, writs, injunctions, decrees or similar commands
applicable to its business, (b) all unwaived terms and provisions of all
contracts, agreements and indentures to which the Company is a party, or by
which the Company or any of its properties is subject, and (c) its charter and
by-laws, respectively, each as amended to date; in the case of the preceding
clauses (a) and (b), excepting only any such noncompliances that, both
individually and in the aggregate, have not resulted and will not result in a
Material Adverse Effect. The Company has not been charged with, or, to the
knowledge of the Company, been under investigation with respect to, any
violation of any provision of any federal, state, or local law or administrative
regulation. The Company has and maintains, and Section 3.28 of the Disclosure
Schedule sets forth a complete and correct list of, all such licenses, permits
and other authorizations of governmental authorities as are necessary for the
conduct of their respective businesses or in connection with the ownership or
use of its properties, all of which are in full force and effect, and true and
complete copies of all of which have previously been delivered to Holding or its
counsel. The Company does not have knowledge of any fact which would make it
reasonably likely that the Company would be unable to obtain the renewal of any
such license, permit or other authorization.
3.29. ASSETS AND PROPERTIES COMPLETE. The assets and properties of the
Company are and as of the Closing Date shall be in all material respects
adequate and sufficient to conduct the business of the Company as currently
conducted.
3.30. DISCLOSURE. No representation or warranty of the Company or any of
the Principal Stockholders in this Agreement (including the Exhibits and
Schedules hereto), or any of the Other Agreements to be executed and delivered
by any of them as contemplated hereby contains or shall contain any untrue
statement of a material fact or omits or shall omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not false or misleading. There is no fact that the Company or the
Principal Stockholders have not disclosed to Holding in writing that has or is
reasonably likely to have a Material Adverse Effect, or materially adversely
affects the ability of the Company or any of the Principal Stockholders to
perform their respective obligations under this Agreement or to consummate any
of the transactions contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF HOLDING AND ACQUISITION. Holding,
Klearfold and Acquisition jointly and severally represent and warrant to the
Company, both as of the date hereof and as of the Closing Date, as follows:
<PAGE>
-29-
4.1. ORGANIZATION AND STANDING. Holding is a corporation, duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, and Acquisition is a corporation, duly organized, validly existing,
and in good standing under the laws of the State of Illinois. Each of Holding
and Acquisition has all requisite corporate power and authority to own or lease
and operate its properties and to carry on its business as now conducted.
4.2. AUTHORIZATION AND ENFORCEABILITY. Each of Holding, Klearfold and
Acquisition has all requisite corporate power and full legal right and authority
(including in each case due approval of its Board of Directors) to enter into
this Agreement and all of the Other Agreements to which it is or is to be a
party as contemplated hereby, to perform all of its agreements and obligations
hereunder and thereunder, each in accordance with its respective terms, and to
consummate the transactions contemplated hereby and thereby. Each of this
Agreement and such Other Agreements to which Holding, Klearfold and/or
Acquisition is or is to be a party has been, or upon execution and delivery as
contemplated hereby, will be, duly executed and delivered by Holding, Klearfold
and/or Acquisition, as the case may be, and constitutes or will constitute the
legal, valid, and binding obligation of each of them party hereto and/or
thereto, enforceable against each of them party hereto and/or thereto in
accordance with its respective terms, except to the extent that (i) enforcement
may be limited by or subject to any bankruptcy, insolvency, reorganization,
moratorium, or similar laws now or hereafter in effect relating to or limiting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief are subject to certain equitable
defenses and to the discretion of the court or other similar Person before which
any proceeding therefor may be brought.
4.3. NON-CONTRAVENTION. The execution, delivery, and performance by each
of Holding, Klearfold and Acquisition of this Agreement and the Other Agreements
to be executed and delivered by them at the Closing as contemplated hereby will
not result in any violation of or be in conflict with its charter or by-laws, or
any agreement, instrument, judgment, decree, order, statute, rule, or regulation
applicable to it, or be in conflict with or constitute a default or material
breach under any of the foregoing.
4.4. GOVERNMENT AND OTHER THIRD-PARTY CONSENTS, ETC. Except for (i) the
filing of the notification required on the part of Holding or its "ultimate
parent entity" under the HSR Act, and any further information required in
connection therewith (as referred to in Section 12.1 below), and (ii) the filing
of the Articles of Merger, no consent, approval, or authorization of or
registration, designation, declaration or filing with any governmental
authority, federal or other, or any other Person, on the part of Holding,
Klearfold or Acquisition is required in connection with the execution, delivery,
and performance by them of this Agreement or the consummation by them of the
transactions contemplated hereby.
<PAGE>
-30-
4.5. BROKERS. Neither Holding nor Acquisition has retained, utilized, or
been represented by any broker or finder in connection with the negotiation,
preparation, execution, or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
4.6 CONDUCT OF ACQUISITION. Acquisition has not incurred any
liabilities, conducted any business, or entered into any contracts or
commitments, except such as are in furtherance of or incidental to the
transactions contemplated by this Agreement and the Other Agreements.
5. CONDUCT OF THE COMPANY'S BUSINESS PENDING CLOSING. The Company and,
with respect to Sections 5.13 and 5.14 only, the Principal Stockholders
severally and not jointly covenant and agree that, from and after the date of
this Agreement and until the Closing, except as otherwise specifically
contemplated by this Agreement (including without limitation the attached
Disclosure Schedule) or otherwise specifically consented to or approved by
Holding in writing:
5.1. STOCKHOLDER APPROVAL. As promptly as practicable, the Company shall
(i) call, give notice, convene, and hold a special meeting, or solicit (in
accordance with Section 7.10 of the Illinois Business Corporation Act) written
consents, of its Stockholders for the purposes of approving this Agreement and
the Merger, (ii) recommend such approvals to its Stockholders and solicit
proxies or consents therefor, and (iii) use its best efforts to obtain such
approvals of its Stockholders. The Principal Stockholders shall vote, cause to
be voted or execute a written consent with respect to all shares directly or
indirectly owned by them in favor of such approvals, and shall use their best
efforts to cause the other Stockholders to vote or execute a written consent in
favor of such approvals.
5.2. FULL ACCESS. The Company shall afford to Holding and its authorized
representatives full access during normal business hours to all properties,
books, records, contracts, and documents of the Company and a full opportunity
to make such investigations as they shall desire to make of the Company, and the
Company shall furnish or cause to be furnished to Holding all such information
with respect to the affairs and businesses of the Company as Holding or its
counsel may reasonably request. No investigation pursuant to this Section 5.2
shall affect any representation or warranty in this Agreement of any party
thereto or any condition to the obligations of the parties hereto.
5.3. CARRY ON IN REGULAR COURSE. The Company shall maintain its owned
and leased properties in good operating condition and repair, shall make all
necessary renewals, additions, and replacements thereto which would otherwise be
made in the ordinary course of business in accordance with the Company's past
<PAGE>
-31-
practices, shall carry on its businesses diligently and substantially in the
same manner as heretofore, and shall not make or institute any new, unusual, or
novel methods of manufacture, purchase, sale, lease, management, accounting, or
operation (including, without limitation, the extension of the time for payment
of the Company's payables or rebates) or take or permit to occur or exist any
action or circumstance referred to in Section 3.7 hereof, other than (a) the
repayment of Indebtedness of the Company either (i) in the ordinary course of
business from cash generated by operations or (ii) pursuant to Section 6.6
hereof, and (b) the incurrence of Indebtedness through the guarantees of the
Indebtedness contemplated to be incurred pursuant to Sections 6.7 and 7.5
hereof.
5.4. NO DIVIDENDS, ISSUANCES, REPURCHASES, ETC. The Company shall not
declare, set aside, or pay any dividends (whether in cash, shares of stock,
other property, or otherwise) on, or make any other distribution in respect of,
any shares of its capital stock, or issue, purchase, redeem, or otherwise
acquire for value any shares of its capital stock, other than the declaration
and payment of the Note Dividend and the Tax Dividend.
5.5. NO GENERAL INCREASES. The Company shall not grant any general or
uniform increase in the rates of pay of its employees or grant any general or
uniform increase in the benefits under any bonus or pension plan or other
contract or commitment, or increase the compensation payable or to become
payable to its officers, directors, key employees or agents, or increase any
bonus, insurance, pension or other benefit plan, payment or arrangement made to,
for or with any such officers, directors, key employees or agents, other than
(i) increases occurring in the ordinary course of business consistent with the
Company's past practices or required by law and (ii) the accelerated vesting of
the SARs in connection with the transactions contemplated hereby.
5.6. CONTRACTS AND COMMITMENTS. The Company shall not enter into any
contract or commitment or engage in any transaction with any Affiliate other
than in the usual and ordinary course of business and consistent with its normal
business practices.
5.7. PURCHASE AND SALE OF CAPITAL ASSETS. The Company shall not purchase,
lease as lessee, license as licensee, or otherwise acquire any interest in, or
sell, lease as lessor, license as licensee, or otherwise dispose of any interest
in, any capital asset(s) (a) other than in the ordinary course of business, or
(b) having a market value in excess of $10,000 in any instance, or in excess of
$50,000 in the aggregate.
5.8. INSURANCE. The Company shall maintain with financially sound and
reputable insurance companies, funds or underwriters adequate insurance
(including without limitation the insurance referred to on Section 3.20 of the
Disclosure
<PAGE>
-32-
Schedule) of the kinds, covering such risks, in such amounts, and with such
deductibles and exclusions, as are consistent with prudent business practice.
5.9. PRESERVATION OF ORGANIZATION. The Company shall use its best efforts
to preserve its business organization intact, to keep available for the benefit
of the Surviving Corporation its present key officers and employees, and to
preserve for the benefit of the Surviving Corporation the Company's present
business relationships with its suppliers and customers and others having
business relationships with the Company.
5.10. NO DEFAULT. The Company shall use commercially reasonable efforts
to avoid a default in any material respect under, or a material breach of, any
of its contracts, commitments or obligations.
5.11. COMPLIANCE WITH LAWS. The Company shall comply in all material
respects with all applicable laws, regulations, and orders.
5.12. ADVICE OF CHANGE. The Company shall promptly advise Holding in
writing of any change resulting in, or reasonably likely to result in, a
Material Adverse Effect.
5.13. CONSENTS OF THIRD PARTIES. The Company shall use its commercially
reasonable efforts to secure, as soon as possible but in any event on or before
the Closing Date, the consent, in form and substance satisfactory to Holding and
its counsel, to the consummation of the transactions contemplated by this
Agreement by each Person whose consent or approval thereof may be necessary to
permit such consummation, including without limitation each party to any
contract, commitment or obligation of the Company under which such transactions
would constitute a default in any material respect or a material breach, would
accelerate obligations of the Company, or would permit cancellation of any such
contract by a Person other than the Company.
5.14. NO SHOPPING. Neither the Company nor any of the Principal
Stockholders shall negotiate for, solicit, discuss, negotiate, or enter into any
agreement or understanding, whether or not binding, with respect to the
issuance, sale, or transfer of any of the capital stock or substantial part of
the assets of the Company (other than sales of inventory in the ordinary course
of business) or any merger or other business combination of the Company to or
with any Person other than Holding or a Subsidiary of Holding.
5.15. DISCLOSURE SUPPLEMENTS. From time to time before the Closing, and
in any event immediately before the Closing, the Company shall promptly advise
Holding in writing of any matter hereafter arising or becoming known to any of
them that, if existing, occurring, or known at the date of this Agreement, would
<PAGE>
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have been required to be set forth or described in such Disclosure Schedule, or
that is necessary to correct any information in such Disclosure Schedule that is
or has become inaccurate. No such disclosure shall be taken into account in
determining whether the conditions to Holding's or Acquisition's obligations to
consummate the transactions contemplated by this Agreement have been satisfied,
but such disclosures shall be taken into account in determining whether, and if
the transactions contemplated hereby are consummated, the Participating
Stockholders, and, if the transactions contemplated hereby are not consummated,
the Company, are liable to indemnify Holding and/or Acquisition pursuant to
Section 8.1 hereof.
6. CONDITIONS TO OBLIGATIONS OF HOLDING AND ACQUISITION. The obligations
of each of Holding and Acquisition, respectively, to consummate the transactions
contemplated hereby are subject to the satisfaction (to the extent not
specifically waived in writing by Holding), on or before the Closing Date, of
each of the conditions precedent set forth below. The Company shall use its
commercially reasonable efforts to cause the satisfaction on or before the
Closing Date of all of such conditions that impose obligations, or require
actions on the part of, the Company or any Holding Indemnitees, and the
Principal Stockholders shall use their respective commercially reasonable
efforts to ensure their respective compliance with the last sentence of Section
5.1 above.
6.1. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Company and/or the Principal Stockholders in or pursuant
to this Agreement or in any statement, certificate, or other document delivered
to Holding or Acquisition pursuant hereto or in connection with the transactions
contemplated hereby shall have been correct when made and shall be correct, in
all material respects, at and as of the Closing.
6.2. COMPLIANCE WITH AGREEMENT. The Company and each of the Principal
Stockholders shall have performed and complied with all of their respective
obligations under this Agreement to be performed or complied with by them before
or at the Closing, including without limitation the execution and delivery of
all documents to be executed and delivered by any of them, or which any of them
are to cause to be executed and delivered, pursuant to Section 1.4 hereof.
6.3. NO LITIGATION. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no litigation, arbitration,
action, suit, or proceeding shall be pending or threatened before any court,
arbitrator, administrative body, or other Person in which it will be or is
sought to restrain or prohibit or obtain damages or other relief in connection
with this Agreement or the consummation of the transactions contemplated hereby.
<PAGE>
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6.4. NO MATERIAL CHANGE. There shall not have been, and there shall not be
threatened, any material damage to or loss or destruction of any properties or
assets owned or leased by the Company (whether or not covered by insurance) or
any material adverse change in the condition (financial or otherwise),
operations, business, prospects or assets of the Company, or imposition of any
law, rule or regulation which is reasonably likely to have a Material Adverse
Effect.
6.5. CLOSING CERTIFICATE. The Company shall have executed and delivered to
Holding, at and as of the Closing, a certificate, in form and substance
satisfactory to Holding and its counsel, certifying that the conditions referred
to in Sections 6.1 through 6.4 hereof have been satisfied.
6.6. OUTSTANDING COMPANY INDEBTEDNESS. The Company's aggregate
Indebtedness for borrowed money, excluding any Indebtedness with respect to (a)
the Jacksonville IRBs (as defined in Section 6.7(b) below) and (b) the Dividend
Notes, outstanding immediately prior to the Closing shall not exceed
$24,000,000.
6.7 FINANCING.
(a) A Rule 144A private placement of senior subordinated notes on terms
satisfactory to Holding and the Holding Stockholders which generates gross
proceeds to Holding or a Subsidiary of Holding of not less than $93,500,000
shall have been consummated.
(b) There shall be in effect commitments providing to Acquisition and
Holding at least $40,000,000 of senior debt financing from Bank of America N.T.
& S.A. on the terms set forth in the letter of intent from such lender dated
January 12, 1998, and the term-sheet attached thereto dated January 5, 1998, or
from another lender or other lenders on substantially similar terms and
conditions, or on such other terms and conditions as may be satisfactory to
Holding in its sole discretion, and in any case providing for the issuance of a
replacement letter of credit in favor of, and in form and substance satisfactory
to, Bank One of Springfield, Illinois, in its capacity as Trustee under a Trust
Indenture dated as of January 1, 1995, with respect to $7,460,000 in original
principal amount of City of Jacksonville, Illinois, Multi-Mode Industrial
Project Revenue Bonds, Series 1995 (AGI Incorporated Project) (the "Jacksonville
------------
IRBs").
- ----
6.8. APPROVAL OF COMPANY STOCKHOLDERS; DISSENTING SHARES.
(a) The Company shall have duly obtained the favorable vote or consent of
the holders of a number of shares of Company Common Stock sufficient to approve
this Agreement and the Merger under the Illinois Business Corporation Act and
under the Existing Shareholders' Agreement.
<PAGE>
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(b) None of the holders of issued and outstanding shares of Company
Common Stock shall have both (i) given due notice, pursuant to Section 11.70 of
the Illinois Business Corporation Act, of their intention to demand that they be
paid the fair value of their shares if the Merger is effectuated, and (ii)
refrained from voting in favor of the Merger, unless each such holder shall have
executed and delivered to the Company a release in form and substance reasonably
acceptable to Holding and its counsel and the President and Secretary of the
Company shall have delivered to Holding a certificate to the foregoing effect
dated as of the Closing Date.
6.9. (INTENTIONALLY OMITTED)
6.10. REPAYMENT OF LOANS TO AFFILIATES. Each of the Participating
Stockholders, their Related Parties and all other Affiliates of the Company
shall have repaid in full all amounts owing by them to the Company.
6.11. OPINIONS OF COUNSEL. Sonnenschein Nath & Rosenthal, counsel to the
Company and the Principal Stockholders, respectively, shall have delivered to
Holding and Acquisition written legal opinions addressed to them and to the
lenders, underwriters and/or other sources involved in providing financing for
the transactions contemplated hereby and dated on and as of the Closing Date,
which opinions shall be acceptable in form and substance to Holding and such
lenders, underwriters and/or other sources of financing and their respective
counsel.
6.12. HSR ACT. The waiting period with respect to the HSR Act
notifications filed by Holding and the Company (or their respective "ultimate
parent entities"), respectively, pursuant to Section 12.1 hereof shall have
expired or been duly terminated without receipt from the Federal Trade
Commission or the Department of Justice of any objection or unwithdrawn notice
of possible objection to the Merger or the other transactions contemplated
hereby.
6.13. ESCROW AGREEMENT. The Company, the Escrow Agent and the Escrowed
Stockholder Representative shall have executed and delivered to Holding the
Escrow Agreement, in form and substance acceptable to Holding and its counsel,
and the Escrow Agreement shall be in full force and effect.
6.14. INVESTMENT AGREEMENT. Each of the Continuing AGI Stockholders and
the Other Investors (each as defined in the Investment Agreement) shall have
executed and delivered to Holding the Investment Agreement, in form and
substance acceptable to Holding and its counsel, all conditions to the
effectiveness of the Investment Agreement other than the Merger shall have been
completed, and the Investment Agreement and the transactions contemplated
thereby shall close simultaneously with the Merger.
<PAGE>
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6.15. PAYABLES STATUS. Holding shall be reasonably satisfied that there
shall have been no extension of the average time for payment by the Company of
its payables and rebates from the average time for such payment applicable in
the three-month period ending December 31, 1997.
6.16. PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to Holding and/or Acquisition pursuant to
this Agreement, or otherwise in connection with the Closing, shall be reasonably
satisfactory to Holding and Acquisition and their counsel.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE PRINCIPAL
STOCKHOLDERS. The obligations of each of the Company and the Principal
Stockholders, respectively, to consummate the transactions contemplated hereby
are subject to the satisfaction of each of the conditions precedent set forth
below on or before the Closing Date (to the extent not specifically waived in
writing by the Company and the Principal Stockholders). Holding and Acquisition
shall use their respective commercially reasonable efforts to cause the
satisfaction on or before the Closing Date of all of such conditions that impose
obligations, or require actions on the part of, any of them.
7.1. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by Holding and/or Acquisition in or pursuant to this Agreement
or in any statement, certificate, or other document delivered to the Company or
the Principal Stockholders pursuant hereto or in connection with the
transactions contemplated hereby shall have been correct when made and shall be
correct, in all material respects, at and as of the Closing.
7.2. COMPLIANCE WITH AGREEMENT. Holding and Acquisition shall have
performed and complied with all of their respective obligations under this
Agreement to be performed or complied with by them before or at the Closing,
including without limitation the execution and delivery of all documents to be
executed and delivered by any of them pursuant to Section 1.4 hereof.
7.3. NO LITIGATION. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no litigation, arbitration,
action, suit, or proceeding shall be pending or threatened before any court,
arbitrator, administrative body, or other Person in which it will be or is
sought to restrain or prohibit or obtain damages or other relief in connection
with this Agreement or the consummation of the transactions contemplated hereby.
7.4. CLOSING CERTIFICATE. Holding and Acquisition shall have executed and
delivered to the Company and the Stockholders, at and as of the Closing,
certificates, in form and substance satisfactory to the Company and the
Principal
<PAGE>
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Stockholders and their counsel, certifying that the conditions referred to in
Sections 7.1 through 7.3 hereof have been satisfied.
7.5. FINANCING.
(a) A Rule 144A private placement of senior subordinated notes which
generates gross proceeds to Holding or a Subsidiary of Holding of not less than
$93,500,000 shall have been consummated.
(b) There shall be in effect commitments providing to Acquisition and
Holding at least $40,000,000 of senior debt financing from Bank of America N.T.
& S.A. on the terms set forth in the letter of intent from such lender dated
January 12, 1998, and the term-sheet attached thereto dated January 5, 1998, or
from another lender or other lenders on substantially similar terms and
conditions, or on such other terms and conditions as may be satisfactory to
Holding in its sole discretion, and in any case providing for the issuance of a
replacement letter of credit in favor of, and in form and substance satisfactory
to, Bank One of Springfield, Illinois, as Trustee for the Jacksonville IRBs.
7.6. APPROVAL OF COMPANY STOCKHOLDERS; DISSENTING SHARES.
(a) The Company shall have duly obtained the favorable vote or consent of
the holders of a number of shares of Company Common Stock sufficient to approve
this Agreement and the Merger under the Illinois Business Corporation Act.
(b) None of the holders of issued and outstanding shares of Company Common
Stock shall have both (i) given due notice, pursuant to Section 11.70 of the
Illinois Business Corporation Act, of their intention to demand that they be
paid the fair value of their shares if the Merger is effectuated, and (ii)
refrained from voting in favor of the Merger, unless each such holder shall have
executed and delivered to the Company a release in form and substance reasonably
acceptable to the Company and its counsel.
7.7. (INTENTIONALLY OMITTED).
7.8. OPINION OF COUNSEL. Bingham Dana LLP, counsel to Holding and
Acquisition, shall have delivered to the Company and the Principal Stockholders
a written legal opinion addressed to them and dated on and as of the Closing
Date, which opinion shall be acceptable in form and substance to the Company and
the Principal Stockholders and their counsel.
7.9. HSR ACT. The waiting period with respect to the HSR Act notifications
filed by Holding and the Company (or their respective "ultimate parent
<PAGE>
-38-
entities"), respectively, pursuant to Section 12.1 hereof shall have expired or
been duly terminated without receipt from the Federal Trade Commission or the
Department of Justice of any objection or unwithdrawn notice of possible
objection to the Merger or the other transactions contemplated hereby.
7.10. ESCROW AGREEMENT. Holding and the Escrow Agent shall have executed
and delivered to the Escrowed Stockholder Representative the Escrow Agreement,
in form and substance acceptable to the Company and its counsel, and the Escrow
Agreement shall be in full force and effect.
7.11. INVESTMENT AGREEMENT. Holding and each of the Holding Stockholders
shall have executed and delivered to the Principal Stockholders the Investment
Agreement, in form and substance acceptable to the Company and the Principal
Stockholders and their counsel, all conditions to the effectiveness of the
Investment Agreement other than the Merger shall have been completed, and the
Investment Agreement and the transactions contemplated thereby shall close
simultaneously with the Merger.
7.12. GENERAL RELEASE AND AGREEMENT IN CONTEMPLATION OF MERGER. Each of
the Participating Stockholders shall have executed and delivered to the Company
a General Release and Agreement in Contemplation of Merger in substantially the
form attached hereto as Exhibit 7.12.
------- ----
7.13 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Company and the Principal
Stockholders pursuant to this Agreement, or otherwise in connection with the
Closing, shall be reasonably satisfactory to the Company and the Principal
Stockholders and their counsel.
8. INDEMNIFICATION.
8.1. INDEMNIFICATION OF HOLDING AND AFFILIATES.
(a) Subject to the limitations set forth in Section 8.5 hereof, if the
transactions contemplated hereby are not consummated, the Company shall
indemnify, defend and hold harmless each of the Holding Indemnitees from and
against any and all Damages related to or arising, directly or indirectly, out
of or in connection with any AGI Indemnified Claims. Notwithstanding the
foregoing, in no event shall the aggregate damages payable pursuant to this
Section 8.1(a) by the Company exceed $3,500,000 or, if less, the aggregate
amount of all costs, expenses and disbursements of the Holding Indemnitees
incurred in connection with the transactions contemplated hereby and by the
Investment Agreement.
<PAGE>
-39-
(b) Subject to the limitations set forth in Section 8.5 hereof, if the
transactions contemplated hereby are consummated, each of the AGI Indemnitors
shall jointly and severally, but subject to the limitations set forth below in
this paragraph (b) and in Section 8.5, indemnify, defend and hold harmless each
of the Holding Indemnitees from and against any and all Damages related to or
arising, directly or indirectly, out of or in connection with any AGI
Indemnified Claims. Notwithstanding the foregoing, the aggregate liability of
any AGI Indemnitor with respect to any AGI Indemnified Claim shall not exceed:
(i) except for any Principal Stockholder with respect to AGI
Indemnified Claims resulting from a Principal-Stockholder-Specific Breach by
such Principal Stockholder, such AGI Indemnitor's Pro Rata Share of the
aggregate amount of Damages from such Claim; or
(ii) except for Principal Stockholders with respect to Unlimited
Claims, (x) such AGI Indemnitor's Pro Rata Share of the Maximum AGI Indemnity
Amount, minus (y) the amount of Damages with respect to all AGI Prior Claims
-----
which have been paid by or on behalf of such AGI Indemnitor;
provided that the aggregate liability of any Principal Stockholder with respect
to Damages (whether arising from Unlimited Claims or relating to Principal-
Stockholder-Specific Breaches or otherwise) shall be limited to such Principal
Stockholder's Total After-Tax Consideration. Each of the parties hereto
acknowledges and agrees that except for the Principal Stockholders' liabilities
with respect to Unlimited Claims (including, for the avoidance of doubt,
Unlimited Claims arising from Principal-Stockholder-Specific Breaches), no AGI
Indemnitor shall be liable for more than an aggregate of his Pro Rata Share of
the Maximum AGI Indemnity Amount with respect to any and all AGI Indemnified
Claims and claims under Section 8 of the Investment Agreement.
8.2. INDEMNIFICATION OF THE COMPANY AND ITS STOCKHOLDERS. Subject to the
limitations set forth in Section 8.5 hereof and in Section 8 of the Investment
Agreement, regardless of whether the transactions contemplated hereby are
consummated, the Holding Indemnitors jointly and severally shall indemnify,
defend, and hold harmless each of the AGI Indemnitees, from and against any and
all Damages related to or arising, directly or indirectly, out of any Holding-
Indemnified Claim, without duplication of any indemnification provided for under
the Investment Agreement. Notwithstanding the foregoing, the aggregate
liability of the Holding Indemnitors with respect to all Holding Indemnified
Claims other than Holding Unlimited Claims shall not exceed $2,305,882, minus
-----
the amount of all Damages with respect to all Holding Prior Claims which have
been paid by or on behalf of the Holding Indemnitors; provided, however, that
the aggregate liability of any Holding Indemnitor which is also an Investor (as
defined pursuant to the Investment Agreement) pursuant hereto and pursuant to
Section 8 of the
<PAGE>
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Investment Agreement (including with respect to Holding Unlimited Claims) may
not exceed the Share Value of all shares of common stock of Holding owned by
such Investor immediately after consummation of the transactions contemplated by
the Investment Agreement.
8.3. CLAIMS. In the event that any party hereto (the "Indemnified Party")
----------- -----
desires to make a claim against another party hereto (the "Indemnifying Party,"
------------ -----
which term shall include all indemnifying parties if more than one) in
connection with any third-party litigation, arbitration, action, suit,
proceeding, claim, or demand at any time instituted against or made upon it for
which it may seek indemnification hereunder (a "Third-Party Claim"), the
----------- -----
Indemnified Party shall notify the Indemnifying Party of such Third-Party Claim
and of its claims of indemnification with respect thereto, provided, that
failure to give such notice shall not relieve the Indemnifying Party of its
indemnification obligations under this Section 8 except to the extent, if at
all, that the Indemnifying Party shall have been actually prejudiced thereby.
Upon receipt of such notice from the Indemnified Party, the Indemnifying Party
shall be entitled to participate in the defense of such Third-Party Claim, and
if and only if each of the following conditions is satisfied, the Indemnifying
Party may assume the defense of such Third-Party Claim, and in the case of such
an assumption the Indemnifying Party shall have the authority to negotiate,
compromise, and settle such Third-Party Claim, provided, that the Indemnifying
Party shall not agree to any settlement of such Third-Party Claim that does not
include an unconditional release of all liability of each Indemnified Party with
respect to such Third-Party Claim, or which imposes on any Indemnified Party the
burden of any injunctive or equitable relief, without in either case the prior
written consent of such Indemnified Party (such consent not to be unreasonably
withheld or delayed):
(i) the Indemnifying Party confirms in writing that it is obligated
hereunder to indemnify the Indemnified Party in full with respect to such
Third-Party Claim; and
(ii) the Indemnified Party does not give the Indemnifying Party
written notice that the Indemnified Party's counsel has determined, in its
reasonable opinion, that an irreconcilable conflict of interest make
separate representation by the Indemnified Party's counsel advisable.
The Indemnified Party shall retain the right to employ its own counsel and
to participate in the defense of any Third-Party Claim, the defense of which has
been assumed by an Indemnifying Party pursuant hereto, but such Indemnified
Party shall bear and shall be solely responsible for its own costs and expenses
in connection with such participation. The Indemnified Party shall make no
settlement or compromise in connection with any Third-Party Claim (whether or
not the defense thereof has been assumed by the Indemnifying Party) that would
impose
<PAGE>
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upon any Indemnifying Party the burden of any injunctive or equitable relief, or
would give rise to liability hereunder or otherwise on the part of any
Indemnifying Party, without the prior written consent of such Indemnifying Party
(such consent not to be unreasonably withheld or delayed).
8.4. PAYMENT OF CLAIMS.
(a) In the event of any claims for indemnification under this Section 8,
the claimant shall advise the party or parties who are required to provide
indemnification therefor in writing of the amount and circumstances surrounding
such claim. With respect to liquidated claims, if within thirty days the other
party has not contested such claim in writing, such other party shall (subject
to the provisions of Section 8.4(b) below) pay the full amount thereof within
ten days after the expiration of such thirty-day period. Any amount payable by
an Indemnifying Party in respect of indemnification pursuant to this Agreement
may be set off and deducted by the Indemnified Party from and against any
amounts that may otherwise be or become payable by such Indemnified Party to
such Indemnifying Party, including without limitation amounts payable pursuant
to any of the Other Agreements. No recourse shall be sought against the Escrow
Amount for any AGI Indemnified Claim unless, substantially simultaneously with
seeking recourse thereagainst, the applicable Indemnified Party uses
commercially reasonable efforts to seek recourse with respect to such AGI
Indemnified Claim against the Non-Escrowed Stockholders liable with respect
thereto. Amounts owed by any Escrowed Stockholder as an Indemnifying Party
hereunder shall be paid solely from the Escrow Amount pursuant to, and subject
to the limitations set forth in, the Escrow Agreement. The unpaid balance of
any claim for Damages under this Section 8 shall bear interest at the rate
announced from time to time by BankBoston, N.A., as its "Base Rate" plus two
----
percent, from the date notice of such claim is given by the Indemnified Party to
the Indemnifying Party.
(b) In the event an Indemnified Party is either a Holding Indemnitee or an
Investor under the Investment Agreement, and the Indemnifying Party is also an
Investor under, and acquires shares of Holding pursuant to, the Investment
Agreement, the Indemnifying Party shall have the option, upon final
determination of the dollar amount of a claim for indemnification payable to
such Indemnified Party in accordance with this Section 8, by written notice to
such Indemnified Party delivered within ten (10) business days after the date of
such determination, to elect to satisfy such claim, or any part thereof, by
transferring without further consideration to such Indemnified Party, free and
clear of all Liens, that number of shares of New Common Stock (as defined in the
Investment Agreement), rounded to the second decimal place, which is equal to:
(i) if the Indemnified Party is (A) a party other than an Investor
pursuant to the Investment Agreement or (B) an Investor pursuant to the
<PAGE>
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Investment Agreement seeking indemnification other than on account of, or
related to, Damages suffered by Holding or any of its Subsidiaries, (x) the
final determined dollar amount of such claim (or such portion thereof as the
applicable Indemnifying Party is electing to satisfy pursuant to this Section
8.4(b)) divided by (y) the Share Value; and
(ii) if the Indemnified Party is an Investor pursuant to the
Investment Agreement and is seeking indemnification on account of Damages
suffered by Holding or any of its Subsidiaries, (x) such Investor's pro rata
directly- or indirectly-allocable portion of the dollar amount of the Damages
suffered by Holding or such Subsidiary (or such portion thereof as the
applicable Indemnifying Party is electing to satisfy pursuant to this Section
8.4(b)), calculated on the same basis as is set forth in Section 8.5(a) of the
Investment Agreement, divided by (y) the Adjusted Share Value (as defined
below).
For the purposes hereof, the term "Adjusted Share Value" shall mean the Share
-------- ----- -----
Value, reduced to reflect the per share reduction in the value of New Common
Stock solely as a result of the Damages on account of which indemnification is
being sought, and as appropriately adjusted from time to time to reflect stock
splits, combinations, recapitalizations or the like; provided, however, that (1)
-------- -------
with respect to AGI Indemnified Claims, other than Unlimited Claims, the
aggregate amount of the adjustment shall not exceed $3,500,000, and (2) with
respect to Holding Indemnified Claims, other than Holding Unlimited Claims, the
aggregate amount of the adjustment shall not exceed $2,305,882.
8.5. LIMITATIONS OF LIABILITY.
(a) No Indemnifying Party shall be required to indemnify an Indemnified
Party hereunder except to the extent that (i) the aggregate amount of Damages
(including Damages from Unlimited Claims) for which the Holding Indemnitees, on
the one hand, pursuant to Section 8.1 hereof and Section 8.2 of the Investment
Agreement, are otherwise entitled to indemnification, or would have been so
entitled but for the limitations on the liabilities of the AGI Indemnitors set
forth in Section 8.1(b) hereof, exceeds an aggregate of $150,000, or (ii) the
aggregate amount of Damages (including Damages from Unlimited Holding Claims, as
defined in the Investment Agreement) for which the AGI Indemnitees, on the other
hand, pursuant to Section 8.2 hereof and Section 8.1 of the Investment
Agreement, are otherwise entitled to indemnification exceeds an aggregate of
$100,000, whereupon such Indemnified Parties shall be entitled to
indemnification in the amount by which the aggregate amount of all such Damages
exceeds the applicable amounts referred to in clauses (i) or (ii) above, subject
to the limitations on maximum amount of recovery set forth in Sections 8.1 and
8.2 hereof, respectively.
<PAGE>
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(b) No Indemnifying Party shall be liable for any Damages pursuant to this
Section 8 unless a written claim for indemnification in accordance with Section
8.4 is given by the Indemnified Party to the Indemnifying Party with respect
thereto, subject to the following proviso, within (i) in the case of any Damages
related to or arising, directly or indirectly from any breach of the
representations and warranties in Section 3.13 hereof ("Safety and Environmental
Matters"), two years, and (ii) otherwise one year after the Closing; provided,
that these time limitations shall not apply to any Unlimited Claims, for which
indemnification shall have no time limitation except as otherwise imposed by
law.
(c) The amount of any Damages otherwise payable to any Indemnified Party
in respect of any breach of the representations and warranties set forth in
Sections 3 and/or 4 of this Agreement shall be reduced to the extent that such
Indemnified Party actually realizes, by reason of such Damages, any tax benefit
that is not offset by any corresponding adjustment of the tax attributes of such
Indemnified Party or any of his or its assets (e.g., any tax deduction available
to such Indemnified Party in respect of such Damages shall not be deemed to
result in a tax benefit to such Indemnified Party to the extent that such tax
deduction results in a decrease in such Indemnified Party's basis in any
securities or other assets). In the event that any such tax benefit is actually
realized by an Indemnified Party subsequent to the receipt by such Indemnified
Party of an indemnification payment hereunder in respect of the Damages to which
such tax benefit relates, appropriate refunds shall be made regarding the amount
of such indemnification payment.
(e) No Indemnifying Party shall be liable pursuant to this Section 8 for
lost profits or special or consequential Damages, even if notified in advance of
the possibility thereof.
(f) Each of the parties hereto agrees that its sole recourse for any
breach or default hereunder (other than any such breach or default under or with
respect to Section 9.1 or 9.2 hereof) or under the Investment Agreement, or for
any other matter as to which indemnification is provided to it in this Section 8
or in Section 8 of the Investment Agreement, shall be the indemnification
provisions set forth herein and therein, and, to the extent applicable, the
Escrow Agreement and the Escrow Amount held thereunder.
9. OTHER COVENANTS.
9.1. CONFIDENTIAL INFORMATION.
(A) BEFORE THE CLOSING. Any and all non-publicly available information
disclosed by or on behalf of the Company or the Principal Stockholders or their
representatives to Holding or Acquisition or their representatives, or by or on
behalf of Holding or Acquisition or their representatives to the Company or the
<PAGE>
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Principal Stockholders or their representatives, as part of or in connection
with the negotiations leading to the execution of this Agreement, or in
furtherance thereof, which information was not already known to the receiving
Person, as the case may be, shall remain confidential until the Closing Date,
except to the extent that Holding or Acquisition in its reasonable judgment
must disclose any such information to banks and other institutional lenders in
the process of obtaining financing for the transactions contemplated hereby. If
the Closing does not take place for any reason, each of the parties agrees not
to further divulge or disclose or use for their benefit or purposes any such
information of any other party at any time in the future unless it has otherwise
become public through no action or omission on the part of any party required
hereunder to keep such information confidential. The information intended to be
protected hereby shall include without limitation information with respect to
finances, customers, sales, representatives, and anything else having an
economic or pecuniary benefit to the disclosing party.
Notwithstanding the foregoing, if any party is required by law or
regulation to disclose any information covered by this Section 9.1(a), the party
under such disclosure obligation will provide the party who disclosed such
information with prompt notice of such disclosure obligation so that the
disclosing party may seek a protective order or take other appropriate action
and/or waive compliance with this Section 9.1(a) to the extent of such required
disclosure. In the absence of such a waiver, if any party is, in the opinion of
its counsel, compelled to disclose any such information of any other party upon
pain of liability for contempt or other censure or penalty, the party under such
disclosure obligation may disclose such information to the relevant court or
other tribunal or governmental authority without liability hereunder, but
notwithstanding such disclosure, such information shall remain confidential
under this Section 9.1(a) after such disclosure.
(B) AFTER THE CLOSING. If the transactions contemplated hereby are
consummated, each of the Principal Stockholders shall maintain the
confidentiality of all confidential, sensitive, or proprietary information of
the Surviving Corporation and/or any of its Subsidiaries, including without
limitation with respect to their respective businesses, finances, affairs, and
technology, which shall be and remain the exclusive property of the Surviving
Corporation and/or such Subsidiary, as the case may be, and unless previously
authorized in writing by Holding, and except with respect to information that
has otherwise become public through no action or omission on the part of any of
the Principal Stockholders, shall not disclose any such information to any third
party, or use it for any purpose other than in the discharge of such Principal
Stockholder's respective employment responsibilities in the ordinary course of
the Surviving Corporation's business.
Notwithstanding the foregoing, if any of the Principal Stockholders is
required by law or regulation to disclose any confidential, sensitive, or
proprietary information of the Surviving Corporation and/or any of its
Subsidiaries, such
<PAGE>
-45-
Principal Stockholder will provide each of the Surviving Corporation and Holding
with prompt notice of such disclosure obligation so that the Surviving
Corporation and/or Holding may seek a protective order or take other appropriate
action and/or waive compliance with this Section 9.1(b) to the extent of such
required disclosure. In the absence of such a waiver, if any of the Principal
Stockholders is, in the opinion of his counsel, compelled to disclose any such
information upon pain of liability for contempt or other censure or penalty,
such Principal Stockholder may disclose such information to the relevant court
or other tribunal or governmental authority without liability hereunder, but
notwithstanding such disclosure, such information shall remain confidential
under this Section 9.1(b) after such disclosure.
9.2. NON-COMPETITION, ETC. In order to induce Holding and Acquisition to
enter into this Agreement and to consummate the transactions contemplated
hereby, the Principal Stockholders hereby covenant as follows, which covenants
shall be in addition and without prejudice to any other noncompetition,
nonsolicitation, and/or similar covenants to which any of the Principal
Stockholders or any of their Affiliates may be subject from time to time,
including without limitation those set forth in the agreements referred to in
Section 1.4(c) hereof:
(A) NON-COMPETITION. Without limiting or restricting any Principal
Stockholder's non-competition or non-solicitation obligations under any other
agreement between such Principal Stockholder and Holding, the Company or any
Affiliate of either, for the period of two years following the Effective Time,
which period shall automatically be extended by a period of time equal to any
period in which any of the Principal Stockholders and/or any of their Affiliates
is in breach of any obligations under this Section 9.2 (including any such
extension, the "Restricted Period"), each of the Principal Stockholders and
---------- ------
their respective Affiliates shall not engage, directly or indirectly (except as
a stockholder, director, officer, and/or employee of Holding and/or the
Surviving Corporation), as a proprietor, equityholder, investor (except as a
passive investor holding not more than 3% of the outstanding capital stock of a
publicly held company), lender, partner, director, officer, employee,
consultant, or representative, or in any other capacity, in the manufacture,
design, printing or production of specialty packaging products for use in the
cosmetics, entertainment (including recorded music, video, software, multimedia
and electronic gaming) or tobacco markets, or in any other business presently
being conducted by the Company anywhere in the Restricted Area (each of the
Principal Stockholders hereby acknowledging that the Company is currently doing
business throughout the Restricted Area), provided that the provision of legal
or accounting professional services by any natural person who is an Affiliate of
a Principal Stockholder to any such business shall not by itself constitute a
breach by such Principal Stockholder or the applicable Affiliate of this Section
9.2.
<PAGE>
-46-
(B) NON-SOLICITATION OF EMPLOYEES, ETC. During the Restricted Period, none
of the Principal Stockholders nor any of their respective Affiliates shall
directly or indirectly recruit, solicit, induce, or attempt to induce any of the
employees or independent contractors of the Surviving Corporation or any of its
Subsidiaries to terminate their employment or contractual relationship with the
Surviving Corporation or such Subsidiary; and none of them shall assist any
other Person to do so, or be a proprietor, equityholder, investor (except as a
passive investor holding not more than 3% of the capital stock of a publicly
held company), lender, partner, director, officer, employee, consultant, or
representative of any Person who does or attempts to do so.
(C) NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. During the Restricted
Period, none of the Principal Stockholders nor any of their respective
Affiliates shall directly or indirectly solicit, divert, take away, or attempt
to divert or take away, from the Surviving Corporation or any of its
Subsidiaries any of the business or patronage of any of their respective
customers, clients, accounts, vendors, or suppliers, or induce or attempt to
induce any such Person to reduce the amount of business it does with the
Surviving Corporation or any of its Subsidiaries, and none of the Principal
Stockholders nor any of their respective Affiliates shall assist any other
Person to do so, or be a proprietor, equityholder, investor (except as a passive
investor holding not more than 3% of the capital stock of a publicly held
company), lender, partner, director, officer, employee, consultant, or
representative of any Person who does or attempts to do so.
(D) NON-DISPARAGEMENT. None of the Principal Stockholders nor any of their
respective Affiliates shall disparage, deprecate or make any negative comment
with respect to the Company or the Surviving Corporation or their respective
businesses, operations or properties.
(E) EQUITABLE REMEDIES. Each of the Principal Stockholders hereby
acknowledges that any breach by him or any of his Affiliates of their respective
obligations under this Section 9.2 would cause substantial and irreparable
damage to the other parties to this Agreement, and that money damages would be
an inadequate remedy therefor, and accordingly, acknowledges and agrees that
each of the other parties shall be entitled to an injunction, specific
performance, and/or other equitable relief to prevent the breach of such
obligations (in addition to all other rights and remedies to which such party
may be entitled in respect of any such breach).
(F) MODIFICATION. In the event that a court of competent jurisdiction
determines that any of the provisions of this Section 9.2 would be unenforceable
as written because they cover too extensive a geographic area, too broad a range
of activities, or too long a period of time, or otherwise, then such provisions
shall automatically be modified to cover the maximum geographic area, range of
<PAGE>
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activities, and period of time as may be enforceable, and in addition, such
court is hereby expressly authorized so to modify this Agreement and to enforce
it as so modified. No invalidity or unenforceability of any section of this
Agreement or any portion thereof shall affect the validity or enforceability of
any other section or of the remainder of such section.
9.3 CONDUCT OF ACQUISITION'S BUSINESS PENDING CLOSING. From and after the
date of this Agreement and until the Effective Time, except as specifically
contemplated by, in furtherance or, or incidental to the transactions
contemplated by this Agreement, or as otherwise specifically consented to by the
Company in writing, Acquisition shall not incur any liabilities, conduct any
business, or enter into any contracts or commitments.
9.4 PARTICIPATION IN POST-CLOSING AUDITS. If the Surviving Corporation
receives notice from a taxing authority of its intention to audit any return of
the Company for any period prior to the Effective Time, or any proposed
adjustment by any taxing authority with respect to any such period, the
Surviving Corporation shall inform the Stockholder Representatives in writing of
the intended audit or proposed adjustment promptly after receipt of such notice.
Upon notice from either Stockholder Representative, the Surviving Corporation
shall permit the Stockholder Representatives, at their own expense, to control
any such audit or contest any such proposed adjustment and shall cooperate in
providing access to any books, records or other documents or information
reasonably required by either Stockholder Representative with respect to such
audit or proposed adjustment provided that (a) the Stockholder Representatives
shall have confirmed in writing that the AGI Indemnitors shall indemnify the
Surviving Corporation with respect to all liability arising from such audit or
proposed adjustment, subject to the limitations set forth in Section 8 hereof
and in the Investment Agreement, (b) the Surviving Corporation shall have the
right, at its own expense, to participate in (but not control) any such audit or
proposed adjustment, and (c) the Stockholder Representatives shall not settle or
compromise any such audit or proposed adjustment without the prior written
consent of the Surviving Corporation, if for any reason (including the
limitations on indemnity set forth in Section 8 hereof or in the Investment
Agreement, or collateral effects of the audit or proposed adjustment that would
affect periods after the Effective Time) such settlement would adversely affect
the Surviving Corporation after the Effective Time.
9.5 TAX INDEMNITY. The Surviving Corporation shall indemnify, defend and
hold harmless the Participating Stockholders from and against their respective
liability with respect to Taxes resulting from any final determination (or
settlement) of an adjustment (by reason of an amended return, claim for refund,
audit or otherwise) resulting in a net increase in income or gain or a net
decrease in any loss or deduction with respect to the Company for any period
prior to the Effective Time, and a corresponding net decrease in the liability
for the Taxes payable by the
<PAGE>
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Surviving Corporation; provided, however, the amount of any such indemnification
-------- -------
payment shall be reduced by an amount equal to the federal or state tax benefit,
including interest, arising due to deductions allowable for federal or state
taxes paid by the applicable Participating Stockholder in respect of any taxable
income shifted from a period prior to the Effective Date to a period after the
Effective Date. Moreover, and notwithstanding the foregoing, the amount of any
such indemnification payment required to be made by the Surviving Corporation
shall not exceed the amount, if any, by which (i) the amount of the reduction in
the liability for Taxes and interest thereon of the Surviving Corporation that
results form the adjustment exceeds (ii) all reasonable costs incurred by the
Surviving Corporation attributable to securing such reduction in liability for
Taxes.
9.6 INDEMNIFICATION OF AGI OFFICERS, DIRECTORS AND AGENTS. From and after
the Effective Time, Holding shall, and shall cause the Surviving Corporation to,
indemnify and hold harmless each and every present and former officer, director,
employee and agent of AGI (each a "Former Agent") against any and all Damages to
------ -----
such Former Agent arising at or prior to, or arising from conduct at or prior
to, the Effective Time, to the same extent, and on terms no less favorable to
such Former Agent, as would have been provided pursuant to any of AGI's By-laws
or Certificate of Incorporation, the Existing Shareholders' Agreement, or any
other contract between AGI and such Former Agent described in Section 9.6 of the
Disclosure Schedule, in each case as any such document or agreement is in effect
on the date hereof, provided that no such indemnification shall provide
indemnity against any Claim against any such Former Agent pursuant to Section 8
hereunder or Section 8 of the Investment Agreement.
10. TERMINATION.
(a) This Agreement may be terminated at any time by agreement of all of
the parties hereto.
(b) In the event that (i) the Federal Trade Commission or Department of
Justice raises any objection to the Merger or the other transactions
contemplated hereby, which objection is not withdrawn within 45 days after
notice thereof is given, (ii) any temporary restraining order, preliminary or
permanent injunction, or other order issued by any court of competent
jurisdiction, or other binding legal restraint or prohibition preventing the
consummation of the Merger or the other transactions contemplated hereby shall
at any time be in effect for a period of more than 20 consecutive days, or (iii)
the Closing does not occur on or before March 31, 1998, either Holding or the
Company may terminate this Agreement at any time after the close of business on
the date such termination right arises hereunder by delivering written notice to
the other, provided that such failure to close is not a result of a breach by
the terminating party (including, in the case of any such termination by
Holding, any such breach by Acquisition, or in the case of any such
<PAGE>
-49-
termination by the Company, any such breach by any of the Principal
Stockholders) of any obligations hereunder.
(c) Any termination of this Agreement shall not affect the rights or
obligations of any party arising, or based on actions or omissions occurring,
before such termination. The provisions of Sections 8 ("Indemnification"), 9.1
("Confidential Information"), and 12 ("General") (other than Section 12.1
("Cooperation")) hereof shall survive any termination of this Agreement.
11. DEFINITIONS.
11.1. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms have the following respective meanings:
"Affiliate" means, with respect to a specified Person, (i) any Person that
---------
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the specified Person and (ii)
any Person that is an officer, director, trustee, member or general partner of,
or serves in a similar capacity with respect to, the specified Person, or of
which the specified Person is an officer, director, trustee, member or general
partner, or with respect to which the specified Person serves in a similar
capacity or (iii) any Person who is a spouse, parent, sibling or lineal
descendant of such Person or any Person described in clauses (i) or (ii),
provided that for purposes of Section 9.2 hereof, this clause (iii) of the
definition of "Affiliate" shall only extend to include any Person who is a
spouse or a dependent child of such Person or any Person described in clauses
(i) or (ii). For purposes of this definition the term "control" when used with
-------
respect to a Person means (a) the beneficial ownership (as defined in Rule 13d-d
promulgated under the Securities and Exchange Act of 1934, as amended) of 50
percent or more of the voting interests in such Person, or (b) the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Affiliated Group" has the meaning given to it in Section 1504 of the Code,
---------- -----
and in addition includes any analogous combined, consolidated, or unitary group,
as defined under any applicable state, local, or foreign income Tax law.
"AGI Indemnified Claims" means, collectively, any claim for Damages
--- ----------- ------
resulting from:
(i) any breach by the Company or any of the Principal Stockholders
of any representation, warranty, covenant, agreement, obligation, or
undertaking made by the Company or any of the Principal Stockholder in this
Agreement (including any schedule or exhibit hereto), or
<PAGE>
-50-
any other agreement, instrument, certificate, or other document delivered
by or on behalf of the Company or any of the Principal Stockholder in
connection with this Agreement or any of the transactions contemplated
hereby;
(ii) any actual or threatened litigation or other proceedings or
claims by or on behalf of any stockholder of the Company related to or
arising, directly or indirectly, out of or in connection with the
transactions contemplated by this Agreement, including without limitation
the Merger; and
(iii) all claims for damages consisting of the difference (if any,
but not less than zero) between (x) the aggregate amount of consideration
paid or payable by the Surviving Corporation in respect of all Dissenting
Shares, minus (y) the aggregate amount of cash consideration that the
-----
Surviving Corporation would have been required to pay in respect of such
shares had the holders thereof not exercised their appraisal rights under
Section 11.65 and 11.70 of the Illinois Business Corporation Act but
instead had accepted the cash consideration that would have been payable in
respect of such shares pursuant to Sections 1.2(d)(i) and 1.3 hereof.
"AGI Indemnitees" means the Participating Stockholders, the SAR Holders,,
--- -----------
and the holder of the Horowitz Option and if the transactions contemplated
hereby are not consummated, also the Company and its directors, officers,
employees, representatives and other Affiliates, and each individually an "AGI
---
Indemnitee".
- ----------
"AGI Indemnitors" means, collectively, each of the Participating
---------------
Stockholders, the SAR Holders, and the holder of the Horowitz Option, and each
individually, an "AGI Indemnitor".
--------------
"AGI Prior Claims" means, as of the date on which any Claim is to be paid,
--- ----- ------
(x) with respect to any AGI Indemnitor other than a Principal Stockholder, the
aggregate amount of Damages with respect to AGI Indemnified Claims (whether or
not Unlimited Claims or relating to Principal-Stockholder-Specific Breaches) for
which such AGI Indemnitor was liable pursuant hereto, and (y) with respect to
any Principal Stockholder, the aggregate amount of Damages with respect to (1)
AGI Indemnified Claims other than Unlimited Claims and (2) claims against such
Principal Stockholder pursuant to Section 8 of the Investment Agreement, (in
either case) for which such AGI Indemnitor was liable.
"Company Common Stock" means the Company's common stock, $1.00 par value
------- ------ -----
per share, prior to the Effective Time.
<PAGE>
-51-
"Damages" means, with respect to any Person, all claims, liabilities,
-------
obligations, losses, damages, costs and expenses, including without limitation
the fees and disbursements of counsel, of or to such Person.
"Holding-Indemnified Claims" means, collectively, any claim for Damages
------------------- ------
resulting from any failure or breach by Holding and/or Acquisition of any
representation, warranty, covenant, agreement, obligation, or undertaking made
by them or any of them in this Agreement (including any schedule or exhibit
hereto), or any other agreement, instrument, certificate, or other document
delivered by or on behalf of them or any of them in connection with this
Agreement or any of the transactions contemplated hereby.
"Holding Indemnitees" means, collectively, each of the Holding and
------- -----------
Acquisition, and each of their respective stockholders (without duplication),
directors, officers, employees, representatives and other Affiliates, together
with, if the Merger is consummated, the Surviving Corporation, and each of its
directors, officers, employees, representatives and other Affiliates, and each
individually a "Holding Indemnitee".
------- ----------
"Holding Indemnitors" means, collectively, (a) each of Holding and its
------- -----------
Subsidiaries, jointly and severally, if the transactions contemplated hereby are
not consummated, and (b) subject to the limitations set forth in Section 8.1(b)
of the Investment Agreement, Heritage and the Herrin Stockholders, if the
transactions contemplated hereby are consummated.
"Holding Prior Claims" means, as of any date, the aggregate amount of
------- ----- ------
Damages with respect to Holding Indemnified Claims and claims pursuant to
Section 8 of the Investment Agreement, other than Holding Unlimited Claims.
"Holding Unlimited Claims" shall mean, collectively, "Unlimited Holding
------- --------- ------
Claims" pursuant to and as defined in the Investment Agreement, and Holding
Indemnified Claims arising from any breach of the representations and warranties
made pursuant to Section 4.5 hereof.
"Horowitz Option" shall mean that certain stock option to purchase 25,000
-------- ------
shares of Company Common Stock for an aggregate exercise price of $187,500
issued by the Company to David Horowitz.
"Indebtedness", as applied to any Person, means (a) all indebtedness of
------------
such Person for borrowed money, whether current or funded, or secured or
unsecured, (b) all indebtedness of such Person for the deferred purchase price
of property or services represented by a note or other security, (c) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement (even if the rights and remedies of the seller
or lender under such agreement in the
<PAGE>
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event of default are limited to repossession or sale of specific property), (d)
all indebtedness of such Person secured by a purchase money mortgage or other
Lien to secure all or part of the purchase price of property subject to such
mortgage or other Lien, (e) all obligations of such Person under leases that
have been or must be, in accordance with generally accepted accounting
principles, recorded as capital leases in respect of which such Person is liable
as lessee, (f) any liability of such Person in respect of banker's acceptances
or letters of credit, and (g) all indebtedness referred to in clauses (a), (b),
(c), (d), (e), or (f) above that is directly or indirectly guaranteed by such
Person or which such Person has agreed (contingently or otherwise) to purchase
or otherwise acquire or in respect of which such Person has otherwise assured a
creditor against loss.
"knowledge", "known to", or similar terms, when used in this Agreement to
--------- --------
qualify any representation or warranty of the Company, mean that (at the time
the applicable representation or warranty is made or deemed made or repeated)
any of Richard Block, David Underwood, James Oppenheimer, Richard Oppenheimer,
Dean Henkel or Gary Mankoff either has actual (and not imputed or constructive)
knowledge of certain specific facts or circumstances affecting such
representation or warranty, or is actually (and not imputedly or constructively)
aware of facts or circumstances which should have led a reasonable person with
similar business responsibilities to conduct a reasonably-detailed investigation
into such facts or circumstances and the legal consequences thereof, and such an
investigation would have resulted in the investigating party having actual (and
not imputed or constructive) knowledge of specific facts or circumstances
affecting such representation or warranty. Except as specifically described
above, no knowledge of any other stockholder, director, officer or employee of
the Company shall be imputed to the Company.
"Lien" means any lien, claim, mortgage, security interest, charge,
----
encumbrance, or restriction on transfer of any kind.
"Maximum AGI Indemnity Amount" means $3,500,000.
------- --- --------- ------
"Other Agreement(s)" means, when used with reference to a particular
----- ------------
Person, all of the agreements, instruments, certificates, and other documents
executed and delivered by such Person at the Closing or otherwise in connection
with this Agreement and/or the transactions contemplated hereby, and when used
without reference to any particular Person, means all such agreements,
instruments, certificates, and other documents of all Persons.
"Participating Stockholder" means each Stockholder other than a Dissenting
------------- -----------
Stockholder.
<PAGE>
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"Permitted Liens" means, collectively, (a) Liens securing the payment of
---------------
taxes, either not yet due or the validity of which are being contested in good
faith by appropriate proceedings, and as to which the applicable party shall, if
appropriate under generally accepted accounting principles, have set aside on
its books and records adequate reserves, provided that such contest does not
have a Material Adverse Effect, (b) deposits under worker's compensation,
unemployment insurance, social security and other similar laws, or to secure the
performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure indemnity, performance or similar bonds for the
performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure statutory obligations or surety or appeal bonds, or
to secure indemnity, performance or other similar bonds in the ordinary course
of business, (c) statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen or suppliers incurred in the ordinary course of business
for sums not yet delinquent, (d) Liens securing the Indebtedness contemplated
pursuant to Sections 6.7(b) and 7.5(b) hereof, (e) zoning restrictions and non-
material easements, licenses, covenants and other restrictions affecting the use
of real property, and (f) Liens described in Section 3.8 of the Disclosure
Schedule as "Permitted Liens".
"Person" means any natural person, entity, or association, including
------
without limitation any corporation, partnership, limited liability company,
government (or agency or subdivision thereof), trust, joint venture or sole or
joint proprietorship.
"Principal-Stockholder-Specific Breach" means, with respect to any
------------------------------ ------
Principal Stockholder, a breach by such Principal Stockholder of any of (i) the
representations and warranties made by him pursuant to Section 3.2
(Authorization and Enforceability), and subsections (b) and (c) of Section 3.3
(Capitalization) hereof to the extent such representations and warranties
expressly relate to such Principal Stockholder solely in his individual capacity
(i.e., not in his capacity as an officer, director, employee or agent of the
Company), or (ii) obligations, covenants or agreements pursuant to the last
sentence of Section 5.1 (Stockholder Approval) and Section 9.2 (Non-Competition,
Etc.) hereof to be performed by him in his individual capacity (i.e., not those
required to be performed by him in his capacity as an officer, director,
employee or agent of the Company).
"Pro Rata Share" means, with respect to any AGI Indemnitor, such AGI
--- ---- -----
Indemnitor's share based on the proportion of the number of shares of Company
Common Stock, SARs, or shares of Company Common Stock issuable upon exercise of
the Horowitz Option, as the case may be, owned by such AGI Indemnitor
immediately before the Effective Time to the aggregate number of issued and
outstanding shares of Company Common Stock, SARs and/or shares of Company Common
Stock issuable upon exercise of the Horowitz Option, immediately before the
Effective Time.
<PAGE>
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"Related Parties" shall mean with respect to any natural person, that
------- -------
person's spouse, parents, siblings and lineal descendants.
"Restricted Area" means the United States, Canada and Mexico.
---------- ----
"Share Value" means $340.00, being the value of each share of New Common
-----------
Stock as of the Closing Date, as agreed among the parties hereto for the
purposes of this Agreement, as such amount shall be appropriately adjusted from
time to time to reflect stock splits, combinations, recapitalizations or the
like.
"Stockholder" means any stockholder of the Company prior to the Effective
-----------
Time.
"Stockholder Representatives" means Richard Block and the Escrowed
---------------------------
Stockholder Representative.
"Subsidiary" or "Subsidiaries" means, with respect to any Person, any
---------- ------------
corporation a majority (by number of votes) of the outstanding shares of any
class or classes of the capital stock of which shall at the time be owned by
such Person or by a Subsidiary of such Person, if the holders of the shares of
such class or classes of capital stock (a) are ordinarily, in the absence of
contingencies, entitled to vote for the election of at least a majority of the
directors (or persons performing similar functions) of the issuer thereof,
regardless of whether the right so to vote has been suspended by the happening
of such a contingency, or (b) are at the relevant time of reference entitled, as
such holders, to vote for the election of at least a majority of the directors
(or persons performing similar functions) of the issuer thereof, regardless of
whether the right so to vote exists by reason of the happening of a contingency.
"Tax" or "Taxes" means any federal, state, local, or foreign income, gross
--- -----
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
"Tax Return" means any return, declaration, report, claim for refund,
--- ------
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or administrative
requirements relating to any Tax.
<PAGE>
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"Total After-Tax Consideration" means, as to any AGI Indemnitor, the amount
----- --------- -------------
calculated as the sum of (a) such AGI Indemnitor's portion of the Aggregate
Merger Consideration hereunder, plus (b) to the extent such AGI Indemnitor is
----
also an Investor under the Investment Agreement, an amount equal to the product
of the number of shares of New Common Stock acquired by such AGI Indemnitor
under the Investment Agreement times the Share Value, plus (c) the aggregate
----- ----
amount of the Note Dividend made to such AGI Indemnitor, all calculated after
deduction of all payments of Taxes required to be made by such AGI Indemnitor
with respect to such amounts, provided that in the event that such AGI
Indemnitor receives a Tax benefit during the then-applicable Tax year, or will
receive such a benefit in the following Tax year, as a result of the matter to
which such indemnification relates, then the amount of such AGI Indemnitor's
Total After-Tax Consideration shall be increased to reflect such benefit.
"Unlimited Claims" means all claims for Damages related to or arising
--------- ------
directly or indirectly out of or in connection with any inaccuracy in or breach
of any representation or warranty made by the Company or any of the Principal
Stockholders in Sections 3.2 ("Authorization and Enforceability"), 3.3
("Capitalization"), 3.11 ("Taxes"), 3.27 ("Brokers"), or (to the extent that it
relates to any of the foregoing) 3.31 ("Disclosure") hereof, and all claims for
damages arising from AGI Indemnified Claims arising under clause (iii) of the
definition thereof.
11.2. TERMS DEFINED ELSEWHERE. The following terms are defined herein in
the sections identified below:
<TABLE>
<CAPTION>
TERM SECTION TERM SECTION
---- ------- ---- -------
<S> <C> <C> <C>
Acquisition Preamble Herrin Family Trust Preamble
Adjusted Share Value 8.4 Herrin Stockholders Preamble
Aggregate Base Value 1.2(d)(iii) Holdback Amount 1.3(d)
Aggregate Exercise Price 1.2(d)(vi) Holding Preamble
Aggregate Merger Consideration 1.2(d)(i) Holding Stockholders 1.4
Aggregate Option Holdback HSR Act 3.22
Amount 1.3(d) Indemnified Party 8.3
Aggregate Rightholder Indemnifying Party 8.3
Consideration 1.2(d)(iii) Intellectual Properties 3.18(a)
Aggregate Share Consideration 1.2(d)(ii) Investment Agreement 1.4
Agreement Preamble IRS 3.16(b)
Articles of Merger 1.1 Jacksonville IRBs 6.7
Audited Balance Sheet 3.6 Klearfold Preamble
Certificate 2.1(a) Leased Real Property 3.8(b)
</TABLE>
<PAGE>
-56-
<TABLE>
<S> <C> <C> <C>
Closing 1.1 Leases 3.8(b)
Closing Date 1.1 Maranov Option 3.3(b)
Code 3.16(c) Material Adverse Effect 3.4
Company Preamble Merger 1.1
Continuing AGI Stockholder 1.4 Non-Escrowed Stockholders 1.3(b)
Contract 3.15 Note Dividend 3.7
Converted Shares 1.2(d) Option Consideration 1.2(d)(vi)
Dissenting Shares 1.2(f) Other Investor 1.4
Dissenting Stockholder 1.2(f) Owned Real Property 3.8(b)
Dividend Notes 3.7 PBGC 3.16(d)(ii)
Effective Time 1.1 Per Share Consideration 1.2(d)(iv)
Employee Benefit Plan 3.16(a) Principal Stockholder Preamble
Environmental and Safety Laws 3.13(b) Process Agent 12.14
ERISA 3.16(c) Real Property 3.8(b)
Escrow Agent 1.4(d) Restricted Period 9.2(a)
Escrow Agreement 1.4(d) Rightholder Equity Value 1.2(d)(iii)
Escrow Amount 1.3(a) SARs 1.2(d)(i)
Escrowed Stockholders 1.3(a) SAR Holders 1.3(c)
Escrowed Stockholder Scott Family Trust Preamble
Representative 1.4(d) Share Equity Value 1.2(d)(ii)
Existing Shareholders Share Escrow Amount 1.3(a)
Agreement 3.3(b) Tax Dividends 3.7
Fully Diluted Number of Shares 1.2(d)(iii) Third Party Claim 8.3
Heritage Preamble @@
</TABLE>
12. GENERAL.
12.1. COOPERATION. Each of the parties shall cooperate with the others
and use all reasonable efforts to prepare all necessary documentation, to effect
all necessary filings, and to obtain all necessary permits, consents, approvals,
and authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement, including without
limitation the notifications required on the part of Holding and the Principal
Stockholders (or other appropriate "ultimate parent entities" with respect to
each of them) under the HSR Act, and the furnishing of such further information
with respect thereto as the Federal Trade Commission or Department of Justice
may request in connection therewith. Each of Holding, on the one hand, and the
Principal Stockholders, on the other hand, shall be responsible for one-half of
the filing fees payable in connection with such notifications. Each party shall
have the right to review and approve in advance all descriptions of or with
respect to it that appear in any filing with any governmental body made in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, the parties shall act reasonably and as promptly as
practicable.
12.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties hereto contained in this Agreement or any of the Other
Agreements or otherwise made in writing in connection with the transactions
contemplated hereby shall be deemed material, and, notwithstanding any
<PAGE>
-57-
investigation by Holding or Acquisition, shall be deemed to have been relied on
by them, and, subject to the provisions of Section 8.5(c) hereof, shall survive
the Closing and the consummation of the transactions contemplated hereby.
12.3. EXPENSES.
(a) If the transactions contemplated hereby are not consummated before
the termination of this Agreement by reason of the non-satisfaction of either of
the conditions precedent set forth in Sections 6.8 or 6.13, then the Company
shall be responsible for and shall reimburse Holding, the Holding Stockholders
and Acquisition for the aggregate amount of their actual out-of-pocket costs and
expenses incurred after August 21, 1997 in connection with the transactions
contemplated hereby, including without limitation fees incurred in connection
with their efforts to obtain debt financing for such transactions (including so-
called "breakup" fees), legal and accounting expenses (including the legal and
accounting expenses of any lenders, underwriters or other financing sources,
prospective or otherwise, for which Holding, the Holding Stockholders and/or
Acquisition are liable), and environmental and other "due diligence" expenses.
(b) Except as expressly provided otherwise in this Agreement (including
without limitation in Section 12.3(a) hereof): (i) if the transactions
contemplated hereby are not consummated, (A) each of Holding, the Holding
Stockholders and Acquisition shall be responsible for and shall pay all of their
own expenses in connection with the negotiation and preparation of this
Agreement and the Other Agreements and the transactions contemplated hereby and
thereby, including without limitation the fees and expenses of their respective
counsel and accountants, and the costs and expenses incurred in connection with
the proposed offering of senior subordinated notes referred to in Sections 6.7
and 7.5 hereof (including costs of preparation, printing or reproducing any
offering materials relating thereto, any fees of bond rating agencies or other
similar fees and expenses incurred in the marketing or distribution of such
notes, and any legal and accounting expenses of any lenders, underwriters or
other financing sources, prospective or otherwise, for which any of Holding, the
Holding Stockholders and/or Acquisition are liable), and (B) the Company shall
be responsible for and shall pay all expenses of itself and the Principal
Stockholders in connection with the negotiation and preparation of this
Agreement and the Other Agreements and the consummation of the transactions
contemplated hereby and thereby, including without limitation the fees and
expenses of their counsel and accountants, all compensation payable to Allen &
Company Incorporated and any other investment bank or other financial advisor
engaged by the Company and/or any of the Principal Stockholders in connection
with such transactions, and the costs and expenses incurred by the Company and
the Principal Stockholders, and their counsel and accountants, in co-operating
with and providing information to any lenders, underwriters or other financing
sources in connection with the proposed offering of
<PAGE>
-58-
senior subordinated notes referred to in Sections 6.7 and 7.5 hereof and (ii) if
the transactions contemplated hereby are consummated, the Surviving Corporation
shall be responsible for and shall pay all of the out-of-pocket expenses of each
of the parties hereto in connection with the negotiation and preparation of this
Agreement and the Other Agreements and the consummation of the transactions
contemplated hereby and thereby, including without limitation the fees and
expenses of their respective counsel and accountants, and all costs and expenses
incurred in connection with the proposed offering of senior subordinated notes
referred to in Sections 6.7 and 7.5 hereof, provided however that the
Participating Stockholders shall be responsible for and shall pay the fees and
expenses of any counsel other than Sonnenschein Nath & Rosenthal retained by any
of the Participating Stockholders individually in connection with the
negotiation and preparation of this Agreement or any of the Other Agreements and
the consummation of the transactions contemplated hereby and thereby, and all
compensation payable to Allen & Company Incorporated in connection with such
transactions, the aggregate amount of such compensation being deducted in
calculating Aggregate Merger Consideration pursuant to Section 1.2(d)(i) hereof.
12.4. BENEFITS OF AGREEMENT; NO ASSIGNMENTS; NO THIRD-PARTY BENEFICIARIES.
(a) This Agreement shall bind and inure to the benefit of the parties
hereto and their respective heirs, successors, and permitted assigns.
(b) No party shall assign any rights or delegate any obligations
hereunder without the consent of the other parties, and any attempt to do so
shall be void; provided, that each of Holding and Acquisition, and in the case
of the following clause (ii) only, also each of the Company and/or the Surviving
Corporation, shall have the right (i) to assign its rights and delegate its
obligations hereunder to any Person controlling, under the control of, or under
common control with it, and (ii) to assign all or any part of its rights
hereunder by way of collateral assignment to any bank or financial institution
or public authority providing financing for the transactions contemplated
hereby; but no such assignment made pursuant to clauses (i) or (ii) shall
relieve any of Holding, Acquisition, the Company or the Surviving Corporation of
its respective obligations under this Agreement.
(c) Nothing in this Agreement is intended to or shall confer any rights
or remedies on any Person other than the parties hereto and their respective
heirs, successors, and permitted assigns.
12.5. NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail,
<PAGE>
-59-
return receipt requested, postage prepaid (effective five business days after
dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed as follows (or to such other address as the recipient party may
have previously furnished to the sending party in accordance with this section):
(a) If to Holding, Acquisition and/or the Surviving Corporation, to or in
care of:
KFI Holding Corporation
364 Valley Road
Warrington, Pennsylvania 18976
Attention: H. Scott Herrin
Telecopier No. (215) 343-0484
with copies sent at the same time and by the same means to:
Heritage Partners Management Company, Inc.
30 Rowes Wharf, Suite 300
Boston, MA 02110
Attention: Michael F. Gilligan, Managing Director
Telecopier No. (617) 439-0689
and to:
David L. Engel, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Telecopier No. (617) 951-8736
(b) If to the Company, any of the Stockholders, or the Stockholder
Representatives, to or in care of:
AGI Incorporated
1950 North Ruby Street
Melrose Park, Illinois 60160-1178
Attention: Richard Block and David Underwood
Telecopier No. (708) 344-9113
with copies sent at the same time and by the same means to:
<PAGE>
-60-
Linda Chaplik Harris, Esq.
Sonnenschein Nath & Rosenthal
Suite 8000 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Telecopier No. (312) 876-7934
(c) If to Klearfold or any of the Herrin Stockholders, as follows:
Klearfold, Inc.
364 Valley Road
Warrington, Pennsylvania 18976
Attention: H. Scott Herrin
Telecopier No. (215) 343-0484
with copies sent at the same time and by the same means to the addresses
for copies set forth in paragraph (a) above and to:
Richard J. Braemer, Esq.
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
Telecopier No. (215) 864-8999
(d) If to Heritage, to the addresses for copies set forth in paragraph (a)
above.
12.6. COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. In pleading or proving this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
12.7. CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and shall not affect the interpretation or construction
of this Agreement.
12.8. EQUITABLE RELIEF. Each of the parties hereby acknowledges that any
breach by it of its obligations under this Agreement would cause substantial and
irreparable damage to the other parties, and that money damages would be an
inadequate remedy therefor, and accordingly, acknowledges and agrees that each
of the other parties shall be entitled to an injunction, specific performance,
and/or other equitable relief to prevent the breach of such obligations (in
addition to all
<PAGE>
-61-
other rights and remedies to which such party may be entitled in respect of any
such breach).
12.9. CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.
12.10. WAIVERS. No waiver of any breach or default hereunder shall be
valid unless in a writing signed by the waiving party. No failure or other delay
by any party exercising any right, power, or privilege hereunder shall be or
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
12.11. FURTHER ASSURANCES. From time to time on and after the Closing
Date, each party hereto shall promptly execute and deliver all such further
instruments and other documents, and shall promptly take all such further
actions, as any other party hereto may reasonably request in order more
effectively to effect or confirm the transactions hereby contemplated and to
carry out the purposes of this Agreement.
12.12. ENTIRE AGREEMENT. This Agreement, together with the exhibits and
schedules hereto and the other agreements, instruments, certificates, and other
documents referred to herein as having been or to be executed and delivered in
connection with the transactions contemplated hereby, contains the entire
understanding and agreement among the parties, and supersedes any prior
understandings or agreements among them, or between or among any of them, with
respect to the subject matter hereof.
12.13. GOVERNING LAW. This Agreement shall to the maximum lawful extent
be governed by and interpreted and construed in accordance with the internal
laws of the State of Illinois, as applied to contracts under seal made, and
entirely to be performed, within Illinois, and without reference to principles
of conflicts or choice of law.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
<PAGE>
SIGNATURE PAGE 1 OF 3 FOR MERGER AGREEMENT
IN WITNESS WHEREOF, each of the parties has executed and delivered to the
others this Agreement and Plan of Merger as an agreement under seal as of the
date first above written.
KFI HOLDING CORPORATION
By /s/ Michael F. Gilligan
--------------------------
Name Michael F. Gilligan
Title:
KLEARFOLD, INC.
By /s/ H. Scott Herrin
--------------------------
Name: H. Scott Herrin
Title:
AGI ACQUISITION CORPORATION
By /s/ H. Scott Herrin
--------------------------
Name: H. Scott Herrin
Title:
AGI INCORPORATED
By /s/ Richard Block
--------------------------
Name: Richard Block
Title:
<PAGE>
SIGNATURE PAGE 2 OF 3 FOR MERGER AGREEMENT
HERITAGE FUND I
INVESTMENT CORPORATION
By /s/ Michael F. Gilligan
--------------------------
Name: Michael F. Gilligan
Title:
/s/ Melvin B. Herrin
-----------------------------
Melvin B. Herrin
/s/ H. Scott Herrin
-----------------------------
H. Scott Herrin
/s/ Matthew H. Kamens
-----------------------------
Matthew H. Kamens, not individually
but as trustee under an Indenture
of Trust of Melvin B. Herrin dated
June 4, 1996
/s/ Arthur S. Keyser
-----------------------------
Arthur S. Keyser, not individually
but as trustee under an Indenture
of Trust dated August 12, 1992
f/b/o H. Scott Herrin
PRINCIPAL STOCKHOLDERS:
/s/ Richard Block
-----------------------------
Name: Richard Block
<PAGE>
SIGNATURE PAGE 3 OF 3 FOR MERGER AGREEMENT
/s/ James Oppenheimer
------------------------------
Name: James Oppenheimer
/s/ Richard Oppenheimer
------------------------------
Name: Richard Oppenheimer
/s/ Donald W. Kosterka
------------------------------
Name: Donald W. Kosterka
/s/ James A. Ladwig
------------------------------
Name: James A. Ladwig
/s/ Dean Henkel
------------------------------
Name: Dean Henkel
/s/ Gary Mankoff
------------------------------
Name: Gary Mankoff
/s/ David Underwood
------------------------------
Name: David Underwood
<PAGE>
Exhibits to the Merger Agreement (omitted herein).
--------------------------------------------------
Exhibit 1.1 Articles of Merger
Exhibit 1.2(c) Company's Amended and Restated Articles of Incorporation
Exhibit 1.2(c)(i) Company's Amended and Restated By-Laws
Exhibit 1.2(d) Stock Appreciation Rights
Exhibit 1.3(a) List of Escrowed Shareholders
Exhibit 1.3(b) List of Non-Escrowed Shareholders
Exhibit 1.4(b) Form of Stockholder Agreement
Exhibit 1.4(c) Form of Employment, Non-Competition and Stock Repurchase
Agreement
Exhibit 1.4(d) Form of Escrow Agreement
Exhibit 7.12 Form of General Release and Agreement
Schedules to the Merger Agreement (omitted herein).
---------------------------------------------------
Schedule 1 List of Holding Stockholders
Schedule 2 List of Continuing AGI Stockholders
Schedule 3 List of Other Investors
Disclosure Schedule for Representation and Warranties of
the Company
The Company will furnish supplementally a copy of any omitted schedule to the
Securities and Exchange Commission upon request.
<PAGE>
Exhibit 2.2
INVESTMENT AGREEMENT
This Investment Agreement (this "Agreement") dated as of February 19,
---------
1998, is by and among KFI Holding Corporation, a Delaware corporation
("Holding"); Heritage Fund I Investment Corporation, a Delaware corporation
-------
("Heritage"); Melvin B. Herrin, an individual residing in the State of
--------
Pennsylvania; H. Scott Herrin, an individual residing in the State of
Pennsylvania; Matthew H. Kamens, not individually but as Trustee under Indenture
of Trust dated 6/4/96 of Melvin B. Herrin; Arthur S. Keyser, not individually
but as trustee under an Irrevocable Deed of Trust dated 8/12/92 f/b/o H. Scott
Herrin, (together, collectively, the "Klearfold Herrin Investors") and each of
--------- ------ ---------
the other employees of Klearfold, Inc., a Pennsylvania corporation ("Klearfold")
---------
listed in Part II of Schedule 1A hereto who are purchasing Series A Common Stock
-------- --
(as defined herein) pursuant to this Agreement (together, collectively, the
"Klearfold Employee Investors", and together with the Klearfold Herrin
--------- -------- ---------
Investors, the "Klearfold Management Investors"); each of the persons listed on
--------- ---------- ---------
Schedule 2 hereto (together, collectively, the "AGI Rollover Investors"; each of
- -------- - --- -------- ---------
whom is an individual, residing in the state referred to beneath their
respective names; and each of the persons listed in the attached Schedule 3
-------- -
(together, collectively, the "New AGI Investors", and together with the AGI
--- --- ---------
Rollover Investors, collectively, the "AGI Investors"), each of whom is an
--- ---------
individual residing in the State of Illinois. The AGI Investors, the Klearfold
Management Investors and Heritage, collectively, are referred to herein as the
"Investors".
---------
Concurrently with the execution and delivery of this Agreement, Holding,
Holding's wholly-owned subsidiary, AGI Acquisition Corporation, an Illinois
corporation ("Acquisition"), AGI Incorporated, an Illinois corporation ("AGI"),
----------- ---
each of the AGI Investors and certain other holders of securities of AGI are
entering into an Agreement and Plan of Merger (the "Merger Agreement"), dated as
------ ---------
of the date hereof, pursuant to and subject to the terms and conditions of
which, among other things, Holding will acquire ownership, through the merger of
Acquisition with and into AGI, of all of the capital stock of AGI not acquired
by Holding at the Closing under this Agreement.
The parties desire that the Investors contribute certain securities of
Holding and AGI to, and make certain investments in, Holding on the terms and
conditions set forth herein, and in exchange for such contributions and
investments receive certain shares of Holding's Series A Common Stock (as
defined herein).
Capitalized terms used and not otherwise defined upon first usage herein
are defined in Section 11.1 of this Agreement.
Accordingly, subject to the terms and conditions herein and based upon the
respective representations and warrants herein and in the Other Agreements, the
parties hereby agree as follows:
<PAGE>
-2-
1. CONTRIBUTIONS AND INVESTMENTS.
(A) HERITAGE. Subject to the terms and conditions set forth in this
Agreement, at the Closing, Heritage shall contribute to Holding the securities
listed below:
(i) 14,500 shares of Old Preferred Stock;
(ii) 45,000 shares of Old Voting Common Stock;
(iii) 8,500 shares of Old Non-Voting Common Stock; and
(iv) Holding's Variable Amount Voting Common Stock Purchase Warrant
dated June 7, 1996, for the purchase of up to 45,313 shares of Old Voting
Common Stock (the "Old Warrant");
--- -------
and Heritage shall pay to Holding as a cash investment $3,400,000 by wire
transfer, and upon receipt by Holding of such amount and each of the
certificates or instruments representing the securities described in clauses (i)
- - (iv) of this Section 1.1(a), Holding shall issue to Heritage 40,000 shares of
Series A Common Stock (such shares, the "New Heritage Stock"). The parties
--- -------- -----
agree that the aggregate purchase price for the New Heritage Stock is
$13,600,000, for a purchase price of $340.00 per share, and shall be reported as
such by all parties for all federal, state and local Tax purposes.
(B) KLEARFOLD MANAGEMENT INVESTORS. Subject to the terms and conditions
set forth in this Agreement, at the Closing, each of the Klearfold Herrin
Investors shall contribute to Holding the securities set forth opposite his or
its name in columns 2, 3 and 4 of Schedule 1 hereto, consisting in total of the
-------- -
securities listed below:
(i) 4,500 shares of Old Preferred Stock;
(ii) 42,500 shares of Old Voting Common Stock; and
(iii) 500 shares of Old Non-Voting Common Stock;
and each of the Klearfold Management Investors shall pay to Holding as a cash
investment the amount set forth opposite his or its name in column 5 of Schedule
--------
1 hereto, consisting in total of an aggregate amount of $1,200,000, by wire
- -
transfer, and upon receipt by Holding of such amounts and each of the
certificates or instruments representing the securities described in clauses (i)
- - (iii) above, Holding shall issue to each of the Klearfold Management Investors
that number of shares of Series A Common Stock as is set forth opposite such
Investor's name in column 6 of Schedule 1 hereto, consisting in total of 17,647
-------- -
shares of Series A Common Stock (the "New Klearfold Management Stock"). The
--- -------------------- -----
parties agree that the aggregate purchase price for the New Klearfold Management
Stock is
<PAGE>
-3-
$6,000,000, for a purchase price of $340.00 per share, and shall be reported as
such by all parties for all federal, state and local Tax purposes.
(C) AGI ROLLOVER INVESTORS. Subject to the terms and conditions set forth
in this Agreement, at the Closing, each of the AGI Rollover Investors shall
contribute to Holding shares of AGI's Common Stock, $1.00 par value per share
("AGI Stock") and/or cash, with the aggregate amount of contributed
--- -----
consideration with respect to each such AGI Rollover Investor being set forth
opposite his name in column 2 of Schedule 2 hereto (with each share of AGI Stock
-------- -
so contributed being valued at an amount equal to the amount of the Per Share
Consideration, as defined in and determined in accordance with the Merger
Agreement), and upon receipt by Holding of such amounts by wire transfer or off-
set and each of the certificates representing the shares of AGI Stock being
contributed hereunder, Holding shall issue to each of the AGI Rollover Investors
that number of shares of Series A Common Stock as is set forth opposite such AGI
Rollover Investor's name in column 3 of Schedule 2 hereto (the "New AGI Rollover
-------- - --- --- --------
Investor Stock").
- -------- -----
(D) NEW AGI INVESTORS. Subject to the terms and conditions set forth in
this Agreement, at the Closing, each of the New AGI Investors shall pay to
Holding as a cash investment the amount set forth opposite his name in column 2
of Schedule 3 hereto, consisting in total of an aggregate amount of $1,373,600,
-------- -
by wire transfer, and upon receipt by Holding of such amounts, Holding shall
issue to each of the New AGI Investors that number of shares of Series A Common
Stock as is set forth opposite such New AGI Investor's name in column 3 of
Schedule 3 hereto (all such shares of Series A Common Stock, together with the
- -------- -
New AGI Rollover Investor Stock referred to in Section 1.1(c) above, being
referred to herein as the "New AGI Investor Stock"), consisting (when aggregated
--- --- -------- -----
with the New AGI Rollover Investor Stock referred to in Section 1.1(c) above) in
total of 42,353 shares of New AGI Investor Stock. The parties agree that the
aggregate purchase price for the New AGI Investor Stock is $14,400,000, for a
purchase price of $340.00 per share, and shall be reported as such by all
parties for all federal, state and local Tax purposes.
2. CLOSING.
2.1. TIME AND PLACE. The closing of the contributions and investments set
forth in Section 1 above (the "Closing") shall be held at the offices of Latham
-------
& Watkins, 885 Third Avenue, Suite 1000, New York, NY 10022 on the date referred
to in Section 1.1 of the Merger Agreement as the Closing Date. The date on
which the Closing is actually held hereunder is also referred to herein as the
"Closing Date".
------- ----
2.2. TRANSACTIONS AT CLOSING. At the Closing, in addition to the delivery
of any other instruments or documents referred to herein or in the Merger
Agreement:
(a) Certain of the Klearfold Management Investors, together with other
persons, all of whom are listed and specifically identified on Schedule 1B
-------- --
hereto, shall deliver to Holding certificates representing the shares of capital
stock of Holding held by such
<PAGE>
-4-
persons free and clear of any Lien other than Liens in favor of Holding; Holding
shall deliver the promissory notes in the aggregate amount of $35,000 payable to
it made by each of the persons listed on Schedule 1B hereto; and such shares of
-------- --
capital stock and such promissory notes shall be exchanged and canceled;
(b) Heritage shall deliver to Holding free and clear of any Lien, the Old
Warrant, marked canceled, and certificates representing the shares of capital
stock of Holding referred to in Sections 1(a)(i) - 1(a)(iii) above, duly
endorsed in blank or with duly executed stock powers attached;
(c) each of the Klearfold Herrin Investors shall deliver to Holding, free
and clear of any Lien, certificates representing the shares of Holding stock
referred to in Sections 1(b)(i) - 1(b)(iii) above, duly endorsed in blank or
with duly executed stock powers attached;
(d) each of the AGI Rollover Investors shall deliver to Holding, free and
clear of any Lien, certificates representing any shares of AGI Stock delivered
pursuant to Section 1(c), duly endorsed in blank and with duly executed stock
powers attached, and in addition thereto, David Horowitz and Zenas Block shall
pay to the Escrow Agent under and as defined in the Merger Agreement and the
Escrow Agreement described therein, an amount in each case equal to the Holdback
Amount (as defined in Section 1.3(a) of the Merger Agreement) multiplied by the
number of AGI Shares contributed by such AGI Investor pursuant to this Section
2.2(d), such amount to be held as part of the Escrow Amount pursuant to Section
1.3(a) of the Merger Agreement and the Escrow Agreement;
(e) each of Heritage, the Klearfold Management Investors, and the AGI
Investors shall pay to Holding the cash investments described in Section 1
above;
(f) the Restated Certificate of Incorporation of Holding, in the form
attached hereto as Exhibit A, or in such other form as shall have been approved
------- -
in writing by the Majority Heritage Holders, the Majority Klearfold Management
Holders and the Majority AGI Holders on or prior to the Closing Date (the
"Charter Amendment"), shall be filed with the Secretary of State of the State of
------- ---------
Delaware;
(g) Holding shall deliver to each of Heritage, the Klearfold Management
Investors and the AGI Investors certificates representing all of the shares of
Series A Common Stock, in the amounts set forth opposite each such Investor's
name in Schedule 4 hereto;
-------- -
(h) Holding shall enter into agreements with each of the Klearfold
Employee Investors, together with the other Klearfold employees listed and
specifically identified on Schedule 1C hereto (collectively, the "Klearfold
-------- -- ---------
Optionees") and the Klearfold Herrin Investors, providing for each of the
- ---------
Klearfold Optionees to receive incentive stock option agreements for the number
of shares of Series A Common Stock set forth opposite such Klearfold Optionee's
name on Schedule 1C hereto, such shares to be provided by the
-------- --
<PAGE>
-5-
Klearfold Herrin Investors, on the terms referred to in such Schedule 1C and/or
-------- --
on such other terms as shall be reasonably satisfactory to the Klearfold Herrin
Investors and the Klearfold Optionees and the Board of Directors of Holding as
constituted pursuant to Section 2.2(i) below;
(i) Each of the Investors shall execute and deliver to Holding the
Stockholder Agreement in the form attached hereto as Exhibit B (the "Stockholder
------- - -----------
Agreement"), and the Boards of Directors of Holding, each of its Subsidiaries
- ---------
and AGI as the Surviving Corporation under the Merger Agreement shall be
constituted as set forth in Section 3.1(a) of the Stockholder Agreement;
(j) Holding, Heritage, and each of the Klearfold Herrin Investors shall
execute and deliver the Termination Agreement in the form attached hereto as
Exhibit C, pursuant to which each of (i) that certain Investment Agreement dated
- ------- -
as of May 15, 1996, and (ii) the Stockholders' Agreement of Holding dated as of
June 7, 1996 (the "Existing Stockholders' Agreement"), shall be terminated with
-------- ------------ ---------
effect from the Closing Date; Holding and each of the Klearfold Optionees shall
execute and deliver a Termination Agreement in the form attached hereto as
Exhibit D, pursuant to which the Stock Restriction Agreements of Holding dated
- ------- -
as of June 7, 1996, shall be terminated with effect from the Closing Date; and
each of the stockholders of Holding prior to the Closing Date and certain other
Affiliates of Holding prior to the Closing Date shall execute and deliver a
Release similar in substance to Article 1 of the General Release and Agreement
in Contemplation of Merger to be delivered pursuant to Section 7.12 of the
Merger Agreement, and otherwise reasonably satisfactory to Holding and the
releasing parties thereunder;
(k) Each of the Investors listed on Schedule 5 hereto shall execute and
-------- -
deliver to Holding an Employment, Non-Competition and Stock Repurchase Agreement
in the form referred to in Schedule 5 hereto, with such modifications thereto as
-------- -
Holding and such Investor shall mutually agree;
(l) Each of the Klearfold Optionees shall execute and deliver to Holding
an Agreement relating to Employment and Stock Ownership in form and substance as
mutually agreed upon by Holding and such Klearfold Optionee;
(m) The By-Laws of Holding shall be amended and restated in the form
attached hereto as Exhibit E, and the By-Laws of Klearfold and each of its
------- -
domestic Subsidiaries shall be amended and restated to conform in form and
substance with the Amended and Restated By-Laws of Holding as set forth in
Exhibit E hereto;
- ------- -
(n) Holding shall adopt an Equity Incentive Plan providing for the
issuance of up to ten percent (10%) of the fully-diluted common stock equity of
the Company, which shall be in form and substance satisfactory to the Majority
Heritage Holders, the Majority Klearfold Management Holders and the Majority AGI
Holders; and
<PAGE>
-6-
(o) immediately following completion of the Closing hereunder, Holding,
Acquisition, AGI and the "Participating Stockholders" referred to in the Merger
Agreement shall complete the "Closing" under and as defined in the Merger
Agreement in accordance with the terms and provisions thereof, pursuant to
which, among other things, all of the shares of AGI Stock contributed to Holding
hereunder shall be canceled.
3. REPRESENTATIONS AND WARRANTIES OF HOLDING.
Holding hereby represents and warrants to each of the Investors (other than
Heritage and the Klearfold Herrin Investors), both as of the date hereof and as
of the Closing Date (immediately prior to the Closings hereunder and under the
Merger Agreement), as follows, subject in each case to such exceptions as are
specifically contemplated by this Agreement or as are set forth in (i) the
attached Disclosure Schedule, or (ii) except as provided in the final sentence
of Section 5(e) hereof, the disclosure supplements contemplated by that section,
and provided that, notwithstanding the fact that the representations and
warranties in this Section 3 are made by Holding alone, Holding, each of its
Subsidiaries and the Holding Indemnitors (as defined below) shall indemnify
against any and all Damages related to or arising, directly or indirectly, out
of or in connection with any breach of such representations and warranties to
the extent, and subject to the limitations, set forth in Section 8 hereof.
Notwithstanding any other provision of this Agreement (except the final sentence
of Section 5(e)), the Disclosure Schedule, or any such disclosure supplement,
each exception set forth in the Disclosure Schedule or any such disclosure
supplement shall be deemed to qualify each representation and warranty set forth
in this Agreement (x) that is specifically identified (by cross-reference or
otherwise) in the Disclosure Schedule or such disclosure supplement as being
qualified by such exception, or (y) with respect to which the relevance of such
exception is apparent on the face of the disclosure of such exception set forth
in the Disclosure Schedule or such disclosure supplement, provided, in either
case, that the relevant facts are set forth in reasonable detail in the
Disclosure Schedule or such disclosure supplement.
3.1. INCORPORATION; AUTHORITY. Holding is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to own or lease and operate
its properties and to carry on its business as now conducted. Holding has
delivered to each of the Investors or their respective counsel complete and
correct copies of Holding's Certificate of Incorporation and by-laws, in each
case with all amendments thereto.
3.2. AUTHORIZATION AND ENFORCEABILITY. Each of Holding and its
Subsidiaries has all requisite power and full legal right and authority
(including due approval of its Board of Directors) to enter into this Agreement
and all of the Other Agreements to which it is or is to be a party as
contemplated hereby, to perform all of its agreements and obligations hereunder
and thereunder, each in accordance with its respective terms, and to consummate
the transactions contemplated hereby and thereby. Each of this Agreement and
such Other Agreements to which Holding and/or any of its Subsidiaries is or is
to be a party has been, or upon execution and delivery as contemplated hereby,
will be, duly
<PAGE>
-7-
executed and delivered by Holding and/or such Subsidiary, as the case may be,
and constitutes or will constitute its legal, valid, and binding obligation,
enforceable against it in accordance with its respective terms, except to the
extent that (i) enforcement may be limited by or subject to any bankruptcy,
insolvency, reorganization, moratorium, or similar laws now or hereafter in
effect relating to or limiting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court or
other similar Person before which any proceeding therefor may be brought.
3.3. CAPITALIZATION.
(a) Immediately prior to the effectiveness of the Charter Amendment, the
authorized capital stock of Holding consists of 19,000 shares of Old Preferred
Stock, all of which are issued and outstanding on the date hereof, 135,813
shares of Old Voting Common Stock, 90,500 of which are issued and outstanding on
the date hereof, and 9,500 shares of Old Non-Voting Common Stock, all of which
are issued and outstanding on the date hereof. All of such outstanding shares
of the capital stock of Holding are duly authorized, validly issued, fully paid
and non-assessable, are owned of record, as set forth in Section 3.3(a) of the
Disclosure Schedule, and, to Holding's knowledge, are owned free and clear of
all Liens, other than (i) any restrictions on transfer arising under applicable
securities laws solely by reason of the fact that such shares were issued
pursuant to exemptions from registration under such securities laws and (ii)
restrictions imposed pursuant to the Existing Stockholders' Agreement, which
restrictions shall be terminated on the Closing Date. Except as set forth in
this Investment Agreement or in the Existing Stockholders' Agreement, there are
no agreements or other obligations on the part of Holding to purchase or sell,
and other than as set forth in Section 3.3(a) of the Disclosure Schedule, no
options, warrants, or other rights to subscribe for or purchase from Holding or
any of its Stockholders, any shares of capital stock or other securities of
Holding.
(b) Immediately following the effectiveness of the Charter Amendment, the
authorized capital stock of Holding will consist of (i) 150,000 shares of Series
A Common Stock, 100,000 shares of which shall, after giving effect to the
transactions described herein, be issued and outstanding, and (ii) 50,000 shares
of Series B Common Stock, none of which shall, after giving effect to the
transactions described herein, be issued and outstanding. All of such
outstanding shares of Series A Common Stock will, upon issuance thereof pursuant
to and in accordance with the terms and conditions of this Agreement, be duly
authorized, validly issued, fully paid and non-assessable, and will be owned of
record as set forth in Section 3.3(b) of the Disclosure Schedule.
3.4. QUALIFICATION. Each of Holding and its Subsidiaries is duly qualified
and in good standing as a foreign corporation in all jurisdictions in which the
character of its owned or leased properties or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or admitted and in good standing does not and is not reasonably likely to have a
material adverse effect on the business,
<PAGE>
-8-
financial condition, or results of operations of Holding and its Subsidiaries,
taken as a whole (a "Material Adverse Effect").
-------- ------- ------
3.5. SUBSIDIARIES.
(a) Holding does not have any Subsidiaries other than those listed in
Section 3.5 of the Disclosure Schedule. Each Subsidiary so listed is a
corporation duly organized, validly existing, and in good standing under the
laws of its jurisdiction of incorporation and has all requisite corporate power
and authority to own or lease and operate its properties and to carry on its
business as now conducted. Holding has delivered to each of the Investors or
their respective counsel complete and correct copies of each of its
Subsidiaries' charter documents and by-laws, in each case with all amendments
thereto.
(b) The numbers of shares of the capital stock of each Subsidiary of
Holding that are, respectively, (i) authorized, and (ii) issued and outstanding
or held in treasury, are set forth in Section 3.5 of the Disclosure Schedule.
All of such issued and outstanding shares of capital stock of each of Holding's
Subsidiaries are duly authorized, validly issued, fully paid, and non-assessable
and are owned of record, and in the case of shares held by Holding, also
beneficially, as set forth in Section 3.5 of the Disclosure Schedule. There are
no agreements or other obligations on the part of Holding, any of its
Subsidiaries, or, to Holding's knowledge, any of its Stockholders, to purchase
or sell, and no options, warrants, or other rights to subscribe for or purchase
from any of them, any shares of capital stock or other securities of any such
Subsidiary.
(c) Except as described in Section 3.5 of the Disclosure Schedule, Holding
does not own any equity securities or other legal and/or beneficial interests in
any corporations, partnerships, limited liability companies, business trusts, or
joint ventures or in any other unincorporated trade or business enterprises.
3.6. FINANCIAL STATEMENTS. Included in Section 3.6 of the Disclosure
Schedule are copies of the consolidated balance sheets of Holding and its
Subsidiaries as of December 31, 1996 and December 31, 1997 (such balance sheet
as of December 31, 1997, the "Audited Balance Sheet"), and of the consolidated
------- ------- -----
balance sheet of Klearfold and its wholly-owned Subsidiaries as of December 31,
1995, and in each case the related consolidated statements of income, retained
earnings and cash flows of such Persons for the fiscal years ended on such
dates, certified by KPMG Peat Marwick LLP, in the case of the 1995 and 1996
financial statements and Price Waterhouse L.L.P., in the case of the 1997
financial statements. Each of such financial statements is true and complete in
all material respects and has been prepared (a) from, and is consistent with,
Holding's or, as the case may be, Klearfold's books and records (which
themselves are true and complete and properly reflect all transactions of the
Company) and (b) in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods; each of such balance sheets
fairly presents the consolidated financial condition of Holding and its
Subsidiaries, or Klearfold and its wholly-owned Subsidiaries, as the case may
be, as of its respective date; and each of such statements of income, retained
earnings, and cash flows
<PAGE>
-9-
fairly presents the consolidated results of operations, retained earnings or
cash flows, as the case may be, of Holding and its Subsidiaries, or Klearfold
and its wholly-owned Subsidiaries, as the case may be, for the period covered
thereby.
3.7. ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 3.7 of the
Disclosure Schedule, since December 31, 1997, Holding and its Subsidiaries have
conducted their business only in the ordinary course, and without limiting the
foregoing, there has not been: (a) any change in the assets, liabilities,
sales, income, or business of Holding and its Subsidiaries, taken as a whole, or
in their respective relationships with suppliers, customers, or lessors, other
than changes that were both in the ordinary course of business and have not had,
either in any case or in the aggregate, a Material Adverse Effect; (b) except as
specifically contemplated by Section 3.7 of the Disclosure Schedule or otherwise
in this Agreement, any acquisition or disposition by Holding or any of its
Subsidiaries of any asset or property (i) from or to any Affiliate of any of
them, or (ii) other than in the ordinary course of business, other than any such
acquisitions, on the one hand, or dispositions, on the other hand, of assets the
fair market value and book value of which do not in the aggregate exceed
$100,000; (c) any damage, destruction or loss, whether or not covered by
insurance to the property of Holding or any of its Subsidiaries which, after
giving effect to any insurance proceeds receivable in connection therewith, had
or is reasonably likely to have a Material Adverse Effect, (d) any declaration,
setting aside or payment of any dividend or any other distributions in respect
of any shares of capital stock of Holding, and there has been no such
declaration, setting aside or payment since June 30, 1997; (e) any issuance of
any shares of the capital stock of Holding or any of its Subsidiaries or any
direct or indirect redemption, purchase, or other acquisition by Holding or any
of its Subsidiaries of any such capital stock; (f) any increase in the
compensation, pension, or other benefits payable or to become payable by Holding
or any of its Subsidiaries to any of their respective officers or employees, or
any bonus payments or arrangements made to or with any of them, other than (i)
increases occurring in the ordinary course of business consistent with past
practices or required by law and described in Section 3.7 of the Disclosure
Schedule and (ii) bonuses payable pursuant to Holding's or any of its
Subsidiaries' bonus plan in the ordinary course of business consistent with past
practices and described in Section 3.7 of the Disclosure Schedule, and, to the
extent required by Section 3.25 hereof, in Section 3.25 of the Disclosure
Schedule; (g) any forgiveness or cancellation of any material debt or claim by
Holding or any of its Subsidiaries or any waiver of any right of material value
other than compromises of accounts receivable in the ordinary course of
business; (h) except as specifically contemplated hereby, any entry by Holding
or any of its Subsidiaries into any transaction with any Affiliate of any of
them other than in the ordinary course of business; (i) any incurrence by
Holding or any of its Subsidiaries of any obligations or liabilities, whether
absolute, accrued, contingent or otherwise (including without limitation
liabilities as guarantor or otherwise with respect to obligations of others),
other than obligations and liabilities incurred in the ordinary course of
business with Persons other than any Affiliate of Holding or any of its
Subsidiaries; (j) any incurrence or imposition of any material Lien on any of
the assets, tangible or intangible, of Holding or any of its Subsidiaries; (k)
any discharge or satisfaction by Holding or any of its Subsidiaries of any
material Lien or
<PAGE>
-10-
payment by Holding or any of its Subsidiaries of any obligation or liability
(fixed or contingent) other than (i) current liabilities included in the Audited
Balance Sheet, and (ii) current liabilities to Persons other than any Affiliate
of Holding or any of its Subsidiaries incurred since the date of the Audited
Balance Sheet in the ordinary course of business; (l) any material change in the
credit practices of Holding or any of its Subsidiaries; (m) any employment
contract or collective bargaining agreement, whether written or oral, entered
into by Holding or any of its Subsidiaries or any material modification of the
terms of any existing such contract or agreement; or (n) a commitment, whether
oral or written, by or on behalf of Holding or any of its Subsidiaries to do any
of the matters described in clauses (a) through (m) of this Section 3.7.
3.8. TITLE TO PROPERTY, REAL PROPERTY LEASES, ETC.
(a) Personal Property. Except as set forth in Section 3.8 of the
-----------------
Disclosure Schedule, (i) Holding and each of its Subsidiaries has good and
marketable title to, or a valid leasehold interest in, the personal property and
assets it uses regularly in the conduct of its business (including, without
limitation, those reflected on the Audited Balance Sheet, except to the extent
such properties and assets have been disposed of since the date of such balance
sheet in the ordinary course of business), and none of such properties or assets
owned by Holding or any of its Subsidiaries is subject to any Liens other than
Permitted Liens, and (ii) all of the properties, plant and equipment which are
material to business of Holding and its Subsidiaries are, in all material
respects, in satisfactory condition (subject, in the case of tangible property,
to normal wear, tear and maintenance) and as such are, in the aggregate,
adequate to conduct the business of the Company as presently conducted. Section
3.8 of the Disclosure Schedule sets forth a complete list of all capital assets
owned by the Company having a net book value in excess of $100,000.
(b) Real Property. Section 3.8 of the Disclosure Schedule sets forth a
------------
legal description of each parcel of real property owned by Holding or any of its
Subsidiaries (including all improvements thereon, the "Owned Real Property") and
----- ---- --------
all real property leased by Holding or any of its Subsidiaries (including all
leased improvements thereon, the "Leased Real Property" and collectively with
------ ---- --------
the Owned Real Property, the "Real Property"). The Real Property constitutes
---- --------
all of the real property owned, leased, occupied or otherwise utilized in
connection with the business of Holding and its Subsidiaries (including, without
limitation, the Real Property reflected on the Audited Balance Sheet, except to
the extent such Real Property has been disposed of since the date of such
balance sheet in the ordinary course of business). Except as set forth in
Section 3.8 of the Disclosure Schedule, (i) Holding or its Subsidiary, as
applicable, has title to or a valid leasehold interest in the Real Property, and
none of the Real Property is subject to any Liens other than Permitted Liens,
(ii) other than Holding or its Subsidiaries, there are no parties in possession
or parties having any current or future right to occupy any of the Owned Real
Property, (iii) Holding or its Subsidiary, as applicable, is in quiet possession
of the Leased Real Property, and (iv) the Real Property is adequate to conduct
the business of Holding and its Subsidiaries as presently conducted. Except as
set forth in Section 3.8 of the Disclosure Schedule, Holding does not have
knowledge of (x) any proposed
<PAGE>
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condemnation, requisition or other taking of any of the Real Property by any
public authority or (y) any public improvements which may result in special
assessments against or otherwise affecting any of the Real Property.
(c) Leases. Section 3.8 of the Disclosure Schedule lists all lease and
------
other agreements affecting the rights or obligations of Holding or any of its
Subsidiaries with respect to the Leased Real Property and any personal property
and assets leased by Holding or any of its Subsidiaries, including without
limitation, any master lease agreements, equipment schedules, non-disturbance
and recognition agreements, subordination agreements, attornment agreements and
agreements regarding the term or renewal of any of the leases, and any
amendments and modifications thereof (the "Leases"). Except as set forth in
------
Section 3.8 of the Disclosure Schedule all of the material Leases are valid and
enforceable and in full force and effect, except to the extent that (i)
enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar laws now or thereafter in effect relating
to or limiting creditors' rights generally, (ii) the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court or other Person
before which any proceeding therefor may be brought, or (iii) the enforcement
thereof may be contrary to public policy. Except as set forth in Section 3.8 of
the Disclosure Schedule, neither Holding nor any of its Subsidiaries, and to the
knowledge of Holding, no other party, is in default in any material respect, or
in material breach, of its obligations under any of the Leases, and neither
Holding nor any of its Subsidiaries has either delivered or received any notice
of default under any such Lease, and, to Holding's knowledge, no event has
occurred which, with the giving of notice, the passage of time or that, would
constitute a default under any such Lease. Complete and correct copies of all
of the Leases have been delivered by Holding and its Subsidiaries to the
Investors or their respective counsel.
3.9. INDEBTEDNESS. Neither Holding nor any of its Subsidiaries has any
Indebtedness outstanding except as set forth in Section 3.9 of the Disclosure
Schedule. Neither Holding nor any of its Subsidiaries is in default with
respect to any outstanding Indebtedness or any agreement, instrument, or other
obligation relating thereto and no such Indebtedness or any agreement,
instrument, or other obligation relating thereto purports to limit the issuance
of any securities by Holding or any of its Subsidiaries or the operation of
their respective businesses. Complete and correct copies of all agreements,
instruments, and other obligations (including all amendments, supplements,
waivers, and consents) relating to any Indebtedness of Holding or any of its
Subsidiaries have been furnished to each of the Investors or their respective
counsel.
3.10. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent (a)
reflected or reserved against in the Audited Balance Sheet, (b) incurred with
Persons other than any Affiliate of Holding or any of its Subsidiaries in the
ordinary course of business after the date of the Audited Balance Sheet, (c)
incurred under contracts, leases and instruments either (i) set forth in the
Disclosure Schedule or (ii) entered into in the ordinary course of the business
of Holding and its Subsidiaries and otherwise not required to be disclosed in
<PAGE>
-12-
any section of the Disclosure Schedule (but not, in any such case, liabilities
for breaches thereof), or (d) not included under clauses (a) - (c) above and
aggregating not more than $50,000, neither Holding nor any of its Subsidiaries
has any liabilities or obligations of any nature, whether accrued, absolute,
contingent, or otherwise (including without limitation liabilities, as guarantor
or otherwise, in respect of obligations of others).
3.11. TAXES.
(A) BASIS, ETC. Set forth in Section 3.11(a) of the Disclosure Schedule
are the net operating loss, net capital loss, credit, minimum tax, charitable
contribution, and other Tax carryforwards (by type of carryforward and
expiration date, if any) of Holding and each of its Subsidiaries.
(B) ELECTIONS. All material elections with respect to Taxes (including
without limitation any elections under Sections 108(b)(5), 338(g), 565, 936(a),
or 936(e) of the Code or Treasury Regulation Sections 1.1502-20(g) or 1.1502-
32(f)(2) (as in effect before January 1, 1995)) affecting Holding or any of its
Subsidiaries and/or made by Holding or any of its Subsidiaries are described in
Section 3.11(b) of the Disclosure Schedule.
(C) FILING OF TAX RETURNS AND PAYMENT OF TAXES. Holding and each of its
Subsidiaries have timely filed all Tax Returns required to be filed by any of
them, each such Tax Return has been prepared in compliance with all applicable
laws and regulations, and all such Tax Returns are true and accurate in all
respects. All Taxes due and payable by Holding or any of its Subsidiaries have
been paid, and Holding and such Subsidiaries shall not be liable for any
additional Taxes in respect of any taxable period ending on or before the
Closing Date in an amount that exceeds the corresponding reserve therefor, if
any, reflected in the accounting records of Holding or the relevant Subsidiary
at that date. Holding has delivered to the Investors or their respective
counsel correct and complete copies of all Tax Returns filed by or with respect
to it or any of its Subsidiaries with respect to taxable periods ended on or
after December 31, 1994, and all relevant documents and information with respect
thereto, including without limitation work papers, records, examination reports,
statements of deficiencies assessed against or agreed to by Holding or any of
its Subsidiaries.
(D) AUDIT HISTORY. With respect to each taxable period of Holding or any
of its Subsidiaries ended on or before December 31, 1991, either such taxable
period has been audited by the relevant taxing authority or the time for
assessing or collecting Tax with respect to each such taxable period has closed
and such taxable period is not subject to review by any relevant taxing
authority.
(E) DEFICIENCIES. No deficiency or proposed adjustment in respect of
Taxes that has not been settled or otherwise resolved has been asserted,
assessed, or threatened in writing by any taxing authority against Holding or
any of its Subsidiaries.
<PAGE>
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(F) LIENS. There are no Liens for Taxes (other than current Taxes not yet
due and payable) on the assets of Holding or any of its Subsidiaries.
(G) EXTENSIONS OF STATUTES OF LIMITATIONS ON ASSESSMENT OR COLLECTION OF
TAXES. Neither Holding nor any of its Subsidiaries has consented to extend the
time in which any Tax may be assessed or collected by any taxing authority.
(H) EXTENSIONS OF THE TIME FOR FILING TAX RETURNS. Neither Holding nor any
of its Subsidiaries has requested or been granted an extension of the time for
filing any Tax Return to a date on or after the Closing Date.
(I) PENDING PROCEEDINGS. There is no action, suit, taxing authority
proceeding, or audit with respect to any Tax now in progress, pending, or to
Holding's knowledge, threatened, against or with respect to (i) Holding or any
of its Subsidiaries, or (ii) any Affiliated Group with respect to a taxable
period during which Holding or any of its Subsidiaries was a member of such
Affiliated Group.
(J) NO CLAIM OF FAILURE TO FILE TAX RETURNS. No claim has ever been made
by a taxing authority in a jurisdiction where Holding or any of its Subsidiaries
does not pay Tax or file Tax Returns that any such Person is or may be subject
to Taxes assessed by such jurisdiction.
(K) MEMBERSHIP IN AFFILIATED GROUPS, ETC. None of Holding or any of its
Subsidiaries has been a member of any Affiliated Group, or filed or been
included in a combined, consolidated, or unitary Tax Return, other than one of
which Holding was the parent.
(L) (INTENTIONALLY OMITTED)
(M) ADJUSTMENTS UNDER SECTION 481. Neither Holding nor any of its
Subsidiaries will be required, as a result of a change in method of accounting
for any period ending on or before the Closing Date, to include any adjustment
under Section 481(c) of the Code (or any similar or corresponding provision or
requirement under any Tax law) in taxable income for any period ending on or
after the Closing Date.
(N) TAX SHARING, ALLOCATION, OR INDEMNITY AGREEMENTS. Neither Holding nor
any of its Subsidiaries is a party to or bound by any Tax sharing or allocation
agreement or has any current or potential contractual obligation to indemnify
any other Person with respect to Taxes.
(O) WITHHOLDING TAXES. Holding and each of its Subsidiaries have withheld
and paid all Taxes required to have been withheld and paid by them in connection
with amounts paid or owing to any employee, creditor, independent contractor, or
other Person.
<PAGE>
-14-
(P) FOREIGN PERMANENT ESTABLISHMENTS AND BRANCHES. Neither Holding nor
any of its Subsidiaries has a "permanent establishment" in any foreign country,
as defined in the relevant tax treaty between the United States of America and
such foreign country, or otherwise operates or conducts business through any
branch in any foreign country.
(Q) U.S. REAL PROPERTY HOLDING CORPORATION. Neither Holding nor any of
its Subsidiaries has been a United States real property holding corporation
within the meaning of Code Section 897(c)(2), during the applicable period
specified in Code Section 897(c)(1)(A)(ii).
(R) SAFE HARBOR LEASE PROPERTY. None of the property owned or used by
Holding or any of its Subsidiaries is subject to a tax benefit transfer lease
executed in accordance with Section 168(f)(8) of the Internal Revenue Code of
1954, as amended by the Economic Recovery Tax Act of 1981.
(S) TAX-EXEMPT USE PROPERTY. None of the property owned by Holding or any
of its Subsidiaries is "tax-exempt use property" within the meaning of Section
168(h) of the Code.
(T) SECURITY FOR TAX-EXEMPT OBLIGATIONS. Except as set forth in Section
3.11(t) of the Disclosure Schedule, none of the assets of Holding or any of its
Subsidiaries directly or indirectly secures any indebtedness, the interest on
which is tax-exempt under Section 103(a) of the Code, and none of them is
directly or indirectly an obligor or a guarantor with respect to any such
indebtedness.
(U) SECTION 341(F) CONSENT. Neither Holding nor any of its Subsidiaries
has filed a consent under Code Section 341(f) concerning collapsible
corporations.
(V) PARACHUTE PAYMENTS. Neither Holding nor any of its Subsidiaries has
made any payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make any
payments, that will not be deductible under Code Sections 162(m) or 280G.
3.12. LITIGATION. Except as set forth in Section 3.12 of the Disclosure
Schedule, there is no litigation, arbitration, action, suit, proceeding, or
investigation (whether conducted by any judicial or regulatory body, arbitrator,
or other Person) is pending or, to the knowledge of Holding, threatened against
Holding or any of its Subsidiaries (nor is there any basis therefor known to
Holding) which, seeks damages in excess of $50,000 in any individual instance of
$100,000 in the aggregate, or which seek any form of equitable or injunctive
relief, including without limitation, seeking to prohibit, restrict or delay the
consummation of the transactions contemplated hereby. Except as set forth in
Section 3.12 of the Disclosure Schedule, neither Holding nor any of its
Subsidiaries nor any of their respective properties and assets are subject to
any judicial or administrative order, judgment or decree.
<PAGE>
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3.13. SAFETY AND ENVIRONMENTAL MATTERS.
(a) Except as set forth in Section 3.13 or Section 3.28 of the Disclosure
Schedule:
(i) Holding and each of its Subsidiaries and each real property
owned, leased, operated, or controlled by any of them currently or within
the last five years is now, and at all times within the last five years has
been, in material compliance with all Environmental and Safety Laws;
(ii) Holding and each of its Subsidiaries have obtained all
material permits, licenses, and authorizations required pursuant to all
applicable Environmental and Safety Laws with respect to their respective
properties and operations;
(iii) neither Holding nor any of its Subsidiaries has received any
notice from any third party asserting that any of them is or may be liable
under any Environmental and Safety Laws, including without limitation in
connection with any release or threatened release of any hazardous or
regulated substances or wastes;
(iv) Holding and its Subsidiaries have not, nor, to the knowledge
of Holding, have any of their predecessors or any other Person for which
Holding or any of its Subsidiaries may be obligated, disposed of or
released any hazardous or regulated substance in a manner that reasonably
could be expected to result in any Person incurring liability pursuant to
Environmental and Safety Laws;
(v) there is no contamination from any hazardous or regulated
substance, or any other environmental defect, at, on, upon, or under the
real property currently owned, leased, operated, or controlled by Holding
or any of its Subsidiaries, or to Holding's knowledge, any real property
formerly owned, leased, operated, or controlled by Holding or any of its
Subsidiaries, any of its predecessors or any other Person for which Holding
or any of its Subsidiaries may be obligated, that reasonably could be
expected to result in any Person incurring any cleanup costs (including,
without limitation, any cost of investigation, abatement, removal,
remediation, or corrective action);
(vi) to the knowledge of Holding, there currently exist no
conditions, circumstances, or events that reasonably could be expected to
result in Holding or any of its Subsidiaries, either now or with the
passage of time, incurring any material expenditure to comply with any
Environmental and Safety Law or any permit issued pursuant thereto; and
(vii) no environmental studies, reports, assessments, sampling
results, or audits with respect to real property owned, leased, operated or
controlled by
<PAGE>
-16-
Holding or any of its Subsidiaries have been conducted during the period of
its tenure at or operation or control of such property or, to Holding's
knowledge, during any other time.
(b) For purposes of this Agreement, "Environmental and Safety Laws" means
------------- --- ------ ----
all federal, state, local, and foreign statutes, regulations, ordinances, and
similar provisions having the force or effect of law, and all judicial and
administrative orders, judgments, decrees, and similar determinations,
concerning public health and safety, pollution, occupational health and safety,
and/or protection of the environment, including without limitation the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, and the Occupational
Safety and Health Act of 1970, as amended.
3.14. LABOR RELATIONS. Holding and each of its Subsidiaries are and have
been in compliance in all material respects with all federal and state laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and nondiscrimination in employment, and are not
and have not been engaged in or, to Holding's knowledge, alleged to have been
engaged in, any unfair labor practice, or any unlawful discrimination in
employment practices. There is no labor strike, dispute, concerted work slow-
down, or concerted work stoppage pending or, to Holding's knowledge, threatened
against or involving Holding or any of its Subsidiaries. No one has petitioned
within the last five years or is now petitioning for union representation of any
of the employees of Holding or any of its Subsidiaries. No grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is pending against Holding or any of its Subsidiaries and no claim
therefor has been asserted. Except for employees covered by the collective
bargaining agreements listed in Section 3.14 of the Disclosure Schedule, none of
the employees of Holding or any of its Subsidiaries is covered by any collective
bargaining agreement, and no collective bargaining agreement is currently being
negotiated by Holding or any of its Subsidiaries. Neither Holding nor any of
its Subsidiaries has experienced any concerted work stoppage or other material
labor difficulty during the last five years. Neither Holding nor any of its
Subsidiaries has implemented any plant closing or mass layoff of employees that
could implicate the Worker Adjustment Retraining and Notification Act of 1988,
as amended, or any similar state or local law or regulations.
3.15. CONTRACTS. Section 3.15 of the Disclosure Schedule sets forth a
complete and accurate list of all contracts to which Holding or any of its
Subsidiaries is a party or by or to which any of them or any of their respective
assets or properties is bound or subject and which, with respect to any single
contract or group of related contracts, call for or potentially could call for
payments to or from Holding or any of its Subsidiaries in excess of $50,000, or
which grant exclusive dealing arrangements or which in any manner, restrict the
Company's operation or business except (i) contracts (and related correspondence
and other documents) for the sale or purchase of goods and/or services by
<PAGE>
-17-
Holding and/or any of its Subsidiaries, entered into with customers or suppliers
in the ordinary course of business, (ii) contracts with Persons other than any
Affiliate of any of them, entered into in the ordinary course of business after
the date hereof and before the Closing, which will be identified to the
Investors or their respective counsel before the Closing in a disclosure
supplement pursuant to Section 5(e) hereof, and (iii) contracts terminable by
Holding and/or its Subsidiary party thereto, as the case may be, upon 60 days'
notice or less and without the payment of any termination fee or penalty. As
used in this Agreement, the word "contract" includes every agreement or
understanding of any kind, written or oral, that is legally enforceable by or
against or otherwise binding on Holding or any of its Subsidiaries, and
specifically includes: (a) contracts and other agreements with any current or
former officer, director, employee, consultant, or stockholder, or any
partnership, corporation, joint venture, or any other entity in which any such
Person has an interest; (b) contracts and other agreements with any labor union
or association representing any employee; (c) contracts and other agreements for
the provision of services by or to Holding or any of its Subsidiaries; (d) bonds
or other security agreements provided by any party in connection with the
business of Holding or any of its Subsidiaries; (e) contracts and other
agreements for the purchase or other acquisition or the sale or other
disposition of any of the assets or properties of Holding or any of its
Subsidiaries, in each case other than in the ordinary course of business, or for
the grant to any person of any preferential rights to purchase any of such
assets or properties; (f) joint venture agreements relating to the assets,
properties, or business of Holding or any of its Subsidiaries or by or to which
any of them or any of their respective assets or properties are bound or
subject; (g) contracts and other agreements under which Holding or any of its
Subsidiaries agrees to indemnify any party, to share tax liability of any party,
or to refrain from competing with any party; (h) contracts or other agreements
with regard to Indebtedness; or (i) any other contract or other agreement,
whether or not made in the ordinary course of business. All of the contracts
listed in Section 3.15 of the Disclosure Schedule are in full force and effect,
and neither Holding nor any of its Subsidiaries is in default in any material
respect under, or material breach of, any of them, nor to the knowledge of
Holding is any other party to any such contract in default in any material
respect thereunder or in material breach thereof; nor does any event or
condition exist that after notice or lapse of time or both could constitute a
default thereunder or a material breach thereof on the part of Holding or any of
its Subsidiaries, or to the knowledge of Holding, any other party thereto.
Except as disclosed in Section 3.15 of the Disclosure Schedule, no approval or
consent of any Person that has not already been obtained is needed in order that
the contracts listed in Section 3.15 of the Disclosure Schedule continue in full
force and effect following the consummation of the transactions contemplated by
this Agreement, and no such contract includes any provision, the effect of which
may be to terminate such contract or enlarge or accelerate any obligations of
Holding or any of its Subsidiaries thereunder or to give additional rights to
any other party thereunder upon consummation of the transactions contemplated by
this Agreement. Holding has delivered to each of the Investors or their
respective counsel true, correct, and complete copies of all contracts listed in
Section 3.15 of the Disclosure Schedule, together with copies of all
modifications and supplements thereto.
<PAGE>
-18-
3.16. EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in Section 3.16 of the Disclosure Schedule,
neither Holding nor any of its Subsidiaries now maintains or contributes to, or
has in the current or preceding six calendar years maintained or contributed to,
any pension, profit-sharing, deferred compensation, bonus, stock option, share
appreciation right, severance, group or individual health, dental, medical, life
insurance, survivor benefit, or similar plan, policy, or arrangement, whether
formal or informal, for the benefit of any director, officer, consultant or
employee, whether active or terminated, of Holding or any of its Subsidiaries.
Each of the arrangements set forth in Section 3.16 of the Disclosure Schedule is
hereinafter referred to as an "Employee Benefit Plan," except that any such
arrangement which is a multi-employer plan shall be treated as an Employee
Benefit Plan only for purposes of Sections 3.16(d)(iii), (iv) and (vi), 3.16(e)
and 3.16(g) below.
(b) Holding has delivered to each of the Investors or their respective
counsel true, correct, and complete copies of each Employee Benefit Plan, and
with respect to each such Plan (i) any associated trust, custodial, insurance,
or service agreements, (ii) any annual report, actuarial report, or disclosure
materials (including specifically any summary plan descriptions) submitted to
any governmental agency or distributed to participants or beneficiaries
thereunder in the current or any of the three preceding calendar years, and
(iii) the most recently received Internal Revenue Service ("IRS") determination
---
letters and any governmental advisory opinions or rulings.
(c) Each Employee Benefit Plan is and has heretofore been maintained and
operated in all material respects in compliance with the terms of such Plan and
with the requirements prescribed (whether as a matter of substantive law or as
necessary to secure favorable tax treatment) by any and all statutes,
governmental or court orders, and governmental rules or regulations in effect
from time to time, including but not limited to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the Internal Revenue Code of
-----
1986, as amended (the "Code") and applicable to such Plan. Each Employee
----
Benefit Plan that is intended to qualify under Section 401(a) of the Code has
been determined by the IRS to be so qualified, and to the knowledge of Holding,
nothing has occurred since the date of the last such determination that has
resulted or is likely to result in the revocation of such determination.
(d) (i) There is no pending, or to the knowledge of Holding,
threatened, legal action, proceeding, or investigation, other than routine
claims for benefits, concerning any Employee Benefit Plan, or, to the
knowledge of Holding, any fiduciary or service provider thereof, and, to
the knowledge of Holding, there is no basis for any such legal action,
proceeding, or investigation concerning any Employee Benefit Plan or any
such fiduciary or service provider.
(ii) No liability (contingent or otherwise) to the Pension Benefit
Guaranty Corporation ("PBGC") has been incurred by Holding or any of its
----
Subsidiaries or
<PAGE>
-19-
any of their respective Affiliates (other than insurance premiums satisfied in
due course). No Employee Benefit Plan is a plan subject to Title IV of ERISA.
(iii) No Employee Benefit Plan other than a multiemployer plan nor
any party in interest with respect thereof, nor to the knowledge of
Holding, no Employee Benefit Plan that is a multiemployer plan nor any
party in interest with respect thereof, has engaged in a prohibited
transaction that could subject Holding or any of its Subsidiaries directly
or indirectly to liability under Section 409 or 502(i) of ERISA or Section
4975 of the Code.
(iv) No Employee Benefit Plan provides welfare benefits subsequent
to termination of employment to employees or their beneficiaries (except to
the extent required by applicable state insurance laws and Title I, Part 6
of ERISA).
(v) No benefits due under any Employee Benefit Plan have been
forfeited subject to the possibility of reinstatement (which possibility
would still exist at or after Closing).
(vi) Neither Holding nor any of its Subsidiaries has contracted or
otherwise agreed to maintain or contribute to any Employee Benefit Plan for
any definite future period of time and each such Plan is terminable at the
sole discretion of the sponsor thereof, subject only to such constraints as
may be imposed by applicable law or any currently applicable collective
bargaining agreement.
(e) With respect to each Employee Benefit Plan for which a separate fund
of assets is or is required to be maintained, full payment has been made of all
amounts that Holding or any of its Subsidiaries is required, under the terms of
each such Plan, to have paid as contributions to that Plan, either as of the end
of the most recently ended plan year of that Plan or on all such amounts
required to be paid through the Closing. No Employee Benefit Plan is subject to
Section 302 of ERISA or Section 412 of the Code.
(f) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment (whether of
severance pay or otherwise) becoming due from any Employee Benefit Plan to any
current or former director, officer, consultant, or employee of Holding or any
of its Subsidiaries or result in the vesting, acceleration of payment, or
increases in the amount of any benefit payable to or in respect of any such
current or former director, officer, consultant, or employee.
(g) Neither Holding nor any of its Subsidiaries nor any of their
respective affiliates (i) has incurred any liability to a multi-employer plan,
contingent or otherwise, that has not been previously satisfied, on account of a
discontinuance or reduction in contributions thereto (including without
limitation a withdrawal or partial withdrawal within the meaning of Title IV of
ERISA), (ii) has experienced any event that, within the following twelve months,
will result in a withdrawal or partial withdrawal as so defined, or (iii) has
incurred a reduction in contributions such that if the current rate of
<PAGE>
-20-
contributions continues, a seventy percent (70%) decline in contributions (as
defined in Section 4205 of ERISA) will occur within the next three plan years.
Neither Holding nor any of its Subsidiaries nor any of their respective
affiliates has received notice with respect to any multi-employer plan of (i)
any failure by such plan to satisfy the minimum funding requirements of Section
412 of the Code, (ii) any application for or receipt of a waiver of such minimum
funding requirements with respect to such plan, or (iii) such plan's insolvency
or entry into reorganization status within the meaning of Section 4241 of ERISA.
Holding has previously provided to each of the Investors or their respective
counsel copies of all documents and other information received by Holding or any
of its Subsidiaries from any multi-employer plan (or any of its agents) to which
Holding or a Subsidiary contributes pertaining to Holding's or any of its
Subsidiaries' obligations under such plan, including any materials pertaining to
the computation of any liability that may be imposed upon a cessation of or
reduction in contributions thereto.
(h) For purposes of this Section 3.16, "multi-employer plan," "party in
interest," "current value," "accrued benefit," "reportable event," and "benefit
liability" have the same meaning assigned such terms under Sections 3, 4043(b)
or 4001(a) of ERISA, and "affiliate" means any entity that under Section 414 of
the Code is treated as a single employer with Holding or any of its
Subsidiaries.
3.17. POTENTIAL CONFLICTS OF INTEREST.
(a) No officer, director or stockholder of Holding or any of its
Subsidiaries (i) owns, directly or indirectly, any interest (excepting not more
than 1% stock holdings for investment purposes in securities of publicly held
and traded companies) in, or is an officer, director, employee, or consultant
of, any Person that is a competitor, lessor, lessee, customer, or supplier of
Holding or any of its Subsidiaries; (ii) owns, directly or indirectly, in whole
or in part, any tangible or intangible property that Holding or any of its
Subsidiaries is using or the use of which is necessary for the business of
Holding or any of its Subsidiaries; or (iii) has any cause of action or other
claim whatsoever against, or owes any amount to, Holding or any of its
Subsidiaries, except for claims in the ordinary course of business, such as for
accrued vacation pay, accrued benefits under Employee Benefit Plans, and similar
matters and agreements.
(b) To the knowledge of Holding, no officer, director, employee, or
consultant of Holding or any of its Subsidiaries is presently obligated under or
bound by any agreement or instrument, or any judgment, decree, or order of any
court of administrative agency, that (i) conflicts or may conflict with his or
her agreements and obligations to use his or her best efforts to promote the
interests of Holding or any of its Subsidiaries, (ii) conflicts or may conflict
with the business or operations of Holding or any of its Subsidiaries as
presently conducted or as proposed to be conducted in the short term, or (iii)
restricts or may restrict the use or disclosure of any information that may be
useful to Holding or any of its Subsidiaries.
3.18. INTELLECTUAL PROPERTIES.
<PAGE>
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(a) Section 3.18 of the Disclosure Schedule lists all patents, patent
applications, trademarks, trade names, service marks, logos, copyrights,
technology, know-how, trade secrets, processes, formulas, techniques, and
licenses (other than for off-the-shelf software programs that have not been
customized for Holding's or any of its Subsidiaries' use) used in the business
of Holding or any of its Subsidiaries as now being conducted (collectively, the
"Intellectual Properties"). Holding (or, if so indicated in Section 3.18 of the
-----------------------
Disclosure Schedule, one of its Subsidiaries) owns, or is licensed or otherwise
has the full and unrestricted exclusive right to use throughout the world,
without the payment of royalties or other further consideration except as
indicated in Section 3.18 of the Disclosure Schedule, all of the Intellectual
Properties. No intellectual property rights, privileges, licenses, contracts or
other agreements, instruments or evidences of interest, other than (i) the
Intellectual Properties, and (ii) off-the-shelf software programs that have not
been customized for Holding's or any of its Subsidiaries' use, are necessary to
or used in the conduct of the business of Holding and its Subsidiaries as now
being conducted. All of the patents, trademarks and copyrights owned by Holding
or any of its Subsidiaries have been duly registered in, filed in or issued by
the United States Patent and Trademark Office or Register of Copyrights or the
corresponding offices of other countries as identified in Section 3.18 of the
Disclosure Schedule, and have been properly maintained and renewed, consistent
with commercially reasonable business practices, in accordance with all
applicable provisions of law and administrative regulations in the United States
and each such country.
(b) In any instance where Holding's rights to Intellectual Properties, or
such rights of any of its Subsidiaries, arise under a license or similar
agreement (other than for off-the-shelf software programs that have not been
customized for Holding's or such Subsidiary's use), this is indicated in Section
3.18 of the Disclosure Schedule, and to the knowledge of Holding, such rights
are licensed exclusively to Holding or the indicated Subsidiary except as
indicated in Section 3.18 of the Disclosure Schedule. To Holding's knowledge,
no other Person has an interest in or right or license to use any of the
Intellectual Properties. To Holding's knowledge, none of the Intellectual
Properties is being infringed by others, or is subject to any outstanding order,
decree, judgment, or stipulation. No litigation (or other proceedings in or
before any court or other governmental, adjudicatory, arbitral, or
administrative body) relating to the Intellectual Properties (other than any
Intellectual Properties licensed by Holding or any of its Subsidiaries as
licensee), or, to Holding's knowledge, relating to any Intellectual Properties
licensed by Holding or any of its Subsidiaries as licensee, is pending, or to
Holding's knowledge, threatened, nor, to Holding's knowledge, is there any basis
for any such litigation or proceeding. Each of Holding and its Subsidiaries
maintains reasonable security measures for the preservation of the secrecy and
proprietary nature of such of its Intellectual Properties as constitute trade
secrets or other confidential information.
(c) (i) Neither Holding nor any of its Subsidiaries, nor to the knowledge
of Holding, any of the employees of or consultants to Holding or any of its
Subsidiaries, has infringed or made unlawful use of, or is infringing or making
unlawful use of, any
<PAGE>
-22-
proprietary or confidential information of any Person, including without
limitation any former employer of any past or present employee of or consultant
to Holding or any of its Subsidiaries; and (ii) the activities of the employees
of or consultants to Holding and its Subsidiaries in connection with their
employment do not violate any agreements or arrangements that any such employees
or consultants have with any former employer or any other Person. Except as
described in Section 3.18 of the Disclosure Schedule, no litigation (or other
proceedings in or before any court or other governmental, adjudicatory,
arbitral, or administrative body) charging Holding or any of its Subsidiaries
with infringement or unlawful use of any license, patent, trademark, service
mark, trade name, logo, copyright, trade secret, or other proprietary right is
pending, or to the knowledge of Holding, threatened; nor, to the knowledge of
Holding, is there any basis for any such litigation or proceeding.
3.19. ACCOUNTS RECEIVABLE. All accounts and notes receivable reflected on
the Audited Balance Sheet, and all accounts and notes receivable arising
subsequent to the date of such Audited Balance Sheet, have arisen in the
ordinary course of business, represent valid obligations to Holding or its
Subsidiaries, and have been collected or are collectible in the aggregate
recorded amounts thereof in accordance with their terms net of (i) the reserve
for uncollected accounts set forth in the accounting records of Holding or its
Subsidiaries, as the case may be, and (ii) the proceeds of credit insurance with
respect thereto payable to Holding or any of its Subsidiaries.
3.20. INSURANCE. Section 3.20 of the Disclosure Schedule lists the
policies of theft, fire, liability, workmen's compensation, life, property and
casualty, and other insurance owned or held by Holding or any of its
Subsidiaries. Such policies of insurance are maintained with financially sound
and reputable insurance companies, funds, or underwriters, and are of the kinds,
cover such risks, and are in such amounts and with such deductibles and
exclusions, as are consistent with prudent business practice. All such policies
are in full force and effect; are sufficient for compliance by Holding and its
Subsidiaries with all requirements of law and of all agreements to which Holding
or any of its Subsidiaries is a party; are valid, outstanding, and (subject to
the qualifications set forth in Section 3.2(i) and (ii)) enforceable policies
and provide that they will remain in full force and effect through the
respective dates set forth in Section 3.20 of the Disclosure Schedule; and will
not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Holding and its Subsidiaries have
delivered to the Investors or their respective counsel complete and correct
copies of all such policies with all riders and amendments thereto.
3.21. BANK ACCOUNTS, SIGNING AUTHORITY, POWERS OF ATTORNEY. Section 3.21
of the Disclosure Schedule sets forth a complete and accurate list of all bank,
brokerage, and other accounts, and all safe-deposit boxes, of Holding and its
Subsidiaries and the Persons with signing or other authority to act with respect
thereto. Except as so listed, neither Holding nor any of its Subsidiaries has
any account or safe deposit box in any bank, and no Person has any power,
whether singly or jointly, to sign any checks on behalf of Holding or any of its
Subsidiaries, to withdraw any money or other property from any
<PAGE>
-23-
bank, brokerage, or other account of Holding or any of its Subsidiaries, or to
act under any agency or power of attorney granted by Holding or any of its
Subsidiaries at any time for any purpose. Section 3.21 of the Disclosure
Schedule also sets forth the names of all persons authorized to borrow money or
sign notes on behalf of Holding or any of its Subsidiaries.
3.22. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS, NON-CONTRAVENTION, ETC.
Except for (i) the filing of the Charter Amendment with the Secretary of State
of the State of Delaware, and (ii) the filing of the notifications required on
the part of Holding and AGI under the Hart-Scott-Rodino Antitrust Improvement
Act of 1976, as amended, and the rules and regulations promulgated thereunder
(the "HSR Act"), and any further information required in connection therewith
--- ---
(as referred to in Section 12.1 below), no consent, approval, or authorization
of or registration, designation, declaration, or filing with any governmental
authority, federal or other, or any other Person, on the part of Holding, is
required in connection with the execution, delivery, and performance of this
Agreement by Holding or the consummation by Holding of the transactions
contemplated hereby. The execution, delivery, and performance of this Agreement
and the Other Agreements executed and delivered or to be executed and delivered
by Holding and/or any of its Subsidiaries as contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby, will not
violate (a) any provision of the charter or by-laws of Holding or any of its
Subsidiaries, (b) any order, judgment, injunction, award or decree of any court
or state or federal governmental or regulatory body applicable to Holding or any
of its Subsidiaries, or (c) any judgment, decree, order, statute, rule,
regulation, agreement, instrument, or other obligation to which Holding or any
of its Subsidiaries is a party or by or to which any of them or any of their
respective assets is bound or subject.
3.23. INVENTORY. The inventory and supplies of Holding and its
Subsidiaries are adequate for their present needs, and are, in all material
respects, in usable or saleable condition in the ordinary course of business,
subject only to such reserves for obsolescence, if any, as are reflected in
their respective accounting records.
3.24. SUPPLIERS AND CUSTOMERS. Section 3.24 of the Disclosure Schedule
lists the five largest suppliers and ten largest customers of Holding and its
Subsidiaries during the twelve months ended on the date of the Audited Balance
Sheet. The relationships of Holding and such Subsidiaries with their respective
suppliers and customers are good commercial working relationships, and no
supplier or customer of material importance to Holding and its Subsidiaries,
taken as a whole, has canceled or otherwise terminated, or threatened in writing
to cancel or terminate, its relationship with Holding or such Subsidiary or has
during the last 12 months decreased materially, or threatened to decrease or
limit materially, its services, supplies, or materials to Holding or such
Subsidiary or its usage or purchase of the services or products of Holding or
such Subsidiary, except for normal cyclical changes related to customers'
businesses. To Holding's knowledge, no such supplier or customer intends to
cancel or otherwise substantially modify its relationship with Holding or any of
such Subsidiaries, or to decrease materially or limit its
<PAGE>
-24-
services, supplies or materials to them, or its usage or purchase of their
services or products, and the consummation of the transactions contemplated
hereby will not, to the knowledge of Holding, adversely affect the relationship
of Holding or any of such Subsidiaries with any such supplier or customer.
3.25. EMPLOYMENT OF OFFICERS, EMPLOYEES. Section 3.25 of the Disclosure
Schedule lists the name and total annual compensation payable by Holding or any
of its Subsidiaries for the calendar year ended December 31, 1997 to each exempt
non-hourly employee (a) whose base salary for the calendar year ended December
31, 1997, or current annual base salary, is $200,000 or more, or (b) who
received bonuses for the calendar year ended December 31, 1997, of $50,000 or
more.
3.26. MINUTE BOOKS. The copies of the minute books of Holding and its
Subsidiaries made available to the Investors or their respective counsel for
inspection accurately record therein all material actions taken by their
respective Boards of Directors and stockholders.
3.27. BROKERS. No finder, broker, agent, or other intermediary has acted
for or on behalf of Holding or any of its Subsidiaries in connection with the
negotiation, preparation, execution, or delivery of this Agreement or the
consummation of the transactions contemplated hereby.
3.28. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Except with respect
to the matters that are the subject of the specific representations and
warranties set forth in Section 3.13 hereof ("Safety and Environmental
Matters"), Holding and each of its Subsidiaries has complied with, and is in
compliance with, (a) all laws, statutes, governmental regulations and all
judicial or administrative tribunal orders, judgments, writs, injunctions,
decrees or similar commands applicable to its business, (b) all unwaived terms
and provisions of all contracts, agreements and indentures to which Holding or
any such Subsidiary is a party, or by which Holding, such Subsidiary, or any of
their respective properties is subject, and (c) its charter and by-laws,
respectively, each as amended to date; in the case of the preceding clauses (a)
and (b), excepting only any such noncompliances that, both individually and in
the aggregate, have not resulted and will not result in Material Adverse Effect.
Neither Holding nor any of its Subsidiaries has been charged with, or to the
knowledge of Holding, been under investigation with respect to, any violation by
Holding or any of its Subsidiaries of any provision of any federal, state, or
local law or administrative regulation. Holding and its Subsidiaries have and
maintain, and Section 3.28 of the Disclosure Schedule sets forth a complete and
correct list of, all such licenses, permits, and other authorizations of
governmental authorities as are necessary for the conduct of their respective
businesses or in connection with the ownership or use of their respective
properties, all of which are in full force and effect, and true and complete
copies of all of which have previously been delivered to each of the Investors
or their respective counsel. Holding does not have knowledge of any fact which
would make it reasonably likely that the Company would be unable to obtain the
renewal of any such license, permit or other authorization.
<PAGE>
-25-
3.29. ASSETS AND PROPERTIES COMPLETE. The assets and properties of
Holding and each of its Subsidiaries are and as of the Closing Date shall be in
all material respects adequate and sufficient to conduct the business of Holding
or the relevant Subsidiary as currently conducted.
3.30. DISCLOSURE. No representation or warranty of Holding in this
Agreement (including the exhibits and schedules hereto), or any of the Other
Agreements to be executed and delivered by any of them as contemplated hereby
contains or shall contain any untrue statement of a material fact or omits or
shall omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not false or misleading. There is no
fact that Holding has not disclosed to the Investors or their respective counsel
in writing that has or is reasonably likely to have a Material Adverse Effect,
or materially adversely affects the ability of Holding or any of its
Subsidiaries to perform their respective obligations under this Agreement and
the Other Agreements, or to consummate any of the transactions contemplated
hereby or thereby.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
In order to induce Holding to enter into this Agreement and to issue and
sell its securities as contemplated hereby, each of the Investors severally
represents and warrants to Holding, as of the date hereof and as of the Closing
Date, as follows:
4.1. AUTHORIZATION AND ENFORCEABILITY. Such Investor has all requisite
power and full legal right and authority (including, in the case of Heritage,
due approval of its Board of Directors) to enter into this Agreement, to perform
all of his or its agreements and obligations hereunder, and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by such Investor and constitutes his or its legal, valid, and binding
obligation, enforceable against him or it, as the case may be, in accordance
with its terms, except to the extent that (a) enforcement may be limited by or
subject to any bankruptcy, insolvency, reorganization, moratorium, or similar
laws now or hereafter in effect relating to or limiting creditors' rights
generally, and (b) the remedy of specific performance and injunctive and other
forms of equitable relief are subject to certain equitable defenses and to the
discretion of the court or other similar Person before which any proceeding
therefor may be brought.
4.2. INVESTMENT REPRESENTATIONS.
(a) Such Investor represents that the securities to be acquired by him
or it as contemplated hereby shall be acquired for his or its own account, for
investment, and not with a view to the distribution thereof. Such Investor
understands that such securities have not been registered under the Securities
Act of 1933, as amended (the "Act"), on the ground that the offer and sale of
---
such securities to him or it are exempt from the registration requirements of
the Act under Section 4(2) thereof as a transaction not involving any public
offering of such securities. Such Investor understands that Holding's
<PAGE>
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reliance on such exemption is predicated in part on the representations of such
Investor contained herein.
(b) Such Investor understands that he or it must bear the economic risk of
his investment in the securities to be acquired by him or it hereunder for an
indefinite period of time because such securities have not been registered under
the Act, and therefore cannot be sold unless they are subsequently registered
under the Act or an exemption from such registration is available. Such
Investor agrees that he or it shall not offer to sell or otherwise transfer any
of such securities except after Holding has received an opinion of counsel,
reasonably acceptable to Holding in form and substance, that such offer, sale,
and/or transfer is not in violation of the registration requirements of the Act
or other applicable law.
(c) Such Investor acknowledges and agrees that each certificate
representing the securities acquired by him or it hereunder shall bear a
restrictive legend substantially in the following form:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended. No transfer, sale, or other
disposition of these securities may be made unless a registration statement
with respect to these shares has become effective under said act, or the
issuer has been furnished with an opinion of counsel, satisfactory to the
issuer in form and substance, that such registration is not required."
(d) Such Investor acknowledges and agrees that Holding shall make a
notation regarding the restrictions on transfer of the securities acquired by
such Investor hereunder in the stock books of Holding, and any purported
transfer of such securities shall be reflected in the stock books of Holding
only if and when transferred in compliance with all of the terms and conditions
of this Agreement.
(e) Such Investor acknowledges and agrees that, before the issuance of any
securities to him or it pursuant to this Agreement, he or it shall execute and
deliver the Stockholder Agreement, pursuant to which the securities to be issued
to such Investor pursuant to this Agreement shall be subject to the restrictions
set forth therein, including without limitation certain restriction on the
voting and transfer of such securities.
4.3. TITLE TO CONTRIBUTED SECURITIES. Such Investor has, and as of the
Closing will have, sole record ownership of all of the securities of Holding or
AGI, as the case may be, to be contributed to Holding hereunder pursuant to
Section 1 hereof, free and clear of any Liens, other than (a) any restrictions
on transfer arising under applicable securities laws solely by reason of the
fact that such shares were issued pursuant to exemptions from registration under
such securities laws, (b) in the case of any shares of AGI Stock contributed by
Richard Block pursuant to Section 1(c) hereof, the Maranov Option as defined and
more fully described in Section 3.3(b) of the Merger Agreement, (c) in the case
of the shares of AGI Stock contributed pursuant to Section 1(c) hereof,
<PAGE>
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restrictions pursuant to the Existing Shareholders Agreement of AGI, as defined
and more fully described in Section 3.3(b) of the Merger Agreement, and (d) in
the case of the shares of Old Preferred Stock, Old Voting Common Stock and Old
Non-Voting Common Stock, and the Old Warrant, contributed pursuant to Section
1(a) and 1(b) hereof, restrictions pursuant to the Existing Stockholders'
Agreement of Holding, provided that all of the Liens referred to in clauses (b)
- - (d) shall be terminated as of the Closing Date.
4.4. GOVERNMENTAL CONSENTS. Except as set forth in Section 4.4 of the
Disclosure Schedule, no consent, approval or authorization of, or registration,
qualification or filing with, any governmental agency or authority is required
for the execution and delivery by such Investor of this Agreement, or for the
consummation by such Investor of the transactions contemplated hereby.
5. CONDITIONS TO THE PARTIES' OBLIGATIONS.
(A) CONDITIONS TO OBLIGATIONS OF HERITAGE. The obligations of Heritage to
consummate the transactions contemplated hereby are subject to the satisfaction
(to the extent not specifically waived in writing by Heritage) on or before the
Closing Date, of:
(i) each of the conditions precedent set forth in Section 6 of the
Merger Agreement, other than the completion of the Closing hereunder (except to
the extent such conditions shall have been waived in accordance with the
provisions of the Merger Agreement), and the additional condition precedent
that, subject to the foregoing, the Merger Agreement is in full force and
effect;
(ii) the condition precedent that each of the Investors other than
Heritage shall have performed and complied with all of their respective
obligations under this Agreement to be performed or complied with by each of
them before or at the Closing; and
(iii) the condition precedent that each of the transactions described
in Section 2.2 above to be performed at the Closing, other than those to be
performed by Heritage, shall have been performed.
(B) CONDITIONS TO OBLIGATIONS OF KLEARFOLD MANAGEMENT INVESTORS. The
obligations of Klearfold Management Investors to consummate the transactions
contemplated hereby are subject to the satisfaction (to the extent not
specifically waived in writing by Klearfold Management Investors) on or before
the Closing Date, of:
(i) each of the conditions precedent set forth in Section 6 of the
Merger Agreement, other than the completion of the Closing hereunder (except to
the extent such conditions shall have been waived in accordance with the
provisions of the Merger Agreement), and the additional condition that, subject
to the foregoing, the Merger Agreement is in full force and effect;
<PAGE>
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(ii) the condition precedent that each of the Investors other than
the Klearfold Management Investors shall have performed and complied with all of
their respective obligations under this Agreement to be performed or complied
with by each of them before or at the Closing; and
(iii) the condition precedent that each of the transactions described
in Section 2.2 above to be performed at the Closing, other than those to be
performed by the Klearfold Management Investors, shall have been performed.
(C) CONDITIONS TO OBLIGATIONS OF AGI INVESTORS. The obligations of each of
the AGI Investors to consummate the transactions contemplated hereby are subject
to the satisfaction (to the extent not specifically waived in writing by such
AGI Investor), on or before the Closing Date, of:
(i) each of the conditions precedent set forth in Section 7 of the
Merger Agreement, other than the completion of the Closing hereunder (except to
the extent such conditions shall have been waived in accordance with the
provisions of the Merger Agreement), and the additional condition that, subject
to the foregoing, the Merger Agreement is in full force and effect;
(ii) the conditions precedent that each of the representations and
warranties of Holding set forth in this Agreement shall have been true and
correct when made and shall be true and correct at and as of the Closing, and
that Holding and each of the Investors other than the AGI Investors shall have
performed and complied with all of their respective obligations under this
Agreement to be performed or complied with by each of them before or at the
Closing; and
(iii) the condition precedent that each of the transactions described
in Section 2.2 above to be performed at the Closing, other than those to be
performed by the AGI Investors, shall have been performed.
(D) CONDITIONS TO OBLIGATIONS OF HOLDING. The obligations of Holding to
consummate the transactions contemplated hereby are subject to the satisfaction
(to the extent not specifically waived in writing by Holding), on or before the
Closing Date, of the condition precedent that each of the representations and
warranties of each of the Investors set forth in this Agreement shall have been
true and correct when made and shall be true and correct at and as of the
Closing; and that each of the Investors shall have performed and complied with
all of its obligations under this Agreement to be performed or complied with by
him or it before or at the Closing, including without limitation such Investor's
execution and delivery of the Stockholder Agreement.
(E) DISCLOSURE SUPPLEMENTS. From time to time before the Closing, and in
any event immediately before the Closing, Holding shall promptly advise each of
the Investors or their respective counsel in writing of any matter hereafter
arising or becoming known to Holding that, if existing, occurring, or known at
the date of this Agreement, would have
<PAGE>
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been required to be set forth or described in the Disclosure Schedule hereto, or
that is necessary to correct any information in such Disclosure Schedule that is
or has become inaccurate. No such disclosure shall be taken into account in
determining whether the conditions to any of the Investor's obligations to
consummate the transactions contemplated by this Agreement have been satisfied,
but such disclosures shall be taken into account in determining whether Holding
or any of its Subsidiaries are liable to the AGI Investors or any of them
pursuant to Section 8.1 hereof.
6. COVENANTS OF HOLDING.
6.1. CONDUCT OF BUSINESS PENDING CLOSING. Holding covenants that, from
and after the date of this Agreement and until the Closing, except as otherwise
specifically contemplated by this Agreement (including without limitation the
attached Disclosure Schedule) or otherwise specifically consented to or approved
in writing by the holders of a majority of the shares of AGI Stock to be
contributed to Holding hereunder:
(A) STOCKHOLDER APPROVAL. As promptly as practicable, Holding shall either
circulate a written consent to or call and hold a special meeting of its
stockholders for the purpose of approving the Charter Amendment. Heritage and
the Klearfold Management Investors shall vote (or cause to be voted) all shares
of each class of the capital stock of Holding directly or indirectly owned by
them in favor of such approval.
(B) FULL ACCESS. Holding shall afford to the AGI Investors and their
authorized representatives full access during normal business hours to all
properties, books, records, contracts and documents of Holding and its
Subsidiaries and a full opportunity to make such investigations as they shall
desire to make of Holding and its Subsidiaries, and Holding shall furnish or
cause to be furnished to the AGI Investors and their authorized representatives
all such information with respect to the affairs and businesses of Holding and
its Subsidiaries as the AGI Investors or their counsel may reasonably request.
(C) CARRY ON IN REGULAR COURSE. Holding and its Subsidiaries shall
maintain their owned and leased properties in good operating condition and
repair, shall make all necessary renewals, additions, and replacements thereto,
shall carry on their business diligently and substantially in the same manner as
heretofore, and shall not make or institute any new, unusual, or novel methods
of manufacture, purchase, sale, lease, management, accounting, or operation
(including, without limitation, the extension of the time for payment of
Holding's and its Subsidiaries' payables or rebates) or take or permit to occur
or exist any action or circumstance referred to in Section 3.7 hereof, other
than (i) the repayment of Indebtedness of Holding and the Subsidiaries either in
the ordinary course of business from cash generated by operations or in
connection with obtaining the financing referred to in Sections 6.7 and 7.5 of
the Merger Agreement and (ii) the adoption of the name "IMPAC Group, Inc."
pursuant to the Charter Amendment, and any preparations therefor.
<PAGE>
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(D) NO DIVIDENDS, ISSUANCES, REPURCHASES, ETC. Holding shall not declare,
set aside, or pay any dividends (whether in cash, shares of stock, other
property, or otherwise) on, or make any other distribution in respect of, any
shares of its capital stock, or issue, purchase, redeem, or otherwise acquire
for value any shares of its capital stock (other than pursuant to this
Agreement), or the capital stock of any of its Subsidiaries.
(E) NO GENERAL INCREASES. Neither Holding nor any of its Subsidiaries
shall grant any general or uniform increase in the rates of pay of its
employees, or grant any general or uniform increase in the benefits under any
bonus or pension plan or other contract or commitment, or increase the
compensation payable or to become payable to officers, directors, key employees,
or agents, or increase any bonus, insurance, pension, or other benefit plan,
payment, or arrangement made to, for, or with any such officers, directors, key
employees, or agents, other than increases occurring in the ordinary course of
business consistent with Holding's and its Subsidiaries' past practices or
required by law.
(F) CONTRACTS AND COMMITMENTS. Neither Holding nor any of its Subsidiaries
shall enter into any contract or commitment or engage in any transaction with
any Affiliate of any of them other than in the usual and ordinary course of
business and consistent with its normal business practices.
(G) PURCHASE AND SALE OF CAPITAL ASSETS. Neither Holding nor any of its
Subsidiaries shall purchase, lease as lessee, license as licensee, or otherwise
acquire any interest in, or sell, lease as lessor, license as licensee, or
otherwise dispose of any interest in, any capital asset(s) (i) other than in the
ordinary course of business, or (ii) having a market value in excess of $10,000
in any instance, or in excess of $50,000 in the aggregate.
(H) INSURANCE. Holding and its Subsidiaries shall maintain with
financially sound and reputable insurance companies, funds or underwriters
adequate insurance (including without limitation the insurance referred to on
Section 3.20 of the Disclosure Schedule) of the kinds, covering such risks, in
such amounts, and with such deductibles and exclusions, as are consistent with
prudent business practice.
(I) PRESERVATION OF ORGANIZATION. Holding and its Subsidiaries shall use
their best efforts to preserve their business organizations intact, to keep
available for the benefit of the Investors their present key officers and
employees, and to preserve for the benefit of the Investors the present business
relationships with their suppliers and customers and others having business
relationships with them.
(J) NO DEFAULT. Holding and of its Subsidiaries shall use commercially
reasonable efforts to avoid a default in any material respect under, or a
material breach of any contract, commitment, or obligation of Holding or any of
its Subsidiaries.
<PAGE>
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(K) COMPLIANCE WITH LAWS. Holding and each of its Subsidiaries shall
comply in all material respects with all applicable laws, regulations, and
orders.
(L) ADVICE OF CHANGE. Holding shall promptly advise the AGI Investors in
writing, in accordance with Section 12.5 hereof, of any change resulting in, or
reasonably likely to result in, a Material Adverse Effect.
(M) CONSENTS OF THIRD PARTIES. Holding and its Subsidiaries shall use
their respective commercially reasonable efforts to secure, as soon as possible
but in any event on or before the Closing Date, the consent, in form and
substance satisfactory to the AGI Investors and their counsel, to the
consummation of the transactions contemplated by this Agreement by each Person
whose consent or approval thereof may be necessary to permit such consummation,
including without limitation each party to any contract, commitment, or
obligation of Holding or any of its Subsidiaries under which such transactions
would constitute a default in any material respect or a material breach, would
accelerate obligations of Holding or any of its Subsidiaries, or would permit
cancellation of any such contract by a Person other than Holding and its
Subsidiaries.
(N) NO SHOPPING. Neither Holding, nor any of its Subsidiaries, nor
Heritage, nor any of the Klearfold Management Investors shall negotiate for,
solicit, discuss, negotiate, or enter into any agreement or understanding,
whether or not binding, with respect to the issuance, sale, or transfer of any
of the capital stock or substantial part of the assets of Holding or any of its
Subsidiaries (other than sales of inventory in the ordinary course of business)
or any merger or other business combination of Holding or any of its
Subsidiaries, to or with any Person other than (i) pursuant to the Merger
Agreement, or (ii) in connection with a possible transaction with Sancoa
previously disclosed to the Investors.
6.2. CONTINUING COVENANTS. Holding covenants that, unless otherwise
specified in the Stockholder Agreement, or except as may be otherwise
specifically agreed to in writing by the holders of at least a majority of the
outstanding shares of Series A Common Stock, Holding shall comply and shall
cause any Subsidiaries it may have from time to time (including without
limitation Klearfold and AGI) to comply with the following provisions:
(A) RECORDS AND ACCOUNTS. Holding and each of its Subsidiaries shall keep
true and accurate records and books of account in which full, true, and correct
entries shall be made in accordance with generally accepted accounting
principles, and maintain adequate accounts and reserves for all Taxes (including
income Taxes), all depreciation, depletion, obsolescence, and amortization of
its properties, all contingencies, and all other reserves.
(B) CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. Holding and each of
its Subsidiaries shall preserve and keep in full force and effect their
respective corporate existences, rights, and franchises. Holding and each of
its Subsidiaries shall maintain all of their respective properties used or
useful in the conduct of their respective businesses in
<PAGE>
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good condition, repair, and working order, and shall cause to be made all
necessary repairs, renewals, replacements, betterments, and improvements
thereto, all as in the judgment of Holding may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this section shall prevent
Holding or any of its Subsidiaries from discontinuing the operation and
maintenance of any of such properties if such discontinuance is, in the judgment
of Holding, desirable in the conduct of its business and does not have a
material adverse effect on Holding or any of its Subsidiaries.
(C) INSURANCE. Holding and each of its Subsidiaries shall maintain with
financially sound and reputable insurance companies, funds, or underwriters,
insurance of the kinds, covering the risks and in the relative amounts usually
carried by reasonable and prudent companies conducting businesses similar to
those of Holding or such Subsidiary, as the case may be.
(D) TAXES. Holding and each of its Subsidiaries shall pay and discharge,
or cause to be paid and discharged, before the same shall become overdue, all
Taxes upon it and its business, properties, sales, and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law give rise to a Lien
upon any of its properties; provided, however, that any such Tax or claim need
not be paid if the validity or amount thereof shall currently be contested in
good faith by appropriate proceedings and if Holding or such Subsidiary shall
have set aside on its books adequate reserves with respect thereto; and provided
further that Holding or such Subsidiary shall pay or cause to be paid all such
Taxes or claims forthwith upon the commencement of proceedings to foreclose any
Lien that may have attached as security therefor.
(E) COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS. Holding and
each of its Subsidiaries shall comply with (i) all applicable laws and
regulations wherever its business is conducted, (ii) the provisions of its
Certificate of Incorporation (and/or other charter documents) and by-laws, (iii)
all agreements and instruments to which it is party or by or to which it or any
of its properties may be bound or subject, and (iv) all applicable decrees,
orders, and judgments; except where in each case other than under clause (ii),
such noncompliances would not, either individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), business or
assets of Holding and its Subsidiaries taken as a whole. If any authorization,
consent, approval, operating right, permit, or license from any officer, agency,
or instrumentality of any government shall become necessary or required in order
that Holding or any of its Subsidiaries may fulfill any of its obligations
hereunder, Holding or such Subsidiary shall immediately take or cause to be
taken all reasonable steps within its power to obtain such authorization,
consent, approval, operating right, permit, or license.
(F) EMPLOYEE BENEFIT PLANS. Holding and each of its Subsidiaries shall
take all actions necessary to maintain, fund, and administer its Employee
Benefit Plans in accordance with federal, state, and local law.
<PAGE>
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(G) FURTHER ASSURANCES. Holding and each of its Subsidiaries shall
cooperate with each of the Investors and execute such further instruments and
documents as it or he may reasonably request to carry out to its or his
reasonable satisfaction the transactions contemplated by this Agreement.
(H) ANNUAL STATEMENTS. As soon as available, and in any event within 90
days after the close of each fiscal year of Holding, commencing with the fiscal
year ending December 31, 1997, Holding shall deliver to each of the Investor
Representatives consolidated and consolidating balance sheets and statements of
income, retained earnings, and cash flows of Holding and its Subsidiaries, such
consolidated financial statements to be audited by an independent public
accounting firm selected by Holding and reasonably acceptable to each of the
Investor Representatives, and certified by such accounting firm to have been
prepared in accordance with generally accepted accounting principles,
consistently applied, except for such changes in the application of such
principles as are required by such principles themselves.
(I) MONTHLY STATEMENTS. As soon as available, and in any event within 30
days after the end of each month commencing with the first month ending after
the Closing Date, Holding shall deliver to each of the Investor Representatives
consolidated and consolidating internal, unaudited balance sheets and statements
of income, retained earnings, and cash flows of Holding and its Subsidiaries as
of the end of each such month, certified by the President and the Treasurer of
Holding to be true and correct and to have been prepared in accordance with
generally accepted accounting principles, consistently applied (subject to the
absence of footnotes and to normal year-end adjustments, the details of which,
if they are expected to be material, shall be disclosed).
(J) OTHER FINANCIAL INFORMATION. Holding shall deliver to each of the
Investor Representatives, at least 30 days prior to the commencement of each
fiscal year, an annual budget and projected monthly balance sheets and
statements of income for such fiscal year, prepared on a comparative basis to
the projections of the future financial performance of Holding and its
Subsidiaries, on a consolidated basis, that have been provided to the Investors
and as soon as practicable after preparation thereof, complete and correct
copies of all quarterly (if any) and annual budgetary analyses or forecasts of
Holding in the form customarily prepared by management for its own internal use
or the use of the Board of Directors of Holding. Promptly after the receipt
thereof, Holding shall provide copies of any management letters or other reports
of its independent accountants as to the internal accounting controls of Holding
and/or its Subsidiaries.
(K) NOTICE OF LITIGATION, DEFAULT, ETC. Holding shall promptly give notice
to each of the Investor Representatives of any litigation, arbitration, action,
suit, proceeding, or investigation to which Holding or any of its Subsidiaries
may hereafter become a party (or that is threatened against any of them) that
may result in any material adverse effect with respect to any of them.
Forthwith upon any officer of Holding or of any of its Subsidiaries obtaining
knowledge of any default or event of default (or any occurrence or
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circumstance that, with the giving of notice or the passage of time or both,
could give rise to a default or event of default) under any agreement or
instrument relating to any Indebtedness of Holding or any of its Subsidiaries,
Holding shall furnish a notice specifying in reasonable detail the nature and
period of existence thereof and what action Holding and/or any of its
Subsidiaries has taken, is taking, and/or proposes to take with respect thereto.
(L) RIGHTS TO ATTEND BOARD MEETINGS. Each of Holding and its Subsidiaries
shall give each of the Investor Representatives at least five business days'
prior written notice of the time, place, and subject matter of any proposed
meeting (or action by written consent) of its Board of Directors (or any
executive thereof) of Holding or such Subsidiary, such notice to include true
and complete copies of all documents furnished to any director in connection
with such meeting or consent. Any of the respective Investor Representatives,
or their officers and authorized representatives (in addition to any such
Investor Representative or such officers or representatives who have been
elected to the Board of Directors of Holding or such Subsidiary) shall be
entitled to attend as an observer at any such meeting, or if a meeting is held
by telephone conference, to participate therein for the purpose of listening
thereto. Each of Holding and its Subsidiaries shall call and hold a meeting of
its Board of Directors or executive committee at least once each fiscal quarter.
(M) OTHER INFORMATION. From time to time upon the request of any of the
Investor Representatives, Holding shall furnish to such Person or any authorized
officer or representative of such Person such information regarding the
business, affairs, prospects, and financial condition of Holding and its
Subsidiaries as such Investor Representative may reasonably request and which
may be so furnished by Holding without undue effort or expense. Each Investor
Representative or any authorized officer or representative of such Person shall
have the right during normal business hours to examine the books and records of
Holding and its Subsidiaries, to make copies, notes, and abstracts therefrom,
and to make an independent examination of the books and records of Holding and
its Subsidiaries.
7. REGISTER AND TRANSFER OF SHARES.
(A) REGISTER OF SHARES. Holding shall keep at its principal office a
register in which shall be recorded the names and addresses of the record
holders of shares of Series A Common Stock, and all transfers of such shares.
References to the "holder" or "holder of record" of any shares of Series A
Common Stock shall mean the holder thereof unless the holder shall have
presented stock certificates evidencing such shares of Series A Common Stock to
Holding for transfer, and the transferee shall have been entered in said
register as a subsequent holder, in which case such terms shall mean such
subsequent holder. The ownership of any shares of the Series A Common Stock
shall be proven by such register and Holding may conclusively rely upon such
register.
<PAGE>
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(B) TRANSFER OF SHARES. Upon surrender at such office of any certificate
representing shares of Series A Common Stock for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed by
the holder of such certificate or such holder's attorney duly authorized in
writing, then subject to compliance with the applicable provisions of this
Agreement, the Stockholder Agreement, and applicable securities laws, Holding
shall issue, at its expense, one or more new certificates, in such denomination
or denominations as may be requested, for the transferred shares of Series A
Common Stock, and registered as the presenting holder may have requested.
Holding shall pay shipping and insurance charges, from and to each holder's
principal office, upon any transfer pursuant to this section.
(C) REPLACEMENT OF CERTIFICATES. Upon receipt of evidence reasonably
satisfactory to Holding of the loss, theft, destruction, or mutilation of any
certificate representing any shares of Series A Common Stock, and, in the case
of any such loss, theft, or destruction, upon delivery of an indemnity bond in
such reasonable amount as Holding may determine (or, in the case of any such
security held by Heritage or any other institutional holder, of an unsecured
indemnity agreement from such holder reasonably satisfactory to Holding), or, in
the case of any such mutilation, upon the surrender of such certificate to
Holding at its principal office for cancellation, Holding, at its own expense,
shall execute and deliver, in lieu thereof, a new certificate of like tenor.
Any lost, stolen, destroyed, or mutilated certificate in lieu of which any such
new certificate has been so executed and delivered by Holding shall not be
deemed to be outstanding for any purpose.
8. INDEMNIFICATION.
8.1. INDEMNIFICATION BY HOLDING.
(a) Subject to the limitations set forth in Section 8.5 hereof, if the
transactions contemplated hereby are not consummated, Holding and each of its
Subsidiaries, jointly and severally, shall indemnify, defend and hold harmless
each of the AGI Indemnitees from and against any and all Damages related to or
arising, directly or indirectly, out of or in connection with any Holding
Indemnified Claims. Notwithstanding the foregoing, in no event shall the
aggregate damages payable pursuant to this Section 8.1(a) by the Company and its
Subsidiaries together exceed the Maximum Holding Indemnity Amount or, if less,
the aggregate amount of all costs, expenses and disbursements of the AGI
Indemnitees incurred in connection with the transactions contemplated hereby and
by the Merger Agreement.
(b) Subject to the limitations set forth in this Section 8.1(b) and in
Section 8.5 hereof, if the transactions contemplated hereby are consummated,
each of Heritage and the Klearfold Herrin Investors (together, the "Holding
-------
Indemnitors") shall indemnify, defend and hold harmless each of the AGI
- -----------
Indemnitees from and against any and all Damages related to or arising, directly
or indirectly, out of or in connection with any Holding Indemnified Claims;
provided that Heritage shall not be liable under this Section 8.1(b) for any
Damages in excess of sixty-eight percent (68%) of the Damages for which the
Holding
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Indemnitors would otherwise be liable hereunder from time to time but for this
proviso, and the Klearfold Herrin Investors together shall not be liable under
this Section 8.1 for any Damages in excess of thirty-two percent (32%) of the
Damages for which the Holding Indemnitors would otherwise be liable hereunder
from time to time but for this proviso, and provided further that:
(i) the aggregate liability of the Holding Indemnitors with respect to
any Holding Indemnified Claims other than Unlimited Holding Claims shall
not exceed the Maximum Holding Indemnity Amount; and
(ii) the aggregate liability of the Holding Indemnitors with respect to
any Holding Indemnified Claims which are Unlimited Holding Claims shall be
limited to the Share Value of all shares of Series A Common Stock owned by
the Holding Indemnitors immediately after consummation of the transactions
contemplated hereby.
Any Damages related to or arising directly or indirectly out of or in connection
with Unlimited Holding Claims shall not be included in calculating whether the
aggregate amount of Damages is equal to or exceeds the Maximum Holding Indemnity
Amount.
8.2. INDEMNIFICATION BY THE INVESTORS. Subject to the limitations set
forth in Section 8.5 hereof, regardless of whether the transactions contemplated
hereby are consummated, each of the Investors severally and not jointly shall
indemnify, defend and hold harmless Holding and its Subsidiaries, and each of
their respective directors, officers, employees, representatives and other
Affiliates (collectively, "Holding Indemnitees", and each a "Holding
------- ----------- -------
Indemnitee"), from and against any and all Damages related to or arising,
- ----------
directly or indirectly, out of any failure or any breach by such Investor of any
representation, warranty, covenant, agreement, obligation, or undertaking made
by in this Agreement (including any schedule or exhibit hereto), or any other
agreement, instrument, certificate, or other document delivered by or on behalf
of such Investor in connection with this Agreement or any of the transactions
contemplated hereby, but excluding any representation, warranty, covenant,
agreement, obligation, or undertaking made by any of the AGI Investors in the
Merger Agreement in such AGI Investor's capacity as a Principal Stockholder or
Participating Stockholder, as to which the terms and provisions of the Merger
Agreement shall apply, and without duplication of indemnities provided for in
the Merger Agreement, provided that the aggregate liability of any Investor
under this Section 8.2 is hereby limited to and shall in no event exceed the
Share Value of all shares of Series A Common Stock owned by such Investor
immediately after consummation of the transactions contemplated hereby.
8.3. CLAIMS. In the event that any party hereto (the "Indemnified Party")
----------- -----
desires to make a claim against another party hereto (the "Indemnifying Party,"
------------ -----
which term shall include all indemnifying parties if more than one) in
connection with any third-party litigation, arbitration, action, suit,
proceeding, claim, or demand at any time instituted against or made upon it for
which it may seek indemnification hereunder (a "Third-Party
-----------
<PAGE>
-37-
Claim"), the Indemnified Party shall notify the Indemnifying Party of such
- -----
Third-Party Claim and of its claims of indemnification with respect thereto,
provided, that failure to give such notice shall not relieve the Indemnifying
Party of its indemnification obligations under this Section 8 except to the
extent, if at all, that the Indemnifying Party shall have been actually
prejudiced thereby. Upon receipt of such notice from the Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense of such
Third-Party Claim, and if and only if each of the following conditions is
satisfied, the Indemnifying Party may assume the defense of such Third-Party
Claim, and in the case of such an assumption the Indemnifying Party shall have
the authority to negotiate, compromise, and settle such Third-Party Claim,
provided, that the Indemnifying Party shall not agree to any settlement of such
Third-Party Claim that does not include an unconditional release of all
liability of each Indemnified Party with respect to such Third-Party Claim, or
which imposes on any Indemnified Party the burden of any injunctive or equitable
relief, without in either case the prior written consent of such Indemnified
Party (such consent not to be unreasonably withheld or delayed):
(i) the Indemnifying Party confirms in writing that it is obligated
hereunder to indemnify the Indemnified Party in full with respect to such
Third-Party Claim; and
(ii) the Indemnified Party does not give the Indemnifying Party
written notice that the Indemnified Party's counsel has determined, in its
reasonable opinion, that an irreconcilable conflict of interest make
separate representation by the Indemnified Party's counsel advisable.
The Indemnified Party shall retain the right to employ its own counsel and
to participate in the defense of any Third-Party Claim, the defense of which has
been assumed by an Indemnifying Party pursuant hereto, but such Indemnified
Party shall bear and shall be solely responsible for its own costs and expenses
in connection with such participation. The Indemnified Party shall make no
settlement or compromise in connection with any Third-Party Claim (whether or
not the defense thereof has been assumed by the Indemnifying Party) that would
impose upon any Indemnifying Party the burden of any injunctive or equitable
relief, or would give rise to liability on the part of any Indemnifying Party,
without the prior written consent of such Indemnifying Party (such consent not
to be unreasonably withheld or delayed).
8.4. PAYMENT OF CLAIMS.
(a) In the event of any claims for indemnification under this Section 8,
the claimant shall advise the party or parties who are required to provide
indemnification therefor in writing of the amount and circumstances surrounding
such claim. With respect to liquidated claims, if within thirty days the other
party has not contested such claim in writing, such other party shall (subject
to the provision of Section 8.4(b) below) pay the full amount thereof within ten
days after the expiration of such thirty-day period. Any amount payable by an
Indemnifying Party in respect of indemnification pursuant to this
<PAGE>
-38-
Agreement may be set off and deducted by the Indemnified Party from and against
any amounts that may otherwise be or become payable by such Indemnified Party to
such Indemnifying Party, including without limitation amounts payable pursuant
to any of the Other Agreements. The unpaid balance of any claim for Damages
under this Section 8 shall bear interest at the rate announced from time to time
by BankBoston, N.A., as its "Base Rate" plus two percent, from the date notice
----
of such claim is given by the Indemnified Party to the Indemnifying Party.
(b) In the event an Indemnified Party is either a Holding Indemnitee or an
Investor under the Investment Agreement, and the Indemnifying Party is also an
Investor under, and acquires shares of Series A Common Stock pursuant to, the
Investment Agreement, the Indemnifying Party shall have the option, upon final
determination of the dollar amount of a claim for indemnification payable to
such Indemnified Party in accordance with this Section 8, by written notice to
such Indemnified Party delivered within ten (10) business days after the date of
such determination, to elect to satisfy such claim, or any part thereof, by
transferring without further consideration to such Indemnified Party, free and
clear of all Liens, that number of shares of Series A Common Stock, rounded to
the second decimal place, which is equal to:
(i) if the Indemnified Party is either (A) a Holding Indemnitee other
than an Investor pursuant to the Investment Agreement or (B) an Investor
pursuant to the Investment Agreement seeking indemnification other than on
account of, or related to, Damages suffered by Holding or any of its
Subsidiaries, (x) the final determined dollar amount of such Claim (or such
portion thereof as the applicable Indemnifying Party is electing to satisfy
pursuant to this Section 8.4(b)) divided by (y) the Share Value; and
(ii) if the Indemnified Party is an Investor pursuant to the
Investment Agreement and is seeking indemnification on account of Damages
suffered by Holding or any of its Subsidiaries, (x) such Investor's pro rata
directly- or indirectly-allocable portion of the dollar amount of the Damages
suffered by Holding or such Subsidiary (or such portion thereof as the
applicable Indemnifying Party is electing to satisfy pursuant to this Section
8.4(b)), calculated on the same basis as is set forth in Section 8.5(a) below,
divided by (y) the Adjusted Share Value (as defined below).
For the purposes hereof, the term "Adjusted Share Value" shall mean the Share
-------- ----- -----
Value, reduced to reflect the per share reduction in the value of Series A
Common Stock solely as a result of the Damages on account of which
indemnification is being sought, and as appropriately adjusted from time to time
to reflect stock splits, combinations, recapitalizations or the like; provided,
--------
however, that (1) with respect to AGI Indemnified Claims, other than Unlimited
- -------
Claims (in each case as defined in the Merger Agreement), the aggregate amount
of the adjustment shall not exceed the Maximum AGI Indemnity Amount, and (2)
with respect to Holding Indemnified Claims, other than Unlimited
<PAGE>
-39-
Holding Claims, the aggregate amount of the adjustment shall not exceed the
Maximum Holding Indemnity Amount.
8.5. LIMITATIONS OF LIABILITY.
(a) In the event that any Damages are incurred or suffered by Holding or
any of its Subsidiaries resulting from Holding Indemnified Claims for which the
AGI Investors are entitled to indemnification from the Holding Indemnitors
pursuant to Section 8.1(b) above, the Holding Indemnitors shall only be required
to indemnify the AGI Investors for that portion of any such Damages which is
equal to the product of (i) the aggregate amount of such Damages incurred or
suffered by Holding or such Subsidiary, as the case may be, multiplied by (ii) a
fraction, the denominator of which is the total number of shares of Series A
Common Stock then outstanding on a fully-diluted basis, and the numerator of
which is the total number of shares of Series A Common Stock issued hereunder
and then owned by the AGI Investors. For the avoidance of doubt, this Section
8.5(a) shall not operate to reduce the amount payable to the AGI Investors or
any of them with respect to any Damages directly suffered or incurred by any
such AGI Investor and for which such AGI Investor is entitled to indemnification
pursuant to Section 8.1 above.
(b) Holding, its Subsidiaries and the Holding Indemnitors shall not be
required to indemnify any of the AGI Indemnitees hereunder except to the extent
that the aggregate amount of Damages (including Damages from Unlimited Holding
Claims) for which the AGI Indemnitees pursuant to Section 8.1 hereof (after
application of the limitation in Section 8.5(a) hereof), and pursuant to Section
8.2 of the Merger Agreement would otherwise be entitled to indemnification
exceeds $100,000, whereupon such AGI Indemnitees shall be entitled to
indemnification in the amount by which the aggregate amount of all such Damages
exceeds $100,000, subject to the limitations on liability set forth in the
proviso in Section 8.1(b) and on maximum amount of recovery set forth in Section
8.1(b) and this Section 8.5(b).
(c) Notwithstanding anything to the contrary stated herein or in any of the
Other Agreements, neither Heritage nor any of the Klearfold Management
Investors, nor any of their respective directors, officers, employees,
representatives and other Affiliates, shall be entitled to indemnification for
any breach by Holding of any of its representations and warranties in Section 3
of this Agreement.
(d) No Indemnifying Party shall be liable for any Damages pursuant to this
Section 8 unless a written claim for indemnification in accordance with Section
8.4 is given by the Indemnified Party to the Indemnifying Party with respect
thereto, subject to the following proviso, within (i) in the case of any Damages
related to or arising, directly or indirectly from any breach of the
representations and warranties in Section 3.13 hereof ("Safety and Environmental
Matters") or any Unlimited Holding Claims described in clause (b) of the
definition thereof, two years after the Closing, and (ii) otherwise, one year
after the Closing; provided, that these time limitations shall not apply to any
<PAGE>
-40-
Unlimited Holding Claims described in clause (a) of the definition thereof, for
which indemnification shall have no time limitation except as otherwise imposed
by law.
(e) The amount of any Damages otherwise payable to any Indemnified Party in
respect of any breach of the representations and warranties set forth in
Sections 3 and/or 4 of this Agreement shall be reduced to the extent that such
Indemnified Party actually realizes, by reason of such Damages, any tax benefit
that is not offset by any corresponding adjustment of the tax attributes of such
Indemnified Party or any of his or its assets (e.g., any tax deduction available
to such Indemnified Party in respect of such Damages breach shall not be deemed
to result in a tax benefit to such Indemnified Party to the extent that such tax
deduction results in a decrease in such Indemnified Party's basis in any
securities or other assets). In the event that any such tax benefit is actually
realized by an Indemnified Party subsequent to the receipt by such Indemnified
Party of an indemnification payment hereunder in respect of the Damages to which
such tax benefit relates, appropriate refunds shall be made regarding the amount
of such indemnification payment.
(f) No Indemnifying Party shall be liable pursuant to this Section 8 for
lost profits or special or consequential Damages, even if notified in advance of
the possibility thereof.
(g) Each of the parties hereto agrees that its sole recourse for any breach
or default hereunder or under the Merger Agreement (other than any such breach
or default under or with respect to Section 9.1 or 9.2 of the Merger Agreement
or Section 9 hereof), or for any other matter as to which indemnification is
provided to it in this Section 8 or in Section 8 of the Merger Agreement, shall
be the indemnification provisions set forth herein and therein, and, to the
extent applicable, the Escrow Agreement and the Escrow Amount held thereunder
(in each case as defined in the Merger Agreement).
9. CONFIDENTIAL INFORMATION.
(A) BEFORE THE CLOSING. Any and all non-publicly available information
disclosed by or on behalf of Holding or its representatives to any of the
Investors or their representatives, as part of or in connection with the
negotiations leading to the execution of this Agreement, or in furtherance
thereof, which information was not already known to the receiving Person, as the
case may be, shall remain confidential until the Closing Date, except to the
extent that such Investor in its or his reasonable judgment must disclose any
such information to banks and other institutional lenders in the process of
obtaining financing for the transactions contemplated hereby. If the Closing
does not take place for any reason, each of the AGI Investors agrees not to
further divulge or disclose or use for their benefit or purposes any such
information of Holding or its Subsidiaries at any time in the future unless it
has otherwise become public through no action or omission on the part of any
party required hereunder to keep such information confidential. The information
intended to be protected hereby shall include without limitation information
with respect to
<PAGE>
-41-
finances, customers, sales, representatives, and anything else having an
economic or pecuniary benefit to the disclosing party.
Notwithstanding the foregoing, if any party is required by law or
regulation to disclose any information covered by this clause (a), the party
under such disclosure obligation will provide the party who disclosed such
information with prompt notice of such disclosure obligation so that the
disclosing party may seek a protective order or take other appropriate action
and/or waive compliance with this Section 9(a) to the extent of such required
disclosure. In the absence of such a waiver, if any party is, in the opinion of
its counsel, compelled to disclose any such information of any other party upon
pain of liability for contempt or other censure or penalty, the party under such
disclosure obligation may disclose such information to the relevant court or
other tribunal or governmental authority without liability hereunder, but
notwithstanding such disclosure, such information shall remain confidential
under this Section 9(a) after such disclosure.
(B) AFTER THE CLOSING. If the transactions contemplated hereby are
consummated, each of the Investors shall maintain the confidentiality of all
confidential, sensitive, or proprietary information of Holding and/or any of its
Subsidiaries, including without limitation with respect to their respective
businesses, finances, affairs, and technology, which shall be and remain the
exclusive property of Holding and/or such Subsidiary, as the case may be, and
unless previously authorized in writing by Holding, and except with respect to
information that has otherwise become public through no action or omission on
the part of any such Investor, shall not disclose any such information to any
third party or use it for any purpose, other than in the discharge of any such
Investor's respective employment responsibilities (if any) in the ordinary
course of Holding's business.
Notwithstanding the foregoing, if any of the Investors is required by law
or regulation to disclose any confidential, sensitive, or proprietary
information of Holding and/or any of its Subsidiaries, such Investor will
provide Holding with prompt notice of such disclosure obligation, so that
Holding may seek a protective order or take other appropriate action and/or
waive compliance with this Section 9(b) to the extent of such required
disclosure. In the absence of such a waiver, if any Investor is, in the opinion
of his or its counsel, compelled to disclose any such information upon pain of
liability for contempt or other censure or penalty, such Investor may disclose
such information to the relevant court or other tribunal or governmental
authority without liability hereunder, but notwithstanding such disclosure, such
information shall remain confidential under this Section 9(b) after such
disclosure.
10. TERMINATION.
(a) This Agreement may be terminated at any time by agreement of all of
the parties hereto.
<PAGE>
-42-
(b) This Agreement, and the obligations of the parties to make the
contributions and investments and to issue securities in exchange therefor all
as set forth in Section 1 hereof, shall automatically terminate upon termination
in accordance with its terms of the Merger Agreement prior to the Closing Date.
(c) This Agreement shall terminate, and the covenants of Holding set
forth in Section 6.2 hereof shall be of no further force or effect, upon the
closing of a Qualified Public Offering (as defined in the Stockholder
Agreement).
(d) Any termination of this Agreement shall not affect the rights or
obligations of any party arising, or based on actions or omissions occurring,
before such termination. The provisions of Sections 8 ("Indemnification"), 9
("Confidential Information"), and 12 ("General") (other than Section 12.1
("Cooperation")) hereof shall survive any termination of this Agreement.
11. DEFINITIONS.
11.1. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms have the following respective meanings:
"Affiliate" means, with respect to a specified Person, (i) any Person that
---------
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the specified Person and (ii)
any Person that is an officer, director, trustee, member or general partner of,
or serves in a similar capacity with respect to, the specified Person, or of
which the specified Person is an officer, director, trustee, member or general
partner, or with respect to which the specified Person serves in a similar
capacity or (iii) any Person who is a spouse, parent, sibling or lineal
descendant of such Person or any Person described in clauses (i) or (ii). For
purposes of this definition the term "control" when used with respect to a
-------
Person means (a) the beneficial ownership (as defined in Rule 13d-d promulgated
under the Securities and Exchange Act of 1934, as amended) of 50 percent or more
of the voting interests in such Person, or (b) the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Affiliated Group" has the meaning given to it in Section 1504 of the Code,
---------- -----
and in addition includes any analogous combined, consolidated, or unitary group,
as defined under any applicable state, local, or foreign income Tax law.
"AGI Indemnitees" means the AGI Investors, and if the transactions hereby
--- -----------
are not consummated, also AGI and its directors, officers, employees,
representatives and other Affiliates, and each individually an "AGI Indemnitee".
--- ----------
"AGI Investor Shares" means the shares of Series A Common Stock issued and
--- -------- ------
sold to the AGI Investors pursuant to this Agreement, together with any
securities issued or
<PAGE>
-43-
issuable with respect to the original AGI Investor Shares by way of a stock
dividend, stock split, combination or division of shares, recapitalization,
merger, consolidation, reorganization, or the like and any securities into which
any of the original AGI Investor Shares are (directly or indirectly) converted
or for which any of the original AGI Investor Shares are (directly or
indirectly) exchanged, and "Majority AGI Holders" means the holders, as of the
-------- --- -------
relevant time of reference, of at least a majority of the AGI Investor Shares.
"Damages" means, with respect to any Person, all claims, liabilities,
-------
obligations, losses, damages, costs and expenses, including without limitation
the fees and disbursements of counsel, of or to such Person.
"Heritage Shares" means the shares of Series A Common Stock issued and sold
-------- ------
to Heritage pursuant to this Agreement, together with any securities issued or
issuable with respect to the original Heritage Shares by way of a stock
dividend, stock split, combination or division of shares, recapitalization,
merger, consolidation, reorganization, or the like and any securities into which
any of the original Heritage Shares are (directly or indirectly) converted or
for which any of the original Heritage Shares are (directly or indirectly)
exchanged, and "Majority Heritage Holders" means the holders, as of the relevant
-------- -------- -------
time of reference, of at least a majority of the Heritage Shares.
"Holding Indemnified Claims" means, collectively, any claim for Damages
------- ----------- ------
resulting from any failure or breach by Holding and/or any of its Subsidiaries
of any representation, warranty, covenant, agreement, obligation, or undertaking
made by them or any of them in this Agreement (including any schedule or exhibit
hereto), or any other agreement, instrument, certificate, or other document
delivered by or on behalf of them or any of them in connection with this
Agreement or any of the transactions contemplated hereby.
"Indebtedness", as applied to any Person, means (a) all indebtedness of
------------
such Person for borrowed money, whether current or funded, or secured or
unsecured, (b) all indebtedness of such Person for the deferred purchase price
of property or services represented by a note or other security, (c) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement (even if the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of specific property), (d) all indebtedness of such Person
secured by a purchase money mortgage or other Lien to secure all or part of the
purchase price of property subject to such mortgage or other Lien, (e) all
obligations of such Person under leases that have been or must be, in accordance
with generally accepted accounting principles, recorded as capital leases in
respect of which such Person is liable as lessee, (f) any liability of such
Person in respect of banker's acceptances or letters of credit, and (g) all
indebtedness referred to in clauses (a), (b), (c), (d), (e), or (f) above that
is directly or indirectly guaranteed by such Person or which such Person has
agreed (contingently or otherwise) to purchase or otherwise acquire or in
respect of which such Person has otherwise assured a creditor against loss.
<PAGE>
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"Investor Representatives" means, collectively, one Person designated from
-------- ---------------
time to time by the Majority Heritage Holders, one Person designated from time
to time by the Majority Klearfold Management Holders, and one Person designated
from time to time by the Majority AGI Holders, in each case by written notice to
Holding given in accordance with Section 12.5 hereof, for purposes of making
elections, and giving and receiving notices and other communications to and from
Holding (subject to appropriate confidentiality restrictions), on behalf of the
holders of the Heritage Shares, the Klearfold Management Shares or the AGI
Investor Shares, as the case may be; and "Investor Representative" means any of
-------- --------------
the Investor Representatives.
"Klearfold Management Shares" means the shares of Series A Common Stock
--------- ---------- ------
issued and sold to the Klearfold Management Investors pursuant to this
Agreement, together with any securities issued or issuable with respect to the
original Klearfold Management Shares by way of a stock dividend, stock split,
combination or division of shares, recapitalization, merger, consolidation,
reorganization, or the like and any securities into which any of the original
Klearfold Management Shares are (directly or indirectly) converted or for which
any of the original Klearfold Management Shares are (directly or indirectly)
exchanged, and "Majority Klearfold Management Holders" means the holders, as of
-------- --------- ---------- -------
the relevant time of reference, of at least a majority of the Klearfold
Management Shares.
"knowledge" "known to" or similar terms, when used to qualify any
--------- ----- --
representation or warranty of Holding, or when used in any similar context, mean
that (at the time the applicable representation or warranty is made or deemed
made or repeated) any of Melvin B. Herrin, H. Scott Herrin, Walt Lawhead, John
McInerney, Daniel Santry or Michael Gilligan either has actual (and not imputed
or constructive) knowledge of certain specific facts or circumstances affecting
such representation or warranty, or is actually (and not imputedly or
constructively) aware of facts or circumstances which should have led a
reasonable person with similar business responsibilities to conduct a
reasonably-detailed investigation into such facts or circumstances and the legal
consequences thereof, and such an investigation would have resulted in the
investigating party having actual (and not imputed or constructive) knowledge of
specific facts or circumstances affecting such representation or warranty.
Except as specifically described above, no knowledge of any other stockholder,
director, officer, or employee of the Holding shall be imputed to Holding.
"Lien" means any lien, claim, mortgage, security interest, charge,
----
encumbrance, or restriction on transfer of any kind.
"Maximum AGI Indemnity Amount" means $3,500,000.
------- --- --------- ------
"Maximum Holding Indemnity Amount" means $2,305,882.
------- ------- --------- ------
<PAGE>
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"Old Non-Voting Common Stock" means Holding's Voting Common Stock, $0.001
--- ---------- ------ -----
par value per share, prior to the effectiveness of the Charter Amendment.
"Old Preferred Stock" means Holding's Preferred Stock, $0.001 par value per
--- --------- -----
share, prior to the effectiveness of the Charter Amendment.
"Old Voting Common Stock" means Holding's Voting Common Stock, $0.001 par
--- ------ ------ -----
value per share, prior to the effectiveness of the Charter Amendment.
"Other Agreement(s)" means the Merger Agreement and all of the other
----- ------------
agreements, instruments, certificates, and documents executed and delivered at
the Closing or otherwise in connection with this Agreement and/or the Merger
Agreement, and/or in connection with the transactions contemplated hereby and
thereby, and when used with reference to any particular Person, means all such
agreements, instruments, certificates and other documents executed and delivered
by such Person.
"Person" means any natural person, entity, or association, including
------
without limitation any corporation, partnership, limited liability company,
government (or agency or subdivision thereof), trust, joint venture or sole or
joint proprietorship.
"Series A Common Stock" means Holding's Series A Common Stock, $0.001 par
------ - ------ -----
value per share, from and after the effectiveness of the Charter Amendment.
"Series B Common Stock" means Holding's Series B Common Stock, $0.001 par
------ - ------ -----
value per share, from and after the effectiveness of the Charter Amendment.
"Share Value" means $340.00, being the value of each share of Series A
----- -----
Common Stock as of the Closing Date, as agreed among the parties hereto for the
purposes of this Agreement, and as such amount shall be appropriately adjusted
from time to time to reflect stock splits, combinations, recapitalizations or
the like.
"Subsidiary" or "Subsidiaries" means, with respect to any Person, any
---------- ------------
corporation a majority (by number of votes) of the outstanding shares of any
class or classes of the capital stock of which shall at the time be owned by
such Person or by a Subsidiary of such Person, if the holders of the shares of
such class or classes of capital stock (a) are ordinarily, in the absence of
contingencies, entitled to vote for the election of at least a majority of the
directors (or persons performing similar functions) of the issuer thereof,
regardless of whether the right so to vote has been suspended by the happening
of such a contingency, or (b) are at the relevant time of reference entitled, as
such holders, to vote for the election of at least a majority of the directors
(or persons performing similar functions) of the issuer thereof, regardless of
whether the right so to vote exists by reason of the happening of a contingency.
AGI shall not be deemed to be a Subsidiary of Holding for purposes of Sections 3
and 6.1 hereof.
<PAGE>
-46-
"Tax" or "Taxes" means any federal, state, local, or foreign income, gross
--- -----
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
"Tax Return" means any return, declaration, report, claim for refund,
--- ------
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or administrative
requirements relating to any Tax.
"Unlimited Holding Claims" means (a) all Damages related to or arising
--------- ------- ------
directly or indirectly out of or in connection with any inaccuracy in or breach
of any representation or warranty made by Holding in Sections 3.2
("Authorization and Enforceability"), 3.3 ("Capitalization"), 3.11 ("Taxes"),
3.27 ("Brokers"), or (to the extent that it relates to any of the foregoing)
3.31 ("Disclosure") hereof, and (b) all Damages to Holding or any of its
Subsidiaries related to or arising directly or indirectly out of or in
connection with Klearfold's agreements in Section 2 and/or Section 7 of Article
X of that certain Agreement between United Paperworkers International Union
Local 286 and Klearfold, effective December 1, 1994, as amended and in effect
from time to time.
11.2. TERMS DEFINED ELSEWHERE. The following terms are defined herein in
the sections identified below:
@@
<PAGE>
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<TABLE>
<CAPTION>
TERM SECTION TERM SECTION
---- ------- ---- -------
<S> <C> <C> <C>
Acquisition Preamble Indemnified Party 8.3
Act 4.2(a) Indemnifying Party 8.3
Adjusted Share Value 8.4 Intellectual Properties 3.18
AGI Preamble Investor Preamble
AGI Investors Preamble IRS 3.16(b)
AGI Rollover Investors Preamble Klearfold Preamble
AGI Stock 1.1(c) Klearfold Herrin Investors Preamble
Agreement Preamble Klearfold Employee Investors Preamble
Audited Balance Sheet 3.6 Klearfold Management
Charter Amendment 2.2(f) Investors Preamble
Closing 2.1 Klearfold Optionees 2.2(h)
Closing Date 2.1 Material Adverse Effect 3.4
Code 3.16(c) Merger Agreement Preamble
Contract 3.15 New AGI Investors Preamble
Damages 8.1(a) New AGI Investor Stock 1.1(d)
Employee Benefit Plan 3.16(a) New AGI Rollover
Environmental and Safety Laws 3.13(b) Investor Stock 1.1(c)
ERISA 3.16(c) New Heritage Stock 1.1(a)
Existing Stockholders' New Klearfold Management
Agreement 2.2(j) Stock 1.1(b)
Holding Preamble Old Warrant 1.1(a)(iv)
Holding Indemnitees 8.2 PBGC 3.16(d)(ii)
Holding Indemnitors 8.1(b) Real Property 3.8
HSR Act 3.22 Stockholder Agreement 2.2(i)
Third Party Claim 8.3
</TABLE>
@@ 12. GENERAL.
12.1. COOPERATION. Each of the parties hereto agrees to use his or its
commercially reasonable efforts to fulfill the conditions precedent to the
effectiveness of this Agreement. Each of the parties shall cooperate with the
others and use commercially reasonable efforts to prepare all necessary
documentation, to effect all necessary filings, and to obtain all necessary
permits, consents, approvals, and authorizations of all third parties and
governmental bodies necessary to consummate the transactions contemplated by
this Agreement. Each party shall have the right to review and approve in advance
all descriptions of or with respect to it that appear in any filing with any
governmental body made in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, the parties shall act reasonably
and as promptly as practicable.
12.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties hereto contained in this Agreement or any of the Other
Agreements or otherwise made in writing in connection with the transactions
contemplated hereby shall be deemed material, and, notwithstanding any
investigation by Holding or any of the Investors, as the case may be, shall be
deemed to have been relied on by them, and, subject to the provisions of Section
8.5(d) hereof and Section 8 of the Merger Agreement, shall survive the Closing
and the consummation of the transactions contemplated hereby and by the Merger
Agreement.
<PAGE>
-48-
12.3. EXPENSES. Except as expressly provided otherwise in this Agreement
or the Merger Agreement, each of the parties shall be responsible for and shall
pay its or his own expenses in connection with the negotiation and preparation
of this Agreement and the consummation of the transactions contemplated hereby.
12.4. BENEFITS OF AGREEMENT; NO ASSIGNMENTS; NO THIRD-PARTY BENEFICIARIES.
(a) This Agreement shall bind and inure to the benefit of the parties
hereto and their respective heirs, successors, and permitted assigns.
(b) No party shall assign any rights or delegate any obligations
hereunder without the consent of the other parties, and any attempt to do so
shall be void.
(c) Nothing in this Agreement is intended to or shall confer any rights
or remedies on any Person other than the parties hereto and their respective
heirs, successors, and permitted assigns.
12.5. NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed as follows (or to such other address as the recipient party may
have previously furnished to the sending party in accordance with this section):
(a) If to Holding or any of its Subsidiaries prior to the Closing Date,
to or in care of:
<PAGE>
-49-
KFI Holding Corporation
364 Valley Road
Warrington, Pennsylvania 18976
Attention: H. Scott Herrin
Telecopier No. (215) 343-0491
and if to Holding or any of its Subsidiaries after the Closing Date,
to or in care of:
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, Illinois 60160-1178
Attention: Richard Block and David Underwood
Telecopier No. (708) 344-9113
and in each case with copies to the other addresses specified in
paragraphs (b) - (d) below.
(b) If to Heritage, to or in care of:
Heritage Partners Management Company, Inc.
30 Rowes Wharf, Suite 300
Boston, MA 02110
Attention: Michael F. Gilligan, Managing Director
Telecopier No. (617) 439-0689
with a copy sent at the same time and by the same means to:
David L. Engel, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Telecopier No. (617) 951-8736
(c) If to any of the Klearfold Management Investors, to or in care of:
Klearfold, Inc.
364 Valley Road
Warrington, Pennsylvania 18976
Attention: H. Scott Herrin
Telecopier No. (215) 343-0491
with a copy sent at the same time and by the same means to:
<PAGE>
-50-
Richard Braemer, Esq.
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
Telecopier No.: (215) 864-8999
(d) If to any of the AGI Investors, to or in care of:
AGI Incorporated
1950 North Ruby Street
Melrose Park, Illinois 60160-1178
Attention: Richard Block and David Underwood
Telecopier No. (708) 344-9113
with copies sent at the same time and by the same means to:
Linda Chaplik Harris, Esq.
Sonnenschein Nath & Rosenthal
Suite 8000 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Telecopier No. (312) 876-7934
12.6. COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. In pleading or proving this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
12.7. CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and shall not affect the interpretation or construction
of this Agreement.
12.8. EQUITABLE RELIEF. Each of the parties hereby acknowledges that any
breach by it of its obligations under this Agreement would cause substantial and
irreparable damage to the other parties, and that money damages would be an
inadequate remedy therefor, and accordingly, acknowledges and agrees that each
of the other parties shall be entitled to an injunction, specific performance,
and/or other equitable relief to prevent the breach of such obligations (in
addition to all other rights and remedies to which such party may be entitled in
respect of any such breach).
12.9. CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.
<PAGE>
-51-
12.10. WAIVERS. No waiver of any breach or default hereunder shall be
valid unless in a writing signed by the waiving party. No failure or other delay
by any party exercising any right, power, or privilege hereunder shall be or
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
12.11. FURTHER ASSURANCES. From time to time on and after the Closing
Date, each party hereto shall promptly execute and deliver all such further
instruments and other documents, and shall promptly take all such further
actions, as any other party hereto may reasonably request in order more
effectively to effect or confirm the transactions hereby contemplated and to
carry out the purposes of this Agreement.
12.12. ENTIRE AGREEMENT. This Agreement, together with the exhibits and
schedules hereto, the Other Agreements, and the other agreements, instruments,
certificates and documents referred to herein and/or therein as having been or
to be executed and delivered in connection with the transactions contemplated
hereby and thereby, contains the entire understanding and agreement among the
parties, and supersedes any prior understandings or agreements among them, or
between or among any of them, with respect to the subject matter hereof.
12.13. GOVERNING LAW. This Agreement shall to the maximum lawful extent be
governed by and interpreted and construed in accordance with the internal laws
of the State of Delaware, as applied to contracts under seal made, and entirely
to be performed, within Delaware, and without reference to principles of
conflicts or choice of law.
<PAGE>
SIGNATURE PAGE 1 OF 3 FOR INVESTMENT AGREEMENT
IN WITNESS WHEREOF, each of the parties has executed and delivered this
Agreement to the others as an agreement under seal as of the date first above
written.
KFI HOLDING CORPORATION
By /s/ Michael F. Gilligan
----------------------------
Name: Michael F. Gilligan
Title:
HERITAGE FUND I
INVESTMENT CORPORATION
By /s/ Michael F. Gilligan
----------------------------
Name: Michael F. Gilligan
Title:
KLEARFOLD HERRIN INVESTORS:
/s/ Melvin B. Herrin
-------------------------------
Melvin B. Herrin
/s/ H. Scott Herrin
-------------------------------
H. Scott Herrin
/s/ Matthew H. Kamens
-------------------------------
Matthew H. Kamens, as Trustee under
Indenture of Trust dated 06/04/96 of
Melvin B. Herrin
<PAGE>
SIGNATURE PAGE 2 OF 3 FOR INVESTMENT AGREEMENT
/s/ Arthur S. Keyser
-------------------------------
Arthur S. Keyser, as Trustee under
an Irrevocable Deed of Trust dated
08/12/92 f/b/o H. Scott Herrin
AGI ROLLOVER INVESTORS:
/s/ Richard Block
-------------------------------
Richard Block
/s/ James Oppenheimer
-------------------------------
James Oppenheimer
/s/ Richard Oppenheimer
-------------------------------
Richard Oppenheimer
/s/ John Maranov
-------------------------------
John Maranov
/s/ Gary Mankoff
-------------------------------
Gary Mankoff
/s/ Donald Kosterka
-------------------------------
Donald Kosterka
/s/ David Horowitz
-------------------------------
David Horowitz
<PAGE>
SIGNATURE PAGE 3 OF 3 FOR INVESTMENT AGREEMENT
/s/ Zenas Block
------------------------------
Zenas Block
NEW AGI INVESTORS:
/s/ Dean Henkel
-------------------------------
Dean Henkel
/s/ David Underwood
-------------------------------
David Underwood
/s/ Dennis McGuin
-------------------------------
Dennis McGuin
/s/ Mary Frances Griffin
-------------------------------
Mary Frances Griffin
KLEARFOLD EMPLOYEE INVESTORS:
/s/ Steve Frazier
-------------------------------
Steve Frazier
/s/ Daniel Santry
-------------------------------
Daniel Santry
/s/ Robert Eliason
-------------------------------
Robert Eliason
/s/ John McInerney
-------------------------------
John McInerney
/s/ Richard Mazurek
-------------------------------
Richard Mazurek
/s/ Craig H. Wilson
-------------------------------
Craig H. Wilson
<PAGE>
SCHEDULE 1A
-------- --
KLEARFOLD MANAGEMENT INVESTORS
--------- ---------- ---------
<TABLE>
<CAPTION>
1. 2. 3. 4. 5. 6.
Klearfold Management Investor Shares of Old Preferred Shares of Old Shares of Old Cash Shares of Series
Stock Voting Common Non-Voting Investment A Common Stock
Stock Common Stock
<S> <C> <C> <C> <C> <C>
Part I
- ---- -
Klearfold Herrin Investors
- --------- ------ ---------
Melvin B. Herrin/1/ 3,553 10,625 250 4,964
H. Scott Herrin/1/
Matthew H. Kamens and Arthur S. 10,625 3,916
Kayser, as Trustees under Indenture
of Trust dated 06/04/96 of Melvin
B. Herrin/1/
Arthur S. Keyser, Matthew H. Kamens, 947 21,250 250 7,958
and H. Scott Herrin, as Trustees
under an Irrevocable Deed
of Trust dated 08/12/92 f/b/o H.
Scott Herrin/1/
</TABLE>
___________________________________
_________/1/Does not reflect inter-Herrin transfers prior to contribution.
<PAGE>
<TABLE>
<CAPTION>
2. 3. 4. 5. 6.
Part II Shares of Old Preferred Shares of Old Shares of Old Cash Shares of Series
- ---- --
Klearfold Employee Investors Stock Voting Common Non-Voting Investment A Common Stock
- --------- -------- ---------
Stock Common Stock
<S> <C> <C> <C> <C> <C>
Robert Eliason $ 75,000 220.5
John McInerny $ 100,000 294.0
Craig Wilson $ 25,000 73.5
Daniel Santry $ 25,000 73.5
Steve Frazier $ 25,000 73.5
H. Scott Herrin $ 925,000 2720.5
Richard Mazurek $ 25,000 73.5
TOTAL $1,200,000 3,259
</TABLE>
<PAGE>
SCHEDULE 1B
-------- --
CANCELLATION OF OLD COMMON STOCK
--------------------------------
<TABLE>
<CAPTION>
NAME OF HOLDER SHARES OF OLD VOTING COMMON STOCK SHARES OF OLD NON-VOTING COMMON
STOCK
<S> <C> <C>
Vincent Cundari 500 -0-
Robert Eliason 500 -0-
Richard Mazurek 500 -0-
Craig Wilson 500 -0-
Daniel Santry -0- 500
Melvin B. Herrin 500 -0-
H. Scott Herrin 500 -0-
</TABLE>
<PAGE>
SCHEDULE 1C
-------- --
KLEARFOLD OPTIONEES
-------------------
<TABLE>
<CAPTION>
KLEARFOLD OPTIONEES OPTIONS FOR FOLLOWING NUMBER OF
SHARES OF SERIES A COMMON STOCK
<S> <C>
Daniel Santry 152
Robert Eliason 152
Richard Mazurek 152
Craig Wilson 152
Walter Lawhead 152
Steve Frazier 152
John McInerny 152
</TABLE>
<PAGE>
SCHEDULE 2
-------- -
AGI ROLLOVER INVESTORS
--- -------- ---------
<TABLE>
<CAPTION>
1. 2. 3. 4.
AGI Rollover Investor Shares of AGI Stock Cash Investment Shares of Series A Common
Contributed (from proceeds Stock
OF SAR'S)
<S> <C> <C> <C>
Richard Block 103,398.57 6154000 18,100
James Oppenheimer 19,737.60 2117180 6,227
Richard Oppenheimer 8,669.71 1509600 4,440
Gary Mankoff 14,660.57 henkel - 1285880 2,941
999940
Donald Kosterka 5,277.81 360060 1,059
John Maranov 5,131.20 349860 1,029
David Horowitz 2,932.11 199920 588
Zenas Block 733.03 49980 147
</TABLE>
<PAGE>
SCHEDULE 3
-------- -
NEW AGI INVESTORS
--- --- ---------
<TABLE>
<CAPTION>
1. 2. 3.
New AGI Investor Cash Investment Shares of Series A Common
(from proceeds of SAR's) Stock
<S> <C> <C>
Dean Henkel $ 761,003 3,782
David Underwood $1,044,480 3,072
Dennis McGuin $ 164,560 484
Mary Frances Griffin $ 164,560 484
TOTAL $1,373,600
</TABLE>
<PAGE>
SCHEDULE 4
-------- -
HOLDERS OF SERIES A COMMON STOCK
------- -- ------ - ------ -----
<TABLE>
<CAPTION>
Name of Holder Number of Shares
- -------------- ----------------
<S> <C>
Heritage Fund I Investment Corporation 40,000
Richard Block 18,100
Melvin B. Herrin 4,964
Matthew H. Kamens and Arthur S. Kayser, not individually, 3,916
as Trustees under an Irrevocable Deed of Trust dated
06/04/96 of Melvin B. Herrin
Arthur S. Keyser, Matthew H. Kames, and H. Scott Herrin, 7,958
not individually but as Trustees under an Irrevocable Deed
of Trust dated 08/12/92 f/b/o H. Scott Herrin
James Oppenheimer 6,227
Richard Oppenheimer 4,440
David Underwood 3,072
Gary Mankoff 2,941
Dean Henkel 3,782
Donald Kosterka 1,059
John Maranov 1,029
David Horowitz 588
Dennis McGuin 481
Mary Frances Griffin 481
Zenas Block 147
_______
TOTAL 99,185
</TABLE>
<PAGE>
SCHEDULE 5
-------- -
EMPLOYMENT AGREEMENTS
---------- ----------
The following individuals will enter into Employment, Non-Competition and Stock
Repurchase Agreements substantially in the form attached to the Merger Agreement
as Exhibit 1.4(c), with such modifications thereto as such individual and
------- ------
Holding shall agree:
Richard Block
James Oppenheimer
Richard Oppenheimer
David Underwood
Dean Henkel
The following individuals will enter into Employment, Non-Competition and Stock
Repurchase Agreements in a form; based on the form attached to the Merger
Agreement as Exhibit 1.4, to be mutually agreed between such individual and
------- ---
Holding:
Jacqueline Barry
Dennis McGuin
Mary Frances Griffin
The following individuals will enter into Employment, Non-Competition and Stock
Repurchase Agreements substantially in the forms agreed with Holding on or prior
to the date hereof, with such modifications thereto as such individual and
Holding shall agree:
Melvin B. Herrin
H. Scott Herrin
<PAGE>
SCHEDULES TO THE INVESTMENT AGREEMENT (OMITTED HEREIN)
------------------------------------------------------
Disclosure Schedules
--------------------
Section 3.3(a) Previous Capitalization of Holding
Section 3.3(b) New Capitalization of Holding
Section 3.5 Subsidiaries
Section 3.6 Financial Statements
Section 3.7 Absence of Certain Changes
Section 3.8 Title to Property, Real Property Leases, Etc.
Section 3.9 Indebtedness
Section 3.10 Absence of Certain Undisclosed Liabilities
Section 3.11 Taxes
Section 3.12 Litigation
Section 3.13 Safety and Environmental Matters
Section 3.14 Labor Relations
Section 3.15 Contracts
Section 3.16 Employee Benefit Plans
Section 3.18 Intellectual Property
Section 3.20 Insurance
Section 3.21 Bank Accounts, Signing Authority, Powers of
Attorney
Section 3.24 Suppliers and Customers
Section 3.25 Employment of Officers, Employees
Section 3.28 Compliance with Other Instruments, Laws, Etc.
Section 4.4 Governmental Consents of Investors
Exhibits
--------
Exhibit A Form of Amended and Restated Certificate of
Incorporation of Holding
Exhibit B Form of Stockholders Agreement
Exhibit C Form of Termination Agreement terminating the old
Investment and old Stockholders' Agreement of
Holding.
Exhibit D Form of Termination Agreement terminating the
old Stock Restriction Agreement of Holdings
Exhibit E Amended and Restated By-Laws of Klearfold
The Company will furnish supplementally a copy of any omitted schedule to the
Securities and Exchange Commission upon request.
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF
-----------------------------------
INCORPORATION OF KFI HOLDING CORPORATION
----------------------------------------
KFI Holding Corporation (the "Company") is a company organized and existing
-------
under and by virtue of the Delaware General Corporation Law. Pursuant to the
provisions of Section 242 and Section 245 of the Delaware General Corporation
Law, the Company adopts the following Amended and Restated Certificate of
Incorporation. The original Certificate of Incorporation of the Company was
filed with the Delaware Secretary of State on May 9, 1996, as amended and
restated by the Amended and Restated Certificate of Incorporation dated as of
May 21, 1996 (the "Original Certificate of Incorporation").
-------------------------------------
This Amended and Restated Certificate of Incorporation, which restates and
amends the Original Certificate of Incorporation in its entirety, was duly
adopted as of March 11, 1998 in accordance with the provisions of Sections 228,
242 and 225 of the Delaware General Corporation Law.
The provisions of the Original Certificate of Incorporation are hereby
further amended and restated, such amendment and restatement to be effective on
March 12, 1998, to read in their entirety as follows:
ARTICLE 1
NAME
The name of the Company is IMPAC Group, Inc.
ARTICLE 2
REGISTERED OFFICE
The address of the Company's registered office in the State of Delaware is
1013 Center Road, in the City of Wilmington, County of New Castle (Zip Code
19805). The name of the Company's registered agent at such address is
Corporation Service Company.
ARTICLE 3
<PAGE>
-2-
PURPOSES
The purpose of the Company is to engage in any lawful act or activity for
which corporations may be organized under the Delaware General Corporation Law.
ARTICLE 4
STOCK
Section 1. NUMBER OF SHARES. The total number of shares of all classes
--------- ----------------
of stock that the Company shall have authority to issue is 150,000, consisting
solely of 150,000 shares of common stock, $0.001 par value per share ("Series A
--------
Common Stock").
- ------------
Section 2. VOTING RIGHTS. Except as otherwise required by law, the
--------- -------------
holders of each share of Series A Common Stock shall be entitled to vote on all
matters and shall be entitled to one vote for each such share held; and the
holders of Series A Common Stock will vote together as the holders of a single
class of stock.
Section 3. TRANSFERS. The Company shall keep at its principal office or
--------- ---------
at the office of its legal counsel a register for the registration of shares of
Common Stock. Upon the surrender at such place of any certificate representing
any share of Common Stock of the Company, the Company shall, at the request of
the record holder of such certificate, execute and deliver a new certificate or
certificates in exchange therefor representing in the aggregate the number and
type of shares of Stock represented by the surrendered certificate. Each such
new certificate shall be registered in the name of the record holder of the
surrendered certificate or (subject to compliance with applicable securities
laws and with the provisions of provisions of this Amended and Restated
Certificate of Incorporation, the By-Laws of the Company, and any contract or
agreement to which such holder is or may become party) such other name as such
holder may request, and shall be substantially identical in form to the
surrendered certificate. The issuance of new certificates shall be made without
charge to the holders of the surrendered certificates for any issuance tax in
respect thereof or other cost incurred by the Company in connection with such
issuance, unless such issuance is made in connection with a transfer of shares
of capital stock, in which case the transferring holder shall pay all taxes
arising from such transfer.
SECTION 4. REPLACEMENT. Upon receipt of evidence reasonably satisfactory
--------- -----------
to the Company (for which purpose an affidavit of the registered holder shall be
satisfactory) of the ownership and the loss,
<PAGE>
-3-
theft, destruction, or mutilation of any certificate evidencing shares of the
Company's capital stock, and in the case of any such loss, theft, or
destruction, upon receipt of indemnity reasonably satisfactory to the Company,
or in the case of any such mutilation upon surrender of such certificate, the
Company shall (at its expense) execute and deliver in lieu of such certificate a
new certificate of like kind representing the number and type of shares of
capital stock represented by such lost, stolen, destroyed, or mutilated
certificate and dated the date of such lost, stolen, destroyed, or mutilated
certificate.
SECTION 5. NOTICES. All notices, requests, payments, instructions or
--------- -------
other documents to be given hereunder shall be given in the manner provided in,
and shall be deemed to be effective in accordance with, the By-Laws of the
Company.
ARTICLE 5
MANAGEMENT
The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Company and for defining and
regulating the powers of the Company and its directors and stockholders and are
in furtherance and not in limitation of the powers conferred upon the Company by
statute:
A. The number of directors of the Company shall be such as from time to
time shall be fixed by, or in the manner provided in, the By-Laws of the
Company. The election of directors need not be by written ballot.
B. Subject to such limitations as may be from time to time imposed by
other provisions of this Amended and Restated Certificate of Incorporation, by
the By-Laws of the Company, by applicable statutory or other law, and by any
contract or agreement to which the Company is or may become a party, the Board
of Directors shall have the power and authority:
(i) to adopt, amend, and/or repeal the By-Laws of the Company,
provided however that no such adoption, amendment or repeal shall
invalidate any prior act or deed of the directors which was valid when
taken or made;
(ii) to the full extent permitted or not prohibited by law, and
without the consent of or other action by the stockholders, to authorize or
create mortgage, pledges or other liens or encumbrances upon any or all of
the assets, real, personal or mixed,
<PAGE>
-4-
and franchises of the Company, including after-acquired property, and to
exercise all of the powers of the Company in connection therewith;
(iii) to determine whether, to what extent, at what times and places,
and under what conditions the records, accounts, books, and papers of the
Company shall be open for inspection by its stockholders, and no
stockholder shall have any right to inspect any record, account, book, or
paper of the Company except as conferred by statute or authorized by the
By-Laws of the Company or by the Board of Directors; and
(iv) to exercise all such other powers and to do all such other acts
and things as may be exercised or done by the Company.
ARTICLE 6
INDEMNIFICATION
The Company shall indemnify, and upon request shall advance expenses to, in
the manner and to the full extent permitted by law, any person (or the estate of
any person) who was or is a party to, or is threatened to be made a party to,
any threatened, pending or completed action, suit or proceeding, whether or not
by or in the right of the Company, and whether civil, criminal, administrative,
investigative or otherwise, by reason of the fact that such person is or was a
director or officer of the Company, or is or was serving at the request of the
Company as a director, officer, partner or trustee of another company,
partnership, joint venture, trust or other enterprise. The Company may, to the
fullest extent permitted by law, purchase and maintain insurance on behalf of
any such person against any liability which may be asserted against him or her,
whether or not the Company would have the power to indemnify him or her against
such liability pursuant to this Article 6. To the fullest extent permitted by
law, the indemnification and advances provided for herein shall include expenses
(including attorney's fees), judgments, fines and amounts paid in settlement.
The indemnification provided herein shall not be deemed to limit the right of
the Company to indemnify any other person for any such expenses to the full
extent permitted by law, nor shall it be deemed exclusive of any other rights to
which any person seeking indemnification from the Company may be entitled under
any agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office.
<PAGE>
-5-
A director shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (a) for any breach of the director's duty of loyalty to the
Company or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the Delaware General Corporation Law, or (d) for any transaction
from which the director derived an improper personal benefit. If the Delaware
General Corporation Law is amended after approval by the stockholder of this
Section to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the Company
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended. Any repeal or modification of the
foregoing portion of this Section by the stockholders shall not adversely effect
any right or protection of a director of the Company existing at the time of
such repeal or modification.
ARTICLE 7
COMPROMISE OR ARRANGEMENT
AND REORGANIZATION
Whenever a compromise or arrangement is proposed between the Company and
its creditors or any class of them and/or between the Company and its
stockholders or any Class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the Company or
of any creditor or stockholder thereof or on the application of any receiver or
receivers appointed for the Company under the provisions of Section 391 of Title
8 of the Delaware Code or on the application of trustees in dissolution or of
any receiver or receivers appointed for the Company under the provisions of
Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Company, as the case may be, to be summoned in such a manner as the said court
directs. If at least a majority of the number representing three-fourths
(3/4ths) in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Company, as the case may be, agree
to any compromise or arrangement and to any reorganization of the Company as a
consequence of such compromise or arrangement, the compromise or arrangement and
the said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all creditors or class of creditors,
and/or stockholders or class of stockholders of the Company, as the case may be,
and also on the Company.
<PAGE>
-6-
IN WITNESS WHEREOF, I have hereunto set my hand and seal, the 11 day of
March, 1998.
KFI HOLDING CORPORATION
/s/ Michael F. Gilligan
--------------------------
Name: Michael F. Gilligan
Title: President
<PAGE>
Exhibit 3.2
IMPAC GROUP, INC.
-----------------
AMENDED AND RESTATED B Y - L A W S
----------------------------------
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
Article I. - General ............................................................1
1.1. Offices .........................................................1
1.2. Seal ............................................................1
1.3. Fiscal Year .....................................................1
Article 11. - Stockholders ......................................................1
2.1. Place of Meetings ...............................................1
2.2. Annual Meeting ..................................................1
2.3. Quorum ..........................................................2
2.4. Right to Vote: Proxies ..........................................2
2.5. Voting ..........................................................2
2.6. Notice of Annual Meetings .......................................3
2.7. Stockholders List ...............................................3
2.8. Special Meetings ................................................3
2.9. Notice of Special Meetings ......................................3
2.10. Inspectors ......................................................4
2.11. Stockholders' Consent in Lieu of Meeting ........................4
Article III. - Directors ........................................................5
3.1. Number of Directors .............................................5
3.2. Change in Number of Directors; Vacancies ........................5
3.3. Resignation .....................................................6
3.4. Removal .........................................................6
3.5. Place of Meetings and Books .....................................6
3.6. General Powers ..................................................6
3.7. Committees ......................................................6
3.8. Powers Denied to Committees .....................................7
3.9. Expenses and Compensation of Directors ..........................7
3.10. Annual Meeting ..................................................7
3.11. Regular Meetings ................................................8
3.12. Special Meetings ................................................8
3.13. Quorum ..........................................................8
3.14. Telephonic Participation in Meetings ............................8
3.15. Action by Consent ...............................................9
Article IV. - Officers ..........................................................9
4.1. Selection: Statutory Officers ...................................9
4.2. Additional Officers .............................................9
4.3. Terms of Office .................................................9
4.4. Compensation of Officers ........................................9
4.5. Chairman of the Board ...........................................9
</TABLE>
<PAGE>
-ii-
<TABLE>
<S> <C>
4.6. President ......................................................9
4.7. Executive Vice Presidents and Vice Presidents ..................10
4.8. Treasurer ......................................................10
4.9. Secretary ......................................................10
4.10. Assistant Secretary ............................................11
4.11. Assistant Treasurer ............................................11
4.12. Subordinate Officers ...........................................11
Article V. - Stock .............................................................11
5.1. Stock ..........................................................11
5.2. Fractional Share Interests .....................................12
5.3. Transfers of Stock .............................................12
5.4. Record Date ....................................................13
a.5. Transfer Agent and Registrar ...................................13
5.6. Dividends ......................................................13
5.7. Lost, Stolen or Destroyed Certificates .........................14
5.8. Inspection of Books ............................................14
Article VI. - Miscellaneous Management Provisions ..............................14
6.1. Checks, Drafts and Notes .......................................14
6.2. Notices ........................................................14
6.3. Conflict of Interest ...........................................15
6.4. Voting of Securities owned by this Corporation .................16
Article VII. - Indemnification .................................................16
7.1. Right to Indemnification .......................................16
7.2. Right of Indemnitee to Bring Suit ..............................17
7.3. Non-Exclusivity of Rights ......................................18
7.4. Insurance ......................................................18
7.5. Indemnification of Employees and Agents of the
Corporation ..........................................................18
Article VIII. - Amendments .....................................................18
8.1. Amendments .....................................................18
</TABLE>
<PAGE>
EXHIBIT E
IMPAC GROUP, INC.
-----------------
AMENDED AND RESTATED BY-LAWS
----------------------------
Notwithstanding any provision of these by-laws to the contrary, these by-
laws shall be subject to, and in the case of any conflict or inconsistency,
shall be controlled and overridden by, the terms of that certain Stockholder
Agreement dated as of __________ __, 1998, by and among the Corporation and its
stockholders (as amended and in effect from time to time, the "Stockholder
-----------
Agreement"), and by the terms of the Other Agreements as defined therein.
- ---------
Article I. - General.
--------------------
1.1. Offices. The registered office shall be in the City of Wilmington,
-------
County of New Castle, State of Delaware. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
1.2. Seal. The seal of the Corporation, if any, shall be in the form of a
----
circle and shall have inscribed thereon the name of the Corporation, the year of
its organization and the words "Corporate Seal, Delaware".
1.3. Fiscal Year. The fiscal year of the Corporation shall be the period
-----------
from January 1 through December 31.
Article II. - Stockholders.
--------------------------
2.1. Place of Meetings. All meetings of the stockholders shall be held
-----------------
wherever the Board of Directors shall from time to time determine, upon notice
as hereinafter provided.
2.2. Annual Meeting. The annual meeting of the stockholders shall be held
--------------
each year on such date and at such time as the Board of Directors may determine.
At each annual meeting the stockholders entitled to vote shall elect a Board of
Directors in accordance with the provisions of Section 3.1 of the Stockholder
Agreement applicable at the time of such meeting and they may transact such
other corporate business as may properly be brought before the meeting. At the
annual meeting any business may be transacted irrespective of whether the
notice calling such meeting shall have contained a reference thereto, except
where
<PAGE>
-2-
notice is required by law, the Corporation's Restated Certificate of
Incorporation (as amended and in effect from time to time, the "Certificate of
----------- --
Incorporation"), or these by-laws.
- -------------
2.3. Quorum. At all meetings of the stockholders the holders of a majority
------
of the stock issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum requisite for the
transaction of business except as otherwise provided by law, by the Certificate
of Incorporation or by these by-laws. If, however, such majority shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or by proxy, by a majority vote,
shall have power to adjourn the meeting from time to time without notice other
than announcement at the meeting until the requisite amount of voting stock
shall be present. If the adjournment is for more than thirty (30) days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting. At such adjourned meeting, at which the
requisite amount of voting stock shall be represented, any business may be
transacted which might have been transacted if the meeting had been held as
originally called.
2.4. Right to Vote; Proxies. Each holder of a share or shares of capital
----------------------
stock of the Corporation having the right to vote at any meeting shall be
entitled to one vote for each such share of stock held by him. Any stockholder
entitled to vote at any meeting of stockholders may vote either in person or by
proxy, but no proxy which is dated more than three years prior to the meeting at
which it is offered shall confer the right to vote thereat unless the proxy
provides that it shall be effective for a longer period. A proxy may be
granted by a writing executed by the stockholder or his authorized officer,
director, employee or agent or by transmission or authorization of transmission
of a telegram, cablegram, or other means of electronic transmission to the
person who will be the holder of the proxy or to a proxy solicitation firm,
proxy support service organization or like agent duly authorized by the person
who will be the holder of the proxy to receive such transmission, subject to the
conditions set forth in Section 212 of the Delaware General Corporation Law, as
it may be amended from time to time (the "Delaware GCL").
------------
2.5. Voting. At all meetings of stockholders, except as otherwise expressly
------
provided for by law, the Certificate of Incorporation, these bylaws or binding
agreement among the stockholders, (a) in all matters other than the election of
directors, the affirmative vote of a majority of shares present in person or
represented by proxy at the meeting and
<PAGE>
-3-
entitled to vote on such matter shall be the act of the stockholders, and (b)
directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Except as otherwise expressly provided by law, the
Certificate of Incorporation, these by-laws, or binding agreement among the
stockholders, at all meetings of stockholders the voting shall be by voice vote,
but any stockholder qualified to vote on the matter in question may demand a
stock vote, by shares of stock, upon such question, whereupon such stock vote
shall be taken by ballot, each of which shall state the name of the stockholder
voting and the number of shares voted by him, and, if such ballot be cast by a
proxy, it shall also state the name of the proxy.
2.6. Notice of Annual Meetings. Written notice of the annual meeting of the
-------------------------
stockholders shall be mailed to each stockholder entitled to vote thereat at
such address as appears on the stock books of the Corporation at least ten (10)
days (and not more than sixty (60) days) prior to the meeting. It shall be the
duty of every stockholder to furnish to the Secretary of the Corporation or to
the transfer agent, if any, of the class of stock owned by him, his post-office
address and to notify said Secretary or transfer agent of any change therein.
2.7. Stockholders' List. A complete list of the stockholders entitled to
------------------
vote at any meeting of stockholders, arranged in alphabetical order and showing
the address of each stockholder, and the number of shares registered in the name
of each stockholder, shall be prepared by the Secretary and filed either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice in the meeting, or, if not so specified, at the place
where the meeting is to be held, at least ten days before such meeting, and
shall at all times during the usual hours for business, and during the whole
time of said election, be open to the examination of any stockholder for a
purpose germane to the meeting.
2.8. Special Meetings. Special meetings of the stockholders for any purpose
----------------
or purposes, unless otherwise provided by law, the Certificate of Incorporation,
these by-laws, or binding agreement among the stockholders, may be called by (a)
the Board of Directors, (b) the President, (c) the Majority Klearfold Holders
(as defined in the Stockholder Agreement), (d) the Majority AGI Holders (as
defined in the Stockholder Agreement), or (e) the Majority Heritage Holders (as
defined in the Stockholder Agreement).
2.9. Notice of Special Meetings. Written notice of a special meeting of
--------------------------
stockholders, stating the time and place and object thereof
<PAGE>
-4-
shall be mailed, postage prepaid, not less than ten (10) nor more than sixty
(60) days before such meeting, to each stockholder entitled to vote thereat, at
such address as appears on the books of the Corporation, and, if such special
meeting is called pursuant to clauses (c)-(e) of (S)2.8 of these by-laws, also
to the Corporation. No business may be transacted at such meeting except that
referred to in said notice, or in a supplemental notice given also in compliance
with the provisions hereof, or such other business as may be germane or
supplementary to that stated in said notice or notices.
2.10. Inspectors.
----------
(a) One or more inspectors may be appointed by the Board of
Directors before or at any meeting of stockholders, or, if no such
appointment shall have been made, the presiding officer may make such
appointment at the meeting. At the meeting for which the inspector or
inspectors are appointed, he or they shall open and close the polls,
receive and take charge of the proxies and ballots and decide all
questions touching on the qualifications of voters, the validity of
proxies and the acceptance and rejection of votes. If any inspector
previously appointed shall fail to attend or refuse or be unable to
serve, the presiding officer shall appoint an inspector in his place.
(b) At any time at which the Corporation has a class of voting
stock that is (i) listed on a national securities exchange, (ii)
authorized for quotation on an inter-dealer quotation system of a
registered national securities association, or (iii) held of record by
more than 2,000 stockholders, the provisions of Section 231 of the
Delaware GCL with respect to inspectors of election and voting
procedures shall apply in lieu of the provisions of paragraph (a) of
this (S)2.10.
2.11. Stockholders' Consent in Lieu of Meeting. Unless otherwise
----------------------------------------
provided in the Certificate of Incorporation, any action required by law to be
taken at any annual or special meeting of stockholders of the Corporation, or
any action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes (in total numbers and by Type of shares, within the
meaning of the Stockholder Agreement), that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and
<PAGE>
-5-
voted and shall be delivered to the Corporation by delivery to its registered
office in the Stare of Delaware, or its principal place of business, or an
officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within
sixty (60) days of the earliest dated consent delivered in the manner required
by this (S)2.11 to the Corporation, written consents signed by a sufficient
number of stockholders to take action under this (S) 2.11 are delivered to the
Corporation in the manner required by this (S)2.11. The Corporation shall give
prompt notice of the taking of action without a meeting by less than unanimous
written consent to those stockholders who have not consented if writing.
Article III. - Directors.
------------------------
3.1. Number of Directors; Vacancies. The property and business of the
------------------------------
Corporation shall be managed by or under the direction of a board (the "Board
of Directors" or "Board") comprising seven (7) directors, unless such number
shall have been increased pursuant to and in accordance with Sections 3.1(c) or
3.1(e) of the Stockholder Agreement. Directors need not be stockholders,
residents of Delaware or citizens of the United States. The directors shall be
elected at the annual meeting of the stockholders in accordance with the
provisions of Section 3.1 of the Stockholder Agreement applicable at the time of
such meeting, and each director shall be elected to serve until his successor
shall be elected and shall qualify or until his earlier resignation or removal;
provided that in the event of failure to hold such meeting or to hold such
election at such meeting, such election may be held at any special meeting of
the stockholders called for that purpose or by stockholders' written consent or
consents in lieu of a meeting, in each case in accordance with the provisions
of Section 3.1 of the Stockholder Agreement applicable either (a) at the time of
such special meeting, or (b) on the date upon which written consents signed by a
sufficient number of stockholders to take action are delivered to the
Corporation, as the case may be. If the office of any director becomes vacant by
reason of death, resignation, disqualification, removal, or otherwise, such
director's replacement shall be designated and elected in accordance with the
provisions of Section 3.1(c) of the Stockholder Agreement.
<PAGE>
-6-
3.2. Change in Number of Directors. The number of directors may be
-----------------------------
increased in accordance with Section 3.1(e) of the Stockholder Agreement, and
may otherwise only be changed by an amendment to these by-laws adopted in
writing by the Majority AGI Holders, the Majority Klearfold Holders and the
Majority Heritage Holders (each as defined in the Stockholder Agreement). If the
number of directors is increased by an amendment to these by-laws adopted in
writing by the Majority AGI Holders, the Majority Klearfold Holders and the
Majority Heritage Holders, then, unless otherwise agreed by such stockholders,
the additional directors may be elected at the annual meeting of the
stockholders or at a special meeting of the stockholders called for that
purpose.
3.3. Resignation. Any director of this Corporation may resign at any
-----------
time by giving written notice to the President or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein,
at the time of receipt if no time is specified therein and at the time of
acceptance if the effectiveness of such resignation is conditioned upon its
acceptance. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
3.4. Removal. Any director shall be removed, with or without cause by
-------
action of the stockholders in accordance with Section 3.1(d) of the Stockholder
Agreement if so instructed or requested by the stockholder or stockholders
entitled to designate such director or a replacement for such director pursuant
to Section 3.1(d) of the Stockholder Agreement, provided that written notice of
such removal shall be given to such director and to the President or the
Secretary of the Corporation.
3.5. Place of Meetings and Books. The Board of Directors may hold
---------------------------
their meetings and keep the books of the Corporation outside the State of
Delaware, at such places as they may from time to time determine.
3.6. General Powers. In addition to the powers and authority expressly
--------------
conferred upon them by these by-laws, the Board of Directors may exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by law or by the Certificate of Incorporation or by these by-laws directed or
required to be exercised or done by the stockholders.
3.7. Committees. The Board of Directors may designate one or more
----------
committees by resolution or resolutions passed by unanimous consent of the whole
Board of Directors; such committee or committees shall consist of one or more
directors of the Corporation, and to the extent
<PAGE>
-7-
provided in the resolution or resolutions designating them, shall have and may
exercise specific powers of the Board of Directors in the management of the
business and affairs of the Corporation to the extent permitted by law and shall
have power to authorize the seal of the Corporation to be affixed to all papers
which may require it. Such committee or committees shall have such name or names
as may be determined from time to time by resolution adopted by the Board of
Directors. The act of a majority of the members of such committee shall be the
act of the committee. Such committee may meet at stated times or on notice to
all members of such committee by any of their own number. Vacancies in the
membership of any such committee shall be filled by the Board of Directors at a
regular meeting or at a special meeting called for that purpose. Any committee
shall keep regular minutes of its proceedings and report the same to the Board
of Directors as may be required by the Board.
3.8. Powers Denied to Committees. Committees of the Board of Directors
---------------------------
shall not, in any event, have any power or authority to amend the Certificate of
Incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares adopted by the
Board of Directors as provided in Section 151(a) of the Delaware GCL, fix the
designations and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series),
adopt an agreement of merger or consolidation, recommend to the stockholders the
sale lease or exchange of all or substantially all of the Corporation's property
and assets, recommend to the stockholders a dissolution of the Corporation or a
revocation of a dissolution or to amend the by-laws of the Corporation. Further,
no committee of the Board of Directors shall have the power or authority to
declare a dividend, to authorize the issuance of stock or to adopt a certificate
of ownership and merger pursuant to Section 253 of the Delaware GCL, unless the
resolution or resolutions of the whole Board of Directors designating such
committee expressly so provides.
3.9. Expenses and Compensation of Directors. The Board of Directors,
--------------------------------------
acting on the recommendation of the President, shall have the power to fix the
compensation, if any, to be paid to directors and members of committees of the
Board. Directors shall be reimbursed their expenses, if any, of attendance at
each meeting of the Board or committee of the Board.
<PAGE>
-8-
3.10. Annual Meeting. The newly elected Board of Directors may meet at
--------------
such place and time as shall be fixed and announced by the presiding officer at
the annual meeting of stockholders, for the purpose of organization or
otherwise, and no further notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present, or they may meet at such place and time as shall be stated in
a notice given to such directors two (2) days prior to such meeting, or as shall
be fixed by the consent in writing of all the directors.
3.11. Regular Meetings. Regular meetings of the Board of Directors may
----------------
be held without notice at such time and place as shall from time to time be
determined by the Board.
3.12. Special Meetings. Special meetings of the Board of Directors may
----------------
be called by the Chairman of the Board or the President on at least forty-eight
(48) hours notice to each of the directors, or such shorter period of time
before the meeting as will nonetheless be sufficient for the convenient assembly
of all of the directors: special meetings of the Board of Directors shall be
called by the Secretary in like manner and on like notice, on the written
request of two or more directors.
3.13. Quorum.
------
(a) So long as the Board of Directors has no more than seven
(7) members, at all meetings of the Board of Directors, six (6)
directors shall be necessary and sufficient to constitute a quorum for
the transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall be
the act of the Board of Directors, except as may be otherwise
specifically permitted or provided by law, by the Certificate of
Incorporation, or by these by-laws. If at any meeting of the Board of
Directors there shall be less than a quorum present, such meeting
shall be adjourned and each of the directors notified by telephone and
written telecommunication of the date and time of which such meeting
is to be reconvened, which shall be not less than forty-eight (48)
hours following the time of the originally-scheduled meeting of the
Board of Directors, and at such reconvened meeting the quorum of the
Board of Directors shall constitute four (4) directors, provided that,
--------
if at the time of such meeting the Board of Directors is constituted
pursuant to and in accordance with the provisions of Section 3.1(b) of
the Stockholder Agreement, then, in order to constitute a quorum, the
number of Heritage Directors (as defined in the Stockholder Agreement)
present at any such meeting
<PAGE>
-9-
(including any such reconvened meeting) must exceed the number of
Non-Heritage Directors as defined in the Stockholder Agreement) so
present.
(b) So long as the Board of Directors has more than seven (7)
members, at all meetings of the Board of Directors, one less than the
then-applicable aggregate number of directors shall be necessary and
sufficient to constitute a quorum for the transaction of business, and
the act of a majority of the directors present at any meeting at which
there is a quorum shall be the act of the Board of Directors, except
as may be otherwise specifically permitted or provided by law, by the
Certificate of Incorporation, or by these bylaws. If at any meeting of
the Board of Directors there shall be less than a quorum present, such
meeting shall be adjourned and each of the directors notified by
telephone and written telecommunication of the date and time of which
such meeting is to be reconvened, which shall be not less than
forty-eight (48) hours following the time of the originally-scheduled
meeting of the Board of Directors, and at such reconvened meeting the
quorum of the Board of Directors shall constitute one-half of the
then-applicable aggregate number of directors, rounded up, if
necessary, to the next whole number.
3.14. Telephonic Participation in Meetings. Members of the Board of
------------------------------------
Directors or any committee designated by the Board may participate in a meeting
of the Board of Directors or such committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
(S)3.14 shall constitute presence in person at such meeting.
3.15. Action by Consent. Unless otherwise restricted by law, the
-----------------
Certificate of Incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board or
committee.
Article IV. - Officers.
----------------------
4.1. Selection: Statutory Officers. The officers of the Corporation
-----------------------------
shall be chosen by the Board of Directors, based on the recommendation of the
President (other than with respect to the office of President). There shall be a
President, a Secretary and a Treasurer, and
<PAGE>
-10-
there may be one or more Executive Vice Presidents, one or more Vice Presidents
one or more Assistant Secretaries, and one or more Assistant Treasurers, as the
Board of Directors may elect. Any number of offices may be held by the same
person. None of said officers need be a director.
4.2. Additional Officers. The Board of Directors based on the
-------------------
recommendation of the President may appoint such other officers and agents as it
shall deem necessary, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board based on the recommendation of the President.
4.3. Terms of Office. Each officer of the Corporation shall hold office
---------------
until his successor is chosen and qualified, or until his earlier resignation or
removal. Any officer elected or appointed by the Board of Directors may be
removed at any time by the Board of Directors, based on the recommendation of
the President (other than with respect to the office of President).
4.4. Compensation of Officers. The Board of Directors, based on the
------------------------
recommendation of the President (other than with respect to the office of
President), shall have power to fix the compensation of all officers of the
Corporation, and may authorize the President to fix the compensation of
subordinate officers.
4.5. President. The President shall be the chief executive officer of
---------
the Corporation and shall preside at all meetings of stockholders and all
meetings of the Board of Directors. Under the supervision of the Board of
Directors, the President shall have the general control and management of the
business and affairs of the Corporation, subject, however, to the right of the
Board of Directors to confer any specific power, except such as may by statute
or contract exclusively conferred on the President, upon any other officer or
officers of the Corporation. The President shall perform and do all acts and
things incident to the position of President of the Corporation, and such other
duties as may be assigned to him from time to time by the Board of Directors.
4.6. Executive Vice Presidents and Vice Presidents. The Executive Vice
---------------------------------------------
Presidents and Vice Presidents shall perform such of the duties of the President
on behalf of the Corporation as may be respectively assigned to them from time
to time by the Board of Directors or by the President. The Board of Directors
may, upon recommendation of the President, designate any Vice President as an
Executive Vice President.
<PAGE>
-11-
4.7. Treasurer. The Treasurer shall be the Chief Financial Officer and
---------
shall have the care and custody of all the funds and securities of the
Corporation which may come into his hands as Treasurer, and the power and
authority to endorse checks, drafts and other instruments for the payment of
money for deposit or collection when necessary or proper and to deposit the same
to the credit of the Corporation in such bank or banks or depository as the
Board of Directors, or the President may designate, and he may endorse all
commercial documents requiring endorsements for or on behalf of the Corporation.
He may sign all receipts and vouchers for the payments made to the Corporation.
He shall render an account of his transactions to the Board of Directors as
often as the Board shall require the same. He shall enter regularly in the books
to be kept by him for that purpose full and adequate account of all moneys
received or paid on account of the Corporation. He shall perform all acts
incident to the position of Treasurer of a corporation, subject to the control
of the Board of Directors and the President. He shall, when requested pursuant
to a vote of the Board of Directors, give a bond to the Corporation to secure
the faithful performance of his duties, the expense of which bond shall be borne
by the Corporation. In the absence or inability to act of the President, the
Treasurer shall have and possess all of the power and discharge all of the
duties of the President, subject to the control of the Board of Directors.
4.8. Secretary. The Secretary shall keep the minutes of all meetings of the
---------
Board of Directors and of the stockholders: he shall attend to the giving and
serving of all notices of the Corporation. Except as otherwise ordered by the
Board of Directors, he shall attest the seal of the Corporation upon all
contracts and instruments executed under such seal and shall affix the seal of
the Corporation thereto, and may affix the seal of the Corporation to
certificates of shares of capital stock of the Corporation. He shall have charge
of the stock certificate book, transfer book and stock ledger, and such other
books and papers as the Board of Directors may direct. He shall, in general,
perform all of the duties of the Secretary of a corporation, subject to the
control of the Board of Directors and the President.
4.9. Assistant Secretary. The Board of Directors, based on the
-------------------
recommendation of the President, or the President and any one other officer of
the Corporation, acting jointly, may appoint or remove one or more Assistant
Secretaries of the Corporation. Any Assistant Secretary upon his appointment
shall perform such duties of the Secretary, and also any and all such other
duties, as any of the Board, the President, the Treasurer, or the Secretary may
designate.
<PAGE>
-12-
4.10. Assistant Treasurer. The Board of Directors, based on the
-------------------
recommendation of the President, or the President and any one other officer of
the Corporation, acting jointly, may appoint or remove one or more Assistant
Treasurers of the Corporation. Any Assistant Treasurer upon his appointment
shall perform such of the duties of the Treasurer, and also any and all such
other duties, as any of the Board, the President, the Treasurer, or the
Secretary may designate.
4.11. Subordinate Officers. The Board of Directors, based on the
--------------------
recommendation of the President, may select such subordinate officers of the
Corporation as it may deem desirable. Each such officer shall hold office for
such period, have such authority, and perform such duties as the Board of
Directors may prescribe. The Board of Directors may authorize the President to
appoint and remove subordinate officers and to prescribe the powers and duties
thereof.
Article V. - Stock.
------------------
5.1. Stock. Each stockholder shall be entitled to a certificate or
-----
certificates of stock of the Corporation in such form as the Board of Directors
may from time to time prescribe. The certificates of stock of the Corporation
shall be numbered and shall be entered in the books of the Corporation as they
are issued. They shall certify the holder's name and number and class of shares
and shall be signed by both of (a) either the President or a Vice President, and
(b) any one of the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary. The corporate seal of the Corporation may, but is not
required to, be affixed to such certificate. If such certificate is
Countersigned (i) by a transfer agent other than the Corporation or its
employee, or (ii) by a registrar other than the Corporation or its employee, the
signature of the officers of the Corporation and the corporate seal may be
facsimiles. In case any officer or officers who shall have signed, or whose
facsimile signature or signatures shall have been used on, any such certificate
or certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature shall have been used thereon had not
so ceased to be such officer or officers of the Corporation.
5.2. Fractional Share Interests. The Corporation may, but shall not be
--------------------------
required to, issue fractions of a share. If the Corporation does not
<PAGE>
-13-
issue fractions of a share, it shall (a) arrange for the disposition of
fractional interests by those entitled thereto, (b) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined, or (c) issue scrip or warrants in registered or bearer
form which shall entitle the holder to receive a certificate for a full share
upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share shall, but scrip or warrants shall not unless
otherwise provided therein, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
Corporation in the event of liquidation. The Board of Directors may cause scrip
or warrants to be issued subject to the conditions that they shall become void
if not exchanged for certificates representing full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the Corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions which the Board of Directors may impose.
5.3. Transfers of Stock. Subject to any transfer restrictions then in
------------------
force, the shares of stock of the Corporation shall be transferable only upon
its books by the holders thereof in person or by their duly authorized attorneys
or legal representatives and upon such transfer the old certificates shall be
surrendered to the Corporation by the delivery thereof to the person in charge
of the stock and transfer books and ledgers or to such other person as the
directors may designate by whom they shall be canceled and new certificates
shall thereupon be issued. The Corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person whether or not it shall
have express or other notice whereof save as experience provided by the laws of
Delaware.
5.4. Record Date. For the purpose of determining the stockholders entitled
-----------
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or the
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion, or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty (60) days nor less than ten (10) days before the date of
such meeting, nor more than sixty (60) days prior to any other action. If no
such record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the
<PAGE>
-14-
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held: the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary, shall be the day on
which the first written consent is expressed; and the record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. A determination of stockholders of record entitled to notice of or to
vote at any meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
5.5. Transfer Agent and Registrar. The Board of Directors may appoint
----------------------------
one or more transfer agents or transfer clerks and one or more registrars and
may require all certificates of stock to bear the signature or signatures of any
of them.
5.6. Dividends.
---------
(a) Power to Declare. Dividends upon the capital stock of the
----------------
Corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors at
any regular or special meeting, pursuant to law. Dividends may be paid
in cash, in property, or in shares of capital stock, subject to the
provisions of the Certificate of Incorporation and the laws of
Delaware.
(b) Reserves. Before payment of any dividend, there may be
--------
set aside out of any funds of the Corporation available for dividends
such sum or sums as the Board of Directors from time to time, in its
absolute discretion, thinks proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose
as the Board shall think conducive to the interests of the
Corporation, and the Board may modify or abolish any such reserve in
the manner in which it was created.
5.7. Lost, Stolen or Destroyed Certificates. No certificates for
--------------------------------------
shares of stock of the Corporation shall be issued in place of any certificate
alleged to have been lost, stolen or destroyed, except upon production of such
evidence of the loss, theft or destruction and upon indemnification of the
Corporation and its agents to such extent and in such manner as the Board of
Directors may from time to time prescribe.
<PAGE>
-15-
5.8. Inspection of Books. The stockholders of the Corporation, by a
-------------------
majority vote at any meeting of stockholders duly called, or in case the
stockholders shall fail to act. the Board of Directors shall have power from
time to time to determine whether and to what extent and at what times and
places and under what conditions and regulations the accounts and books of the
Corporation (other than the stock ledger) or any of them, shall be open to
inspection of stockholders; and no stockholder shall have any right to inspect
any account or book or document of the Corporation except as conferred by
statute or authorized by the Board of Directors or by a resolution of the
stockholders.
Article VI. - Miscellaneous Management Provisions.
-------------------------------------------------
6.1. Checks, Drafts and Notes. All checks, drafts or orders for the
------------------------
payment of money, and all notes and acceptances of the Corporation, shall be
signed by such officer or officers, agent or agents as the Board of Directors
may designate.
6.2. Notices.
-------
(a) All notices, requests, payments, instructions, or other
documents to be given to directors or officers may, and all notices,
requests, payments, instructions, or other documents to be given to
stockholders shall, be in writing or by written telecommunication, and
shall be deemed to have been duly given if (i) delivered personally
(effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five (5)
business days after dispatch), (iii) sent by a reputable, established
courier service that guarantees next business day delivery (effective
the next business day), or (iv) sent by telecopier followed within 24
hours by confirmation by one of the foregoing methods (effective upon
receipt of the telecopy in complete, readable form), addressed, if to
the Corporation or to a director or officer of the Corporation, to the
Corporation's then principal executive office, or if to any
stockholder, to such stockholder at his or its address as it appears
in the stock records of the Corporation (or to such other address as
the recipient party may have furnished to the sending party for the
purpose of receiving notices). Notice to directors or officers may
also be given orally, by telephone or in person.
(b) Whenever any notice is required to be given under the
provisions of law, of the Certificate of Incorporation or of these
bylaws, a written waiver of notices signed by the person or persons
entitled to said notice, whether before or after the time stated
therein for the meeting or action to which such notice relates, shall
<PAGE>
-16-
be deemed equivalent to notice. Attendance of a person at a meeting
shall constitute a waiver of notice of such meeting except when the
person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because
the meeting is not lawfully called or convened.
6.3. Conflict of Interest. No contract or transaction between the
--------------------
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorized the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (a) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, thereof which authorized the contract or
transaction and the Board or such committee in good faith authorizes the
contract or transaction by the affirmative vote of a majority of the
disinterested directors or committee members, even though the disinterested
directors or committee members constitute less than a quorum: or (b) the
material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders of the Corporation
entitled to vote thereon, and the contract or transaction as specifically
approved in good faith by vote of such stockholders; or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a duly-authorized committee
thereof or the stockholders. Interested directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes the contract or transaction.
6.4. Voting of Securities owned by this Corporation. Subject always to
----------------------------------------------
the specific directions, if any, of the Board of Directors, (i) any shares or
other securities issued by any other corporation and owned or controlled by this
Corporation may be voted in person at any meeting of security holders of such
other corporation by the President of this Corporation, if he is present at such
meeting, or in his absence by the Treasurer of this Corporation, if he is
present at such meeting, and (ii) whenever, in the judgment of the President, it
is desirable for this Corporation to execute a proxy or written consent in
respect of any shares or other securities issued by any other corporation and
owned by this Corporation, such proxy or consent shall be executed in the name
of this Corporation by the President, without the necessity of any authorization
<PAGE>
-17-
by the Board of Directors, affixation of corporate seal or countersignature or
attestation by another officer, provided that if the President is unable to
execute such proxy or consent by reason of sickness, absence from the United
States or other similar cause, the Treasurer may execute such proxy or consent.
Any person or persons designated in the manner above stated as the proxy or
proxies of this Corporation shall have full right, power and authority to vote
the shares or other securities issued by such other corporation and owned by
this Corporation the same as such shares or other securities might be voted by
this Corporation.
Article VII. - Indemnification.
------------------------------
7.1. Right to Indemnification. Each person who was or is made a party
------------------------
or is threatened to be made a party to or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of being or having been a director or officer of the
----------
Corporation or serving or having served at the request of the Corporation as a
director, trustee, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan (an "Indemnitee"), whether the basis of such
----------
proceeding is alleged action or failure to act in an official capacity as a
director, trustee, officer, employee or agent or in any other capacity while
serving as a director, trustee, officer, employee or agent, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than permitted
prior thereto) (as used in this Article 7, the "Delaware Law"), against all
-------- ---
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such Indemnitee in connection therewith and such indemnification
shall continue as to an Indemnitee who has ceased to be a director, trustee,
officer, employee or agent and shall inure to the benefit of the Indemnitee's
heirs, executors and administrators: provided, however, that, except as provided
in (S)7.2 hereof with respect to Proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such Indemnitee in
connection with a Proceeding (or part thereof) initiated by such Indemnitee only
if such Proceeding (or part thereof) was authorized by the Board of Directors.
The right to indemnification conferred in this Article 7 shall be a contract
right and shall include the right to be paid by the Corporation the expenses
(including attorneys' fees) incurred in defending any such Proceeding in advance
of its final disposition (an "Advancement of
----------- --
<PAGE>
-18-
Expenses") provided, however, that, if the Delaware Law so requires, an
- --------
Advancement of Expenses incurred by an Indemnitee shall be made only upon
delivery to the Corporation of an undertaking (an "Undertaking"), by or on
-----------
behalf of such Indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (a "Final Adjudication") that such Indemnitee is not
----- ------------
entitled to be indemnified for such expenses under this Article 7 or otherwise.
7.2. Right of Indemnitee to Bring Suit. If a claim under (S)7.1 hereof
---------------------------------
is not paid in full by the Corporation within sixty days after a written claim
has been received by the Corporation, except in the case of a claim for an
Advancement of Expenses, in which case the applicable period shall be twenty
days, the Indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
Advancement of Expenses pursuant to the terms of an Undertaking, the Indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the Indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the Indemnitee to
enforce a right to an Advancement of Expenses) it shall be a defense that, and
(ii) in any suit by the Corporation to recover an Advancement of Expenses
pursuant to the terms of an Undertaking the Corporation shall be entitled to
recover such expenses upon a Final Adjudication that, the Indemnitee has not met
the applicable standard of conduct set forth in the Delaware Law. Neither the
failure of the Corporation (including the Board of Directors, its independent
legal counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the Indemnitee is proper in
the circumstances because the Indemnitee has met the applicable standard of
conduct set forth in the Delaware Law, nor an actual determination by the
Corporation (including the Board of Directors, its independent legal counsel, or
its stockholders) that the Indemnitee has not met such applicable standard of
conduct, shall create a presumption that the Indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to
enforce a right to indemnification or to an Advancement of Expenses hereunder,
or by the Corporation to recover an Advancement of Expenses pursuant to the
terms of an Undertaking, the burden of proving that the Indemnitee is not
entitled to be indemnified, or to such Advancement of Expenses, under this
Article 7 or otherwise shall be on the Corporation.
<PAGE>
- 19-
7.3. Non-Exclusivity of Rights. The rights to indemnification and to
-------------------------
the Advancement of Expenses conferred in this Article 7 shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, the Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
7.4. Insurance. The Corporation may maintain insurance, at its expense,
---------
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under this Article 7 or under the Delaware Law.
7.5. Indemnification of Employees and Agents of the Corporation. The
----------------------------------------------------------
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification, and to the Advancement of Expenses,
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article 7 with respect to the indemnification and Advancement
of Expenses of directors and officers of the Corporation.
Article VIII. - Amendments.
--------------------------
8.1. Amendments. The by-laws of the Corporation may be altered, amended
----------
or repealed only with the written consent of the Majority AGI Holders, the
Majority Klearfold Holders and the Majority Heritage Holders, as each of such
terms is defined in the Stockholder Agreement.
<PAGE>
Exhibit 4.1
___________________________________________________________________
IMPAC GROUP, INC.
SERIES A AND SERIES B
10 1/8% SENIOR SUBORDINATED NOTES DUE 2008
INDENTURE
____________________________
Dated as of March 12, 1998
____________________________
STATE STREET BANK AND TRUST COMPANY
Trustee
___________________________________________________________________
<PAGE>
CROSS-REFERENCE TABLE*
(a) Trust Indenture
Act Section Indenture Section
<TABLE>
<S> <C>
310 (a)(1)........................................................... 7.10
(a)(2)............................................................... 7.10
(a)(3)............................................................... N.A.
(a)(4)............................................................... N.A.
(a)(5)............................................................... 7.10
(i)(b)............................................................... 7.10
(ii)(c).............................................................. N.A.
311(a)............................................................... 7.11
(b).................................................................. 7.11
(iii(c).............................................................. N.A.
312 (a).............................................................. 2.05
(b).................................................................. 11.03
(iv)(c).............................................................. 11.03
313(a)............................................................... 7.06
(b)(2)............................................................... 7.07
(v)(c) 7.06; 12.02
(vi)(d).............................................................. 7.06
314(a)............................................................... 4.03;
12.02
(c)(1)............................................................... 12.04
(c)(2)............................................................... 12.04
(c)(3)............................................................... N.A.
(vii)(e)............................................................. 11.05
(f).................................................................. NA
315 (a).............................................................. 7.01
(b).................................................................. 7.05,
12.02
(A)(c)............................................................... 7.01
(d).................................................................. 7.01
(e).................................................................. 6.11
316 (a)(last sentence)............................................... 2.09
(a)(1)(A)............................................................ 6.05
(a)(1)(B)............................................................ 6.04
(a)(2)............................................................... N.A.
(b).................................................................. 6.07
(B)(c)............................................................... 2.12
317 (a)(1)........................................................... 6.08
(a)(2)............................................................... 6.09
(b).................................................................. 2.04
318 (a).............................................................. 12.01
(b).................................................................. N.A.
(c).................................................................. 12.01
N.A. means not applicable.
</TABLE>
<PAGE>
*This Cross-Reference Table is not part of the Indenture.
2
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE...................... 1
Section 1.01. Definitions................................................ 1
Section 1.02. Other Definitions.......................................... 16
Section 1.03. Terms of Tia............................................... 16
Section 1.04. Rules of Construction...................................... 17
ARTICLE 2. THE NOTES....................................................... 17
Section 2.01. Form and Dating............................................ 17
Section 2.02. Execution and Authentication................................ 19
Section 2.03. Registrar and Paying Agent................................. 19
Section 2.04. Paying Agent to Hold Money in Trust........................ 20
Section 2.05. Holder Lists............................................... 20
Section 2.06. Transfer and Exchange...................................... 21
Section 2.07. Replacement Notes.......................................... 33
Section 2.08. Outstanding Notes.......................................... 33
Section 2.09. Treasury Notes............................................. 34
Section 2.10. Temporary Notes............................................ 34
Section 2.11. Cancellation............................................... 34
Section 2.12. Defaulted Interest......................................... 34
ARTICLE 3. REDEMPTION AND PREPAYMENT....................................... 35
Section 3.01. Notices to Trustee......................................... 35
Section 3.02. Selection of Notes to Be Redeemed.......................... 35
Section 3.03. Notice of Redemption....................................... 35
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 3.04. Effect of Notice of Redemption............................. 36
Section 3.05. Deposit of Redemption Price................................ 36
Section 3.06. Notes Redeemed in Part..................................... 37
Section 3.07. Optional Redemption........................................ 37
Section 3.08. Mandatory Redemption....................................... 37
Section 3.09. Offer to Purchase by Application of Excess Proceeds........ 37
ARTICLE 4. COVENANTS....................................................... 39
Section 4.01. Payment of Notes........................................... 39
Section 4.02. Maintenance of Office or Agency............................ 40
Section 4.03. Reports.................................................... 40
Section 4.04. Compliance Certificate..................................... 41
Section 4.05. Taxes...................................................... 41
Section 4.06. Stay, Extension and Usury Laws............................. 42
Section 4.07. Restricted Payments........................................ 42
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries............................................. 44
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock.................................................... 45
Section 4.10. Asset Sales................................................ 47
Section 4.11. Transactions with Affiliates............................... 48
Section 4.12. Liens...................................................... 48
Section 4.13. No Senior Subordinated Debt................................ 48
Section 4.14. Corporate Existence........................................ 49
Section 4.15. Offer to Repurchase Upon Change of Control................. 49
Section 4.16. Payments for Consent....................................... 50
Section 4.17. Additional Subsidiary Guarantees........................... 50
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE 5. SUCCESSORS...................................................... 50
Section 5.01. Merger, Consolidation, or Sale of Assets................... 50
Section 5.02. Successor Corporation Substituted.......................... 51
ARTICLE 6. DEFAULTS AND REMEDIES........................................... 51
Section 6.01. Events of Default.......................................... 51
Section 6.02. Acceleration............................................... 53
Section 6.03. Other Remedies............................................. 54
Section 6.04. Waiver of Past Defaults.................................... 54
Section 6.05. Control by Majority........................................ 54
Section 6.06. Limitation on Suits........................................ 54
Section 6.07. Rights of Holders of Notes to Receive Payment.............. 55
Section 6.08. Collection Suit by Trustee................................. 55
Section 6.09. Trustee May File Proofs of Claim........................... 55
Section 6.10. Priorities................................................. 56
Section 6.11. Undertaking for Costs...................................... 56
ARTICLE 7. TRUSTEE......................................................... 57
Section 7.01. Duties of Trustee.......................................... 57
Section 7.02. Rights of Trustee.......................................... 58
Section 7.03. Individual Rights of Trustee............................... 58
Section 7.04. Trustee's Disclaimer....................................... 58
Section 7.05. Notice of Defaults......................................... 59
Section 7.06. Reports by Trustee to Holders of the Notes................. 59
Section 7.07. Compensation and Indemnity................................. 59
Section 7.08. Replacement of Trustee..................................... 60
Section 7.09. Successor Trustee by Merger, etc........................... 61
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 7.10. Eligibility; Disqualification.............................. 61
Section 7.11. Preferential Collection of Claims Against Company.......... 61
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE........................ 62
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance... 62
Section 8.02. Legal Defeasance and Discharge............................. 62
Section 8.03. Covenant Defeasance........................................ 62
Section 8.04. Conditions to Legal or Covenant Defeasance................. 63
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions........................... 64
Section 8.06. Repayment to Company....................................... 64
Section 8.07. Reinstatement.............................................. 65
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER................................ 65
Section 9.01. Without Consent of Holders of Notes........................ 65
Section 9.02. With Consent of Holders of Notes........................... 66
Section 9.03. Compliance with Trust Indenture Act........................ 67
Section 9.04. Revocation and Effect of Consents.......................... 67
Section 9.05. Notation on or Exchange of Notes........................... 68
Section 9.06. Trustee to Sign Amendments, etc............................ 68
ARTICLE 10. SUBORDINATION.................................................. 68
Section 10.01. Agreement to Subordinate.................................. 68
Section 10.02. Certain Definitions....................................... 68
Section 10.03. Liquidation; Dissolution; Bankruptcy...................... 69
Section 10.04. Default on Designated Senior Debt......................... 70
Section 10.05. Acceleration of Securities................................ 70
Section 10.06. When Distribution Must Be Paid over....................... 70
Section 10.07. Notice by Company......................................... 71
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Section 10.08. Subrogation............................................... 71
Section 10.09. Relative Rights........................................... 71
Section 10.10. Subordination May Not Be Impaired by Company.............. 72
Section 10.11. Distribution or Notice to Representative.................. 72
Section 10.12. Rights of Trustee and Paying Agent........................ 73
Section 10.13. Authorization to Effect Subordination..................... 73
Section 10.14. Amendments................................................ 73
ARTICLE 11. SUBSIDIARY GUARANTEES.......................................... 73
Section 11.01. Guarantee................................................. 73
Section 11.02. Subordination of Subsidiary Guarantee..................... 74
Section 11.03. Limitation on Guarantor Liability......................... 75
Section 11.04. Execution and Delivery of Subsidiary Guarantee............ 75
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms........ 76
Section 11.06. Releases Following Sale of Assets or Capital Stock........ 76
ARTICLE 12. MISCELLANEOUS.................................................. 76
Section 12.01. Trust Indenture Act Controls.............................. 76
Section 12.02. Notices................................................... 76
Section 12.03. Communication by Holders of Notes with Other Holders of
Notes................................................... 78
Section 12.04. Certificate and Opinion as to Conditions Precedent........ 78
Section 12.05. Statements Required in Certificate or Opinion............. 78
Section 12.06. Rules by Trustee and Agents............................... 79
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders............................................ 79
Section 12.08. Governing Law............................................. 79
Section 12.09. No Adverse Interpretation of Other Agreements............. 79
Section 12.10. Successors................................................ 79
Section 12.11. Severability.............................................. 79
</TABLE>
v
<PAGE>
<TABLE>
<S> <C>
Section 12.12. Counterpart Originals..................................... 79
Section 12.13. Table of Contents, Headings, etc.......................... 79
</TABLE>
vi
<PAGE>
EXHIBITS
Exhibit A-1 FORM OF NOTE
Exhibit A-2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E FORM OF SUBORDINATED SUBSIDIARY GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
vii
<PAGE>
INDENTURE dated as of March 12, 1998 between IMPAC Group, Inc., a
Delaware corporation (the "Company"), and State Street Bank and Trust Company, a
Massachusetts trust company, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 101/8% Series
A Senior Subordinated Notes due 2008 (the "Series A Notes") and the 101/8%
Series B Senior Subordinated Notes due 2008 (the "Series B Notes" and, together
with the Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a global note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person but in any event excluding the agent and
lenders under the New Credit Facility. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business consistent with past practices (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company and its Restricted Subsidiaries taken as a whole will be governed by
Sections 4.15 or 5.01 and not by Section 4.10 hereof
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and (ii) the issue or sale by the Company or any of its Restricted Subsidiaries
of Equity Interests of any of the Company's Restricted Subsidiaries, in the case
of either clause (i) or (ii), whether in a single transaction or a series of
related transactions (a) that have a fair market value in excess of $1.0 million
or (b) for net proceeds in excess of $1.0 million. Notwithstanding the
foregoing, the following items shall not be deemed to be Asset Sales: (i) a
transfer of assets by the Company to a Restricted Subsidiary or by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary, (ii) an issuance
of Equity Interests by a Restricted Subsidiary to the Company or to another
Restricted Subsidiary, and (iii) a Restricted Payment that is permitted by
Section 4.07 hereof.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any lender party to the New Credit Facility or with any domestic commercial
bank having capital and surplus in excess of $500 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within six months after the date of
acquisition and (vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i) - (v) of this
definition.
"Cedel" means Cedel Bank, SA.
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"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than one or more Principals or Related Parties of one or
more Principals or a Management Group, (ii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), other than one or more Principals and
their Related Parties or a Management Group, becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except
that a person shall be deemed to have "beneficial ownership" of all securities
that such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 50% of the Voting Stock of the
Company (measured by voting power rather than number of shares), (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above) other
than a Management Group becomes the "beneficial owner" (as defined above),
directly or indirectly, of 35% or more of the Voting Stock of the Company
(measured by voting power rather than number of shares) and the Principals and
their Related Parties in the aggregate "beneficially own" (as defined above)
less than 35% of the Voting Stock of the Company (measured by voting power
rather than number of shares) or (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
"Company" means IMPAC Group, Inc., a Delaware corporation, and any and
all successors thereto.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iv) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve for
cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such depreciation, amortization and other
non-cash expenses were deducted in computing such Consolidated Net Income, minus
(v) non-cash items increasing such Consolidated Net Income for such period, in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or profits
of, and the depreciation and amortization and other non-cash expenses of, a
Restricted
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Subsidiary of the referent Person shall be added to Consolidated Net Income to
compute Consolidated Cash Flow only to the extent that a corresponding amount
would be permitted at the date of determination to be dividended to the Company
by such Restricted Subsidiary without prior governmental approval (that has not
been obtained), and without direct or indirect restriction pursuant to the terms
of its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof that is a Guarantor, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded, (v)
the Net Income of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the Company or one of its Restricted Subsidiaries, and (vi) the
Net Income of any Restricted Subsidiary shall be calculated after deducting
preferred stock dividends payable by such Restricted Subsidiary to Persons other
than the Company and its other Restricted Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) effected subsequent to the date of this Indenture in the book
value of any asset owned by such Person or a consolidated Subsidiary of such
Person, (y) all investments as of such date in unconsolidated Subsidiaries and
in Persons that are not Subsidiaries (except, in each case, Permitted
Investments), and (z) all unamortized debt discount and expense and unamortized
deferred charges as of such date, all of the foregoing determined in accordance
with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture, (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election or (iii) was elected to such Board of Directors pursuant
to a designation made
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pursuant to the Stockholder Agreement, provided that at such time the
Principals, any Management Group and their Related Parties own more than 50% of
the Voting Stock of the Company.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facilities" means, with respect to the Company and its
Restricted Subsidiaries, one or more debt facilities (including, without
limitation, the New Credit Facility) or commercial paper facilities with banks,
insurance companies, commercial finance companies or other institutional lenders
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit or Hedging Obligations, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A-1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the Holder thereof,
in whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.07 hereof.
"Employment Agreement" means any of the employment agreements, dated
the date of this Indenture, between the Company and Richard Block, Melvin B.
Herrin, H. Scott Herrin, David Underwood, James Oppenheimer, Richard Oppenheimer
or Dean Henkel.
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"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Affiliate Transactions" means any transaction contemplated
by any of (i) the Stockholder Agreement, (ii) the Employment Agreements, (iii)
the Agreement and Plan of Merger, dated as of February 19, 1998, among the
Company, AGI Acquisition Corp., AGI Incorporated and certain individuals named
therein, (iv) the Investment Agreement, dated as of February 19, 1998, among the
Company, the Principals and certain other individuals named therein, (v) the
lease of the Company's Warrington, Pennsylvania facility, dated as of June 7,
1996, between Klearfold, Inc. and Melvin B. Herrin, (vi) the lease of the
Company's Louisa, Virginia facility, dated as of June 7, 1996, between
Klearfold, Inc. and Dena Corp. and (vii) the lease of the Company's Melrose
Park, Illinois facility, dated as of May 29, 1985, between AGI and Chicago Title
and Trust Company, as lessor and trustee to Ruby North Partnership, L.P., a real
estate trust, in each case as in effect on the Date of this Indenture.
"Existing Indebtedness" means up to $11.6 million in aggregate
principal amount of Indebtedness of the Company and its Restricted Subsidiaries
(other than Indebtedness under the New Credit Facility) in existence on the date
of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations) and (ii)
the consolidated interest of such Person and its Restricted Subsidiaries that
was capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon) and (iv) the product of (a) all dividend payments, whether or not in cash,
on any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable solely in
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Equity Interests of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person and its Restricted Subsidiaries for such
period. In the event that the referent Person or any of its Restricted
Subsidiaries incurs, assumes, guarantees or redeems or prepays any Indebtedness
(other than revolving credit borrowings) or issues or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee, redemption or prepayment of
Indebtedness, or such issuance or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the definition
of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, and
(iii) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
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"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Guarantors" means each of (i) AGI Incorporated, Klearfold, Inc., KF-
International, Inc., and KF-Delaware, Inc., and (ii) any other subsidiary that
executes a Guarantee in accordance with the provisions of this Indenture, and
their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency changes.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after
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giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Restricted Subsidiary not sold or disposed
of in an amount determined as provided in Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on such payment for
the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Management Group" means a group consisting of Richard Block and his
Related Parties and any other Person that is a member of the Company's
management as of the date of this Indenture and each of their Related Parties;
provided that Richard Block, together with his Related Parties, owns at least
25% of the Voting Stock of the Company.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss).
"Net Proceeds" means the aggregate cash proceeds received directly or
indirectly by the Company or any of its Restricted Subsidiaries in respect of
any Asset Sale (including, without limitation, any cash received upon the sale
or other disposition of any non-cash consideration received in any Asset Sale),
net of the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of Indebtedness (other than Indebtedness under the New
Credit Facility) secured by a
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Lien on the asset or assets that were the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"New Credit Facility" means that certain Credit Agreement, dated as of
the date of this Indenture, by and among the Company and its Subsidiaries and
Bank of America National Trust and Savings Association, as agent and lender, and
the other lenders named therein, providing for up to $40.0 million of revolving
credit borrowings and $13.0 million of letters of credit, including any related
notes, Guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time.
"Non-Recourse Debt" means Indebtedness: (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise) or (c) constitutes the lender; (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby) of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
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"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Permitted Investments" means (a) any Investment in the Company or in
a Restricted Subsidiary of the Company that is a Guarantor; (b) any Investment
in Cash Equivalents; (c) any Investment by the Company or any Restricted
Subsidiary of the Company in a Person, if as a result of such Investment (i)
such Person becomes a Restricted Subsidiary of the Company and a Guarantor or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Restricted Subsidiary of the Company that is a Guarantor; (d)
any Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof;
(e) any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company; (f) Hedging
Obligations; and (g) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (g) that are at the time
outstanding, not to exceed $1.0 million.
"Permitted Liens" means (i) Liens on assets of the Company, any of its
Restricted Subsidiaries or any of the Guarantors securing Senior Debt that was
permitted by the terms of this Indenture to be incurred; (ii) Liens in favor of
the Company; (iii) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Company or any Restricted
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property or assets existing at the time of acquisition
thereof or the acquisition of a Person owning such property or assets by the
Company or any Restricted Subsidiary of the Company, provided that such Liens
were in existence prior to the contemplation of such acquisition; (v) Liens to
secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred in the ordinary
course of business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of Section 4.09 hereof covering only the
assets acquired or financed with such Indebtedness; (vii) Liens existing on the
date of this Indenture; (viii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (ix) Liens
incurred in the ordinary course of business of the Company or any Restricted
Subsidiary of the Company with respect to obligations that do not exceed $5.0
million at any one time outstanding and that (a) are not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Company or such Restricted
Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
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(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness is subordinated in right of
payment to the Notes on terms at least as favorable to the Holders of Notes as
those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Principals" means Heritage Partners, Inc., Heritage Fund I Investment
Corporation, Melvin B. Herrin, Richard Block and H. Scott Herrin.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Company and
the other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in
the form of Exhibit A-2 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a
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denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Related Party" with respect to any Principal or member of a
Management Group means (A) any controlling stockholder, 80% (or more) owned
Subsidiary, or spouse or ex-spouse or immediate family member (in the case of an
individual) of such Principal or member of a Management Group or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal or Member of a Management Group
and/or such other Persons referred to in the immediately preceding clause (A) or
(C) any investment fund, whether a limited partnership, limited liability
corporation or corporation, managed and controlled by Heritage Partners
Management Co., Inc. d/b/a Heritage Partners, Inc.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" means, with respect to any person, each
Subsidiary of such Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
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"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Stockholder Agreement" means the Stockholder Agreement, dated as of
the date of this Indenture, among the Company and its stockholders, as in effect
on the date of this Indenture, and as thereafter amended from time to time;
provided for purposes of the definition of "Continuing Director" that no such
amendment alters the provision relating to the designation and election of
members of the Company's Board of Directors.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means the subordinated Guarantee by each
Guarantor of the Company's payment obligations under this Indenture and the
Notes, executed pursuant to the provisions of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A-1 attached hereto that bears the Global Note Legend and that has
the "Schedule of Exchanges of Interests in the Global Note" attached thereto,
and that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution, but only to the extent that such Subsidiary: (i) has no Indebtedness
other than Non-Recourse Debt; (ii) is not party to any agreement,
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contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (iii) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (A) to subscribe for additional Equity Interests or (B) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (iv) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries; and (v) has at least one
director on its board of directors that is not a director or executive officer
of the Company or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of the Company or
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation compiled with the
foregoing conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof the Company shall be in
default of such covenant). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 4.09 hereof calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period, and (ii) no Default or Event of Default would be in existence
following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned" means, when used with respect to any Subsidiary or
Restricted Subsidiary of a Person, a Subsidiary (or Restricted Subsidiary, as
appropriate) of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Subsidiaries (or
Wholly Owned Restricted Subsidiaries, as appropriate) of such Person and one or
more Wholly Owned Subsidiaries (or Wholly Owned Restricted Subsidiaries, as
appropriate) of such Person.
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Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction"......................... 4.11
"Asset Sale Offer".............................. 3.09
"Authentication Order".......................... 2.02
"Change of Control Offer"....................... 4.15
"Change of Control Payment"..................... 4.15
"Change of Control Payment Date"................ 4.15
"Commission".................................... 4.03
"Covenant Defeasance"........................... 8.03
"Designated Senior Debt"........................ 10.02
"Event of Default".............................. 6.01
"Excess Proceeds"............................... 4.10
"incur"......................................... 4.09
"Legal Defeasance".............................. 8.02
"Offer Amount".................................. 3.09
"Offer Period".................................. 3.09
"Paying Agent".................................. 2.03
"Permitted Debt"................................ 4.09
"Permitted Junior Securities"................... 10.02
"Purchase Date"................................. 3.09
"Registrar"..................................... 2.03
"Representative"................................ 10.02
"Restricted Payments"........................... 4.07
"Senior Debt"................................... 10.02
</TABLE>
Section 1.03. Terms of TIA.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
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"obligor" on the Notes and the Subsidiary Guarantees means the Company
and the Guarantors, respectively, and any successor obligor upon the Notes and
the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibits A-1 or A-2 attached hereto (including the Global Note
Legend thereon and the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Notes issued in definitive form shall be substantially
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in the form of Exhibit A-1 attached hereto (but without the Global Note Legend
thereon and without the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Each Global Note shall represent such of the outstanding
Notes as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount of outstanding Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its Corporate Trust office, as
custodian for the Depositary, and registered in the name of the Depositary or
the nominee of the Depositary for the accounts of designated agents holding on
behalf of Euroclear or Cedel Bank, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The Restricted Period
shall be terminated upon the receipt by the Trustee of (i) a written certificate
from the Depositary, together with copies of certificates from Euroclear and
Cedel Bank certifying that they have received certification of non-United States
beneficial ownership of 100% of the aggregate principal amount of the Regulation
S Temporary Global Note (except to the extent of any beneficial owners thereof
who acquired an interest therein during the Restricted Period pursuant to
another exemption from registration under the Securities Act and who will take
delivery of a beneficial ownership interest in a 144A Global Note bearing a
Private Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof),
and (ii) an Officers' Certificate from the Company. Following the termination of
the Restricted Period, beneficial interests in the Regulation S Temporary Global
Note shall be exchanged for beneficial interests in Regulation S Permanent
Global Notes pursuant to the Applicable Procedures. Simultaneously with the
authentication of Regulation S Permanent Global Notes, the Trustee shall cancel
the Regulation S Temporary Global Note. The aggregate principal amount of the
Regulation S Temporary Global Note and the Regulation S Permanent Global Notes
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
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(d) Euroclear and Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes that are held by
Participants through Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
An Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer (an "Authentication Order"), authenticate Notes for original issue up to
the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. The Company or any
of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.
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The Company shall, prior to the Record Date, notify the Paying Agent
of any wire transfer instructions for payments that it receives from Holders.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA (S) 312(a).
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Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act and provided further, there shall be
no continuing Default or Event of Default. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Temporary Regulation S Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person (other
than an Initial Purchaser). Beneficial interests in any Unrestricted Global
Note may be transferred to Persons who take delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect
the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section
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2.06(b)(i) above, the transferor of such beneficial interest must deliver
to the Registrar either (A) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2) instructions
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or (B)
(1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Registrar containing information regarding
the Person in whose name such Definitive Note shall be registered to effect
the transfer or exchange referred to in (1) above; provided that in no
event shall Definitive Notes be issued upon the transfer or exchange of
beneficial interests in the Regulation S Temporary Global Note prior to (x)
the expiration of the Restricted Period and (y) the receipt by the
Registrar of any certificates required pursuant to Rule 903 under the
Securities Act. Upon consummation of an Exchange Offer by the Company in
accordance with Section 2.06(f) hereof, the requirements of this Section
2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal
delivered by the Holder of such beneficial interests in the Restricted
Global Notes. Upon satisfaction of all of the requirements for transfer or
exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities Act,
the Trustee shall adjust the principal amount of the relevant Global
Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof;
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
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(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a beneficial interest
in an Unrestricted Global Note, a certificate from such holder in the
form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
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(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)(d) thereof,
if applicable:
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions
a Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant
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to this Section 2.06(c) shall be registered in such name or names and
in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c)(i) shall bear the Private Placement
Legend and shall be subject to all restrictions on transfer contained
therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an exemption
from the registration requirements of the Securities Act other than Rule
903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a broker-
dealer, (2) a Person participating in the distribution of the Exchange
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery
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thereof in the form of a Definitive Note that does not bear the
Private Placement Legend, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person
who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted Definitive Note proposes
to exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to
a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
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(C) if such Restricted Definitive Note is being transferred to
a Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to
an Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)(d) thereof,
if applicable;
(F) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, and increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, in the case of
clause (B) above, the 144A Global Note, and in the case of clause (c)
above, the Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
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(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Unrestricted Definitive Note and
increase or cause to be increased the aggregate principal amount of one of
the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar
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the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3)(d) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
Any Restricted Definitive Note may be exchanged by the Holder thereof for
an Unrestricted Definitive Note or transferred to a Person or Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive Note, a
certificate
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from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant
to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not broker-
dealers, (y) they are not participating in a distribution of the Exchange Notes
and (z) they are not affiliates (as defined in Rule 144) of the Company, and
accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE
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OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS
OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, (3) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN
A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND OTHER JURISDICTIONS."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
(c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section
2.06 (and all Notes issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN)."
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(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes
or Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Registrar shall not be required (A) to issue, to register
the transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (c) to register the transfer
of or to exchange a Note between a record date and the next succeeding
Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note
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is registered as the absolute owner of such Note for the purpose of
receiving payment of principal of and interest on such Notes and for all
other purposes, and none of the Trustee, any Agent or the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
Section 2.07. Replacement Notes
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary of the
Company or an Affiliate of any thereof) holds, on a redemption date or maturity
date, money sufficient to pay Notes payable on that date, then on and after that
date such Notes shall be deemed to be no longer outstanding and shall cease to
accrue interest.
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Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be
delivered to the Company. The Company may not issue new Notes to replace Notes
that it has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Company shall fix or cause to be
fixed each such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related payment date
for such defaulted interest. At least 15 days before the special record date,
the Company (or, upon the written request of the Company, the Trustee in the
name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
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ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
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<PAGE>
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
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Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to March 15, 2003. Thereafter, the Notes will be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, to the applicable redemption date, if
redeemed during the twelve-month period beginning on March 15 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.......................................105.062%
2004.......................................103.375%
2005.......................................101.687%
2006 and thereafter........................100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time prior to March 15, 2001, the Company may on any one or more occasions
redeem up to $35.0 million in aggregate principal amount of Notes at a
redemption price of 110.125% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of Public Equity Offerings by the Company; provided
that at least $65.0 million in aggregate principal amount of Notes remain
outstanding immediately after the occurrence of such redemption (excluding Notes
held by the Company and its Subsidiaries); and provided, further, that such
redemption shall occur within 60 days of the date of the closing of such Public
Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
Except as set forth in Sections 4.10 and 4.15 hereof, the Company
shall not be required to make mandatory redemption payments with respect to the
Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
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The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be
made to all Holders. The notice, which shall govern the terms of the Asset Sale
Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
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(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay
all Liquidated Damages, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
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Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations of the Securities
and Exchange Commission (the "Commission"), so long as any Notes are
outstanding, the Company shall furnish to the Holders of Notes (i) all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Company were required
to file such Forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if the Company were required to file such reports, in
each case within the time periods specified in the Commission's rules and
regulations. In addition, following the consummation of the exchange offer
contemplated by the Registration Rights Agreement, whether or not required by
the rules and regulations of the Commission, the Company shall file a copy of
all such information and reports with the Commission for public availability
within the time periods specified in the Commission's rules and regulations
(unless the Commission will not accept such a filing) and make such information
available to securities analysts and prospective investors upon request.
(b) In addition, for so long as any Notes remain outstanding, the Company
and the Guarantors shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act. Any materials
required to be furnished to Holders of Notes by this Section 4.03 shall discuss,
in reasonable detail, either on the face of the financial statements included
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<PAGE>
therein or in the footnotes thereto and in any Management's Discussion and
Analysis of Financial Condition and Results of Operations, the financial
condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company.
Section 4.04. Compliance Certificate.
(a) The Company and each Guarantor (to the extent that such Guarantor is so
required under the TIA) shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
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Section 4.06. Stay, Extension and Usury Laws.
The Company and each of the Guarantors covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including, without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company; (iii) make any payment
on or with respect to, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated to the Notes, except a
payment of interest or principal at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii), (iv) and (vi) of the next succeeding paragraph), is less
than the sum, without duplication, of (i) 50% of the Consolidated Net Income of
the Company for the period (taken as one accounting period) from the beginning
of the first fiscal quarter commencing after the date of this Indenture to the
end of the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment (or,
if such Consolidated Net Income for such
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period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate
net cash proceeds received by the Company since the date of this Indenture as a
contribution to its common equity capital or from the issue or sale of Equity
Interests of the Company (other than Disqualified Stock) or from the issue or
sale of Disqualified Stock or debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary of the
Company), plus (iii) to the extent that any Restricted Investment that was made
after the date of this Indenture is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (A) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment, plus (iv) $1.0 million.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Indebtedness that is subordinated to the Notes or Equity
Interests of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c) (ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of Indebtedness that is
subordinated to the Notes with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend (in cash or
otherwise) by a Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis; (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Subsidiary of the Company held by any member of the Company's (or any of its
Subsidiaries') management pursuant to any management equity subscription
agreement, stock option agreement, or employment agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests of the Company or any Subsidiary shall not exceed $2.5 million
in any twelve-month period and no Default or Event of Default shall have
occurred and be continuing immediately after such transaction; or (vi) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Subsidiary of the Company held by any
member of the Company's (or any of its Subsidiaries') management pursuant to any
management equity subscription agreement, stock option agreement or employment
agreement, provided that the purchase price is paid with the proceeds to the
Company of key man life or disability insurance policies purchased by the
Company specifically to finance any such repurchase, redemption or other
acquisition.
The Board of Directors of the Company may designate any Restricted
Subsidiary (other than Klearfold, Inc., a Pennsylvania corporation, or AGI
Incorporated, an Illinois corporation) to be an Unrestricted Subsidiary if such
designation would not cause a Default. For purposes of making such
determination, all outstanding investments by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
clause (c) of this Section 4.07. All such outstanding investments will be deemed
to constitute investments in an amount equal to the greatest of (x) the net book
value of such investments at the time of such designation, (y) the fair market
value of such investments at the time of such designation and (z) the
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original fair market value of such investments at the time they were made. Such
designation will only be permitted if such Restricted Payment would be permitted
at such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors whose resolution with respect thereto shall be delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $5.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed, together with a copy of any opinion or appraisal required by this
Indenture.
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions will not apply to encumbrances or restrictions existing under or by
reason of (a) Existing Indebtedness as in effect on the date of this Indenture,
(b) the New Credit Facility as in effect as of the date of this Indenture, and
any amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are not materially more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than those
contained in the New Credit Facility as in effect on the date of this Indenture
as determined in good faith by the Company's Board of Directors, (c) the
Indenture and the Notes, (d) applicable law, (e) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred, (f) customary non-assignment provisions in leases and other
contracts, (g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (h) any agreement for the sale of a
Subsidiary or a substantial portion of such Subsidiary's assets that restricts
distributions by that Subsidiary pending its sale, (i) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are not materially more
restrictive, taken as a whole, than those
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contained in the agreements governing the Indebtedness being refinanced as
determined in good faith by the Company's Board of Directors, (j) secured
Indebtedness otherwise permitted to be incurred pursuant to the provisions of
Section 4.12 that limits the right of the debtor to dispose of the assets
securing such Indebtedness, (k) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other similar
agreements entered into in the ordinary course of business and (l) restrictions
on cash or other deposits or net worth imposed by customers under contracts
entered into in the ordinary course of business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and that the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 2.0 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, as the case may
be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this Section 4.09 will not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company of Indebtedness and letters of
credit (with letters of credit being deemed to have a principal amount
equal to the stated amount thereof) and other obligations under Credit
Facilities in an aggregate principal amount that does not exceed at any one
time $40.0 million less the aggregate amount of all Net Proceeds of Asset
Sales applied to repay Indebtedness under a Credit Facility pursuant to
Section 4.10 hereof (other than temporary paydowns pending final
application of such Net Proceeds);
(ii) the incurrence by the Company and the Guarantors of the Existing
Indebtedness and letters of credit (including reimbursement obligations
with respect thereto) supporting Existing Indebtedness whether such letters
of credit are incurred under the New Credit Facility or otherwise;
(iii) the incurrence by the Company of Indebtedness represented by
the Notes;
(iv) the incurrence by the Company or any of the Guarantors of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the
Company or such Subsidiary, in an aggregate principal amount, including all
Permitted
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Refinancing Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (iv), not to exceed $5.0
million at any time outstanding;
(v) the incurrence by the Company or any of the Guarantors of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that is permitted by this Indenture to be
incurred under the first paragraph hereof or clauses (ii) or (iv) of this
paragraph;
(vi) the incurrence by the Company or any of the Guarantors of
intercompany Indebtedness between or among the Company and any Guarantor;
provided, however, that (i) if the Company is the obligor on such
Indebtedness, such Indebtedness is expressly subordinated to the prior
payment in full in cash of all Obligations with respect to the Notes and
(ii)(A) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the
Company or a Subsidiary thereof and (B) any sale or other transfer of any
such Indebtedness to a Person that is not either the Company or a Guarantor
thereof shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Guarantor, as the case may be, that was
not permitted by this clause (vi);
(vii) the incurrence by the Company or any of the Guarantors of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be outstanding;
(viii) the guarantee by the Company or any of its Subsidiaries or any
of the Guarantors of Indebtedness of the Company or another Guarantor that
was permitted to be incurred by another provision of this Section 4.09;
(ix) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (ix), and
the issuance of preferred stock by Unrestricted Subsidiaries; and
(x) the incurrence by the Company or any of the Guarantors of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (x), not to exceed $5.0
million.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (x) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.09. Accrual of interest, accretion
or amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Stock in the form of additional shares of
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the same class of Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this Section
4.09; provided, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued (to the extent not already included in Fixed
Charges).
Section 4.10. Asset Sales
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash;
provided that the amount of (x) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet) of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinated to the Notes or the Subsidiary Guarantees) that
are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary from
further liability and (y) in the case of any Asset Sale constituting the
transfer (by merger or otherwise) of all of the Capital Stock of a Restricted
Subsidiary, any liabilities (as shown on such Restricted Subsidiary's most
recent balance sheet) of such Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the Notes or
the Subsidiary Guarantees) that will remain outstanding after such transfer and
will not be a liability of the Company or any other Restricted Subsidiary of the
Company following such transfer and (z) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are contemporaneously (subject to ordinary settlement periods)
converted by the Company or such Restricted Subsidiary into cash (to the extent
of the cash received), shall be deemed to be cash for purposes of this
provision.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option, (a) to repay
Senior Debt, or (b) to the acquisition of a majority of the assets of, or a
majority of the Voting Stock of, another business, the making of a capital
expenditure or the acquisition of other long-term assets, in each case, in, or
used or useful in, the same or a similar line of business as the Company or one
of its Subsidiaries was engaged in on the date of this Indenture or any
reasonable extension or expansion thereof. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce revolving credit
borrowings or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company will be required to make an offer to
all Holders of Notes and all holders of other pari passu Indebtedness containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets (an "Asset Sale
Offer") to purchase the maximum principal amount of Notes and such other pari
passu Indebtedness that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, in accordance with the procedures set forth in this Indenture and
such other Indebtedness. To the extent that any Excess Proceeds remain after
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consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by this Indenture. If the aggregate
principal amount of Notes and such other Indebtedness tendered into such Asset
Sale Offer surrendered by Holders thereof exceeds the amount of Excess Proceeds,
the Trustee shall select the Notes and such other Indebtedness to be purchased
on a pro rata basis. Upon completion of such offer to purchase, the amount of
Excess Proceeds shall be reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement entered into by the
Company or any of its Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Subsidiary, (ii)
transactions between or among the Company and/or its Subsidiaries, (iii) payment
of reasonable directors fees to Persons who are not otherwise Affiliates of the
Company, (iv) Restricted Payments that are permitted by Section 4.07 hereof and
(v) Existing Affiliate Transactions.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist
any Lien on any asset now owned or hereafter acquired, or any income or profits
therefrom or assign or convey any right to receive income therefrom, securing
Indebtedness or trade payables, except Permitted Liens.
Section 4.13. No Senior Subordinated Debt.
Notwithstanding the provisions of Section 4.09 hereof, (i) the
Company shall not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
any Senior Debt and senior in any respect in right of payment to the Notes, and
(ii) no Guarantor shall incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to Senior Debt of such Guarantor and senior in any respect in right of
payment to the Subsidiary Guarantees.
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Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within fifteen Business Days following any Change
of Control, the Company shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by this Indenture and described in such notice. The Company shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being repurchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unrepurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. Prior to complying
with the provisions of this Section 4.15, but in any event within 90 days
following a Change of Control, the Company shall either repay all outstanding
Senior Debt or obtain the requisite consents, if any, under all agreements
governing outstanding Senior Debt to permit the repurchase of Notes required by
this Section 4.15. The Company shall publicly announce
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the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
(c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.15 and Section 3.09 hereof and purchases all Notes validly tendered
and not withdrawn under such Change of Control Offer.
Section 4.16. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Section 4.17. Additional Subsidiary Guarantees
If the Company or any of its Restricted Subsidiaries shall acquire or
create another Subsidiary after the date of this Indenture, then such newly
acquired or created Subsidiary shall become a Guarantor and execute a
Supplemental Indenture and deliver an Opinion of Counsel, in accordance with the
terms of this Indenture; provided, that all Subsidiaries that have properly been
designated as Unrestricted Subsidiaries in accordance with this Indenture (i)
shall not be subject to the requirements of this Section 4.17 and (ii) shall be
released from all Obligations under any Subsidiary Guarantee, in each case for
so long as they continue to constitute Unrestricted Subsidiaries.
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) except in the case of a merger or consolidation of the Company
with or into a Wholly Owned Restricted Subsidiary of the Company, the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Registration Rights Agreement, the Notes
and the Indenture
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pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee; (iii) immediately after such transaction no Default or Event of Default
exists; and (iv) except in the case of a merger or consolidation of the Company
with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or
the entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) shall have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) shall, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 hereof.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults for 30 days in the payment when due of interest
on, or Liquidated Damages with respect to, the Notes (whether or not prohibited
by the subordination provisions of this Indenture);
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of this Indenture);
(c) failure by the Company or any of its Subsidiaries for 30 days after
notice to comply with any of the provisions of Section 4.07, 4.09, 4.10 or 4.15
hereof;
(d) the Company or any of its Subsidiaries fails to comply with any other
covenant, representation, warranty or other agreement in this Indenture or the
Notes for 60 days after notice;
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(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be issued or by which there may
be secured or evidenced any Indebtedness for money borrowed by the Company or
any of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), whether such Indebtedness or
Guarantee now exists, or is created after the date of this Indenture, which
default results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness the maturity of which
has been so accelerated, aggregates $5.0 million or more (other than Existing
Indebtedness to the extent it is secured by or paid by the drawing against a
letter of credit permitted to be issued under this Indenture);
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries and such judgment or judgments remain
undischarged for a period (during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all such undischarged
judgments exceeds $5.0 million;
(g) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a custodian of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or substantially all of the
property of the Company or any of its Significant Subsidiaries or any group
of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary; or
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(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days; or
(i) except as permitted by this Indenture, any Subsidiary Guarantee is
held in any judicial proceeding to be unenforceable or invalid in any material
respect or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary) occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately. Notwithstanding
the foregoing, if an Event of Default specified in clause (g) or (h) of Section
6.01 hereof occurs with respect to the Company, any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, all outstanding Notes shall be due and
payable without further action or notice. Holders of the Notes may not enforce
this Indenture or the Notes except as provided in this Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
If an Event of Default occurs on or after March 15, 2003 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to March 15, 2003
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the twelve month period beginning on March 15
of the years set forth below, as set forth below (expressed as a percentage of
the Principal Amount):
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YEAR PERCENTAGE
---- ----------
1998...................................... 113.500%
1999...................................... 111.812%
2000...................................... 110.125%
2001...................................... 108.438%
2002...................................... 106.750%
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may,
subject to Article 10, pursue any available remedy to collect the payment of
principal, premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on the Notes (including any waiver obtained in connection with a purchase of,
tender offer or exchange offer for Notes)(provided, however, that the Holders of
a majority in aggregate principal amount of the then outstanding Notes may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration). Upon such waiver, such Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve
the Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
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(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture and subject to
Article 10 and Section 11.02,, the right of any Holder of a Note to receive
payment of principal, premium and Liquidated Damages, if any, and interest on
the Note, on or after the respective due dates expressed in the Note (including
in connection with an offer to purchase), or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses,
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disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall,
subject to Article 10, pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
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ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
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Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement
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or recital herein or any statement in the Notes or any other document in
connection with the sale of the Notes or pursuant to this Indenture other than
its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default, in good faith, relating to the payment of
principal or interest on any Note, the Trustee may withhold the notice if it
determines that withholding the notice is in the interests of the Holders of the
Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA (S) 313(a) (but if no event described in
TIA (S) 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
(S) 313(b)(2). The Trustee shall also transmit by mail all reports as required
by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
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The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to
the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
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If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
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ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders
of outstanding Notes to receive, solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest and Liquidated Damages on such
Notes when such payments are due, (b) the Company's obligations with respect to
such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article Eight. Subject to
compliance with this Article Eight, the Company may exercise its option under
this Section 8.02 notwithstanding the prior exercise of its option under Section
8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.05, 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17 and clause (iv) of Section 5.01 hereof
with respect to the outstanding Notes on and after the date the conditions set
forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and
the Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such
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covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(c) through 6.01(f) hereof shall not
constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in United States dollars, non-
callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest and Liquidated Damages on the outstanding Notes on the Stated Maturity
or on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit) or insofar as
Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this
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Indenture) to which the Company or any of its Subsidiaries is bound including,
without limitation, the New Credit Facility;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over any other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding any other creditors
of the Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become
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due and payable shall be paid to the Company on its request or (if then held by
the Company) shall be discharged from such trust; and the Holder of such Note
shall thereafter, as a secured creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may (subject to Section 10.14) amend or supplement this Indenture or the
Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's (and Guarantors')
obligations to the Holders of the Notes in the case of a merger or consolidation
or sale of all or substantially all of the Company's (and Guarantors') assets
pursuant to Article 5 or Article 11 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note; and
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(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA;
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02 and in Section 10.14,
the Company and the Trustee may amend or supplement this Indenture (including
Section 3.09, 4.10 and 4.15 hereof), or the Notes and any Subsidiary Guarantees
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding voting as a single
class (including, without limitation, consents obtained in connection with a
purchase of, tender offer or exchange offer for, Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a purchase of, tender offer or exchange offer for,
Notes). Section 2.08 hereof shall determine which Notes are considered to be
"outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority
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in aggregate principal amount of the Notes then outstanding voting as a single
class may waive compliance in a particular instance by the Company with any
provision of this Indenture or the Notes. However, without the consent of each
Holder affected, an amendment or waiver under this Section 9.02 may not (with
respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes except as
provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest on any
Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the payment default that resulted from such
acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes; or
(g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 3.09, 4.10 and 4.15 hereof or make any change in
Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions.
In addition, any amendment to the provisions of Article 10 of this
Indenture (which relate to subordination) will require the consent of the
Holders of at least 75% in aggregate principal amount of the Notes then
outstanding if such amendment would adversely affect the rights of Holders of
Notes.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment,
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supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
SECTION 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
SECTION 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness, interest and other Obligations of any kind evidenced by the
Notes and this Indenture is subordinated in right of payment, to the extent and
in the manner provided in this Article 10, to the prior payment in full in cash
of all Senior Debt (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Debt.
Section 10.02. Certain Definitions.
"Designated Senior Debt" means (i) any Indebtedness outstanding under
the New Credit Facility and (ii) any other Senior Debt permitted under this
Indenture the principal amount of which is $10.0 million or more and that has
been designated by the Company as "Designated Senior Debt"; provided, however,
that so long as the New Credit Facility remains in effect, lenders holding a
majority in aggregate amount of the loan commitments thereunder shall have
consented, in writing, to such designation of additional Indebtedness as
Designated Senior Debt.
"Permitted Junior Securities" means Equity Interests in the Company or
any Guarantor or debt securities that are unsecured and subordinated to all
Senior Debt (and any debt securities issued
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in exchange for Senior Debt) to at least the same extent as, or to a greater
extent than, the Notes are subordinated to Senior Debt pursuant to this
Indenture (without limiting the forgoing, such Permitted Junior Securities shall
have no required principal payments or equity redemption requirements until
after the final maturity of all Senior Debt).
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
"Senior Debt" means (i) all principal, premium, interest, fees,
expenses and other obligations or liabilities of any kind together with
available undrawn amounts under letters of credit issued or guaranteed under the
New Credit Facility (including, without limitation, post-petition interest
whether or not allowed as a claim in any bankruptcy, reorganization, insolvency,
receivership or similar proceeding) with respect to Indebtedness outstanding
under Credit Facilities and all Hedging Obligations with respect thereto, (ii)
any other Indebtedness permitted to be incurred by the Company under the terms
of this Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in right
of payment to the Notes and (iii) all Obligations with respect to the foregoing.
Senior Debt will not include (w) any liability for federal, state, local or
other taxes owed or owing by the Company, (x) any Indebtedness of the Company to
any of its Subsidiaries or other Affiliates, excluding any Indebtedness owed to
any Affiliate that was incurred prior to such Person becoming an Affiliate in
connection with the acquisition by the Company or any Subsidiary of a business
or Person from such Affiliate, (y) any trade payables or (z) any Indebtedness
that is incurred in violation of this Indenture.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company or any Guarantor
whether in cash, properties, securities or otherwise, in a liquidation or
dissolution of the Company or any Guarantor or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company, any
Guarantor, or their property, an assignment for the benefit of creditors or any
marshaling of the Company's or any Guarantor's assets and liabilities, the
holders of Senior Debt shall be entitled to receive payment in full in cash of
all Obligations due in respect of such Senior Debt (including interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Debt whether or not allowed as a claim in any such proceeding) before the
Holders of Notes will be entitled to receive any payment with respect to the
Notes or under the Subsidiary Guarantee, and until all Obligations with respect
to Senior Debt are paid in full in cash, any distribution to which the Holders
of Notes would be entitled shall be made to the holders of Senior Debt (except
that Holders of Notes may receive and retain Permitted Junior Securities and
payments made from the trust created pursuant to Article 8 hereof).
To the extent any payment of Senior Debt (whether by or on behalf of
the Company or any Subsidiary, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person, the Senior Debt or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if
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such payment had not occurred. To the extent the obligation to repay any Senior
Debt is declared to be fraudulent, invalid, or otherwise set aside under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then
the obligations so declared fraudulent, invalid or otherwise set aside (and all
other amounts that would come due with respect thereto had such obligation not
been affected) shall be deemed to be reinstated and outstanding as Senior Debt
for all purposes hereof as if such declaration, invalidity or setting aside had
not occurred.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company and the Guarantors also may not make any payment upon or
in respect of the Notes or the Subsidiary Guarantees (except in Permitted Junior
Securities or from the trust created pursuant to Article 8 hereof) if (i) a
default in the payment of the principal of, premium, if any, or interest on
Senior Debt occurs and is continuing or (ii) any other default occurs and is
continuing with respect to Designated Senior Debt that currently, or with the
passage of time or giving of notice, permits holders of the Designated Senior
Debt as to which such default relates to accelerate its maturity and, in the
case of any such default described in this clause (ii), the Trustee receives a
notice of such default of the type referred to in this clause (ii) (a "Payment
Blockage Notice") from the Company or the holders of any Designated Senior Debt.
Payments on the Notes may and shall be resumed (a) in the case of a payment
default, upon the date on which such default is cured or waived in writing by
the holders of the applicable Senior Debt and (b) in case of a nonpayment
default, the earlier of the date on which such nonpayment default is cured or
waived in writing by the holders of Designated Senior Debt or 179 days after the
date on which the applicable Payment Blockage Notice is received by the Trustee,
unless the maturity of any Designated Senior Debt has been accelerated. No new
period of payment blockage may be commenced under clause (ii) above unless and
until (i) 360 days have elapsed since the initial effectiveness of the
immediately prior Payment Blockage Notice and (ii) all scheduled payments of
principal of, premium, if any, and interest on the Notes that have come due have
been paid in full in cash. No nonpayment default that existed and was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall be,
or be made, the basis for a subsequent Payment Blockage Notice unless such
default shall have been waived in writing or cured for a period of not less than
90 days. In the event that the Company or any Guarantor makes any payment to the
Trustee or any Holder of any Note prohibited by the foregoing, such payment will
be required to be held in trust for and paid over to the holders of Senior Debt
(or the representative thereof). The Trustee and the Holders of the Notes will
not challenge or contest the enforceability or validity of the New Credit
Facility or any obligation, Lien or encumbrance thereunder.
SECTION 10.05. ACCELERATION OF SECURITIES.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of
any Obligations with respect to the Notes at a time when the Trustee or such
Holder, as applicable, has actual knowledge that such payment is prohibited by
Section 10.04 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon
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written request, to, the holders of Senior Debt as their interests may appear or
their Representative under the indenture or other agreement (if any) pursuant to
which Senior Debt may have been issued, as their respective interests may
appear, for application to the payment of all Obligations with respect to Senior
Debt remaining unpaid to the extent necessary to pay such Obligations in full in
cash in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.07. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 10.
SECTION 10.08. SUBROGATION.
After all Senior Debt is paid in full in cash and until the Notes are
paid in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
SECTION 10.09. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and
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owners of Senior Debt to receive distributions and payments otherwise payable to
Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
Trustee and Holders agree that they will not challenge the validity,
enforceability or perfection of any Senior Debt or the liens, guarantees and
security interests securing the same and that as between the holders of the
Senior Debt on the one hand and the Trustee and Holders on the other, the terms
hereof shall govern even if all or part of the Senior Debt or such liens and
security interests are avoided, disallowed, subordinated, set aside or otherwise
invalidated in any judicial proceeding or otherwise, regardless of the theory
upon which such action is premised.
Without in any way limiting the generality of this section 10.10, the
holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders, without incurring
responsibility to the Trustee or the Holders and without impairing or releasing
the subordination provided in this Article 10 or the obligations hereunder of
the Holders to the holders of Senior Debt, do any one or more of the following:
(a) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, Senior Debt, the New Credit Facility or any instrument
evidencing the same or any agreement under which Senior Debt is outstanding or
secured: (b) sell, exchange, release, foreclose against or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Debt; (c) release
any Person liable in any manner for the collection of Senior Debt; and (d)
exercise or refrain from exercising any rights against the Company, any
Subsidiary thereof or any other Person.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
any Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative(s) or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, all holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
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SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least two Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may
do the same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10 and the subordination of the Subsidiary Guarantees as provided in
Section 11.02, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes, including, in the event of any dissolution,
winding up, liquidation or reorganization of the Company or any Subsidiary
(whether in bankruptcy, insolvency, receivership, reorganization or similar
proceedings or upon an assignment for the benefit of creditors or otherwise),
the filing of a claim for the unpaid balance of its Notes in the form required
in those proceedings. If the Trustee does not file a proper proof of claim or
proof of debt in the form required in any proceeding referred to in Section 6.09
hereof at least 30 days before the expiration of the time to file such claim,
the Representatives are hereby authorized to file an appropriate claim for and
on behalf of the Holders of the Notes.
SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 or Section 11.02 or 11.06
(including, without limitation, any definitions or other sections included by
reference or incorporation or the terms and conditions of the Subsidiary
Guarantees) shall not be amended or modified without the written consent of the
holders of all Senior Debt.
ARTICLE 11.
SUBSIDIARY GUARANTEES
SECTION 11.01. GUARANTEE.
Subject to this Article 11, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the
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Notes, if any, if lawful, and all other obligations of the Company to the
Holders or the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in case
of any extension of time of payment or renewal of any Notes or any of such other
obligations, that same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same immediately.
Each Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and this
Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTEE.
The Obligations of each Guarantor under its Subsidiary Guarantee
pursuant to this Article 11 shall be junior and subordinated to the prior
payment in full in cash of the Senior Debt of such Guarantor on the same basis
as the Notes are junior and subordinated to Senior Debt of the Company. For the
purposes of the foregoing sentence, the Trustee and the Holders shall have the
right to receive and/or retain payments by any of the Guarantors only at such
times as they may receive and/or retain payments in respect of the Notes
pursuant to this Indenture, including Article 10 hereof.
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SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor under its Subsidiary Guarantee and this
Article 11 shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 11, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01, each
Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor by its
President, Treasurer or one of its Vice Presidents. Further, the Company shall
cause all future Guarantors to execute a Supplemental Indenture substantially in
the form of Exhibit F.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth
in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.17 hereof the
Company shall cause such Subsidiaries to execute supplemental indentures to this
Indenture and Subsidiary Guarantees in accordance with Section 4.17 hereof and
this Article 11, to the extent applicable; provided, that all Subsidiaries that
have properly been designated as Unrestricted Subsidiaries in accordance with
this Indenture (i) will not be subject to the requirements of Section 4.17
hereof and (ii) be released from all Obligations under any Subsidiary Guarantee,
in each case for so long as they continue to constitute Unrestricted
Subsidiaries.
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SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person), another corporation, Person or
other entity whether or not affiliated with such Guarantor unless (i) subject to
the provisions of the following paragraph, the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture, in form and
substance reasonably satisfactory to the Trustee, under the Notes, the Indenture
and the Registration Rights Agreement; (ii) immediately after giving effect to
such transaction, no Default or Event of Default exists; and (iii) except in the
case of a merger of a Guarantor with or into another Guarantor or a merger of a
Guarantor with or into the Company, the Company would be permitted by virtue of
the Company's pro forma Fixed Charge Coverage Ratio, immediately after giving
effect to such transaction, to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09
hereof.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS OR CAPITAL STOCK.
In the event of a sale or other disposition of all or substantially
all of the assets of any Guarantor (other than to the Company or another
Guarantor), by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the Capital Stock of any Guarantor (other than to the
Company or another Guarantor), then such Guarantor (in the event of a sale or
other disposition, by way of such a merger, consolidation or otherwise, of all
of the Capital Stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Subsidiary Guarantee and any such acquiring corporation
will not be required to assume any obligations of such Guarantor under the
applicable Subsidiary Guarantee; provided that such sale or other disposition
complies with all applicable provisions of this Indenture including, without
limitation, Section 4.10 or Article 10 hereof. The Trustee will provide any
written confirmation or evidence of the termination of such Subsidiary Guarantee
as reasonably required by the Representative.
Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 11.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (S) 318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or
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certified, return receipt requested), telex, telecopier or overnight air courier
guaranteeing next day delivery, to the other's address
If to the Company and/or any Guarantor:
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, IL 60160
Telecopier No.: (708) 344-0083
Attention: David Underwood
With a copy to:
Bingham Dana LLP
150 Federal Street
Boston, MA 02110
Telecopier No. (617) 951-8736
Attention: John Utzschneider
If to the Trustee:
State Street Bank and
Trust Company
Two International Place
Corporate Trust Department, 4th Floor
Boston, MA 02110
Telecopier No. (617)-664-5371
Attention: Arthur MacDonald
Re: IMPAC Group, Inc.
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
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<PAGE>
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
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SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION. 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or such Guarantor under the Notes,
the Subsidiary Guarantees, this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
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<PAGE>
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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<PAGE>
SIGNATURES
Dated as of ______,199_
IMPAC Group, Inc.
By: /s/ David C. Underwood
-----------------------------------
Name: David C. Underwood
Title:
Klearfold, Inc., as Guarantor
By: /s/ H. Scott Herrin
-----------------------------------
Name: H. Scott Herrin
Title:
AGI Incorporated, as Guarantor
By: /s/ David C. Underwood
-----------------------------------
Name: David C. Underwood
Title:
KF-International, Inc., as Guarantor
By: /s/ H. Scott Herrin
-----------------------------------
Name: H. Scott Herrin
Title:
KF-Delaware, Inc., as Guarantor
By: /s/ Adam Murphy
-----------------------------------
Name: Adam Murphy
Title:
State Street Bank And Trust Company,
as Trustee
By: /s/ Arthur J. MacDonald
-----------------------------------
Name: Arthur J. MacDonald
81
<PAGE>
Title: Assistant Vice President
82
<PAGE>
EXHIBIT A-1
(Face of Note)
================================================================================
CUSIP: _________
10 % [Series A] [Series B] Senior Subordinated Notes due 2008
No.: $________
IMPAC Group, Inc.
promises to pay to _____________________________________________________________
or registered assigns,
the principal sum of _______________________________________________
Dollars on________, 2008.
Interest Payment Dates:_________,and ________
Record Dates:_______,and _______________
Dated: ____________,199_
IMPAC Group, Inc.
By:________________________________
Name:
Title:
(SEAL)
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company,
as Trustee
By:_____________________
Name:
Title:
A1-1
<PAGE>
================================================================================
A1-2
<PAGE>
(Back of Note)
101/8 % [Series A] [Series B] Senior Subordinated Notes due 2008
[INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE
INDENTURE]
[INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS
OF THE INDENTURE]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. IMPAC Group, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
101/8% per annum from March 12, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages semi-
annually on March 15 and September 15 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be September 15, 1998. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand to the extent lawful at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 1 or September
1 next preceding the Interest Payment Date, even if such Notes are cancelled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
Principal, premium, if any, and interest and Liquidated Damages on the Notes
will be payable at the office or agency of the Company maintained for such
purpose or, at the option of the Company, payment of interest and Liquidated
Damages may be made by check mailed to the Holders of the Notes at their
respective addresses set forth in the register of Holders of Notes; provided
that all payments of principal, premium, interest and Liquidated Damages with
respect to Notes the Holders of which have given wire transfer instructions to
the Company prior to the Record Date will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Until otherwise designated by the Company, the Company's office or
agency in New York will be the office of the Trustee maintained for such
purpose. The Notes will be issued in denominations of $1,000 and
A1-3
<PAGE>
integral multiples thereof. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE AND SUBORDINATION. The Company issued the Notes under
an Indenture dated as of March 12, 1998 ("Indenture") between the Company and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are general unsecured obligations of the
Company limited to $100.0 million in aggregate principal amount.
The payment of the Notes will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full in
cash or cash equivalents of all Senior Debt.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Notes will not be redeemable at the Company's option prior to March 15, 2003.
Thereafter, the Notes will be subject to redemption at any time at the option of
the Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages thereon
to the applicable redemption date, if redeemed during the twelve-month period
beginning on March 15 of the years indicated below:
<TABLE>
Year Percentage
---- ----------
<S> <C>
2003..................................... 105.062%
2004..................................... 103.375
2005..................................... 101.687
2006 and thereafter...................... 100.000
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to March 15,
2001, the Company may on any one or more occasions redeem up to $35.0 million in
aggregate principal amount of Notes at a redemption price of 110.125% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds of
Public Equity Offerings by the Company; provided that at least $65.0 million in
aggregate principal amount of Notes remain outstanding immediately after the
occurrence of such redemption (excluding Notes held by the Company and its
Subsidiaries); and provided, further, that such redemption shall occur within 60
days of the date of the closing of such Public Equity Offering.
A1-4
<PAGE>
6. MANDATORY REDEMPTION.
Except as set forth in Paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, each Holder of Notes will have
the right to require the Company to make an offer (a "Change of Control Offer")
to repurchase all or any part (equal to $1,000 or an integral multiple thereof)
of such Holder's Notes at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase (the "Change of Control Payment").
Within 15 Business Days following any Change of Control, the Company will mail a
notice to each Holder describing the transaction or transactions that constitute
the Change of Control and offering to repurchase Notes on the date specified in
such notice, which date shall be no earlier than 30 days and no later than 60
days from the date such notice is mailed (the ``Change of Control Payment
Date''), pursuant to the procedures required by the Indenture and described in
such notice. The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $5.0 million the
Company will be required to make an offer to all Holders of Notes and all
holders of other pari passu Indebtedness containing provisions similar to those
set forth in the Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture and such other Indebtedness. To
the extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and such
other Indebtedness tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other Indebtedness to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed by
first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. Notes in denominations
larger than $1,000 may be redeemed in part. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will
A1-5
<PAGE>
be issued in the name of the Holder thereof upon cancellation of the original
Note. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company or the Registrar is not required to
transfer or exchange any Note selected for redemption. Also, the Company or the
Registrar is not required to transfer or exchange any Notes for a period of 15
days before a selection of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Notes or the Subsidiary Guarantees may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes) and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes). Without the consent of any Holder of Notes, the
Company and the Trustee may amend or supplement the Indenture or the Notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's obligations to Holders of the Notes in case of a merger or
consolidation, or sale of all or substantially all of the Company's assets, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (ii) default in payment when due of principal of or premium,
if any, on the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (iii) failure by the Company or any of its Subsidiaries for
30 days after notice to comply with Section 4.07, 4.09, 4.10 or 4.15 of the
Indenture; (iv) failure by the Company or any of its Subsidiaries for 60 days
after notice to comply with any of its other agreements in the Indenture or the
Notes; (v) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created
after the date of the Indenture, which default results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness the maturity of which has been so accelerated,
A1-6
<PAGE>
aggregates $5.0 million or more (other than Existing Indebtedness to the extent
it is secured by or paid by the drawing against a letter of credit permitted to
be issued under the Indenture); (vi) failure by the Company or any of its
Restricted Subsidiaries to pay final judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or stayed for a period of 60
days; (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries as set forth in the Indenture;
and (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid in any
material respect or shall cease for any reason to be in full force and effect or
any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency as set
forth in the Indenture, with respect to the Company, any Significant Subsidiary
or any group of Subsidiaries, that taken together would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required, upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or any Guarantor under the
Notes, the Subsidiary Guarantees or the Indenture or the Registration Rights
Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
A1-7
<PAGE>
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of the date of the Indenture, between the Company and the
parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, IL 60160
Attention: Chief Financial Officer
A1-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:____________
Your Signature:_____________________________
(Sign exactly as your name appears on the
face of this Note)
SIGNATURE GUARANTEE.
_________________________
Participant in a Recognized Signature
Guarantee Medallion Program
A1-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date:_________ Your Signature:_____________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No:______________________________
SIGNATURE GUARANTEE.
________________________________
Participant in a Recognized Signature
Guarantee Medallion Program
A1-10
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE /1/
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount
decrease in increase in of this Signature of
Principal Principal Global Note authorized officer
Amount of Amount of following such of Trustee or
Date of Exchange this Global Note this Global Note decrease (or increase) Custodian
- ---------------- ---------------- ---------------- ---------------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
________________________________
/1/ This should be included only if the Note is issued in global form.
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
================================================================================
CUSIP:__________________
10 1/8% [Series A] [Series B] Senior Subordinated Notes due 2008
No._______ $__________________
IMPAC Group, Inc.
promises to pay to______________________________________________________________
or registered assigns,
the principal sum of____________________________________________________________
Dollars on_____________, 2008.
Interest Payment Dates:_____________, and ______________
Record Dates:____________, and _____________
Dated:____________, 199_____
IMPAC Group, Inc.
By:_________________________________
Name:
Title:
[(SEAL)]
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company,
as Trustee
By:____________________________
Name:
Title:
================================================================================
A2-1
<PAGE>
(Back of Regulation S Temporary Global Note)
10 1/8% [Series A] [Series B] Senior Subordinated Notes due 2008
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (2) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903
OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) TO AN INSTITUTIONAL
ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (5) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND OTHER JURISDICTIONS.
A2-2
<PAGE>
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. IMPAC Group, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
10 1/8% per annum from March 12, 1998 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on March 15 and September 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of original issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be September 15, 1998. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand to the extent lawful at a rate that is 1% per annum in excess of
the rate then in effect; it shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Senior Subordinated Notes under the Indenture.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 1 or September
1 next preceding the Interest Payment Date, even if such Notes are cancelled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
Principal, premium, if any, and interest and Liquidated Damages on the Notes
will be payable at the office or agency of the Company maintained for such
purpose or, at the option of the Company, payment of interest and Liquidated
Damages may be made by check mailed to the Holders of the Notes at their
respective addresses set forth in the register of Holders of Notes; provided
that all payments of principal, premium, interest and Liquidated Damages with
respect to Notes the Holders of which have given wire transfer instructions to
the Company prior to the Record Date will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Until otherwise designated by the Company, the Company's office or
agency in New York will be the office of the Trustee maintained for such
purpose. The Notes will be issued in denominations of $1,000 and integral
multiples thereof. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
A2-3
<PAGE>
3. Paying Agent and Registrar. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture and subordination. The Company issued the Notes under
an Indenture dated as of March 12, 1998 ("Indenture") between the Company and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts
with the express provisions of the Indenture, the provisions of the Indenture
shall govern and be controlling. The Notes are general unsecured obligations of
the Company limited to $100.0 million in aggregate principal amount.
The payment of the Notes will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full in
cash or cash equivalents of all Senior Debt.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Notes will not be redeemable at the Company's option prior to March 15, 2003.
Thereafter, the Notes will be subject to redemption at any time at the option of
the Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages thereon
to the applicable redemption date, if redeemed during the twelve-month period
beginning on March 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003........................... 105.062%
2004........................... 103.375
2005........................... 101.687
2006 and thereafter............ 100.000
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to March 15,
2001, the Company may on any one or more occasions redeem up to $35.0 million in
aggregate principal amount of Notes at a redemption price of 110.125% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds of
Public Equity Offerings by the Company; provided that at least $65.0 million in
aggregate principal amount of Notes remain outstanding immediately after the
occurrence of such redemption (excluding Notes held by the Company and its
Subsidiaries); and provided, further, that such redemption shall occur within 60
days of the date of the closing of such Public Equity Offering.
6. Mandatory Redemption.
Except as set forth in Paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
A2-4
<PAGE>
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, each Holder of Notes will have
the right to require the Company to make an offer (a "Change of Control Offer")
to repurchase all or any part (equal to $1,000 or an integral multiple thereof)
of such Holder's Notes at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase (the "Change of Control Payment").
Within 15 Business Days following any Change of Control, the Company will mail a
notice to each Holder describing the transaction or transactions that constitute
the Change of Control and offering to repurchase Notes on the date specified in
such notice, which date shall be no earlier than 30 days and no later than 60
days from the date such notice is mailed (the "Change of Control Payment Date"),
pursuant to the procedures required by the Indenture and described in such
notice. The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $5.0 million, the
Company will be required to make an offer to all Holders of Notes and all
holders of other pari passu Indebtedness containing provisions similar to those
set forth in the Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture and such other Indebtedness. To
the extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and such
other Indebtedness tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other Indebtedness to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
8. Notice of Redemption. Notice of redemption will be mailed by
first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. Notes in denominations
larger than $1,000 may be redeemed in part. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or
A2-5
<PAGE>
permitted by the Indenture. The Company or the Registrar is not required to
transfer or exchange any Note selected for redemption. Also, the Company or the
Registrar is not required to transfer or exchange any Notes for a period of 15
days before a selection of Notes to be redeemed.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture, the Notes or the Subsidiary Guarantees may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes) and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes). Without the consent of any Holder of Notes, the
Company and the Trustee may amend or supplement the Indenture or the Notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's obligations to Holders of the Notes in case of a merger or
consolidation or sale of all or substantially all of the Company's assets, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (ii) default in payment when due of principal of or premium,
if any, on the Notes (whether or not permitted by the subordination provisions
of the Indenture); (iii) failure by the Company or any of its Subsidiaries for
30 days after notice to comply with Section 4.07, 4.09, 4.10 or 4.15 of the
Indenture; (iv) failure by the Company or any of its Subsidiaries for 60 days
after notice to comply with any of its other agreements in the Indenture or the
Notes or (v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries) whether such Indebtedness or Guarantee now exists, or
is created after the date of the Indenture, which default results in the
acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness the maturity of which has been so
accelerated, aggregates $5.0 million or more (other than Existing Indebtedness
to the extent it is
A2-6
<PAGE>
secured by or paid by the drawing against a letter of credit permitted to be
issued under the Indenture); (vi) failure by the Company or any of its
Restricted Subsidiaries to pay final judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or stayed for a period of 60
days; (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries as set forth in the Indenture;
and (viii) except as permitted by the Indenture, any Subsidiary Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid in any
material respect or shall cease for any reason to be in full force and effect or
any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency as set
forth in the Indenture, with respect to the Company, any Significant Subsidiary
or any group of Subsidiaries, that taken together would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or any Guarantor under the
Notes, the Subsidiary Guarantees or the Indenture or the Registration Rights
Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
A2-7
<PAGE>
16. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of the date of the Indenture, between the Company and the
parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, IL 60160
Attention: Chief Financial Officer
A2-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:_______________
Your Signature:_____________________________
(Sign exactly as your name appears on the face of this Note)
SIGNATURE GUARANTEE.
_____________________________________
Participant in a Recognized Signature
Guarantee Medallion Program
A2-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
________________________________________________________________________________
Date:________________ Your Signature:_______________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:_______________
SIGNATURE GUARANTEE.
_____________________________________
Participant in a Recognized Signature
Guarantee Medallion Program
A2-10
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE/1/
The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note, or of other Restricted
Global Notes for an interest in this Regulation S Temporary Global Note, have
been made:
<TABLE>
<CAPTION>
Amount of Principal Amount
decrease in Amount of increase in of this Signature of
Principal Principal Global Note authorized officer
Amount of Amount of following such of Trustee or
Date of Exchange this Global Note this Global Note decrease (or increase) Custodian
- ---------------- ---------------- ---------------- --------------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
_________________________
/1/ This should be included only if the Note is issued in global form.
A2-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, IL 60160
[Registrar address block]
Re: 10 1/8% Series __ Senior Subordinated Notes due 2008
----------------------------------------------------
Reference is hereby made to the Indenture, dated as of March 12, 1998
(the "Indenture"), between IMPAC Group, Inc., as issuer (the "Company"), and
--------- -------
State Street Bank and Trust Company, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
----------
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
--------
to __________ (the "Transferee"), as further specified in Annex A hereto. In
----------
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
- -----------------------------------------------------------
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
---------- ---
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR A DEFINITIVE
- --------------------------------------------------------------------------------
NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and
- -----------------------------
in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged
B-1
<PAGE>
with a buyer in the United States, (ii) no directed selling efforts have been
made in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, (iii) the transaction is not part of a
plan or scheme to evade the registration requirements of the Securities Act and
(iv) if the proposed transfer is being made prior to the expiration of the
Restricted Period, the transfer is not being made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an initial purchaser). Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note, the Temporary Regulation S
Global Note and/or the Definitive Note and in the Indenture and the Securities
Act.
3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
-------------------------------------------------------------------
INTEREST IN THE GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF
- -----------------------------------------------------------------------------
THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being
- -------------------------------------------------------
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [_] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that it has not engaged in any
general solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Note or Restricted Definitive Notes
and the requirements of the exemption claimed, which certification is supported
by (1) a certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if such Transfer is in respect of a principal amount of Notes
at the time of transfer of less than $250,000, an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on
B-2
<PAGE>
transfer enumerated in the Private Placement Legend printed on the Global Note
and/or the Definitive Notes and in the Indenture and the Securities Act.
B-3
<PAGE>
4. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN
UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
____________________________
[Insert Name of Transferor]
By:_________________________
Name:
Title:
Dated:________,_____
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP _________), or
(ii) [_] Regulation S Global Note (CUSIP _________), or
(b) [_] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP ________), or
(ii) [_] Regulation S Global Note (CUSIP ________), or
(iii) [_] Unrestricted Global Note (CUSIP ________); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, IL 60160
[Registrar address block]
Re: 10 1/8% Series __ Senior Subordinated Notes due 2008
-----------------------------------------------------
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of March 12, 1998
(the "Indenture"), between IMPAC Group, Inc., as issuer (the "Company"), and
--------- -------
State Street Bank and Trust Company, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s]
-----
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
--------
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
- -----------------------------------------------------------------
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
--------------
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
- -------------------------------------------
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
C-1
<PAGE>
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
- --------------------------------------------------
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
- ----------------------------
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
--------------------------------------------------
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
- ----------------------------------------------------
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
- -----------------------------------------------
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] __144A Global Note, __Regulation S Global Note with an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
C-2
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
________________________________
[Insert Name of Owner]
By:_____________________________
Name:
Title:
Dated: ________________, ____
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, IL 60160
[Registrar address block]
Re: 101/8% Series Senior Subordinated Notes due 2008
-------------------------------------------------
Reference is hereby made to the Indenture, dated as of March 12,
1998 (the "Indenture"), between IMPAC Group, Inc., as issuer (the "Company"),
--------- -------
and State Street Bank and Trust Company, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
--------------
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (c) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer, of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a
D-1
<PAGE>
Global Note from us in a transaction meeting the requirements of clauses (A)
through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
________________________________________
[Insert Name of Accredited Investor]
By:_____________________________________
Name:
Title:
Dated: __________________, ____
D-2
<PAGE>
EXHIBIT E
FORM OF SUBORDINATED SUBSIDIARY GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of March 12, 1998 (the "Indenture") among
IMPAC Group, Inc., the Guarantors listed on the signature page thereto and State
Street Bank and Trust Company, as trustee (the "Trustee"), (a) the due and
punctual payment of the principal of, premium, if any, and interest on the Notes
(as defined in the Indenture), whether at maturity, by acceleration, redemption
or otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to the
Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee and the
Indenture are expressly set forth in Article 11 of the Indenture and reference
is hereby made to the Indenture for the precise terms of the Subsidiary
Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and shall
be bound by such provisions, (b) authorizes and directs the Trustee, on behalf
of such Holder, to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Indenture and (c) appoints the
Trustee attorney-in-fact of such Holder for such purpose; provided, however,
that the Indebtedness evidenced by this Subsidiary Guarantee shall cease to be
so subordinated and subject in right of payment upon any defeasance of this Note
in accordance with the provisions of the Indenture.
The terms of Article 10 of the Indenture are incorporated herein by
reference.
[Name of Guarantor]
By:___________________________
Name:
Title:
E-1
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
Supplemental Indenture (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of IMPAC Group, Inc. (or its permitted successor), a Delaware
corporation (the "Company"), the Company, the other Guarantors (as defined in
the Indenture referred to herein) and State Street Bank and Trust Company, as
trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of March 12, 1998 providing for
the issuance of an aggregate principal amount of up to $100.0 million of 101/8 %
Senior Subordinated Notes due 2008 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Subsidiary Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of
the Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful,
and all other obligations of the Company to the
F-1
<PAGE>
Holders or the Trustee hereunder or thereunder will be
promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that same will
be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay
the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or the
Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to
any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency
or bankruptcy of the Company, any right to require a proceeding
first against the Company, protest, notice and all demands
whatsoever.
(d) This Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes
and the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting
in relation to either the Company or the Guarantors, any amount
paid by either to the Trustee or such Holder, this Subsidiary
Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders and
the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Article 6 of the Indenture for the purposes of this Subsidiary
Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as
F-2
<PAGE>
provided in Article 6 of the Indenture, such obligations (whether
or not due and payable) shall forthwith become due and payable by
the Guarantors for the purpose of this Subsidiary Guarantee.
(h) The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Guarantee.
(i) The obligations hereunder shall be subject to the subordination
provisions set forth in Article 10 of the Indenture.
3. Execution and Delivery. Each Guaranteeing Subsidiary agrees that
the Subsidiary Guarantees shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Subsidiary Guarantee.
4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms.
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving
Person) another corporation, Person or entity whether or not
affiliated with such Guarantor unless:
(i) subject to Section 11.05 and 11.06 of the Indenture, the
Person formed by or surviving any such consolidation or
merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such
Guarantor, pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the
Notes, the Indenture and the Subsidiary Guarantee on the
terms set forth herein or therein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists; and
(iii) except in the case of a merger of a Guarantor with or into
another Guarantor or a merger of a Guarantor with or into
the Company, the Company would be permitted by virtue of
the Company's pro forma Fixed Charge Coverage Ratio,
immediately after giving effect to such transaction, to
incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in Section
4.09 of the Indenture.
(b) In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Subsidiary Guarantee endorsed upon
the Notes and the due and punctual performance of all of the
covenants and conditions of the Indenture to be performed by the
Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had
been named
F-3
<PAGE>
herein as a Guarantor. Such successor corporation thereupon may
cause to be signed any or all of the Subsidiary Guarantees to be
endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Subsidiary Guarantees so issued
shall in all respects have the same legal rank and benefit under
the Indenture as the Subsidiary Guarantees theretofore and
thereafter issued in accordance with the terms of the Indenture
as though all of such Subsidiary Guarantees had been issued at
the date of the execution hereof.
(c) Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in
the Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company
or another Guarantor, or shall prevent any sale or conveyance of
the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.
5. Releases.
(a) In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise,
or a sale or other disposition of all to the Capital Stock of any
Guarantor (other than to the Company or another Guarantor), then
such Guarantor (in the event of a sale or other disposition, by
way of merger, consolidation or otherwise, of all of the Capital
Stock of such Guarantor (other than to the Company or another
Guarantor)) or the corporation acquiring the property (in the
event of a sale or other disposition of all or substantially all
of the assets of such Guarantor) will be released and relieved of
any obligations under its Subsidiary Guarantee and any such
acquiring corporation will not be required to assume any
obligations of such Guarantor under the applicable Subsidiary
Guarantee; provided that such sale or other disposition complies
with all applicable provisions of the Indenture including,
without limitation, Section 4.10 hereof. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion
of Counsel to the effect that such sale or other disposition was
made by the Company in accordance with the provisions of the
Indenture, including without limitation Section 4.10 of the
Indenture, the Trustee shall execute any documents reasonably
required in order to evidence the release of any Guarantor from
its obligations under its Subsidiary Guarantee.
(b) Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Notes and for the other
obligations of any Guarantor under the Indenture as provided in
Article 11 of the Indenture.
6. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any
F-4
<PAGE>
Subsidiary Guarantees, the Indenture or this Supplemental Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of the Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the SEC that such a
waiver is against public policy.
7. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
F-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _______________, ____
[Guaranteeing Subsidiary]
By: _________________________________
Name:
Title:
<PAGE>
Exhibit 4.2
================================================================================
CUSIP: 449694AA6
10 1/8 % Series A Senior Subordinated Notes due 2008
No.1
$98,750,000.00
IMPAC Group, Inc.
promises to pay to Cede & Co. or registered assigns,
the principal sum of Ninety Eight Million Seven Hundred Fifty Thousand
Dollars on March 15, 2008.
Interest Payment Dates: March 15, and September 15
Record Dates: March 1, and September 1
Dated: March 12, 1998
IMPAC Group, Inc.
By: /s/ David C. Underwood
--------------------------------
Name: David C. Underwood
Title:
This is one of the Global
Notes referred to in the (SEAL)
within-mentioned Indenture:
State Street Bank and Trust Company,
as Trustee
By: /s/ Arthur J. MacDonald
------------------------------
Name: Arthur J. MacDonald
Title: Assistant Vice President
================================================================================
<PAGE>
10 1/8 % Series A Senior Subordinated Notes due 2008
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (2) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903
OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) TO AN INSTITUTIONAL
ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (5) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND OTHER JURISDICTIONS.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. IMPAC Group, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
10 1/8% per annum from March 12, 1998 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on March 15 and September 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of original issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be September 15, 1998. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand to the extent lawful at a rate that is 1% per annum
<PAGE>
in excess of the rate then in effect; it shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 1 or September
1 next preceding the Interest Payment Date, even if such Notes are cancelled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
Principal, premium, if any, and interest and Liquidated Damages on the Notes
will be payable at the office or agency of the Company maintained for such
purpose or, at the option of the Company, payment of interest and Liquidated
Damages may be made by check mailed to the Holders of the Notes at their
respective addresses set forth in the register of Holders of Notes; provided
that all payments of principal, premium, interest and Liquidated Damages with
respect to Notes the Holders of which have given wire transfer instructions to
the Company prior to the Record Date will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Until otherwise designated by the Company, the Company's office or
agency in New York will be the office of the Trustee maintained for such
purpose. The Notes will be issued in denominations of $1,000 and integral
multiples thereof. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. Paying Agent and Registrar. Initially, State Street Bank and
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture and subordination. The Company issued the Notes under
an Indenture dated as of March 12, 1998 ("Indenture") between the Company and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts
with the express provisions of the Indenture, the provisions of the Indenture
shall govern and be controlling. The Notes are general unsecured obligations of
the Company limited to $100.0 million in aggregate principal amount.
The payment of the Notes will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full in
cash or cash equivalents of all Senior Debt.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Notes will not be redeemable at the Company's option prior to March 15, 2003.
Thereafter, the Notes will
<PAGE>
be subject to redemption at any time at the option of the Company, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on March
15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003............................. 105.062%
2004............................. 103.375
2005............................. 101.687
2006 and thereafter.............. 100.000
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to March 15,
2001, the Company may on any one or more occasions redeem up to $35.0 million in
aggregate principal amount of Notes at a redemption price of 110.125% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds of
Public Equity Offerings by the Company; provided that at least $65.0 million in
aggregate principal amount of Notes remain outstanding immediately after the
occurrence of such redemption (excluding Notes held by the Company and its
Subsidiaries); and provided, further, that such redemption shall occur within 60
days of the date of the closing of such Public Equity Offering.
6. Mandatory Redemption.
Except as set forth in Paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, each Holder of Notes will have
the right to require the Company to make an offer (a "Change of Control Offer")
to repurchase all or any part (equal to $1,000 or an integral multiple thereof)
of such Holder's Notes at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase (the "Change of Control Payment").
Within 15 Business Days following any Change of Control, the Company will mail a
notice to each Holder describing the transaction or transactions that constitute
the Change of Control and offering to repurchase Notes on the date specified in
such notice, which date shall be no earlier than 30 days and no later than 60
days from the date such notice is mailed (the ``Change of Control Payment
Date''), pursuant to the procedures required by the Indenture and described in
such notice. The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
<PAGE>
(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $5.0 million the
Company will be required to make an offer to all Holders of Notes and all
holders of other pari passu Indebtedness containing provisions similar to those
set forth in the Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture and such other Indebtedness. To
the extent that any Excess Proceeds remain after consummation of an Asset Sale
Offer, the Company may use such Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and such
other Indebtedness tendered into such Asset Sale Offer surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other Indebtedness to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
8. Notice of Redemption. Notice of redemption will be mailed by
first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. Notes in denominations
larger than $1,000 may be redeemed in part. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company or the Registrar is not required to
transfer or exchange any Note selected for redemption. Also, the Company or the
Registrar is not required to transfer or exchange any Notes for a period of 15
days before a selection of Notes to be redeemed.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture, the Notes or the Subsidiary Guarantees may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes) and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal
<PAGE>
amount of the then outstanding Notes (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes). Without the consent of any Holder of Notes, the Company and the
Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's obligations to Holders of the Notes in case of a merger or
consolidation, or sale of all or substantially all of the Company's assets, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (ii) default in payment when due of principal of or premium,
if any, on the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (iii) failure by the Company or any of its Subsidiaries for
30 days after notice to comply with Section 4.07, 4.09, 4.10 or 4.15 of the
Indenture; (iv) failure by the Company or any of its Subsidiaries for 60 days
after notice to comply with any of its other agreements in the Indenture or the
Notes; (v) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created
after the date of the Indenture, which default results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness the maturity of which has been so accelerated, aggregates $5.0
million or more (other than Existing Indebtedness to the extent it is secured by
or paid by the drawing against a letter of credit permitted to be issued under
the Indenture); (vi) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days; (vii)
certain events of bankruptcy or insolvency with respect to the Company or any of
its Significant Subsidiaries as set forth in the Indenture; and (viii) except as
permitted by the Indenture, any Subsidiary Guarantee shall be held in any
judicial proceeding to be unenforceable or invalid in any material respect or
shall cease for any reason to be in full force and effect or any Guarantor, or
any Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee. If any Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency as set forth in the
Indenture, with respect to the Company, any Significant Subsidiary or any group
of Subsidiaries, that taken together would constitute a Significant Subsidiary,
all outstanding Notes will become due and payable without further action or
notice. Holders of the Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of
<PAGE>
Default relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required, upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or any Guarantor under the
Notes, the Subsidiary Guarantees or the Indenture or the Registration Rights
Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of the date of the Indenture, between the Company and the
parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
<PAGE>
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
IMPAC Group, Inc
1950 North Ruby Street
Melrose Park, IL 60160
Attention: Chief Financial Officer
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:_______________
Your Signature:__________________________
(Sign exactly as your name appears on the
face of this Note)
SIGNATURE GUARANTEE.
_________________________
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date: Your Signature:______________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No:_______________________
SIGNATURE GUARANTEE.
________________________________
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of this Signature of
decrease in increase in Global Note authorized
Principal Principal following such officer of
Date of Amount of Amount of decrease Trustee or
Exchange this Global Note this Global Note (or increase) Custodian
- -------- ---------------- ---------------- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
CERTIFICATE OF TRANSFER
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, IL 60160
[Registrar address block]
Re: 10% Series A Senior Subordinated Notes due 2008
------------------------------------------------
Reference is hereby made to the Indenture, dated as of March 12, 1998
(the "Indenture"), between IMPAC Group, Inc., as issuer (the "Company"), and
--------- -------
State Street Bank and Trust Company, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
----------
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
--------
to __________ (the "Transferee"), as further specified in Annex A hereto. In
----------
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
- -----------------------------------------------------------
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
---------- ---
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR A DEFINITIVE
- --------------------------------------------------------------------------------
NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and
- -----------------------------
in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore
<PAGE>
securities market and neither such Transferor nor any Person acting on its
behalf knows that the transaction was prearranged with a buyer in the United
States, (ii) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities
Act, (iii) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act and (iv) if the proposed
transfer is being made prior to the expiration of the Restricted Period, the
transfer is not being made to a U.S. Person or for the account or benefit of a
U.S. Person (other than an initial purchaser). Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
Transfer enumerated in the Private Placement Legend printed on the Regulation S
Global Note, the Temporary Regulation S Global Note and/or the Definitive Note
and in the Indenture and the Securities Act.
3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
-------------------------------------------------------------------
INTEREST IN THE GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF
- -----------------------------------------------------------------------------
THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being
- -------------------------------------------------------
effected in compliance with the transfer restrictions applicable to beneficial
interests in Restricted Global Notes and Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [_] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that it has not engaged in any
general solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Note or Restricted Definitive Notes
and the requirements of the exemption claimed, which certification is supported
by (1) a certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if such Transfer is in respect of a principal amount of Notes
at the time of transfer of less than $250,000, an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
<PAGE>
Placement Legend printed on the Global Note and/or the Definitive Notes and in
the Indenture and the Securities Act.
4. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN
UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
_____________________________________
[Insert Name of Transferor]
By:__________________________________
Name:
Title:
Dated:_____, ______
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP _________), or
(ii) [_] Regulation S Global Note (CUSIP
_________), or
(b) [_] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP ________), or
(ii) [_] Regulation S Global Note (CUSIP
________), or
(iii) [_] Unrestricted Global Note (CUSIP
________); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
<PAGE>
CERTIFICATE OF EXCHANGE
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, IL 60160
[Registrar address block]
Re: 10% Series A Senior Subordinated Notes due 2008
------------------------------------------------
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of March 12, 1998
(the "Indenture"), between IMPAC Group, Inc., as issuer (the "Company"), and
--------- -------
State Street Bank and Trust Company, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s]
-----
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
--------
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
- -----------------------------------------------------------------
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
--------------
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
- -------------------------------------------
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions
<PAGE>
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
- --------------------------------------------------
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
- ----------------------------
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
--------------------------------------------------
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
- ----------------------------------------------------
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
- -----------------------------------------------
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] __144A Global Note, __Regulation S Global Note with an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in
<PAGE>
compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the beneficial interest issued will be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the relevant Restricted Global Note and in the Indenture and the Securities
Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
___________________________________
[Insert Name of Owner]
By:________________________________
Name:
Title:
Dated: ________________, ____
<PAGE>
CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, IL 60160
[Registrar address block]
Re: 10 1/8% Series A Senior Subordinated Notes due 2008
----------------------------------------------------
Reference is hereby made to the Indenture, dated as of March 12,
1998 (the "Indenture"), between IMPAC Group, Inc., as issuer (the "Company"),
--------- -------
and State Street Bank and Trust Company, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
--------------
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (c) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer, of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and
<PAGE>
we further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
_______________________________________________
[Insert Name of Accredited Investor]
By:____________________________________________
Name:
Title:
Dated: __________________, ____
<PAGE>
SUBORDINATED SUBSIDIARY GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of March 12, 1998 (the "Indenture") among
IMPAC Group, Inc., the Guarantors listed on the signature page thereto and State
Street Bank and Trust Company, as trustee (the "Trustee"), (a) the due and
punctual payment of the principal of, premium, if any, and interest on the Notes
(as defined in the Indenture), whether at maturity, by acceleration, redemption
or otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to
the Holders of Notes and to the Trustee pursuant to the Subsidiary Guarantee and
the Indenture are expressly set forth in Article 11 of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Subsidiary Guarantee. Each Holder of a Note, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints the Trustee attorney-in-fact of such Holder for such purpose; provided,
however, that the Indebtedness evidenced by this Subsidiary Guarantee shall
cease to be so subordinated and subject in right of payment upon any defeasance
of this Note in accordance with the provisions of the Indenture.
The terms of Article 10 of the Indenture are incorporated herein by
reference.
Klearfold, Inc. KF-Delaware, Inc.
By: /s/ H. Scott Herrin By: /s/ Adam Murphy
----------------------- -------------------------
Name: H. Scott Herrin Name: Adam Murphy
Title: Title:
AGI Incorporated KF-International, Inc.
By: /s/ David C. Underwood By: /s/ H. Scott Herrin
----------------------- -------------------------
Name: David C. Underwood Name: H. Scott Herrin
Title: Title:
<PAGE>
Exhibit 4.3
________________________________________________________________________________
REGISTRATION RIGHTS AGREEMENT
Dated as of March 12, 1998
by and among
IMPAC Group, Inc.
the Guarantors named herein,
Goldman, Sachs & Co.,
and
Donald, Lufkin & Jenrette Securities Corporation
________________________________________________________________________________
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 12, 1998 by and among IMPAC Group, Inc., a Delaware corporation
(the "Company"), AGI Incorporated, an Illinois corporation, Klearfold, Inc., a
Pennsylvania corporation KF-International, Inc., a Virgin Islands corporation,
and KF-Delaware, Inc., a Delaware corporation (together with any future
subsidiary of the Company that executes a guarantee in accordance with the
provisions of the Indenture, the "Guarantors"), and Goldman Sachs & Co. and
Donaldson, Lufkin & Jenrette Securities Corporations (the "Initial Purchasers"),
each of whom has agreed to purchase the Company's 10 1/8% Senior Subordinated
Notes due 2008 (together with the guarantee thereof by any Guarantor, the
"Series A Notes") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated March 5,
1998 (the "Purchase Agreement"), by and among the Company, the Guarantors and
the Initial Purchasers. In order to induce the Initial Purchasers to purchase
the Series A Notes, the Company and the Guarantors (collectively, the "Issuers")
have agreed to provide the registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the obligations of
the Initial Purchaser set forth in Section 2 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
---
Affiliate: With respect to any specified Person, any Person directly or
---------
indirectly controlling or controlled by such specified Person, or any Person
under direct or common control with such specified Person.
Business Day: Any day other than a Saturday, a Sunday or a day on which
------------
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed.
Broker-Dealer: Any broker or dealer registered as such under the Exchange
-------------
Act.
Closing Date: The date of this Agreement.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
----------
of this Agreement upon the occurrence of (i) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (ii) the maintenance of such
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the minimum period required pursuant to
Section 3(b) hereof, and (iii) the delivery by the Issuers to the Registrar
under the Indenture of Series B Notes in the same aggregate principal amount as
the aggregate principal amount of Series A Notes that were tendered by Holders
thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Notes, each Interest Payment
--------------------
Date.
1
<PAGE>
Effectiveness Target Date: As defined in Section 5.
-------------------------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Exchange Offer: The registration by the Issuers under the Act of the
--------------
Series B Notes pursuant to a Registration Statement pursuant to which the
Issuers offer the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Series B Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
-------------------------------------
relating to the Exchange Offer, including the related Prospectus.
Holders: As defined in Section 2(b) hereof.
-------
Indemnified Holder: As defined in Section 8(a) hereof.
------------------
Indenture: The Indenture, dated as of the date hereof, among the Issuers
---------
and State Street Bank and Trust Company, as trustee (the "Trustee"), pursuant to
which the Notes are to be issued, as such Indenture is amended or supplemented
from time to time in accordance with the terms thereof.
Initial Purchasers: As defined in the preamble hereto.
------------------
Interest Payment Date: As defined in the Indenture and the Notes.
---------------------
Liquidated Damages: As defined in Section 5 hereof.
------------------
NASD: National Association of Securities Dealers, Inc.
----
Notes: The Series A Notes and the Series B Notes.
-----
Person: An individual, partnership, corporation, limited liability
------
company, limited liability partnership, trust or unincorporated organization, or
a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as
----------
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Purchase Agreement: As defined in the preamble hereto.
------------------
Record Holder: With respect to any Damages Payment Date relating to the
-------------
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
--------------------
2
<PAGE>
Registration Statement: Any registration statement of the Issuers
----------------------
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Series A Notes: As defined in the preamble hereto.
--------------
Series B Notes: The Company's 10 1/8% Series B Senior Subordinated Notes
--------------
due 2008 to be issued pursuant to the Indenture in the Exchange Offer, together
with the guarantee thereof by any Guarantor.
Shelf Filing Deadline: As defined in Section 4 hereof.
---------------------
Shelf Registration Statement: As defined in Section 4 hereof.
----------------------------
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
---
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
------------------------------
(a) the date on which such Note is exchanged in the Exchange Offer and the Note
for which it is exchanged is entitled to be resold to the public by the Holder
thereof without complying with the prospectus delivery requirements of the Act,
(b) the date on which such Note has been effectively registered under the Act
and disposed of in accordance with a Shelf Registration Statement or (c) the
date on which such Note is permitted to be distributed to the public pursuant to
Rule 144 under the Act or by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein).
Underwritten Registration or Underwritten Offering: A registration in
------------------------- ---------------------
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
------------------------------
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be a
-----------------------------------------
holder of Transfer Restricted Securities (each, a "Holder") whenever such Person
owns Transfer Restricted Securities. A holder is deemed a "selling Holder"
whenever such Holder notifies the Company of the Holder's intent to sell
Transfer Restricted Securities pursuant to a Shelf Registration Statement.
3
<PAGE>
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Issuers shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 90 days after the Closing Date, an Exchange Offer Registration Statement,
(ii) use commercially reasonable efforts to cause such Registration Statement to
become effective at the earliest possible time, but in no event later than 150
days after the Closing Date, (iii) in connection with the foregoing, file (A)
all pre-effective amendments to such Registration Statement as may be necessary
in order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings in connection
with the registration and qualification of the Series B Notes to be made under
the Blue Sky laws of such jurisdictions as are necessary to permit the Exchange
Offer to be Consummated, and (iv) upon the effectiveness of such Registration
Statement, commence the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Series B Notes to be offered in
exchange for the Transfer Restricted Securities and to permit resales of Notes
held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall use commercially reasonable efforts to cause the
Exchange Offer Registration Statement to be effective continuously and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such period be less
than 20 Business Days. The Company shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other than
the Series B Notes shall be included in the Exchange Offer Registration
Statement. The Company shall use commercially reasonable efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 30 Business Days thereafter.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company), may exchange such
Series A Notes pursuant to the Exchange Offer; however, such Broker-Dealer may
be deemed to be an "underwriter" within the meaning of the Act and must,
therefore, deliver a prospectus meeting the requirements of the Act in
connection with any resales of the Series B Notes received by such Broker-Dealer
in the Exchange Offer, which prospectus delivery requirement may be satisfied by
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of Notes held by any such Broker-Dealer except to the
extent required by the Commission as a result of a change in policy after the
date of this Agreement.
Subject to Section 4(c), the Issuers shall use commercially reasonable
efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by the provisions of Section
6(c) below to the extent necessary to ensure that it is
4
<PAGE>
available for resales of Notes acquired by Broker-Dealers for their own accounts
as a result of market-making activities or other trading activities, and to
ensure that it conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of 180 days from the date on which the Exchange Offer
Registration Statement is declared effective.
The Issuers shall provide sufficient copies of the latest version of such
Prospectus to Broker-Dealers promptly upon request at any time during such 180
day period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Issuers are not required to file an
------------------
Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 20 Days after the Exchange Offer shall have been Consummated (A)
that such Holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, or (B) that such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, or (C) that such Holder is a Broker-Dealer and holds Series A Notes
acquired directly from the Company or one of its Affiliates, then the Issuers
shall
(x) use commercially reasonable efforts to file a shelf
registration statement pursuant to Rule 415 under the Act, which may
be an amendment to the Exchange Offer Registration Statement (in
either event, the "Shelf Registration Statement") on or prior to the
earliest to occur of (1) the 60th day after the date on which the
Company determines that it is not required to file the Exchange Offer
Registration Statement or (2) the 60th day after the date on which the
Company receives notice from a Holder of Transfer Restricted
Securities as contemplated by clause (ii) above (such earliest date
being the "Shelf Filing Deadline"), which Shelf Registration Statement
shall provide for resales of all Transfer Restricted Securities the
Holders of which shall have provided the information required pursuant
to Section 4(b) hereof; and
(y) use commercially reasonable efforts to cause such Shelf
Registration Statement to be declared effective by the Commission on
or before the 135th day after the obligation to file the Shelf
Registration Statement arises.
Subject to Section 4(c), the Issuers shall use commercially reasonable efforts
to keep such Shelf Registration Statement continuously effective, supplemented
and amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for resales of Notes by the
Holders of Transfer Restricted Securities entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years following the
Closing Date.
(b) Provision by Holders of Certain Information in Connection with the
------------------------------------------------------------------
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
- ----------------------------
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such
5
<PAGE>
Holder furnishes to the Company in writing, within 15 Business Days after
receipt of a request therefor, such information as the Company may reasonably
request for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to Liquidated Damages (as defined)
pursuant to Section 5 hereof unless and until such Holder shall have used its
best efforts to provide all such reasonably requested information. Each Holder
as to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.
(c) The Company shall be entitled to suspend the effectiveness of any
Shelf Registration Statement and the duration of such suspension shall be
excluded from the calculation of the two-year period referred to in Section
4(a). Such suspension shall be effected only if the Board of Directors of the
Company determines reasonably and in good faith that the effectiveness of the
Shelf Registration Statement would materially impede, delay or interfere with
any financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving the Company or any of
its Affiliates or require disclosure of material information which the Company
has a lawful and bona fide business purpose for preserving as confidential,
which financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction is under active consideration by
the Company at the time of such suspension described above; provided, however,
that the Company shall not be entitled to more than one suspension no longer
than six weeks duration. If the Company shall so suspend the effectiveness of a
Shelf Registration Statement it shall, as promptly as possible, deliver a
certificate signed by the Chief Executive Officer or President of the Company to
the Initial Purchasers and Holders of Transfer Restricted Securities as to such
determination, and such Initial Purchasers and Holders shall receive an
extension of the registration period equal to the number of days of the
suspension.
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SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement is
not filed with the Commission on or prior to the date specified for such filing
in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 30 Business Days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose (except pursuant to Section 4(c) ) prior to the
expiration of the time period specified by this Agreement without being
succeeded immediately by a post-effective amendment to such Registration
Statement that cures such failure and that is itself immediately declared
effective (each such event referred to in clauses (i) through (iv), a
"Registration Default", and each period during which a Registration Default has
occurred and is continuing, a Registration Default Period"), the Issuers hereby
jointly and severally agree that the liquidated damages ("Liquidated Damages"),
in addition to the base interest that would otherwise accrue on the Transfer
Restricted Securities, shall accrue at a per annum rate of 0.25% of the
aggregate principal amount of such Transfer Restricted Securities outstanding
for the first 90 days of the Registration Default Period, at a per annum rate of
0.50% of the aggregate principal amount of such Transfer Restricted Securities
for the second 90 days of the Registration Default Period, at a per annum rate
of 0.75% of the aggregate principal amount of such Transfer Restricted
Securities for the third 90 days of the Registration Default Period and at a per
annum rate of 1.0% of the aggregate principal amount of such Transfer Restricted
Securities outstanding thereafter for the remaining portion of the Registration
Default Period. All accrued liquidated damages shall be paid to Record Holders
by the Company by wire transfer of immediately available funds or by federal
funds check on each Damages Payment Date, as provided in the Indenture.
Following the cure of all Registration Defaults relating to any particular
Transfer Restricted Securities, the accrual of Liquidated Damages with respect
to such Transfer Restricted Securities will cease immediately.
All obligations of the Issuers set forth in the preceding paragraph that
are outstanding with respect to any Transfer Restricted Security at the time
such security ceases to be a Transfer Restricted Security shall survive until
such time as all such obligations with respect to such Security shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
-------------------------------------
Exchange Offer, the Issuers shall comply with all of the provisions of Section
6(c) below, shall use commercially reasonable efforts to effect such exchange
and shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel to the Company there is a
question as to whether the Exchange Offer is permitted by applicable law, the
Issuers hereby agree to seek a no-action letter or other favorable decision
from the Commission allowing the Issuers to Consummate an Exchange Offer for
such Series A Notes. The Issuers hereby agree to pursue the issuance of such
a decision to the Commission staff level but shall not be required to take
commercially unreasonable action to effect a change of Commission policy.
The Issuers hereby agree, however, to (A) participate in telephonic
conferences with the Commission, (B) deliver to the Commission staff an
analysis prepared by counsel to the Company setting forth the legal bases, if
any, upon which such counsel has concluded that
7
<PAGE>
such an Exchange Offer should be permitted and (C) diligently pursue a
resolution (which need not be favorable) by the Commission staff of such
submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the time
that it is Consummated, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate of the
Issuers, (B) it is not engaged in, and does not intend to engage in, and has
no arrangement or understanding with any person to participate in, a
distribution of the Series B Notes to be issued in the Exchange Offer, (C) it
is acquiring the Series B Notes in its ordinary course of business. In
addition, all such Holders of Transfer Restricted Securities shall otherwise
cooperate in the Issuers' preparations for the Exchange Offer and (D) such
other customary representations as the Issuers may reasonably request. Each
Holder hereby acknowledges and agrees that any Broker-Dealer and any such
Holder using the Exchange Offer to participate in a distribution of the
securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
----------------------------
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
----------------------------------
May 13, 1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters (including any no-
action letter obtained pursuant to clause (i) above), and (2) must comply
with the registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a secondary
resale transaction should be covered by an effective registration statement
containing the selling security holder information required by Item 507 or
508, as applicable, of Regulation S-K if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired by such
Holder directly from the Company or an Affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers shall provide a supplemental letter to the Commission
(A) stating that the Issuers are registering the Exchange Offer in reliance
on the position of the Commission enunciated in Exxon Capital Holdings
----------------------
Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available
----------- ----------------------------
June 5, 1991) and, if applicable, any no-action letter obtained pursuant to
clause (i) above and (B) including a representation that neither the Company
nor any Guarantor has entered into any arrangement or understanding with any
Person to distribute the Series B Notes to be received in the Exchange Offer
and that, to the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B Notes in its
ordinary course of business and has no arrangement or understanding with any
Person to participate in the distribution of the Series B Notes received in
the Exchange Offer.
(b) Shelf Registration Statement. In connection with any Shelf
----------------------------
Registration Statement, the Issuers shall comply with all the provisions of
Section 6(c) below and shall use their commercially reasonable efforts to effect
such registration to permit the sale of the Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution thereof,
and pursuant thereto the Issuers will as expeditiously as possible prepare and
file with the Commission a Registration Statement relating to the registration
on any appropriate form under the Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended and
lawful method or methods of distribution thereof.
8
<PAGE>
(c) General Provisions. Subject to Section 4(c), in connection with any
------------------
Registration Statement and any Prospectus required by this Agreement to permit
the sale or resale of Transfer Restricted Securities (including, without
limitation, any Registration Statement and the related Prospectus required to
permit resales of Notes by Broker-Dealers), the Issuers shall:
(i) use commercially reasonable efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements (including, if required by the Act or any regulation thereunder,
financial statements of the Guarantors) for the period specified in Section 3
or 4 of this Agreement, as applicable; upon the occurrence of any event that
would cause any such Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities during the
period required by this Agreement, the Issuers shall file promptly an
appropriate amendment to such Registration Statement, in the case of clause
(A), correcting any such misstatement or omission, and, in the case of either
clause (A) or (B), use its commercially reasonable efforts to cause such
amendment to be declared effective and such Registration Statement and the
related Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter;
(ii) prepare and file with the Commission such amendments and post-
effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period set forth
in Section 3 or 4 hereof, as applicable, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such
Registration Statement have been exchanged or cease to be Transfer Restricted
Securities; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 under the Act, and to comply fully with the applicable provisions of
Rules 424 and 430A under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement to the
Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders promptly
and, if requested by such Persons, to confirm such advice in writing, (A)
when the Prospectus or any Prospectus supplement or post-effective amendment
has been filed, and, with respect to any Registration Statement or any post-
effective amendment thereto, when the same has become effective, (B) of any
request by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act or
of the suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document incorporated
by reference therein untrue, or that requires the making of any additions to
or changes in the Registration Statement or the Prospectus in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Upon receipt of written notice of any stop order
described in the preceding clause (C), selling Holders shall refrain from
delivering any Prospectus or Prospectus Supplement in the jurisdiction
issuing such stop order until notification by the Issuers that such stop
order has been lifted or withdrawn. Upon the receipt of written notice
9
<PAGE>
of any fact or event described in the preceding clause (D), selling Holders
shall refrain from delivering any Prospectus or Prospectus Supplement
requiring amendment or supplement as described therein. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under
state securities or Blue Sky laws, the Issuers shall use commercially
reasonable efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review of
such Holders and underwriter(s), if any, for a period of at least three
Business Days, and the Issuers will not file any such Registration Statement
or Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by
reference) to which a selling Holder of Transfer Restricted Securities
covered by such Registration Statement or the underwriter(s), if any, shall
reasonably object within three Business Days after the receipt thereof;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make the Issuers representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as such
selling Holders or underwriter(s), if any, reasonably may request, provided
that the Company may require any such Person to enter into a customary
confidentiality agreement;
(vi) subject to the receipt of confidentiality agreements as provided
above, make available at reasonable times for inspection by the selling
Holders, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained by such
selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Issuers and
cause the Issuers' officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter, attorney or
accountant in connection with such Registration Statement subsequent to the
filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s), if
any, promptly incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer Restricted
Securities, information with respect to the principal amount of Transfer
Restricted Securities being sold to such underwriter(s), the purchase price
being paid therefor and any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering; and make all required
filings of such Prospectus supplement or post-effective amendment as soon as
practicable after the Issuers are notified of the matters to be incorporated
in such Prospectus supplement or post-effective amendment;
10
<PAGE>
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal amount of
Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the underwriter(s),
if any, without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each selling Holder and each of the underwriter(s),
if any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Issuers hereby consent to the use of the
Prospectus and any amendment or supplement thereto in accordance with this
Agreement by each of the selling Holders and each of the underwriter(s), if
any, in connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement thereto;
(xi) enter into such agreements (including an underwriting
agreement), and make such reasonable and customary representations and
warranties, and take all such other actions in connection therewith as
reasonably necessary in order to expedite or facilitate the disposition of
the Transfer Restricted Securities pursuant to any Registration Statement
contemplated by this Agreement, all to such extent as may be reasonably
requested by any Initial Purchaser or by any Holder of Transfer Restricted
Securities or underwriter in connection with any sale or resale pursuant to
any Registration Statement contemplated by this Agreement; and whether or not
an underwriting agreement is entered into and whether or not the registration
is an Underwritten Registration, the Issuers shall:
(A) furnish to the Initial Purchasers, each selling Holder and each
underwriter, if any, in the event of a Shelf Registration Statement, and
furnish to any Initial Purchaser tendering Notes in an Exchange Offer, if
any, in the event of an Exchange Offer, in each case, in such substance
and scope as they may reasonably request and as are customarily made by
issuers to underwriters in primary underwritten offerings, upon the date
of the Consummation of the Exchange Offer and, if applicable, the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date the Exchange Offer is Consummated
or the date of effectiveness of the Shelf Registration Statement, as
the case may be, signed by (y) the President or any Vice President and
(z) a principal financial or accounting officer of the Company
confirming, as of the date thereof, the matters set forth in paragraphs
(b), (c) and (d) of Section 7 of the Purchase Agreement and such other
matters as such parties may reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration Statement,
as the case may be, of counsel for the Issuers, covering the matters
customarily opined to in connection with the registration of securities
as contemplated by Sections 3 and 4 of this Agreement and such other
matter as such parties may reasonably request, and in any event
including a statement to the effect that such counsel has participated
in conferences with officers and other representatives of the Company
and the
11
<PAGE>
Guarantors, representatives of the independent public accountants for
the Company and the Guarantors, representatives of the Initial
Purchasers and their counsel in connection with the preparation of the
Registration Statement and related Prospectus and have considered the
matters required to be stated therein and the statements contained
therein and, although they have not independently verified and are not
passing upon and assume no responsibility for the accuracy,
completeness or fairness of such statements, on the basis of the
foregoing, they hereby confirm that no facts came to their attention
that caused them to believe that the Registration Statement and related
Prospectus, as of their date, contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. Without limiting the foregoing, such counsel may state
further that such counsel expresses no belief or opinion with respect
to, assumes no responsibility for, and has not independently verified,
the accuracy, completeness or fairness of exhibits, the financial
statements, notes and schedules and other financial data included in
any Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness of the
Shelf Registration Statement, as the case may be, from the Issuers'
independent accountants, in the customary form and covering matters of
the type customarily covered in comfort letters by underwriters in
connection with primary underwritten offerings, and affirming the
matters set forth in the comfort letters delivered pursuant to Section
7(a) of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the underwriting
agreement, if any, the indemnification provisions and procedures of
Section 8 hereof with respect to all parties to be indemnified pursuant to
said Section; and
(C) deliver such other documents and certificates as may be reasonably
requested by such parties to evidence compliance with clause (A) above and
with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Issuers pursuant to this clause (xi),
if any.
If at any time during which a Registration Statement is required to be
effective under this Agreement the Issuers become aware that the
representations and warranties of the Issuers contemplated in clause (A)(1)
above cease to be true and correct, the Issuers shall so advise the Initial
Purchaser and the underwriter(s), if any, and each selling Holder promptly
and, if requested by such Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions (within the United States, Canada or, with respect to
sales to institutions, the United Kingdom) as the selling Holders or
underwriter(s) may reasonably request and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the Shelf
Registration Statement; provided, however, that neither the Company nor any
Guarantor shall be required to register or qualify as a foreign corporation
where it is not now so qualified
12
<PAGE>
or to take any action that would subject it to the service of process in
suits or to taxation, other than as to matters and transactions relating to
the Registration Statement, in any jurisdiction where it is not now so
subject;
(xiii) to the extent lawful, issue, upon the request of any Holder of
Series A Notes covered by the Shelf Registration Statement, Series B Notes,
having an aggregate principal amount equal to the aggregate principal amount
of Series A Notes surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such Series B Notes to be registered
in the name of such Holder or in the name of the purchaser(s) of such Notes,
as the case may be; in return, the Series A Notes held by such Holder shall
be surrendered to the Company for cancellation;
(xiv) cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and enable such Transfer Restricted Securities to be in
such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two Business Days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);
(xv) use commercially reasonable efforts to cause the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities (within
the United States, Canada or the United Kingdom) as may be reasonably
necessary to enable the seller or sellers thereof or the underwriter(s), if
any, to consummate the disposition of such Transfer Restricted Securities,
subject to the proviso contained in clause (xii) above;
(xvi) subject to Section 6(c)(i), if any fact or event contemplated
by clause (c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Registration Statement and provide
the Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities that are in a form eligible for deposit with The
Depository Trust Company;
(xviii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use commercially reasonable efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities (within the United States, Canada or the United Kingdom) as may
be necessary to enable the Holders selling Transfer Restricted Securities to
consummate the disposition of such Transfer Restricted Securities;
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<PAGE>
(xix) otherwise commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) for the twelve-month period (A) commencing at the end of any fiscal
quarter in which Transfer Restricted Securities are sold to underwriters in a
firm or best efforts Underwritten Offering or (B) if not sold to underwriters
in such an offering, beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the Registration
Statement;
(xx) if so required under the TIA, cause the Indenture to be
qualified under the TIA not later than the effective date of the first
Registration Statement required by this Agreement, and, in connection
therewith, cooperate with the Trustee and the Holders of Notes to effect such
changes to the Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and execute and use
commercially reasonable efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such Indenture
to be so qualified in a timely manner;
(xxi) provide promptly to each Holder upon request each document filed
by the Company with the Commission pursuant to the requirements of Section 13
and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of any notice from the Company of the existence of any fact of the
kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If
so directed by the Company, each Holder will deliver to the Company (at the
Issuers' expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
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<PAGE>
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' performance of or compliance
with this Agreement will be borne by the Company or the respective Guarantor,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
filings made by any Initial Purchaser or Holder with the NASD (and, if
applicable, the reasonable fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules and regulations
of the NASD)); (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the Series B Notes to be issued in the Exchange Offer
and printing of Prospectuses), messenger and delivery services and telephone
incurred by the Company the Guarantors and their agents; (iv) all fees and
disbursements of counsel for the Company and, subject to Section 7(b) below, the
Holders of Transfer Restricted Securities; (v) all application and filing fees
in connection with listing Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Issuers
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Issuers will bear their internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expenses of any annual audit and the fees and
expenses of any Person, including special experts, retained by any Issuer.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuers will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors will, jointly and severally, indemnify
and hold harmless each Holder against any losses, claims, damages or
liabilities, joint or several, to which such Holder may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact necessary to make the statements therein not misleading, and will reimburse
each Holder for any legal or other expenses reasonably incurred by such Holder
in connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company and the Guarantors
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Registration Statement or Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Holder expressly for use therein.
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(b) Each Holder will, severally and not jointly, indemnify and hold
harmless the Company and the Guarantors against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Registration Statement
or Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Holder
expressly for use therein; and will reimburse the Company and the Guarantors for
any legal or other expenses reasonably incurred by the Company and the
Guarantors in connection with investigating or defending any such action or
claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantors on the one hand and the Holders on the other
from the sale by the Company of the Series A Notes. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only
16
<PAGE>
such relative benefits but also the relative fault of the Company and the
Guarantors on the one hand and the Holders on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors on the one hand and the Holders on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering of the Notes
(before deducting expenses) received by the Company and the Guarantors bear to
the total proceeds received by such holder upon the sale of the Notes giving
rise to such indemnification obligations. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and the Guarantors
on the one hand or the Holders on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Guarantors agree, and the Holders
shall be deemed to have agreed, that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), no
Holder shall be required to contribute any amount in excess of the amount by
which the total net proceeds received by such Holder with respect to the Notes
exceeds the amount of any damages which such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 8(d) are several in
proportion to the respective principal amount of Series A Notes held by each of
the Holders hereunder and not joint.
(e) The obligations of the Company and the Guarantors under this Section 8
shall be in addition to any liability which the Company and the Guarantors may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Holder within the meaning of the Act; and the
obligations of the Holders under this Section 8 shall be in addition to any
liability which the respective Holders may otherwise have and shall extend, upon
the same terms and conditions, to each officer and director of the Company and
the Guarantors and to each person, if any, who controls the Company within the
meaning of the Act the amount by which the total net proceeds received by such
Holder with respect to the Notes exceeds the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) Notwithstanding anything to the contrary in this Section 8, the
Company and the Guarantors shall not be required to indemnify and hold harmless
any party with respect to any loss, liability, claim, damage or expense to the
extent arising out of (x) the use of a Prospectus relating to a Shelf
Registration Statement during any period when its use has been suspended
pursuant to section 4(c) after the Issuers have provided (and such party has
actually received) written notice of such suspension pursuant to Section 12(e);
provided, that the Company shall
17
<PAGE>
have established beyond a reasonable doubt in a court of competent jurisdiction
that such Holder actually received such written notice on a timely basis and
that such loss, liability, claim, damage or expense would have been completely
avoided had such notice been complied with or (y) the use of an outdated
Prospectus relating to a Shelf Registration Statement following the delivery of
an updated Prospectus correcting the untrue statement or omission giving rise to
the loss, liability, claim, damage or expense to any Holder; provided, that the
Company shall have established beyond a reasonable doubt in a court of competent
jurisdiction that (i) any such untrue statement or omission was fully corrected
in such updated Prospectus, (ii) that the delivery of such updated Prospectus by
such Holder would not have given rise to such loss, liability, claim, damage or
expense and (iii) such Holder was provided with sufficient quantities of such
updated Prospectus and written notice of suspension of the prior Prospectus,
each on a timely basis. Any amounts paid by the Issuers to a Holder pursuant to
this Agreement as a result of such losses, liabilities, claims, damages or
expenses shall be returned to the Issuer, if it shall be finally determined by a
court of competent jurisdiction that such Holder was not entitled to
indemnification by the Issuers by virtue of this Section 8(f).
SECTION 9. RULE 144A
The Issuers hereby agree with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Issuers agree that monetary damages (including the
--------
liquidated damages contemplated hereby) would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
18
<PAGE>
(b) No Inconsistent Agreements. The Issuers will not, on or after the
--------------------------
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Neither the Company nor the
Guarantor have previously entered into any agreement granting any registration
rights with respect to its securities to any Person. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Issuers' securities under any agreement
in effect on the date hereof.
(c) Adjustments Affecting the Notes. The Issuers will not take any
-------------------------------
action, or permit any change to occur, with respect to the terms of the Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Issuers have obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Issuers:
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, IL 60160
Telecopier No.:(708) 344-0083
Attention: Chief Financial Officer
with a copy to
John R. Utzschneider
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
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<PAGE>
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(I) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement, the Indenture, the Notes, is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Issuers with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
[Signature page follows]
20
<PAGE>
In witness whereof, the parties have executed this Agreement as of the
Very truly yours,
IMPAC Group, Inc.
By: /s/ David C. Underwood
----------------------------------------
Name: David C. Underwood
Title:
Klearfold, Inc., as Guarantor
By: /s/ H. Scott Herrin
----------------------------------------
Name: H. Scott Herrin
Title:
AGI Incorporated, as Guarantor
By: /s/ David C. Underwood
----------------------------------------
Name: David C. Underwood
Title:
KF-International, Inc., as Guarantor
By: /s/ H. Scott Herrin
----------------------------------------
Name: H. Scott Herrin
Title:
KF-Delaware, Inc., as Guarantor
By: /s/ Adam Murphy
----------------------------------------
Name: Adam Murphy
Title:
21
<PAGE>
Accepted as of the date hereof:
Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette Securities Corporation
By: /s/ Goldman, Sachs & Co.
----------------------------------------
(Goldman, Sachs & Co.)
22
<PAGE>
Exhibit 10.1
KFI Holding Corporation
10 1/8% SENIOR SUBORDINATED NOTES DUE 2008
________________________
PURCHASE AGREEMENT
------------------
March 5, 1998
Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette Securities
Corporation
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
KFI Holding Corporation, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$100,000,000 principal amount of the 10 1/8% Senior Subordinated Notes due 2008
of the Company, specified above (the "Notes"). The Notes will be fully and
unconditionally guaranteed (the "Guarantees", and together with the Notes, the
"Securities") as to payment of principal, interest, liquidated damages, if any,
and premium, if any, on a senior subordinated basis, jointly and severally by
each of the Company's current and future subsidiaries, (each a "Guarantor", and
collectively, the "Guarantors"). All references to "subsidiaries" contained
herein, assume the consummation of all transactions contemplated by the
Acquisition Documents (as defined herein) as of the date hereof.
1. The Company and each of the Guarantors party hereto, jointly and
severally, represent and warrant to, and agree with, each of the Purchasers
that:
(a) A preliminary offering circular, dated February 19, 1998 (the
"Preliminary Offering Circular") and an offering circular, dated March 5, 1998
(the "Offering Circular"), have been prepared in connection with the offering of
the Securities. Any reference to the Preliminary Offering Circular or the
Offering Circular shall be deemed to refer to and include any Additional Issuer
Information (as defined in Section 5(f) hereof) furnished by the Company prior
to the completion of the distribution of the Securities. The Preliminary
Offering Circular or the Offering Circular and any amendments or supplements
thereto did not and will not, as of their respective dates, and, in the case of
the Offering Circular, as of the Time of Delivery, contain an untrue
<PAGE>
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company by a
Purchaser through Goldman, Sachs & Co. expressly for use therein;
(b) No registration of the Securities under the Securities Act of 1933, as
amended (the "Act"), and no qualification of an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act") with respect
thereto, is required for the offer, sale and initial resale of the Notes by the
Purchasers in the manner contemplated by this Agreement;
(c) Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited financial statements included in the Offering
Circular any loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Offering Circular which would have a material
adverse effect on the current or future financial position or prospects,
stockholders' equity or results of operations of the Company and its
subsidiaries (a "Material Adverse Effect"); and, since the respective dates as
of which information is given in the Offering Circular, there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth in or contemplated
by the Offering Circular;
(d) The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Offering Circular or such as do
not materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries;
(e) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to own its
properties and conduct its business as described in the Offering Circular, and
has been duly qualified as a foreign corporation for the transaction of business
and is in good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by reason of
the failure to be so qualified in any such jurisdiction;
(f) The Company and each of the Guarantors has all requisite corporate
power and authority to execute, deliver and perform their obligations under this
Agreement, the Indenture (as defined below), the Notes, the Guarantees, the
Registration Rights Agreement (as defined below),
2
<PAGE>
the Exchange Notes (as defined below) and the Exchange Guarantees (as defined
below) (collectively, the "Operative Documents") to which they are, or will be,
a party and to consummate the transactions contemplated hereby and thereby,
including without limitation the corporate power and authority to issue, sell
and deliver the Notes and the Exchange Notes and to issue the Guarantees and the
Exchange Guarantees, as applicable, as provided herein and therein;
(g) Each of the Preliminary Offering Circular and the Offering Circular,
as of their respective dates, contains the information specified in Rule
144A(d)(4) under the Act;
(h) After giving effect to the transactions contemplated by the
Acquisition Documents (as defined below), the Company will have an authorized
capitalization as set forth in the Merger Agreement (as defined below), and all
of the issued shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable; all of the issued
shares of capital stock of each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and (except for
directors' qualifying shares) are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims except such as are
described in the Offering Circular; and the Company has no subsidiaries other
than the Guarantors listed on the signature page hereto;
(i) This Agreement has been duly authorized, executed and delivered by the
Company and each of the Guarantors;
(j) The registration rights agreement in the form attached hereto as Annex
II (the "Registration Rights Agreement"), has been duly authorized by the
Company and each of the Guarantors and, when duly executed and delivered by the
Company and each of the Guarantors, will be the valid and legally binding
obligation of the Company and each of the Guarantors, enforceable against the
Company and each of the Guarantors in accordance with its terms, subject as to
enforcement, bankruptcy, reorganization, insolvency or other similar laws
affecting creditors' rights generally or by general principles of equity and, as
to rights of indemnification or contribution, to principles of public policy or
federal or state securities laws relating thereto; pursuant to the Registration
Rights Agreement, the Company will agree to file with the Securities and
Exchange Commission (the "Commission"), under the circumstances set forth
therein a registration statement under the Act relating to another series of
debt securities and Guarantees of the Company and the Guarantors, respectively,
with terms identical to the Notes (the "Exchange Notes") and the Guarantees (the
"Exchange Guarantees" and together with the Exchange Notes, the "Exchange
Securities") to be offered in exchange for the Securities (the "Exchange
Offer"), and to the extent required by the Registration Rights Agreement, a
shelf registration statement pursuant to Rule 415 under the Act relating to the
resale by holders of the Notes, and, as provided in the Registration Rights
Agreement, to use their best efforts to cause such applicable registration
statement or registration statements to be declared effective; and the
Registration Rights Agreement will conform to the descriptions thereof in the
Offering Circular;
(k) The Notes have been duly authorized and, when issued and delivered
pursuant to this Agreement, will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the Indenture to be dated as of
March 12, 1998 (the "Indenture") between the Company, the
3
<PAGE>
Guarantors and State Street Bank and Trust Company, as Trustee (the "Trustee"),
under which they are to be issued, which will be substantially in the form
previously delivered to you; the Indenture has been duly authorized and, when
executed and delivered by the Company and the Trustee, the Indenture will
constitute a valid and legally binding instrument, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy, reorganization,
insolvency and other similar laws relating to or affecting creditors' rights
generally and to general principles of equity; and the Notes, and the Indenture
will conform to the descriptions thereof in the Offering Circular and will be in
substantially the form previously delivered to you;
(l) The Exchange Notes have been duly authorized for issuance by the
Company, and when issued and authenticated in accordance with the terms of the
Indenture and the Registration Rights Agreement, will be the valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Indenture,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity (whether considered in a
proceeding in equity or at law); and the Exchange Notes, when issued, will
conform to the descriptions thereof in the Offering Circular;
(m) The Guarantees have been duly authorized by each of the Guarantors
and, when executed and delivered in accordance with the terms of the Indenture
and when the Notes have been issued and authenticated in accordance with the
terms of the Indenture and delivered to and paid for by the Purchasers in
accordance with the terms of this Agreement, will be the valid and legally
binding obligations of the Guarantors, enforceable against the Guarantors in
accordance with their terms, except as the enforcement thereof may be limited by
applicable bankruptcy, reorganization, insolvency or other similar laws
affecting creditors' rights generally or by general principles of equity; and
Guarantees, when issued, will conform to the description thereof in the Offering
Circular;
(n) The Exchange Guarantees have been duly authorized by each of the
Guarantors and, when executed and delivered in accordance with the terms of the
Indenture and when the Exchange Notes are issued and authenticated in accordance
with the terms of the Indenture and the Registration Rights Agreement, will be
the valid and legally binding obligation of the Guarantors, enforceable against
the Guarantors in accordance with their terms, except as the enforcement thereof
may be limited by applicable bankruptcy, reorganization, insolvency or other
similar laws affecting creditors' rights generally or by general principles of
equity; and Exchange Guarantees, when issued, will conform to the description
thereof in the Offering Circular;
(o) The Company and each of its subsidiaries, as applicable, has all
requisite corporate power and authority to execute, deliver and perform their
obligations under (i) the credit agreement (the "Credit Agreement"), to be dated
March 12, 1998, by and among the Company, each of its Subsidiaries named
therein, Bank of America National Trust and Savings Association and the various
other lenders named therein (ii) and any and all other agreements and
instruments ancillary to or entered into in connection with the transactions
contemplated by the Credit Agreement (items (i) and (ii) are referred to
collectively as the "Credit Documents"). Each of the Credit Documents has been,
or will prior to the Time of Delivery be, duly authorized by the Company and
each of its subsidiaries named therein and, when duly executed and delivered by
4
<PAGE>
the Company and each of its subsidiaries named therein will be the valid and
legally binding obligation of the Company and each of its subsidiaries named
therein, enforceable against each of them in accordance with its terms, subject,
as to enforcement, to bankruptcy, reorganization, insolvency and other similar
laws relating to or affecting creditors' rights generally and to general
principles of equity. The Company will have at least $39 million of borrowings
available to it under the Credit Agreement after giving effect to all
transactions contemplated by the Credit Documents, the Operative Documents and
the Acquisition Documents (as defined herein) and after giving effect to any
borrowing base requirements. All representations and warranties to be made by
any party under any of the Credit Documents will be true and correct in all
material respects as of the Time of Delivery as if made at the Time of Delivery;
provided, that any such representations and warranties that speak as of a
specific date shall be deemed to be made as of such date.
(p) The Company and each of its subsidiaries, as applicable, has all
requisite corporate power and authority to execute, deliver and perform their
obligations under (i) the Investment Agreement (the "Investment Agreement"),
dated as of February 19, 1998, by and among the existing shareholders of KFI
Holding Corporation and certain holders of stock appreciation rights of AGI
Incorporated and KFI Holding Corporation, (ii) the Agreement and Plan of Merger,
dated as of February 19, 1998 (the "Merger Agreement"), by and among KFI Holding
Corporation, Klearfold, Inc., AGI Incorporated, AGI Acquisition Corporation and
certain shareholders and holders of stock appreciation rights of AGI
Incorporated and (iii) any and all other agreements and side letters ancillary
to or entered into in connection with the transactions contemplated by any of
the foregoing (items (i), (ii) and (iii) are referred to collectively as the
"Acquisition Documents"). Each of the Acquisition Documents has been duly
authorized, and has been, or prior to the Time of Delivery of any such
Acquisition Document will be, executed and delivered by the Company and each of
its subsidiaries named therein, and, constitutes or will constitute the valid
and legally binding obligation of the Company and each of its subsidiaries named
therein, enforceable against each of them in accordance with its terms, subject,
as to enforcement, to bankruptcy, reorganization, insolvency and other similar
laws relating to or affecting creditors' rights generally and to general
principles of equity and except that certain indemnification and contribution
provisions may be limited by considerations of public policy. All
representations and warranties made by any party under any of the Acquisition
Documents, dated and delivered prior to this Agreement, are true and correct in
all material respects as of the date hereof and all of the representations and
warranties made by any party under any of the Acquisition Documents to be dated
and delivered after the date of this Agreement will be true and correct in all
material respects as of the date of such Acquisition Documents.
(q) The Company has delivered to the Purchasers true and correct, executed
copies of each of the Acquisition Documents that have been executed and
delivered to date and there have not been and prior to the Time of Delivery will
not be any amendments, alterations, modifications or waivers to any of the
Acquisition Documents or the exhibits or schedules thereto other than those as
to which the Purchasers shall previously have been advised and shall not have
reasonably objected after being furnished a copy thereof. The Company has
delivered to the Purchasers true and current negotiated drafts of the Credit
Documents, and there have been and prior to the Time of Delivery will not be any
alterations, modifications or waivers to any of such drafts of the Credit
Documents or the exhibits or schedules thereto other than those as to which the
Purchasers shall previously have been advised and shall not have reasonably
objected after
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being furnished a copy thereof. The Acquisition Documents and Credit Documents
will conform in all material respects to the descriptions thereof in the
Offering Circular.
(r) Except as disclosed in the Preliminary Offering Circular and the
Offering Circular, and after giving effect to the transactions contemplated by
the Acquisition Documents, there are no outstanding (i) securities or
obligations of the Company or any of the Guarantors convertible into or
exchangeable for any capital stock of the Company or any such Guarantor, (ii)
warrants, rights or options to subscribe for or purchase from the Company or any
of the Guarantors any such capital stock or any such convertible or exchangeable
securities or obligations, or (iii) obligations of the Company or any of the
Guarantors to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights or options,
in each case, other than the options set forth on Schedule 1C hereto which are
in the aggregate not material to the Company;
(s) There are no holders of securities of the Company or any of the
Guarantors who, by reason of the execution of this Agreement or any other
Operative Document by the Company or the Guarantors, as the case may be, or the
consummation of the transactions contemplated hereby and thereby, have the right
to request or demand the Company or any of the Guarantors to register under the
Act or analogous foreign laws and regulations any securities held by them (other
than pursuant to the Registration Rights Agreement);
(t) None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the Securities)
will violate or result in a violation of Section 7 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any regulation promulgated
thereunder, including, without limitation, Regulations G, T, U, and X of the
Board of Governors of the Federal Reserve System;
(u) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has constituted or
which might have been expected to cause or result in stabilization or
manipulation of the price of any security of the Company in connection with the
offering of the Securities;
(v) Except for certain consents required under certain real estate leases
in connection with the transactions contemplated by the Acquisition Documents,
which will either be obtained prior to the Time of Delivery or are not material,
the issue and sale of the Securities and the compliance by the Company and each
of the Guarantors with all of the provisions of this Agreement, each of the
other Operative Documents, the Credit Documents and the Acquisition Documents
and the consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such action result in any
violation of the provisions of the Certificate of Incorporation, Articles of
Incorporation or By-laws, as applicable, of the Company or any of the Guarantors
or any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their
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properties; no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities or the consummation by the
Company or any of its subsidiaries of the other transactions contemplated by
this Agreement, the other Operative Documents, the Credit Documents and the
Acquisition Documents, except for the filing of a registration statement
pertaining to the Exchange Securities by the Company and each of the Guarantors
with the Commission pursuant to the Act, the Registration Rights Agreement and
Section 5(k) hereof, such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by the
Underwriters and such filings (all of which have been made) as may be required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"Hart-Scott-Rodino Act"); and the applicable waiting period under the Hart-
Scott-Rodino Act has expired or been terminated in accordance with the
provisions thereof without any action by the United States Department of Justice
or Federal Trade Commission to prevent consummation of any of the forgoing
transactions;
(w) Except as described in the Offering Circular, neither the Company nor
any of its subsidiaries is in violation of its Certificate of Incorporation,
Articles of Incorporation, or By-laws, as applicable, or in default in any
material respect in the performance or observance of any material obligation,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound;
(x) The statements set forth in the Offering Circular under the caption
"Description of Notes", insofar as they purport to constitute a summary of the
terms of the Securities, and under the captions "Certain Federal Income Tax
Consequences", "The Combination", "Description of Other Indebtedness", and
"Underwriting", insofar as they purport to describe the provisions of the laws
and documents referred to therein, are accurate, complete and fair in all
material respects;
(y) Other than as set forth in the Offering Circular, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;
(z) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the meaning of
Rule 144A under the Act ("Rule 144A")) as securities which are listed on a
national securities exchange registered under Section 6 of the United States
Securities Exchange Act or quoted in a U.S. automated inter-dealer quotation
system;
(aa) Neither the Company, nor any of the Guarantors is, and after giving
effect to the offering and sale of the Securities, will be an "investment
company", or an entity "controlled" by an "investment company", as such terms
are defined in the United States Investment Company Act of 1940, as amended (the
"Investment Company Act");
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(ab) None of the Company, the Guarantors, or any person acting on its or
their behalf has offered or sold the Securities by means of any general
solicitation or general advertising within the meaning of Rule 502(c) under the
Act or, with respect to Securities sold outside the United States to non-U.S.
persons (as defined in Rule 902 under the Act), by means of any directed selling
efforts within the meaning of Rule 902 under the Act and the Company, the
Guarantors, any affiliate of the Company and the Guarantors, and any person
acting on its or their behalf has complied with and will implement the "offering
restriction" within the meaning of such Rule 902;
(ac) Within the preceding six months, none of the Company, the Guarantors
or any other person acting on its or their behalf has offered or sold to any
person any Securities, or any securities of the same or a similar class as the
Securities, other than Securities offered or sold to the Purchasers hereunder.
The Company and the Guarantors will take reasonable precautions designed to
insure that any offer or sale, direct or indirect, in the United States or to
any U.S. person (as defined in Rule 902 under the Act) of any Securities or any
substantially similar security issued by the Company and the Guarantors, within
six months subsequent to the date on which the distribution of the Securities
has been completed (as notified to the Company by Goldman, Sachs & Co.), is made
under restrictions and other circumstances reasonably designed not to affect the
status of the offer and sale of the Securities in the United States and to U.S.
persons contemplated by this Agreement as transactions exempt from the
registration provisions of the Act. None of the Company, the Guarantors or any
of its or their affiliates or any person acting on its or their behalf (other
than the Purchasers, as to whom the Company and the Guarantors make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the Act with respect to the Notes or
the Guarantees;
(ad) The Company and each of the Guarantors maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect thereto;
(ae) The consolidated historical financial statements, together with
related schedules and notes, set forth in the Preliminary Offering Circular and
the Offering Circular comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the Act and
fairly present the consolidated financial position of the Company and each of
its subsidiaries as of the dates indicated and the results of their operations
and their cash flows for the periods indicated, in accordance with generally
accepted accounting principles consistently applied throughout such periods
(except as otherwise disclosed therein). The pro forma financial statements
contained in the Preliminary Offering Circular and the Offering Circular comply
as to form in all material respects with the requirements of the rules
promulgated under the Act and have been prepared on a basis consistent with the
historical statements, except for the pro forma adjustments specified therein,
and give effect to assumptions made on a reasonable basis and present fairly the
historical and proposed transactions contemplated by this Agreement, the other
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Operative Documents, the Credit Documents and the Acquisition Documents. The
other financial and statistical information and data included in the Preliminary
Offering Circular and the Offering Circular, historical and pro forma, are, in
all material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company and the
Guarantors. The statistical and market-related data included in the Preliminary
Offering Circular and the Offering Circular are based on or derived from sources
which the Company and the Guarantors believe to be reliable and accurate in all
material respects;
(af) KPMG Peat Marwick LLP, who have certified certain financial statements
of the Company and its subsidiaries, and Arthur Andersen LLP and Price
Waterhouse LLP, who have each certified certain financial statements of AGI
Incorporated, are each independent public accountants as required by the Act and
the rules and regulations of the Commission thereunder.
(ag) The Company and each of the Guarantors has complied in all respects
with all laws, regulations and orders applicable to them or their businesses the
violation of which would have a Material Adverse Effect;
(ah) Except as would not, individually or in the aggregate, have a Material
Adverse Effect, (i) the Company and each of the Guarantors has all certificates,
consents, exemptions, orders, permits, licenses, authorizations, or other
approvals (each, an "Authorization") of and from, and has made all declarations
and filings with, all federal, state, local and other governmental authorities,
all self-regulatory organizations and all courts and other tribunals, necessary
or required to engage in the business currently conducted by it in the manner
described in the Offering Circular; (ii) all such Authorizations are valid and
in full force and effect and (iii) the Company and each of the Guarantors is in
compliance in all material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory authorities
and governing bodies having jurisdiction with respect thereto;
(ai) The Company and each of the Guarantors owns or possesses or has the
right to use the patents, patent rights, licenses, inventions, copyrights, know-
how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names (collectively, the "Intellectual Property")
presently employed by it in connection with, and material to, individually or in
the aggregate, the operation of the businesses now operated by it, and neither
the Company nor any of the Guarantors has received any notice of infringement of
or conflict with asserted rights of others with respect to the foregoing which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect. To the best
knowledge of the Company and the Guarantors, the use of such Intellectual
Property in connection with the business and operations of the Company and the
Guarantors does not infringe on the rights of any person, except as would not,
individually or in the aggregate, result in a Material Adverse Effect;
(aj) All tax returns required to be filed by the Company or any of the
Guarantors in all jurisdictions have been timely and duly filed, other than
those filings being contested in good faith, except where the failure to so file
any such returns could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. There are no tax returns of the
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Company or any of the Guarantors that are currently being audited by state,
local or federal taxing authorities or agencies (and with respect to which the
Company or any of the Guarantors has received notice), where the findings of
such audit, if adversely determined, would result in a Material Adverse Effect.
All taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities have been
paid, other than those being contested in good faith and for which adequate
reserves have been provided or those currently payable without penalty or
interest;
(ak) The Company and each of the Guarantors maintains insurance covering
their properties, operations, personnel and businesses which insures against
such losses and risks as is adequate in accordance with its reasonable business
judgment to protect the Company and the Guarantors and their businesses.
Neither the Company nor the Guarantors has received notice from any insurer or
agent of such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such insurance. All such
insurance is outstanding and duly in force on the date hereof and will be
outstanding and duly in force at the Time of Delivery;
(al) Except as disclosed in the Preliminary Offering Circular and the
Offering Circular (including, without limitation, the documents incorporated by
reference therein), there are no business relationships or related party
transactions which would be required to be disclosed therein by Item 404 of
Regulation S-K of the Commission and each business relationship or related party
transaction described therein is a fair and accurate description of the
relationships and transactions so described in all material respects;
(am) The Company and each of the Guarantors is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any Guarantor would have any liability; neither
the Company nor any of the Guarantors has incurred or expects to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Section 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the Company or any
Guarantor would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or by failure to act, which would cause the loss
of such qualification, except, in each case, as would not have a Material
Adverse Effect;
(an) There is (i) no material unfair labor practice complaint pending
against the Company or any of the Guarantors, or, to the best knowledge of the
Company, threatened against any of them, before the National Labor Relations
Board or any state or local labor relations board, and no significant grievance
or significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of the Guarantors,
or, to the best knowledge of the Company, threatened against any of them, (ii)
no material strike, labor dispute, slowdown or stoppage pending against the
Company or any of the Guarantors nor, to the best knowledge of the Company and
the Guarantors, threatened against the Company or
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any of the Guarantors and (iii) to the best knowledge of the Company and the
Guarantors, no union representation question existing with respect to the
employees of the Company or any of the Guarantors and, to the best knowledge of
the Company and the Guarantors, no union organizing activities are taking place,
except, in each case, as would not have a Material Adverse Effect;
(ao) The Company and each of the Guarantors has reviewed the effect of
Environmental Laws (as defined below) and the disposal of hazardous or toxic
substances, wastes, pollutants and contaminants on the business, assets,
operations and properties of the Company and each of the Guarantors, and
identified and evaluated associated costs and liabilities (including, without
limitation, any material capital and operating expenditures required for clean-
up, closure of properties and compliance with environmental, safety or similar
laws or regulations applicable to it or its business or property relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), all
permits, licenses and approvals, all related constraints on operating activities
and all potential liabilities to third parties). On the basis of such reviews,
the Company and the Guarantors have reasonably concluded that such associated
costs and liabilities would not have a Material Adverse Effect. Neither the
Company nor any of the Guarantors has violated any Environmental Laws, lacks any
permit, license or other approval required of it under applicable Environmental
Laws or is violating any term or condition of such permit, license or approval
which could reasonably be expected to, either individually or in the aggregate,
have a Material Adverse Effect;
(ap) None of the Company, the Guarantors or, to the Company's and the
Guarantors' knowledge, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of the Guarantors, has
used any corporate funds during the last five years for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; made any unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment, except, in each case, such as would not have a Material
Adverse Effect;
(aq) Other than as contemplated by or described in this Agreement, there is
no broker, finder or other party that is entitled to receive from the Company or
any of the Guarantors any brokerage or finder's fee or other fee or commission
as a result of any of the transactions contemplated by this Agreement or any of
the Operative Documents; and
(ar) Each certificate signed by any officer of the Company or any Guarantor
and delivered at the Time of Delivery to the Purchasers or counsel for the
Purchasers shall be deemed to be a representation and warranty by the Company or
such Guarantor, as the case may be, to the Purchasers as to the matters covered
thereby.
2. Subject to the terms and conditions herein set forth, the Company and
the Guarantors, jointly and severally agree to issue and sell to each of the
Purchasers and each of the Purchasers agrees, severally and not jointly, to
purchase from the Company and the Guarantors,
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at a purchase price of 97.0% of the principal amount thereof, the principal
amount of Notes (together with the Guarantees) set forth opposite the name of
such Purchaser in Schedule I hereto.
3. Upon the authorization by you of the release of the Securities, the
several Purchasers propose to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company and the
Guarantors that:
(a) It will offer and sell the Securities only to:(i) persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A in transactions meeting the requirements of Rule 144A or,
(ii) upon the terms and conditions set forth in Annex I to this Agreement;
(b) It is an institutional "Accredited Investor" (within the meaning of
Rule 501 of the Act); and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the methods
described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased by each Purchaser hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Goldman, Sachs & Co., for the account of each Purchaser, against
payment by or on behalf of such Purchaser of the purchase price therefor by
certified or official bank check or checks, payable to the order of the Company
in Federal (same day) funds, by causing DTC to credit the Securities to the
account of Goldman, Sachs & Co. at DTC. The Company will cause the certificates
representing the Securities to be made available to Goldman, Sachs & Co. for
checking at least twenty-four hours prior to the Time of Delivery (as defined
below) at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:30 a.m.,
New York City time, on March 12, 1998 or such other time and date as Goldman,
Sachs & Co. and the Company may agree upon in writing. Such time and date are
herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Purchasers
pursuant to Section 7 hereof, will be delivered at such time and date at the
offices of Bingham Dana Murase LLP, 399 Park Avenue, New York, New York (the
"Closing Location"). A meeting will be held at the Closing Location at 4:00
p.m., New York City time, on the New York Business Day next preceding the Time
of Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
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5. Each of the Company and the Guarantors party hereto, jointly and
severally, agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to make no
amendment or any supplement to the Offering Circular which shall be disapproved
by you promptly after reasonable notice thereof; and to furnish you with copies
thereof;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as you may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company and the Guarantors shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process or become subject to taxation in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time to furnish the
Purchasers with three copies of the Offering Circular and each amendment or
supplement thereto signed by an authorized officer of the Company with the
independent accountants' report(s) in the Offering Circular, and any amendment
or supplement containing amendments to the financial statements covered by such
report(s), signed by the accountants, and additional copies thereof in such
quantities as you may from time to time reasonably request, and if, at any time
prior to the expiration of nine months after the date of the Offering Circular,
any event shall have occurred as a result of which the Offering Circular as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Offering Circular is delivered, not misleading, or, if for any other reason it
shall be necessary or desirable during such same period to amend or supplement
the Offering Circular, to notify you and upon your request to prepare and
furnish without charge to each Purchaser and to any dealer in securities as many
copies as you may from time to time reasonably request of an amended Offering
Circular or a supplement to the Offering Circular which will correct such
statement or omission or effect such compliance;
(d) During the period beginning from the date hereof and continuing until
the date six months after the Time of Delivery, not to offer, sell contract to
sell or otherwise dispose of, except as provided hereunder any securities of the
Company or any of its subsidiaries that are substantially similar to the
Securities;
(e) Not to be or become, at any time prior to the expiration of three
years after the Time of Delivery, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act;
(f) At any time when the Company and the Guarantors are not subject to
Section 13 or 15(d) of the Exchange Act, for the benefit of holders from time to
time of Securities, to furnish at their expense, upon request, to holders of
Securities and prospective purchasers of securities
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information (the "Additional Issuer Information") satisfying the requirements of
subsection (d)(4)(i) of Rule 144A;
(g) If requested by you, to use its best efforts to cause the Securities
to be eligible for the PORTAL trading system of the National Association of
Securities Dealers, Inc.;
(h) To furnish to the holders of the Securities as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flows of the Company and
its consolidated subsidiaries certified by independent public accountants) and,
as soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date of the
Offering Circular), consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail (the foregoing shall
be deemed satisfied by the delivery of Annual Reports on Form 10K and Quarterly
Reports on Form 10-Q.);
(i) During a period of five years from the date of the Offering Circular,
to furnish to you copies of all reports or other communications (financial or
other) of the type that would be customarily furnished to public stockholders of
the Company, and to deliver to you (i) as soon as they are available, copies of
any reports and financial statements furnished to or filed with the Commission
or any securities exchange on which the Securities or any class of securities of
the Company are listed; and (ii) such additional information concerning the
business and financial condition of the Company and the Guarantors as you may
from time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders generally
or to the Commission);
(j) During the period of two years after the Time of Delivery, not to, and
not to permit any of its "affiliates" (as defined in Rule 144 under the Act
("Rule 144")) to, resell any of the Securities which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them;
(k) To comply with all terms of the Registration Rights Agreement,
including, without limitation, filing on or prior to 90 days after the Time of
Delivery and using commercially reasonable efforts to cause to be declared or
become effective under the Act, on or prior to 150 days after the Time of
Delivery, a registration statement on Form S-4 providing for the registration of
another series of debt securities of the Company, with terms identical to the
Securities (the "Exchange Securities"), and the exchange of the Securities for
the Exchange Securities, all in a manner which will permit persons who acquire
the Exchange Securities to resell the Exchange Securities pursuant to Section
4(1) of the Act; and
(l) To use the net proceeds received by them from the sale of the
Securities pursuant to this Agreement in the manner specified in the Offering
Circular under the caption "Use of Proceeds".
6. Each of the Company and the Guarantors party hereto, jointly and
severally covenant and agree with the several Purchasers that the Company and/or
the Guarantors will pay
14
<PAGE>
or cause to be paid the following: (i) the fees, disbursements and expenses of
the Company's and the Guarantors' counsel and accountants in connection with the
issue of the Securities and all other expenses in connection with the
preparation, printing and filing of the Preliminary Offering Circular and the
Offering Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchasers and dealers; (ii) the cost of
printing or producing any agreement among Purchasers, this Agreement, the
Registration Rights Agreement, the Indenture, the Blue Sky and Legal Investment
Memoranda, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities; (iii) all expenses in connection with the qualification of the
Securities for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the reasonable and customary fees and
disbursements of counsel for the Purchasers in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) the cost of preparing the Securities; (vi) the fees and expenses of the
Trustee and any agent of the Trustee and the fees and disbursements of counsel
for the Trustee in connection with the Indenture and the Securities; (vii) any
cost incurred in connection with the designation of the Securities for trading
in PORTAL and (viii) all other costs and expenses incident to the performance of
their obligations hereunder which are not otherwise specifically provided for in
this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Purchasers will pay all of their own
costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Securities by them.
7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company and the Guarantors herein are, at and as of the Time
of Delivery, true and correct, the condition that the Company and the Guarantors
shall have performed all of their obligations hereunder thereunder to be
performed, and the following additional conditions:
(a) Latham & Watkins, counsel for the Purchasers, shall have furnished to
you such opinion or opinions, dated the Time of Delivery, with respect to such
matters as you may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to pass
upon such matters;
(b) Bingham Dana LLP, counsel for the Company, Kleinbard, Bell & Brecker
LLP, and Ballard, Spahr, Andrews & Ingersoll, counsel to Klearfold and its
subsidiaries and Sonnenschein Nath & Rosenthal, counsel to AGI Incorporated,
shall have furnished to you their written opinion dated the Time of Delivery, in
the form attached hereto as Exhibit A, Exhibit B, Exhibit C and Exhibit D,
respectively.
(c) On the date of the Offering Circular prior to the execution of this
Agreement and also at the Time of Delivery, KPMG Peat Marwick LLP, Arthur
Andersen LLP and Price Waterhouse LLP shall have furnished to you "comfort
letters," dated the respective dates of delivery thereof, substantially in the
forms heretofore approved by the Purchasers;
(d) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Circular any loss or
15
<PAGE>
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular, and (ii) since the respective dates as of
which information is given in the Offering Circular there shall not have been
any change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Offering
Circular, the effect of which, in any such case described in Clause (i) or (ii),
is in the judgment of the Purchasers so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities on the terms and in the manner contemplated in this Agreement
and in the Offering Circular;
(e) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities;
(f) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on the Nasdaq National Market
(NASDAQ); (ii) a general moratorium on commercial banking activities declared by
either Federal or New York State authorities; (iii) the outbreak or escalation
of hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event specified
in this Clause (iii) in the judgment of the Purchasers makes it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities on
the terms and in the manner contemplated in the Offering Circular; or (iv) the
occurrence of any material adverse change in the existing, financial, political
or economic conditions in the United States or elsewhere which, in the judgment
of the Purchasers, would materially and adversely affect the financial markets
or the markets for Securities and other debt securities;
(g) The Securities have been designated for trading on PORTAL;
(h) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of Offering Circulars on the New York
Business Day next succeeding the date of this Agreement;
(i) The Company and the Guarantors shall have furnished or caused to be
furnished to you at the Time of Delivery certificates of officers of the Company
and the Guarantors reasonably satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Guarantors herein at and
as of such Time of Delivery, as to the performance by the Company and the
Guarantors of all of their obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in subsections (d) and (e) of
this Section and as to such other matters as you may reasonably request.
16
<PAGE>
(j) The Company, the Guarantors and the Trustee shall have entered into
the Indenture and the Purchasers shall have received counterparts, conformed as
executed, thereof.
(k) The Company, the Guarantors and the Purchasers shall have entered into
the Registration Rights Agreement in the form attached hereto as Annex II and
the Purchasers shall have received counterparts, conformed as executed, thereof.
(l) Prior to or simultaneously with the closing of the transactions
contemplated by Section 2 hereof, the Company and the Guarantors shall have
consummated all of the transactions contemplated by the Credit Documents and the
Acquisition Documents, including, without limitation, the Combination (as
described in the Offering Circular), the initial borrowings under the Credit
Agreement (as described in the Offering Circular), if any, and the issuance of
the Letters of Credit under the Credit Documents (as described in the Offering
Circular).
(m) Prior to or simultaneously with the closing of the transactions
contemplated by Section 2 hereof, the Company shall have entered into each of
the Employment Agreements (as defined in the Offering Circular) and each of such
Employment Agreements shall be in the form previously agreed to by the
Purchasers and described in the Offering Circular.
(n) Latham & Watkins, counsel for the Purchasers, shall have been
furnished with final, executed copies of each of the documents set forth above
and such other documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in this Section 7 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
8. (a) The Company and the Guarantors will, jointly and severally,
indemnify and hold harmless each Purchaser against any losses, claims, damages
or liabilities, joint or several, to which such Purchaser may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, and will reimburse each Purchaser for any legal or other
expenses reasonably incurred by such Purchaser in connection with investigating
or defending any such action or claim as such expenses are incurred; provided,
however, that the Company and the Guarantors shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Offering Circular or the Offering
Circular or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by any Purchaser through
Goldman, Sachs & Co. expressly for use therein.
(b) Each Purchaser will, severally and not jointly, indemnify and hold
harmless the Company and the Guarantors against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or otherwise,
insofar as such losses, claims,
17
<PAGE>
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Circular or the Offering Circular, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Offering Circular or the Offering
Circular or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by such Purchaser through
Goldman, Sachs & Co. expressly for use therein; and will reimburse the Company
and the Guarantors for any legal or other expenses reasonably incurred by the
Company and the Guarantors in connection with investigating or defending any
such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantors on the one hand and the Purchasers on the
other from the offering of the Securities. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection (c)
18
<PAGE>
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Guarantors on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Guarantors on the one hand and the Purchasers on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Guarantors
bear to the total underwriting discounts and commissions received by the
Purchasers, in each case as set forth in the Offering Circular. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
and the Guarantors on the one hand or the Purchasers on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Guarantors and
the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to
investors were offered to investors exceeds the amount of any damages which such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Purchasers' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company and the Guarantors under this Section 8
shall be in addition to any liability which the Company and the Guarantors may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Purchaser within the meaning of the Act; and
the obligations of the Purchasers under this Section 8 shall be in addition to
any liability which the respective Purchasers may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company and the Guarantors and to each person, if any, who controls the Company
within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by
any Purchaser you do not arrange for the purchase of such Securities, then the
Company at its discretion shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to you
to purchase such Securities on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so arranged
for the purchase of such Securities, or the Company notifies you that it has so
arranged for the purchase of such Securities, you or the Company shall
19
<PAGE>
have the right to postpone the Time of Delivery for a period of not more than
seven days, in order to effect whatever changes may thereby be made necessary in
the Offering Circular, or in any other documents or arrangements, and the
Company agrees to prepare promptly any amendments to the Offering Circular which
in your opinion may thereby be made necessary. The term "Purchaser" as used in
this Agreement shall include any person substituted under this Section 9 with
like effect as if such person had originally been a party to this Agreement with
respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities, then the Company shall have
the right to require each non-defaulting Purchaser to purchase the principal
amount of Securities which such Purchaser agreed to purchase hereunder and, in
addition, to require each non-defaulting Purchaser to purchase its pro rata
share (based on the principal amount of Securities which such Purchaser agreed
to purchase hereunder) of the Securities of such defaulting Purchaser or
Purchasers for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of Securities
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Securities, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Purchasers to purchase
Securities of a defaulting Purchaser or Purchasers, then this Agreement shall
thereupon terminate, without liability on the part of any non-defaulting
Purchaser or the Company, except for the expenses to be borne by the Company and
the Purchasers as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Purchaser from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Guarantors and the several Purchasers,
as set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Purchaser or any controlling person of any Purchaser, the Company,
the Guarantors or any officer or director or controlling person of the Company
or the Guarantors, and shall survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company and the Guarantors
as provided herein, the Company and the Guarantors will reimburse the Purchasers
through you for all reasonable out-of-pocket expenses, including fees and
disbursements of counsel, reasonably incurred by the Purchasers in making
preparations for the purchase, sale and delivery of the Securities, but the
Company and the Guarantors shall then be under no further liability to any
Purchaser except as provided in Sections 6 and 8 hereof.
20
<PAGE>
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you in care of Goldman, Sachs & Co., 85 Broad Street,
New York, New York 10004, Attention: Registration Department, with a copy to
Kirk A. Davenport, Latham & Watkins, 885 Third Avenue, New York, New York 10022;
and if to the Company or any of the Guarantors shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth in
the Offering Circular, Attention: Secretary, with a copy to John R.
Utzschneider, Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts 02110;
provided, however, that any notice to a Purchaser pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Purchaser at its address set forth in its Purchasers' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company, the Guarantors and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Purchaser, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Securities from any Purchaser shall be deemed a successor or assign
by reason merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
21
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us three counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers, the Company
and each of the Guarantors named below. It is understood that your acceptance
of this letter on behalf of each of the Purchasers is pursuant to the authority
set forth in a form of Agreement among Purchasers, the form of which shall be
submitted to the Company for examination upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
KFI Holding Corporation
By: /s/ Michael F. Gilligan
----------------------------------------
Name: Michael F. Gilligan
Title:
Klearfold, Inc., as Guarantor
By: /s/ H. Scott Herrin
----------------------------------------
Name: H. Scott Herrin
Title: President
AGI Incorporated, as Guarantor
By: /s/ David C. Underwood
----------------------------------------
Name: David C. Underwood
Title: Vice President-Finance
KF-International, Inc., as Guarantor
By: /s/ H. Scott Herrin
----------------------------------------
Name: H. Scott Herrin
Title: President
KF-Delaware, Inc., as Guarantor
By: /s/ Melvin S. Herrin
----------------------------------------
Name: Melvin S. Herrin
Title:
22
<PAGE>
Accepted as of the date hereof:
Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette Securities Corporation
By: /s/ Goldman, Sachs & Co.
----------------------------------------------
(Goldman, Sachs & Co.)
23
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
PURCHASERS
Principal
Amount of
Securities
to be
Purchaser Purchased
- --------- --------------
<S> <C>
Goldman, Sachs & Co. .................................................................. $ 65,000,000
Donaldson, Lufkin & Jenrette Securities Corporation ................................... $ 35,000,000
--------------
Total ............................................................................ $100,000,000
==============
</TABLE>
s-1
<PAGE>
ANNEX I
TERMS AND CONDITIONS OF SALES
UNDER REGULATION S UNDER THE ACT
(1) The Securities have not been and will not be registered under the Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Securities Act. Each Purchaser represents that it has offered and sold the
Securities, and will offer and sell the Securities (i) as part of their
distribution at any time and (ii) otherwise until 40 days after the later of the
commencement of the offering and the Time of Delivery, only in accordance with
Rule 903 of Regulation S or Rule 144A or pursuant to Paragraph 2 of this Annex I
under the Act. Accordingly, each Purchaser agrees that neither it, its
affiliates nor any persons acting on its or their behalf has engaged or will
engage in any directed selling efforts with respect to the Securities, and it
and they have complied and will comply with the offering restrictions
requirement of Regulation S. Each Purchaser agrees that, at or prior to
confirmation of sale of Securities (other than a sale pursuant to Rule 144A) or
pursuant to Paragraph 2 of this Annex I, it will have sent to each distributor,
dealer or person receiving a selling concession, fee or other remuneration that
purchases Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Act") and may not
be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering and the closing
date, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Act. Terms used above have the
meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or delivery of
the Securities, except with its affiliates or with the prior written consent of
the Company.
(2) Notwithstanding the foregoing, Securities in registered form may be
offered, sold and delivered by the Purchasers in the United States and to U.S.
persons pursuant to Section 3 of this Agreement without delivery of the written
statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has not
offered or sold and will not offer or sell any Securities to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to
<PAGE>
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom, and (c) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issuance of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 of Great Britain or is a person to whom
the document may otherwise lawfully be issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any of
the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with Goldman, Sachs & Co.'s express written consent and then only at its own
risk and expense.
<PAGE>
Exhibit 10.2
ESCROW AGREEMENT
------ ---------
This ESCROW AGREEMENT, dated as of March 12, 1998, is among (i) KFI Holding
Corporation, a Delaware corporation ("Holding"), (ii) Timothy Murray, in his
capacity as attorney-in-fact under various Powers of Attorney for certain
stockholders of AGI Incorporated, a corporation organized under the laws of the
State of Illinois ("AGI"), party to such Power of Attorney (collectively, the
"Individual Blair Stockholders"), (iii) the Stockholders of AGI referred to on
the signature pages hereto as the "Other Escrowed Stockholders", and together
with the Individual Blair Stockholders, being referred to herein as the
"Escrowed Stockholders", and (iv) First Trust National Association, as the
escrow agent (the "Escrow Agent"). All capitalized terms not otherwise defined
herein shall have the meanings assigned to them in the Merger Agreement (as
defined below).
WHEREAS, Holding, AGI and certain other parties have entered into an
Agreement and Plan of Merger, dated as of February 19, 1998 (the "Merger
Agreement"), pursuant to which Holding has agreed to purchase the Converted
Shares of AGI for the purchase price specified in Section 1.3(a) of the Merger
Agreement (the "Purchase Price");
WHEREAS, pursuant to the Merger Agreement, Holding has agreed to deposit
the $812,622 in escrow with the Escrow Agent to be held and distributed by the
Escrow Agent on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth in this Agreement, the parties hereto hereby agree as follows:
1. DEPOSIT OF ESCROWED FUNDS. Holding hereby deposits with the Escrow
Agent, and the Escrow Agent hereby acknowledges receipt of, the sum of $812,622
(the "Escrow Amount") as security for the payment of claims of indemnification,
if any, made against the Escrowed Stockholders, subject to the terms,
conditions, limitations and qualifications set forth in Article 8 of the Merger
Agreement. The Escrow Amount, together with any interest earned thereon from
any investment thereof hereunder, is hereinafter referred to as the "Escrowed
Funds".
2. INVESTMENT OF ESCROWED FUNDS. Until the release of the Escrowed Funds
pursuant to Section 3 hereof, the Escrow Agent shall, at the written direction
of Holding and the Escrowed Stockholders, invest and reinvest the Escrowed Funds
solely in (a) marketable obligations of, or obligations guaranteed by, the
United States of America, (b) U.S. Money Market Funds (as defined below), (c)
deposits in any interest-bearing account with a commercial bank or trust company
having capital surplus of at least $100,000,000 and having at least an "A"
rating or better from Standard & Poor's, and/or (d) other investments mutually
agreed upon by Holding and the Escrowed Stockholders. The initial written
direction of the Escrowed Stockholders and Holding is
<PAGE>
-2-
attached hereto as Schedule 1. In the event that Holding and the Escrowed
Stockholders do not give written directions to the Escrow Agent in a timely
manner, the Escrow Agent shall invest and reinvest the Escrowed Funds in U.S.
Money Market Funds offered by the Escrow Agent or its affiliates. The Escrow
Agent shall not have any liability to the Escrowed Stockholders or Holding
arising, directly or indirectly, from any investment made pursuant to this
Section 2. As used herein, the term "U.S. Money Market Funds" means interests
in any open-end or closed-end management type investment company or investment
trust registered under the Investment Company Act of 1940 (as from time to time
amended, the "Investment Company Act"), the portfolio of which is limited to
obligations of, or obligations guaranteed by, the United States or any agency
thereof ("Federal Obligations") and to agreements to repurchase Federal
Obligations that are at least 100% collateralized by Federal Obligations marked
to market on a daily basis, including those offered by the Escrow Agent or its
affiliates.
3. RELEASE OF ESCROWED FUNDS.
(a) Subject to paragraphs (b) and (c) below, on the first anniversary of
the Closing (the "Distribution Date"), the Escrow Agent shall distribute the
remaining Escrowed Funds to each of the Escrowed Stockholders, pro rata in
accordance with the percentage set forth opposite such Escrowed Stockholder's
name on Exhibit A hereto, unless on the Distribution Date there is outstanding
any unresolved AGI Indemnified Claim (sometimes called a "Claim" or "Claims")
asserted pursuant to Article 8 of the Merger Agreement which has been previously
notified to the Escrow Agent in accordance with paragraph (b) below, in which
case the Escrow Agent shall retain in the Escrow Account, and subject to all of
the terms and provisions of this Agreement, an amount of the Escrowed Funds
equal to the amount of all such unresolved Claims.
(b) From time to time prior to the Distribution Date, in accordance with
Article 8 of the Merger Agreement, Holding may deliver to the Escrow Agent a
written notice (a "Claim Notice") requesting distribution to Holding of a
specified amount of the Escrowed Funds in full or partial payment of the
indemnification obligations of the Escrowed Stockholders to the Holding
Indemnitees related to or arising directly or indirectly out of or in connection
with any AGI Indemnified Claims which have been asserted pursuant to the terms
of Article 8 of the Merger Agreement, along with (a) a delivery receipt or other
appropriate proof of actual delivery to the Escrowed Stockholder Representative
of a copy of such Claim Notice and (b) a certificate, in the form of Exhibit B
attached hereto and made a part hereof, signed by Holding evidencing that
Holding has asserted a demand against the Non-Escrowed Stockholders relating to
such AGI Indemnified Claim as required in accordance with Article 8 of the
Merger Agreement (it being agreed that the Escrowed Stockholder Representative
shall receive a copy of such certificate and proof of delivery). If the Escrow
Agent is not in actual receipt of a written objection from the Escrowed
Stockholder Representative to such Claim Notice within 35 days following the
date of the Escrow Agent's actual receipt of such Claim Notice (or if the 35th
day is not a business day,
<PAGE>
-3-
then on the first business day after the 35th day (such later date being called
the "Final Receipt Date")), then on the first business day following the Final
Receipt Date, the Escrow Agent shall pay to Holding the amount of the Escrowed
Funds specified in the Claim Notice.
(c) If the Escrow Agent is in actual receipt of a written objection from
the Escrowed Stockholder Representative to a Claim Notice on or prior to the
Final Receipt Date, the Escrow Agent shall not distribute to Holding any amount
which Holding has requested for distribution pursuant to its Claim Notice
(unless the Escrowed Stockholder Representative's objection specifically
authorizes distribution of a portion of such amount, in which case the Escrow
Agent may distribute to Holding such authorized portion), and the Escrow Agent
shall be prohibited from making any distributions of the amount requested by
Holding until the Escrow Agent shall have received either (i) non-conflicting
written instructions from the Escrowed Stockholder Representative and Holding as
to the disposition of the portion of the Escrowed Funds in question, or (ii) an
order of an arbitrator or court having jurisdiction over the matter which is
final and not subject to further court proceedings or appeal along with a
certificate from either counsel to the Escrowed Stockholders or counsel to
Holding that such order is final. Upon receipt of any such written instructions
or order, the Escrow Agent shall distribute such Escrowed Funds in accordance
therewith. If the Escrowed Stockholder Representative's objection to payment of
a Claim shall prevent timely payment to Holding of any amount which is
ultimately determined to be distributable to Holding in satisfaction of such
Claim, Holding shall be entitled to all interest which shall have accrued on
such amount by its investment hereunder from and after the Final Receipt Date
until distribution of such amount to Holding in payment thereof, and the
determination by the Escrow Agent of such interest amount to which Holding is
entitled shall be binding upon both the Escrowed Stockholders and Holding.
(d) If necessary to satisfy any distributions under this Agreement or the
Escrow Agent's fees and expenses, the Escrow Agent may sell or liquidate, in its
sole discretion, any one or more investments prior to maturity and the Escrow
Agent shall not be liable to Holding or to the Escrowed Stockholders for any
loss or penalties resulting from or relating to such sale or liquidation,
however, Holding and the Escrowed Stockholders may extend any payment period in
this Section 3 in order to avoid any loss of income or principal from a
premature liquidation of an escrow investment.
(e) All releases of Escrowed Funds shall be made by wire transfer, or by
delivery to the appropriate party at the address and in the manner set forth for
such party in Section 7 hereof of a bank check in the amount of such release, or
in such other manner as may be agreed to between the appropriate party and the
Escrow Agent.
4. RESPONSIBILITY OF ESCROW AGENT. The Escrow Agent shall not be
responsible for the genuineness of any signature or document presented to it
pursuant to this Agreement and may rely conclusively upon and shall be protected
in acting upon any judicial order or decree, certificate, notice, request,
consent, statement, instruction or other
instrument believed by it in good faith to be genuine or to be signed or
presented by the
<PAGE>
-4-
proper person hereunder, or duly authorized by such person or properly made.
Notwithstanding anything to the contrary in this Agreement, prior to taking any
action hereunder, the Escrow Agent may, if in doubt regarding its duties and
obligations, seek instructions from Holding and the Escrowed Stockholders, and
if such instructions are in conflict, the Escrow Agent may seek instructions or
other relief (including but not limited to interpleader) from a court of
competent jurisdiction, and further may request such evidence, documents,
certificates or opinions as it may deem appropriate. The Escrow Agent shall be
entitled to retain counsel both to advise it and in connection with any court
action, and such counsel's reasonable attorneys' fees shall be charged to
Holding. The Escrow Agent shall be entitled to act in reliance upon the advice
of counsel in all matters pertaining to this Agreement, and shall not be liable
for any action taken or omitted by it in good faith in accordance with such
advice. The Escrow Agent shall not be responsible for any of the agreements
contained herein or in the Merger Agreement except the performance of its duties
as expressly set forth herein. The duties and obligations of the Escrow Agent
hereunder shall be governed solely by the provisions of this Agreement, and the
Escrow Agent shall have no duties other than the duties expressly imposed herein
and shall not be required to take any action other than in accordance with the
terms hereof. The Escrow Agent shall not be bound by any notice of, or demand
with respect to, any waiver, modification, amendment, termination, cancellation,
rescission or supercession of this Agreement, unless in writing and signed by
Holding, the Escrowed Stockholders, and the Escrow Agent. In the event of any
controversy or dispute hereunder or with respect to any question as to the
construction of this Agreement, or any action to be taken by the Escrow Agent
hereunder, the Escrow Agent shall not incur any liability for any action taken
or suffered in good faith, its liability hereunder to be limited solely to gross
negligence or willful misconduct on its part. Holding and the Escrowed
Stockholders jointly and severally agree to indemnify and hold the Escrow Agent
harmless, and further to protect and defend the Escrow Agent (with counsel
selected by the Escrow Agent) against any losses, liabilities and damages
incurred by the Escrow Agent as a consequence of any action taken or omitted to
be taken by it in the performance of its obligations hereunder (including,
without limitation, the reasonable fees and disbursements of counsel), with the
exception of any losses, liabilities and damages arising from the Escrow Agent's
gross negligence or willful misconduct. The representations and obligations of
the Escrowed Stockholders and Holding to the Escrow Agent in this Agreement
shall survive the termination of this Agreement and shall be applicable whether
or not First Trust National Association is serving as Escrow Agent.
5. EXPENSES OF ESCROW AGENT. The escrow fees set forth on Schedule 2 to
this Agreement and to the other reasonable costs and expenses of the Escrow
Agent incurred in connection with the administration of this Escrow Agreement
(including reasonable attorneys' fees and disbursements) shall be paid by
Holding on demand made by the Escrow Agent.
<PAGE>
-5-
6. ESCROWED STOCKHOLDER REPRESENTATIVE. By the execution and delivery of
this Agreement, the Escrowed Stockholders hereby irrevocably constitute and
appoint Timothy Murray as the true and lawful agent and attorney-in-fact (the
"Escrowed Stockholder Representative") of the Escrowed Stockholders with full
power of substitution to act in the name, place and stead of the Escrowed
Stockholders with respect to the escrow arrangements contemplated by this
Agreement, and to act on behalf of the Escrowed Stockholders in any dispute,
claim, litigation or arbitration involving this Agreement, to do or refrain from
doing all such further acts and things, and to execute all such documents as the
Escrowed Stockholder Representative shall deem necessary or appropriate in
connection with the transactions contemplated by this Agreement, including,
without limitation, the power:
(i) to act for the Escrowed Stockholders with regard to matters
pertaining to indemnification claims against the Escrowed Stockholders
referred to in this Agreement and Article 8 of the Merger Agreement,
including the power to compromise any claim on behalf of the Escrowed
Stockholders and to transact matters of litigation or arbitration;
(ii) to execute and deliver all ancillary agreements, certificates
and documents that the Escrowed Stockholder Representative deems necessary
or appropriate in connection with the transactions contemplated by this
Agreement;
(iii) to receive funds on behalf and give receipts for funds, in each
case on behalf of the Escrowed Stockholders;
(iv) to do or refrain from doing any further act or deed on behalf
of the Escrowed Stockholders that the Escrowed Stockholder Representative
deems necessary or appropriate in his sole discretion relating to the
subject matter of this Agreement, as fully and completely as the Escrowed
Stockholders could do if personally present; and
(v) to receive service of process on behalf of the Escrowed
Stockholders in connection with any claims under this Agreement;
and Timothy Murray hereby accepts appointment as the Escrowed Stockholder
Representative hereunder.
If Timothy Murray dies or otherwise becomes incapacitated and unable to
serve as Escrowed Stockholder Representative, Richard Block shall serve as the
new Escrowed Stockholder Representative. The appointment of the Escrowed
Stockholder Representative shall be deemed coupled with an interest and shall be
irrevocable, and Holding, the Escrow Agent, and any other person may
conclusively and absolutely rely, without inquiry, upon any action of the
Escrowed Stockholder Representative in all matters referred to herein.
<PAGE>
-6-
All payments and notices made or delivered by Holding to the Escrowed
Stockholder Representative for the benefit of the Escrowed Stockholders shall
discharge in full all liabilities and obligations of Holding to the Escrowed
Stockholders with respect thereto. The Escrowed Stockholders hereby confirm all
that the Escrowed Stockholder Representative shall do or cause to be done by
virtue of his appointment as the Escrowed Stockholder Representative of the
Escrowed Stockholders. The Escrowed Stockholder Representative shall act for
the Escrowed Stockholders on all of the matters set forth in this Agreement in
the manner the Escrowed Stockholder Representative believes to be in the best
interest of the Escrowed Stockholders and consistent with the obligations under
this Agreement, but the Escrowed Stockholder Representative shall not be
responsible to the Escrowed Stockholders for any loss or damages the Escrowed
Stockholders may suffer by the performance of his duties under this Agreement,
other than loss or damage arising from willful violation of the law or gross
negligence in the performance of his or her duties under this Agreement. It is
expressly agreed that the Escrowed Stockholder Representative shall not have any
liability whatsoever for declining to take any action with respect to any actual
or threatened claim for indemnification pursuant to the Merger Agreement.
7. NOTICES AND COMMUNICATIONS. All notices, demands and other
communications hereunder shall be in writing or by written telecommunication,
and shall be deemed to have been duly given if delivered personally or if mailed
by certified mail, return receipt requested, postage prepaid, or if sent by
overnight courier, or if sent by written telecommunication, as follows:
If to the Escrowed Stockholders:
Timothy Murray
Escrowed Stockholders' Representative
William Blair & Company, L.L.C.
222 West Adam Street
Chicago, Illinois 60606
Telecopier No. (312) 236-5728
with copies sent at the same time and by the same means to:
Linda Chaplik Harris, Esq.
Sonnenschein Nath & Rosenthal
Suite 8000 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Telecopier No. (312) 876-7934
<PAGE>
-7-
If to Holding, to:
KFI Holding Corporation
1950 North Ruby Street
Melrose Park, Illinois 60160-11178
Attention: Richard Block and David Underwood
Telecopier No. (708) 344-9113
with copies sent at the same time and by the same means to:
Heritage Partners Management Company, Inc.
30 Rowes Wharf, Suite 300
Boston, MA 02110
Attention: Michael F. Gilligan, Managing Director
Telecopier No. (617) 439-0689
and to:
David L. Engel, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Telecopier No. (617) 951-8736
If to the Escrow Agent, to:
First Trust National Association
111 E. Wacker Drive, Suite 3000
Chicago, Illinois 60611
Attention: Escrow Area
Telecopier No. (312) 228-9402
or to such other address as such party shall designate by written notice to the
other parties hereto. Any such notice shall be effective (a) if delivered
personally, when received, (b) if sent by overnight courier, on the next
business day, (c) if mailed, five (5) days after being mailed as described
above, and (d) if sent by written telecommunication and later confirmed, when
dispatched.
8. TERM; AMENDMENTS; SUCCESSORS. Except as otherwise provided herein,
this Agreement shall continue until the date on which all of the Escrowed Funds
have been distributed as provided in Section 3 hereof, may be amended only as
provided in Section 4 hereof and shall be binding upon and shall inure to the
benefit of the parties hereto and its respective successors and assigns.
<PAGE>
-8-
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same instrument. In making proof of this Agreement
it shall be necessary to produce or account for only one such counterpart signed
by or on behalf of the party sought to be charged herewith.
10. SUCCESSOR ESCROW AGENT. The Escrow Agent may resign on thirty (30)
days prior written notice to Holding and the Escrowed Stockholder
Representative. Upon receipt of notice of the resignation of the Escrow Agent
or upon any vacancy created by the death or incapacity of the Escrow Agent or
for any other reason, Holding and the Escrowed Stockholder Representative shall
appoint a successor escrow agent(s) or otherwise provide for the disposition of
funds held by the Escrow Agent by notice in writing to the Escrow Agent. The
Escrow Agent shall pay over the Escrowed Funds as provided in said notice.
11. ENTIRE AGREEMENT. This Agreement, except with respect to Holding and
the Escrowed Stockholders, contains the entire agreement and understanding of
the parties with respect to the transactions contemplated hereby. No prior
agreement, either written or oral, shall be construed to change, amend, alter,
repeal or invalidate this Agreement.
12. REPRESENTATIONS OF HOLDING AND THE ESCROWED STOCKHOLDER
REPRESENTATIVE. Each of Holding and the Escrowed Stockholder Representative
represents and warrants to the Escrow Agent that it has the power and authority
to enter into this Agreement and to carry out its obligations hereunder, that it
has duly authorized, executed and delivered this Agreement, and this Agreement
is its valid and binding obligation.
13. GOVERNING LAW. The validity, enforceability and construction of this
Agreement shall be governed by the laws of the State of Illinois (without giving
effect to principles of conflicts of laws).
<PAGE>
-9-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as an
instrument under seal as of the day and year first written above.
KFI HOLDING CORPORATION
By: /s/ Michael F. Gilligan
----------------------------
Name: Michael F. Gilligan
Title:
ESCROW AGENT:
------------
FIRST TRUST NATIONAL ASSOCIATION,
as Escrow Agent
By: /s/ Frank S. Garaglino
----------------------------
Name: Frank S. Garaglino
Title: Vice President
ESCROWED STOCKHOLDER
---------------------
REPRESENTATIVE:
--------------
/s/ Timonthy M. Murray
-----------------------------------------
Timothy Murray, attorney-in-fact under
power of attorney dated _______ ___, 1998
OTHER ESCROWED
--------------
STOCKHOLDERS:
------------
/s/ Zenas Block
-----------------------------------------
Zenas Block
<PAGE>
-10-
/s/ John Maranov
----------------------------------------
John Maranov
/s/ Robert B. Bartels, Trustee
----------------------------------------
Robert B. Bartels, under Declaration of
Trust dated 5/17/91
/s/ W. James Truettner, Jr., Trustee
----------------------------------------
W. James Truettner, Jr.
under Trust Agreement, dated 10/25/85
and restated 2/15/89
/s/ David Horowitz
----------------------------------------
David Horowitz
<PAGE>
Exhibit A
------- -
Escrowed Stockholders
-------- ------------
James J. Arado
Robert B. Bartels Declaration of Trust dated 5/17/91
Zenas Block
Bowen Blair
Harvery H. Bundy, III
E. David Coolidge, III
Henry De Vogue
F. Conrad Fischer
Robert C. Fix
Richard D. Gottfred
John K. Greene
Edward M. Hoban
David Horowitz
Edgar D. Janotta
Richard P. Kiphart
James W. Mabie
John Maranov
James D. McKinney
James M. McMullen
Timothy Murray
Thomas P. Owen
Ronald L. Strauss
W. James Truettner, Jr. Trust Agreement dated 10/21/85 and restated 2/15/89
Larry E. Zent
<PAGE>
-2-
Exhibit B
---------
HOLDING CERTIFICATE
-------------------
The undersigned, the duly elected and qualified __________ [officer] of KFI
Holding Corporation ("Holding"), hereby certifies as follows:
1. Holding, or a Holding Indemnified Party, is entitled to indemnity
pursuant to Article 8 of the Merger Agreement. The basis of such AGI
Indemnified Claim is as follows:
[Describe Claim]
The amount of such Claim is $____________. The Escrowed Stockholders' aggregate
pro rata share of such Claim is ____% of $____________, or $____________.
2. Holding has complied with all of the terms of Article 8 of the Merger
Agreement in asserting such Claim. Without limiting the foregoing:
(a) Holding has provided actual notice of such Claim to the Escrowed
Stockholder Representative in the following manner [specify], all
pursuant to Section 7 of the Escrow Agreement referred to below.
[Proof of delivery is enclosed] or [Delivery of notice was made
personally.]
(b) Holding has made demand for such Claim to each of the Non-Escrowed
Stockholders as required by Article 8 of the Merger Agreement, and the
Non-Escrowed Stockholders have received effective notice thereof
pursuant to and within the meaning of Section 12.5 of the Merger
Agreement. Proof of delivery of such notice (other than in the case of
personal delivery) has been sent to the Escrowed Stockholder
Representative.
3. All capitalized terms used and not defined herein have the meanings
ascribed to them in that certain Escrow Agreement, dated ____________, 1998, to
which Holding and Timothy Murray, as Escrowed Stockholder Representative, among
others, are parties.
KFI HOLDING CORPORATION
By:
--------------------------
Its
-----------------------
<PAGE>
-3-
Schedule 1 to Escrow Agreement
------------------------------
INITIAL INVESTMENT INSTRUCTIONS
------- ---------- ------------
<PAGE>
-4-
Schedule 2 to Escrow Agreement
-------- - -- ------ ---------
ESCROW AGENT'S FEES
------ ------- ----
<PAGE>
Exhibit 10.3
STOCKHOLDER AGREEMENT
This Stockholder Agreement (this "Agreement"), dated as of March 12,
---------
1998, is by and among IMPAC Group, Inc., a Delaware corporation, formerly known
as KFI Holding Corporation ("Holding"); Heritage Fund I Investment Corporation,
-------
a Delaware corporation ("Heritage"); Melvin B. Herrin and H. Scott Herrin, each
--------
of whom is an individual; Matthew H. Kamens, not individually but as trustee
under an Indenture of Trust of Melvin B. Herrin dated June 4, 1996 (the "Herrin
------
Family Trust"); Arthur S. Keyser, not individually but as trustee under an
- ------ -----
Irrevocable Deed of Trust dated August 12, 1992, f/b/o H. Scott Herrin (the
"Scott Trust") (collectively, Melvin B. Herrin, H. Scott Herrin, the Herrin
- ------ -----
Family Trust and the Scott Trust are sometimes referred to herein as the "Herrin
------
Stockholders"); each of the stockholders of Holding named on Schedule 1 hereto
- ------------ -------- -
(the "Klearfold Managers", and together with the Herrin Stockholders,
--------- --------
collectively, the "Klearfold Management Stockholders"); each of the stockholders
--------- ---------- ------------
of Holding and other Persons named on Schedule 2 hereto (the "AGI Management
-------- - --- ----------
Stockholders"); and each other Person who becomes a party to this Agreement by
- ------------
executing and delivering to Holding an Instrument of Accession in the form of
the attached Exhibit A which is subsequently accepted in writing by Holding (an
------- -
"Instrument of Accession"). Each of the parties to this Agreement other than
---------- -- ---------
Holding is sometimes referred to herein as a "Stockholder", and all of them,
-----------
collectively, are sometimes referred to herein as the "Stockholders."
------------
The parties desire to enter into this Agreement in order to establish
certain rights and obligations with respect to their ownership of Securities (as
defined herein) and with respect to the internal affairs of Holding.
Capitalized terms used herein and not defined on their first use shall have
the meanings set forth in Section 8 below.
The parties further agree as follows:
1. RESTRICTIONS ON TRANSFER OF SECURITIES.
1.1. TRANSFER. No Stockholder shall sell, assign, pledge, or otherwise
dispose of or transfer any Securities or any interest (legal, beneficial, or
otherwise) in any Securities (a "Transfer"; or to effect any such Transfer, to
--------
"Transfer"), either voluntarily, involuntarily, by operation of law, or
- ---------
otherwise, except any Transfer:
(A) pursuant to and in accordance with the repurchase provisions of
Section 2.1 hereof or the repurchase provisions of those certain Employment,
Non-Competition and Stock Repurchase Agreements, Agreements relating to
Employment and Stock Ownership, or Stock Purchase or Stock Restriction
Agreements entered into by each of the
<PAGE>
-2-
Stockholders who is a natural person and by each natural person whose Family
Trust is a Stockholder, as amended and in effect from time to time (each, a
"Repurchase Agreement");
---------- ---------
(B) in the case of any Stockholder who is a natural person, to (i) such
Stockholder's Family Members, provided that such Stockholder retains exclusive
voting control over the Transferred Securities, and (ii) such Stockholder's
Personal Representative, and in the case of any Stockholder which is a Family
Trust, to (A) the individual for whom, or for the benefit of whose Related
Persons, such Family Trust was created, and (B) the Family Members of such
individual, provided that, in the case of any transfer pursuant to clauses (A)
or (B) such individual retains exclusive voting control over the Transferred
Securities, and (C) such individual's Personal Representative;
(C) at any time prior to June 7, 2002, to any Person, provided that such
Transfer shall have been previously approved in writing by Stockholders holding
a majority of the Securities then outstanding, other than the Securities held by
the Stockholder proposing such Transfer and any Affiliate or Family Member of
such Stockholder, and in any event subject to the provisions of Section 1.4
hereof;
(D) pursuant to a Public Offering or an Approved Sale;
(E) in the case of any Herrin Stockholder, to another Herrin Stockholder,
and in the case of any Block Stockholder, to another Block Stockholder;
(F) in the case of any Heritage Securities, (i) to Heritage Fund I, L.P.,
a Delaware limited partnership (the "Heritage Fund"), (ii) to a successor entity
-------- ----
of any Heritage Holder, as a result of a merger, consolidation, or sale of all
or substantially all of the assets of such Heritage Holder, and (iii) by the
Heritage Fund, to the extent required pursuant to the terms of the First Amended
and Restated Agreement of Limited Partnership of the Heritage Fund dated as of
December 14, 1994, as in effect on the date hereof (it being understood and
agreed that such limited partnership agreement may be further amended from time
to time after the date hereof in accordance with its terms, but that
notwithstanding any such amendment, a Transfer of Heritage Securities by the
Heritage Fund will be permitted under this Section 1.1(f)(iii) only to the
extent that such Transfer would have been required pursuant to the terms of such
limited partnership agreement as in effect on the date hereof);
(G) from and after June 7, 2002, to any Person, provided that the
Transferring Stockholder shall first have complied with all of the provisions of
Sections 1.2 and 1.3 below;
and provided, further, in the case of any such Transfer other than a Transfer to
Holding or pursuant to a Public Offering or an Approved Sale, that (x) the
restrictions contained in this Section 1 shall continue to be applicable to the
Transferred Securities after such Transfer, and (y) the Transferee of such
Securities shall either already be a party hereto or
<PAGE>
-3-
shall first have executed and delivered to Holding an Instrument of Accession
which, if such Transfer is otherwise in compliance with this Section 1.1, shall
be accepted in writing by Holding.
1.2. FIRST REFUSAL RIGHTS.
(A) At least 30 days prior to any Transfer proposed to be made pursuant to
Section 1.1(g) hereof, the Transferring Stockholder (the "Transferring
------------
Stockholder") shall deliver a written notice (the "Transfer Offer Notice") to
- ----------- -------- ----- ------
Holding and, if the Securities proposed to be transferred are AGI Holder
Securities, Klearfold Holder Securities or Heritage Securities, to each of the
Stockholders holding Securities of the Type to be Transferred (collectively, the
"Non-Transferring Same-Type Stockholders") in accordance with the provisions of
---------------- --------- ------------
Section 9(b) hereof. The Transfer Offer Notice shall disclose in reasonable
detail the number of Securities of each Type that are proposed to be
Transferred, the proposed terms and conditions of the Transfer (including
without limitation the consideration to be paid for such Securities and any
deferred payment terms), and the identity of the proposed Transferee(s). If the
Securities proposed to be transferred are AGI Holder Securities, Klearfold
Holder Securities or Heritage Securities, each of the Non-Transferring Same-Type
Stockholders may elect to purchase any or all of the Securities of the Type
proposed to be Transferred, as specified in the Transfer Offer Notice, at the
price and on the terms specified therein (provided, that each such Non-
Transferring Same-Type Stockholder shall have the option to substitute for any
non-cash consideration proposed to be received in respect of such proposed
Transfer, cash in the amount of the fair market value thereof), by delivering
written notice of such election to the Transferring Stockholder and Holding
within 30 days after the delivery of such Transfer Offer Notice (the "Initial
-------
Stockholder Election Period"). If one or more of such Non-Transferring Same-
- ----------- -------- ------
Type Stockholders duly elect to purchase all of the Securities of any such Type
so offered, the Transfer of such Securities shall be consummated 30 days after
the expiration of the Initial Stockholder Election Period, or such earlier date
as agreed upon by the Non-Transferring Same-Type Stockholders who will be
purchasing not less than a majority of the Securities to be Transferred,
provided that written notice of such earlier date is delivered not later than
ten (10) days prior to such date to the Transferring Stockholder, Holding and
each of the other Non-Transferring Same-Type Stockholders electing to purchase
any of such Securities pursuant to this Section 1.2(a). If the Non-Transferring
Same-Type Stockholders oversubscribe for the Securities of any such Type being
offered, each Non-Transferring Same-Type Stockholder electing to purchase such
Securities shall be entitled to purchase from the Transferring Stockholder a pro
rata portion (based upon the respective numbers of shares of such Type of
Securities then held by each of the participating Non-Transferring Same-Type
Stockholders (calculated on a Fully Diluted Basis)) of the Securities of such
Type being offered.
(B) If either (i) the Securities proposed to be transferred are AGI Holder
Securities, Klearfold Securities or Heritage Securities and the Non-Transferring
Same-Type Stockholders do not duly elect to purchase all of such Securities
within the Initial Stockholder Election Period in accordance with Section 1.2(a)
hereof then within fifteen
<PAGE>
-4-
(15) days of the expiration of the Initial Stockholder Election Period, or (ii)
the Securities proposed to be transferred are Other Stockholder Securities, then
within thirty (30) days after the delivery of the Transfer Offer Notice (such
period of fifteen or thirty days pursuant to clauses (i) or (ii) above, as
applicable, being referred to herein as the "Holding Election Period"), Holding
------- -------- ------
may elect to purchase any or all of the Securities specified in the Transfer
Offer Notice, at the price and on the terms specified therein, but excluding any
such Securities which Non-Transferring Same-Type Stockholders shall have elected
to purchase pursuant to Section 1.2(a) hereof, to the extent applicable
(provided, that Holding shall have the option to substitute for any non-cash
consideration proposed to be received in respect of such proposed Transfer, cash
in the amount of the fair market value thereof), by delivering written notice of
such election to the Transferring Stockholder within the applicable Holding
Election Period. If Holding, alone or in combination with the Non-Transferring
Same-Type Stockholders, duly elects to purchase all of the Securities so
offered, the Transfer of such Securities shall be consummated not less than ten
(10) nor more than thirty (30) days after the expiration of the applicable
Holding Election Period. The date of the consummation shall be determined by a
majority vote of the Board of Directors of Holding, on the date it elects to
purchase such Securities, and Holding shall promptly, but not less than ten (10)
days prior to the proposed date of consummation, provide notice thereof to the
Non-Transferring Same-Type Stockholders, if any, which elected to purchase any
of the Securities proposed to be Transferred pursuant to Section 1.2(a) hereof.
(C) If Holding and/or, to the extent applicable, the Non-Transferring
Same-Type Stockholders do not duly elect to purchase all of the Securities being
offered within the applicable Holding Election Period, and/or the Initial
Stockholder Election Period, respectively, the Transferring Stockholder shall
within fifteen (15) days after the end of the applicable Holding Election Period
deliver a further Transfer Offer Notice as to such Securities, in the same form
and substance as the first Transfer Offer Notice delivered pursuant to Section
1.2(a) hereof or, in the case of a proposed sale by an Other Stockholder,
Section 1.2(b) hereof, above, to each of the Stockholders other than the Non-
----- ----
Transferring Same-Type Stockholders (if any) entitled to receive such first
Transfer Offer Notice (collectively, such other Stockholders being referred to
herein as the "Other Non-Transferring Stockholders") in accordance with the
----- ---------------- ------------
provisions of Section 9(b) hereof specifying, in addition, the number of
Securities which the Non-Transferring Same-Type Stockholders and Holding have
elected to purchase in accordance with Sections 1.2(a) and 1.2(b) hereof, and
the number of Securities remaining to be purchased (the "Remaining Securities").
--------- ----------
Each of the Other Non-Transferring Stockholders may elect to purchase all of the
Remaining Securities specified in the further Transfer Offer Notice delivered to
them (but collectively, not more nor less than all of the Remaining Securities),
at the price and on the terms specified therein (provided, that each such Other
Non-Transferring Stockholder shall have the option to substitute for any non-
cash consideration proposed to be received in respect of such proposed Transfer,
cash in the amount of the fair market value thereof), by delivering written
notice of such election to the Transferring Stockholder within 15 days after the
delivery of such Transfer Offer Notice (the "Second Stockholder Election
------ ----------- --------
Period"). If one or more of such Other Non-Transferring
<PAGE>
-5-
Stockholders duly elect to purchase all of the Securities so offered, the
Transfer of such Securities shall be consummated 30 days after the expiration of
the Second Stockholder Election Period, or such earlier date as agreed upon by
the Other Non-Transferring Stockholders who or which will, collectively, be
purchasing not less than a majority of the Securities so offered, provided that
written notice of such earlier date is provided not later than ten (10) days
prior thereto to the Transferring Stockholder, Holding, and each of the other
Stockholders who or which shall have elected to purchase Securities pursuant to
this Section 1.2. If the Other Non-Transferring Stockholders oversubscribe for
the Securities being offered, each Other Non-Transferring Stockholder electing
to purchase such Securities shall be entitled to purchase from the Transferring
Stockholder a pro rata portion (based upon the respective numbers of Securities
then held by each of the participating Other Non-Transferring Stockholders
(calculated on a Fully Diluted Basis)) of the Securities being offered.
(D) In the event that, collectively, Holding, the Non-Transferring Same-
Type Stockholders and the Other Non-Transferring Stockholders fail to purchase
all of the Securities specified in any Transfer Offer Notice in accordance with
Sections 1.2(a), (b) and (c) hereof, the elections to so purchase pursuant to
those sections shall be void and of no further effect, and the Transferring
Stockholder may, within 90 days after the expiration of the Second Stockholder
Election Period, complete the Transfer of such Securities for such consideration
and on such other terms as are no more favorable to the Transferees than the
terms offered to the Non-Transferring Same-Type Stockholders and the Other Non-
Transferring Stockholders in their respective Transfer Offer Notices, provided,
that no such Transfer may be completed except in compliance with Section 1.3, if
applicable, and further provided, that each of such Transferees shall have
executed and delivered to Holding an Instrument of Accession as a condition
precedent to such Transfer. If the Transferring Stockholder fails to consummate
such Transfer within the 90-day period after the expiration of the Second
Stockholder Election Period, any subsequent proposed Transfer of such Securities
shall be once again subject to all of the provisions of Section 1.1 above.
(E) In the event that non-cash consideration is proposed to be received in
respect of any proposed Transfer by a Transferring Stockholder, the Initial
Stockholder Election Period (or, if the Transferring Stockholder is an Other
Stockholder, the Holding Election Period) shall be extended by the period of
time necessary to determine the fair market value of such non-cash
consideration.
1.3. GENERAL CO-SALE RIGHTS. In the event that, collectively, Holding, the
Non-Transferring Same-Type Stockholders and the Other Non-Transferring
Stockholders fail to purchase all of the Securities specified in any Transfer
Offer Notice delivered by a Transferring Stockholder who immediately prior to
giving effect to the Transfer described in such Transfer Offer Notice holds at
least five percent (5%) of the total number of outstanding shares of Common
Stock, on a Fully Diluted Basis, each of the Non-Transferring Same-Type
Stockholders and the Other Non-Transferring Stockholders (collectively, the Non-
---
Transferring Stockholders") may elect to participate in the
- ------------ ------------
<PAGE>
-6-
contemplated Transfer of Securities by delivering written notice to the
Transferring Stockholder before the lapse of 15 days after expiration of the
Second Stockholder Election Period. If any of such Non-Transferring Stockholders
elects to participate in such sale, the Transferring Stockholder and each of
such participating Non-Transferring Stockholders shall be entitled to sell in
the proposed Transfer a number of Securities equal to the product of (x) a
fraction, the numerator of which is the number of Securities (calculated on a
Fully Diluted Basis) held by such Person, and the denominator of which is the
aggregate number of Securities (calculated on a Fully Diluted Basis) owned by
the Transferring Stockholder and such participating Non-Transferring
Stockholders, multiplied by (y) the number of Securities to be Transferred in
the contemplated Transfer.
(For example: If the notice from the Transferring Stockholder contemplated
a Transfer of 100 shares of Common Stock by the Transferring Stockholder,
and the Transferring Stockholder at such time owns 300 shares of Common
Stock, and if one Non-Transferring Stockholder elects to participate in
such sale pursuant to this Section 1.3 and such Non-Transferring
Stockholder owns 200 shares of Common Stock (calculated on a Fully Diluted
Basis), such Transferring Stockholder would be entitled to sell 60 shares
of Common Stock (300/500 x 100 shares) and such Non-Transferring
Stockholder would be entitled to sell 40 shares of Common Stock (200/500 x
100 shares).)
The Transferring Stockholder shall use all commercially reasonable efforts to
obtain the agreement of the prospective Transferee(s) to the participation of
the Non-Transferring Stockholders in any proposed sale, and in any event shall
not Transfer any Securities to the prospective Transferee(s) if the prospective
Transferee(s) declines to allow the participation of the Non-Transferring
Stockholders on the terms specified herein. The Transferring Stockholder may,
within 90 days after the expiration of the Second Stockholder Election Period,
complete the Transfer of such Securities (i) with respect to which the
Transferring Stockholder has duly given a Transfer Offer Notice, (ii) with
respect to which neither the Company nor any of the Non-Transferring
Stockholders has duly exercised its rights to acquire such Securities pursuant
to Section 1.2 hereof, and (iii) as constitute the excess of the Securities
described in the applicable Transfer Offer Notice over the aggregate amount of
Securities as to which Non-Transferring Stockholders have duly elected to sell
in such proposed sale pursuant to and in accordance with this Section 1.3, for
such consideration and on such other terms as are no more favorable to the
Transferring Stockholder than the terms offered to the Non-Transferring
Stockholders in the applicable Transfer Offer Notice; provided, that each of
such Transferees shall have executed and delivered to Holding an Instrument of
Accession as a condition precedent to such Transfer. If the Transferring
Stockholder fails to consummate such Transfer within the 90-day period after the
expiration of the Second Stockholder Election Period, any subsequent proposed
Transfer of such Securities shall be once again subject to all of the provisions
of Section 1.1 above.
1.4. CO-SALE RIGHTS OF KLEARFOLD MANAGEMENT HOLDERS. In the event that, at
any time prior to June 7, 2002, the Heritage Holders shall have elected to
Transfer more
<PAGE>
-7-
than five percent (5%) of the total amount of Heritage Securities then held by
the Heritage Holders, and such Transfer has been approved in writing by
Stockholders holding a majority of the Securities then outstanding (other than
Securities then held by the Heritage Holders and their Affiliates) pursuant to
Section 1.1(c) hereof, but such Transfer has not been approved by the Majority
Klearfold Holders, then the Herrin Stockholders may elect to participate in the
contemplated Transfer of Heritage Securities and Transfer a proportionate
percentage of their Klearfold Holder Securities, by delivery of a written notice
(the "Klearfold Co-Sale Notice") from the Herrin Stockholders to Holding, the
--------- ------- ------
Heritage Holders and the AGI Management Stockholders within 15 days after the
date of such approval, and the provisions of Section 1.3 shall apply, mutatis
mutandis, to the participation by such Herrin Stockholders, as participating
Non-Transferring Stockholders, in the proposed Transfer by the Heritage Holders,
as Transferring Stockholders. Notwithstanding the foregoing, simultaneously
with, and as a condition to, any participation by the Herrin Stockholders
proposing to participate in such Transfer (the "Transferring Klearfold
------------ ---------
Management Stockholders") in any proposed Transfer by the Heritage Holders, the
- ---------- ------------
Transferring Klearfold Management Stockholders and the Heritage Holders, pro
rata in accordance with the respective number of shares of Common Stock then
held by each of them, shall offer to the AGI Management Stockholders the
opportunity to acquire up to a maximum number of the Klearfold Holder
Securities and Heritage Securities to be Transferred (collectively, the "Co-Sale
-------
Securities") equal to the greater of (a) the aggregate number of Co-Sale
- ----------
Securities proposed to be Transferred by the Transferring Klearfold Management
Stockholders, and (b) that number of Co-Sale Securities, the acquisition of
which by the AGI Management Stockholders would ensure the ownership by the AGI
Management Stockholders, collectively, of fifty percent (50%) plus one of the
----
then outstanding shares of Common Stock. Any such purchase of Co-Sale
Securities shall be at the same price and on the same terms specified for the
proposed Transfer by the Heritage Holders (provided, that each participating AGI
Management Stockholder shall have the option to substitute for any non-cash
consideration proposed to be received in respect of such proposed Transfer, cash
in the amount of the fair market value thereof based on an appraisal by an
Independent Appraiser). If the AGI Management Stockholders wish to exercise
their right to acquire any such Co-Sale Securities, the Majority AGI Holders
shall so indicate by written notice to Holding, the Heritage Holders and the
Klearfold Management Stockholders within 30 days of the date of the Klearfold
Co-Sale Notice (or such longer period, not to exceed 60 days after the effective
date of delivery of the Klearfold Co-Sale Notice, as may be required to
determine the value of non-cash consideration, if non-cash consideration is
proposed to be received in respect of such proposed Transfer). Unless such
notice shall have been timely delivered, the Klearfold Management Stockholders
shall be free to participate fully in the proposed Transfer by the Heritage
Holders in accordance with the first sentence of this Section 1.4, provided that
no such Transfer shall be completed until after the end of the period during
which a Klearfold Co-Sale Notice may be delivered. If such notice is delivered
within such 30-day period, the proposed Transfer by the Heritage Holders shall
be delayed for such period, not to exceed six (6) months from the date of the
Klearfold Co-Sale Notice, as shall be reasonably necessary to permit those AGI
Management
<PAGE>
-8-
Stockholders who so wish to acquire any such Co-Sale Securities pursuant to this
Section 1.4.
1.5. CLOSINGS.
(A) In the event of any exercise by any of the Non-Transferring
Stockholders of their first-refusal rights under Section 1.2 hereof, the
Transferring Stockholder shall Transfer to each such Non-Transferring
Stockholder the Securities to be purchased by such Non-Transferring Stockholder
at a closing to be held at 10:00 a.m. at Holding's principal executive offices
on the date specified in accordance with the applicable provisions of Section
1.2 hereof. At such closing, the Transferring Stockholder shall deliver to each
such Non-Transferring Stockholder the certificate(s) representing the Securities
to be purchased by such Non-Transferring Stockholder (properly endorsed or
accompanied by duly executed stock powers or assignments, with signature(s)
guaranteed or similar appropriate documentation of authority to transfer), free
and clear of Liens, against payment therefor as provided herein by certified or
bank check payable to the Transferring Stockholder, or by wire transfer to an
account designated by the Transferring Stockholder.
(B) In the event of any exercise by any of the Non-Transferring
Stockholders of their co-sale rights under Sections 1.3 or 1.4 hereof, the
closing of the sale of the Securities to be sold by such Non-Transferring
Stockholders pursuant to such rights shall take place at the same date, time,
and place at which the Transferring Stockholder is to consummate his or its
Transfer of Securities to the prospective Transferee. At such closing, the
Transferring Stockholder and each of the Non-Transferring Stockholders shall
deliver the certificate(s) representing the respective Securities to be sold by
him or it (properly endorsed or accompanied by duly executed stock powers or
assignments, with signature(s) guaranteed or similar appropriate documentation
of authority to transfer), free and clear of Liens, against payment therefor as
provided herein by certified or bank check payable to him or it, or by wire
transfer to an account designated by him or it.
(C) In the event of any exercise by any of the AGI Management Stockholders
of their rights under Section 1.4 hereof, the Transferring Klearfold Management
Stockholders and Heritage Holders shall Transfer to each such AGI Management
Stockholder the Co-Sale Securities to be purchased by such AGI Management
Stockholder at a closing to be held at the same date, time, and place, subject
to the provisions of Section 1.4 above, as that at which the Transferring
Heritage Holders are to consummate the Transfer of their Securities to their
prospective Transferee pursuant to Section 1.1(c). At such closing, the
Transferring Klearfold Management Stockholders and Heritage Holders shall
deliver to each such AGI Management Stockholder the certificate(s) representing
the Co-Sale Securities to be purchased by such AGI Management Stockholder
(properly endorsed or accompanied by duly executed stock powers or assignments,
with signature(s) guaranteed or similar appropriate documentation of authority
to transfer), free and clear of Liens, against payment therefor as provided
herein by certified or bank check payable to the applicable Transferring
Klearfold Management Stockholder or Heritage
<PAGE>
-9-
Holder, as the case may be, or by wire transfer to an account designated by such
Stockholder.
1.6. TRANSFERS OF SECURITIES IN BREACH OF THIS AGREEMENT. Any attempted or
purported Transfer of Securities in breach of this Agreement shall be wholly
void, and commencing immediately upon the date of such attempted or purported
Transfer (a) no dividend or distribution of any kind shall be paid by Holding in
respect of such Securities (all rights to any such payment being hereby
irrevocably waived and relinquished by the Stockholder attempting such transfer
or purporting so to Transfer Securities, for both himself or itself and any
purported Transferee), (b) the voting rights of such Securities, if any, shall
terminate, and (c) neither the Stockholder attempting such transfer or
purporting so to Transfer Securities nor the purported Transferee shall be
entitled to any rights in respect of such Securities unless and until such
attempted or purported Transfer in breach of this Agreement has been rescinded.
2. REPURCHASE OF HERITAGE SECURITIES; SALE OF HOLDING.
2.1. REPURCHASE OF HERITAGE SECURITIES.
(A) RIGHT TO REQUEST REPURCHASE. At any time after June 7, 2002, the
Majority Heritage Holders shall be entitled to request Holding to repurchase all
of the Heritage Securities, at the Repurchase Price determined in accordance
with Section 2.1(c) hereof and at a closing held in accordance with Section
2.1(d) hereof, by delivering to Holding written notice (the "Heritage Put
-------- ---
Request") requesting such repurchase. Within fifteen (15) days following the
- -------
date on which the applicable Repurchase Price is definitively determined in
accordance with Section 2.1(c) below, Holding shall give written notice (the
"Holding Election") to such Majority Heritage Holders, irrevocably electing one
- -------- --------
of the following alternatives:
(i) that Holding will comply with the Heritage Put Request, in which
case Holding shall be irrevocably obligated to repurchase, and the Heritage
Holders shall be irrevocably obligated to sell, all of the Heritage
Securities, at the Repurchase Price and at a closing to be held in
accordance with Section 2.1(d) hereof, subject only to the limitations set
forth in Section 2.1(b) hereof; or
(ii) that Holding will not comply with the Heritage Put Request, but
will use all commercially reasonable efforts to complete within 180 days
after the date of the Heritage Put Request, either (A) a sale of Holding or
its business (whether by merger, consolidation, sale of all or
substantially all of the assets or capital stock of Holding and/or one or
more of its Subsidiaries, or otherwise), such sale to be approved prior to
the completion thereof by a majority of the directors of Holding and to
comply with the condition stated in Section 2.3 below (any such sale, a
"Qualified Sale"), or (B) a Qualified Public Offering, provided that if
--------- ----
neither a Qualified Sale nor a Qualified Public Offering shall have been
completed within such 180-day period, then the Majority Heritage Holders
shall immediately
<PAGE>
-10-
become, and thereafter shall be, entitled to exercise their rights pursuant
to Section 2.1(h) below;
(iii) that Holding will not comply with the Heritage Put Request and
will not pursue a Qualified Sale or Qualified Public Offering, in which
case the Majority Heritage Holders shall immediately become, and thereafter
shall be, entitled to exercise their rights pursuant to Section 2.1(h)
below;
provided that any failure by Holding duly to make a Holding Election within the
15-day period therefor referred to above, shall constitute an irrevocable
election not to comply with the Heritage Put Request and not to pursue a
Qualified Sale or Qualified Public Offering, with the consequences referred to
in Section 2.1(a)(iii) above. Any decision by the Board of Directors of Holding
as to which Holding Election to make shall be taken by a majority vote of the
members of the Board of Directors of Holding without the participation in such
decision of any of the Heritage Directors (as defined in Section 3.1 below).
Unless both of the Klearfold Directors (as defined in Section 3.1 below) shall
have concurred with a decision of the Board of Directors of Holding to comply
with the Heritage Put Request, in the event of a Holding Election pursuant to
Section 2.1(a)(i), Melvin Herrin, on behalf of himself, the Herrin Family Trust
and their permitted transferees (other than Scott Herrin) after the date hereof
who or which is then a Stockholder, may by written notice to Holding given
within ten (10) days of such Holding Election elect to require Holding to
repurchase all of the Securities owned by him, the Herrin Family Trust and such
permitted transferees simultaneously with, and on the same terms and conditions
as, Holding's repurchase of all of the Heritage Securities described below, and
Scott Herrin, on behalf of himself and each of the other Herrin Stockholders
(including Melvin Herrin, who, in the event such a notice is given by Scott
Herrin, shall be bound by such notice), may or, in the event he is not at the
time of the applicable Holding Election employed by Holding or any of its
Subsidiaries, shall by written notice to Holding, given within ten (10) days of
the applicable Holding Election, elect to require Holding to repurchase all of
the Securities of the Herrin Stockholders and their permitted transferees
simultaneously with, and on the same terms and conditions as, Holding's
repurchase of all of the Heritage Securities described below, provided that in
the event that Melvin Herrin alone shall have notified Holding in accordance
with this sentence and at the time of the applicable Holding Election, Scott
Herrin shall be employed by Holding or any of its Subsidiaries, then (A) Scott
Herrin shall have no right to require Holding to repurchase any of the Klearfold
Management Securities owned by him, the Scott Trust and their permitted
transferees after the date hereof, in connection with Holding's repurchase of
all of the Heritage Securities, and (B) at the end of the ten-day period
described in this sentence, the Employment, Non-Competition and Stock Repurchase
Agreement between Scott Herrin and Holding then in effect shall be amended to
provide for the inclusion of repurchase provisions with respect to the
Securities owned by Scott Herrin, the Scott Trust and their permitted
transferees (which shall not then include Melvin Herrin or any Family Trust for
the benefit of Melvin Herrin) similar in form and substance to the repurchase
provisions in the Employment, Non-Competition and Stock Repurchase Agreements
between Holding and its senior executive employees (other than Melvin Herrin) as
in
<PAGE>
-11-
effect immediately after the date hereof. If at any time following a Holding
Election pursuant to Sections 2(a)(i) or 2(a)(ii), the Board of Directors of
Holding determines in good faith, such determination to be made within ten (10)
days after a request in good faith by any of the Heritage Directors for such a
determination, but excluding all of the Heritage Directors for the purpose of
making such determination, that Holding will either (x) not be able to comply
with the Heritage Put Request within the 180-day period specified in Section
2.1(d) (as such period may be extended pursuant to Section 2.4 below), if the
applicable Holding Election was to comply with the Heritage Put Request pursuant
to Section 2.1(a)(i), or (y) not be able to complete a Qualified Sale or
Qualified Public Offering within the 180-day period specified in Section
2(a)(ii) (as such period may be extended pursuant to Section 2.4 below), if the
applicable Holding Election was pursuant to such Section, then, and in either
such case, Holding shall so notify the Heritage Holders, and the Majority
Heritage Holders shall immediately become, and thereafter shall be, entitled to
exercise their rights pursuant to Section 2.1(h) below. In addition, in the
event that at any time subsequent to a Holding Election pursuant to Sections
2(a)(i) or 2(a)(ii), Holding determines that it does not intend to comply with
the Heritage Put Request or to complete a Qualified Sale or a Qualified Public
Offering, then Holding shall immediately so notify the Heritage Holders in
writing, and the Majority Heritage Holders shall immediately become, and
thereafter shall be, entitled to exercise their rights pursuant to Section
2.1(h) below.
(B) LIMITATIONS ON HERITAGE REPURCHASE. Notwithstanding the foregoing or
any other provision hereof, in any circumstance in which Holding becomes
obligated hereunder to repurchase Heritage Securities, no repurchase of the
Heritage Securities shall be required to be made to the extent that to make such
repurchase would violate the Delaware General Corporation Law, the terms of
Holding's senior credit agreement with Bank of America, or any successor senior
credit arrangements refinancing amounts outstanding under such agreement, or the
terms of Holding's senior subordinated notes outstanding from time to time or
the related Indenture; provided, in the event that any such repurchase is not
made as otherwise required hereunder because of the limitation set forth in the
preceding part of this sentence, that the Majority Heritage Holders shall
immediately become, and thereafter shall be, entitled to exercise their rights
pursuant to Section 2.1(h) below.
(C) FAIR MARKET VALUE. The fair market value of Holding's common stock
equity initially shall be determined for purposes of determining the applicable
Repurchase Price under Section 2.1(a) or Section 2.1(i) hereof by an Independent
Appraiser (the "Holding Appraiser") selected by majority vote of the members of
------- ---------
the Board of Directors of Holding who were not designated for election as
directors by the Majority Heritage Holders, whose appraisal (the "Holding
-------
Appraisal") shall be delivered to each of the Heritage Holders within 45 days
- ---------
after the effective date of the later to be given (the "Last Notice") of (i) the
---- ------
Heritage Put Request, if such determination is pursuant to Section 2.1(a), or
the Second Heritage Put Request, if such determination is pursuant to Section
2.1(i) hereof, and (ii) the Holding Election. If the Majority Heritage Holders
do not object to the determination of the Holding Appraiser within 15 days after
the effective date
<PAGE>
-12-
of delivery to them of the Holding Appraisal, the fair market value determined
by the Holding Appraiser shall be conclusive and shall be used to determine the
Repurchase Price of shares of Common Stock, and judgment thereon may be entered
in any court of competent jurisdiction. If the Majority Heritage Holders object
to the fair market value determined by the Holding Appraiser, the Majority
Heritage Holders may select an Independent Appraiser (the "Heritage Appraiser"),
-------- ---------
who shall review the determination of the Holding Appraiser and issue a report
thereon (the "Heritage Appraisal") within 30 days after the effective date of
-------- ---------
the delivery to the Majority Heritage Holders of the Holding Appraisal. Within
10 days after the effective date of delivery of the Heritage Appraisal to
Holding, the Holding Appraiser and the Heritage Appraiser shall meet in order to
resolve any questions or differences with respect to the fair market value of
Holding's common stock equity. If such Appraisers agree on a fair market value
of Holding's common stock equity, such agreed fair market value shall be
conclusive and shall be used to determine the Repurchase Price, and judgment
thereon may be entered in any court of competent jurisdiction. If no such
agreement is reached, such Appraisers within 5 days after such meeting shall
select another Independent Appraiser (the "Third Appraiser"). The fair
----- ---------
market value of Holding's common stock equity shall then be determined by the
Third Appraiser within 30 days after the effective date of delivery of the
Heritage Appraisal to Holding, and the determination of the Third Appraiser
shall be conclusive and shall be used to determine the Repurchase Price, and
judgment thereon may be entered in any court of competent jurisdiction. The
fair market value of Holding's common stock equity shall in all cases be
calculated by determining the fair market value of the entire common stock
equity interests of Holding taken as a whole, without premium for control or
discounts for minority interests or restrictions on transfer. All expenses of
the Holding Appraiser shall be borne by Holding; all expenses of the Heritage
Appraiser shall be borne by the Heritage Holders; and all expenses of the Third
Appraiser shall be borne 50% by Holding and 50% by the Heritage Holders.
(D) REPURCHASE CLOSING. The closing of any repurchase pursuant to this
Section 2.1 shall take place at the offices of Holding as soon as is reasonably
practicable, but in any event not more than 180 days after the effective date of
the Heritage Put Request or the Second Heritage Put Request, if applicable (as
such period may be extended pursuant to Section 2.4 below). At such closing,
the Heritage Holders will deliver to Holding, or its assignee pursuant to
Section 2.1(f) below, certificates evidencing all of the Heritage Securities
(properly endorsed or accompanied by duly executed stock powers or assignments
with signature(s) guaranteed or similar appropriate documentation of authority
to transfer), free and clear of all Liens, and Holding, or such assignee, shall
pay to each of the Heritage Holders in immediately available cash funds the
Repurchase Price for each of the Heritage Securities to be repurchased from such
Heritage Holder. Holding from time to time shall duly and promptly take any
such action, including without limitation to effect any upward revaluation of
the assets and properties of it and/or its Subsidiaries, that may lawfully be
effected so as to eliminate or reduce any legal constraint on the repurchase of
any of the Heritage Securities pursuant to this Section 2.1. If Holding or any
assignee of Holding pursuant to Section 2.1(f) below fails for any reason or for
no reason to repurchase all of the Heritage Securities that it has become
obligated to repurchase in
<PAGE>
-13-
accordance with this Section 2.1 within 180 days after the effective date of the
Heritage Put Request or the Second Heritage Put Request, if applicable (as such
period may be extended pursuant to Section 2.4 below), then the Majority
Heritage Holders shall immediately become, and thereafter shall be, entitled to
exercise their rights pursuant to Section 2.1(h) below.
(E) ADDITIONAL PAYMENTS. If at any time within six months after any
closing with respect to the repurchase of any Common Stock pursuant to this
Section 2.1, Holding shall become party to one or more mergers, consolidations,
sales of more than 50% of its assets or other similar corporate actions pursuant
to which the holders of Common Stock (or Holding) receive cash, securities, or
other property, or Holding is acquired by purchase of a majority of its common
equity, or shares of Common Stock shall be sold pursuant to a registration
statement with respect to Common Stock filed under the Securities Act of 1933,
as amended, or Holding or any of its stockholders enter into any written
agreement or written letter of intent contemplating any of the foregoing
transactions, which transaction is consummated within 180 days thereafter,
Holding shall, simultaneously with the consummation of any such transaction or
at such later time as any payment described below is received by Holding or any
of its stockholders, make an additional payment to each Heritage Holder that
held Common Stock repurchased pursuant to this Section 2.1 in an amount per
share of such Common Stock equal to the excess, if any, of (i) the value per
share of the cash, securities, and other property that such Heritage Holder
would have received (or that Holding received and in which such Heritage Holder
would have had a beneficial interest as a holder of Common Stock of Holding) had
such Common Stock not been repurchased, over (ii) the payment received by such
Heritage Holder with respect to each such share pursuant to this Section 2.1.
Each payment to any Heritage Holder pursuant to this Section 2.1(e) shall be
made either in cash or in the form of the securities and other property received
by Holding or the holders of common equity of Holding.
(F) ASSIGNMENT BY HOLDING OF RIGHT TO REPURCHASE. Notwithstanding anything
to the contrary stated herein, Holding may, following a Holding Election
pursuant to Section 2.1(a)(i) above, assign to a third party the right to
repurchase all of the Heritage Securities at the Repurchase Price in accordance
with the terms of this Section 2.1, provided, however, that (i) such assignment
shall have been approved by a majority vote of the members of the Board of
Directors of Holding without the participation in such decision of any of the
Heritage Directors, (ii) Holding shall have given the Heritage Holders written
notice of any such assignment at least thirty (30) days prior to the date
proposed for a repurchase closing with the assignee, and (iii) no such
assignment shall in any way limit or restrict the obligation of Holding to honor
a Holding Election made pursuant to Section 2.1(a)(i) above.
(G) VOTING AGREEMENT. Notwithstanding anything to the contrary stated
herein Heritage hereby agrees to vote or cause to be voted all Securities having
voting rights that are owned by Heritage or over which Heritage or any of its
Affiliates has voting control, and shall use its best efforts to cause the
Heritage Directors (as defined in Section
<PAGE>
-14-
3.1(a)(ii) below) to vote, to approve any proposed Qualified Sale or Qualified
Public Offering following any Holding Election pursuant to Section 2.1(a)(ii),
if the proceeds thereof to Holding will be sufficient to permit payment to the
Heritage Holders of the Repurchase Price in accordance with this Section 2.1,
and furthermore (without limiting the foregoing) to approve all actions required
to be approved by the stockholders or directors, as the case may be, of Holding
in order to permit Holding to complete a Qualified Sale or Qualified Public
Offering as described above.
(H) APPOINTMENT OF A SALE COMMITTEE. Upon the occurrence of a Heritage
Put Default (as defined below), the Majority Heritage Holders shall have the
right to request that Holding create a Sale Committee (a "Sale Committee") of
---- ---------
its Board of Directors, which have the authority to (i) solicit and evaluate
proposals to sell Holding or its business, whether by merger, consolidation,
sale of all or substantially all of its assets or capital stock of Holding
and/or one or more of its Subsidiaries, or otherwise (each, a "Sale Proposal"),
---- --------
(ii) hire agents, investment bankers and other professionals for and on behalf
of Holding in connection therewith, (iii) make recommendations to Holding's
Board of Directors regarding any Sale Proposal. A Sale Committee shall be
constituted of two Heritage Directors and shall remain in office for two years
after appointment. In the event that (x) Holding fails to appoint a Sale
Committee within thirty (30) days of a valid request hereunder, or (y) subject
to the provisos below, Holding's Board of Directors fails to approve any Sale
Proposal within thirty (30) days of delivery of written notice to each of the
members of the Board of a recommendation of such Sale Proposal by the Sale
Committee, or fails to duly authorize the taking of such actions as are
reasonably necessary to consummate any such recommended Sale Proposal (in either
case, referred to herein as a "Sale Committee Default"), then the Majority
---- --------- -------
Heritage Holders shall immediately become, and thereafter shall be, entitled to
exercise the right to elect a majority of Holding's Board of Directors pursuant
to Section 3.1(b) hereof, provided, however, that any Sale Proposal recommended
to the Board by the Sale Committee shall comply with the requirements of Section
2.3 below, and provided, further, that from and after the first anniversary of
the Sale Committee's appointment, any Sale Proposal shall first be presented to
the AGI Prospective Purchasers in accordance with, and shall otherwise be
subject to compliance with the provisions of, Section 2.2(a) hereof. For the
purposes hereof, a "Heritage Put Default" shall be deemed to have occurred if
-------- --- -------
any of the following shall occur:
(A) Holding makes an election pursuant to Section 2.1(a)(iii) hereof;
(B) Holding, having made an election pursuant to Section 2.1(a)(i)
hereof, fails to repurchase, or informs the Heritage Holders in writing
that it will be unable to or does not intend to purchase, the Heritage
Securities in full compliance with the provisions of, and within the time
limits specified in Section 2.1 hereof; or
(C) Holding, having made an election pursuant to Section 2.1(a)(ii)
hereof, (1) fails to use commercially reasonable efforts to pursue either a
Qualified Sale or a Qualified Public Offering or (2) fails to consummate,
or informs the Heritage
<PAGE>
-15-
Holders in writing that it will be unable to or does not intend to
consummate, a Qualified Sale or a Qualified Public Offering within the time
limitations specified in Sections 2.1(a)(ii) hereof.
(I) DISSOLUTION OF SALE COMMITTEE; SECOND REPURCHASE REQUEST. In the
event that the Sale Committee is still in existence on the second anniversary of
its original appointment pursuant to Section 2.1(h), the Sale Committee shall be
dissolved automatically and without any further action on the part of the Board,
and then and thereafter the Majority Heritage Holders shall be entitled to
submit a second request to Holding to repurchase all of the Heritage Securities,
at a Repurchase Price to be determined as of the date of such second repurchase
request and otherwise in accordance with Section 2.1(c) hereof and at a closing
held in accordance with Section 2.1(d) hereof, by delivering to Holding written
notice (the "Second Heritage Put Request") requesting such repurchase. Upon
------ -------- --- -------
delivery of the Second Heritage Put Request, the provisions of this Section 2.1
shall apply as though such Second Heritage Put Request were the original
Heritage Put Request pursuant to Section 2.1(a), and this Section 2.1 shall be
interpreted accordingly.
2.2. RIGHT OF FIRST REFUSAL; APPROVED SALE.
(A) RIGHT OF FIRST REFUSAL. If at any time after the second anniversary
of the date hereof, Holding's Board of Directors wishes to approve the sale of
Holding or its business, whether by merger, consolidation, sale of all or
substantially all of the assets or capital stock of Holding and/or one or more
of its Subsidiaries, or otherwise (any such sale, "Qualified Proposed Sale"),
--------- -------- ----
whether pursuant to the terms of a bona fide offer to purchase Holding or its
business received by Holding from a third party not Affiliated to any
Stockholder (a "Purchase Offer"), or, subject to the limitations set forth in
-------- -----
Section 2.2(b) below, pursuant to a decision by a majority of the members of the
Board to offer Holding or its business for sale (a "Sale Decision"), the Board
---- --------
shall not recommend approval or approve any such Qualified Proposed Sale unless
Holding has complied in full with the terms of this Section 2.2(a).
(i) Immediately following any Sale Decision or the receipt by Holding
of any Purchase Offer, Holding shall provide written notice thereof (a
"Sale Notice") to the AGI Prospective Purchasers (as defined below),
----- ------
setting forth in such Sale Notice in reasonable detail the nature and the
proposed terms and conditions of the Qualified Proposed Sale, including,
without limitation, the aggregate consideration to be paid (the "Offer
-----
Price"), whether such Sale Notice is being delivered pursuant to a Sale
-----
Decision or with respect to a Purchase Offer and, in the case of any
Purchase Offer, the identity of the proposed purchaser, details of any
deferred payment terms and other details as to the structure of the
proposed consideration, together with a copy of the Purchase Offer if in
writing.
(ii) By delivery of written notice (an "AGI Purchase Notice") to
--- -------- ------
Holding within 30 days of the effective date of delivery of the Sale Notice
(or such longer
<PAGE>
-16-
period, not to exceed 60 days after the effective date of delivery of the
Sale Notice, as may be required to determine the value of non-cash
consideration, if non-cash consideration is proposed to be received in
respect of such Qualified Proposed Sale), the AGI Prospective Purchasers
may elect to purchase the following (in any such case, the "Items To Be
----- -- --
Sold"): (A) all of the assets, stock or other properties described in the
----
Sale Notice, at the Offer Price and on the other terms specified therein;
(B) if the Qualified Proposed Sale described in the Sale Notice is a
purchase and sale of all or substantially all of the capital stock of
Holding, all of the shares of capital stock proposed to be sold pursuant to
such Qualified Proposed Sale, other than such shares then owned by the AGI
Prospective Purchasers, at a price per share equivalent to the price per
share which the holders of such capital stock would have received in the
Qualified Proposed Sale described in the applicable Sale Notice and on the
other terms specified therein; or (C) if the Qualified Proposed Sale
described in the Sale Notice is a purchase and sale of all or substantially
all the assets of Holding, at the AGI Prospective Purchasers' discretion,
all of the shares of Holding's capital stock, other than such shares then
owned by the AGI Prospective Purchasers, at a price per share equivalent to
the distribution per share which the holders of Holding's capital stock
(other than the AGI Prospective Purchasers) would have received in the
event that Holding had paid out the purchase price, net of expenses and
taxes incurred in connection with such transaction, for all or
substantially all of its assets as a distribution on its capital stock;
provided, however, that if non-cash consideration is proposed to be
received in any such case, the AGI Prospective Purchasers shall have the
right to pay cash in the amount of the fair market value thereof pursuant
to an appraisal obtained by them from an Independent Appraiser; and any
such appraisal shall be included with the applicable AGI Purchase Notice.
(iii) If (x) the AGI Prospective Purchasers do not timely deliver an
AGI Purchase Notice in accordance with paragraph (ii) above, or (y) the AGI
Prospective Purchasers do deliver an AGI Purchase Notice in accordance with
paragraph (ii) above, but fail to consummate an AGI Purchase (as defined
below) pursuant to and in accordance with Section 2.2(a)(vi) below, then
Holding shall be free, in the case of clause (x), for a period of five (5)
months from the last date upon which an AGI Purchase Notice might have been
timely delivered pursuant to paragraph (ii) above, and in the case of
clause (y), for a period of 12 months from the applicable AGI Purchase
Termination Date (such period, as determined under clause (x) or clause (y)
above, the "Board Sale Period") to pursue and complete the Qualified
----- ---- ------
Proposed Sale, and such sale completed in accordance herewith shall be an
"Approved Sale" hereunder, subject to the terms and conditions set forth in
Sections 2.2(c) and 2.3 hereof. Holding shall notify the AGI Prospective
Purchasers if at any time during a Board Sale Period the fair market value
of the aggregate consideration being offered (with any non-cash
consideration being valued on the same basis as employed in the appraisal,
if any, obtained by the AGI Prospective Purchasers pursuant to paragraph
(ii) above, and if no such appraisal shall have been obtained, as valued in
accordance with an appraisal obtained by
<PAGE>
-17-
Holding from an Independent Appraiser reasonably acceptable to the AGI
Prospective Purchasers) shall be less than 92.5% of the Offer Price. At any
such time during a Board Sale Period, or if the Qualified Proposed Sale has
not been consummated within the applicable Board Sale Period and Holding's
Board of Directors determines at the end of such period, subject to the
limitations of Section 2.2(b), that it wishes to continue to pursue a
Qualified Proposed Sale, then and in either such case Holding shall provide
written notice thereof to the AGI Prospective Purchasers (a "Second Sale
------ ----
Notice"), setting forth in such Second Sale Notice the information
------
described in paragraph (i) above with respect to the terms and conditions
of the Qualified Proposed Sale as then proposed, together with any
appraisal obtained by Holding of any non-cash consideration offered in such
Qualified Proposed Sale. If the AGI Prospective Purchasers elect to
purchase the Items To Be Sold as described in such Second Sale Notice, then
they shall so notify Holding by written notice (also an "AGI Purchase
--- --------
Notice") within 30 days of the effective date of delivery of the Second
------
Sale Notice.
(iv) If an AGI Purchase Notice shall have been duly and timely
delivered in accordance with paragraphs (ii) or (iii), then the purchase of
the Items To Be Sold (the "AGI Purchase") shall be consummated, unless
--- --------
otherwise agreed by the AGI Prospective Purchasers, on a pro rata basis
based upon the ratio which the number of shares of AGI Holder Securities
then held by each such electing AGI Prospective Purchaser bears to the
total of AGI Holder Securities held by all of the AGI Prospective
Purchasers who have elected to participate in such purchase (in all cases
calculated on a Fully Diluted Basis). The AGI Purchase shall be
consummated on the terms, as to price and other conditions, referred to in
paragraph (ii) above and such Purchase shall be an "Approved Sale"
hereunder, subject to the terms and conditions set forth in Sections 2.2(c)
and 2.3 hereof. A legally-binding and enforceable agreement to complete
the AGI Purchase on such terms within a period not to exceed 30 days after
the date of such agreement and without a financing contingency (an "AGI
---
Purchase Contract") shall have been entered into on the later of (x) if the
-------- --------
Qualified Proposed Sale were pursuant to a Purchase Offer, the date which
the prospective purchaser proposed to consummate such purchase as described
in such Purchase Offer, or (y) the date five (5) months following the date
of the applicable AGI Purchase Notice, subject in each case to the AGI
Prospective Purchasers' compliance with the provisions of paragraph (v)
below.
(v) From and after the delivery of an AGI Purchase Notice, the AGI
Prospective Purchasers shall use their best efforts to inform Holding's
Board of Directors as to their progress or lack thereof in procuring
financing for the completion of the AGI Purchase. Without limiting the
foregoing general obligation, (x) within 60 days of the delivery of the AGI
Purchase Notice, the AGI Prospective Purchasers shall have delivered to
Holding's Board of Directors reasonably detailed expressions of interest
from one or more financing sources regarding financing in the amounts
necessary to complete the AGI Purchase and
<PAGE>
-18-
pay the AGI Prospective Purchasers' related expenses, and (y) within 120
days of the delivery of the AGI Purchase Notice, the AGI Prospective
Purchasers shall have delivered to Holding's Board of Directors letter(s)
of intent from one or more reasonably reputable financing sources setting
forth reasonably detailed proposals for the provision to the AGI
Prospective Purchasers of financing in such amounts as shall then be
necessary to complete the AGI Purchase and pay the AGI Prospective
Purchasers' related expenses, together with a reasonably complete draft of
an AGI Purchase Contract. In any event, the AGI Prospective Purchasers
shall deliver to Holding's Board of Directors copies of all such
expressions of interest and letters of intent and copies of the first and
last drafts of financing documentation and of any proposed AGI Purchase
Contract, as soon as such documents are received by such AGI Prospective
Purchasers. So long as the AGI Prospective Purchasers are complying with
the provisions of this Section 2.2(a)(v), Holding and each of the
Stockholders other than the AGI Prospective Purchasers agree to act with
respect to the proposed AGI Purchase in accordance with the provisions of
Section 2.2(c), and such AGI Purchase shall be deemed to be an Approved
Sale hereunder. Holding and each of such other Stockholders agree to treat
as confidential all information regarding the proposed AGI Purchase
pursuant to this Section 2.2(a)(v).
(vi) If (A) at any time following delivery of an AGI Purchase Notice
pursuant to paragraphs (ii) or (iii) above and prior to entering into an
AGI Purchase Contract, (x) the AGI Prospective Purchasers determine in good
faith (provided that if requested in good faith by any director of Holding,
the AGI Prospective Purchasers shall within ten (10) days after such
request send written notice to Holding's Board of Directors of their
determination as to such matters), that the AGI Prospective Purchasers will
either (1) not be able to enter into an AGI Purchase Contract within the
period specified in paragraph (iv) above, or (2) not be able to complete an
AGI Purchase on the terms required by this Section 2.2(a), or (y) the AGI
Prospective Purchasers elect not to proceed with an AGI Purchase, or (B)
the AGI Prospective Purchasers shall have breached or been unable to comply
with the requirements of paragraphs (iv) and/or (v) above, or (C) the AGI
Prospective Purchasers have not, within ten (10) days of being requested to
do so by any director of Holding, delivered to Holding a written
determination as described in clause (A)(x) above, then, in the case of
clause (A) above, the AGI Prospective Purchasers shall immediately so
notify Holding's Board of Directors in writing, and in any such case the
rights of the AGI Prospective Purchasers to pursue an AGI Purchase pursuant
to this Section 2.2(a) shall thereupon terminate, and thereafter the AGI
Prospective Purchasers shall only be entitled to pursue an AGI Purchase
pursuant to and in accordance with Section 2.2(b) below.
(vii) The term "AGI Prospective Purchasers" means Richard Block,
--- ----------- ----------
individually, together with his Family Members and Family Trusts. No AGI
Prospective Purchaser may assign any or all of his or its rights to deliver
an AGI Purchase Notice, to pursue an AGI Purchase, or to complete an AGI
Purchase under this Section 2.2(a) without the prior written consent of
Holding, provided
<PAGE>
-19-
that if the proposed assignee is an entity under the control of ("control",
for purposes of this Section 2.2(a)(vii), includes Richard Block holding a
senior executive position with, or membership of the board of, such entity)
or majority-owned by an AGI Prospective Purchaser, then such consent shall
not be unreasonably withheld or delayed.
(B) SUBSEQUENT PURCHASE RIGHTS. In the event that an AGI Purchase Notice
(other than an Exempt Purchase Notice, as defined below) shall have been
delivered in accordance with Sections 2.2(a)(ii) or 2.2(a)(iii) above, and the
period for the AGI Prospective Purchasers to pursue an AGI Purchase pursuant
thereto shall have terminated pursuant to and in accordance with Section
2.2(a)(vi) above (the date of such termination, the "AGI Purchase Termination
--- -------- -----------
Date"), then the AGI Prospective Purchasers shall have the right to deliver not
- ----
more than one additional AGI Purchase Notice with respect to any Sale Notices
delivered prior to June 7, 2002, provided that this limitation shall not apply
to limit the AGI Prospective Purchasers' right to deliver AGI Purchase Notices
which are Exempt Purchase Notices under clause (B) of the definition thereof,
and provided further that any AGI Purchase Notice otherwise permitted to be
delivered hereunder and which becomes an Exempt Purchase Notice under clause (A)
of the definition thereof shall not be considered to be an additional AGI
Purchase Notice for purposes of this limitation. If, in response to any Sale
Notice delivered prior to June 7, 2002, the AGI Prospective Purchasers shall
have delivered an AGI Purchase Notice which was not an Exempt Purchase Notice,
then the AGI Prospective Purchasers shall have no right to deliver an AGI
Purchase Notice in response to a Sale Notice delivered after June 7, 2002,
unless such AGI Purchase Notice would be an Exempt Purchase Notice under clause
(B) of the definition thereof, and would be delivered in connection with a Sale
Notice originally delivered prior to June 7, 2002. If the first AGI Purchase
Notice which is not an Exempt Purchase Notice is delivered in response to a Sale
Notice delivered after June 7, 2002, then, except with respect to Exempt
Purchase Notices described in clause (B) of the definition thereof, no other AGI
Purchase Notice may be provided under this Agreement. Notwithstanding anything
herein to the contrary, (i) to the extent that two AGI Purchase Notices shall
have been delivered in response to Sale Notices with respect to Qualified
Proposed Sales, other than Exempt Purchase Notices under clause (B) of the
definition thereof, no further AGI Purchase Notices may be delivered, and (ii)
Exempt Purchase Notices under clause (B) of the definition thereof may be
delivered at any time, including after June 7, 2002, to the extent that any such
Exempt Purchase Notice relates to a Sale Notice with respect to which the AGI
Prospective Purchasers originally had the right to deliver an AGI Purchase
Notice under the other terms of this Section 2.2(b).
As used herein, the term "Exempt Purchase Notice" means (A) any AGI
Purchase Notice delivered in response to a Sale Decision, if no Qualified
Proposed Sale is consummated either pursuant to such AGI Purchase Notice or
during the applicable Board Sale Period thereafter, or (B) any AGI Purchase
Notice delivered during a Board Sale Period in response to a Second Sale Notice
disclosing an Offer Price which is less than 92.5% of the Offer Price disclosed
in the Sale Notice delivered prior to the commencement of such Board Sale
Period.
<PAGE>
-20-
In the event that a further AGI Purchase Notice is permitted to be
delivered in accordance with the foregoing provisions of this Section 2.2(b),
the provisions of Section 2.2(a) shall apply to such AGI Purchase Notice and to
the rights and obligations of Holding and the AGI Prospective Purchasers arising
therefrom, except that the period by which an AGI Purchase Contract is to have
been entered into pursuant to Section 2.2(a)(iv)(y) shall be reduced from six
(6) months (or seven (7), as the case may be) to four (4) months (or five (5),
as the case may be), and the periods of 60 and 120 days specified in Section
2.2(a)(v) shall each be reduced by 30 days to 30 and 90 days, respectively.
Subject to the foregoing limitations, Holding shall comply with the provisions
of Section 2.2(a) with respect to any and all Qualified Proposed Sales,
including the requirement to deliver to the AGI Prospective Purchasers Sale
Notices with respect thereto, from and after the second anniversary of the date
hereof, provided, however, that in the event that a Sale Notice resulting from a
Sale Decision has been delivered and no Qualified Proposed Sale has been
consummated within a period of six months (if no AGI Purchase Notice was
delivered in connection therewith) or, in all other cases, twelve (12)
consecutive months following such delivery (as such period may have been
extended to permit the valuation of any proposed non-cash consideration), then
Holding may not deliver another Sale Notice resulting from a Sale Decision for a
period after the end of such 6- or 12-month period, as the case may be (as so
extended), equal to the lesser of (A) six (6) months, or (B) the period to June
7, 2002 (provided that, for the avoidance of doubt, this provision shall not
limit Holding's obligation to deliver Sale Notices with respect to Purchase
Offers received by Holding).
(C) APPROVED SALE. If at any time Holding's Board of Directors approves
the sale of Holding or its business, whether by merger, consolidation, sale of
all or substantially all of the assets or capital stock of Holding and/or one or
more of its Subsidiaries, or otherwise, and (x) if after the second anniversary
of the date hereof, such approval was permitted pursuant to Section 2.2(a), and
(y) if prior to the second anniversary of the date hereof, each of the Majority
AGI Holders, the Majority Heritage Holders and the Majority Klearfold Holders
have consented to such sale pursuant to and in accordance with such Section 3.2
(any such proposed sale, or any sale to one or more AGI Prospective Purchasers
pursuant to and in accordance with Section 2.2(a), an "Approved Sale"), then:
-------- ----
(i) Holding and each of the Stockholders shall cooperate fully in any
Approved Sale and shall not take any action that is prejudicial to or
inconsistent with such Approved Sale.
(ii) Each Stockholder (A) shall vote or cause to be voted all
Securities having voting rights that are owned by such Stockholder or over
which such Stockholder has voting control to approve the terms of any such
Approved Sale and such matters ancillary thereto as may be necessary or
appropriate, in the judgment of the Board of Directors of Holding, to
effect such Approved Sale, (B) hereby irrevocably waives and relinquishes,
to the fullest extent permitted by applicable
<PAGE>
-21-
law, all rights to object to or dissent from such Approved Sale (including
without limitation any appraisal or similar rights), and agrees to raise no
objections against, such Approved Sale, (C) with respect to any Approved
Sale structured as a sale of stock, shall sell all of such Stockholder's
Securities on the terms and conditions approved by the Board of Directors
of Holding, and (D) upon Holding's request, shall deliver the certificates
representing all Securities owned or controlled by such Stockholder (duly
endorsed, or accompanied by duly executed instruments of transfer) in
escrow (pending receipt of the purchase price therefor) to Holding's
counsel in such sale.
(iii) Holding shall cause its officers, employees, agents,
contractors, and other Persons under its control to cooperate in any
Approved Sale and not to take any action that might impede any such sale.
Without limiting the generality of the foregoing, any resignation of any
office of Holding prior to closing of any Approved Sale by a director or
executive officer of Holding shall be a breach of this Section 2.2(c)(iii).
Pending the completion of any Approved Sale, Holding shall operate only in
the ordinary course and shall use all commercially reasonable efforts to
maintain all existing business relationships in good standing.
2.3. RECEIVED CONSIDERATION. The obligations of the Stockholders with
respect to any Approved Sale are subject to the satisfaction of the condition
that upon the consummation of such sale, all of the holders of Common Stock
shall receive the same forms and amounts of consideration per share outstanding,
or if any holders are given an option as to the form and amount of consideration
to be received per share, all holders shall be given the same option.
2.4. REPURCHASE DELAY. If a "Change of Control", as such term is defined
in the Indenture, would occur either (a) as a result of an exercise of the AGI
Proposed Purchasers' rights under Section 2.2 above or (b) as a result of a
repurchase of the Heritage Securities and/or certain of the Klearfold Holder
Securities pursuant to and in accordance with Section 2.1 above, then and in
either such case the closing of the transaction which would otherwise result in
such Change of Control may be delayed, at the option of the AGI Prospective
Purchasers, if pursuant to clause (a), or at Holding's option, if pursuant to
clause (b), for a period not to exceed ninety (90) days beyond the end of the
period(s) required for the completion thereof under the applicable sections
above, notwithstanding any provisions to the contrary in such sections. In
addition, in the event that Holding shall have made a Holding Election pursuant
to Section 2.1(a)(i) or 2.1(a)(ii) and the date by which the transaction
proposed to be completed pursuant to such Holding Election would, but for the
provision of this Section 2.4, fall before the first date upon which Holding
shall be able to redeem the Senior Subordinated Notes under and as defined in
the Indenture (such date, the "Redemption Date") then the date for completion of
---------------
such proposed transaction shall be delayed for a period of up to one hundred and
twenty (120) days, but in any event no longer than ten (10) days after the
Redemption Date.
3. VOTING.
<PAGE>
-22-
3.1. BOARD OF DIRECTORS.
(A) Subject to the provisions of Sections 3.1(b) - (e) hereof, in any and
all elections of directors of Holding, AGI, Klearfold, and any other Subsidiary
of Holding existing from time to time (whether at a meeting or by written
consent in lieu of a meeting), each Stockholder shall vote or cause to be voted
all Securities having voting rights that are owned by such Stockholder or over
which such Stockholder has voting control, and/or, as relevant, shall use such
Stockholder's best efforts to cause such Stockholder's designees as directors to
vote so as to fix the number of directors of Holding at seven, to cause such
Stockholder's designees as directors of Holding to so act as to ensure that
Holding, in its capacity as stockholder of AGI, Klearfold, and any other such
Subsidiary, fixes the number of directors of each of AGI, Klearfold, and any
other such Subsidiary at seven, and, in each case, to nominate and elect, or use
its best efforts to cause to be nominated and elected, such directors of each of
Holding, AGI, Klearfold, and any other such Subsidiary, respectively, as
follows:
(i) Three individuals (the "AGI Directors") designated as follows:
--- ---------
(A) if Richard Block is both chief executive officer of Holding and holds
at least 75% (on a Fully Diluted Basis) of the number of shares of Common
Stock issued to him pursuant to the Investment Agreement, as adjusted for
splits, combinations, and other recapitalizations from and after the date
hereof, then Richard Block and two individuals designated by Richard Block;
(B) if Richard Block is both chief executive officer of Holding and holds
at least 50% but less than 75% (on a Fully Diluted Basis) of the numbers of
shares of Common Stock issued to him pursuant to the Investment Agreement,
as adjusted for splits, combinations and other recapitalizations from and
after the date hereof, then Richard Block, one individual designated by
Richard Block, and one individual designated by the holders of a majority
of the then outstanding AGI Holder Securities who are then employed by
Holding or its Subsidiaries (the "Majority AGI Employee Holders"); (C) if
-----------------------------
Richard Block is both chief executive officer of Holding and holds less
than 50% (on a Fully Diluted Basis) of the numbers of shares of Common
Stock issued to him pursuant to the Investment Agreement, as adjusted for
splits, combinations and other recapitalizations from and after the date
hereof, then Richard Block and two individuals designated by the Majority
AGI Employee Holders; (D) if Richard Block is not chief executive officer
of Holding and holds at least 50% (on a Fully Diluted Basis) of the numbers
of shares of Common Stock issued to him pursuant to the Investment
Agreement, as adjusted for splits, combinations and other recapitalizations
from and after the date hereof, then one individual designated by Richard
Block and two individuals designated by the Majority AGI Employee Holders;
and (E) if Richard Block is not chief executive officer of Holding and
holds less than 50% (on a Fully Diluted Basis) of the number of shares of
Common Stock issued to him pursuant to the Investment Agreement, as
adjusted for splits, combinations and other recapitalizations from and
after the date hereof, then three individuals designated by the Majority
AGI Employee Holders;
<PAGE>
-23-
(ii) Two individuals (the "Heritage Directors") designated by the
-------- ---------
Majority Heritage Holders; and
(iii) Two individuals (the "Klearfold Directors") designated by the
--------- ---------
Majority Herrin Holders;
and a quorum of the Board of Directors of each of Holding, AGI, Klearfold, and
any other Subsidiary of Holding existing from time to time, shall consist of six
directors, provided, however that in the event a quorum is not present at any
meeting of the Board of Directors of any such company, such meeting shall be
adjourned and each director notified by telephone and written telecommunication
of the date and time at which such meeting is to be reconvened, which shall be
not less than 48 hours following the time of the originally-scheduled meeting of
the Board of Directors, and at such reconvened meeting the quorum of the Board
of Directors shall consist of four directors.
(B) Notwithstanding the foregoing Section 3.1(a) and Section 3.1(c) below:
(i) if Holding fails to achieve the minimum levels of operating
earnings specified in the attached Schedule 3.1(b) for the respective
-------- ------
periods specified in such Schedule 3.1(b), then until Holding achieves a
-------- ------
subsequent minimum level of operating earnings so specified; or
(ii) if any Sale Committee Default shall occur, then and for the
period of twelve (12) consecutive months thereafter; or
(iii) if any default in the timely payment of principal or interest
shall have occurred under either (A) that certain Credit Agreement among
Holding, the lenders referred to therein and Bank of America N.T. & S.A.,
as Agent for such lenders, dated the date hereof, (B) those certain Senior
Subordinated Notes of Holding dated the date hereof, and the related
Indenture, or (C) any renewal, refinancing, refunding or extension of any
of the foregoing, all as amended, modified or restated from time to time,
and pursuant thereto the holders of the indebtedness of Holding or any of
its Subsidiaries thereunder shall have the right to accelerate any of such
indebtedness (or would have had such right but for the existence of any
subordination or inter-creditor arrangement between such holders and the
holders of any other indebtedness of Holding or any of its Subsidiaries),
then until such default shall have been cured or waived by the required
holders of such indebtedness pursuant to a written waiver in form and
substance satisfactory to the Majority Heritage Holders;
and in any such case and for the periods respectively specified above, each
Stockholder shall vote or cause to be voted all Securities having voting rights
that are owned by such Stockholder or over which such Stockholder has voting
control, and/or, as relevant, shall use such Stockholder's best efforts to cause
such Stockholder's designees as directors to
<PAGE>
-24-
vote, so as to fix the number of directors of Holding at seven, and to nominate
and elect such seven directors as follows:
(x) Four individuals designated by the Majority Heritage Holders
(also being referred to herein as "Heritage Directors"); and
-------- ---------
(y) Two individuals designated by the Majority AGI Holders (also
being referred to herein as "AGI Directors"); and
-------------
(z) One individual designated by the Majority Herrin Holders (also
being referred to herein as a "Klearfold Director", and together with the
------------------
AGI Directors referred to in clause (y) above, the "Non-Heritage
------------
Directors");
and each of the Stockholders will use its best efforts to cause Holding so to
act as to make conforming changes to the Boards of Directors of AGI, Klearfold,
and each other Subsidiary of Holding existing at such time, and each of the
Stockholders shall vote or cause to be voted all Securities having voting rights
that are owned by such Stockholder or over which such Stockholder has voting
control in favor of all matters recommended for approval by the Stockholders by
any Board of Directors elected pursuant to this Section 3.1(b). Upon the
occurrence of any event described in clauses (i) - (iii) above, Holding shall
notify each of the Stockholders thereof, provided that the failure to deliver
any such notice, or any Stockholder's failure to receive any such notice, shall
not limit the effectiveness of this Section 3.1(b). While the Boards of
Directors of Holding, AGI, Klearfold, and any other such Subsidiary are
constituted in accordance with this Section 3.1(b), a quorum of each of such
Boards of Directors shall consist of six directors, provided, however that in
the event a quorum is not present at any meeting of the Board of Directors of
any such company, such meeting shall be adjourned and each director notified by
telephone and written telecommunication of the date and time at which such
meeting is to be reconvened, which shall be not less than 48 hours following the
time of the originally-scheduled meeting of the Board of Directors, and at such
reconvened meeting the quorum of the Board of Directors shall consist of four
directors, provided, further, that in order to constitute a quorum, the number
of Heritage Directors present at any such meeting (including any such reconvened
meeting) shall exceed the number of Non-Heritage Directors so present.
(C) Subject to the provisions of Sections 3.1(b) and (d) hereof, in the
event that Scott Herrin's employment with Holding and its Subsidiaries is
terminated either (A) by Scott Herrin with Good Reason, at any time after
January 1, 1999, pursuant to clause (i) of the definition of Good Reason in his
Employment, Non-Competition and Stock Repurchase Agreement with Holding, dated
the date hereof, or (B) pursuant to Section 4(f) of such Agreement, then and
thereafter each Stockholder shall vote or cause to be voted all Securities
having voting rights that are owned by such Stockholder or over which such
Stockholder has voting control, and/or, as relevant, shall use such
Stockholder's best efforts to cause such Stockholder's designees as directors to
vote, so as to fix the number of directors of Holding at nine, and to nominate
and elect such nine directors as follows:
<PAGE>
-25-
(i) seven individuals designated in accordance with Sections
3.1(a)(i)- (iii) hereof;
(ii) one individual, who shall for the purposes hereof also be
referred to herein as an "AGI Director", designated by Richard Block, so
--- --------
long as Richard Block is chief executive officer of Holding, and otherwise
by the Majority AGI Employee Holders, and approved by the Majority Heritage
Holders in their sole discretion (such approval not to be unreasonably
withheld or delayed) but who shall not be an Affiliate or Related Party of
any AGI Stockholder or any Heritage Holder, nor an employee or officer of
Holding or any of its Subsidiaries; and
(iii) one individual, who shall for the purposes hereof also be
referred to herein as a "Heritage Director", designated by the Majority
-------- --------
Heritage Holders, and approved by Richard Block, in his sole discretion, so
long as Richard Block is chief executive officer of Holding, and otherwise
by the Majority AGI Employee Holders, in their sole discretion (such
approval, in either such case, not to be unreasonably withheld or delayed)
but who shall not be an Affiliate or Related Party of any AGI Stockholder
or any Heritage Holder, nor an employee or officer of Holding or any of its
Subsidiaries.
and each of the Stockholders will use its best efforts to cause Holding so to
act as to make conforming changes to the Boards of Directors of AGI, Klearfold,
and each other Subsidiary of Holding existing at such time, and each of the
Stockholders shall vote or cause to be voted all Securities having voting rights
that are owned by such Stockholder or over which such Stockholder has voting
control in favor of all matters recommended for approval by the Stockholders by
any Board of Directors elected pursuant to this Section 3.1(c). Holding shall
notify each of the Stockholders (other than the Herrin Stockholders) of the
occurrence of a termination of Scott Herrin's employment with Holding as
described above in this Section 3.1(c), provided that the failure to deliver any
such notice, or any Stockholder's failure to receive any such notice, shall not
limit the effectiveness of this Section 3.1(c). While the Boards of Directors
of Holding, AGI, Klearfold, and any other such Subsidiary are constituted in
accordance with this Section 3.1(c), a quorum of each of such Boards of
Directors shall consist of eight directors, provided, however that in the event
a quorum is not present at any meeting of the Board of Directors of any such
company, such meeting shall be adjourned and each director notified by telephone
and written telecommunication of the date and time at which such meeting is to
be reconvened, which shall be not less than 48 hours following the time of the
originally-scheduled meeting of the Board of Directors, and at such reconvened
meeting the quorum of the Board of Directors shall consist of five directors.
(D) If any vacancy shall occur in any of the Boards of Directors of
Holding, AGI or Klearfold, whether as a result of the death, disability,
resignation, or removal of any director or otherwise, such director's
replacement shall be designated by the Person or Persons who, pursuant to
subsection (a), (b) or (c) of Section 3.1 hereof, as the case may
<PAGE>
-26-
be, originally designated such director (unless such subsection (a), (b) or (c)
as the case may be, is not at the time of designation of such replacement
director the operative section governing the election of directors hereunder).
Each Person entitled to designate a director or a replacement for a director
pursuant to this Section 3 shall also be entitled to instruct the Stockholders
to remove such director with or without cause and upon such instruction the
Stockholders shall act to remove such director, whereupon the Person(s)
initiating such removal shall be entitled, subject to the approvals required by
Sections 3.1(c)(ii) or 3.1(c)(iii) above, if applicable, to designate a
replacement for any director so removed. Each Stockholder hereby agrees to vote
or cause to be voted all Securities having voting rights that are owned by such
Stockholder or over which such Stockholder has voting control, and shall use
such Stockholder's best efforts to cause such Stockholder's designees as
directors to vote, so as to comply with this Section 3.1(d).
(E) If at any time Holding or any of its Subsidiaries acquires all or
substantially all of the assets or capital stock of any Person for aggregate
consideration in excess of $10,000,000, then the Stockholders holding a majority
of the then outstanding shares of Common Stock may act to amend this Section
3.1, and any corresponding provision of Holding's or any of its Subsidiaries'
by-laws, so as to permit an increase in the number of directors required hereby
(but not, in any event, to decrease such number), provided that the additional
directors elected pursuant to any such increase may not be selected by any
existing Stockholder with the right (either individually or collectively with
other Stockholders) to designate directors under this Section 3.1 as in effect
immediately prior to such amendment, or by any Affiliate of any such
Stockholder.
3.2. CONSENT TO SALE. Until the second anniversary of the date hereof, and
subject to the provisions of Section 2.3 hereof, each of the Stockholders hereby
irrevocably agrees that such Stockholder shall not vote or permit to be voted
any Securities having voting rights that are owned by such Stockholder or over
which such Stockholder has voting control, and shall use such Stockholder's best
efforts to cause such Stockholder's designees as directors not to vote, in favor
of any sale of Holding or its business (whether by merger, consolidation, sale
of all or substantially all of the assets or capital stock of Holding and/or one
or more of its Subsidiaries, or otherwise), if the proposed sale has not been
previously approved in writing by the Majority AGI Holders, the Majority
Heritage Holders and the Majority Klearfold Holders.
3.3. PROXY. Each Stockholder hereby irrevocably appoints Holding as such
Stockholder's true and lawful proxy and attorney-in-fact, with full power of
substitution, to vote or cause to be voted all Securities having voting rights
that are owned by such Stockholder or over which such Stockholder has voting
control to effectuate the agreements of such Stockholder set forth in this
Agreement in the event of any breach by such Stockholder of its obligations
under this Agreement. The proxies and powers granted by each Stockholder
pursuant to this Section 3.3 are coupled with an interest and are given to
secure the performance of such Stockholder's duties under this Agreement. Such
proxies shall be irrevocable for so long as this Agreement remains in effect and
shall survive the death, incompetence, and/or disability of any Stockholder who
is an individual
<PAGE>
-27-
and the merger, liquidation, dissolution, and/or winding-up of any Stockholder
that is not an individual.
3.4. ACTION BY STOCKHOLDERS. Each Stockholder further agrees that such
Stockholder shall not vote or permit to be voted any Securities having voting
rights that are owned by such Stockholder or over which such Stockholder has
voting control, or take any other action as a stockholder of Holding, to
circumvent the voting arrangements set forth in this Section 3. Without
limiting the generality of the foregoing, each Stockholder agrees not to
commence, maintain, or participate in any legal action or proceeding (including
without limitation any stockholder's derivative suit) challenging any action or
transaction duly approved by Holding's Board of Directors in accordance with the
terms of this Agreement.
4. PREEMPTIVE RIGHTS.
4.1. GRANT OF RIGHTS. Subject to the final sentence of this Section 4.1,
if Holding or any of its Subsidiaries authorizes the issuance or sale of any
shares of any class of capital stock or other securities on or prior to June 7,
2002, Holding shall (or shall cause such Subsidiary to) first offer to sell to
each Stockholder a portion of such securities equal to the quotient (expressed
as a percentage) of (i) the number of shares of Common Stock held by such
Stockholder (calculated on a Fully Diluted Basis), divided by (ii) the number of
shares of Common Stock then outstanding (calculated on a Fully Diluted Basis).
Each Stockholder shall be entitled to purchase all or part of such stock or
securities at the same price and on the same terms (including any deferred
payment terms) as such stock or securities are to be offered to any other
Persons, provided, that each such Stockholder shall have the option to
substitute for any non-cash consideration proposed to be received in respect of
such proposed issuance or sale, cash in the amount of the fair market value
thereof. Notwithstanding the foregoing, the provisions of this Section 4.1
shall not apply to the issuance or sale of any shares of capital stock by any of
Holding's Subsidiaries to Holding or to any of its wholly owned Subsidiaries, or
to the issuance of shares of Common Stock (a) pursuant to a Public Sale, (b) as
consideration for the acquisition of all or any substantial portion of the
assets or all or any portion of the capital stock of any Person, provided, for
the avoidance of doubt, that the issuance or sale by Holding or any of its
Subsidiaries of any shares of any class of capital stock or other securities to
generate cash funding of the consideration for any such acquisition shall be
subject to the provisions of the first sentence of this Section 4.1, (c)
pursuant to a management stock option plan or employee incentive plan approved
by the Board of Directors, (d) to, or pursuant to warrants or options issued to,
consultants to, vendors to, or joint venture partners of Holding or its
Subsidiaries, in each case as approved by the Board of Directors, or (e) as a
dividend in respect of the outstanding shares of Common Stock.
4.2. STOCKHOLDERS' EXERCISE OF RIGHT. Each Stockholder must exercise such
Stockholder's purchase rights under Section 4.1 hereof within 30 days after the
effective date of delivery to such Stockholder of written notice from Holding or
its Subsidiary, as the case may be, describing in reasonable detail the stock or
other securities being offered,
<PAGE>
-28-
the purchase price thereof, the payment terms, and such Stockholder's allotted
portion thereof, as determined in accordance with Section 4.1 hereof. If all of
such stock or other securities are not fully subscribed for by the Stockholders
within such 30-day period, the stock or securities that are not so subscribed
for shall be re-offered to the Stockholders purchasing their full allotments
upon the terms set forth in this Section 4, except that (i) such Stockholders
must exercise their purchase rights with respect to such re-offered securities
within ten (10) days after receipt of such re-offer, and (ii) unless such
Stockholders so agree, each such Stockholder shall be offered and shall be
entitled to purchase pursuant to this Section 4.2 a portion of the re-offered
securities equal to the quotient (expressed as a percentage) of (x) the number
of shares of Common Stock held by such Stockholder (calculated on a Fully
Diluted Basis), divided by (y) the number of shares of Common Stock (calculated
on a Fully Diluted Basis) then held by the Stockholders receiving such re-offer.
4.3. HOLDING'S EXERCISE OF RIGHTS. Upon the expiration of the offer and
re-offer (if any) periods described above, Holding or its Subsidiary, as the
case may be, shall be free to sell any stock or other securities that the
Stockholders have not elected to purchase during the ninety (90) days following
such expiration, on terms and conditions no more favorable to the purchasers
thereof than those offered to the Stockholders. Any stock or other securities
offered or sold by Holding or such Subsidiary after such 90-day period and prior
to June 7, 2002 must be re-offered to all of the Stockholders pursuant to the
terms of this Section 4.
5. RESTRICTIVE LEGEND. So long as any Securities are subject to the
provisions hereof, all certificates representing such Securities shall have
imprinted on them a restrictive legend in substantially the following form:
"The securities represented by this certificate are subject to the terms of
a certain Stockholder Agreement, dated as of ________ __, 1998, among the
registered holder of this certificate (or such holder's predecessor-in-
interest), the issuer of this certificate, and certain others. The
Stockholder Agreement contains certain restrictive provisions relating to
the voting and transfer of the securities represented hereby. A copy of
the Stockholder Agreement is on file and may be inspected for any proper
purpose at the issuer's principal executive office."
6. REGISTRATION RIGHTS.
6.1. DEFINITIONS. As used in this Section 6:
"Commission" means the Securities and Exchange Commission.
----------
"Holders" means the Stockholders and all Persons to whom any Registrable
-------
Securities are transferred in accordance with the provisions of this Agreement,
and "Holder" means any one of the Stockholders; provided, in the cases of any
elections to be
<PAGE>
-29-
made by, and any notices or other communications to be made by or to, any Holder
pursuant to this Section 6, that such elections, notices, or other
communications shall be made by or to the Majority Heritage Holders, in the case
of any Heritage Holder, by or to the Majority Klearfold Holders, in the case of
any Holder who is a Klearfold Management Stockholder, or by or to the Majority
AGI Holders, in the case of any Holder who is an AGI Management Stockholder.
"Majority Demanding Holder(s)" means the Demanding Holder or Demanding
-------- --------- ---------
Holders, as the case may be, as defined in Section 6.2(a)(i) below, holding a
majority of the Registrable Securities held by the Demanding Holders.
"Registered" and "registration" (regardless of whether capitalized) refer
---------- ------------
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering by the
Commission of effectiveness of such registration statement.
"Registrable Securities" means the shares of Common Stock issued pursuant
----------- ----------
to the Investment Agreement, together with all shares of Common Stock issued to
Stockholders as a result of any exercise of pre-emptive rights pursuant to
Section 4 hereof, and includes any shares of capital stock and other securities
of Holding issued or issuable with respect to any of the foregoing shares of
Common Stock by way of a stock dividend, stock split, combination or division of
shares, recapitalization, merger, consolidation, reorganization, or the like,
and any shares of capital stock and other securities of Holding into which any
of the foregoing shares of capital stock and other securities of Holding are
(directly or indirectly) converted or for which any of the foregoing shares of
capital stock and other securities of Holding are (directly or indirectly)
exchanged, in each case regardless of subsequent transfers of such shares of
capital stock or other securities of Holding. Securities shall cease to be
Registrable Securities when (i) they have been sold pursuant to an effective
registration statement under the Securities Act, or distributed to the public
through a broker, dealer or market maker pursuant to Rule 144 under the
Securities Act, or any other exemption from the registration requirements of the
Securities Act under which the transferee receives securities that are not
"restricted securities" within the meaning of that term as defined in Rule
144(a)(3), or (ii) when they may be resold under Rule 144(k) (or other similar
exemption from registration) without volume limitation.
"Underwriters' Maximum Number" means, with respect to an underwritten
------------ ---------------
registration, that number of securities to which such registration should be
limited, in the reasonable written opinion of the managing underwriters of such
registration in the light of marketing factors.
6.2. DEMAND REGISTRATIONS.
(A) REQUEST FOR DEMAND REGISTRATION. Subject to the limitations set forth
in the following paragraphs of this Section 6.2:
<PAGE>
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(i) The Holders of either (A) not less than a majority of all of the
Heritage Shares at any time outstanding or (B) at least twenty percent (20%) (on
a Fully Diluted Basis) of the amount of Registrable Securities outstanding on
the date hereof, as adjusted from time to time for splits, combinations and
other recapitalizations (in either such case, the "Demanding Holders"), may at
--------- -------
any time give to Holding a written request for the registration (a "Demand
------
Registration") by Holding under the Securities Act of all or any part of the
- ------------
Registrable Securities held by such Demanding Holders. Within five business
days after the receipt by Holding of any such written request, Holding shall
give written notice of such request to all Holders of Registrable Securities.
(ii) After the receipt of a written request for a Demand
Registration, (A) Holding shall be obligated to include in such Demand
Registration all of the Registrable Securities with respect to which Holding
shall receive the written requests of the Holders thereof for inclusion in such
Demand Registration, within 20 days after the date on which Holding shall have
given to all Holders a written notice of registration request pursuant to
Section 6.2(a)(i) of this Agreement, and (B) Holding shall use its best efforts
in good faith to effect promptly the registration of all such Registrable
Securities. All written requests made by Holders of Registrable Securities
pursuant to this Section 6.2(a)(ii) shall specify the number of Registrable
Securities to be registered and shall also specify the intended method of
disposition thereof. Such method of disposition shall, in any case, be an
underwritten offering unless Holding, the Majority Heritage Holders or, if
different, the Majority Demanding Holders mutually consent otherwise, neither of
which consents shall be unreasonably withheld or delayed.
(B) LIMITATIONS ON DEMAND REGISTRATIONS.
(i) Holding shall not be obligated to effect more than three (3)
Demand Registrations pursuant to Section 6.2(a) of this Agreement.
(ii) Holding shall not be obligated to effect any Demand Registration
of any Registrable Securities pursuant to Section 6.2(a) hereof before the
earlier to occur of (A) June 7, 2002, and (B) six months following the
consummation of Holding's initial public offering of shares of Common Stock
registered in an effective registration statement under the Securities Act.
(iii) Any registration initiated as a Demand Registration pursuant to
Section 6.2(a) hereof shall not count as a Demand Registration for purposes of
the limitation set forth in Section 6.2(b)(i) of this Agreement unless such
registration has become effective and at least 75% of the Registrable Securities
of the Demanding Holders requested to be included in such registration have
actually been sold.
(iv) Holding shall not be obligated to effect any Demand Registration
during the period commencing on the date falling 90 days prior to Holding's
estimated date of filing of, and ending on the date 180 days following the
effective date of, any registration statement pertaining to any registration
initiated by Holding, for the account
<PAGE>
-31-
of Holding and/or stockholders other than Holders (other than with respect to
securities registered solely in connection with acquisitions, employee benefit
plans, and the like); provided, however, that Holding shall use its best efforts
in good faith to cause any such registration statement to be filed and to become
effective as expeditiously as shall be reasonably possible.
(v) Holding shall not be obligated to effect any Demand Registration
for any 120-day period following receipt of any written request for
registration, if in the good faith judgment of the Board of Directors of
Holding, or of the managing underwriter of such offering if (A) such managing
underwriter was selected pursuant to Section 6.2(d) hereof by the consent of the
Majority Demanding Holders, and (B) Holding has not withheld its approval of any
managing underwriter proposed by the Majority Demanding Holders in connection
with such Demand Registration, the filing of any registration statement during
such 120-day period would adversely affect a material proposed or pending
acquisition, merger, or similar corporate event to which Holding is or expects
to be party.
(C) PRIORITY IN DEMAND REGISTRATIONS. If the managing underwriters in any
Demand Registration advise Holding in writing that the number of securities
proposed to be included in such registration exceeds the Underwriters' Maximum
Number, then: (i) if (x) such registration would not be the first registration
of Common Stock by Holding under the Securities Act (other than with respect to
securities registered solely in connection with acquisitions, employee benefit
plans, and the like) or (y) such registration is the first such registration,
but Holding does not desire to sell shares on its own behalf pursuant thereto,
then (A) Holding shall be obligated to include in such registration that number
of Securities duly requested by the Holders thereof to be included in such
registration as does not exceed the Underwriters' Maximum Number, and such
number of Securities shall be allocated pro rata among such Holders on the basis
of the number of Securities held by each such Holder; (B) if the Underwriters'
Maximum Number exceeds the number of Securities duly requested to be included in
such registration, then Holding shall be entitled to include in such
registration that number of securities as shall have been duly requested by
Holding to be included in such registration for the account of Holding and that
is not greater than such excess; and (C) if the Underwriters' Maximum Number
exceeds the sum of the number of Registrable Securities that are to be included
in such registration pursuant to the foregoing clauses (A) and (B), then Holding
may include in such registration that number of other securities that Persons
other than Holders and Holding have requested be included in such registration
and which is not greater than such excess; and (ii) if (x) such registration
would be the first registration of Common Stock by Holding under the Securities
Act (other than with respect to securities registered solely in connection with
acquisitions, employee benefit plans, and the like) and (y) Holding desires to
sell shares on its own behalf pursuant thereto, then (A) Holding shall be
entitled to include in such registration that number of securities as shall have
been authorized to be included by its Board of Directors for its own account, up
to the Underwriter's Maximum Number; (B) if the Underwriters' Maximum Number
exceeds the number of Securities Holding proposes to offer and sell for its own
account in such registration, then Holding
<PAGE>
-32-
shall be obligated to include in such registration that number of Securities
duly requested by the Holders thereof to be included in such registration that
is not greater than such excess, and such number of Securities shall be
allocated pro rata among such Holders on the basis of the number of Securities
held by each such Holder; and (C) if the Underwriters' Maximum Number exceeds
the sum of the number of Securities that are to be included in such registration
pursuant to subclauses (A) and (B) of this clause (ii), then Holding may include
in such registration that number of other securities that Persons other than
Holders and Holding have requested be included in such registration and which is
not greater than such excess. Neither Holding nor any of its other
securityholders shall be entitled to include any securities in any underwritten
Demand Registration initiated pursuant to Section 6.2(x)(i)(A) unless Holding or
such securityholders (as the case may be) agree in writing to sell such
securities on the same terms and conditions as apply to the Heritage Shares to
be included in such Demand Registration.
(D) SELECTION OF UNDERWRITERS. If any Demand Registration is an
underwritten offering, the investment bankers and managing underwriters in such
registration shall be selected by Holding, subject to the approval of the
Majority Demanding Holders, which approval shall not be unreasonably withheld or
delayed. If the Majority Demanding Holders reasonably disapprove of such
investment bankers or underwriters, such Holders shall use their best efforts to
select another investment banker or underwriter reasonably acceptable to Holding
(Holding's approval thereof not to be unreasonably withheld or delayed), and
shall continue such process until such investment bankers or underwriters have
been selected.
6.3. PIGGYBACK REGISTRATIONS.
(A) RIGHTS TO PIGGYBACK.
(i) If (and on each occasion that) Holding proposes to register any
of its securities under the Securities Act, for Holding's own account and/or for
the account of any of its security holders (each such registration not withdrawn
or abandoned prior to the effective date thereof, a "Piggyback Registration"),
--------- ------------
Holding shall give written notice of such proposal to each of the Holders not
later than the earlier to occur of (A) the tenth day following the receipt by
Holding of notice of exercise of any registration rights by any Persons, and (B)
30 days prior to the anticipated filing date of such Piggyback Registration.
Notwithstanding the foregoing, Holding shall not be obligated to give such
notice to Holders with respect to, or to include any Registrable Securities in,
any registration statement on Form S-8 or similar limited-purpose form of
registration statement effected solely to implement an employee benefit plan, or
any registration statement on Form S-4 or similar limited-purpose form of
registration statement effected solely to implement an acquisition.
(ii) Subject to the provisions contained in paragraph (b) of this
Section 6.3 and in the last sentence of this clause (ii): (A) Holding shall be
obligated to include in each Piggyback Registration all Registrable Securities
with respect to which Holding
<PAGE>
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receives, within 20 days after the date on which Holding shall have given
written notice of such Piggyback Registration to Holders pursuant to Section
6.3(a)(i) hereof, the written requests of such Holders for inclusion in such
Piggyback Registration, and (B) Holding shall use its best efforts in good faith
to effect promptly the registration of all such Registrable Securities. Holders
shall be permitted to withdraw all or any part of their Registrable Securities
from any Piggyback Registration at any time prior to the effective date of such
Piggyback Registration.
(B) PRIORITY IN PIGGYBACK REGISTRATIONS. If a Piggyback Registration is
an underwritten registration, and the managing underwriters thereof give written
advice to Holding of an Underwriters' Maximum Number, then: (i) Holding shall be
entitled to include in such registration that number of securities which Holding
proposes to offer and sell for its own account in such registration and which
does not exceed the Underwriters' Maximum Number; (ii) if the Underwriters'
Maximum Number exceeds the number of securities which Holding proposes to offer
and sell for its own account in such registration, then Holding will be
obligated and required to include in such registration that number of
Registrable Securities requested by the Holders thereof to be included in such
registration and which does not exceed such excess and such Registrable
Securities shall be allocated pro rata among the Holders thereof on the basis of
the number of Registrable Securities requested to be included therein by each
such Holder; and (iii) if the Underwriters' Maximum Number exceeds the sum of
the number of Registrable Securities which Holding shall be required to include
in such registration pursuant to clause (ii) and the number of securities which
Holding proposes to offer and sell for its own account in such registration,
then Holding may include in such registration that number of other securities
which Persons other than the Holders shall have requested be included in such
registration and which is not greater than such excess.
(C) SELECTION OF UNDERWRITERS. In any Piggyback Registration, Holding
shall (unless Holding shall otherwise agree) have the right to select the
investment bankers and managing underwriters in such registration.
6.4. LOCKUP AGREEMENTS.
(A) RESTRICTIONS ON PUBLIC OFFERING BY HOLDERS OF REGISTRABLE SECURITIES.
If, in connection with any Public Offering, Holding or, if such Public Offering
is pursuant to an underwritten registration, the managing underwriters thereof
so request, each Holder of Registrable Securities, whether or not any of their
Registrable Securities are included in any such Public Offering, shall not,
without the prior written consent of Holding or (if applicable) such
underwriters, effect any Public Offering or other distribution of any equity
securities of Holding, including any sale pursuant to Rule 144, during the seven
days prior to, and during the 180-day period commencing on, the date of such
Public Offering, except in each case in connection with such Public Offering;
provided that each officer, director and other Affiliate of Holding or any of
its Subsidiaries who holds any equity securities of Holding shall enter into
similar agreements, and provided, further, that to the extent that any such
officer, director, or other Affiliate is released (in whole or in
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part) from such lock-up agreement prior to its scheduled termination date, each
Holder bound by a similar lock-up agreement shall have a proportionate
percentage of its securities released from such lock-up agreement.
(B) RESTRICTIONS ON PUBLIC OFFERING BY HOLDING. Holding shall not effect
any Public offering or other distribution of shares of its capital stock or
other equity securities, or securities exercisable or exchangeable for, or
convertible into, such capital stock or other equity securities, during the
period commencing on the seventh day prior to, and ending on the 180th day
following, the effective date of any underwritten registration, except in
connection with any such registration.
6.5. REGISTRATION PROCEDURES. If (and on each occasion that) Holding
becomes obligated to effect any registration of any Registrable Securities
hereunder, Holding shall use its best efforts in good faith to effect promptly
the registration of such Registrable Securities under the Securities Act and to
permit the public offering and sale of such Registrable Securities in accordance
with the Holders' intended methods of disposition thereof, and, in connection
therewith, Holding as expeditiously as possible shall:
(a) prepare and file with the Commission as soon as is practicable, and in
any event within 120 days after a proper request therefor made in accordance
with Section 6.2(a) hereof, a registration statement with respect to such
Registrable Securities, and use its best efforts to cause such registration
statement to become and remain effective as provided in this Agreement;
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus included in such registration
statement as may be necessary or advisable to comply in all material respects
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement or as may be necessary to keep
such registration statement effective and current, but for no longer than nine
months subsequent to the effective date of such registration;
(c) furnish to each seller of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto (in each
case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus), and such other
documents as any such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities held by such seller;
(d) use its best efforts (i) to list the Registrable Securities to be
registered in such registration on each securities exchange or quotation system
on which similar securities of Holding are then listed (or if none, then at a
minimum on the automated quotations system of the National Association of
Securities Dealers, Inc.), and (ii) to register and qualify the Registrable
Securities covered by such registration statement under such securities or Blue
Sky laws of such jurisdictions as any Holder may reasonably request and do any
and all such other acts and things as may be reasonably necessary or
<PAGE>
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advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities held by such seller; provided,
however, that Holding shall not be required in connection with such Blue Sky
registration or qualification to qualify generally to do business, subject
itself to taxation, or file a general consent to service of process in any such
jurisdiction;
(e) furnish to each prospective seller and each underwriter a signed
counterpart, addressed to such prospective seller, of (i) an opinion of counsel
for Holding, dated the effective date of the registration statement, and (ii) a
"comfort" letter signed by the independent public accountants who have certified
Holding's financial statements included in the registration statement, covering
substantially the same matters with respect to the registration statement (and
the prospectus included therein) and (in the case of the comfort letter, with
respect to events subsequent to the date of the financial statements), as are
customarily covered (at the time of such registration) in opinions of issuer's
counsel and in comfort letters delivered to the underwriters in underwritten
public offerings of securities;
(f) notify each prospective seller of Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which such
prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, Holding will promptly
prepare (and, when completed, give notice to each prospective seller of
Registrable Securities) a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading; provided
that upon such notification by Holding, each prospective seller of such
Registrable Securities will not offer or sell such Registrable Securities until
Holding has notified such seller that it has prepared a supplement or amendment
to such prospectus and delivered copies of such supplement or amendment to such
prospective seller;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into all such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Heritage Shares to be registered (in the case of a Demand
Registration) or the Registrable Securities to be registered (in the case of a
Piggyback Registration) or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities
(including, without limitation, effecting a stock split or a combination of
shares);
(i) make available for inspection on a confidential basis by any Holder,
any underwriter participating in any disposition pursuant to such registration
statement, or any attorney, accountant, or other agent retained by any such
Holder or underwriter (in each
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case after reasonable prior notice), all financial and other records, pertinent
corporate documents, and properties of Holding, and cause Holding's and its
respective Subsidiaries' officers, directors, employees, and independent
accountants to supply on a confidential basis all information reasonably
requested by any such Holder, underwriter, attorney, accountant, or agent in
connection with such registration statement; but in each case only to the extent
reasonably required in order to permit such Holder, underwriter, attorney,
accountant, or agent to conduct an investigation sufficient to establish a "due
diligence" defense in accordance with the Securities Act and the rules,
regulations, and case law thereunder;
(j) permit any Holder who, in his or its sole and exclusive judgment,
might be deemed to be an underwriter or a controlling person of Holding within
the meaning of Section 15 of the Securities Act, to participate in the
preparation of such registration statement and to permit the insertion therein
of material, furnished to Holding in writing, which in the reasonable judgment
of such Holder and his or its counsel should be included, subject to the
omission of such portions, if any, of such furnished material that Holding and
its counsel in good faith may determine was unreasonably furnished;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Registrable Securities included in such Registration Statement for sale in
any jurisdiction, use its best efforts promptly to obtain the withdrawal of such
order;
(l) if requested by the managing underwriter or underwriters or any Holder
in connection with any sale pursuant to a registration statement, promptly
incorporate in a prospectus supplement or post-effective amendment such
information relating to such underwriting as the managing underwriter or
underwriters or such Holder reasonably requests to be included therein, subject
to the omission of such portions, if any, of such material that Holding and its
counsel in good faith may determine was unreasonably furnished, and make all
required filings of such prospectus supplement or post-effective amendment as
soon as practicable after being notified of the matters incorporated in such
prospectus supplement or post-effective amendment;
(m) cooperate with the holders of Registrable Securities and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be sold under such registration statement, and enable
such Registrable Securities to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or such holders may
request;
(n) use its best efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
within the United States and having jurisdiction over Holding as may reasonably
be necessary to enable the seller
<PAGE>
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or sellers thereof or the underwriter or underwriters, if any, to consummate the
disposition of such Registrable Securities; and
(o) otherwise comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders (as contemplated
by Section 11(a) under the Securities Act) an earnings statement satisfying the
provisions of Rule 158 under the Securities Act no later than ninety (90) days
after the end of the twelve month period beginning with the first month of
Holding's first fiscal quarter commencing after the effective date of such
registration statement, which statement shall cover said twelve month period.
6.6. COOPERATION BY PROSPECTIVE SELLERS, ETC.
(a) Each prospective seller of Registrable Securities shall furnish to
Holding in writing such information as Holding may reasonably require from such
seller, and otherwise reasonably cooperate with Holding in connection with any
registration statement with respect to such Registrable Securities.
(b) The failure of any prospective seller of Registrable Securities to
furnish any information or documents in accordance with any provision contained
in this Section 6 shall not affect the obligations of Holding under this Section
6 to any remaining sellers who furnish such information and documents unless in
the reasonable opinion of counsel to Holding or the underwriters, such failure
impairs or may impair the viability of the offering or the legality of the
registration statement or the underlying offering.
(c) Each Holder of Registrable Securities included in any registration
statement shall not (until further notice) effect sales thereof after receipt of
telegraphic or written notice from Holding to such Holder to suspend sales to
permit Holding to correct or update such registration statement or prospectus
(which Holding shall do as promptly as is practicable); but the obligations of
Holding with respect to maintaining any registration statement current and
effective shall be extended by a period of days equal to the aggregate period
any such suspensions are in effect.
(d) At the end of any period during which Holding is obligated to keep any
registration statement current and effective as provided by Section 6.5 hereof
(and any extensions thereof required by the preceding paragraph (c) of this
Section 6.6), the Holders of Registrable Securities included in such
registration statement shall discontinue sales of shares pursuant to such
registration statement upon notice from Holding to such Holders of its intention
to remove from registration the shares covered by such registration statement
which remain unsold, and such Holders shall notify Holding of the number of
shares registered that remain unsold promptly after receipt of such notice from
Holding.
6.7. REGISTRATION EXPENSES.
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(a) Holding shall be responsible for and shall pay all costs and expenses
incurred or sustained in connection with or arising out of each registration
pursuant to this Section 6, including, without limitation, all registration and
filing fees, fees and expenses of compliance with securities or Blue Sky laws
(including reasonable fees and disbursements of counsel for the underwriters in
connection with the Blue Sky qualification of Registrable Securities), printing
expenses, messenger, telephone, and delivery expenses, fees and disbursements of
counsel for Holding, reasonable fees and disbursements of one counsel
representing the Holders of Heritage Shares and one counsel representing the
Holders of other Registrable Securities, fees and disbursements of all
independent certified public accountants (including the expenses relating to the
preparation and delivery of any special audit or comfort letters required by or
incident to such registration), and fees and disbursements of underwriters
(excluding underwriting discounts and commissions), the reasonable fees and
expenses of any special experts retained by Holding on its own initiative or at
the request of the managing underwriters in connection with such registration,
and fees and expenses of all (if any) other Persons retained by Holding (all
such costs and expenses, collectively, "Registration Expenses"). Holding shall,
------------ --------
in any case, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange or quotation system on which similar securities of
Holding are then listed.
(b) Holding shall not bear the cost of nor pay for any stock transfer
taxes imposed in respect of the transfer of any Registrable Securities to any
purchaser thereof by any Holder of Registrable Securities in connection with any
registration of Registrable Securities pursuant to this Section 6.
(c) To the extent that Registration Expenses incident to any registration
are, under the terms of this Section 6, not required to be paid by Holding, each
Holder of Registrable Securities included in such registration shall pay all
Registration Expenses that are clearly solely attributable to the registration
of such Holder's Registrable Securities so included in such registration, and
all other Registration Expenses not so attributable to one Holder shall be borne
and paid by all sellers of securities included in such registration pro rata in
proportion to the number of securities so included by each such seller.
6.8. INDEMNIFICATION.
(A) INDEMNIFICATION BY HOLDING. Holding shall indemnify each Holder
joining in a registration and each underwriter of the securities so registered,
the officers, directors, and partners of each such Person and each Person who
controls (within the meaning of the Securities Act) any of the foregoing, and
their respective successors and assigns, against any and all Damages to which
such Person is or may become subject arising out of or based on any untrue
statement (or alleged untrue statement) of any material fact contained in any
prospectus, offering circular or other document incident to any registration,
qualification or compliance (or in any related registration statement,
<PAGE>
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notification or the like) or any omission (or alleged omission) to state therein
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by Holding of any rule or
regulation promulgated under the Securities Act applicable to Holding and
relating to any action or inaction required of Holding in connection with any
such registration, qualification, or compliance; provided, however, that Holding
shall not be liable in any such case to the extent that any such Damages arise
out of or are based on any untrue statement or omission based upon written
information furnished to Holding in an instrument duly executed by such Holder,
underwriter, officer, director, partner, or controlling person and stated to be
specifically for use in such prospectus, offering circular, or other document.
(B) INDEMNIFICATION BY EACH HOLDER. Each Holder requesting or joining in
a registration shall indemnify each underwriter of the securities so registered,
Holding and its officers and directors and each person, if any, who controls
(within the meaning of the Securities Act) any of the foregoing, and their
respective successors and assigns, against any and all Damages to which such
Person is or may become subject arising out of or based on any untrue statement
(or alleged untrue statement) of any material fact contained in any prospectus,
offering circular, or other document incident to any registration, qualification
or compliance (or in any related registration statement, notification or the
like) or any omission (or alleged omission) to state therein any material fact
required to be stated therein or necessary to make the statement therein not
misleading, but only if and to the extent that such statement or omission was
made in reliance upon written information furnished to such underwriter or
Holding in an instrument duly executed by such Holder and stated to be
specifically for use in such prospectus, offering circular, or other document
(or related registration statement, notification, or the like) or any amendment
or supplement thereto; and provided further that each Holder's liability with
respect to any particular registration shall be limited to an amount equal to
the net cash proceeds received by such Holder from the Registrable Securities
sold by such Holder in such registration.
(C) INDEMNIFICATION PROCEEDINGS. Each party entitled to indemnification
pursuant to this Section 6.8 (the "indemnified party") shall give notice to the
party required to provide indemnification pursuant to this Section 6.8 (the
"indemnifying party") promptly after such indemnified party acquires actual
knowledge of any claim as to which indemnity may be sought, and shall permit the
indemnifying party (at its expense) to assume the defense of any claim or any
litigation resulting therefrom; provided that counsel for the indemnifying
party, who shall conduct the defense of such claim or litigation, must be
acceptable to the indemnified party, and the indemnified party may participate
in such defense at such party's expense; and provided, further, that the failure
by any indemnified party to give notice as provided in this paragraph (c) shall
not relieve any indemnifying party of its obligations under this Section 6.8
except if and to the extent that such failure results in a failure of actual
notice to the indemnifying party and such indemnifying party is actually
prejudiced solely as a result of such failure to give notice. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of each indemnified party, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by the claimant
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or plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation. The reimbursement required by this Section
6.8 shall be made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred, and may be
conditioned upon an undertaking by the indemnified party to reimburse the
indemnifying party in the event the indemnified party is finally determined by a
court of competent jurisdiction not to be entitled to indemnification.
6.9. CONTRIBUTION IN LIEU OF INDEMNIFICATION. If the indemnification
provided for in Section 6.8 hereof is unavailable to a party that would have
been an indemnified party in respect of any Damages referred to therein, then
each party that would have been an indemnifying party thereunder shall, in lieu
of indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such Damages in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and such
indemnified party, respectively, in connection with the statements or omissions
which resulted in such Damages. Relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or such indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. Holding and each
Holder of Registrable Securities agree that it would not be just and equitable
if contribution pursuant to this Section 6.9 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to above in this Section 6.9. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
6.10. RULE 144 REQUIREMENTS; FORM S-3 REGISTRATIONS. From time to time
after the earlier to occur of (a) the ninetieth day following the date on which
there shall first become effective a registration statement filed by Holding
under the Securities Act, or (b) the date on which Holding shall register a
class of securities under Section 12 of the Exchange Act, Holding shall make
every effort in good faith to take all steps necessary to ensure that Holding
will be eligible to register securities on Form S-3 (or any comparable or
successor form adopted by the Commission) as soon thereafter as possible (it
being acknowledged that certain aspects of eligibility to use Form S-3, e.g.,
the aggregate market value of Holding's securities held by non-affiliates, are
beyond Holding's control), and to make publicly available and available to the
Holders, pursuant to Rule 144 of the Commission under the Securities Act, such
current public information as shall be necessary to enable the Holders of
Registrable Securities to make sales of Registrable Securities pursuant to that
Rule. Holding shall furnish to the Holders, upon request at any time after the
undertaking of Holding in the preceding sentence shall have first become
effective, a written statement signed by Holding, addressed to each Holder,
describing briefly the action Holding has taken or proposes to take to comply
with the current public information requirements of Rule 144. Upon receipt of a
certificate certifying (i) that such Holder has held such Purchased Securities
for a period of not less than two (2) years (or
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such lesser period after which the exemption from registration pursuant to which
Rule 144(k) may be available), and (ii) that such Holder has not been an
affiliate (as defined in Rule 144) of Holding during the preceding three months,
Holding shall, at the request of any Holder of Purchased Securities, remove from
the stock certificates representing such Purchased Securities any restrictive
legend (or portion thereof) relating to the registration provisions of the
Securities Act. After (and for so long as) Holding qualifies for the use of Form
S-3, then, subject to the provisions of Sections 6.2(b)(iv) and (v) of this
Agreement, any Holder or Holders of Registrable Securities with an aggregate
fair market value of $1,000,000 or more, shall have the right to require Holding
to register Registrable Securities with not less than such aggregate fair market
value on Form S-3, provided, that Holding shall not be obligated to effect such
a registration more frequently than once in any six-month period.
6.11. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration pursuant to this Section 6 unless
such Person (a) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Persons entitled, under the
provisions hereof, to approve such arrangements, and (b) completes and executes
all questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements, and other documents reasonably required by the terms of
such underwriting arrangements. Any Holder of Registrable Securities to be
included in any underwritten registration shall be entitled at any time to
withdraw such Registrable Securities from such registration prior to its
effective date in the event that such Holder disapproves of any of the terms of
the related underwriting agreement.
7. LIFE INSURANCE. Holding shall maintain and name itself as the
beneficiary of (i) one or more insurance policies on the life of Richard Block
and each other Stockholder who is also an executive employee of Holding and who
has the right under a Repurchase Agreement to require the repurchase by Holding
of his shares of Common Stock upon his death, and (ii) one or more insurance
policies on the lives of Melvin B. Herrin and H. Scott Herrin, payable upon the
later of the deaths of such two individuals. The amount of such insurance under
such policies shall be as set forth on Schedule 7 hereto. Holding shall have
----------
the right to obtain insurance upon the lives of other Stockholders, in such
amounts and upon such terms as Holding may deem appropriate. Once obtained, any
such life insurance (including the policies referred to in clauses (i) and (ii)
above) shall be maintained; provided, however, that Holding's obligation to
obtain or maintain any such insurance shall be limited, in each instance, to
Holding's attempting in good faith to obtain and maintain such insurance at
standard rates; if such insurance is unavailable at standard rates, Holding
shall have the discretion not to obtain or maintain such insurance, or to obtain
or maintain less than that provided for on Schedule 7 hereto. Holding may, but
----------
shall not be required to, increase or decrease the amount of insurance coverage
from that described on Schedule 7 hereto commensurate with changes in its equity
----------
valuation as reasonably determined from time to time by its Board of Directors.
Holding shall direct each insurance company that has issued a policy pursuant to
this Section 7 to send duplicate premium notices to the insured. In the event
that Holding fails to pay any
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premium due on any such policy it has obtained, the insured may pay the premium
and shall be reimbursed by Holding.
8. DEFINITIONS. As used in this Agreement, the following terms have the
following respective meanings:
"Affiliate" means, with respect to a specified Person, (i) any Person that
---------
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the specified Person and (ii)
any Person that is an officer, director, trustee, member or general partner of,
or serves in a similar capacity with respect to, the specified Person, or of
which the specified Person is an officer, director, trustee, member or general
partner, or with respect to which the specified Person serves in a similar
capacity or (iii) any Person who is a spouse, parent, sibling or lineal
descendant of such Person or any Person described in clauses (i) or (ii). For
purposes of this definition the term "control" when used with respect to a
-------
Person means (a) the beneficial ownership (as defined in Rule 13d-d promulgated
under the Securities and Exchange Act of 1934, as amended) of 50 percent or more
of the voting interests in such Person, or (b) the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"AGI" means AGI Incorporated, an Illinois corporation and the surviving
---
corporation of the Merger under and as defined in the Merger Agreement.
"AGI Holder Securities" means the shares of capital stock of Holding
---------------------
originally issued and sold pursuant to the Investment Agreement to AGI
Management Stockholders, any shares of capital stock or other securities of
Holding transferred in accordance with this Agreement or issued from time to
time after the date hereof to any of the AGI Management Stockholders, and any
shares of capital stock issued to any of the AGI Management Stockholders as a
result of any exercise of pre-emptive rights pursuant to Section 4 hereof, and
includes any shares of capital stock and other securities of Holding issued or
issuable with respect to any of the foregoing shares of capital stock or other
securities of Holding by way of a stock dividend, stock split, combination or
division of shares, recapitalization, merger, consolidation, reorganization, or
the like, and any shares of capital stock or other securities of Holding into
which any of the foregoing shares of capital stock or other securities of
Holding are (directly or indirectly) converted or for which any of the foregoing
shares of capital stock or other securities are (directly or indirectly)
exchanged, in each case regardless of subsequent transfers of such shares of
capital stock or other securities of Holding; provided, that shares of capital
stock and other securities of Holding shall cease to be AGI Holder Securities
when transferred (i) to Holding, (ii) pursuant to a Public Sale, or (iii) to any
Heritage Holder, Klearfold Management Stockholder, or Other Stockholder.
"Block Stockholders" means, collectively, (i) Richard Block (ii) Freya
----- ------------
Block, as Trustee of the Richard A. Block Family Trust u/t/a/d 4/1/94, and (iii)
any direct or
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indirect transferee of Securities from either of them pursuant to and in
accordance with Section 1.1(b) hereof.
"Common Stock" means the Series A Common Stock, $0.001 par value per share,
------------
of Holding, provided that such defined term, as used in this Agreement, shall
not include the Series B Stock.
"Family Members" means, with respect to any individual, any Related Person
--------------
or Family Trust of such individual.
"Family Trust" means, with respect to any individual, any trust created for
------------
the benefit of such individual and/or one or more of such individual's Related
Persons, and controlled by such individual.
"Fully Diluted Basis" means, with respect to any calculation to be made at
-------------------
any time pursuant to this Agreement, that such calculation shall be made by
treating as outstanding all shares of Common Stock issuable upon exercise of all
outstanding warrants, options, and/or other rights to acquire shares of Common
Stock, but excluding any such warrants, options, and/or other rights (or any
portions thereof) as are not capable of being exercised then or thereafter in
accordance with the respective terms thereof.
"Heritage Holders" means, collectively, the holders, as of the relevant
----------------
time of reference, of the Heritage Securities, and "Heritage Holder" means any
---------------
one of the Heritage Holders.
"Heritage Securities" means the shares of capital stock and other
-------------------
securities of Holding issued and sold to Heritage pursuant to the Investment
Agreement, any shares of capital stock and other securities of Holding issued or
transferred to Heritage or any permitted Transferee of Heritage pursuant to
Section 1.4 hereof, and any shares of capital stock issued to any of the
Heritage Holders as a result of any exercise of pre-emptive rights pursuant to
Section 4 hereof, and includes any shares of capital stock and other securities
of Holding issued or issuable with respect to any of the foregoing shares of
capital stock or other securities of Holding by way of a stock dividend, stock
split, combination or division of shares, recapitalization, merger,
consolidation, reorganization, or the like, and any shares of capital stock and
other securities of Holding into which any of the foregoing shares of capital
stock and other securities of Holding are (directly or indirectly) converted or
for which any of the foregoing shares of capital stock and other securities of
Holding are (directly or indirectly) exchanged, in each case regardless of
subsequent transfers of such shares of capital stock or other securities of
Holding; provided, that shares of capital stock and other securities of Holding
shall cease to be Heritage Securities when transferred (i) to Holding, (ii)
pursuant to a Public Sale, or (iii) to any of the Non-Heritage Holders.
"Indenture" means the Indenture dated of even date herewith between Holding
---------
and State Street Bank and Trust Company, as trustee.
<PAGE>
-44-
"Independent Appraiser" shall mean an investment banking or accounting firm
---------------------
or independent appraiser of nationally recognized status and at least ten years
of experience in evaluating businesses similar to those of Holding and its
Subsidiaries, and which is not an Affiliate of Holding, any of its Subsidiaries,
or any Stockholder.
"Investment Agreement" means that certain Investment Agreement dated as of
--------------------
February __, 1998, by and among the AGI Management Stockholders, the Klearfold
Management Stockholders, Heritage, Holding and certain other persons named
therein.
"Klearfold" means Klearfold, Inc., a Pennsylvania corporation.
---------
"Klearfold Holder Securities" means the shares of capital stock of Holding
---------------------------
originally issued and sold pursuant to the Investment Agreement to the Klearfold
Management Stockholders, any shares of capital stock or other securities of
Holding transferred in accordance with this Agreement or issued from time to
time after the date hereof to any of the Klearfold Management Stockholders, and
any shares of capital stock issued to any of the Klearfold Management
Stockholders as a result of any exercise of pre-emptive rights pursuant to
Section 4 hereof, and includes any shares of capital stock and other securities
of Holding issued or issuable with respect to any of the foregoing shares of
capital stock or other securities of Holding by way of a stock dividend, stock
split, combination or division of shares, recapitalization, merger,
consolidation, reorganization, or the like, and any shares of capital stock or
other securities of Holding into which any of the foregoing shares of capital
stock or other securities of Holding are (directly or indirectly) converted or
for which any of the foregoing shares of capital stock or other securities are
(directly or indirectly) exchanged, in each case regardless of subsequent
transfers of such shares of capital stock or other securities of Holding;
provided, that shares of capital stock and other securities of Holding shall
cease to be Klearfold Holder Securities when transferred (i) to Holding, (ii)
pursuant to a Public Sale, or (iii) to any Heritage Holder, AGI Management
Stockholder, or Other Stockholder.
"Lien" means any lien, claim, mortgage, security interest, charge,
----
encumbrance, or restriction on transfer of any kind.
"Majority AGI Holders" means the holders, as of the relevant time of
--------------------
reference, of at least a majority of the AGI Holder Securities.
"Majority Heritage Holders" means the holders, as of the relevant time of
-------------------------
reference, of at least a majority of the Heritage Securities.
"Majority Herrin Holders" means the holders, as of the relevant time of
-----------------------
reference, of at least a majority of the Securities then held by the Herrin
Stockholders.
"Majority Klearfold Holders" means the holders, as of the relevant time of
--------------------------
reference, of at least a majority of the Klearfold Holder Securities.
<PAGE>
-45-
"Majority Non-Heritage Holders" means the holders, as of the relevant time
-----------------------------
of reference, of at least a majority of the Non-Heritage Securities.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
----------------
February ___, 1998 by and among Holding, AGI, AGI Acquisition Corporation and
certain stockholders of AGI.
"Non-AGI Holder Securities" means the Heritage Securities, the Klearfold
-------------------------
Holder Securities and the Other Stockholder Securities.
"Non-Heritage Holders" means, collectively, the holders, as of the relevant
--------------------
time of reference, of the Non-Heritage Securities, and "Non-Heritage Holder"
-------------------
means any one of the Non-Heritage Holders.
"Non-Heritage Securities" means the AGI Holder Securities, the Klearfold
-----------------------
Holder Securities and the Other Stockholder Securities.
"Other Agreements" has the same meaning herein as the Investment Agreement.
----- ----------
"Other Stockholder Securities" means shares of capital stock of Holding
----------------------------
originally issued and sold to any Stockholder other than an AGI Management
Stockholder, Klearfold Management Stockholder or Heritage Holder (any such
Stockholder, an "Other Stockholder"), any shares of capital stock or other
-----------------
securities of Holding transferred in accordance with this Agreement or issued
from time to time after the date hereof to any of the Other Stockholders, and
any shares of capital stock issued to any of the Other Stockholders as a result
of any exercise of pre-emptive rights pursuant to Section 4 hereof, and includes
any shares of capital stock and other securities of Holding issued or issuable
with respect to any of the foregoing shares of capital stock or other securities
of Holding by way of a stock dividend, stock split, combination or division of
shares, recapitalization, merger, consolidation, reorganization, or the like,
and any shares of capital stock or other securities of Holding into which any of
the foregoing shares of capital stock or other securities of Holding are
(directly or indirectly) converted or for which any of the foregoing shares of
capital stock or other securities are (directly or indirectly) exchanged, in
each case regardless of subsequent transfers of such shares of capital stock or
other securities of Holding; provided, that shares of capital stock and other
securities of Holding shall cease to be Other Stockholder Securities when
transferred (i) to Holding, (ii) pursuant to a Public Sale, or (iii) to any
Heritage Holder, Klearfold Management Stockholder or AGI Management Stockholder.
"Personal Representative" means the successor or legal representative
-----------------------
(including without limitation, a guardian, executor, administrator or
conservator) of a dead or incompetent Stockholder.
<PAGE>
-46-
"Public Offering" means any sale of shares of Common Stock to the public
---------------
pursuant to a public offering registered under the Securities Act.
"Public Sale" means any Public Offering or any sale of shares of Common
-----------
Stock to the public through a broker or market-maker pursuant to the provisions
of Rule 144 (or any successor rule) adopted under the Securities Act.
"Qualified Public Offering" means an underwritten Public Offering, pursuant
-------------------------
to an effective registration statement under the Securities Act, covering the
offer and sale of shares of Common Stock in which an aggregate of not less than
$25,000,000 of gross proceeds from such Public Offering are received by Holding
and/or one or more of the selling stockholders for its and/or his account, as
the case may be.
"Related Persons" means, with respect to any individual, such individual's
---------------
parents, spouse, children, and grandchildren.
"Repurchase Price" means:
----------------
(a) in the case of each share of Common Stock, the quotient obtained by
dividing (i) the fair market value of Holding's common stock equity as of the
effective date of the Heritage Put Request (as determined pursuant to Section
2.1(c) hereof), plus the aggregate consideration to be paid to Holding upon the
exercise of all outstanding and exercisable options, warrants, and other rights
(including convertible or exchangeable securities) pursuant to which Holding is
then obligated to issue shares of Common Stock, by (ii) the number of
outstanding shares of Common Stock, determined on a Fully Diluted Basis;
provided, that in the event that any such calculation results in a Repurchase
Price per share of Common Stock that is less than the per-share price payable
for any shares of Common Stock issuable upon exercise of any options, warrants,
or other rights to acquire shares of Common Stock that were taken into account
in calculating such Repurchase Price (a "Sub-Exercise Repurchase Price"), the
-----------------------------
Repurchase Price shall be recalculated without taking into account such options,
warrants, or other rights or the consideration receivable by Holding upon the
exercise thereof, to the extent necessary to avoid a Sub-Exercise Repurchase
Price; and
(b) in the case of any options or warrants for the purchase of shares of
Common Stock, the excess of (i) the aggregate Repurchase Price per share of the
Common Stock then purchasable thereunder, as determined under the foregoing
clause (a), over (ii) the aggregate exercise price then payable for the shares
issuable upon the exercise of such option or warrant.
"Securities" means all shares of the capital stock or other securities of
----------
Holding, including without limitation the Heritage Securities and the Non-
Heritage Securities, and all options, warrants, and other rights to acquire
shares of the capital stock or other securities of Holding (including without
limitation upon the conversion or exchange of other securities or instruments).
<PAGE>
-47-
"Series B Stock" means the Series B Common Stock, $0.001 per value per
--------------
share, of Holding.
"Stockholders" means, collectively, all of the Persons except Holding who
------------
are parties to this Agreement as of the relevant time of reference, and
"Stockholder" means any one of the Stockholders.
-----------
"Type" means, as to any Securities, whether such Securities are AGI Holder
----
Securities, Klearfold Holder Securities, Heritage Securities or Other
Stockholder Securities.
"vote" as a noun, means any vote, resolution, or action by written consent,
----
as the case may be, and as a verb, means to adopt or cast any vote or resolution
or to take any action by written consent, as the case may be.
9. MISCELLANEOUS.
(A) BENEFITS OF AGREEMENT; NO ASSIGNMENTS; NO THIRD-PARTY BENEFICIARIES.
(i) This Agreement shall bind and inure to the benefit of the
parties hereto and their respective heirs, successors, and permitted
assigns.
(ii) No party shall assign any rights or delegate any obligations
hereunder without the consent of the other parties, and any attempt to do
so shall be void; provided, that the rights hereunder of the several
parties other than Holding shall also inure to the benefit of any Person
other than Holding to whom Securities are transferred in accordance with
all of the provisions of this Agreement, except any such Person to whom
such securities were transferred pursuant to a Public Sale.
(iii) Nothing in this Agreement is intended to or shall confer any
rights or remedies on any Person other than the parties hereto, their
respective heirs and successors, and permitted transferees of the
securities issued pursuant to this Agreement, as referred to in Section
9(a)(ii) hereof.
(B) NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed as follows (or to such other address as the recipient party may
have furnished to the sending party for the purpose pursuant to this section).
Any reference in this Agreement to the
<PAGE>
-48-
"effectiveness" or the "effective date" of a notice or other communication means
the date as of which such notice or other communication is effective as
determined in accordance with this Section 9(b).
(A) If to Heritage, in care of:
Heritage Partners Management Company, Inc.
30 Rowes Wharf, Suite 300
Boston, MA 02110
Attention: Michael F. Gilligan, Managing Director
Telecopier No. (617) 439-0689
with a copy sent at the same time and by the same means to:
David L. Engel, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Telecopier No. (617) 951-8736
(B) If to any of the Klearfold Management Stockholders, in care of:
Klearfold, Inc.
364 Valley Road
Warrington, Pennsylvania 18976
Attention: H. Scott Herrin
Telecopier No. (215) 343-0484
<PAGE>
-49-
with a copy sent at the same time and by the same means to
Richard J. Braemer, Esq.
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
Telecopier No. (215) 864-8999
(C) If to any of the AGI Management Stockholders, or to the AGI
Prospective Purchasers, in care of:
AGI Incorporated
1950 North Ruby Street
Melrose Park, Illinois 60160-1178
Attention: Richard Block and David Underwood
Telecopier No. (708) 344-9113
with copies sent at the same time and by the same means to:
Linda Chaplik Harris, Esq.
Sonnenschein Nath & Rosenthal
Suite 8000 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Telecopier No. (312) 876-7934
(D) If to Holding, to:
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, Illinois 60160-1178
Attention: Richard Block and David Underwood
Telecopier No. (708) 344-9113
with copies sent at the same time and by the same means to each
of the Persons (including counsel) listed under clauses (A) - (C)
above.
(E) If to any other party to this Agreement, to the most recent
address of such party reflected in the register referred to in Section 7 of
the Investment Agreement, or to such address as such Person may have
furnished to the sending party for such purpose pursuant to this section.
<PAGE>
-50-
(C) COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same agreement.
In pleading or proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart.
(D) CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and shall not affect the interpretation or construction
of this Agreement.
(E) EQUITABLE RELIEF. Each of the parties hereby acknowledges that any
breach by it of its obligations under this Agreement would cause substantial and
irreparable damage to the other parties, and that money damages would be an
inadequate remedy therefor, and accordingly, acknowledges and agrees that each
of the other parties shall be entitled to an injunction, specific performance,
and/or other equitable relief to prevent the breach of such obligations (in
addition to all other rights and remedies to which such party may be entitled in
respect of any such breach).
(F) CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.
(G) WAIVERS. No waiver of any breach or default hereunder shall be valid
unless in a writing signed by the waiving party. No failure or other delay by
any party exercising any right, power, or privilege hereunder shall be or
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
(H) FURTHER ASSURANCES. From time to time on and after the Closing Date,
each party hereto shall promptly execute and deliver all such further
instruments and other documents, and shall promptly take all such further
actions, as any other party hereto may reasonably request in order more
effectively to effect or confirm the transactions hereby contemplated and to
carry out the purposes of this Agreement.
(I) ENTIRE AGREEMENT. This Agreement, together with the Merger Agreement
and the Other Agreements, contains the entire understanding and agreement among
the parties, and supersedes any prior understandings or agreements among them,
or between or among any of them, with respect to the subject matter hereof.
(J) GOVERNING LAW. This Agreement shall to the maximum lawful extent be
governed by and interpreted and construed in accordance with the internal laws
of the State of Delaware, as applied to contracts under seal made, and entirely
to be performed, within Delaware, and without reference to principles of
conflicts or choice of law.
<PAGE>
-51-
(K) TERMINATION. This Agreement may be terminated by written agreement of
all of the parties, and shall automatically terminate upon and concurrently with
the sale to a third party of all or substantially all of Holding's assets or
capital stock, or of all or substantially all of the assets or capital stock of
any Subsidiary or Subsidiaries that constitute all or substantially all of the
assets of Holding (whether pursuant to a merger, consolidation, or otherwise) in
accordance with the terms hereof and the distribution of the net proceeds of
such sale (after payment of creditors of Holding has been made or provided for)
to the stockholders of Holding. Unless earlier terminated in accordance with the
provisions of the preceding sentence, (i) all provisions of this Agreement other
than Sections 6 through 9 hereof shall automatically terminate upon and
concurrently with the closing of an Approved Sale or a Qualified Public
Offering, and (ii) the provisions of Sections 2.1 and 3 hereof shall
automatically terminate upon and concurrently with the completion of a
repurchase from the Heritage Holders of the Heritage Securities pursuant to and
in accordance with Section 2.1 hereof, and in such event amendments and waivers
pursuant to Section 9(l) hereof shall no longer require the approval of the
Majority Heritage Holders. Any termination of this Agreement shall not affect
the rights or obligations of any party arising, or based on actions or omissions
occurring, before such termination.
(L) AMENDMENT AND WAIVER. Except as expressly set forth in Section 3.1(e)
above, any modification, amendment, or waiver of any provision of this Agreement
shall be effective if, and only if, it is approved in writing by the Majority
Heritage Holders, the Majority AGI Holders and the Majority Klearfold Holders.
(M) NO RIGHTS TO EMPLOYMENT. Nothing contained in this Agreement shall
confer on any Stockholder a right to employment or continued employment with
Holding or any of its Subsidiaries, or to employment in the same position or on
the same terms as those currently in effect.
<PAGE>
SIGNATURE PAGE TO THE STOCKHOLDER AGREEMENT
IN WITNESS WHEREOF, each of the parties has executed and delivered this
Agreement to the others as an agreement under seal as of the date first above
written.
IMPAC GROUP, INC.
By /s/ Richard Block
---------------------------
Name: Richard Block
Title:
HERITAGE FUND I
INVESTMENT CORPORATION
By /s/ Michael F. Gilligan
---------------------------
Name: Michael F. Gilligan
Title:
KFI MANAGEMENT STOCKHOLDERS:
-----------------------------
Melvin B. Herrin
/s/ H. Scott Herrin
-----------------------------
H. Scott Herrin
/s/ Matthew H. Kamens
------------------------------
Matthew H. Kamens, not individually
but as trustee under an Indenture
of Trust of Melvin B. Herrin dated June 4, 1996
<PAGE>
SIGNATURE PAGE TO THE STOCKHOLDER AGREEMENT
/s/ Arthur S. Keyser
-----------------------------
Arthur S. Keyser, not individually
but as trustee under an Indenture
of Trust dated August 12, 1992
f/b/o H. Scott Herrin
/s/ Daniel Santry
-----------------------------
Daniel Santry
/s/ Craig Wilson
-----------------------------
Craig Wilson
/s/ Robert Eliason
-----------------------------
Robert Eliason
/s/ John McInerny
-----------------------------
John McInerny
/s/ Steven Frazier
-----------------------------
Steven Frazier
/s/ Richard Mazurek
-----------------------------
Richard Mazurek
<PAGE>
SIGNATURE PAGE TO THE STOCKHOLDER AGREEMENT
AGI MANAGEMENT STOCKHOLDERS:
/s/ Richard Block
-----------------------------
Richard Block
/s/ James Oppenheimer
-----------------------------
James Oppenheimer
/s/ Richard Oppenheimer
-----------------------------
Richard Oppenheimer
/s/ David Underwood
-----------------------------
David Underwood
/s/ Dean Henkel
-----------------------------
Dean Henkel
/s/ John Maranov
-----------------------------
John Maranov
/s/ Gary Mankoff
-----------------------------
Gary Mankoff
/s/ James Ladwig
-----------------------------
James Ladwig
<PAGE>
SIGNATURE PAGE TO THE STOCKHOLDER AGREEMENT
/s/ Donald Kosterka
-----------------------------
Donald Kosterka
/s/ David Horowitz
-----------------------------
David Horowitz
/s/ Zenas Block
-----------------------------
Zenas Block
/s/ Dennis McGuin
-----------------------------
Dennis McGuin
/s/ Maary Frances Griffin
-----------------------------
Mary Frances Griffin
<PAGE>
EXHIBIT A
INSTRUMENT OF ACCESSION
TO
STOCKHOLDER AGREEMENT
The undersigned, ____________________, in order to become the owner or
holder of certain securities of IMPAC Group, Inc., a Delaware corporation
("Holding"), hereby agrees to become an [Heritage] [AGI Management] [Klearfold
- ---------
Management] [Other] Stockholder party to that certain Stockholder Agreement,
dated as of ___________ __, 1998 (the "Stockholder Agreement"), a copy of which
---------------------
is attached. This Instrument of Accession shall be effective and shall become a
part of such Stockholder Agreement upon acceptance by Holding.
Executed under seal as of the date set forth below under the laws of the
State of Delaware.
Dated_____________ _____________________________
(signature)
Print Name:__________________
Address: ____________________
____________________
____________________
ACCEPTED:
IMPAC Group, Inc.
By_____________________________
Name:
Title:
<PAGE>
SCHEDULE 3.1(B)
MINIMUM OPERATING EARNINGS
For purposes of this Schedule 3.1(b), Holding's operating earnings for any
period is the amount equal to its operating income for such period, before
deduction of interest expense, income tax expense and amortization, but after
deduction of depreciation and all other expenses, including without limitation
appropriate accruals for bonuses payable to officers and/or employees of
Holding, as determined in accordance with generally accepted accounting
principles, consistently applied, and reflected in Holding's financial
statements for such period (audited, in the case of year-end financial
statements), provided that Holding will be deemed to have achieved the minimum
levels of operating earnings required (a) as of September 30, 1999, if it
achieves the minimum operating earnings for either (i) the six-month period
ended on that date or (ii) the twelve-month period ended on that date, or (b) as
of December 31, 1999, if it achieves the minimum operating earnings for either
(i) the nine-month period ended on that date or (ii) the twelve-month period
ended on that date:
<TABLE>
<CAPTION>
Period Minimum Operating Earnings
------ --------------------------
($ ,000)
<S> <C>
October 1, 1998 - September 30, 1999 $ 16,204
April 1, 1999 - September 30, 1999 $ 10,454
April 1, 1999 - December 31, 1999 $ 14,384
January 1, 1999 - December 31, 1999 $ 16,698
April 1, 1999 - March 31, 2000 $ 16,991
July 1, 1999 - June 30, 2000 $ 17,445
October 1, 1999 - September 30, 2000 $ 18,317
January 1, 2000 - December 31, 2000 $ 18,815
April 1, 2000 - March 31, 2001 $ 19,063
July 1, 2000 - June 30, 2001 $ 19,445
October 1, 2000 - September 30, 2001 $ 20,181
January 1, 2001 - December 31, 2001 $ 20,602
April 1, 2001 - March 31, 2002 $ 20,834
July 1, 2001 - June 30, 2002 $ 21,192
October 1, 2001 - September 30, 2002 $ 21,881
January 1, 2002 - December 31, 2002 $ 22,274
</TABLE>
<PAGE>
Exhibit 10.4
AMENDMENT AND MODIFICATION
It is hereby agreed by and between KLEARFOLD, INC. and UNITED PAPERWORKERS
INTERNATIONAL UNION, LOCAL 286, that the Collective Bargaining Agreement in
effect from December 1, 1994, through November 30, 1999 shall be extended and
modified as follows:
1. The Agreement scheduled to expire on November 30, 1999 shall be
extended for a period of three (3) years through November 30, 2002. (The
extension period.) This Amendment shall remain in effect through November 30,
2002 so long as the new Roland Press scheduled to be installed in spring 1997
remains in the jurisdiction of Local 286. The Employer shall set the rates of
the aforementioned Press in accordance with currently negotiated rates.
2. Page 2 of Appendix A shall be amended to reflect a thirty cent ($0.30)
per hour increase in each of the extension years. Specifically, the Addendum
shall be amended as follows:
Effective December 1, 1999, all, employees shall receive a wage
increase of thirty cents ($0.30) per hour above their then present hourly rate
of pay.
Effective December 1, 2000, all employees shall receive a wage
increase of thirty cents ($0.30) per hour above their then present hourly rate
of pay.
Effective December 1, 2001, all employees shall receive a wage
increase of thirty cents ($0.30) per hour above their then present hourly rate
of pay.
3. Article X, Health and Welfare Plan shall be amended and modified as
follows:
Section 18. Effective December 1, 1999 the parties agree to a contract
reopener for the sole and limited purpose of negotiating the Employer's and
employees' obligations regarding the benefits presently provided pursuant to
Article X of the Collective Bargaining
<PAGE>
Agreement. Pursuant to the reopener, the parties shall meet and attempt to
negotiate an agreement satisfactory to both parties. The parties shall have
ninety (90) days to reach such an agreement. In the event the parties to reach
an agreement on this limited issue the parties shall submit the matter to
binding arbitration. Costs of the arbitration will be shared equally between the
parties. The Arbitrator shall limit his consideration to the area standards of
the industry and of similarly situated companies represented by Local 286
regarding the provisions of such benefits, and the Employer's maintaining a fair
and competitive position in the marketplace. The submission to binding
arbitration shall not take place unless and until other similarly situated
companies such as (Royal Pioneer Industries, McLean Packaging Company and other
similarly situated employers presently participating in the Health and Welfare
Fund), complete negotiations on this particular matter. Presentation of evidence
to the Arbitrator shall be limited to evidence of costs incurred for the types
of benefits described in Article X of the Collective Bargaining Agreement made
by Employers and employees similarly situated in the industry and represented by
Local 286 as well as the competitive nature of the Employers' business. In no
event will the Employer be required to pay for any types of benefits not
currently provided.
4. In consideration for the aforementioned agreement to submit the issue
in paragraph 3 above to binding arbitration the Union and employees shall not
have the right to strike during the period of reopener and the extension period.
5. Effective upon the execution of this extension and modification, all
employees employed as of the date of the execution of this Agreement shall have
all attendance points removed. Specifically this shall mean that all employees
currently employed on the date of
-2-
<PAGE>
the execution of this Agreement shall have no attendance points as of the date
of execution.
6. By entering into this Agreement, the parties intend to be legally
bound.
7. All other terms and conditions of the Collective Bargaining Agreement
mentioned hereinabove, which is scheduled to expire on November 30, 1999, shall
remain in full force and effect.
UNITED PAPERWORKERS INTERNATIONAL KLEARFOLD, INC.
UNION, LOCAL 286
[SIGNATURE ILLEGIBLE] [SIGNATURE ILLEGIBLE]
- --------------------- ---------------------
4/8/97 3-27-97
[SIGNATURE ILLEGIBLE]
[SIGNATURE ILLEGIBLE]
-3-
<PAGE>
AGREEMENT BETWEEN
UNITED PAPERWORKERS INTERNATIONAL UNION LOCAL 286
AND
KLEARFOLD, INC.
EFFECTIVE: DECEMBER 1, 1994 TO; NOVEMBER 30, 1999
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I EXTENT, SCOPE AND PURPOSE 1 - 4
ARTICLE II TEMPORARY HELP 4 - 5
ARTICLE III SENIORITY, PROMOTION, SHOP STEWARDS 5 - 9
ARTICLE IV OPERATION DAYS 9 - 10
ARTICLE V HOLIDAYS 10 - 11
ARTICLE VI WAGES, RATES OF PAY, VACATION 11 - 15
ARTICLE VII WAGE REIMBURSEMENT 15
ARTICLE VIII NO STRIKES - NO LOCKOUTS 15 - 16
ARTICLE IX GRIEVANCE PROCEDURE 16 - 16
ARTICLE X HEALTH AND WELFARE PLAN 17 - 22
ARTICLE XI PENSION PLAN 22 - 23
ARTICLE XII PREPAID LEGAL SERVICES 23 - 25
ARTICLE XIII FEDERAL CREDIT UNION 25
ARTICLE XIV FURNISHING AND COMPLETION OF FORMS
BY NEW EMPLOYEES 25 - 26
ARTICLE XV COOPERATION 26
ARTICLE XVI LABOR MANAGEMENT COMMITTEE 26 - 27
ARTICLE XVII LEAVES OF ABSENCE 27 - 28
ARTICLE XVIII FUNERAL LEAVE 28 - 29
ARTICLE XIX MANAGEMENT RIGHTS 29
ARTICLE XX CAUSES FOR IMMEDIATE DISCHARGE 29 - 31
ARTICLE XXI REST PERIODS 31
ARTICLE XXII UNION LABEL 31 - 32
ARTICLE XXIII NEW MACHINERY 32
ARTICLE XXIV SEVERANCE TRUST FUND 32 - 33
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE XXV FAIR EMPLOYMENT PRACTICES 33 - 34
ARTICLE XXVI SPECIAL ENFORCEMENT 34 - 35
ARTICLE XXVII EMPLOYER ACCEPTANCE OF JOINTLY
ADMINISTERED FUNDS 35
ARTICLE XXVIII ON THE JOB TESTING/DRUG TESTING 35 - 36
ARTICLE XXIX DURATION 36
APENDIX "A' JOB CLASSIFICATION - MINIMUM RATES 38
</TABLE>
<PAGE>
LABOR AGREEMENT
---------------
THIS AGREEMENT made and entered into this 1st day of December,
1994, by and between KLEARFOLD, INC., party of the first part, hereinafter
---------------
referred to as the "Employer" or the "Company", its successors and assigns and
the UNITED PAPERWORKERS INTERNATIONAL UNION, LOCAL NO. 186, party of the second
------------------------------------------------------
part, (hereinafter referred to as "Union"), for and on behalf of the employees
now employed and hereinafter employed by the Employer, included in the unit of
representation hereinafter described and designated collectively as "Employees"
and singularly as "Employee".
NOW, THEREFORE the parties intending to be legally bound hereby agree
as follows:
ARTICLE I
---------
EXTENT, SCOPE AND PURPOSE
-------------------------
Section 1. It is the intent and purpose of the parties hereto that this
- ----------
Agreement will promote and improve the industrial and economic relationship
between the employees of the Company and the Company, and to set forth herein
the basic agreement covering rates of pay, hours of work and conditions of
employment, to be observed between the parties hereto. This Agreement recognizes
the mutual interest of the Company and the employees in the operation of the
Company's plant to attain economy of operation, safety to
1
<PAGE>
the employees, quantity and quality of output, protection of property and
cleanliness of plant and the parties hereto agree that they will cooperate
fully, individually and collectively for the advancement of these conditions.
Section 2. (a) Employer recognizes the Union or its Successors as the sole
- ----------
agency for collective bargaining. All employees (with the exception of
timekeepers, clerks, office employees and non-working foremen and non-working
supervisors in charge of any classes of labor) who are members of the Union in
good standing on the effective date of this Agreement, shall as a condition of
continued employment, maintain their membership in good standing in the Union.
All employees who on the effective date of this Agreement are not as yet members
in good standing of the Union shall become members of the Union in good standing
at the expiration of a thirty (30) day period following the effective date of
this Agreement. All new employees shall, as a condition of continued employment,
become members and maintain membership in good standing in the Union at the
expiration of a thirty (30) day period following the date of their employment or
the effective date of this Agreement, whichever is the later.
(b) It is agreed that upon the installation of new equipment, the
creation of a new job classification or upon changes in the duties of existing
job classifications, the Company retains the right to unilaterally establish the
initial wage rate. The initial wage rate will be effective for a period of four
(4) months. Upon the expiration of the four (4) month period, the
2
<PAGE>
Company and the Union agree to negotiate an appropriate rate of pay for the new
or changed job at the Union's request. This Section is subject to the grievance
and arbitration provision of this Agreement.
Section 3. The Company agrees to deduct from the wages of its employees who
- ----------
have so authorized, Union Dues and Initiation Fees for transmittal to the Union.
Said deductions will be made out of the first pay of the month and shall be
remitted to the Union by no later than the 15th day of the month for which said
dues apply. Dues and initiation Fees deducted shall be remitted to the Union
headquarters by check. The check shall be accompanied by two (2) copies of a
list showing thereon:
(a) The names of all employees who received pay during the
calendar month for which remittance is made;
(b) The amount of deduction for each employee for whom a
deduction was made; and
(c) For all employees whose names appear on the list for the
first time, their addresses, social security numbers and
date of hire.
The Union agrees to defend, indemnify and hold the Company
harmless against any claim or liability arising from the administration of this
Section of the Agreement.
The Union has the right to require the discharge of employees who
are delinquent in the payment of periodic union dues by giving the Company seven
(7) days' written notice.
Section 4. When the Company hires new employees not referred by the Union,
- ----------
the Shop Steward shall be notified of the employee, name, address and job
classification within forty eight (48) hours
3
<PAGE>
after the hiring date.
Section 5. New employees will be considered probationary employees during
- ----------
the first thirty (30) calendar days of employment. The Union and the Company may
mutually agree to extend the probationary period when warranted by individual
circumstances in writing with the Company providing the reasons necessitating
the extension. The Shop Steward shall be notified of any request for an
extension of the probationary period. During the probationary period, employees
on probation shall be subject to termination without prior notice at the sole
discretion of the Company and such action shall not be subject to the grievance
and arbitration provisions of this agreement. Upon the successful completion of
the probationary period the employee shall be given full seniority credit back
to the original date of employment.
ARTICLE II
----------
TEMPORARY HELP
--------------
Section 1. The Employer may not hire temporary employees, leased employees,
- ----------
or employees affiliated with any other employer, agency or company except under
the terms of this agreement. The Employer acknowledges an obligation to hire
full-time employees to fill positions should the need for employment arise. No
series of probationary employees, regardless of their source, shall be hired
which has the effect of avoiding the obligation of the Employer to hire such
full-time positions or to avoid any other provisions of this Agreement.
Section 2. In the event the Employer has an emergency,
- ----------
4
<PAGE>
repair work, or other non-recurring need for temporary help the Employer may use
temporary help, provided, however, the use of temporary help does not result in
the layoff of any regular employee who is qualified to perform the function.
This clause is not intended to apply to work which is not normally performed by
bargaining unit employees.
ARTICLE III
-----------
SENIORITY, PROMOTIONS SHOP STEWARDS
-----------------------------------
Section 1. All employees who have been in the active employment of the
- ----------
Company for a period of at least one (1) year shall be regarded as the regular
set of help of the Company. These employees thus classified shall, wherever
possible, in accordance with good management, in dull periods of the year share
the work available equally in their given departments. All other help shall be
laid off first during the slow periods and shall be reemployed last when work is
resumed again.
If it shall be necessary for the Company to lay off employees
because of lack of business, the Union Shop Steward shall be the last employee
laid off, providing he/she can perform the work available.
Section 2. Seniority is defined as the length of an employee's service with
- ----------
the Company within the bargaining unit; it shall apply plant wide. In case of
promotions, layoffs and recalls from layoffs, the following factors shall be
considered;
(a) Length of continuous service; and
(b) Skill and ability to perform the work in the
5
<PAGE>
job classification in question.
It is recognized that certain job classifications required
considerable skill and ability to perform. In cases of promotion, layoff and
recall, the plant seniority of the employee shall be determinative only if the
employee possesses the requisite skill and ability immediately to perform such
jobs. In the evaluation of relative skill and ability, the Company shall be the
judge.
Section 3. Newly hired employees and promoted employees shall progress to
- ----------
the classified rate at the rate of not less than twenty cents ($.20) per hour
every thirty (30) days.
Section 4. In the event that a promoted employee is found not to have the
- ----------
ability to perform the work required in his/her promoted job, or if the job to
which the employee has been promoted has been discontinued, the employee shall
be placed back in his/her former position, and shall retain his/her seniority at
the former position from which he/she was promoted.
Section 5. The Company agrees to draw up a plant wide seniority list as of
- ----------
June 1st of each year.
Section 6. The Union may select from the employees covered by this
- ----------
Agreement, a Steward, who has been employed by the Company for a period of at
least one (1) year, whose duty it is to see that this contract is not broken by
either the employees or the Company. The Union shall notify the Company, in
writing of the name of the Shop Steward.
The Shop Steward shall be permitted to leave his
6
<PAGE>
department during working hours whenever absolutely necessary, provided he first
notifies the foremen.
Section 7. As a result of temporary transfer, an employee will not suffer
- ----------
any reduction in his/her hourly rate of pay. However, if temporarily transferred
to a higher rated job said employee shall, after one (1) week, receive the
higher rate.
A temporary transfer shall be defined as one lasting or intended
to last for ninety (90) days or less. In the event a transfer is intended to be
permanent, but in fact lasts for ninety (90) days or less, the employee affected
shall receive as back wages the difference between his former rate and the rate
to which he was transferred within five (5) days of his return to his former job
or rate.
This provision is not intended to modify the bidding procedure
for vacant positions specified in Section 10 of this Article.
Section 8. When an employee is permanently demoted to a lower paying
- ----------
position, the lower rate shall apply but if said employee is reinstated in his
former position, the higher rate shall then apply.
Section 9. An employee promoted to a non-working supervisory position shall
- ----------
retain seniority with respect to his former position for a trial period of three
(3) months and shall resign from the union at the expiration of the said three
(3) month period.
Section 10. All job openings will be posted on the bulletin
- -----------
7
<PAGE>
board for two (2) consecutive working days. The Company may temporarily fill the
vacant position, subject to the permanent selection of an employee to fill the
position. Job openings will be posted only in the event of a permanent opening
in a specific job classification. Senior employees may be permitted to fill
vacancies on the day shift whenever practicable, provided such transfer does not
impair the working efficiency of the plant. The Company agrees not to
unreasonably refuse such transfer. The Company may hire qualified employees from
outside the plant in the event there are no qualified people in the plant. There
shall be no lateral bidding or down-bidding, however, the Company agrees to
consider requests by the Union for down bidding or lateral bidding in special
circumstances which may include health, physical disability and age related
reasons.
Section 11. Employees hired or successfully bidding into unskilled or
- -----------
semi-skilled positions, as defined hereinbelow, may not be permitted to bid
again for a period of four (4) months from the date of the successful bid. In
the event the Employer has knowledge of more than one position to be put up for
bid prior to a bid for a particular position, the Employer will post all job
classifications simultaneously. The unskilled and semi-skilled positions
mentioned hereinabove are as follows:
1. Automatic Screen Catcher
2. Creasing Operator;
3. Stripper;
4. Glue Machine Feeder;
5. Glue Machine Catcher;
6. Quality Assurance;
7. Shipper/Receiver;
8. General Helper;
8
<PAGE>
9. Sheeter;
10. Printing Feeder Operator
11. Baler;
12. Die-Cutting Feeder
Section 12. An employee's seniority rights shall terminate when he or
- -----------
she has been laid off because of lack of work for one (1) year. Employees who
quit or are discharged shall forfeit all seniority.
ARTICLE IV
----------
OPERATION DAYS
--------------
Section 1. Eight (8) consecutive hours exclusive of time for lunch,
- ----------
shall constitute a day's work and forty (40) hours shall constitute a week's
work in any calendar week. All time worked over eight (8) hours in any twenty
four (24) hour period, or forty (40) hours in any one week shall be paid at the
rate of time and one-half but not for both.
Section 2. In the event the Company should fail to inform its employees
- ----------
not to report for work, except for reasons beyond its control, such as an Act of
God, it shall be required to pay four (4) hours on straight time basis to each
employee so reporting. All employees who are informed to report for work at any
time shall be paid for no less than four (4) hours on a straight time basis and
shall do any work assigned to them, but at the rate of pay of their regular
jobs.
Section 3. One and one-half times the regular rate shall be paid for
- ----------
work performed on Saturday.
Section 4. Twice the hourly rate shall be paid for work
- ----------
9
<PAGE>
performed on Sundays. All work performed on any of the designated paid holidays
specified in Article V. Section 1, shall be paid for at the rate of double time
plus holiday pay.
Section 5. A shift premium of fifteen cents ($.15) per hour shall be paid
- ----------
for all work performed on the second shift.
Section 6. A shift premium of nineteen cents ($.19) per hour shall be paid
- ----------
for all work performed on a third shift.
Section 7. The Company shall have the right to require reasonable overtime.
- ----------
The Company shall provide two (2) hours advance notice of daily overtime and
twenty four (24) hours advance notice of overtime required on Saturday, Sunday,
or holidays where possible to employees required to work overtime. When it
becomes necessary to work overtime on a daily basis or on Saturday, Sunday or
holidays, the employee who is performing the job will be given the first
opportunity to work overtime.
ARTICLE V
---------
HOLIDAY
-------
Section 1. The following holidays or days celebrated in place thereof shall
- ----------
be observed and shall be paid for at eight (8) hours of the regular hourly rate
of pay for all eligible employees with three (3) months seniority or more in the
Company;
New Year's Eve Labour Day
New Year's Day Thanksgiving Day
Day after Thankgiving Day
Good Friday Christmas Eve
Decoration Day Christmas Day
July Fourth Two Personal Hoilday
It is hereby agreed the Employer will permit
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<PAGE>
employees to carry over personal holidays for a period of not more than thirty
(30) days after the conclusion of the calendar year (January 1 through January
31 of the following year). Requests for personal holidays shall be consistent
with past practice and shall not be unreasonably denied. Personal holidays may
be selected by mutual agreement with advance notice to the Company.
Section 2. It is agreed that to qualify for holiday pay, an employee shall have
- ---------
worked the regular scheduled work day immediately preceding and succeeding said
holiday, except for an excused absence, provided, however, that work is
available.
Any employee with one (1) year's seniority or more who is actively
employed at any time during the thirty (30) days preceding any of the designated
paid holidays mentioned shall receive his/her regular day's pay for the
particular holiday.
Section 3. An employee entitled to a holiday with pay shall not be required to
- ---------
work on said holiday if unwillingly to do so.
Section 4. The holidays set forth in Section 1 hereof, shall be taken in
- ---------
accordance with the federal laws governing the days, dates and days of the week
on which the federal employees take identical holidays.
ARTICLE VI
----------
WAGES, RATES OF PAY, VACATION
-----------------------------
Section 1. The schedule of rates attached hereto shall become part of this
- ---------
agreement and shall govern during the duration of this agreement. It is
understood that present employees
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<PAGE>
employed by the Company covered hereunder shall not, as a result of the terms of
this contract, suffer any loss in monetary and fringe benefits from their
previous labor agreement. If the regular pay day falls on a holiday, then the
employees shall receive their pay on the preceding day.
Section 2. Each employee who shall have been in the service of the Company for
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the period hereinafter set forth, prior to June 1st of any year, shall receive
vacation and vacation pay. Vacation pay shall be computed on the basis of their
regular hourly rate of pay.
The regular hourly rate of pay for vacation pay at the time an
employee becomes eligible for vacation (June 1 of each year) shall be the
employee's average straight time hourly rate earned during the immediately
preceding vacation year, June 1 to May 31, or the employee's regular rate of pay
at the time of taking vacation, whichever is greater.
In order for an employee to receive full vacation and vacation pay a
minimum of twelve hundred (1200) hours must have been worked during the past
vacation eligibility year.
If an employee works less than twelve hundred (1200) hours, the
employee shall receive vacation and vacation pay on a prorated basis.
The base year for computing prorated vacation and vacation pay will
be fifteen hundred (1500) hours.
12
<PAGE>
<TABLE>
<CAPTION>
Length of Service Vacation Vacation Pay at
Requirements Period Reg. Hrly. Rates
<S> <C> <C>
6 months 1/2 week 20 hours
1 year 1 week 40 hours
3 year's 1-1/2 weeks 60 hours
5 year's 2 weeks 80 hours
9 year's 3 weeks 120 hours
15 year's 4 weeks 160 hours
25 year's 5 weeks 200 hours
</TABLE>
Section 3. (a) Vacation not exceeding two (2) weeks shall be taken in
- ----------
consecutive days. The Company may shut down the plant to grant vacations,
provided it shall notify the employees at least thirty (30) days before the
vacation.
(b) Management shall not be required to grant vacations
extending over more than two (2) weeks in consecutive days, but agrees to do so
when employees request it and it can be done with due regard for plant
operation.
(c) In the event of a dispute between two (2) or more employees
as to the time of their vacations, the employee with the greatest departmental
seniority with the Company shall receive the preference.
Section 4. All vacations are compulsory and shall be taken within the
- ----------
particular calendar year.
It is understood and agreed that the Company may require an
employee to work his fourth week of vacation and the employee shall receive
vacation pay in lieu of vacation.
It is further understood and agreed that the third week of
vacation shall be taken at a time mutually agreed between the employee and the
Company, consistent with production needs.
Employees entitled to more than two weeks vacation
-13-
<PAGE>
may take the balance of their vacation at any time during the calendar year
provided the vacation schedule is mutually agreed upon between the Company and
the employee. Management will not unreasonably withhold approval of an
employee's request for vacation.
Section 5. All employees who have qualified for vacation on June 1st of any
- -----------
year, but who are laid off or discharged prior to the vacation period herein
fixed, shall receive their vacation pay accrued to the time of layoff or
discharge.
Section 6. All employees shall receive their vacation pay on the pay day
- ----------
preceding the vacation period.
Employees must take their vacation during the year. In situations
where the Employer and the employee mutually agree that an employee will not
take scheduled or entitled vacation, the employee will be paid for the scheduled
vacation week during the week he works plus his vacation pay. This shall be
consistent with past practice.
Section 7. Employees who terminated before June of the vacation year shall
- ----------
receive pro rata vacation pay.
Section 8. Employees who voluntarily leave the employment of the Company
- ----------
prior to the vacation period herein fixed shall not be eligible to receive
vacation pay. It is agreed that employees who retire or resign their employment
because of health problems will receive pro rata vacation.
Section 9. Each week of vacation shall be composed exclusively of work days.
- ----------
Any holiday falling within an employee's
14
<PAGE>
vacation schedule shall be paid to the employee as a holiday and the employee
shall have available to him/her another vacation day.
ARTICLE VII
-----------
WAGE REIMBURSEMENT
------------------
Section 1. The Employer agrees to reimburse one (1) Shop Steward and one (1)
- ----------
other employee (total two (2) employees) at their regular hourly rate for all
time lost in connection with their attendance at contract negotiations,
including travel time as follows:
(a) First shift (day) employees up to a maximum of four (4)
hours per session.
(b) Second, Third, Night Shift employees compensation for all
time actually incurred in the negotiations during working
time not to include situations when employee leaves work in
excess of required travel time.
Section 2. Contract negotiating sessions shall alternate between day and
- ----------
night sessions.
ARTICLE VIII
------------
NO STRIKES - NO LOCKOUTS
------------------------
The Union and the Company agree that there shall be no strikes,
boycotts, lockouts, or any general slowing down of production by the employees
during the life of this Agreement, and that in the event differences or disputes
should arise between the Company and the Union as to the meaning and application
of this
15
<PAGE>
Agreement, or should any local trouble of any kind arise in the plant, there
shall be no suspension of work by the employees on account of such differences.
ARTICLE IX
----------
GRIEVANCE PROCEDURE
-------------------
Section 1. Any employee may discuss a grievance with the foreman prior to
- ----------
taking up said grievance with the Union Shop Steward. Any meetings or
conferences pertaining to grievances shall require the presence of the Union
Shop Steward and/or Committee. Should differences arise in the plant between the
Company and the Union or its members employed by the Company, or should any
local trouble of any kind arise in the plant, such grievances shall be reported
by the Union Shop Steward to the Superintendent or Manager of the plant in
writing. If the Manager or Superintendent, Union Shop Steward and the party with
the grievance are unable to arrive at a satisfactory settlement within forty
eight (48) hours, the questions shall then be referred to the official of the
Company and the Business Manager of Local 286 or his accredited representatives
and they shall attempt to bring about a harmonious settlement; but if the above
group is unable to come to a satisfactory conclusion within forty eight (48)
hours, the grievance may be submitted to final and binding arbitration.
Arbitrators shall be chosen from a list agreed upon by the parties. Grievances
processed to arbitration shall be assigned to the listed Arbitrators
sequentially unless both parties agree that time is of the essence, in which
case the Arbitrator from the list who can
16
<PAGE>
provide the earliest date shall be selected. The findings of the selected
Arbitrator shall be final and binding. Cost of the third arbitrator shall be
borne jointly and equally by the Company and the Union.
The arbitrators appointed or chosen hereunder to whom any grievance
or dispute shall be submitted shall have jurisdiction and authority only to
determine the meaning and application of or compliance with the provisions of
this Agreement, and shall not have jurisdiction or authority to change or add to
the provisions of this Agreement.
ARTICLE X
---------
HEALTH AND WELFARE PLAN
-----------------------
Section 1. Effective December 1, 1994, and for the one year concluding November
- ----------
30, 1995, the Company agrees to contribute the rates currently being paid as of
the date of the execution of this agreement, on behalf of each eligible
employee, to the jointly administered and managed Paper Converters Local 286
Health and Welfare Fund ("Trust Fund")
Contributions shall be made for each week in which the employee is
employed for any period of time including vacations and holidays.
Section 2. Effective December 1, 1995 and on each December 1, thereafter, the
- ----------
Company agrees that it will contribute whatever sums shall be necessary to
maintain the level of existing benefits established by the Trustees of the Fund,
together with such benefits as may be purchased by the Trustees
17
<PAGE>
from the Fund reserves during the life of this Agreement, for and on behalf of
the contributing Company's participants in the Fund; provided, however, that the
Company shall not be required to increase their rate of contribution to the Fund
as set forth in Section 1 hereof, until such time as the monies carried as a
reserve by the Fund fall below a figure which is three (3) times the sum of the
monthly cost of all benefits provided to all participants in the Fund (said
costs to include administrative expenses and self insured benefits computed on a
monthly basis and reported to the parties by the Fund accountants). Effective
December 1, 1994 the "existing benefits" referred to above shall include the
payment of the full cost, plus any increases in cost, of the plan which a
covered employee is currently in as of that date, plus costs of administration
for the life of the Agreement. Those plans include:
BLUE CROSS PREFERRED COMPREHENSIVE
BLUE SHIELD PLAY C AND MAJOR MEDICAL
KEYSTONE HMO
BLUE CROSS PERSONAL CHOICE
GREATER ATLANTIC HMO
U S HEALTHCARE
CIGNA HMO
Existing benefits shall also include Ten Thousand Dollars ($10,000.00)
Life Insurance and Ten Thousand Dollars ($10,000.00) double indemnity, eye care,
dental, sick and accident benefits in the amount of One Hundred and Twenty Five
18
<PAGE>
Dollars ($125.00) per week for thirteen (13) weeks, and any other benefits which
the employees currently enjoy.
Section 3. Current employees who wish to change plans during the life of the
- ----------
Agreement shall have the cost of such plan covered by the Employer if the new
plan is of equal or lesser cost. If the employee is forced to change plans for
whatever reason, the Employer shall bear the full cost of the new plan even if
it is greater. If the employee voluntarily switches to a more expensive plan,
he/she shall pay the difference in the cost.
Section 4. New hires, individuals who have never before worked in the
- ----------
industry, shall receive keystone or comparable PPO/HMO with equivalent benefits.
If a new hire wants another option, he/she may make such selection, but must pay
the additional cost.
Section 5. An employee who can establish proof of alternative primary
- ----------
medical coverage may exercise a spousal option receiving as additional
compensation fifty (50%) percent of the cost of their current primary coverage
benefits, not including costs of administration, effective forthwith. The
employee may not opt out of Sick and Accident, life insurance, dental or eye
care coverage. The additional compensation shall be paid to the employee who
elects such option on a weekly basis with their regular paycheck. Employees may
only opt out or back into their prior plan provided by the Health and Welfare
Fund once within any twelve (12) month period, unless they have lost the
alternative coverage. Any employee opting back in shall return to their former
plan. If they wish to move to a costlier plan at that time, they
19
<PAGE>
may do so but must pay the additional cost.
Section 6. An employee who looses primary coverage for any reason (i.e.
- ----------
layoff for more than thirteen weeks), shall return to their prior plan when they
regain their eligibility. If they wish to move to a costlier plan at that time,
they may do so, but must pay the additional cost.
Section 7. Notwithstanding any other provision of this Agreement, the
- ----------
Employer, jointly and severally with the Companies participating in the Health
and Welfare Fund, guarantee the existence at all times of a three (3) month Fund
reserve.
Section 8. In the event additional contributions are required of Companies
- ----------
pursuant to Section 2 above, the Fund accountant shall report the rates of
contribution necessary to maintain the benefits levels of the three (3) month
reserve.
Section 9. If any Company fails to implement a change and pay the increased
- ----------
rates of contributions as required above, the provision of Article XXVI of this
Agreement shall then take effect.
Section 10. There shall be no duplication of Health and Welfare contributions
- -----------
made on behalf of a participant. The Union will cooperate with the Company in
determining whether any such duplicate payments have been made.
In the specific case of layoffs, the Company making contributions
on behalf of a laid off employee shall be relieved of such obligation, if that
employee is employed by a Company making contributions on his behalf of the
Health and Welfare Fund.
Section 11. The sums required by the above sections of this
- -----------
20
<PAGE>
Article shall be remitted monthly to the Paper Converters Local 286 jointly
administered and managed Health and Welfare Trust Fund on or before the
fifteenth (15th) day of the month following the month in which contributions
were accrued.
Section 12. Any newly hired employee who was previously employed by a Company
- -----------
party to the Welfare Trust Fund, and who has already qualified for benefits
under the Welfare Plan shall be transferred without loss of benefits. The new
Employer shall make contributions for the transferred employee from the first
day of hire.
Section 13. Any employee whose coverage was terminated shall be reinstated on
- -----------
the first day of the month following his return to active employment with a
participating Company of the Welfare Fund. The new Company shall make
contributions for the new employee from the first day of hire.
Section 14. Any Company party to the Welfare Fund shall continue
- -----------
contributions for any employee who has been laid off for thirteen (13) weeks
following the date of lay off.
Section 15. Any employer party to the Welfare Fund shall continue
- -----------
contributions for any employee who is on Sick Leave or Worker's Compensation up
to one year starting with the first day of disability.
Section 16. Notwithstanding any other provisions of the Agreement,
- -----------
contributions to the Health and Welfare Fund, shall not be required for the Four
Months of employment for newly hired employees, nor shall he/she be eligible for
benefits during that
21
<PAGE>
period. Newly hired employee is defined as those new hires, who have not worked
previously order any Collective Bargaining Agreement maintained by Local 286
which required the employer make contributions to the above mentioned fund;
any such period of employment in the industry shall be credited to the employee
for the purpose of the four (4) month contribution moratorium set forth above.
"The Four Months of employment" referred to herein shall commence and continue
as does seniority as set forth in Article II, Section 2.
Section 17. Effective December 1, 1998 each participant employed by the
- ----------
Company and who is receiving weekly pay (including vacations and holiday pay,
but not including benefits in the nature of replacement income) will be
required to contribute the amount of Two Dollars ($2.00) per week to the Fund
toward the cost of the health care provided by the Fund to the participant;
provided, however, that no participant contributions shall be required unless
the fund reserves falls below the three (3) month reserve and the Company is
required to increase its contributions above the amount set forth in Section 1
above. The Company's obligation, as set forth in this Collective Bargaining
Agreement, to pay the full contribution rate to the Fund on behalf of any
participant shall not depend upon the participant's ability to make the
participant's contribution during periods where the participant is not working.
ARTICLE XI
----------
PENSION FUND
------------
Section 1. The Company shall contribute for each employee, the
- ---------
-22-
<PAGE>
following sum; effective December 1, 1993, Thirty Six Cents ($.36) per hour, for
each hour paid for, with a maximum of forty (40) hours per week (including
vacations and holidays) to the Paper Converters Local 286 Pension Trust Fund.
Section 2. Notwithstanding any other provisions of the agreement,
- ----------
contributions to the Pension Fund, shall not be required for the first year of
employment for newly hired employees, nor shall he/she be eligible for benefits
during that period. Newly hired employee is defined as those new hires, who have
not worked previously under any Collective Bargaining Agreement maintained by
Local 286 which required the employer to make contributions to the above
mentioned fund; any such period of employment in the industry shall be credited
to the employee for the purpose of the one (1) year contribution moratorium set
forth above. "The first year of employment" referred to herein shall commence
and continue as does seniority as set forth in Article II, Section 2.
ARTICLE XII
-----------
PREPAID LEGAL SERVICES
----------------------
Section 1. The Company agrees to contribute the sum of eight cents ($.08)
- ----------
per hour on behalf of each employee for all hours worked, including vacations
and holidays to the Paperworkers Local 286 Prepaid Legal Services Fund.
Section 2. Contributions shall be made as set forth in Section 1, above, for
- ----------
each regular, probationary, extra or part time employee, covered by this
Agreement on the Company's payroll for
23
<PAGE>
each day worked or paid for. The contributions required in Section 1 above,
shall be limited to forty (40) hours in a work week. Contributions shall not be
made for hours worked in excess of forty (40) hours in a week.
Section 3. The sum required by Section 1 above, shall be remitted monthly to
- ----------
the U.P.I.U. Local 286 Prepaid Legal Services Fund. Such monthly payments shall
be submitted to the Fund on or before the fifteenth (15th) day of the month
following the month in which monies were accrued.
Section 4. Notwithstanding the provisions of this Article, the Union may
- ----------
suspend the operations of a delinquent Company, three (3) working days after
receipt of a verification by certified mail that such Company is delinquent in
its contributions. Copies of the verification shall be sent by the Administrator
of the Fund to the Company, Local Union and the Employer Association in which
the Company is a member.
Section 5. Notwithstanding any other provision of the agreement,
- ----------
contributions to the Prepaid Legal Services Fund, shall not be required for the
first year of employment for newly hired employees, nor shall he/she be eligible
for benefits during that period. Newly hired employee is defined as those new
hires, who have not worked previously under any Collective Bargaining Agreement
maintained by Local 286 which required the employer to make contributions to the
above mentioned fund; any such period of employment in the industry shall be
credited to the employee for the purposes of the one (1) year contribution
moratorium as set
24
<PAGE>
forth above. "The first year of employment" referred to herein shall commence
and continue as does seniority as set forth in Article II, Section 2.
ARTICLE XIII
------------
FEDERAL CREDIT UNION
--------------------
Section 1. The Company agrees to make payroll savings plan deductions from
- ---------
its employees to the Paper Converters Local 286 Federal Credit Union upon
receipt of properly executed forms provided for that purpose.
Section 2. The Company further agrees that money so deducted will be
- ---------
forwarded to the Credit Union within ten (10) calendar days following the end of
each month during which deductions are made.
In the event the employer does not remit savings plan deductions
within twenty one (21) days, the unremitted sums will begin to accrue interest
at the prime rate. Further, in the event legal action is necessitated to compel
the employer to remit the savings plan deductions with interest as aforestated,
the employer shall be liable to pay all court costs and counsel fees of the
Federal Credit Union necessitated by the Credit Union's resort to legal
proceedings.
Section 3. The Union agrees to defend, indemnify and hold the Company
- ---------
harmless against any claim or liability arising from the administration of this
Article.
ARTICLE XIV
-----------
FURNISHING AND COMPLETION OF FORMS BY NEW EMPLOYEES
---------------------------------------------------
Section 1. The Company agrees to furnish each newly hired
- ---------
25
<PAGE>
employee with such forms as the Union and the Funds shall provide immediately
upon hiring, such as Blue Cross, Pension beneficiary designations, Federal
Credit Union, Severance Fund, etc. The Company will exercise its best efforts to
insure that the forms are properly completed and will forward the forms to the
Union business office upon completion.
ARTICLE XV
----------
COOPERATION
-----------
Section 1. Foremen and foreladies are permitted to do general work, but at
- ---------
no time are they to occupy a position that properly belongs to any employee.
Section 2. The Company will allow the Union's accredited representative
- ---------
reasonable access to the shop for Union business upon application to the
Company.
Section 3. The Union agrees for its members that every member will do the
- ---------
work to the best of his or her ability. The Union also agrees that its members
will observe all of the shop rules of the Company and the Union members will
observe and carry out the same, provided that such rules and regulations do not
conflict with any of provisions of this Agreement.
Section 4. The Company agrees not to discriminate in any way for any reason
- ---------
against any member of the Union in the hire or tenure of employment, excepting
as against any member of the Union for his failure to comply with the terms and
conditions of this Agreement.
ARTICLE XVI
-----------
26
<PAGE>
LABOR MANAGEMENT COMMITTEE
--------------------------
The Employer and the Union will establish a Labor Management
Committee in the plant consisting of equal numbers of union and employer
representatives. This committee will meet regularly to discuss working
conditions in the plant. The number of members on this committee and its meeting
schedule shall be no more restricted than it is under current practice, if any,
in the plant.
ARTICLE XVII
------------
LEAVES OF ABSENCE
-----------------
Section 1. A leave of absence from duty for reasons other than sickness will
- ---------
require written permission in advance from the Company. An employee who accepts
employment elsewhere while on a leave of absence shall be subject to loss of
seniority and dismissal.
Leave of absence due to sickness or disability, including pregnancy, may be
granted to employees upon request and upon presentation of a proper certificate
from their attending physician to support such request before such leave shall
be granted. Such employee's seniority date shall not be affected by the leave of
absence.
Section 2. Company agrees to grant necessary and reasonable time without
- ---------
discrimination or lose of seniority rights and without pay to the Shop Steward
and Officers of Local 286 for official Union business. The Union shall be
obligated to give appropriate notice to the Company specifying the approximate
length of time the
27
<PAGE>
Union Steward or Officer may be off. It is agreed that such leaves of absence
shall not exceed three (3) employees from the plant. The maximum leave of
absence shall be sixty (60) days and may be extended by mutual agreement.
ARTICLE XVIII
-------------
FUNERAL LEAVE
-------------
Section 1. When death occurs to a member of an employee's immediate family the
- ---------
employee will be granted an appropriate leave of absence prior to and including
the day of the funeral and in no event more than three (3) days. Any excused
absence for this purpose, which would have been regularly scheduled days of work
during the regular work week for the employee, shall be compensated at the
average straight time rate of pay subject to the following limitation:
(a) Members of an employee's immediate family are limited to the
employee's spouse, mother, father, mother-in-law, father-in-law,
brothers, sisters, sons and daughters. Proof of relationship may
be required. Two (2) days funeral leave shall be permitted in
the event of death of a grandchild.
(b) No compensation will be granted where the employee does not
attend the funeral of the deceased.
(c) Average straight time rate of pay means the average straight
time rate for the week in
28
<PAGE>
which the death occurs.
(d) In order to be eligible, the employee is required to furnish a
certificate of death, obituary, funeral director's
certification, or other appropriate proof of the death.
Immediately upon aquiring seniority, the employee is required to
furnish names and addresses of members of his or her immediate
family as defined above. The Employer will provide a form for
this purpose.
ARTICLE XIX
-----------
MANAGEMENT RIGHTS
-----------------
Section 1. It is understood and agreed that the management of the plant and the
- ---------
direction of the working forces, including the right to hire, suspend,
transfer, or discipline and discharge for proper cause after due regard for
principles of progressive discipline (except as specified in Article XX of this
Agreement) and the right to relieve employees from duty because of lack of work
or other legitimate reasons, is vested exclusively in the Company.
ARTICLE XX
----------
CAUSES FOR IMMEDIATE DISCHARGE
------------------------------
Section 1. The following are some of the causes for immediate discharge;
- ----------
(a) Bringing intoxicants into or consuming intoxicants in the plant
or on the plant premises.
29
<PAGE>
(b) Reporting for duty under the influence of liquor.
(c) Smoking while on duty or in prohibited areas.
(d) Deliberate or negligent destruction or removal of Company's or
other employee's property.
(e) Refusal to comply with Company rules, provided that such rules
shall be communicated to employees, and further provided that no
changes in present rules or no additional rules shall be made that
are inconsistent with this Agreement, and further provided that
any existing or new rules, or changes in rules, may be the subject
of discussion between the standing committee and the Local Plant
Manger; but the decision of the Company shall be final, providing
that it is not inconsistent with this Agreement.
(f) Disorderly conduct.
(g) Sleeping on duty.
(h) Giving or taking a bribe of any nature, as an inducement to
obtaining work or retaining a position.
(i) Failure to report for duty without bonafide reasons.
(j) Reading of books, magazines or newspapers while on duty except
where required in line of duty.
(k) Unsanitary practice endangering the health of others.
(l) Gambling during working hours.
(m) Layoffs or discharges for any other causes which are recognized as
valid reasons for layoffs or discharge shall be referred to the
Union before any action is taken. The Union agrees to act on
charges submitted within three (3) days.
(n) Giving material false reasons for obtaining a leave of absence or
engaging in other compensable employment during such leaves of
absence.
30
<PAGE>
(o) Failing to report for work after recall from layoff within three
(3) calendar days after having been notified by the Company of the
recall, except where the employee has advised the Company that
circumstances beyond his/her control prevent reporting for duty
within that period. The notice required of the Company shall be
sent by Registered or Certified Mail Return Receipt Requested, and
sent to the employee's last known address listed with the Company.
(p) Failing to report back to work at the termination of a leave of
absence, except where the employee has advised the Company prior
to expiration of the leave that circumstances beyond the
employee's control prevent reporting for duty at such time.
(q) Use or possession of illegal drugs.
(r) Possession of any firearms or unlawful weapons on the Company
premises.
ARTICLE XXI
-----------
REST PERIODS
------------
In accordance with past local plant practices, rest period procedures
shall be continued, with all employees receiving a ten (10) minute break each
morning and afternoon.
ARTICLE XXII
------------
UNION LABEL
-----------
During the life of this Agreement the Company is privileged to use the
Union Label of the United Paperworkers International Union, upon any or all of
the products that are manufactured by the workers covered by this Agreement;
however, it is understood and agreed that if upon the expiration of this or any
subsequent agreement entered into by Local 286 of the U.P.I.U. and the Company
that if said Company fails to renew this Agreement,
31
<PAGE>
the cuts of and the Union Label will be returned to the officers of Local 286,
and the Company agrees to discontinue the use of the Label.
ARTICLE XXIII
-------------
NEW MACHINERY
-------------
During the life of this Agreement, it is agreed that upon the
installation of new equipment not already in use for which no wages rates are
now established, the Company and the Union agree to negotiate for the
establishment of wages rates; provided, however, that such new machinery has had
a trial period of ninety (90) days which may be extended as required by mutual
agreement.
ARTICLE XXIV
------------
SEVERANCE
---------
Section 1. United Paperworkers International Union: Local 286 jointly
- ----------
administered and managed Severance Trust fund.
Section 2. The Company party to this Agreement shall contribute to the
- ---------
U.P.I.U. Local 286 jointly administered and managed Severance Trust Fund, the
sum of fifteen cent ($.15) per hour worked, not to exceed a maximum of eight (8)
hours per day and forty (40) hours per week and including any hours paid for
such as holidays, vacation and sick leave.
Section 3. Contributions shall be made as set forth in section 2 above, for
- ---------
each regular, probationary, extra or part time employee, covered by this
Agreement on this Agreement on the Company's payroll for each day worked or paid
for.
Section 4. The sum required by Section 2 above, shall be
- ----------
32
<PAGE>
remitted monthly to the U.P.I.U. Local 286 jointly administered and managed
Severance Trust Fund hereinafter referred to as "the Severance Fund". Such
monthly payments shall be submitted to the Fund on or before the fifteenth
(15th) day of the month following the month in which monies were accured.
Section 5. Notwithstanding the provisions of this Article, the Union may
- ---------
suspend the operations of a delinquent Company three (3) working days after
receipt of a verification by certified mail that such Company is delinquent in
its contributions. Copies of verification shall be sent by the Administrator of
the Fund to the Company, Local Union and the employer association in the Company
is a member.
Notwithstanding the provisions of Article VIII, Section 1, in the
event of a delinquency, the Union shall have the right to strike, engage in a
work stoppage or engage in other forms of concerted activity until such
delinquency is paid in full.
Section 6. In addition to the Employer contributions required above, it is
- ----------
agreed that employees in accordance with procedures established by the Local 286
Severance Trust Fund, shall have the right to make voluntary contribution to the
Plan. It is agreed that the Employer will make appropriate check-offs and
contributions to the Severance Plan for voluntary employee contributions to said
Plan based on an executed check-off authorization form submitted by the
employee. Remittance of voluntary employee contributions shall be made in
accordance with Section 4 of this Article.
33
<PAGE>
ARTICLE XXV
-----------
FAIR EMPLOYMENT PRACTICES
-------------------------
There shall be no discrimination against any employee or applicant for
employment because of race, creed, color, sex, handicap, age, national origin,
or union membership in the administration and application of this contract.
ARTICLE XXVI
------------
SPECIAL ENFORCEMENT
-------------------
Should the Company fail timely to remit to the Union all sums deducted
from employees as monthly dues, assessments or initiation fees as required in
Article I or timely to transmit to the Administrator of the Health and Welfare
Fund or the Pension, Severance or Prepaid Legal Services Funds, respectively,
the contributions to such Funds as required under Articles X, XI, XII and XXIV
then:
(a) The Union or the Trustees of the Fund or the Administrator as the
case may be, shall give the Company written notice by Certified
Mail of alleged delinquency.
(b) Provided thirty (30) days have elapsed following the notice under
(a) above, and payment of the delinquency has not been made; then
(c) The Company may be required to pay, in addition to the actual
delinquent amount, such sums as are set forth as liquidated
damages in the Pennsylvania Wage Payment and Collection Act.
(d) The Union may nothwithstanding Article VIII, strike the Company
to enforce such payments and in addition, seek to enforce such
payments in any court of competent jurisdiction without resort to
the grievance and arbitration procedure set forth in Article IX .
Section 2. The Employer agrees that the Fund shall have the
- ----------
34
<PAGE>
right to conduct periodic audits of their books and records to ensure that
proper reporting and contributions are being made as required by the Agreement.
Such audits shall be in accordance with the rules, regulations and guidelines
established by the Trustees.
ARTICLE XXVII
-------------
EMPLOYER ACCEPTANCE OF JOINTLY ADMINISTERED FUNDS
--------------------------------------------------
Each Company adopts are the provisions of and agrees to comply with
and be bound by, the Trust Agreement, establishing the Paper Converters Local
286 Health and Welfare Fund, Pension Fund, Severance Fund and Prepaid Legal
Services Fund, and all amendments thereto and also hereby designates as its
representatives the Trustees named as Employer Trustees in said Agreements,
together with their successors selected in the manner therein provided.
ARTICLE XXVIII
--------------
ON THE JOB INJURIES/DRUG TESTING
--------------------------------
Employees will be rented immediately if he or she is involved in an
industrial accident that results in the loss of production and/or meaningful
work and required medical treatment beyond facility first aid. If said employee
loses more than eight (8) hours of work the Employer shall have the right to use
the results of the test mentioned herein above. Said eight (8) hours does not
have to be consecutive.
An employee who volunteers to management, prior to a drug and alcohol
testing, that he or she may be addicted to drugs or alcohol, and seeks medical
treatment for the problem will
35
<PAGE>
be permitted appropriate time off or treatment. The Company has the right, in
its discretion, to deny a second request for drug or alcohol treatment.
ARTICLE XXIX
------------
DURATION
--------
Section 1. This Agreement shall be binding upon the parties hereto and their
- ----------
respective successors and designs for the period beginning December 1, 1994 and
ending November 30, 1999.
Section 2. If either party hereto desires to make any changes herein at the
- ----------
expiration date of November 30, 1999, it shall give notice in writing to the
other party of such desire at least sixty (60) days before any such date,
otherwise this Agreement will remain in full force and effect from year to year.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed this ____________ day of __________________, 1994.
UNITED PAPERWORKERS INTERNATIONAL
UNION, PHILADELPHIA LOCAL 286 KLEARFOLD, INC.
- ----------------------------- ---------------
/s/ Carlo Simone Jr. /s/ Melvin Herrin,
- --------------------------------- -----------------------------------
Carlo Simone, Business Manager Mervin Herrin, President
/s/ James Marino
- --------------------------------- ___________________________________
James Marino, President
/s/ Joseph Liberatore
- --------------------------------- ___________________________________
Joseph Liberatore, Int. Representative
/s/ Charles Talley
- ---------------------------------
Charles Talley, Int. Representative
36
<PAGE>
/s/ Luis Pagan
- --------------------------------
Luis Pagan Business Agent
/s/ John King
- --------------------------------
John King, Business Agent
/s/ John Corabi
- --------------------------------
John Corabi, Business Agent
/s/ Carlo Simone III
- --------------------------------
Carlo Simone III, Organizer
[SIGNATURE ILLEGIBLE]
- --------------------------------
[SIGNATURE ILLEGIBLE]
- --------------------------------
________________________________
37
<PAGE>
KLEARFOLD, INC.
APPENDIX "A"
SCHEDULE OF WAGE RATES
<TABLE>
<CAPTION>
MINIMUM RATES PER HOUR
----------------------
12/1/94 12/1/95 12/1/96 12/1/97 12/1/98
------- ------- ------- ------- -------
JOB CLASSIFICATIONS
- -------------------
<S> <C> <C> <C> <C> <C>
Automatic Screen Operator $ 8.85 $ 9.15 $ 9.45 $ 9.75 $10.05
Automatic Screen Catcher 8.45 8.75 9.05 9.35 9.65
Screen Maker 9.15 9.45 9.75 10.05 10.35
Die Maker 9.25 9.55 9.85 10.15 10.45
Die Cutter 9.35 9.65 9.95 10.25 10.55
Creasing (Set Up) 9.35 9.65 9.95 10.25 10.55
Creasing Operator 8.45 8.75 9.05 9.35 9.65
Stripper 8.45 8.75 9.05 9.35 9.65
Stamper 9.35 9.65 9.95 10.25 10.55
Glue Machine Feeder 8.45 8.75 9.05 9.35 9.65
Glue Machine Setter 9.35 9.65 9.95 10.25 10.55
Glue Machine -
Packer/Catcher 8.45 8.75 9.05 9.35 9.65
Quality Assurance 9.02 9.32 9.62 9.92 10.22
Shipper/Receiver 9.11 9.41 9.71 10.01 10.31
General Maintenance 9.35 9.65 9.95 10.25 10.55
General Helper 8.45 8.75 9.05 9.35 9.65
Sheeter 8.785 9.085 9.385 9.685 9.985
Carver 9.235 9.535 9.835 10.135 10.435
Baler 8.785 9.085 9.385 9.685 9.985
Die Cutter Feeder 8.75 9.05 9.35 9.65 9.95
4 Color Pressman 13.17 13.47 13.77 14.07 14.37
2 Color Pressman 12.15 12.45 12.75 13.05 13.35
Printing Feeder Operator 9.35 9.65 9.95 10.25 10.55
6 Color First Pressman 14.60 14.90 15.20 15.50 15.80
6 Color Second Pressman 13.17 13.47 13.77 14.07 14.37
Automatic Creasing Operator 10.35 10.65 10.95 11.25 11.55
Ink Matcher 8.70 9.00 9.30 9.60 9.90
*Film Maker 9.15 9.45 9.75 10.05 10.35
*Plate Maker 9.15 9.45 9.75 10.05 10.35
*Pre-Make Ready 9.25 9.55 9.85 10.15 10.45
HIRING RATE 7.20 7.20 7.20 7.20 7.20
</TABLE>
*Addendum to existing contract - 12/12/95. [SIGNATURE ILLEGIBLE]
[SIGNATURE ILLEGIBLE] 1/22/96
38
<PAGE>
Effective December 1, 1994, all employees shall receive a wage
increase of Thirty Cents ($0.30) per hour above their present hourly rate of
pay.
Effective December 1, 1995, all employees shall receive a wage
increase of Thirty Cents ($0.30) per hour above their then present hourly rate
of pay.
Effective December 1, 1996, all employees shall receive a wage
increase of Thirty Cents ($0.30) per hour above their then present hourly rate
of pay.
Effective December 1, 1997, all employees shall receive a wage
increase of Thirty Cents ($0.30) per hour above their then present hourly rate
of pay.
Effective December 1, 1998, all employees shall receive a wage
increase of Thirty Cents ($0.30) per hour above their then present hourly rate
of pay.
INDEX
29
<PAGE>
Exhibit 10.5
SECOND AMENDMENT TO LEASE
-------------------------
THIS SECOND AMENDMENT TO LEASE (hereinafter the "2nd Amendment") is made
this 30th day of September, 1994, effective as of September 1, 1994, by and
between NORMAN LEVIN and EVELYN F. LEVIN ("Landlord"), whose address, for the
purpose of this 2nd Amendment is c/o Mr. Robert Levin, 8216 Fairview Road,
Elkins Park, Pennsylvania 19117 and KLEARFOLD, INC. ("Tenant"), a Pennsylvania
corporation having its principal place of business at 364 Valley Road,
Warrington, Pennsylvania 18976.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Landlord is the owner of a building at 424 Valley Road,
Warrington, Pennsylvania 18976 (hereinafter the "Landlord's Building"); and
WHEREAS, pursuant to a lease agreement dated January 10, 1994 (the
"January 10th Lease") as amended by an amended lease dated July 25, 1994 (the
"July 25th Amended Lease"), Landlord has leased to Tenant and Tenant has leased
from Landlord approximately 23,199 square feet of an area described as Space "B"
of the Landlord's Building and approximately 30,678 square feet of an area
described as Space "C" of the Landlord's Building; and
WHEREAS, Landlord now desires to lease to Tenant and Tenant desires to
lease from Landlord, (in addition to all of Space "B" and all of Space "C") all
of Space "D" in the Landlord's Building
<PAGE>
so that Tenant will lease, in the aggregate, all of Space "B," all of Space "C"
and all of Space "D," consisting of approximately 83,995 square feet in the
Landlord's Building (all of the space which will be leased to Tenant pursuant to
this 2nd Amendment is referred to hereinafter in the aggregate as the "Aggregate
Leased Premises"), and
WHEREAS, Landlord and Tenant have agreed that this 2nd Amendment shall
replace all prior lease agreements for the space to be leased to Tenant in the
Landlord's Building.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, it is hereby covenanted and agreed as follows:
1. Landlord hereby leases the Aggregate Leased Premises to Tenant
and Tenant hereby leases the Aggregate Leased Premises from Landlord upon and
subject to the terms and conditions set forth herein.
2. Rent shall be paid by Tenant to Landlord during the Initial Term
(as defined in Paragraph 3 hereof) as follows:
(a) During the first four (4) months of the "Initial Term" of
this 2nd Amendment, commencing September 1, 1994 and ending December 31, 1994,
the rent payable by Tenant to Landlord shall be FORTY TWO THOUSAND, SEVEN
HUNDRED FORTY DOLLARS AND THIRTY-SIX CENTS ($42,740.36), payable in equal
monthly
-2-
<PAGE>
installments of TEN THOUSAND, SIX HUNDRED EIGHTY-FIVE DOLLARS AND NINE CENTS
($10,685.09).
(b) During the immediately following nine (9) months of the
Initial Term of this 2nd Amendment, commencing January 1, 1995 and ending
September 30, 1995, the rent payable by Tenant to Landlord shall be ONE HUNDRED
THIRTY-SEVEN THOUSAND, EIGHT HUNDRED NINETY-NINE DOLLARS AND EIGHT CENTS
($137,899.08), payable in equal monthly installments of FIFTEEN THOUSAND, THREE
HUNDRED TWENTY-TWO DOLLARS AND TWELVE CENTS ($15,322.12).
(c) During the balance of the Initial Term of this 2nd
Amendment, commencing October 1, 1995 and ending January 14, 1996, the rent
payable by Tenant to Landlord shall be FIFTY-FIVE THOUSAND, EIGHT HUNDRED TWENTY
DOLLARS AND SIXTY-THREE CENTS ($55,820.63), payable in equal monthly
installments of FIFTEEN THOUSAND, NINE HUNDRED FORTY-EIGHT DOLLARS AND SEVENTY-
FIVE CENTS ($15,948.75), except that the final installment, covering the period
from January 1, 1996 through January 14, 1996 shall be in the amount of SEVEN
THOUSAND, NINE HUNDRED SEVENTY-FOUR DOLLARS AND THIRTY-EIGHT CENTS ($7,974.38).
3. The Initial Term of this 2nd Amendment shall commence on
September 1, 1994 and shall terminate on January 14, 1996. Thereafter:
(a) Provided Tenant is not then in default under this 2nd
Amendment, this 2nd Amendment may be automatically renewed and extended by
Tenant for an additional term of two (2) years, commencing January 15, 1996 and
terminating January 14,
-3-
<PAGE>
PAGE 4 MISSING FROM CLIENT LEAVE BLANK
-4-
<PAGE>
Second Renewal Term, this 2nd Amendment shall be renewed upon the same terms and
conditions as are set forth herein. The rent for the Leased Premises for the
Second Renewal Term shall be TWO HUNDRED TEN THOUSAND, EIGHT HUNDRED EIGHTY-FIVE
DOLLARS AND TWELVE CENTS ($210,885.12) per year, payable in equal monthly
installments of SEVENTEEN THOUSAND, FIVE HUNDRED SEVENTY-THREE DOLLARS AND
SEVENTY-SIX CENTS ($17,573.76), except that the first installment, covering the
period from January 15, 1998, through January 31, 1998, and the final
installment, covering the period from January 1, 2000, through January 14, 2000,
shall each be in the amount of EIGHT THOUSAND, SEVEN HUNDRED EIGHTY-SIX DOLLARS
AND EIGHTY-EIGHT CENTS ($8,786.88).
(c) At such time as Tenant shall exercise the option to extend
this 2nd Amendment for the First Renewal Term (if Tenant shall decide to
exercise such option), Tenant may elect to extend the term of this 2nd Amendment
as to all three Spaces ("B," "C" and "D"), in which event the rental specified
in Paragraph 3(a) hereof shall be applicable or may elect to exercise the option
for only Spaces "B" and "C" (53,877 square feet) or for only spaces "C" and "D"
(60,756 square feet). If the option is exercised by Tenant as to Spaces "B" and
"C" for the First Renewal Term, the rent for such spaces shall be fixed at $2.60
per square foot per year or an aggregate annual rental of $140,080.20
($11,673.35 per month). If the option is exercised by Tenant as to spaces "C"
and "D" for the First Renewal Term, the rent for such spaces shall be fixed at
$2.50
-5-
<PAGE>
per square foot per year or an aggregate annual rental of $151,890 ($12,657.50
per month).
(d) At such time as Tenant shall exercise the option to extend
this 2nd Amendment for the Second Renewal Term (if Tenant shall decide to
exercise such option), provided that Tenant shall have leased all three spaces
("B," "C" and "D") during the First Renewal Term, Tenant may elect to extend the
term of this 2nd Amendment as to all three Spaces, in which event the rental
specified in Paragraph 3(b) hereof shall be applicable, or Tenant may elect to
exercise the option for only Spaces "B" and "C" or Spaces "C" and "D." If Tenant
shall have leased only two of the three spaces during the First Renewal Term,
Tenant's right to exercise the option for the Second Renewal Term shall be
limited to the spaces leased by Tenant during the First Renewal Term. If Spaces
"B" and "C" are leased by Tenant during the Second Renewal Term, the rent for
such spaces shall be fixed at $2.75 per square foot per year or an aggregated
annual rental of $148,161.75 ($12,346.81 per month). If the spaces leased by
Tenant during the Second Renewal Term are Spaces "C" and "D," the rent for such
spaces shall be fixed at $2.65 per square foot per year or an aggregate annual
rental of $161,003.40 ($13,416.95 per month).
4. Rent will be paid in equal monthly installments (except for the
beginning and ending one-half monthly installments during each term referred to
in Paragraph 3 hereof), on the first day of each month, in advance, commencing
September
-6-
<PAGE>
1, 1994. Tenant shall deposit with the Landlord's agent, Promark Realty Group,
Inc., as security for its obligations hereunder, the sum of $15,322.12 (of which
$10,685.09 has previously been deposited with the Landlord's agent) which sum
shall be held by the Landlord's agent in an interest bearing account, with
interest paid, not less frequently than annually, to Tenant. Provided Tenant has
fulfilled its obligations hereunder, said security deposit shall be returned to
Tenant on or before thirty (30) days following termination of this 2nd
Amendment.
5. The parties intend this to be a "triple net" lease pursuant to
which the rent payable hereunder shall be an absolute net return to Landlord for
the term of this 2nd Amendment (subject, however, to the provisions of
Paragraphs 15 and 16 hereof), with the obligation of the Tenant to pay its pro
rata share of all real estate taxes, fire and liability insurance premiums,
water and sewer rents, common area maintenance, and the cost of any other
services that are directly attributable to use of the Aggregate Leased Premises.
Currently the real estate taxes and building insurance charges attributable to
the Aggregate Leased Premises are as follows:
Tenant's pro rata share of real estate taxes: $1,896.66/month
Tenant's pro rata share of building insurance: $ 548.26/month
6. It is understood and agreed that wherever Tenant's pro rata share
of any obligation is required hereunder, said pro rata share shall be calculated
as follows:
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83.955 Square Feet (Square Footage of Leased Premises) = 78.34%
- -----------------------------------------------------------------
107,155 Square Feet (Square Footage of Entire Landlord' Building)
In the event Tenant shall elect, under the provisions of Paragraphs 3(c) or 3(d)
hereof, to reduce the area leased by Tenant during the First Renewal Term, if
applicable, and during the Second Renewal Term, if applicable, the foregoing
calculation shall be adjusted to correctly identify the area being leased by
Tenant and such adjustment shall be applied to the Tenant's pro rata shares of
taxes and insurance under Paragraph 5 hereof.
7. Landlord shall deliver the portion of the Aggregate Leased
Premises which were not occupied by Tenant prior to September 1, 1994 (referred
to hereinafter as Space "D") to the Tenant in broom clean condition, free and
clear of all refuse, debris, building equipment, building supplies, industrial
equipment, and any objects other than fixtures.
8. Notwithstanding anything contained herein to the contrary,
Landlord agrees that Tenant shall not be in default hereunder unless and until
Tenant shall have first been given written notice of Tenant's failure to perform
any obligation hereunder, and unless Tenant, within a period of ten (10)
business days after receipt of such notice as to the failure to pay rent due
hereunder, shall have failed to make such payment of rent, and, as to any other
obligation hereunder, Tenant, within a period of thirty (30) days after receipt
of such notice, shall have failed to perform such obligation or, alternatively,
shall
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<PAGE>
have failed to begin to actively, diligently and in good faith commence efforts
to perform such obligation.
9. [PARAGRAPH 9 OF THE JULY 25TH AMENDED LEASE HAS NOT BEEN
INCORPORATED IN THIS 2ND AMENDMENT SINCE IT NOW IS INAPPLICABLE.]
10. All trade fixtures, trade equipment and other fixtures installed
by Tenant, if any, for its business purposes, whether attached to the Aggregate
Leased Premises or not, shall remain the property of Tenant and shall be
removable as such at any time, and from time to time, during the term of this
2nd Amendment or on the renewal or extension thereof, or at the expiration or
prior termination thereof. Upon removal of any such fixtures or equipment, in
the event such removal shall cause damage to the Aggregate Leased Premises,
Tenant shall restore the Aggregate Leased Premises to their condition prior to
such installation of fixtures or equipment, reasonable wear and tear, however,
excepted.
11. Landlord and Tenant hereby release each other from any and all
liability or responsibility to the other, or anyone claiming through or under
them, by way of subrogation or otherwise, for any loss or damage to property
caused by fire or any of the standard extended coverage casualties, even if such
fire or other casualty shall have been caused by the fault or negligence of the
other party, or by anyone for whom such party may be responsible. The parties
shall maintain insurance policies containing waivers or releases of subrogation
rights and
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<PAGE>
each party, on the other's request, shall exhibit to the other, copies of such
policies.
12. Landlord hereby waives any lien, right of distraint or right of
execution which it may have upon any goods of Tenant which shall be stored at
the Aggregate Leased Premises.
13. Landlord agrees that Tenant, upon paying the rents reserved
herein and observing the covenants and agreements contained herein, shall
lawfully, peaceably and quietly hold, occupy and enjoy the Aggregate Leased
Premises during the term of this 2nd Amendment and any extension thereof,
without hindrance, eviction or molestation by Landlord or any person or persons
claiming under Landlord or claiming by title superior to Landlord. This
covenant shall include any mortgages presently in effect and as a condition of
this 2nd Amendment Landlord shall deliver to Tenant non-disturbance agreements
from its mortgagee or mortgagees. Such non-disturbance agreements shall provide
that Tenants possession of the Aggregate Leased Premises will not be disturbed
or in any way interfered with as long as Tenant is not in default under the
provisions of this 2nd Amendment.
14. All notices required to be given hereunder shall be given by
certified mail, return receipt requested, addressed to the principal places of
business of the respective parties, as set forth on the first page hereof.
Notices to Tenant shall be addressed to the attention of Jeff Shapiro, Financial
Vice President.
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<PAGE>
15. It is agreed and understood that Landlord shall deliver Space "D"
to Tenant with all mechanical systems in good working order and repair. These
systems shall include, but not be limited to, overhead doors and heating,
plumbing, electrical, air conditioning and lighting systems. Should said
systems require maintenance or repairs at the inception of this 2nd Amendment,
Landlord shall have thirty (30) days from the date of Tenant's commencement of
occupancy of the Additional Space "D" to put said systems in proper working
order. Landlord agrees to seal all open louvers presently existing in the walls
of the Aggregate Leased Premises and Tenant shall reimburse Landlord for an
amount equal to the lesser of six hundred dollars ($600) or one-half of the cost
of sealing all open louvers. In addition, Landlord shall promptly inspect the
sprinkler system within Space "D" to assure that is in good working order and
Landlord shall modify the fire and burglar alarm system so that the fire and
burglar alarm system for the Aggregate Leased Premises continues to be separated
from the fire and burglar alarm system for the remainder of the Landlord's
building. The fire and burglar alarm shall be immediately inspected in order to
assure that it is in good working order. Landlord shall also remove, at
Landlord's expense, all graffiti presently on the back wall of the Landlord's
Building. It is agreed and understood that once all of the systems referred to
in this Paragraph 15 are delivered by Landlord to Tenant in proper repair and
working condition, Tenant
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shall be responsible to maintain said systems subject, however, to the
provisions of Paragraph 16 hereof.
16. It is understood and agreed that the obligation of Tenant to make
repairs under any of the provisions of this 2nd Amendment shall not include
structural repairs to the exterior of the Landlord's Building; repairs to the
roof of the Landlord's Building or the underground plumbing of the Landlord's
Building, provided that same are not caused by the gross negligence of the
Tenant. Landlord acknowledges that there has been evidence of leaks in the
Aggregate Leased Premises and Landlord will inspect the roof and walls within
Space "D" to determine the source of any such leaks. Landlord shall repair the
roof and/or walls within thirty (30) days from the date hereof in order to
eliminate such leaks. Thereafter, Landlord will continue to be responsible if
further leaks shall appear.
17. Tenant shall pay, in addition to monthly rent, all charges for
gas, electricity, light, power, heat, telephone, and any charges for all other
utility services used, rendered or supplied on, or in connection with, the
Aggregate Leased Premises, and shall indemnify Landlord and save Landlord
harmless against any liability or charges on account thereof. In case any such
utility charges are not paid by Tenant when due, Landlord may pay same to the
utility company or department furnishing the same, and any amounts so paid by
Landlord shall be paid by Tenant as additional rent following such payment by
Landlord.
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<PAGE>
18. Tenant, at its own expense, shall at all times during the term
hereof keep in effect policies of insurance against loss or liability, naming
Landlord as an additional insured, and with such limits as to each as may be
reasonably required by Landlord from time to time, but in an amount no less than
ONE MILLION DOLLARS ($1,000,000) for each person and TWO MILLION DOLLARS
($2,000,000) for each occurrence in respect to bodily injury or death and FIVE
HUNDRED THOUSAND DOLLARS ($500,000) for each occurrence in respect to property
damage. The Tenant's policy shall be endorsed to provide that it will not be
cancelled or materially changed without at least ten (10) days written notice to
Landlord. Tenant will deposit a certificate of such insurance prior to
occupancy nd a certificate of each renewal thereof with Landlord at least twenty
(20) days prior to such policy expiration date.
19. [PARAGRAPH 19 OF THE JANUARY 10, 1993 LEASE HAS NOT BEEN
INCORPORATED IN THIS 2ND AMENDMENT SINCE IT NOW IS INAPPLICABLE.]
20. Landlord acknowledges and agrees that PROMARK REALTY GROUP, INC.,
is the procuring cause of this 2nd Amendment and, in consideration of its
services, Landlord agrees to pay to Promark Realty Group, Inc. a leasing
brokerage commission of SIX PERCENT (6%) (minimum of $25.00 per month) of the
said rental and other sums collected for the term of this 2nd Amendment or any
renewal, extension, expansion or renegotiation thereof. In the event Tenant
purchases the demised premises at any time during
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<PAGE>
the term of this 2nd Amendment, or any extension or renewal thereof, or within a
period of one (1) year after the expiration of such term, Landlord agrees to pay
Promark Realty Group, Inc., SIX PERCENT (6%) real estate commission on the total
purchase price, to be paid at settlement.
21. Tenant shall be entitled to the use of parking spaces in the
parking area used for the Landlord's Building. The Tenant's parking spaces
shall be specifically designated at the time of execution of this 2nd Amendment
and Landlord will "stripe" the parking area to reflect the parking spaces. In
addition, Landlord will provide, at Landlord's expense, adequate lighting for
the parking area in order to meet Tenant's security and safety requirements.
22. In the event that the Aggregate Leased Premises shall be so
damaged by fire or other casualty that the same cannot in Tenant's opinion be
repaired or restored within a reasonable time as determined by Tenant within
Tenant's discretion, this 2nd Amendment shall absolutely cease and determine,
and the rent shall abate for the balance of the term. If Tenant wishes to make
such election to terminate this Second Amendment, it shall do so by giving
notice thereof to Landlord within thirty (30) days from the day the demised
premises had been damaged by fire or other casualty.
23. It is hereby expressly agreed and understood that the Promark
Realty Group, Inc. is acting as agent only and shall
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<PAGE>
not in any event be held liable to the Landlord or to Tenant for the fulfillment
or non-fulfillment of any of the terms or conditions of this 2nd Amendment, or
for any action or proceedings that may be taken by the Landlord against Tenant,
or by Tenant against Landlord.
24. If the Tenant does not pay in full, within ten (10) days
following receipt of a "late notice" from Landlord, any installments of rent
and/or any other charge or payment herein reserved, included, or agreed to be
treated or collected as rent and/or any other charge, expense, or cost herein
agreed to be paid by the Tenant, at the option of the Landlord, this 2nd
Amendment and the term hereby created shall determine and become absolutely void
without any right on the part of the Tenant to save the forfeiture by payment of
any sum due or by other performance of any condition, term or covenant broken;
whereupon Landlord shall be entitled to recover damages for such breach in an
amount equal to the amount of rent reserved for the balance of the term of this
2nd Amendment, less the rent collected for the said Aggregate Leased Premises
under any subsequent lease for any portion of the term under this 2nd Amendment
with respect to the Aggregate Leased Premises. If any rental payment and/or any
other charge, expense or cost herein agreed to be paid by Tenant remains unpaid
ten (10) days after the payment due date, Tenant shall, in addition to payment
of the principal amount due, pay a late charge to Landlord equal to one and one-
half percent (1-
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<PAGE>
1/2%) per month or part thereof until the principal amount has been paid.
25. Tenant agrees to the following environmental conditions:
(a) Tenant shall not cause, allow or permit contamination of the
Aggregate Leased Premises by toxic or hazardous substances and shall not handle
or permit polychlorinated biphenyls ("PCB'S") or asbestos or substances
containing PCB'S or asbestos on the Aggregate Leased Premises.
(b) Tenant shall conduct all of its operations at the Aggregate
Leased Premises in compliance with all federal, state and local statutes
(including, but not limited to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et. seq. as amended by
the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499,
100 Stat. 1613 (October 17, 1986) ("CERCLA"); the Resources Conservation and
Recovery Act, 42 U.S.C. Section 6901 et. seq. ("RCRA"); the Pennsylvania Solid
Waste Management Act, 35 Pa.C.S. Section 6018.101 et. seq.; the Pennsylvania
Clean Streams Law 35 Pa.C.S. Section 691.1 et. seq.; and the Pennsylvania
Hazardous Sites Cleanup Act, Act 108 or 1988, 35 Pa.C.S. Section 6020.101 et.
seq. ("Pennsylvania Superfund") and regulations enacted thereunder), ordinances,
regulations, orders and requirements of common law, regarding, but not limited
to, (i) discharges to the air, soil, surface or groundwater; and (ii) handling,
utilizing, storage, treatment or disposal of any hazardous substances or
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<PAGE>
toxic substances as defined therein ("Environmental Statutes"). Tenant shall
obtain all permits, licenses or approvals and shall make all notifications and
registrations required by Environmental Statutes and shall submit to Landlord,
upon request, for inspecting and copying all documents, permits, licenses,
approvals, manifests and records required to be submitted and/or maintained by
the provisions of the Environmental Statutes. Tenant shall also provide promptly
to Landlord copies of any correspondence, notice of Violation, summons, order,
complaint or other document received by Tenant pertaining to compliance with
Environmental Statutes.
(c) Tenant shall not install at the Aggregate Leased Premises
any temporary or permanent tanks for the storage of any liquid or gas above or
below ground except as in compliance with the other provisions of this section
and after obtaining written permission to do so from Landlord.
26. Landlord and Tenant agree to the following environmental matters
with respect to Promark Realty Group, Inc.:
The parties acknowledge and agree with PROMARK REALTY GROUP, INC.
("Promark") that Promark (a) is a licensed real estate broker, (b) is not an
expert in construction, engineering, or environmental matters, and (c) has not
made and shall not make any representations of warranties with respect to, nor
conducted investigations of, the environmental condition or suitability of the
Aggregate Leased Premises or any adjacent property, including without limitation
any representations, warranties, or
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<PAGE>
investigations with respect to whether (1) the Aggregate Leased Premises have
been contaminated by any substance in any manner which could require remediation
under any law; (2) the Aggregate Leased Premises contain any environmentally
sensitive areas development in which could be precluded or limited under law,
including without limitation wetlands or flood plains; (3) the Aggregate Leased
Premises contain any substances whose removal or disposal is subject to special
regulation under any law, including without limitation any asbestos or
polychlorinated biphenyls; and (4) any activities on the Aggregate Leased
Premises since Landlord's acquisition of the Aggregate Leased Premises have been
conducted in violation of any laws concerning the handling of any materials by
reason of those materials' hazardous or toxic characteristics, the disposal of
any wastes, the discharges of any materials into the soil, air, surface water,
or groundwater, or the conduct of activities in environmentally sensitive areas.
27. At such time as this 2nd Amendment shall become effective
(following Landlord's satisfaction of Landlord's obligations under Paragraph 15
hereof), the January 10th Lease, the prior Additional Lease covering a portion
of Space "C," the July 25th Amended Lease and any other leases, written or
otherwise, relating to the Aggregate Leased Premises or any part thereof, shall
be terminated and shall be of no further force or effect.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this 2nd Amendment to be
executed, as of the day and year first above written.
LANDLORD:
/s/ Norman Levin
-----------------------------------------
NORMAN LEVIN
/s/ Evelyn F. Levin
-----------------------------------------
EVELYN F. LEVIN
TENANT:
KLEARFOLD, INC.
By /s/ Jeffrey A. Shapiro
--------------------------------------
JEFFREY A. SHAPIRO,
Financial Vice President
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<PAGE>
EXHIBIT 10.6
AMENDED AND RESTATED DEED OF LEASE
by and between
KLEARFOLD, INC.,
as Tenant
and
DENA CORPORATION,
as Landlord
June 7, 1996
<PAGE>
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AMENDED AND RESTATED LEASE
This Amended and Restated Deed of Lease amends and restates that certain
Lease Agreement between Tenant and Landlord dated July 1, 1985, as amended by
Amendment to Lease dated November 14, 1985, as amended by Second Amendment to
Lease dated December 17, 1985, as modified by letter agreement dated March 15,
1995.
SECTION 1 Reference Information
Section 1.1. Reference Information. Reference in this Lease to any of
the following shall have the meaning set forth below:
Date of This Lease: June 7, 1996
Premises: Space "A" and Space "B" (as shown on Exhibit A) of the one-story
masonry and steel building (the "Building") on the 20.742 acre lot (the "Lot")
shown on Exhibit B, situated at Louisa County Industrial Air Park, Louisa,
Virginia, together with the right to use Tenant's Proportionate Fraction of the
parking from time to time provided on the Lot. Space "A" consists of 30,000
square feet and Space "B" consists of 20,000 square feet. Effective as of
January 1, 1998, the portion of the Building identified as Space "C" (as shown
on Exhibit A), consisting of 20,000 square feet, shall become part of the
Premises. In the event that the Expansion Option referenced in Section 2.4 is
exercised and effective as of January 1, 1998, the Premises shall be expanded to
include Space "D" (as shown on Exhibit A), which consists of 30,000 square feet.
Landlord: Dena Corporation, f/k/a Klearfold/Virginia, Inc., a Virginia
corporation
Address of Landlord: Suite 102, 110 Gibraltar Road, Horsham, Pennsylvania
19044
Tenant: Klearfold, Inc., a Pennsylvania corporation
Address of Tenant: 364 Valley Road, Warrington, Pennsylvania 18976
Term Commencement Date: June _, 1996
Term Expiration Date: December 31, 2005
<PAGE>
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Extension Term: One FIVE-YEAR additional term from January 1, 2006 to
December 31, 2010
Original Premises Square Footage: Fifty thousand (50,000) square feet. The
Premises square footage shall increase to 70,000 square feet on January 1, 1998
to include Space "C", and, in the event that the Expansion Option referenced in
Section 2.4 is exercised, the Premises Square Footage shall increase to 100,000
square feet on January 1, 1998.
Building Square Footage: One hundred thousand (100,000) square feet.
Annual Fixed Rental Rate:
From Commencement Date Space "A": $3.05 per square foot per
to December 31, 1997 annum (i.e., $91,500 per annum)
Space "B": $3.90 per square foot per
annum (i.e., $78,000 per annum)
From January 1, 1998 to Space "A": $3.05 per square foot
December 31, 2000 per annum (i.e., $91,500 per annum)
Space "B": $3.05 per square foot
per annum (i.e., $61,000 per annum)
Space "C": $3.05 per square foot
per annum (i.e., $61,000 per annum)
(If Expansion Option is exercised)
Space "D": $3.05 per square foot
per annum (i.e., $91,500 per annum)
From January 1, 2001 to Annual Fixed Rental Rate
December 31, 2005 calculated pursuant to Section
4.2, as of the commencement of
each calendar year.
During Extension Term Annual Fixed Rental Rate
calculated pursuant to Section
4.2, as of the commencement of
each calendar year.
<PAGE>
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Fixed Rental: The annual fixed rent calculated in accordance with the
Annual Fixed Rental Rate.
Permitted Uses: Tenant's manufacturing operations, office space,
warehousing of inventory and related uses.
Liability Insurance Limit:
Bodily Injury Combined single per occurrence limit
and Property of $2,000,000 for bodily injury and property
Danage: damage
Tenant's Proportionate Fraction: A fraction the numerator of which shall be
the gross square footage of the Premises and the denominator of which shall be
the gross square footage of the Building.
Section 1.2. Exhibits. The following Exhibits are attached to and
incorporated in this Lease:
Exhibit A: Plan of Premises
Exhibit B: Description of Lot
SECTION 2 Premises and Term
Section 2.1. Premises. Landlord hereby leases and demises the Premises
to Tenant and Tenant hereby leases the Premises from Landlord, subject to the
terms and provisions of this Lease.
Section 2.2. Term. TO HAVE AND TO HOLD for an original term beginning
on the Term Commencement Date and continuing until the Term Expiration Date,
unless sooner terminated as hereinafter provided.
Section 2.3. Option to Extend Term. Tenant shall have the option to
extend the term of this Lease for the Extension Term as to Space "A", Space "B"
and Space "C" and, if the Expansion Option described in Section 2.4 shall have
been exercised, Space "D", provided Tenant shall have given written notice to
Landlord of its exercise of such option not less than nine months prior to the
expiration of the original term. All of the terms and provisions of this Lease
shall be applicable during the Extension Term except that Tenant shall have no
option to extend the term of the Lease beyond the Extension Term.
<PAGE>
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Section 2.4. Expansion Option. Tenant shall have the option to lease
Space "D" shown on Exhibit A from January 1, 1998 until the end of the term of
this Lease, as the same may be extended (the "Expansion Option") provided Tenant
shall have given written notice to Landlord of its exercise of such option not
less than six months prior to January 1, 1998. If Tenant exercises the
Expansion Option, all of the terms and provisions of this Lease shall be
applicable to Tenant's use of Space "D," and the definition of "Premises" shall
be expanded to include Space "D".
SECTION 3 Condition of Premises
Section 3.1. Condition of Premises. Tenant agrees to accept the
Premises in its present "as is" condition.
SECTION 4 Fixed Rent
Section 4.1. The Fixed Rent. Tenant shall pay rent to Landlord at the
Address of Landlord or at such other place or to such other person or entity as
Landlord may by notice to Tenant from time to time direct, at the Annual Fixed
Rental Rate set forth in Section 1, in equal installments equal to one-twelfth
(1/12) of the Fixed Rental in advance on the first day of each calendar month
included in the term, and for any portion of a calendar month at the beginning
or end of the term, at the rate payable in advance for such portion.
Section 4.2. Producer Price Index Rate. For purposes hereof, the
"Producer Price Index" shall mean the national Producer Price Indexes for
Finished Goods as published monthly by the Bureau of Labor Statistics of the
U.S. Department of Labor with such index equal to 100 for the year 1982.
Effective as of January 1, 2001, the Fixed Rental for the aggregate of
Space "A", Space "B" and Space "C" (and, if the Expansion Option has been
exercised pursuant to Section 2.4, Space "D"), shall be increased in proportion
to the percentage increase in the Producer Price Index by comparing the Producer
Price Index for December, 1995 with the Producer Price Index for December, 2000.
The increased Annual Fixed Rental Rate shall be determined by multiplying a
fraction in which the December, 1995 Producer Price Index is the denominator and
the December, 2000 Producer Price Index is the numerator against the $3.05 per
square foot per annum Annual Fixed Rental Rate to determine the new Annual Fixed
Rental Rate. The Annual Fixed Rental, so determined, shall be effective for the
period January 1, 2001 through December 31, 2001.
<PAGE>
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Thereafter, during the remainder of the current term of this Lease (the
period from January 1, 2002 through December 31, 2005), the Fixed Rental for
Space "A", Space "B" and Space "C" (and, if the Expansion Option has been
exercised pursuant to Section 2.4, Space "D") shall be increased annually, based
upon the percentage increase in the Producer Price Index. For the period January
1, 2002 through December 31, 2002, the calculation shall be made as in the
immediately preceding paragraph except that the numerator shall be the Producer
Price Index for December, 2001 and the denominator shall be the Producer Price
Index for December, 1995 with the fraction multiplied against the $3.05 per
square foot per annum Annual Fixed Rental Rate. For the period January 1, 2003,
through December 31, 2003, the numerator shall be the Producer Price Index for
December, 2002; and for the period January 1, 2004 through December 31, 2004,
the numerator shall be the Producer Price Index for December, 2003; and for the
period January 1, 2005 through December 31, 2005, the numerator shall be the
Producer Price Index for December 2004; and, if the Extension Term option has
been exercised pursuant to Section 2.3, for the period January 1, 2006 through
December 31, 2006, the numerator shall be the Producer Price Index for December,
2005; for the period January 1, 2007 through December 31, 2007, the numerator
shall be the Producer Price Index for December, 2006; for the period January 1,
2008 through December 31, 2008, the numerator shall be the Producer Price Index
for December, 2007; for the period January 1, 2009 through December 31, 2009,
the numerator shall be the Producer Price Index for December, 2008; and for the
period January 1, 2010 through December 31, 2010, the numerator shall be the
Producer Price Index for December, 2009. In each case, the denominator shall be
the Producer Price Index for December, 1995 and, in each case, the fraction
shall be multiplied against the $3.05 per square foot per annum Annual Fixed
Rental Rate.
In the event that the calculation of the Fixed Rental pursuant to this
Section 4.2 results in the reduction of the Fixed Rental, then the Fixed Rental
shall not be reduced but, for the period until the next rent adjustment shall be
calculated, shall be maintained at the level at which it was just prior to the
calculation which would have otherwise resulted in a reduction of the Fixed
Rental.
LEASES
SECTION 5 Real Estate and Other Taxes
<PAGE>
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Section 5.1. Real Estate Taxes. As Additional Rent, Tenant shall pay
to Landlord Tenant's Proportionate Fraction of all taxes, assessments (special,
betterment or otherwise), levies, fees, water and sewer rents and charges, and
all other government levies and charges, general and special, ordinary and
extraordinary, foreseen and unforeseen, which are, at any time prior to or
during the term hereof, imposed or levied upon or assessed against the Lot or
Building (collectively "taxes and assessments" or if singular "tax or
assessment").
If, by law, any tax or assessment is payable, or may at the option of the
taxpayer be paid, in installments (whether or not any interest shall accrue on
the unpaid balance of such tax or assessment), Landlord shall elect to pay the
same in installments over a period of time to be mutually agreed to by Landlord
and Tenant but in no event longer than the longest amortization period available
to the taxpayer, and only the installments thereof (and interest thereon)
becoming due during the term shall be payable by Tenant hereunder.
All payments shall be made by Tenant within ten (10) days after receipt of
Landlord's invoice therefor.
Taxes or assessments shall not include any income taxes, excess profits
taxes, excise taxes, franchise taxes, estate, succession, inheritance or
transfer taxes.
SECTION 6 Insurance
Section 6.1. Tenant '5 Insurance. Tenant shall, as Additional Rent,
maintain throughout the term the following insurance:
(a) commercial general liability insurance for any injury to person or
property occurring on the Premises, naming as insureds Tenant, Landlord and such
persons, including, without limitation, Landlord's managing agent, as Landlord
shall designate from time to time, in amounts which shall, at the beginning of
the Term, be at least equal to the limits set forth in Section 1, and, from time
to time during the term, shall be for such higher limits as are reasonably
required by Landlord; and
(b) workers' compensation insurance with statutory limits covering all of
Tenant's employees working at the Premises.
<PAGE>
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Section 6.2. Landlord's Insurance. Landlord shall maintain throughout
the Term the following insurance:
(a) commercial general liability insurance for any injury to person
or property occurring in the common areas of the Lot or Building, in such
amounts and with such deductibles as Landlord may reasonably consider
appropriate;
(b) all risk, special form property insurance on a replacement cost,
agreed amount basis, in an amount not less than one hundred percent (100%) of
the full insurable value of the Building, together with business interruption or
rental loss coverage and, if Landlord so elects, flood coverage to the extent
the same is available, insuring the Building and its rental value, with
deductibles not to exceed $10,000 or one percent (1%) of the face amount of the
policy, whichever is less; and
(c) insurance against loss or damage from sprinklers and from leakage
or explosions or cracking of boilers, pipes carrying steam or water, or both,
pressure vessels or similar apparatus, in the so-called "broad form," in such
amounts and with such deductibles as Landlord may reasonably consider
appropriate, and insurance against such other hazards and in such amounts as may
from time to time be reasonably required by any bank, insurance company or other
lending institution holding a mortgage on the Building.
For the purposes of this Section, the "full insurable value" shall mean the
actual cost of replacing the Building, without allowance for depreciation and
exclusive of the cost of excavations, foundations and footings, as determined by
the company issuing the insurance policy at the time the policy is issued. Not
more frequently than once every two (2) years, either party shall have the right
to notify- the other party that it elects to have the full insurable value
redetermined by the insurance company, and the insurance policy shall be
adjusted according to the redetermination when made by the insurance company.
All policies for insurance required under the provisions of this Section 6.2
shall be obtained from responsible companies qualified to do business in the
Commonwealth of Virginia and in good standing therein.
Section 6.3. Tenant Reimbursement of Insurance Taken Out by Landlord.
As Additional Rent, Tenant shall from time to time reimburse Landlord within
thirty (30) days of Landlord's invoice for Tenant's Proportionate Fraction of
Landlord's costs incurred in providing the insurance pursuant to Section 6.2.
Tenant shall reimburse Landlord
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for all of Landlord's costs incurred in providing such insurance to the extent
attributable to any special endorsement or increase in premium resulting from
the business or operations of Tenant or any special or extraordinary hazards
resulting therefrom.
Section 6.4. Requirements Applicable to Insurance Policies. All
policies for insurance required under the provisions of Section 6.1 shall be
obtained from responsible companies qualified to do business in the Commonwealth
of Virginia and in good standing therein, which companies and the amount of
insurance allocated thereto shall be subject to Landlord's approval, such
approval not to be unreasonably withheld or delayed. Tenant agrees to furnish
Landlord with insurance company certificates of all such insurance and copies of
the policies therefor prior to the Term Commencement Date and of each renewal
policy at least thirty (30) days prior to the expiration of the policy it
renews. Each such policy shall be noncancellable with respect to the interest of
Landlord and such mortgagees without at least thirty (30) days' prior written
notice thereto.
Section 6.5. Waiver of Subrogation. All insurance which is carried by
either party with respect to the Premises or the Building or to furniture,
furnishings, fixtures or equipment therein or alterations or improvements
thereto, whether or not required hereunder, shall include provisions which
either designate the other party as one of the insureds or deny to the insurer
acquisition by subrogation of rights of recovery against the other party to the
extent such rights have been waived by the insured party prior to occurrence of
loss or injury to the extent that such provisions may be effective without
making it impossible to obtain insurance coverage from responsible companies
qualified to do business in the Commonwealth of Virginia (even though extra
premium may result therefrom) and without voiding the insurance coverage in
force between the insurer and the insured party. On reasonable request, each
party shall be entitled to have duplicates or certificates of policies
containing such provisions. Each party hereby waives all rights of recovery
against the other for loss or injury against which the waiving party is
protected by insurance containing such provisions, reserving, however, any
rights with respect to any excess of loss or injury over the amount recovered by
such insurance.
SECTION 7 Utilities; Maintenance Expenses
Section 7.1. Utilities. Tenant shall pay to Landlord all charges for
water, sewer, gas, electricity and other utilities or services
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used or consumed in the Premises, whether called charge, tax, assessment, fee or
otherwise, including, without limitation, water and sewer use charges and taxes,
if any, such charges to be paid within ten (10) days of receipt of Landlord's
invoice therefor, the amount of such utilities to be determined in accordance
with separate meters for the Premises to be installed at Landlord's expense.
Section 7.2. Maintenance Expenses. Tenant shall pay to Landlord
Tenant's Proportionate Fraction of Landlord's costs and expenses incurred under
Section 9.
SECTION 8 Payments on Account
Section 8.1. Payments on Account. Tenant shall pay to Landlord on
account as Additional Rent, on the first day of each month during the term, one-
twelfth (1/12) of such amounts as Landlord may reasonably determine will be
sufficient to provide in the aggregate funds adequate to pay all amounts to be
paid by Tenant pursuant to Sections 5, 6 and 7 during each year included in the
term. Landlord shall periodically account to Tenant for such payments and any
balance owed by Tenant shall be paid to Landlord within ten (10) days after
billing therefor. Any excess paid by Tenant shall, at Landlord's option, either
be paid by Landlord to Tenant or credited against the next installment of rent
or Additional Rent becoming due.
SECTION 9 Landlord's Covenants
Section 9.1. Building Maintenance. Subject to Sections 10 and 11,
Landlord shall maintain, repair and replace, when necessary, the exterior walls
(exclusive of glass and doors and exclusive of the interior surfaces of the
exterior walls, all of which with respect to the Premises Tenant shall maintain
and repair), roof, foundation, structural supports of the Building, and heating,
plumbing, electrical, air conditioning and mechanical systems of the Building
and Premises, so as to keep the same in good order, condition and repair.
Section 9.2. Common Area Maintenance. Subject to Sections 10 and 11,
Landlord shall maintain, repair and replace, when necessary, the common areas of
the Building, if any, landscaped areas, and common areas on the Lot, including
parking areas, sidewalks and driveways, so as to keep the same in good order,
condition and repair, and shall clean and provide snowplowing for the same.
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SECTION 10 Tenant's Covenants
Section 10.1. Use. Tenant shall use the Premises only for the
Permitted Uses and shall from time to time procure all licenses and permits
necessary therefor at Tenant's sole expense.
Section 10.2. Repair and Maintenance. Except as otherwise provided in
Sections 9 and 11, Tenant shall keep all interior portions of the Premises in as
good order, condition and repair as they are in on the Term Commencement Date or
may be put in during the term, reasonable use and wear and tear and casualty
excepted. Tenant shall keep in a safe, secure and sanitary condition all trash
and rubbish temporarily stored at the Premises and shall arrange for and be
responsible for all of the costs of a trash and rubbish removal service in
connection with Tenant's use of the Premises.
Section 10.3. Compliance with Law and Insurance Requirements.
Tenant shall comply with the requirements of any law or ordinance or any order
or regulation of any public authority arising from Tenant's use of the Premises
and shall keep the Premises equipped with all safety appliances so required,
provided, however, that Tenant shall not be required to make any repairs,
alterations, additions or replacements to the Building structure or the Building
systems by reason of such requirements. Tenant shall not dump, flush, or in any
way introduce any hazardous substances or any other toxic substances into the
septic, sewage or other waste disposal system serving the Premises, or generate,
store or dispose of hazardous substances in or on the Premises or dispose of
hazardous substances from the Premises to any other location, other than in
compliance with the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
(S)6901 et seq., and all other applicable federal, state or local codes,
regulations, ordinances and laws. "Hazardous substances" as used in this Section
shall mean "hazardous substances" as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. (S)9601 et seq. and
regulations adopted pursuant to such Act.
Tenant will provide Landlord, from time to time upon Landlord's request,
with all records and information regarding any hazardous substance maintained on
the Premises by Tenant.
Landlord shall have the right, at Tenant's expense, to make such
inspections as Landlord shall reasonably elect from time to time to determine if
Tenant is complying with this Section.
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Tenant shall comply promptly with the recommendations of any insurer which
may be applicable to the Premises by reason of Tenant's use thereof. In no event
shall any activity be conducted by Tenant on the Premises which may give rise to
any cancellation of any insurance policy or make any insurance unobtainable.
Section 10.4. Tenant's Work. Tenant shall not make any structural
installations, alterations, additions or improvements in or to the Premises,
without on each occasion obtaining the prior written consent of Landlord, such
consent not to be unreasonably withheld or delayed. Any such structural work so
approved by Landlord shall be performed only in accordance with plans and
specifications therefor approved by Landlord. Tenant shall procure at Tenant's
expense all necessary permits and licenses before undertaking any work on the
Premises and shall perform all such work in a good and workmanlike manner
employing materials of good quality and so as to conform with all applicable
zoning, building, fire, health and other codes, regulations, ordinances and laws
and with all applicable insurance requirements. Tenant shall keep the Premises
at all times free of liens for labor and materials. Tenant shall save Landlord
harmless and indemnified from all injury, loss, claims or damage to any person
or property occasioned by or growing out of such work. Landlord may inspect the
work of Tenant at reasonable times and give notice of observed defects.
Section 10.5. Indemnity. Tenant shall defend, with counsel approved by
Landlord, all actions against Landlord, any partner, trustee, stockholder,
officer, director, employee or beneficiary of Landlord ("Indemnified Parties")
with respect to, and shall pay, protect, indemnify and save harmless, to the
extent permitted by law, all Indemnified Parties from and against, any and all
liabilities, losses, damages, costs, expenses (including reasonable attorneys'
fees and expenses), causes of action, suits, claims, demands or judgments of any
nature arising from (a) injury to or death of any person, or damage to or loss
of property, occurring in the Premises or connected with the use, condition or
occupancy of any thereof unless caused by the negligence of Landlord or its
servants, agents, or contractors (b,) violation of this Lease by Tenant,
including any violations of Section 10.3, or (c) any act, fault, omission, or
other misconduct of Tenant or its agents, licensees, sublessees or invitees.
Section 10.6. Landlord's Right to Enter. Tenant shall permit Landlord
and its agents to enter into the Premises at reasonable times and upon
reasonable prior notice to examine the Premises, make such repairs and
replacements as Landlord shall be required to perform, or show the Premises to
prospective purchasers and lenders, and, during the
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last six months of the term, to show the Premises to prospective tenants and to
keep affixed in suitable places notices of availability of the Premises.
Section 10.7. Personal Property at Tenant '5 Risk. All furnishings,
fixtures, machinery, equipment, effects and property of every kind of Tenant and
of all persons claiming by, through or under Tenant which may be on the Premises
shall be at the sole risk and hazard of Tenant and if the whole or any part
thereof shall be destroyed or damaged by fire, water or otherwise, or by the
leakage or bursting of water pipes, steam pipes or other pipes, by theft or from
any other cause, no part of such loss or damage shall be charged to or to be
borne by Landlord, except that Landlord shall in no event be indemnified or held
harmless or exonerated from any liability to Tenant for any injury, loss, damage
or liability (i) not covered by Tenant's insurance to the extent prohibited by
law or (ii) caused by the negligence of Landlord, its employees, agents or
contractors. Tenant shall insure Tenant's personal property. Tenant shall have
the right to move its trade fixtures, machinery and equipment at the termination
of the Lease, including, without limitation, anything affixed to the Premises by
Tenant at its expense for purposes of trade, manufacture, ornamentation or
domestic use.
Section 10.8. Payment of Landlord's Cost of Enforcement.
Tenant shall pay, on demand, Landlord's expenses, including reasonable
attorneys' fees, incurred in enforcing any obligation of Tenant under this
Lease or in curing any default by Tenant under this Lease as provided in
Section 12.4.
Section 10.9. Yield up. At the expiration of the term or earlier
termination of this Lease, Tenant shall surrender all keys to the Premises,
remove all of its trade fixtures, machinery, and equipment and personal property
in the Premises, remove all Tenant's signs wherever located, repair all damage
caused by such removal and yield up the Premises (including all installations
and improvements made by Tenant except for trade fixtures, machinery, equipment
and Tenant's personal property) broom-clean and in the same good order and
repair in which Tenant is obliged to keep and maintain the Premises under this
Lease, wear and tear and casualty excepted. Any property not so removed Shall be
deemed abandoned and may be removed and disposed of by Landlord in such manner
as Landlord shall determine and Tenant shall pay Landlord the entire cost and
expense incurred by it in effecting such removal and disposition and in making
any incidental repairs and replacements to the Premises and for use and
occupancy during the period after the expiration
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of the term and prior to Tenant's performance of its obligations under this
Section 10.9.
Section 10.10. Estoppel Certificate. Each of the parties shall upon
not less than ten (10) business days' prior notice by the other, execute,
acknowledge and deliver to such other party a statement in writing certifying
that this Lease is unmodified and in full force and effect and that, except as
stated therein, the signer of Such certificate has no knowledge of any defenses,
offsets or counterclaims against Tenant's obligations to pay the Fixed Rental
and Additional Rent and any other charges and to perform its other covenants
under this Lease (or, if there have been any modifications that the same is in
full force and effect as modified and stating the modifications and, if there
are any defenses, offsets or counterclaims, setting them forth in reasonable
detail), the dates to which the Fixed Rental and Additional Rent and other
charges have been paid and a statement that such other party is not in default
hereunder (or if in default, the nature of such default, in reasonable detail).
Any such statement delivered pursuant to this Section 10.10 may be relied upon
the party requesting it or by any prospective mortgagee, PURCHASER, assignee or
subtenant.
Section 10.11. Rules and Regulations. Tenant shall comply with such
reasonable and nondiscriminatory Rules and Regulations as may be adopted from
time to time by Landlord to provide for the beneficial operation of the Lot and
Building, provided that such Rules and Regulations are uniformly enforced and do
not limit Tenant's rights under this Lease. Such Rules and Regulations shall be
binding upon Tenant ten (10) days following delivery of a copy thereof to Tenant
Section 10.12. Holding Over. Tenant shall vacate the Premises
immediately upon the expiration or sooner termination of this Lease. If Tenant
shall retain possession of the Premises or any part thereof after the
termination of the term without Landlord's express consent, Tenant shall pay
Landlord rent at the monthly rate specified in Section 1 for the time Tenant so
remains in possession and, in addition thereto, shall pay Landlord for all
direct damages, sustained by reason of Tenant's retention of possession. The
provisions of this Section shall not exclude Landlord's rights of reentry or any
other right hereunder, including, without limitation, the right to refuse the
monthly rent and instead to remove Tenant through summary proceedings for
holding over beyond the expiration of the term of this Lease.
Section 10.13. Assignment and Subletting. Tenant shall not assign,
transfer, mortgage or pledge this Lease or grant a security interest
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in Tenant's rights hereunder or sublease all or any part of the Premises or
suffer or permit this Lease or the leasehold estate hereby created or any other
rights arising under this Lease to be assigned, transferred or encumbered, in
whole or in part, without the prior written consent of the Landlord, such
consent not to be unreasonably withheld or delayed. Any attempted assignment,
transfer, mortgage, pledge, grant of security interest, sublease or other
encumbrance, except with prior written approval thereof from Landlord, shall be
void. No assignment, transfer, mortgage, grant of security interest, Sublease or
other encumbrance, whether or not approved, and no indulgence granted by
Landlord to any assignee or sublessee, shall in any way impair the continuing
primary liability (which after an assignment shall be joint and several with the
assignee) of Tenant hereunder, and no approval in a particular instance shall be
deemed to be a waiver of the obligation to obtain Landlord's approval in any
other case. Notwithstanding the foregoing, Tenant may enter into any of the
following transfers without obtaining the prior written consent of Landlord:
(a) Tenant may sublease all or part of the Premises or assign its
interest in this Lease to any corporation which controls, is
controlled by, or is under common control with the original
Tenant to this Lease by means of an ownership interest of more
than 50%;
(b) Tenant may assign its interest in this Lease to a corporation
which results from a merger, consolidation or other
reorganization in which Tenant is not the surviving corporation;
(c) Tenant may assign this Lease to a corporation which purchases or
otherwise acquires all or substantially all of the assets of
Tenant; and
(d) Tenant may mortgage and/or pledge this Lease and the leasehold
estate created hereby to The First National Bank of Boston, as
Collateral Agent for a syndicate of lenders under that certain
Revolving Credit and Term Loan Agreement to be entered into with
Tenant, pursuant to which such lenders have agreed to make
revolving credit loans and term loans to Tenant in an aggregate
amount not to exceed $43,000,000.
Section 10.14. Overloading and Nuisance. Tenant shall not injure,
overload, deface or otherwise harm the Premises, commit any
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nuisance, permit the emission of any objectionable noise, vibration or odor,
make, allow or suffer any waste or make any use of the Premises which is
contrary to any law or ordinance or which will invalidate any of Landlord's
insurance.
Section 10.15. Signs. Tenant at its cost shall have the right to
place, construct and maintain on the Premises one or more signs advertising its
business on the Premises. Any sign that Tenant shall erect Shall comply with
all laws and applicable governmental regulations and Tenant shall obtain any
approval required by Such laws.
SECTION 11 Casualty or Taking
Section 11.1 Termination. In the event that greater than twenty-five
percent (25%), or such lesser percentage in the event that the suitability of
the Premises for Tenant's use is adversely affected thereby, of the ground floor
area of the Building or the Lot shall be taken by any public authority or for
any public use or destroyed by the action of any public authority (a "Taking")
then this Lease may be terminated by either Landlord or Tenant effective on the
effective date of the Taking. In the event that, greater than 25%, or Such
lesser percentage in the event that the suitability of the Premises for Tenant's
use is adversely affected thereby, of the Premises shall be destroyed or damaged
by fire or casualty (a "Casualty") and if Landlord's architect, engineer or
contractor shall determine that it will require in excess of one hundred twenty
(120) days from the date of the Casualty to restore the Premises, this Lease may
be terminated by either Landlord or Tenant by notice to the other within thirty
(30) days after the casualty. In the case of a Taking, such election, which may
be made notwithstanding the fact that Landlord's entire interest may have been
divested, shall be made by the giving of notice by Landlord or Tenant to the
other within thirty (30) days after Landlord or Tenant, as the case may be,
shall receive notice of the Taking.
Section 11.2 Restoration. In the event of a Taking or a Casualty, if
neither Landlord nor Tenant exercises the election to terminate provided in
Section 11.1, this Lease shall continue in force and a just proportion of the
Fixed Rental and other charges hereunder, according to the nature and extent of
the damages sustained by the Premises shall be abated until the Premises or the
Building, or what may remain thereof, shall be put by Landlord in substantially
the same condition as the Premises were in prior to such Taking or Casualty
subject to zoning and building laws or ordinances then in existence, which,
unless Landlord or Tenant has exercised its option to terminate pursuant to
Section 11.1, Landlord covenants to do with reasonable diligence at
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Landlord's expense. Landlord's obligations with respect to restoration shall not
require Landlord to expend more than the net proceeds of insurance recovered
plus the amount of any deductible or net damages awarded for such Casualty or
Taking. "Net proceeds of insurance recovered" or "net damages awarded" refers
to the gross amount of such insurance or damages less the reasonable expenses of
Landlord in connection with the collection of the same, including, without
limitation. fees and expenses for legal and appraisal services. Notwithstanding
the foregoing, in the event that Landlord's mortgagee does not permit the net
proceeds of insurance recovered or net damages awarded for such Casualty or
Taking to be made available to Landlord for restoration, or in the event the net
proceeds of insurance recovered for such Casualty plus the amount of any
deductible or the net damages awarded for such Taking shall be insufficient to
fully restore the Premises or the Building, or in the event that the Casualty is
not insured against under the policy of insurance required to be maintained by
Landlord under Section 6.2, then Tenant shall have the right to terminate this
Lease unless Landlord agrees to contribute the amount by which the actual costs
of restoring the Premises exceed the net proceeds of insurance recovered or net
damages awarded.
SECTION 12 Default
Section 12.1. Events of Default. If
(a) Tenant shall default in the performance of any of its obligations to
pay the Fixed Rental, Additional Rent or any other sum payable hereunder and if
such default shall continue for ten (10) days after notice from Landlord
designating such default;
(b) within thirty (30) days after notice from Landlord to Tenant any other
default or defaults Tenant has not specifying commenced to correct the default
or diligently thereafter defaults so specified or has not diligently pursued
such correction to completion;
(c) a petition is filed by Tenant for liquidation, or for reorganization
or an arrangement or for any other relief under any provision of the Bankruptcy
Code as then in force and effect; or
(d) an involuntary petition under any of the provisions of the Bankruptcy
Code is filed against Tenant and such involuntary petition is not dismissed
within sixty (60) days thereafter,
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then, and in any of such cases, Landlord and the agents and servants of Landlord
lawfully may, in addition to and not in derogation of any remedies for any
preceding breach of covenant, and with or without process of law (forcibly, if
necessary) enter into and upon the Premises or any part thereof in the name of
the whole, or mail a notice of termination addressed to Tenant, and repossess
the same as of Landlord's former estate and expel Tenant and those claiming
through or under Tenant and without prejudice to any remedies which might
otherwise be used for arrears of rent or prior breach of covenant, and upon such
entry or mailing as aforesaid this Lease shall terminate, Tenant hereby waiving
all statutory rights (including, without limitation, rights of redemption, if
any) to the extent such rights may be lawfully waived.
Section 12.2. Remedies. In the event that this Lease is terminated
under any of the provisions contained in Section 12.1, Tenant shall remain
liable and shall pay punctually to Landlord all the sums and shall perform all
the obligations which Tenant covenants in this Lease to pay and to perform in
the same manner and to the same extent and at the same time as if this Lease had
not been terminated. In calculating the amounts to be paid by Tenant pursuant to
the preceding sentence, Tenant shall be credited with the net proceeds of any
rent obtained by Landlord by reletting the Premises, after deducting all
Landlord's reasonable expenses in connection with such reletting, including,
without limitation, all repossession costs, brokerage commissions, fees for
legal services and expenses of preparing the Premises for such reletting, it
being agreed by Tenant that Landlord may (a) relet the Premises or any part or
parts thereof for a term or terms which may at Landlord's option be equal to or
less than or exceed the period which would otherwise have constituted the
balance of the term hereof and may grant such concessions and free rent as
Landlord in its reasonable judgment considers advisable or necessary to relet
the same and (b) make such alterations, repairs and decorations in the Premises
as Landlord in its reasonable judgment considers advisable or necessary to relet
the same, and no action of Landlord in accordance with the foregoing or failure
to relet or to collect rent under reletting shall operate or be construed to
release or reduce Tenant's liability as aforesaid. Alternatively, at the option
of Landlord, in the event this Lease is so terminated, Landlord shall be
entitled to recover forthwith from Tenant as liquidated damages and not a
penalty, and in lieu of all other damages, the excess of the total rent reserved
for the residue of the term over the fair market rental value of the Premises
for the residue of the term, such excess to be discounted to present value at
per annum rate equal to the Base Rate of The First National Bank of Boston then
in effect.
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Section 12.3. Remedies Cumulative. Except as otherwise expressly
provided herein, any and all rights and remedies which Landlord may have under
this Lease and at law and equity shall be cumulative and shall not be deemed
inconsistent with each other, and any two or more of all such rights and
remedies may be exercised at the same time to the greatest extent permitted by
law.
Section 12.4. Landlord '5 Right to Cure Defaults. At any time
following ten (10) days' prior notice to Tenant (except in cases of emergency
when no notice shall be required), Landlord may (but shall not be obligated to)
cure any default by Tenant under this Lease, and whenever Landlord so elects,
all costs and expenses incurred by Landlord, including reasonable attorneys'
fees, in curing a default shall be paid by Tenant to Landlord as Additional Rent
on demand, together with interest thereon at the rate provided in Section 12.7
from the date incurred by Landlord to the date of payment by Tenant.
Section 12.5. Effect of Waivers of Default. Any consent or permission
by Landlord to any act or omission which otherwise would be a breach of any
covenant or condition herein, or any waiver by Landlord of the breach of any
covenant or condition herein, shall not in any way be held or construed (unless
expressly so declared) to operate so as to impair the continuing obligation of
any covenant or condition herein, or otherwise operate to permit the same or
similar acts or omissions except as to the specific instance. The failure of
Landlord to seek redress for violation of, or to insist upon the strict
performance of, any covenant or condition of this Lease shall not be deemed a
waiver of such violation nor prevent a subsequent act, which would have
originally constituted a violation, from having all the force and effect of an
original violation. The receipt by Landlord of rent with knowledge of the breach
of any covenant of this Lease shall not be deemed to have been a waiver of such
breach by Landlord or of any of Landlord's remedies on account thereof,
including its right of termination for such default.
Section 12.6. No Accord and Satisfaction. No acceptance by Landlord of
a lesser sum than the Fixed Rental, Additional Rent or any other charge then due
shall be deemed to be other than on account of the earliest installment of such
rent or charge due, unless Landlord elects by notice to Tenant to credit such
sum against the most recent installment due. Any endorsement or statement on
any check or any letter accompanying any check or payment as rent or other
charge shall not be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of
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such installment or pursue any other remedy under this Lease or otherwise.
Section 12.7. Interest on Overdue Sums. If Tenant shall fail to pay
Fixed Rental, Additional Rent or any other sum payable by Tenant to Landlord by
the due date thereof (i.e., the due date disregarding any requirement of notice
from Landlord or any period of grace allowed to Tenant), the amount so unpaid
shall bear interest at a variable rate (the "Delinquency Rate") equal to two
percent (2%) in excess of the base rate of The First National Bank of Boston
from time to time in effect commencing with the due date and continuing through
the day on which payment of such delinquent payment with interest thereon is
paid. If such rate is in excess of any maximum interest rate permissible under
applicable law, the Delinquency Rate shall be the maximum interest rate
permissible under applicable law.
SECTION 13 Superiority of Lease; Option to Subordinate
Section 13.1 Superiority of Lease; Option to Subordinate. This
Lease shall be superior to and shall not be subordinate to any mortgage on the
Premises except that Landlord shall subordinate this Lease to any mortgage of
the Premises provided that the holder of record thereof shall enter into an
agreement with Tenant, in such holder's customary form, by the terms of which
Such holder shall agree to (a) recognize the rights of Tenant under this Lease,
(b) perform Landlord's obligations hereunder arising after the date of such
holder's acquisition of title and (c) accept Tenant as tenant of the Premises
under the terms and conditions of this Lease in the event of acquisition of
title by such holder through foreclosure proceedings or otherwise and Tenant
shall agree to recognize the holder of such mortgage as Landlord in such event,
which agreement shall be made expressly to bind and inure to the benefit of the
Successors and assigns of Tenant and of the holder and upon anyone purchasing
the Premises at any foreclosure sale. Tenant agrees to execute and deliver any
appropriate instruments necessary to carry out the agreements contained in this
Section 13.1.
SECTION 14 Miscellaneous Provisions
Section 14.1. Notices from One Party to the Other. All notices
required or permitted hereunder shall be in writing and addressed, if to Tenant,
at the Original Address of Tenant or such other address as Tenant shall have
last designated by notice in writing to Landlord and, if to Landlord, at the
Original Address of Landlord or such other address as
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Landlord shall have last designated by notice in writing to Tenant. Any notice
shall be deemed duly given when delivered or tendered for delivery at such
address.
Section 14.2. Quiet Enjoyment. Landlord agrees that upon Tenant's
paying the rent and performing and observing the terms, covenants, conditions
and provisions on its part to be performed and observed, Tenant shall and may
peaceably and quietly have, hold and enjoy the Premises during the term without
any manner of hindrance or molestation from Landlord or anyone claiming under
Landlord, subject, however, to the terms of this Lease.
Section 14.3. Lease Not to Be Recorded; Notice of Lease. Tenant
agrees that it will not record this Lease. Landlord and Tenant agree that, on
the request of either, they will execute and record a notice or memorandum of
lease in form reasonably acceptable to Landlord and Tenant.
Section 14.4. Bind and Inure. The obligations of this Lease shall run
with the land, and this Lease shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
Section 14.5. Acts of God. In any case where either party hereto is
required to do any act, delays caused by or resulting from acts of God, war,
civil commotion, fire, flood or other casualty, labor difficulties, shortages of
labor, materials or equipment, government regulations, unusually severe weather,
or other causes beyond such party's reasonable control shall not be counted in
determining the time during which work shall be completed, whether such time be
designated by a fixed date, a fixed time or a "reasonable time," and such time
shall be deemed to be extended by the period of such delay.
Section 14.6. Landlord's Default. Landlord shall not be deemed to be
in default in the performance of any of its obligations hereunder unless it
shall fail to perform such obligations and unless within thirty (30) days after
notice from Tenant to Landlord specifying such default Landlord has not
commenced diligently to correct the default so specified or has not thereafter
diligently pursued such correction to completion.
Section 14.7. Miscellaneous. This Lease shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia. There are
no prior oral or written agreements between Landlord and Tenant affecting this
Lease.
<PAGE>
-21-
WITNESS the execution hereof under seal as of the day and year first above
written.
TENANT:
KLEARFOLD, INC.
By: /s/ Scott Herrin
-----------------------------
Name: Scott Herrin
Title: President
LANDLORD:
DENA CORPORATION
By: [SIGNATURE ILLEGIBLE]
-----------------------------
Name:
Title:
<PAGE>
Exhibit A
---------
Sketch Plan of Premises/Floor Plan of Spaces "A"-"D"
[SKETCH PLAN OF PREMISES/FLOOR PLAN OF SPACES "A"-"D" APPEARS HERE]
<PAGE>
Exhibit B
---------
Legal Description of Lot
All that certain tract, parcel or lot of land lying and being situate in Louisa
Courthouse Magisterial District, Louisa County, VIRGINIA, containing 20.724
acres according to a Plat of Survey by James H. Bell, Jr., P.C., dated November
16, 1984, revised May 20, 1985, entitled "Physical Survey of 20.724 Acres
Standing in the Name of KLEARFOLD/VA. Inc., Louisa District, Louisa County,
Virginia," a copy of which is recorded in the Clerk's Office of the Circuit
Court of Louisa County, Virginia, in Plat Book 7, Page 314.
<PAGE>
Exhibit 10.7
AMENDED AND RESTATED LEASE
by and between
KLEARFOLD, INC.,
as Tenant
AND
MELVIN B. HERRIN,
as Landlord
June 7, 1996
<PAGE>
(i)
<TABLE>
<S> <C>
SECTION 1. Reference Information................................... 1
Section 1.1. Reference Information............................. 1
Section 1.2. Exhibit........................................... 2
SECTION 2 Premises and Term........................................ 2
Section 2.1. Premises.......................................... 2
Section 2.2. Term.............................................. 2
Section 2.3. Option to Extend Term............................. 2
SECTION 3 Condition of Premises.................................... 3
Section 3.1. Condition of Premises............................. 3
SECTION4 Fixed Rent................................................ 3
Section 4.1. The Fixed Rent.................................... 3
Section 4.2 Producer Price Index Rate.......................... 3
SECTION 5 Real Estate and Other Taxes.............................. 4
Section 5.1. Real Estate Taxes................................. 4
SECTION 6 Insurance................................................ 5
Section 6.1. Tenant's Insurance................................ 5
Section 6.2. Requirements Applicable to Insurance Policies..... 6
Section 6.3. Waiver of Subrogation............................. 6
SECTION 7 Utilities................................................ 7
Section 7.1. Utilities......................................... 7
SECTION 8 Tenant's Covenants....................................... 7
Section 8.1. Repair and Maintenance............................ 7
Section 8.2. Use............................................... 7
Section 8.3. Compliance with Law and Insurance
Requirements...................................... 7
Section 8.4. Tenant's Work..................................... 8
Section 8.5. Indemnity......................................... 9
Section 8.6. Landlord's Right to Enter......................... 9
Section 8.7. Personal Property at Tenant's Risk................ 9
Section 8.8. Payment of Landlord's Cost of Enforcement.........10
Section 8.9. Yield up..........................................10
Section 8.10. Estoppel Certificate.............................10
Section 8.11. Holding Over.....................................11
Section 8.12. Assignment and Subletting........................11
Section 8.13. Overloading and Nuisance.........................12
Section 8.14. Signs............................................12
SECTION 9 Casualty or Taking.......................................12
Section 9.1. Termination......................................12
Section 9.2. Restoration......................................13
SECTION 10 Default.................................................14
Section 10.1. Events of Default................................14
Section 10.2. Remedies.........................................14
Section 10.3. Remedies Cumulative..............................15
Section 10.4. Landlord's Right to Cure Defaults................15
</TABLE>
<PAGE>
(ii)
<TABLE>
<S> <C>
Section 10.5. Effect of Waivers of Default...................15
Section 10.6. No Accord and Satisfaction.....................16
Section 10.7. Interest on Overdue Sums.......................16
SECTION 11 Superiority of Lease; Option to Subordinate.............16
Section 11.1. Superiority of Lease; Option to Subordinate....16
SECTION 12 Miscellaneous Provisions................................17
Section 12.1. Notices from One Party to the Other............17
Section 12.2. Quiet Enjoyment................................17
Section 12.3. Lease Not to Be Recorded; Notice of Lease......17
Section 12.4. Bind and Inure.................................17
Section 12.5. Acts of God....................................18
Section 12.6. Landlord's Default.............................18
Section 12.7. Permitted Contests.............................18
Section 12.8. Miscellaneous..................................18
</TABLE>
<PAGE>
-1-
AMENDED AND RESTATED LEASE
This Amended and Restated Lease amends and restates that certain Lease
Agreement between Tenant and Landlord dated July 1, 1985, as modified by letter
agreement dated December 15, 1994.
SECTION 1. Reference Information
Section 1.1. Reference Information. Reference in this Lease to any of
the following shall have the meaning set forth below:
Date of This Lease: June __, 1996
Premises: The ________ acre lot (the "Lot") described on Exhibit A attached
hereto, together with the building and other improvements therein (the
"Building"), situated at 364 Valley Road, Warrington, Pennsylvania.
Landlord: Melvin B. Herrin
Address of Landlord: Suite 102, 110 Gibraltar Road, Horsham, Pennsylvania
19044
Tenant: Klearfold, Inc., a Pennsylvania corporation
Address of Tenant: 364 Valley Road, Warrington, Pennsylvania 18976
Term Commencement Date: June 7, 1996
Term Expiration Date: December 31, 2005
Extension Term: One five-year additional term from January 1, 2006 to
December 31, 2010
Annual Fixed Rental Rate:
From Commencement Date $336,203.88
to December 31, 2000 (i.e., $28,016.99 per month)
<PAGE>
-2-
From January 1, 2001 to Annual Fixed Rental Rate calculated
December 31, 2005 pursuant to Section 4.2, as of the
commencement of each calendar year.
During Extension Term Annual Fixed Rental Rate calculated
pursuant to Section 4.2, as of the
commencement of each calendar year.
Fixed Rental: The annual fixed rent calculated in accordance with the
Annual Fixed Rental Rate.
Permitted Uses: Tenant's manufacturing operations, office space,
warehousing of inventory and related uses.
Liability Insurance Limit:
Bodily Injury Combined single per occurrence limit
and Property of $2,000,000 for bodily injury and
Damage: property damage
Section 1.2. Exhibit. The following Exhibit is attached to and
incorporated in this Lease:
Exhibit A: Description of Lot
SECTION 2 Premises and Term
Section 2.1. Premises. Landlord hereby leases and demises the
Premises to Tenant and Tenant hereby leases the Premises from Landlord, subject
to the terms and provisions of this Lease.
Section 2.2. Term. TO HAVE AND TO HOLD for an original term beginning
on the Term Commencement Date and continuing until the Term Expiration Date,
unless sooner terminated as hereinafter provided.
Section 2.3. Option to Extend Term. Tenant shall have the option to
extend the term of this Lease for the Extension Term as to the Premises,
provided Tenant shall have given written notice to Landlord of its exercise of
such option not less than nine months prior to the expiration of the original
term. All of the terms and provisions of this Lease shall be applicable during
the Extension Term except that Tenant
<PAGE>
-3-
shall have no option to extend the term of the Lease beyond the Extension Term.
SECTION 3 Condition of Premises
Section 3.1. Condition of Premises. Tenant agrees to accept the
Premises in its present "as is" condition.
SECTION 4 Fixed Rent
Section 4.1. The Fixed Rent. Tenant shall pay rent to Landlord at the
Address of Landlord or at such other place or to such other person or entity as
Landlord may by notice to Tenant from time to time direct, at the Annual Fixed
Rental Rate set forth in Section 1, in equal installments equal to one-twelfth
(1/12) of the Fixed Rental in advance on the first day of each calendar month
included in the term, and for any portion of a calendar month at the beginning
or end of the term, at the rate payable in advance for such portion.
Section 4.2 Producer Price Index Rate. For purposes hereof, the
"Producer Price Index" shall mean the national Producer Price Indexes for
Finished Goods as published monthly by the Bureau of Labor Statistics of the
U.S. Department of Labor with such index equal to 100 for the year 1982.
Effective as of January 1, 2001, the Fixed Rental for the Premises, shall
be increased in proportion to the percentage increase in the Producer Price
Index by comparing the Producer Price Index for December, 1995 with the Producer
Price Index for December, 2000.
The increased Fixed Rental shall be determined by multiplying a fraction in
which the December, 1995 Producer Price Index is the denominator and the
December, 2000 Producer Price Index is the numerator against the $336,203.88
annual Fixed Rental to determine the new Fixed Rental. The Fixed Rental, so
determined, shall be effective for the period January 1, 2001 through December
31, 2001.
Thereafter, during the remainder of the current term of this Lease
(the period from January 1, 2002 through December 31, 2005), the Fixed
Rental for the Premises shall be increased annually, based upon the
percentage increase in the Producer Price Index. For the period January
1, 2002 through December 31, 2002, the calculation shall be made as in
<PAGE>
-4-
the immediately preceding paragraph except that the numerator shall be the
Producer Price Index for December, 2001 and the denominator shall be the
Producer Price Index for December, 1995 with the fraction multiplied against the
$336,203.88 annual Fixed Rental. For the period January 1, 2003, through
December 31, 2003, the numerator shall be the Producer Price Index for December,
2002; and for the period January 1, 2004 through December 31, 2004, the
numerator shall be the Producer Price Index for December, 2003; and for the
period January 1, 2005 through December 31, 2005, the numerator shall be the
Producer Price Index for December 2004; and, if the Extension Term option has
been exercised pursuant to Section 2.3, for the period January 1, 2006 through
December 31, 2006, the numerator shall be the Producer Price Index for December,
2005; for the period January 1, 2007 through December 31, 2007, the numerator
shall be the Producer Price Index for December, 2006; for the period January 1,
2008 through December 31, 2008, the numerator shall be the Producer Price Index
for December, 2007; for the period January 1, 2009 through December 31, 2009,
the numerator shall be the Producer Price Index for December, 2008; and for the
period January 1, 2010 through December 31, 2010, the numerator shall be the
Producer Price Index for December, 2009. In each case, the denominator shall be
the Producer Price Index for December, 1995 and, in each case, the fraction
shall be multiplied against the $336,203.88 annual Fixed Rental.
In the event that the calculation of the Fixed Rental pursuant to this
Section 4.2 results in the reduction of the Fixed Rental, then the Fixed Rental
shall not be reduced but, for the period until the next rent adjustment shall be
calculated, shall be maintained at the level at which it was just prior to the
calculation which would have otherwise resulted in a reduction of the Fixed
Rental.
LEASES
SECTION 5 Real Estate and Other Taxes
Section 5.1. Real Estate Taxes. Tenant shall pay to the appropriate
taxing or governmental authority all taxes, assessments (special, betterment or
otherwise), levies, fees, water and sewer rents and charges, and all other
government levies and charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, which are, at any time prior to or during the term
hereof, imposed or levied upon or assessed against the Lot or Building
(collectively "taxes and assessments" or if singular "tax or assessment").
<PAGE>
-5-
If, by law, any tax or assessment is payable, or may at the option of the
taxpayer be paid, in installments (whether or not any interest shall accrue on
the unpaid balance of such tax or assessment), unless Tenant shall otherwise
direct, Landlord shall elect to pay the same in installments over a period of
time to be mutually agreed to by Landlord and Tenant but in no event longer than
the longest amortization period available to the taxpayer, and only the
installments thereof (and interest thereon) becoming due during the term shall
be payable by Tenant hereunder.
All payments shall be made by Tenant on or before the due date of such
taxes and assessments, but in no event shall Tenant be liable for any payment
until fifteen (15) days after Landlord shall have delivered the tax bill
therefor to Tenant, and if any penalty or interest shall accrue because Landlord
shall not have timely delivered any such bill to Tenant, Landlord shall pay such
penalty or interest.
Taxes or assessments shall not include any income taxes, excess profits
taxes, excise taxes, franchise taxes, estate, succession, inheritance or
transfer taxes.
SECTION 6 Insurance
Section 6.1. Tenant's Insurance. Tenant shall maintain throughout
the term the following insurance:
(a) commercial general liability insurance for any injury to person or
property occurring on the Premises, naming as insured Tenant, Landlord and such
persons, including, without limitation, Landlord's managing agent, as Landlord
shall designate from time to time, in amounts which shall, at the beginning of
the Term, be at least equal to the limits set forth in Section 1, and, from time
to time during the term, shall be for such higher limits as are reasonably
required by Landlord;
(b) workers' compensation insurance with statutory limits covering all of
Tenant's employees working at the Premises;
(c) all risk, special form property insurance on a replacement cost,
agreed amount basis, in an amount not less than one hundred percent (100%) of
the full insurable value of the Building, together with business interruption or
rental loss coverage and, if Tenant so elects, flood coverage to the extent the
same is available, insuring the Building and its rental value, with deductibles
not to exceed $10,000 or one percent (1%) of the face amount of the policy,
whichever is less, naming Landlord, Tenant,
<PAGE>
-6-
and Landlord's mortgagee as insureds, as their respective interests may appear;
and
(d) insurance against loss or damage from sprinklers and from leakage or
explosions or cracking of boilers, pipes carrying steam or water, or both,
pressure vessels or similar apparatus, in the so-called "broad form," in such
amounts and with such deductibles as Tenant may reasonably consider appropriate,
and insurance against such other hazards and in such amounts as may from time to
time be reasonably required by any bank, insurance company or other lending
institution holding a mortgage on the Premises.
For the purposes of this Section, "full insurable value" shall mean the
actual cost of replacing the Building, without allowance for depreciation and
exclusive of the cost of excavations, foundations and footings, as determined by
the company issuing the insurance policy at the time of the policy issued. Not
more frequently than once every two (2) years, either party shall have the right
to notify the other party that it elects to have the full insurable value
redetermined by the insurance company, and the insurance policy shall be
adjusted according to the redetermination when made by the insurance company.
Section 6.2. Requirements Applicable to Insurance Policies. All
policies for insurance required under the provisions of Section 6.1 shall be
obtained from responsible companies qualified to do business in the Commonwealth
of Pennsylvania and in good standing therein, which companies and the amount of
insurance allocated thereto shall be subject to Landlord's approval, such
approval not to be unreasonably withheld or delayed. Tenant agrees to furnish
Landlord with insurance company certificates of all such insurance and copies of
the policies therefor prior to the Term Commencement Date and of each renewal
policy at least thirty (30) days prior to the expiration of the policy it
renews. Each such policy shall be noncancellable with respect to the interest of
Landlord and such mortgagees without at least thirty (30) days' prior written
notice thereto.
Section 6.3. Waiver of Subrogation. All insurance which is carried by
either party with respect to the Premises or to furniture, furnishings, fixtures
or equipment therein or alterations or improvements thereto, whether or not
required hereunder, shall include provisions which either designate the other
party as one of the insured or deny to the insurer acquisition by subrogation of
rights of recovery against the other party to the extent such rights have been
waived by the insured party prior to occurrence of loss or injury to the extent
that such provisions may be effective without making it impossible to obtain
insurance coverage
<PAGE>
-7-
from responsible companies qualified to do business in the Commonwealth of
Pennsylvania (even though extra premium may result therefrom) and without
voiding the insurance coverage in force between the insurer and the insured
party. On reasonable request, each party shall be entitled to have duplicates or
certificates of policies containing such provisions. Each party hereby waives
all rights of recovery against the other for loss or injury against which the
waiving party is protected by insurance containing such provisions, reserving,
however, any rights with respect to any excess of loss or injury over the amount
recovered by such insurance.
SECTION 7 Utilities
Section 7.1. Utilities. Tenant shall make all arrangements for and
shall pay before delinquent all charges for water, sewer, gas, electricity and
other utilities or services used or consumed in the Premises, whether called
charge, tax, assessment, fee or otherwise, including, without limitation, water
and sewer use charges and taxes, if any. Landlord shall not be liable for any
interruption or failure in the supply of any such utilities to the Premises
unless due to the negligence or willful misconduct of Landlord, its employees or
agents.
SECTION 8 Tenant's Covenants
Section 8.1. Repair and Maintenance. Except as otherwise provided in
Section 9, Tenant shall keep the Premises in as good order, condition and repair
as they are in on the Term Commencement Date or may be put in during the term,
reasonable use and wear and tear excepted, and shall maintain and repair the
exterior walls, roof, foundation, structural supports of the Building and
heating, plumbing, electrical, air conditioning and mechanical systems of the
Building and Premises to the extent necessary to keep the same in such
condition. Tenant shall maintain and repair the landscaped areas, curbs, cellar
doors, awnings and parking areas, sidewalks and driveways, and shall clean and
provide snowplowing for the same. Tenant shall keep in a safe, secure and
sanitary condition all trash and rubbish temporarily stored at the Premises and
shall arrange for and be responsible for all of the costs of a trash and rubbish
removal service in connection with Tenant's use of the Premises.
Section 8.2. Use. Tenant shall use the Premises only for the Permitted
Uses and shall from time to time procure all licenses and permits necessary
therefor at Tenant's sole expense.
Section 8.3. Compliance with Law and Insurance Requirements. Tenant
shall make all repairs, alterations, additions or
<PAGE>
-8-
replacements to the Premises required by any law or ordinance or any order or
regulation of any public authority arising from Tenant's use of the Premises and
shall keep the Premises equipped with all safety appliances so required. Tenant
shall not dump, flush, or in any way introduce any hazardous substances or any
other toxic substances into the septic, sewage or other waste disposal system
serving the Premises, or generate, store or dispose of hazardous substances in
or on the Premises or dispose of hazardous substances from the Premises to any
other location, other than in compliance with the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. (S)6901 et seq., and all other applicable
federal, state or local codes, regulations, ordinances and laws. Tenant shall
comply with the orders and regulations of all governmental authorities with
respect to zoning, building, fire, health and other codes, regulations,
ordinances or laws applicable to the Premises. "Hazardous substances" as used in
this Section shall mean "hazardous substances" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
(S)9601 et seq. and regulations adopted pursuant to such Act.
Landlord may, if it so elects, make any of the repairs, alterations,
additions or replacements referred to in this Section 8.3 which affect the
Building structure or the Building systems, and Tenant shall reimburse Landlord
for the reasonable cost thereof on demand.
Tenant will provide Landlord, from time to time upon Landlord's request,
with all records and information regarding any hazardous substance maintained on
the Premises by Tenant.
Landlord shall have the right, at Tenant's expense, to make such
inspections as Landlord shall reasonably elect from time to time to determine if
Tenant is complying with this Section.
Tenant shall comply promptly with the recommendations of any insurer which
may be applicable to the Premises by reason of Tenant's use thereof. In no event
shall any activity be conducted by Tenant on the Premises which may give rise to
any cancellation of any insurance policy or make any insurance unobtainable.
Section 8.4. Tenant's Work. Tenant shall have the right, at any time
and from time to time during the term of this Lease, at its own cost and
expense, to make such installations, alterations, additions or improvements in
or to the Premises as Tenant may elect, provided, however, that Tenant shall not
construct any additions to the existing Building or erect any new buildings
without on each occasion obtaining
<PAGE>
-9-
the prior written consent of Landlord, such consent not to be unreasonably
withheld or delayed. Any such work so approved by Landlord shall be performed
only in accordance with plans and specifications therefor approved by Landlord.
Tenant shall procure at Tenant's expense all necessary permits and licenses
before undertaking any work on the Premises and shall perform all such work in a
good and workmanlike manner employing materials of good quality and so as to
conform with all applicable zoning, building, fire, health and other codes,
regulations, ordinances and laws and with all applicable insurance requirements.
Tenant shall keep the Premises at all times free of liens for labor and
materials. Tenant shall save Landlord harmless and indemnified from all injury,
loss, claims or damage to any person or property occasioned by or growing out of
such work. Landlord may inspect the work of Tenant at reasonable times and give
notice of observed defects.
Section 8.5. Indemnity. Tenant shall defend, with counsel approved by
Landlord, all actions against Landlord, any partner, trustee, stockholder,
officer, director, employee or beneficiary of Landlord, ("Indemnified Parties")
with respect to, and shall pay, protect, indemnify and save harmless, to the
extent permitted by law, all Indemnified Parties from and against, any and all
liabilities, losses, damages, costs, expenses (including reasonable attorneys'
fees and expenses), causes of action, suits, claims, demands or judgments of any
nature arising from (a) injury to or death of any person, or damage to or loss
of property, occurring in the Premises or connected with the use, condition or
occupancy of any thereof unless caused by the negligence of Landlord or its
servants, agents or contractors, (b) violation of this Lease by Tenant,
including any violations of Section 8.3, or (c) any act, fault, omission, or
other misconduct of Tenant or its agents, contractors, licensees, sublessees or
invitees.
Section 8.6. Landlord's Right to Enter. Tenant shall permit Landlord
and its agents to enter into the Premises at reasonable times and upon
reasonable notice to examine the Premises, make such repairs and replacements as
Landlord shall be required to perform, or show the Premises to prospective
purchasers and lenders, and, during the last six months of the term, to show the
Premises to prospective tenants and to keep affixed in suitable places notices
of availability of the Premises.
Section 8.7. Personal Property at Tenant's Risk. All furnishings,
fixtures, machinery, equipment, effects and property of every kind of Tenant and
of all persons claiming by, through or under Tenant which may be on the Premises
shall be at the sole risk and hazard of Tenant and if the whole or any part
thereof shall be destroyed or damaged
<PAGE>
-10-
by fire, water or otherwise, or by the leakage or bursting of water pipes, steam
pipes or other pipes, by theft or from any other cause, no part of such loss or
damage shall be charged to or to be borne by Landlord, except that Landlord
shall in no event be indemnified or held harmless or exonerated from any
liability to Tenant for any injury, loss, damage or liability (i) not covered by
Tenant's insurance to the extent prohibited by law, or (ii) caused by the
negligence of Landlord, its employees, agents or contractors. Tenant shall
insure Tenant's personal property. Tenant shall have the right to move its
trade fixtures, machinery and equipment at the termination of the Lease,
including, without limitation, anything affixed to the Premises by Tenant at its
expense for purposes of trade, manufacture, ornamentation or domestic use.
Section 8.8. Payment of Landlord's Cost of Enforcement. Tenant shall
pay, on demand, Landlord's expenses, including reasonable attorneys' fees,
incurred in enforcing any obligation of Tenant under this Lease or in curing any
default by Tenant under this Lease as provided in Section 10.4.
Section 8.9. Yield up. At the expiration of the term or earlier
termination of this Lease, Tenant shall surrender all keys to the Premises,
remove all of its trade fixtures, machinery and equipment and personal property
in the Premises, remove all Tenant's signs wherever located, repair all damage
caused by such removal and yield up the Premises (including all installations
and improvements made by Tenant except for trade fixtures, machinery, equipment,
and Tenant's personal property) broom-clean and in the same good order and
repair in which Tenant is obliged to keep and maintain the Premises under this
Lease, wear and tear and casualty excepted. Any property not so removed shall be
deemed abandoned and may be removed and disposed of by Landlord in such manner
as Landlord shall determine and Tenant shall pay Landlord the entire cost and
expense incurred by it in effecting such removal and disposition and in making
any incidental repairs and replacements to the Premises and for use and
occupancy during the period after the expiration of the term and prior to
Tenant's performance of its obligations under this Section 8.9.
Section 8.10. Estoppel Certificate. Each of the parties shall upon
not less than ten (10) business days' prior notice by the other, execute,
acknowledge and deliver to such other party a statement in writing certifying
that this Lease is unmodified and in full force and effect and that, except as
stated therein, the signer of such certificate has no knowledge of any defenses,
offsets or counterclaims against Tenant's obligations to pay the Fixed Rental
and any other charges and to perform
<PAGE>
-11-
its other covenants under this Lease (or, if there have been any modifications
that the same is in full force and effect as modified and stating the
modifications and, if there are any defenses, offsets or counterclaims, setting
them forth in reasonable detail), the dates to which the Fixed Rental and other
charges have been paid and a statement that such other party is not in default
hereunder (or if in default, the nature of such default, in reasonable detail).
Any such statement delivered pursuant to this Section 8.10 may be relied upon by
the party requesting it or by any prospective mortgagee, purchaser, assignee or
subtenant.
Section 8.11. Holding Over. Tenant shall vacate the Premises
immediately upon the expiration or sooner termination of this Lease. If Tenant
shall retain possession of the Premises or any part thereof after the
termination of the term without Landlord's express consent, Tenant shall pay
Landlord rent at the monthly rate specified in Section 1 for the time Tenant so
remains in possession and, in addition thereto, shall pay Landlord for all
direct damages, sustained by reason of Tenant's retention of possession. The
provisions of this Section shall not exclude Landlord's rights of reentry or any
other right hereunder, including, without limitation, the right to refuse the
monthly rent and instead to remove Tenant through summary proceedings for
holding over beyond the expiration of the term of this Lease.
Section 8.12. Assignment and Subletting. Tenant shall not assign,
transfer, mortgage or pledge this Lease or grant a security interest in Tenant's
rights hereunder or sublease all or any part of the Premises or suffer or permit
this Lease or the leasehold estate hereby created or any other rights arising
under this Lease to be assigned, transferred or encumbered, in whole or in part,
without the prior written consent of the Landlord, such consent not to be
unreasonably withheld or delayed. Any attempted assignment, transfer, mortgage,
pledge, grant of security interest, sublease or other encumbrance, except with
prior written approval thereof from Landlord, shall be void. No assignment,
transfer, mortgage, grant of security interest, sublease or other encumbrance,
whether or not approved, and no indulgence granted by Landlord to any assignee
or sublessee, shall in any way impair the continuing primary liability (which
after an assignment shall be joint and several with the assignee) of Tenant
hereunder, and no approval in a particular instance shall be deemed to be a
waiver of the obligation to obtain Landlord's approval in any other case.
Notwithstanding the foregoing, Tenant may enter into any of the following
transfers without obtaining the prior written consent of Landlord:
<PAGE>
-12-
(a) Tenant may sublease all or part of the Premises or assign its
interest in this Lease to any corporation which controls, is controlled by, or
is under common control with the original Tenant to this Lease by means of an
ownership interest of more than 50%;
(b) Tenant may assign its interest in this Lease to a corporation
which results from a merger, consolidation or other reorganization in which
Tenant is not the surviving corporation;
(c) Tenant may assign this Lease to a corporation which purchases or
otherwise acquires all or substantially all of the assets of Tenant; and
(d) Tenant may mortgage and/or pledge this Lease and the leasehold
estate created hereby to The First National Bank of Boston, as Collateral Agent
for a syndicate of lenders under that certain Revolving Credit and Term Loan
Agreement to be entered into with Tenant, pursuant to which such lenders have
agreed to make revolving credit loans and term loans to Tenant in an aggregate
amount not to exceed $43,000,000.
Section 8.13. Overloading and Nuisance. Tenant shall not injure,
overload, deface or otherwise harm the Premises, commit any nuisance, permit the
emission of any objectionable noise, vibration or odor, make, allow or suffer
any waste or make any use of the Premises which is contrary to any law or
ordinance or which will invalidate any of Landlord's insurance.
Section 8.14. Signs. Tenant at its cost shall have the right to place,
construct and maintain on the Premises one or more signs advertising its
business on the Premises. Any sign that Tenant shall erect shall comply with all
laws and applicable governmental regulations and Tenant shall obtain any
approval required by such laws.
SECTION 9 Casualty or Taking
Section 9.1. Termination. In the event that greater than twenty-five
percent (25%), or such lesser percentage in the event that the suitability of
the Premises for Tenant's use is adversely affected thereby, of the ground floor
area of the Building or the Lot shall be taken by any public authority or for
any public use or destroyed by the action of any public authority (a "Taking")
then this Lease may be terminated by either Landlord or Tenant effective on the
effective date of the Taking. In the event that, greater than 25%, or such
lesser percentage in the event that
<PAGE>
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the suitability of the Premises for Tenant's use is adversely affected thereby,
of the Premises shall be destroyed or damaged by fire or casualty (a "Casualty")
and if Tenant's architect, engineer or contractor shall determine that it will
require in excess of one hundred twenty (120) days from the date of the Casualty
to restore the Premises, this Lease may be terminated by Tenant by notice to
Landlord within thirty (30) days after the casualty. In the case of a Taking,
such election, which may be made notwithstanding the fact that Landlord's entire
interest may have been divested, shall be made by the giving of notice by
Landlord or Tenant to the other within thirty (30) days after Landlord or
Tenant, as the case may be, shall receive notice of the Taking.
Section 9.2. Restoration. In the event of a Taking or a Casualty, if
neither Landlord nor Tenant exercises the election to terminate provided in
Section 9.1, this Lease shall continue in force and a just proportion of the
Fixed Rental and other charges hereunder, according to the nature and extent of
the damages sustained by the Premises, but in the case of a Casualty not in
excess of an equitable portion of the net proceeds of insurance recovered by
Landlord under the rental insurance carried pursuant to Section 6.1, shall be
abated until the Premises, or what may remain thereof, shall be put by Tenant in
proper condition for use subject to zoning and building laws or ordinances then
in existence, which, unless Landlord or Tenant has exercised its option to
terminate pursuant to Section 9.1, Tenant covenants to do with reasonable
diligence at Tenant's expense. Tenant's obligations with respect to restoration
shall not require Tenant to expend more than the net proceeds of insurance
recovered plus the amount of any deductible for such Casualty or net damages
awarded to Landlord for such Taking and made available for restoration by
Landlord's mortgagees. "Net proceeds of insurance recovered" or "net damages
awarded" refers to the gross amount of such insurance or damages less the
reasonable expenses of Tenant and Landlord in connection with the collection of
the same, including, without limitation, fees and expenses for legal and
appraisal services.
Notwithstanding the foregoing, in the event that Landlord's mortgagee does
not permit the net proceeds of insurance recovered or net damages awarded for
such Casualty or Taking to be made available to Tenant for restoration, or in
the event the net proceeds of insurance recovered for such Casualty plus the
amount of any deductible or the net damages awarded for such Taking shall be
insufficient to fully restore the Premises, or in the event that the Casualty is
not insured against under the policy of insurance required to be maintained by
Tenant under Section 6.1, then Tenant shall have the right to terminate this
Lease unless Landlord agrees to contribute the amount by which the actual costs
of
<PAGE>
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restoring the Premises exceed the net proceeds of insurance recovered or net
damages awarded.
SECTION 10 Default
Section 10.1. Events of Default. If
(a) Tenant shall default in the performance of any of its obligations to
pay the Fixed Rental or any other sum payable hereunder and if such default
shall continue for ten (10) days after notice from Landlord designating such
default;
(b) within thirty (30) days after notice from Landlord to Tenant
specifying any other default or defaults Tenant has not commenced diligently to
correct the default or defaults so specified or has not thereafter diligently
pursued such correction to completion;
(c) a petition is filed by Tenant for liquidation, or for reorganization
or an arrangement or for any other relief under any provision of the Bankruptcy
Code as then in force and effect; or
(d) an involuntary petition under any of the provisions of the Bankruptcy
Code is filed against Tenant and such involuntary petition is not dismissed
within sixty (60) days thereafter,
then, and in any of such cases, Landlord and the agents and servants of Landlord
lawfully may, in addition to and not in derogation of any remedies for any
preceding breach of covenant, and with or without process of law (forcibly, if
necessary) enter into and upon the Premises or any part thereof in the name of
the whole, or mail a notice of termination addressed to Tenant, and repossess
the same as of Landlord's former estate and expel Tenant and those claiming
through or under Tenant and without prejudice to any remedies which might
otherwise be used for arrears of rent or prior breach of covenant, and upon such
entry or mailing as aforesaid this Lease shall terminate, Tenant hereby waiving
all statutory rights (including, without limitation, rights of redemption, if
any) to the extent such rights may be lawfully waived.
Section 10.2. Remedies. In the event that this Lease is terminated
under any of the provisions contained in Section 10.1, Tenant shall remain
liable and shall pay punctually to Landlord all the sums and shall perform all
the obligations which Tenant covenants in this Lease to pay and to perform in
the same manner and to the same extent and at the same time as if this Lease had
not been terminated. In calculating the
<PAGE>
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amounts to be paid by Tenant pursuant to the preceding sentence, Tenant shall be
credited with the net proceeds of any rent obtained by Landlord by reletting the
Premises, after deducting all Landlord's reasonable expenses in connection with
such reletting, including, without limitation, all repossession costs, brokerage
commissions, fees for legal services and expenses of preparing the Premises for
such reletting, it being agreed by Tenant that Landlord may (a) relet the
Premises or any part or parts thereof for a term or terms which may at
Landlord's option be equal to or less than or exceed the period which would
otherwise have constituted the balance of the term hereof and may grant such
concessions and free rent as Landlord in its reasonable judgment considers
advisable or necessary to relet the same and (b) make such alterations, repairs
and decorations in the Premises as Landlord in its reasonable judgment considers
advisable or necessary to relet the same, and no action of Landlord in
accordance with the foregoing or failure to relet or to collect rent under
reletting shall operate or be construed to release or reduce Tenant's liability
as aforesaid. Alternatively, at the option of Landlord, in the event this Lease
is so terminated, Landlord shall be entitled to recover forthwith from Tenant as
liquidated damages and not a penalty, and in lieu of all other damages, the
excess of the total rent reserved for the residue of the term over the fair
market rental value of the Premises for the residue of the term, such excess to
be discounted to present value at per annum rate equal to the Base Rate of The
First National Bank of Boston then in effect.
Section 10.3. Remedies Cumulative. Except as otherwise expressly
provided herein, any and all rights and remedies which Landlord may have under
this Lease and at law and equity shall be cumulative and shall not be deemed
inconsistent with each other, and any two or more of all such rights and
remedies may be exercised at the same time to the greatest extent permitted by
law.
Section 10.4. Landlord's Right to Cure Defaults. At any time following
ten (10) days' prior notice to Tenant (except in cases of emergency when no
notice shall be required), Landlord may (but shall not be obligated to) cure any
default by Tenant under this Lease, and whenever Landlord so elects, all costs
and expenses incurred by Landlord, including reasonable attorneys' fees, in
curing a default shall be paid by Tenant to Landlord on demand, together with
interest thereon at the rate provided in Section 10.7 from the date incurred by
Landlord to the date of payment by Tenant.
Section 10.5. Effect of Waivers of Default. Any consent or permission
by Landlord to any act or omission which otherwise would be a
<PAGE>
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breach of any covenant or condition herein, or any waiver by Landlord of the
breach of any covenant or condition herein, shall not in any way be held or
construed (unless expressly so declared) to operate so as to impair the
continuing obligation of any covenant or condition herein, or otherwise operate
to permit the same or similar acts or omissions except as to the specific
instance. The failure of Landlord to seek redress for violation of, or to insist
upon the strict performance of, any covenant or condition of this Lease shall
not be deemed a waiver of such violation nor prevent a subsequent act, which
would have originally constituted a violation, from having all the force and
effect of an original violation. The receipt by Landlord of rent with knowledge
of the breach of any covenant of this Lease shall not be deemed to have been a
waiver of such breach by Landlord or of any of Landlord's remedies on account
thereof, including its right of termination for such default.
Section 10.6. No Accord and Satisfaction No acceptance by Landlord of
a lesser sum than the Fixed Rental or any other charge then due shall be deemed
to be other than on account of the earliest installment of such rent or charge
due, unless Landlord elects by notice to Tenant to credit such sum against the
most recent installment due. Any endorsement or statement on any check or any
letter accompanying any check or payment as rent or other charge shall not be
deemed an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such installment
or pursue any other remedy under this Lease or otherwise.
Section 10.7. Interest on Overdue Sums. If Tenant shall fail to pay
Fixed Rental or any other sum payable by Tenant to Landlord by the due date
thereof (i.e., the due date disregarding any requirement of notice from Landlord
or any period of grace allowed to Tenant), the amount so unpaid shall bear
interest at a variable rate (the "Delinquency Rate") equal to two percent (2%)
in excess of the base rate of The First National Bank of Boston from time to
time in effect commencing with the due date and continuing through the day on
which payment of such delinquent payment with interest thereon is paid. If such
rate is in excess of any maximum interest rate permissible under applicable law,
the Delinquency Rate shall be the maximum interest rate permissible under
applicable law.
SECTION 11 Superiority of Lease; Option to Subordinate
Section 11.1. Superiority of Lease; Option to Subordinate. This Lease
shall be superior to and shall not be subordinate to any mortgage on the
Premises except that Landlord shall subordinate this
<PAGE>
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Lease to any mortgage of the Premises provided that the holder of record thereof
shall enter into an agreement with Tenant, in such holder's customary form, by
the terms of which such holder shall agree to (a) recognize the rights of Tenant
under this Lease, (b) perform Landlord's obligations hereunder arising after the
date of such holder's acquisition of title and (c) accept Tenant as tenant of
the Premises under the terms and conditions of this Lease in the event of
acquisition of title by such holder through foreclosure proceedings or otherwise
and Tenant shall agree to recognize the holder of such mortgage as Landlord in
such event, which agreement shall be made expressly to bind and inure to the
benefit of the successors and assigns of Tenant and of the holder and upon
anyone purchasing the Premises at any foreclosure sale. Tenant agrees to execute
and deliver any appropriate instruments necessary to carry out the agreements
contained in this Section 11.1.
SECTION 12 Miscellaneous Provisions
Section 12.1. Notices from One Party to the Other. All notices
required or permitted hereunder shall be in writing and addressed, if to Tenant,
at the Original Address of Tenant or such other address as Tenant shall have
last designated by notice in writing to Landlord and, if to Landlord, at the
Original Address of Landlord or such other address as Landlord shall have last
designated by notice in writing to Tenant. Any notice shall be deemed duly given
when delivered or tendered for delivery at such address.
Section 12.2. Quiet Enjoyment. Landlord agrees that upon Tenant's
paying the rent and performing and observing the terms, covenants, conditions
and provisions on its part to be performed and observed, Tenant shall and may
peaceably and quietly have, hold and enjoy the Premises during the term without
any manner of hindrance or molestation from Landlord or anyone claiming under
Landlord, subject, however, to the terms of this Lease.
Section 12.3. Lease Not to Be Recorded; Notice of Lease. Tenant agrees
that it will not record this Lease. Landlord and Tenant agree that, on the
request of either, they will execute and record a notice or memorandum of lease
in form reasonably acceptable to Landlord and Tenant.
Section 12.4. Bind and Inure. The obligations of this Lease shall run
with the land, and this Lease shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
<PAGE>
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Section 12.5. Acts of God. In any case where either party hereto is
required to do any act, delays caused by or resulting from acts of God, war,
civil commotion, fire, flood or other casualty, labor difficulties, shortages of
labor, materials or equipment, government regulations, unusually severe weather,
or other causes beyond such party's reasonable control shall not be counted in
determining the time during which work shall be completed, whether such time be
designated by a fixed date, a fixed time or a "reasonable time," and such time
shall be deemed to be extended by the period of such delay.
Section 12.6. Landlord's Default. Landlord shall not be deemed to be
in default in the performance of any of its obligations hereunder unless it
shall fail to perform such obligations and unless within thirty (30) days after
notice from Tenant to Landlord specifying such default Landlord has not
commenced diligently to correct the default so specified or has not thereafter
diligently pursued such correction to completion.
Section 12.7. Permitted Contests. Tenant shall have the right to
contest or review the amount or validity of all taxes and assessments and any
repairs, alterations, additions, and improvements required by any law, rule,
regulation or requirement of any public authority and the effect on the Premises
or Tenant's use thereof of any laws, rules, regulations and requirements of any
public authority by legal proceedings, or in such other manner as it may deem
suitable (which, if instituted, Tenant shall conduct, if necessary or
appropriate, in the name of and with the cooperation of Landlord). Landlord
shall execute all documents necessary or appropriate to comply with the
foregoing. Pending any such proceeding Tenant shall have the right to pay any
taxes and assessments in the minimum amount (but not in excess thereof) required
by law in order to maintain such proceeding. Notwithstanding the foregoing,
however, Tenant shall promptly pay all taxes and assessments if at any time the
Premises or any part thereof shall then be immediately subject to forfeiture or
if Landlord shall be subject to any criminal liability arising out of the
nonpayment thereof.
Section 12.8. Miscellaneous. This Lease shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania. There
are no prior oral or written agreements between Landlord and Tenant affecting
this Lease.
<PAGE>
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WITNESS the execution hereof under seal as of the day and year first above
written.
TENANT:
KLEARFOLD, INC.
By: /s/ Scott Herrin
---------------------------
Name: Scott Herrin
Title: President
LANDLORD:
/s/ Melvin B. Herrin
------------------------------
Melvin B. Herrin
<PAGE>
Exhibit A
---------
Legal Description of Lot
ALL THAT CERTAIN tract of land situate in the Township of Warrington, County of
Bucks, Commonwealth of Pennsylvania, bounded and described in accordance with a
Final Plan of the Paul Valley Industrial Park made for Barnsel, Inc. by
Engineering and Planning Associates, Inc. of Warrington, Pennsylvania, dated
August 25, 1966, as follows, to wit:
BEGINNING at a point on the northwesterly right-of-way line of Valley Road (T-
381) (existing 33 feet wide, proposed 80 feet wide) said point being located
South 41 degrees 36 minutes 45 seconds West 1,630.05 feet from the intersection
of said Northwesterly right-of-way line of Valley Road and the Southwesterly
right-of-way line of Street Road (LR 09040) (existing 80 feet wide, proposed 120
feet wide); THENCE the following courses and distances: (1) Continuing to
follow aforementioned Northwesterly right-of-way line of Valley Road South 41
degrees 36 minutes 45 seconds West 421.06 feet to a point; (2) THENCE North 48
degrees 23 minutes 15 seconds West 721.42 feet to a point; (3) THENCE North 40
degrees 51 minutes 50 seconds East 421.10 feet to a point; (4) THENCE South 48
degrees 23 minutes 15 seconds East 726.92 feet to the first mentioned point and
place of beginning.
CONTAINING therein 7 acres, more or less.
BEING LOT NO.5 as shown on the above mentioned plan.
BEING KNOWN AS 364 Valley Road
COUNTY PARCEL NO.50-31-33-6
TOGETHER with the free and common use, right, liberty and privilege of an access
road at times hereafter, forever, in common with the owners, tenants and
occupiers of said parcels of ground abutting same to the use thereof.
<PAGE>
Exhibit 10.8
THIS Lease, made and entered into this 29th day of May, 1985, by and
between Chicago Title and Trust Company, not individually, but as Trustee under
Trust Agreement dated February 1, 1977, and known as Trust Number 1069185,
hereinafter called "Lessor", and AGI Incorporated, an Illinois Corporation,
hereinafter called "Lessee";
WITNESSETH:
----------
1. Premises
--------
For and in consideration of the covenants herein contained, Lessor hereby
leases to Lessee, and Lessee hereby takes from Lessor, on the terms hereinafter
set forth, the land and building, containing 256,629 square feet, situated in
the County of Cook, State of Illinois, legally described on Exhibit "A" attached
hereto and made a part hereof, together with (a) the exclusive use by Lessee,
its agents, employees, customers and assigns (in common with others) of the
parking facilities provided, (b) all rights, privileges, easements and
appurtenances belonging to or in any pertaining to the said premises or the
building and other improvements of which the premises are a part, and (c) all
fixtures, appliances, furnaces, boilers, machinery, engines, motors,
compressors, dynamos, elevators, fittings, piping, connections, conduits, ducts,
partitions, and equipment and apparatus of every kind and description hereafter
affixed or attached to any such building, structure or improvement, all
machinery and equipment used or procured for use in connection with, or for the
heating, cooling, lighting, plumbing, ventilation, air-conditioning,
refrigeration, cleaning or general operation of any such building, structure or
improvement.
Said land, property and interests described in the paragraph immediately
above, are hereinafter called the "premises" or "Demised Premises".
2. Base Term
---------
The original terms of this Lease shall be for a period of seven (7) years,
commencing on June 1, 1985 (hereinafter referred to as the "Commencement Date"),
and ending at 11:59 p.m. on May 31, 1992 (unless this Lease shall sooner
terminate as provided herein) upon and subject to the written covenants,
agreements, terms, provisions and limitations hereinafter set forth, all of
which Lessee covenants and agree to perform and observe.
3. Rent
----
(a) In consideration of the leasing aforesaid, Lessee covenants and agrees
to pay to Lessor rental (hereinafter referred to as "Net Rent") for said Demised
Premises in the amount of FIVE HUNDRED SIX THOUSAND and 00/100 DOLLARS
($506,000.00) per year, payable in monthly installments in advance in the amount
of FORTY TWO THOUSAND ONE HUNDRED SIXTY-SIX and 67/100 DOLLARS ($42,166.67) on
the first day of each and every month thereafter, to and including May 1, 1992.
(b) The aforesaid Net Rent shall be in addition to and over and above all
other payments and reimbursements to be made by Lessee as hereinafter provided.
The Net Rent shall be paid to Lessor without notice or demand and without
abatement, deduction or set-off. It is the purpose and intent of Lessor and
Lessee that the Net Rent shall be absolutely net to Lessor, so that this Lease
shall yield, net, to be absolutely net to Lessor, so that this Lease shall
yield, net, to Lessor, the Net Rent specified herein and that all taxes, costs,
fees, interest, charges, expenses, reimbursements and obligations of every kind
and nature whatsoever relating to the Demised Premises
<PAGE>
mortgage obligation against the Demised Premises) which may arise or become due
during or out of the term of this Lease shall be paid or discharged by Lessee
and Lessor shall be indemnified and saved harmless by Lessee from and against
such taxes, costs, fees, interest, charges, expenses (including, without
limitation all utility expenses), reimbursements and obligations; and in the
event of non-payment thereof, Lessor shall have, in addition to all other rights
and remedies, all the rights and remedies provided for herein or by law in the
case of non-payment of the Net Rent.
(c) All rents shall be paid in such lawful money of the United States of
America as Lessor may designate in writing at the time or from time to time
during the demised term. Lessee shall pay the Net Rent herby reserved at such
place as Lessor may from time to time previously designate in writing, and in
the absence of such designation, to Ruby North Partnership c/o Donald W.
Kosterka, 1950 North Ruby, Melrose Park, Illinois 60160.
4. Taxes and Assessments
---------------------
(a) Lessee shall pay all taxes and assessments, general and special, water
rates, and all other governmental impositions, ordinary and extraordinary, of
every kind and nature whatsoever, unforeseen, as well as foreseen, levied or
assessed upon the said Demised Premises, or any part thereof, or upon any
buildings or improvements at any time situated thereon, or levied or assessed
upon the interest of Lessor in or under this Lease during the term of this
Lease, all of which said taxes, assessments and other impositions shall paid by
Lessee before the same shall become delinquent. Lessee shall pay all of the
general taxes levied upon said premises and the buildings or improvements
thereon for each and every year thereafter during the term hereby demised,
including the general taxes for the year 1992. If it shall appear that the
general taxes levied upon said premises and the buildings and improvements
thereon for the year 1992 shall not become due and payable during the term
hereby demised, then Lessee shall not later than the last day of the term
deposit with Lessor an amount sufficient to pay the general taxes for the year
1992, if the amount of such taxes can be determined or, if not, an amount
sufficient to pay such taxes can be determined or, if not, amount sufficient to
pay such taxes as estimated by Lessor in good faith, which amount shall be
applied to the payment of such taxes when the same become payable and any excess
refunded to, or deficiency paid by, Lessee.
(b) Nothing herein contained shall be construed to require Lessee to pay
any so-called income taxes assessed upon or in respect of the income of Lessor,
or any income taxes chargeable to, or required to be paid by, Lessor, nor shall
anything in this Lease contained be construed to require Lessee to pay any
franchise tax or any so-called inheritance, estate or transfer tax growing out
of any inheritance, devise, gift, transfer or conveyance of Lessor's estate, or
of any interest in the reversion of said real estate.
(c) Lessee shall deliver to Lessor from time to time the original receipts
(or photostatic copies thereof) showing the payment of all said taxes,
assessments and other impositions within thirty (30) days after the respective
payments evidenced thereby, but not later than thirty (30) days after the date
upon which such taxes would become delinquent; provided that, if the issuance of
tax bills or the penalty date for the payment of any taxes shall be delayed, so
that the first installment of such taxes for any year becomes payable after June
1st of the next succeeding year, or the second installment becomes payable after
October 1st, of the next succeeding year, then on any such June 1st or October
1st, as the case may be, Lessee shall deposit with Lessor the amount of such
taxes if then computable, or if not, an amount to cover such taxes estimated by
Lessor in good faith, which amount shall be applied to the payment of such taxes
when the same become payable and any excess refunded to, or deficiency supplied
by, Lessee, or all to be refunded to Lessee if Lessee shall pay such taxes.
-2-
<PAGE>
(d) Lessor shall at its option have the right at all times during the said
demised term to pay any taxes, assessments, and interest and penalties on said
taxes and assessments after rates or other charges or impositions upon said
premises, the building and improvements at any time situated thereon, or any
interest thereon remaining unpaid after the same shall have become delinquent,
and to pay, cancel and clear off all taxes, sales, liens, charges and claims
upon or against said Demised Premises, buildings and improvements from the same,
or any of them, from time to time, and the amount so paid, including reasonable
expenses, shall be so much additional rent due from Leasee to Lessor payable
forthwith with interest as hereinafter specified from the date of such payment
thereof by Lessor until the repayment thereof to Lessor by Lessee; it being
expressly agreed, however, (all other provisions of this Lease to the contrary
notwithstanding) that Lessee shall not be required to pay, discharge nor remove
any tax, assessment, tax lien, or other imposition or charge upon or against the
Demised Premises, or any part thereof, or the building and improvements at any
time situated thereon, so long as Lessee shall in good faith proceed to contest
the same, or the validity thereof, by appropriate legal proceedings, which shall
operate to prevent the collection of the tax, assessment, lien or imposition so
contested, or the sale of the Premises or any part thereof to satisfy the same;
provided, however, that Lessee, not less than five (5) days before any tax
assessment, lien or other imposition upon the Demised Premises or the
improvements situated thereon, shall become delinquent, shall give notice in
writing to Lessor or its intention to contest the validity of the same; and
providing further that Lessee shall deposit at the time of giving such notice
and from time to time thereafter as may be necessary, an amount in the aggregate
sufficient to pay such contested tax, assessment, tax lien, or other imposition
or charge, together with all interest and penalties in connection therewith as
the same may accrue until final disposition of each contest (which amount
deposited shall be held by Lessor without interest); in lieu of a cash deposit,
Lessee may substitute Government Bonds, Treasury Bills, or other forms of
security in an amount which would be sufficient to satisfy Lessee's obligation
in such instances. It is agreed that until such legal proceedings are determined
by a non-appealable order, and provided Lessee has made a deposit as required
hereunder, Lessor shall not have the right to pay, remove or discharge the tax,
assessment, lien or other imposition so contested.
(e) It is mutually covenanted and agreed that notwithstanding the other
provisions of this Lease, Lessee shall not be under obligation to pay
installments of special assessments which are levied or assessed upon the
Demised Premises during the term hereby demised, and which installments shall
become due and payable after the expiration by lapse of time of the term hereby
demised.
(f) If under applicable law any tax charge or charges may at the option of
the taxpayer be paid in installments, Lessee may elect to pay such tax charge or
charges in installments as the same from time to time become due under
applicable law, together with such interest as may accrue thereon as the result
of such installment payment. Nevertheless if any such installments become due
and are payable after the expiration of the term of this Lease, Lessee shall
either pay all such installments accrued interest becoming due after the
expiration of this Lease not later than the date for the payment of the last
installment of the Net Rent, or shall then deposit with Lessor such cash or
securities satisfactory to Lessor sufficient to pay such installments and
interest then or thereafter accruing thereon) as and when the same become due.
(g) Monthly deposits shall not be required hereunder unless deposits are
required by the terms and conditions of a first mortgage on the Demised Premises
or the Leasehold Estate.
-3-
<PAGE>
(a) Lessee, at its sole cost and expense, shall [****] the Demised
Premises insured for the mutual benefit of Lessor and Lessee, during the term of
this Lease, against loss or damage by fire and against loss or damage by other
risks now or hereafter embraced by "Extended Coverage", including, without
limitation, vandalism, malicious mischief, pressure vessel insurance, boiler
insurance and sprinkler insurance (if applicable), in the amount of at least
$3,616,500. The amount of said insurance shall at all times be sufficient to
prevent Lessor or Lessee from becoming a co-insurer under the terms of the
applicable policies, but in any event in an amount not less than eight percent
(80%) of the then full replacement cost. Said policy shall contain (i) an Agreed
Amount Endorsement, (ii) a Replacement Cost Endorsement, (iii) a Standard
Mortgagee Clause, and (iv) an Inflation Guard Endorsement. If a dispute arises
as to replacement cost, Lessee agrees to provide Lessor, at Lessee's expense,
with an insurance appraisal prepared by an insurance appraiser approved by
Lessor establishing full replacement cost in a manner satisfactory to the
insurance carrier.
(b) Lessee, at its sole cost and expense, but for the mutual benefit of
Lessor and Lessee, shall maintain or cause to be maintained:
(i) bodily injury and property damage liability insurance
against claims for bodily injury, death or property damage, occurring in, on, or
about the Demised Premises or any building which may be constructed by Lessee
thereon and the elevators or escalators therein and on, in or about the
adjoining alleys, streets, avenues, property and passageways, naming Lessor and
Lessee as the insureds, such insurance to afford minimum protection, during the
term of this Lease, of not less than One Million Dollars ($1,000,000.00) in
respect to bodily injury or death to any one person, and of not less than One
Million Dollars ($1,000,000.00) in respect of any one accident, and of not less
than Fifty Thousand Dollars ($50,000.00) for property damage with not more than
One Thousand Dollars ($1,000.00) deductible;
(ii) boiler and pressure vessel insurance, provided any building
upon and after its construction, contains a boiler or other pressure vessel;
(iii) war risk insurance if and when a state of war or national or
public emergency exists, and if and when such insurance is obtainable at
standard rates, in an amount not less than the full insurable value thereof, or
in the maximum amount of insurance obtainable;
(iv) rent loss or business interruption insurance in the amount
of at least $269,460 or equal to the rental income generated from the Demised
Premises for six consecutive months, whichever is greater.
(v) Comprehensive General Public Liability and Public Damage
Insurance for an amount not less than $1,000,000 combined single limit for
claims arising from any accident or occurrence in or upon the Demised Premises;
(vi) Flood Insurance whenever in the opinion of Lessor such
protection is necessary; and
(vii) such other insurance policies as may be reasonably required
from time to time by Lessor, upon written notice from Lessor to Lessee.
(c) All policies of insurance shall provide that the proceeds thereof
shall be payable to Lessee and Lessor as their respective interest may appear,
and if and so long as there shall be a mortgage
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<PAGE>
[**************************] shall also be payable to the holders of such
mortgage, as their interest may appear.
(d) All policies of insurance shall be written [****] companies and
amounts in each company satisfactory to Lessor and the holder of any mortgage on
the Premises and shall be written in such form as shall be acceptable to such
mortgages and Lessor. Such policies shall be delivered to Lessor accompanied by
evidence satisfactory to Lessor and the holder of said mortgage that the
premiums thereon have been paid, not less than thirty (30) days prior to the
expiration of any then current policy, except that during such period of time as
Premises are encumbered by the lien of any mortgage, then a duplicate original
of such policies shall be delivered to the holder thereof (if obtainable or else
a certificate evidencing said coverage) and in such event Lessee covenants to
deliver or cause to be delivered to Lessor a certificate or certificates of the
existence of such policies accompanied by evidence satisfactory to Lessor that
the premiums thereof have been paid, not less than thirty (30) days prior to the
expiration of any then current policy, together with the endorsement on such
certificate or certificates whereby the insurance company or companies agree to
give Lessor and such mortgagee notice of at least thirty (30) days or more, of
any cancellations thereof, or any change therein.
(e) Subject to the rights of any mortgagee of the Premises, the loss, if
any, under such policies, except those for public liability, shall be adjusted
with the insurance company or companies (a) by Lessee if the loss is less than
$25,000.00, or (b) by Lessee and Lessor if the loss equals or exceeds
$25,000.00. The loss so adjusted shall, provided the Premises are not then
encumbered by a mortgage, be paid to Lessee if the same is less than 25,000.00
and to Lessor if the same equals or exceeds $25,000.00. If paid to a mortgagee,
such proceeds must be held by such mortgagee subject to the obligation of Lessor
to have the property repaired or rebuilt, and in such event the provisions of
Paragraph 10 shall apply to the application of such proceeds in the same manner
as though such mortgagee were Lessor hereunder. In any event the insurance
monies so received by Lessor or Lessee shall be used as provided in Paragraph 10
this Lease. All such policies shall provide that the loss, if any, thereunder
shall be adjusted and paid as hereinabove provided, subject, however, to the
rights of any mortgagee whose interest may be included in any such policy or
policies. Losses under public liability policies shall be adjusted by Lessee.
In case Lessee shall at any time neglect to secure the insurance, as herein
provided, then Lessor may after five (5) days's written notice to Lessee, at its
election (and in addition to any other remedies of Lessor hereunder) procure or
renew such insurance and add the amount paid therefor to the rent next
thereafter falling due under this Lease, together with interest thereon as
hereinafter specified from the date of payment thereof by Lessor until the same
shall be repaid by Lessee.
6. Compliance with Laws and Regulations
------------------------------------
Lessee agrees that it will comply with and conform to all laws and
ordinance (Municipal, States and Federal) and any and all lawful requirements
and orders of any properly constituted Municipal, State or Federal Board of
Authority, or other Board exercising similar functions, present or future, in
any way relating to the use or occupancy of the Demised Premises throughout the
entire term of this Lease. Lessee also agrees to comply with recommendations of
any insurance company, inspection bureau (such as the Illinois Inspection and
Rating Bureau) or similar agency with respect to the premises. Lessee's
compliance with the above laws, ordinances, and recommendations shall not,
however, apply to any structural changes.
Lessee agree not to; (a) permit any unlawful or immoral practice to be
carried on or committed on the Demised Premises; (b) make any use of or allow
the Demised Premises to be used in any
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of insurance thereof (c) keep or use or permit to [***] kept or used on said
premises any inflammable fluids or [***] without in each instance obtaining
the prior written approval [***] Lessor; (d) use the premises for any purpose
whatsoever which might create a nuisance; (e) deface or injure the building or
premises; (f) overload the floors; or (g) commit or suffer any waste.
Lessee agrees not to install any electrical equipment that overloads lines
servicing the Demised Premises. In connection with the installation or use of
any electrical equipment Lessee shall, at Lessee's own expense, make form time
to time whatever changes are necessary to comply with the requirements of the
insurance underwriters, governmental authorities, the Illinois Inspection Bureau
or of insurance inspectors designated by Lessor.
7. Repairs
-------
(a) With the exception of Lessor's responsibilities under Paragraph 10
herein, Lessee shall, at its own cost and expense, make all necessary repairs to
and replacements of the Demised Premises, interior and exterior, structural and
nonstructural, ordinary and extraordinary all in accordance with good standards
for operation and maintenance. Lessee shall keep the Demised Premises in good
condition and repair and in clean and neat order during the entire term of this
Lease.
(b) Lessee, at Lessee's sole cost and expense, shall maintain and repair
the structural portions of the foundation, roof, exterior walls, structural
members and columns, and any defects or damage to imbedded plumbing and
electrical circuitry caused by structural defects in the roof, exterior walls,
structural members and columns of the premises.
(c) When used in this paragraph the term "repairs" shall include all
necessary replacements, renewals, alterations, additions and betterments. All
repairs made by Lessee shall be at least equal in quality and class to the
original work.
(d) With the exception of Lessor's responsibilities under Paragraph 10
herein, Lessor shall not be required to make any repairs or alterations in or
to the Demised Premises. Lessee assumes the full and sole responsibility for the
condition, operation, repair, replacement and maintenance of the Demised
Premises.
(e) By execution of this Lease, Lessee acknowledges that the Demised
Premises and the improvements thereon have been received by Lessee in good and
first class condition.
8. Indemnification
---------------
Except for negligence of Lessor, Lessor's beneficiaries and their agents
and employees, Lessee waives all claims against Lessor and Lessor's
beneficiaries and their agents and employees for injury to persons or damage to
property sustained by Lessee or any person claiming through Lessee resulting
from any occurrence in or upon the Demised Premises or building of which they
shall be a part, including, but not limited to, such claims for damages
resulting from: (a) any equipment or appurtenances becoming out of repair; (b)
the Demised Premises or the building being out of repair; (c) injury or damage
done or occasioned by wind, water, flooding, freezing, fire, explosion,
earthquake, excessive heat or cold, vandalism, riot, or disorder or other
casualty; (d) any defect in or failure of plumbing, heating or air-conditioning
equipment, electric wiring or installation thereof, gas, water, steam pipes,
walks; (e) broken glass, (f) the backing up of any sewer pipe or downspout; (g)
the bursting, leaking or running of any tank, tub, washstand, water closet,
waste pipe, drain, cooling coil or any
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<PAGE>
Premises; (h) the escape of steam or hot water; (i) water, snow or ice being
upon or coming through the roof, walks, or [****] other place upon or near such
building or premises or otherwise; [***] the falling of any fixture, plaster or
stucco; and (k) any act, omission, or negligence of co-tenants or of other
persons or occupants of said building or of adjoining or contiguous buildings or
of owners of adjacent or contiguous property.
Except for those injuries or damages arising out of the negligence of
Lessor, Lessor's beneficiaries or their agents or employees, Lessee agrees to
indemnify, defend and hold harmless Lessor and Lessor's beneficiaries and their
agents and employees, from and against all claims, liabilities, losses, damages
and expenses for injury to or death of any person or loss of or damage to
property in or upon said Demised Premises and including the person and property
of Lessee, its employees, agents, invitees, licensees or others, it being
understood and agreed that all property kept, stored or maintained in or upon
said premises shall be at the risk of Lessee. The foregoing indemnity shall be
in addition to Lessee's obligation to supply the insurance as required by
Paragraph 5, and not in discharge of or substitution for same.
If any damage to the Demised Premises or other property of Lessor results
from any act or neglect of Lessee, its agents or employees, not covered by
insurance, Lessor may, at its option, repair such damage, and Lessee shall
promptly on demand reimburse Lessor for the cost thereof.
9. Liens
-----
Lessee agrees to keep the Demised Premises, and every part thereof, at all
times during the term of this Lease, free and clear of mechanics' liens and
other liens for labor, service, supplies, equipment or material, funished to the
Demised Premises, and that it will at all times fully and promptly pay and
discharge and wholly protect and save harmless Lessor against any and all
demands or claims which may or could ripen into such liens or claims therefor.
10. Damage or Destruction
---------------------
In the event the Demised Premises are damaged by fire, explosion, or other
casualty or occurrence, Lessor shall repair or rebuild the Demised Premises.
Lessor agrees that as soon as it is reasonably able, but not later than three
months after receipt of insurance proceeds, it will commence to repair or
rebuild, and that it must have the Demised Premises properly repaired or rebuilt
for Lessee within 180 days from the date of damage.
The proceeds of insurance policies covering fire and other hazards shall be
applied to fully restore the premises as nearly as possible to their original
condition or to restore the premises so that it will be equal in value to its
original condition. Provided however, that if said damage occurs during the 11th
through 15th year of the original term of this Lease, or during any renewal
periods, Lessor may elect to rebuild or terminate this Lease upon giving written
notice of such election in writing to Lessee within 45 days of the happening of
the event causing the damage. Should Lessor decide to rebuild, Lessor agrees
that it must have the Demised Premises properly repaired for Lessee within 180
days from the date of damage.
Except as provided in Paragraph 16, no damage to or destruction of any
improvement or building either by fire or other casualty or hazards, or in any
other manner, or any condition rendering the Demised Premises untenantable or
any permanant or temporary revocation or modification of any license, permit,
privilege or right to occupy, use or maintain any street or sidewalk or any
permanant or temporary deprivation of any right, privilege or
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easement appurtenence of any [****] operate as or be deemed an eviction partial
or entire, of Lessee or in any way terminate, diminish, suspend, abate or impair
the obligation of Lessee to pay the full rental herein provided or the
obligation of Lessee to fully observe and perform all covenants on the part of
Lessee herein contained or any other obligation of Lessee herein reserved for
the benefit of Lessor. Lessee agrees that there shall be no abatement of rent
during the period of time in which the Demised Premises are being repaired or
rebuilt, even though the Demised Premises may be untenantable in whole or in
part during said period of time. Lessee shall have no claim against Lessor for
any damage suffered by reason of any such damage, destruction, repair or
restoration.
If Lessor is required or elects to rebuild the Demised Premises as herein
provided, Lessee shall repair or replace its leasehold improvements including
its fixtures, furniture, furnishings, floor coverings and equipment, and stock
in trade, and if Lessee has closed, Lessee shall promptly reopen for business.
Notwithstanding the foregoing, the rights and obligations of Lessor and
Lessee under this paragraph 10 shall be subject to the terms and conditions of
any mortgage of the Demised Premises by Lessor.
11. Alterations
-----------
Lessee shall not attach any fixtures or articles to any portion of the
Demised Premises nor shall Lessee make any alterations, additions, improvements,
changes or perform other work whatever in and to the Demised Premises which
affect the structural components of the building or the general exterior
appearance of the Demised Premises without in each instance obtaining the prior
written approval of Lessor. Any alterations, additions, improvements changes or
other work necessary or required to maintain the Demised Premises in a suitable
condition for Lessee's business purposes under the provisions of this Lease
shall be made by Lessee at Lessee's sole cost and expense.
Lessee agrees, at Lessee's expense, to install all trade fixtures and such
fixtures shall remain the property of Lessee, but same shall not be installed
without the prior written approval of Lessor in instances where the general
exterior appearance of the Demised Premises is altered. It is further agreed
that all trade fixtures belonging to Lessee which are, or may be, put into the
Demised Premises during the term hereof, whether exempt or not from sale under
execution and attachment under the laws of the State of Illinois, shall at all
times be subject to a first lien in favor of Lessor, for all rent or other sums
which may become due to Lessor from Lessee under this Lease.
12. Utilities
---------
Lessee shall apply to the applicable utility company or municipality for
water electricity, gas, telephone and all other utility services required by
Lessee for use in the Demised Premises.
13. Surrender of Premises and Holdover
----------------------------------
Lessee, upon expiration or termination of this Lease, either by lapse of
time or otherwise, agrees peaceably to surrender to Lessor the Demised Premises,
including the alterations, additions, improvements, changes and fixtures other
than Lessee's movable trade fixtures, in broom-clean condition and in good
repair, except for damage caused by acts of God, ordinary use and wear and
damage by fire or casualty. Lessee agrees to remove Lessee's trade fixtures upon
any such expiration or termination and to repair all damage to the Demised
Premises caused by such removal. Lessee's failure to remove all or part of
Lessee's trade fixtures upon such expiration
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<PAGE>
trade fixture and, it Lessor elects to remove all or any part of said fixtures,
the cost of such removal, including [***] and damage to the Demised Premises
caused by such [***] be paid by Lessee. In the event that Lessee shall
fail to surrender the Demised Premises as provided above, Lessee agrees to pay
Lessor, as liquidated damages a sum equal to twice the rental as provided for in
this Lease to be paid by Lessee to Lessor for all the time Lessee shall so
retain possession of the Demised Premises or any part thereof plus any
additional rental payments provided for in this Lease; provided, however, that
exercise of Lessor's rights under this clause shall not be interpreted as a
grant of permission to Lessee to continue in possession.
If Lessor shall at any time be entitled to rental or liquidated damages
pursuant to any of the covenants, conditions or agreements of this Lease either
(1) after termination of Lessee's right to possession without termination of
this Lease or (2) after the termination of this Lease, Lessor shall recover and
Lessee agrees to pay all sums due under the provisions of this Lease.
14. Assignment and Subletting
-------------------------
Lessee shall not sell, assign, mortgage, pledge or in any manner
transfer this Lease or any interest therein without in each case the consent in
writing of Lessor first had and obtained; nor permit any transfer of Lessee's
interest created hereby or allow any lien upon Lessee's interest by operation of
law. Lessee shall be permitted to sublet portions of the Demised Premises to
credit worthy subtenants without the consent of Lessor. In the event of any
assignment or subletting, Lessee shall remain liable for the performance of all
of its obligations hereunder.
15. Default of Tenant
-----------------
It is agreed that (i) if Lessee vacates or abandons the Demised Premises or
permits the same to remain vacant or unoccupied for a period of ten (10) days,
or (ii) if the rent, or any part thereof shall be unpaid for five (5) days after
written notice thereof to Lessee, or (iii) if default shall be made in the
prompt and full performance of any covenant, condition or agreement or breach of
performance shall continue for more than a reasonable time (in no event to
exceed thirty (30) days after written notice to Lessee, specifying such default,
or breach of performance), or (iv) if any proceedings shall be commenced to
declare Lessee bankrupt or insolvent or to obtain relief under any chapter or
provision of any bankruptcy or debtor relief law or act or to reduce or modify
Lessee's debts or obligations or to delay or extend the payment thereof, or if
any assignment of Lessee's property be made for benefit of creditors, or if a
receiver or trustee be appointed for Lessee or Lessee's property or business,
then Lessor may treat the occurrence of any one or more of the foregoing events
as a breach of this Lease and thereupon at its option, without further notice or
demand of any kind to Lessee or any other person, may have, in addition to all
other legal or equitable remedies, the following described remedies:
(a) Lessor may elect to terminate this Lease and the term created hereby
in which event Lessor forthwith may repossess the Demised Premises and Lessee
shall pay at once to Lessor as liquidated damages a sum of money equal to the
rental provided in Paragraph 3 of this Lease to be paid by Lessee to Lessor for
the balance of the stated term of this Lease less the fair rental value of the
Demised Premises for said period.
(b) Lessor may elect to terminate Lessee's right of possession without
termination of this Lease in which event Lessee agrees to surrender possession
and vacate the Demised Premises immediately and deliver possession thereof to
Lessor and Lessee hereby grants to
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Premises, in whole or in part, with or without process of law to dispossess
Lessee of the Demised Premises or any [****] hereof and to expel or remove
Lessee and any other person, firm [****] corporation who may be occupying or
within the Demised Premises or any part thereof and remove any and all property
therefrom without terminating the Lease or releasing Lessee in whole or in part
from Lessee's obligation to pay rent and perform the covenants, conditions and
agreements to be performed by Lessee as provided in this Lease; without being
deemed in any manner quilty of trespass, eviction or forcible entry or detainer;
and without relinquishing Lessor's right to rental or any other right of Lessor
under this Lease or by operation of law.
Upon and after entry into possession without terminating the Lease, Lessor
may, but shall not be obligated to relet all or any part to the Demised Premises
for the account of Lessee for such rent and upon such terms and to such person,
firm or corporation and for such period or periods as Lessor in Lessor's sole
discretion shall determine, and Lessor shall not be required to accept any
tenant offered by Lessee, to observe any instruction given by Lessee about such
reletting or to do any act or exercise any care or diligence with respect to
such reletting or to the mitigation of damages of Lessee. For the purpose of
such reletting, Lessor may decorate or make repairs, changes, alterations or
additions in or to the Demised Premises to the extent deemed by Lessor desirable
or convenient. All such consideration so received shall be the sole property of
Lessor; provided, however, if the consideration collected by Lessor upon any
such reletting for Lessee's account is not sufficient to pay the rental reserved
in this Lease together with an amount equal to five percent (5%) of the rent
provided for in any new Lease as liquidated damages and the cost of repairs,
alternations, additions redecorating and Lessor's other expenses, Lessee agrees
to pay to Lessor the deficiency upon demand.
The service of five-day notice, demand for possession, a notice that the
tenancy hereby created will be terminated on the date therein named, institution
of an action of forcible detainer or ejectment or the entering of a judgement
for possession in such action, or any other act or acts resulting, in the
termination of Lessee's right to possession of the Demised Premises shall not
relieve Lessee from Lessee's obligation to pay the rent hereunder during the
balance of the term or any extension thereof, except as herein expressly
provided. Lessor may collect and receive any rent due from Lessee; and the
payment thereof shall not constitute a waiver of or affect any notice or demand
given, suit instituted or judgement obtained by Lessor, or be held to waive,
affect, change, modify or alter the rights or remedies which Lessor has in
equity or at law or by virtue of the Lease.
The acceptance of liquidated damages by Lessor under any of the provisions
of this Lease shall not preclude Lessor from the enforcement of any of the
covenants or agreements of this Lease, nor shall any other act which infers
recognition of the tenancy operate as a waiver of Lessor's right to terminate
this Lease or operate as an extension of this Lease.
16. Eminent Domain
--------------
In the event of condemnation by eminent domain (or similar law authorizing
the involuntary taking of private property, which shall include a sale in lien
thereof to a public body) of all or a portion of the Demised Premises by any
public, quasi-public or other authority or entity legally endowed with said
power, the respective rights and obligations of the parties hereto shall be as
follows:
(a) If the entire Demised Premises is taken under the power of eminent
domain, or sold under the threat of the exercise of said power (all of which are
herein call "condemnation"), this lease
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possession, and rent payable hereunder shall be apportioned as of such
termination date.
(b) If more than 50% of the floor area of the improvements in the Demised
Premises is taken by condemnation, Lessee may, at Lessee's option, to be
exercised in writing within thirty (30) days after Lessor has given Lessee
written notice of such taking (or in the absence of such notice, within ten (10)
days after the condemning authority shall have taken possession) terminate this
Lease as of the date the condemning authority takes such possession. In the
event Lessee does not terminate this Lease or in the event the option to
terminate does not arise because the area condemned does not meet the maximum
percentage indicated, this Lease shall remain in full force and effect as to the
portion of the premises remaining, except that the rent shall be reduced in the
proportion that the floor area taken bears to total floor area of the Demised
Premises prior to taking.
In any event, Lessee shall have no claim against Lessor by reason of such
taking or termination and shall not have any claim or right to any portion of
the amount that any may be awarded or paid to Lessor as a result of any such
taking. The entire compensation awarded in or by reason of said eminent domain
proceedings shall belong to Lessor without any deduction therefrom for any
present or future estate or interest of Lessee and Lessee hereby assigns to
Lessor all of Lessee's right, title and interest in and to any and all such
compensation together with any and all rights, estate and interest of Lessee now
existing or hereafter arising in and to the same or any part thereof.
17. Subordination of Lease
----------------------
Lessor reserves the right to subordinate this Lease at all times to the
lien of any mortgage, mortgages, trust deed or trust deeds now or hereafter in
existence. Lessee agrees to execute, upon demand, such further instruments
subordinating this Lease to the lien of any such mortgage, mortgages, trust deed
or trust deeds as shall be desired by Lessor, or any mortgagees or proposed
mortgagees or trustees under trust deeds, upon condition that Lessee shall have
the right to remain in possession of the Demised Premises under the terms of
this Lease, notwithstanding any default in any such mortgage, mortgages, trust
deed or trust deeds, or after foreclosure thereof, so long as Lessee is not in
default under any of the covenants, conditions and agreements contained in this
Lease. As herein used, the term "foreclosure" shall include both judicial
proceedings and the exercise of a power of sale under any mortgage or deed of
trust without recourse to judicial proceedings.
If any mortgagee or trustee elects to have this Lease and the interest of
Lessee hereunder superior to any such interest or right and evidences such
election by written notice given to Lessee, then this Lease and the interest of
Lessee hereunder shall be deemed superior to any such mortgage or trust deed,
whether this Lease was executed before or after such mortgage or trust deed, and
in this event such mortgagee or trustee shall have the same rights with respect
to this Lease as if it had been executed and delivered prior to the execution
and delivery of the mortgage or trust deed and had been assigned to such
mortgagee or trustee.
Lessee shall execute and deliver whatever instruments may be required for
such purposes, and in the event Lessee fails so to do within ten (10) days after
demand in writing, Lessee does hereby make, constitute and irrevocable appoint
Lessor's agent as its attorney in fact and in its name, place and stead so to
do.
18. Estoppel Certificate
--------------------
At any time, and from time to time, Lessee agrees, upon request in writing
from Lessor, to execute, acknowledge and deliver to Lessor, a statement in
writing certifying that this Lease is
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[****] [****] [****] [****] [****] [****] [****] [****] [****] [****]
modifications, that the same is in full force and [****] as modified and stating
the modifications) and the dates to [****] rent and other charges have been
paid.
19. Remedies
--------
All rights and remedies of Lessor herein created or otherwise existing at
law or equity are cumulative and the exercise of one or more rights or remedies
shall not be taken to exclude or waive the right to the exercise of any other.
All such rights and remedies may be exercised and enforced concurrently and
whenever and as often as Lessor shall deem desirable.
The failure of Lessor to insist upon strict performance by Lessee of any of
the covenants, conditions and agreements of this Lease shall not be deemed a
waiver of any of Lessor's rights or remedies concerning any subsequent or
continuing breach or default by Lessee of any of the covenants, conditions, and
agreements of this Lease. No surrender of the Demised Premises shall be effected
by Lessor's acceptance of rental or by any other means whatsoever unless the
same be evidenced by Lessor's written acceptance of such as a surrender.
20. Quiet Enjoyment
---------------
Lessor represents that at the time of the execution of this Lease the
Demised Premises may lawfully be used for Lessee's intended purposes and further
agrees that so long as Lessee is not in default hereunder and so long as Lessee
is not in violation of any "Rules and Regulations" as shown in Paragraph 28,
Lessee shall have the quiet enjoyment of the Demised Premises without let or
hindrance on the part of Lessor, and Lessor will defend Lessee in the peaceful
and quiet enjoyment of the Demised Premises against the claims of all persons
claiming by, through or under Lessor.
21. Security Deposit
----------------
Lessee has deposited with Lessor a Security Deposit of THREE HUNDRED THIRTY
NINE THOUSAND FIVE HUNDRED EIGHT and 80/100 DOLLARS ($39,508.80) for the
faithful performance of each and every covenant, condition and agreement of
this Lease. Lessor shall have the right, but not the obligation, to apply the
Security Deposit, in whole or in part, in payment of any unpaid rent or other
amount due because of an unperformed covenant or agreement by Lessee. Lessee's
right to possession of the premises for non-payment of rent or for any other
reason, shall not be affected by the fact that Lessor holds security. Lessee's
liability is not limited to the amount of the Security Deposit. On termination
of the Lease and full payment of all amounts due and performance of all Lessee's
covenants and agreements (including surrender of the Demised Premises in
accordance with Paragraph 13), the Security Deposit or any portion thereof
remaining unapplied shall be returned to Lessee without interest.
Lessee hereby agrees not to look to the mortgagee of the Premises, as
mortgagee, mortgagee in possession, or successor in title to the Premises, for
accountability for any security deposit required by Lessor hereunder, unless
said sums have actually been received by said mortgagee as security for Lessee's
performance or this Lease.
22. Interest Upon Arrears
---------------------
(a) It is further covenanted and agreed that each and every installment of
rent accruing under the covenants of this Lease, which shall not be paid when
due, shall bear interest at the rate of thirteen percent (13%) per annum from
the date when the same is payable under the terms of this Lease until the same
shall be paid to Lessor, and that all other sums becoming due or payable to
Lessor under this Lease, including all monies expended by Lessor pursuant to the
provisions of this Lease, or on account of any default by
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this Lease (which monies shall be and become additional rental due hereunder and
shall be payable forthwith when [****] [****] Lessor), shall in like manner bear
interest from the [****] [****] when the same shall become due and payable to
Lessor at such [****] of thirteen per cent (13%) per annum until the same shall
be paid by Lessee to Lessor. Any such monies expended by Lessor shall be
considered a business loan within the purview of Chapter 74, Section 4 (c) of
the Illinois Revised Statutes (1975).
(b) If by the terms and conditions of this Lease, Lessor shall exercise
its option to make payment of any sums due and owning by Lessee, or which by the
terms of this lease shall be paid by Lessee, the sums so paid by Lessor shall
bear interest at the rate of thirteen percent (13%) per annum. Such advances
shall be considered a business loan made by Lessor to Lessee and shall be deemed
to be within the purview of Chapter 74, Section 4 (c) of the Illinois Revised
Statutes, 1975, and if not paid on demand shall be considered a default by
Lessee in the payment of rent and Lessor may, in addition to any other remedy
available to it, exercise the remedy set forth in this Lease for the non-payment
of rent.
23. Lessee's Option to Purchase
---------------------------
(a) Provided that Lessee is not in default, Lessee shall have the
following option to purchase the Premises during the final sixty (60) days of
the term of this Lease:
(i) Lessee shall have the right to purchase all but not less than
all of the Premises then leased hereunder during the Lease term, or any
extension thereof, at a price equal to the "fair market value" (as defined).
Lessee shall give Lessor written notice of its election to exercise the purchase
option provided for in this Paragraph and of the desired closing date for the
purchase. Said notice shall be given at least 180 days prior to the desired
closing date. Payment of the option price shall be made on the closing date, in
funds there current, against delivery of a good and sufficient Trustee's Deed
transferring and conveying to Lessee all right, title and interest of Lessor in
and to the Premises. Lessor shall not be required to make any representation or
warranty as to the condition of the Premises or any other matters.
(ii) The "fair market value" shall be an amount mutually agreed upon
by Lessor and Lessee; provided that if Lessor and Lessee are unable to agree
upon the fair market value of the Premises within 30 days after receipt by
Lessor of the notice of Lessee's election to exercise the purchase option, the
fair market value shall be determined by an appraiser selected by mutual
agreement of Lessor and Lessee. If Lessor and Lessee are not able to agree upon
an appraiser, or if the fair market value is not so determined within 30 days
after receipt by Lessor of Lessee's election to purchase, each party shall
select an appraiser and the two appraisers so selected shall choose a third
appraiser. The three appraisers so selected shall then determine the fair market
value of the Premises.
(iii) Unless Lessee has given Lessor notice as required in connection
with exercise of the foregoing option, at least 180 days prior to the end of the
term of this Lease, then all of the Premises leased hereunder shall be returned
to Lessor in accordance with Paragraph 13 hereof at the end of the Lease term.
(b) Notwithstanding any election of Lessee to purchase, the provisions of
this Lease shall continue in full force and effect until the date of purchase
and the passage of ownership of the premises to Lessee.
(c) With its notice of election to purchase, Lessee shall include a
cashier's or certified check, payable to the order of Lessor, in the amount of
ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000.00) as a deposit and to apply on
account of the payment of
-13-
<PAGE>
receipt of such notice, deliver to Lessee a preliminarly Commitment for Title
Insurance issued by a Title Insurance Company reasonably acceptable to Lessee
covering the date of such [****] in the amount of the purchase price, subject
only to matters and things to which this Lease is made subject, current real
estate taxes and other liens which under the provisions of this Lease Lessee is
obligated to pay or discharge, a first mortgage to Mutual Benefit Life in the
original principal amount of THREE MILLION and 00/100 DOLLARS ($3,000,000.00)
and any other liens which have been established by Lessee, the general
exceptions or so-called "stock exceptions" at the time generally contained in
Owner's Policies issued by such Title Insurance Company and this Lease and the
rights of Lessee and other persons claiming under Lessee. Upon consummation of
the said sale, Lessee may take title subject to the existing first mortgage
should the mortgage consent, and if so, it shall receive credit for the then
outstanding balance due thereunder. There shall be no further prorations between
the parties, other than advanced rents and Lessor agrees to assign its interest
to Lessee in this Lease and in all policies of insurance for which premiums
have been paid by Lessee.
25. Arbitration
-----------
In each case specified in this Lease in which it shall become necessary to
resort to arbitration, such arbitration shall be determined as provided in this
paragraph 24. The party desiring such arbitration shall give written notice to
that effect to the other party, specifying in said notice the name and address
of the person designated to act as arbitrator on its behalf. Within fifteen (15)
days after the service of such notice, the other party shall give written notice
to the first party specifying the name and address of the person designated to
act as arbitrator on its behalf. If the second party fails to notify the first
party of the appointment of its arbitrator, as aforesaid, within or by the time
above specified, then the appointment of the second arbitrator shall be made in
the same manner as hereinafter provided for the appointment of a third
arbitrator in a case where the two arbitrators appointed hereunder and the
parties are unable to agree upon such an appointment. The arbitrators so chosen
shall meet within ten (10) days after the second arbitrator is appointed and if,
within thirty (30) days after the second arbitrator is appointed, the said two
arbitrators shall not agree upon the question in dispute, they shall themselves
appoint a third arbitrator who shall be a competent and impartial person; and in
the event of their being unable to agree upon such appointment within ten (10)
days after the time aforesaid, the third arbitrator shall be selected by the
parties themselves if they can agree thereon within a further period of fifteen
(15) days. If the parties do not so agree, then either party on behalf of both,
may apply to the then Chief Judge of the United States District Court for the
Northern District of Illinois, Eastern Division, for the appointment of such
third arbitrator and the other party shall not raise any question as to the
Court's full power and jurisdiction to entertain the application and make the
appointment. The decision of the arbitrators so chosen shall be given within a
period of thirty (30) days after the appointment of such third arbitrator. Each
party shall pay the fees and expenses of the one of the two original arbitrators
appointed by such party, or in whose stead as above provided, such arbitrator
was appointed, and the fees and expenses of the third arbitrator, if any, shall
be borne equally by both parties. All arbitration as provided herein shall take
place in the City of Chicago, County of Cook, State of Illinois.
In the event a panel of three arbitrators cannot reach a unanimous
decision, then a binding and conclusive determination shall be made as follows:
the decision which any two so appointed and acting shall concur.
-14-
<PAGE>
Lessor and Lessee agree to execute, acknowledge, [****] duplicate
originals, and deliver to each other, a Memorandum of Lease in the form of
Exhibit "B" attached hereto in order that it may be recorded in the Recorder's
Office of Cook County, Illinois, as evidence and notice of the existence of this
Lease and of the rights, titles and interests of Lessor and Lessee hereunder.
26. Rules and Regulations
---------------------
(a) All loading and unloading of goods shall be done only in the areas and
through the entrances designated for such purpose by Lessor;
(b) All garbage and refuse shall be kept in the kind of container
specified by Lessor, shall be placed in the areas specified by Lessor and
prepared for collection in the manner and at the times and places specified by
Lessor;
(c) Lessee shall keep the Demised Premises at a temperature sufficiently
high to prevent freezing of water in pipes and fixtures;
(d) Lessee shall not make or permit any objectionable noise or odor to
emanate from the Demised Premises and no person shall use the Demised Premises
as sleeping quarters, sleeping apartments or lodging rooms;
(e) Lessee shall obtain all permits or licenses necessary to conduct its
business;
In the event of any breach of any rules and regulations herein set forth or
any amendments or additions, thereto, Lessor shall have all remedies in this
Lease provided for default of Lessee.
27. Signs
-----
Lessee may install, maintain and replace on the exterior walls of the
Demised Premises a sign or signs, provided that the erection of said sign(s) by
Lessee shall first be approved by appropriate governmental authorities and
Lessor prior to being erected. Lessee shall make all repairs required by reason
of the installation and maintenance of its sign(s), except damage caused by the
acts or omissions of Lessor, its agents, servants or employees.
28. Service of Notice
-----------------
Any notice or demand or statement of interest which either party hereto may
desire to serve upon the other in furtherance of any provision of this Lease
shall be sufficiently served if the same be enclosed in a sealed envelope, which
envelope shall be deposited in the United States Post Office, postage prepaid
and certified or registered, return receipt requested and addressed in the
instance of Lessor to Chicago Title and Trust Company, Attention: Trust
Department, 111 West Washington Street, Chicago, Illinois and to Donald W.
Kosterka, 990 North Lake Shore Drive, Chicago, Illinois 60611, or any other
address which Lessee may be notified in writing by Lessor, and in instance of
Lessee to AGI Incorporated, 1950 North Ruby Street, Melrose Park, Illinois
60160, or such other address as Lessee shall designate by notice. Such notice
shall be deemed to have been served at the time of receipt thereof.
29. Access To Premises
------------------
Lessee agrees that Lessor, Lessor's beneficiaries and their agents,
employees or servants or any person authorized by Lessor may enter the Demised
Premises during normal business hours, except that Lessor shall be permitted to
enter the Demised Premises at any time when Lessor believes there is an
emergency situation which warrants
-15-
<PAGE>
additions, improvements, changes or alterations to the Demised Premises, as
Lessor may elect to make, and to [****] same to prospective purchasers of the
Demised Premises or to respective tenants and to place upon the Demised Premises
at such places as may be determined by Lessor "for rent" signs or notices during
the last one hundred eighty (180) days of the term hereof and Lessee undertakes
and agrees that neither Lessee nor any person within Lessee's control will
interfere with such signs or notices. Such entry, inspection and repairs,
additions, improvements, changes or alterations as Lessor may make on the
Demised Premises shall not constitute eviction of Lessee in whole or in part and
the rent reserved shall in no way abate while such work is being done by reason
of loss or interruption of business of Lessee or otherwise.
If Lessee or Lessee's agents or employees shall not be present to permit
entry into the Demised Premises at any time and for any reason when entry
therein shall be necessary or permissible under this Lease, Lessee or Lessor's
beneficiaries or their agents or employees may enter same by reasonable means.
30. Successors and Assigns
----------------------
This Lease shall inure to the benefit of and be binding upon the heirs,
executors, administrators, successors and assigns of Lessor, and each of them,
and the successors and assigns of Lessee.
31. Entire Agreement
----------------
This instrument contains the entire and only agreement between the parties,
and no oral statements or representations or prior written matter not contained
in this instrument shall have any force or effect. This Lease shall not be
modified in any way or terminated, except by a writing executed by both parties.
32. Partial Invalidity
------------------
If any term, covenant, condition or provision of this Lease, or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease shall not be affected
thereby and each term, covenant, condition and provision of this Lease shall be
valid and be enforced to the fullest extent permitted by law.
33. Force Majeure
-------------
Whenever Lessee or Lessor shall be required hereunder or by law to perform
any provisions of this Lease other than the payment of money or to perform or
comply with any law, order, ordinance, or building, zoning or other regulation,
requirement or rule of any governmental authority having jurisdiction, or to
discharge any lien against the Demised Premises or to perform any covenant
hereunder, neither Lessee nor Lessor shall be deemed in default therein and
neither Lessor nor Lessee shall enforce or exercise any of its rights hereunder
if and so long as:
(a) Non-performance or default therein shall be caused by strikes,
lockouts, non-availability of labor or materials, war or national defense
pre-emptions, governmental restrictions, acts of God or other causes beyond the
control of either Lessee or Lessor; or
(b) Lessor or Lessee shall contest the matter involved with the diligence
and in good faith in a proper forum or court with the person or governmental
authority requiring such Payment, act, work, labor or services or contract or
lien; provided, however, that Lessee or Lessor shall indemnify the other party
against any loss or expense arising out of the failure of Lessee or Lessor so to
pay or perform during the pendency of such contest.
-16-
<PAGE>
During the term hereof Lessee shall pay prior to [****] all taxes assessed
against and levied upon fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Demised Premises, and Lessee shall cause
said fixtures, furnishings, equipment and other personal property to be assessed
and billed separately from the real property of Lessor.
35. Interpretation
--------------
The time of the performance of all of the covenants, conditions and
agreements of this Lease is of the essence of this agreement.
The necessary grammatical changes required to make the provisions of this
Lease apply in the plural sense where there is more than one tenant and to
either corporations, associations, partnerships or individuals, males or
females, shall in all instances be assumed as though in each case fully
expressed. Lessor's beneficiaries shall have the right to enforce the
obligations of Lessee in this Lease set forth in their own names or through an
agent. The laws of the State of Illinois shall govern the validity, performance
and enforcement of this Lease. The captions of the several articles contained
herein are for convenience only and do not define, limit, describe or construe
the contents of such articles.
36. Attorneys' Fees
---------------
In case Lessor, Lessor's beneficiaries or their agents or employees or
any of them shall be made a party to any litigation commenced by or against
Lessee, and Lessor, Lessor's beneficiaries of their agents or employees is not
found to be at fault, then lessee shall pay all costs, expenses and reasonable
attorneys' fees incurred or paid by Lessor, Lessor's beneficiaries or their
agents or employees in connection with such litigation. Lessee shall also pay
all costs, expenses and reasonable attorney's fees that may be incurred or paid
by Lessor, Lessor's beneficiaries and either's agents in enforcing the covenants
and agreements of this Lease.
37. Lessor's Consent
----------------
Wherever Lessor's consent is required, it shall not be unreasonably
withheld or delayed.
38. Termination of Previous Lease
-----------------------------
Lessor and Lessee hereby terminate as of 11:59 p.m., May 31, 1985 that
certain lease dated February 2, 1977 between Lessor and Lessee whereby Lessor
leased the Demised Premises to Lessee.
39. Trust
-----
It is expressly understood and agreed that this Lease is executed by
the undersigned Trustee, not personally but solely as Trustee under the terms of
that certain agreement dated the 1st day of February, 1977, creating Trust No.
1069185; the covenants, undertakings, representations and agreements herein made
are made and intended not as personal covenants, undertakings, representations
and agreements of the Trustee or its beneficiaries, individually, or for the
purpose of binding them personally, but this instrument is executed and
delivered by Chicago Title and Trust Company as trustee, solely in the exercise
of the powers conferred upon it as such Trustee under said agreement and no
personal liability or personal responsibility is assumed by, nor shall at any
time be asserted or enforced against the Chicago Title and Trust Company as
trustee or its beneficiaries, on account hereof, or on account of any covenant,
undertaking, representation, warranty or agreement herein contained, either
expressed or implied, all such
-17-
<PAGE>
personal liability, if any, being hereby expressly waived and released by the
parties hereto or holder hereof, and [****] persons claiming by or through
or under said parties or hold [****].
IN WITNESS WHEREOF, said Chicago Title and Trust Company has caused its
name to be signed to these presents by a ASST. VICE PRESIDENT ________ and its
corporate seal to be hereunto affixed and attested by its Assistant Secretary,
the day and year first above written.
LESSOR: CHICAGO TITLE AND TRUST COMPANY, not
individually, but as Trustee under
Trust Agreement dates February 1, 1977,
and known as Trust No. 1069185
By [SIGNATURE ILLEGIBLE]
--------------------------------
ATTEST: Its ASST. VICE PRESIDENT
-------------------------------
[SIGNATURE ILLEGIBLE]
- -------------------------
Its Assistant Secretary
---------------------
LESSEE: AGI INCORPORATED, an Illinois
corporation
By [SIGNATURE ILLEGIBLE]
--------------------------------
ATTEST: Its President
[SIGNATURE ILLEGIBLE]
- -------------------------
Its Assistant Secretary
---------------------
-18-
<PAGE>
COUNTY OF COOK ) SS.
)
I, OLINTHA SMITH, a Notary Public, in and for said County in the State
aforesaid, DO HEREBY CERTIFY that DOROTHY CATALANO, personally known to me to be
the ASST, VICE PRESIDENT of CHICAGO TITLE AND TRUST COMPANY, a corporation of
the State of Illinois, and ALDA DI MAYO, personally known to be the ASST.
Secretary of said corporation, and personally known to me to be the same persons
whose names are subscribed to the foregoing instrument appeared before me this
day in person and severally acknowledged that they signed and delivered the said
instrument as their own free and voluntary acts and as the free and voluntary
act of said corporation for the uses and purposes therein set forth, and the
said ASST. Secretary did also then and there acknowledge that he as custodian of
the corporate seal of said corporation, did affix the said corporate seal of the
said corporation to said instrument as his own free and voluntary act and as the
free and voluntary act of said corporation for the uses and purposes therein set
forth.
GIVEN under my hand a notarial sal this 29th day of May, 1985.
/s/ Olintha Smith
----------------------------------
Notary Public
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I, [SIGNATURE ILLEGIBLE] Notary Public, in and for said County in the State
aforesaid, DO HEREBY CERTIFY that Donald W. Kosterka, personally known to me to
be the President of AGI INCORPORATED, a corporation of the State of Illinois,
and James K Henesan, personally known to to be the Assistant Secretary of said
corporation, and personally known to me to be the same persons whose names are
subscribed to the foregoing instrument appeared before me this day in person and
severally acknowledged that they signed and delivered the said instrument as
their own free and voluntary acts and as the free and voluntary act of said
corporation for the uses and purposes therein set forth, and the said Assistant
Secretary did also then and there acknowledge that he as custodian of the
corporate seal of said corporation, did affix the said corporate seal of the
said corporation to said instrument as his own free and voluntary act and as the
free and voluntary act of said corporation for the uses and purposes therein set
forth.
GIVEN under my hand a notarial seal this 29th day of May, 1985.
[SIGNATURE ILLEGIBLE]
----------------------------------
Notary Public
My Commission Expires 10/1/85
-19-
<PAGE>
COUNTY OF COOK )
I, ________________________, a Notary Public, in and for said County in the
State aforesaid, DO HEREBY CERTIFY that __________________________________,
Personally known to be the ______________________of CHICAGO TITLE AND TRUST
COMPANY, a corporation of the State of Illinois, and __________________________,
personally known to me to be the _______________ Secretary of said corporation,
and personally known to me to be the same persons whose names are subscribed to
the foregoing instrument appeared before me this day in person and severally
acknowledged that they signed and delivered the said instrument as their own
free and voluntary acts and as the free and voluntary act of said corporation
for the uses and purposes therein set forth, and the said _____________________
Secretary did also then and there acknowledge that he as custodian of the
corporate seal of said corporation to said instrument as his own free and
voluntary act and as the free and voluntary act of said corporation for the uses
and purposes therein set forth.
GIVEN under my hand and notarial seal this ___ day of May, 1985.
_____________________________
Notary Public
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I, ________________________, a Notary Public, in and for said County in the
State aforesaid, DO HEREBY CERTIFY that __________________________________,
personally known to be the ______________________ of AGI Incorporated, a
corporation of the State of Illinois, and __________________________, personally
known to me to be the _______________ Secretary of said corporation, and
personally known to me to be the same persons whose names are subscribed to the
foregoing instrument appeared before me this day in person and severally
acknowledged that they signed and delivered the said instrument as their own
free and voluntary acts and as the free and voluntary act of said corporation
for the uses and purposes therein set forth, and the said _____________________
Secretary did also then and there acknowledge that he as custodian of the
corporate seal of said corporation to said instrument as his own free and
voluntary act and as the free and voluntary act of said corporation for the uses
and purposes therein set forth.
GIVEN under my hand and notarial seal this ___ day of May, 1985.
_____________________________
Notary Public
<PAGE>
MEMORANDUM OF LEASE
-------------------
This Memorandum of Lease made as of this ____ day of May, 1985, by and
between Chicago Title and Trust Company, not individually, but as Trustee under
Trust Agreement dated February 1, 1977 and known as Trust Number 1069185,
("Lessor") and AGI Incorporated f/k/a Album Graphics, Inc., an Illinois
corporation ("Lessee").
WITNESSETH:
----------
Lessor herby demises and leases to Lessee that certain real estate situated
in the County of Cook and State of Illinois, more particularly described on
Exhibit "A" attached hereto and made a part hereof (the "Demised Premises").
To have and to hold unto the said Lessee for a term commencing on the 1st
day of June, 1985 and ending on the 31st day of May, 1992.
Lessor and Lessee hereby terminate as of 11:59 p.m., May 31, 1985 that
certain Lease dated February 2, 1977 between Lessor and Lessee whereby Lessor
leased the Demised Premises to Lessee, a memorandum of which was recorded with
the Recorder of Deeds of Cook County, Illinois on February 28, 1997 as Document
Number 23833423.
The rental for the Demised Premises and the covenants, agreements, terms,
provisions, conditions and limitations of the Lease, including an option to
purchase the entire Demised Premises, are set forth in that certain Lease
between the parties hereto, of even date herewith, and this Memorandum of Lease
is subject to all of the covenants, conditions, and terms set forth in said
Lease.
Lessor's address is 111 West Washington, Chicago, Illinois and Lessee's
address is 1950 North Ruby Street, Melrose Park, Illinois.
IN WITNESS WHEREOF, the parties hereto have duly executed these presents
and affixed their respective seals as of the day and year first above written.
CHICAGO TITLE AND TRUST COMPANY,
not personally, but as Trustee
under Trust Agreement dated the
"Lessor" 1st day of February, 1977, and
known as Trust Number 1069185
ATTEST: By__________________________________
Its ____________________ President
________________________________
Its________________ Secretary
AGI INCORPORATED, f/k/a
Album Graphics, Inc.
"Lessee"
By__________________________________
ATTEST: Its President
________________________________
Its________________ Secretary
Prepared by and when recorded Address of Property:
mail to:
James K. Henegan 1950 North Ruby Street
Pedersen & Houpt Melrose Park, Illinois 60160
180 North LaSalle Street
Suite 3400
Chicago, Illinois 60601
<PAGE>
LEGAL DESCRIPTION
-----------------
PARCEL 1 A:
- ----------
That part of the East 356.50 feet of the West 1235.10 feet of the Southeast
fraction quarter, North of the Indian Boundary Line, of Section 33, Township 40
North, [****] East of the Third Principal Meridian, lying between two lines
drawn at right angles through points which are respectively 738 feet North of
the North line of North Avenue as dedicated and 1551.64 feet South of the North
line of the aforesaid quarter Section of said Section 33, excepting therefrom a
parcel of land described by beginning at the Southwest corner of the above
described tract of land; thence North along the West [****] thereof, 200 feet;
thence Southerly 170.95 feet to a point 30 feet North of the South line and 18
feet East of the West line of the above described tract of land; thence South 30
feet; thence West 18 feet to the point of beginning, in Cook County, Illinois.
PARCEL 1 B:
- ----------
A parcel of land in the aforesaid Southeast fractional quarter of said Section
33, described as beginning at the Northwest corner of the above described tract
of land; thence North 155 feet along the West line of the above described tract
of land extend North; thence Southeasterly 121.34 feet to a point 18 feet East
of the extended West line and 35 feet North of the North line of the above
described tract of land; thence South 35 feet; thence West 18 feet to the place
of beginning, in Cook County, Illinois.
PARCEL 2 A:
- ----------
That part of the East 381 feet of the West 1235.10 feet of the Southeast
fractional quarter, North of the Indian Boundary Line, of Section 33, Township
40 North, Range East of the Third Principal Meridian, lying South of a line
drawn through a point [****] the East line of the aforesaid West 1235.10 feet
which is 618 feet North of the North line of North Avenue as dedicated;
excepting therefrom a strip of land 60 feet wide Northwesterly of and adjoining
the Indian Boundary Line; and also excepting the West feet of the North 213.02
feet of the tract described; also excepting: That part of the East 7 feet of the
West 861.1 feet of the Southeast fractional quarter, North of the Indian
Boundary Line, of Section 33, Township 40 North, Range 12, East of the Third
Principal Meridian, described as follows: Beginning at the intersection of the
North line of North Avenue as dedicated, with East line of the West 854.1 feet
of said quarter Section; thence North along said line, 402.49 feet; thence East
at right angles, 7 feet; thence South along the East line of the West 861.1 feet
aforesaid, 402.54 feet to the North line of North Avenue; thence West along the
North line of North Avenue, 7 feet to the point of beginning, in Cook County,
Illinois.
PARCEL 2 B:
- ----------
A triangular parcel of land immediately North of and adjoining the above
described tract of land, described by beginning at a point on the North line of
said tract, is 29.54 feet East of the Northwest corner thereof, as first
described; thence West 5.04 feet; thence North on the East line of West 878.60
feet of the Southeast fractional quarter of said Section 33, a distance of 100
feet; thence Southerly, 100.07 feet to the place of beginning, in Cook County,
Illinois.
PARCEL 3:
- --------
That part of the East 356.50 feet of the West 1235.10 feet of the Southeast
fraction quarter, North of the Indian Boundary Line, of Section 33, Township 40
North, Range [****] East of the Third Principal Meridian, described by beginning
at a point on the East *** of described tract, which is 618 feet North of the
North line of North Avenue as dedicated; thence West at right angles to said
East line, 351.46 feet; thence North [****] 100.07 feet to a point on the East
line of West 878.60 feet of aforesaid quarter Section which is 100 feet North of
first above described line extended West; thence North **** described line, 220
feet; thence Southeasterly on a line forming an angle of 6 degrees 02'40'
measured from South to Southeast with the East line of aforesaid West 878.60
feet, a distance of 170.95 feet to a point on the East line of West 896.60 feet
of said quarter Section; thence South along said line, 30 feet; thence East
along a line 120 feet North of and parallel with the first above described line,
338.50 feet to the East line of West 1235.10 feet of the Southeast fractional
quarter of Section 33, aforesaid; thence South along said line 120 feet to the
place of beginning, all in the Village of Melrose Park, in Cook County,
Illinois.
<PAGE>
LEGAL DESCRIPTION
-----------------
PARCEL 1 A:
- ----------
That part of the East 356.50 feet of the West 1235.10 feet of the Southeast
fraction quarter, North of the Indian Boundary Line, of Section 33, Township 40
North, Range East of the Third Principal Meridian, lying between two lines drawn
at right angles through points which are respectively 738 feet North of the
North line of North Avenue as dedicated and 1551.64 feet South of the North line
of the aforesaid quarter Section of said Section 33, excepting therefrom a
parcel of land described by beginning at the Southwest corner of the above
described tract of land; thence North along the West [****] thereof, 200 feet;
thence Southeasterly 170.95 feet to a point 30 feet North of the South line and
18 feet East of the West line of the above described tract of land; thence South
30 feet; thence West 18 feet to the point of beginning, in Cook County,
Illinois.
PARCEL 1 B:
- ----------
A parcel of land in the aforesaid Southeast fractional quarter of said Section
33, described as beginning at the Northwest corner of the above described tract
of land; thence North 155 feet along the West line of the above described tract
of land extend North; thence Southeasterly 121.34 feet to a point 18 feet East
of the extended West line and 35 feet North of the North line of the above
described tract of land; thence South 35 feet; thence West 18 feet to the place
of beginning, in Cook County, Illinois.
PARCEL 2 A:
- ----------
That part of the East 381 feet of the West 1235.10 feet of the Southeast
fractional quarter, North of the Indian Boundary Line, of Section 33, Township
40 North, Range East of the Third Principal Meridian, lying South of a line
drawn through a point on the East line of the aforesaid West 1235.10 feet which
is 618 feet North of the North line of North Avenue as dedicated; excepting
therefrom a strip of land 60 feet wide Northwesterly of and adjoining the Indian
Boundary Line; and also excepting the West feet of the North 213.02 feet of the
tract described; also excepting: That part of the East 7 feet of the West 861.1
feet of the Southeast fractional quarter, North of the Indian Boundary Line, of
Section 33, Township 40 North, Range 12, East of the Third Principal Meridian,
described as follows: Beginning at the intersection of the North line of North
Avenue as dedicated, with the East line of the West 854.1 feet of said quarter
Section; thence North along said line, 402.49 feet; thence East at right
angles, 7 feet; thence South along the East line of the West 861.1 feet
aforesaid, 402.54 feet to the North line of North Avenue; thence West along the
North line of North Avenue, 7 feet to the point of beginning, in Cook County,
Illinois.
PARCEL 2 B:
- ----------
A triangular parcel of land immediately North of and adjoining the above
described tract of land, described by beginning at a point on the North line of
said tract, which is 29.54 feet East of the Northwest corner thereof, as first
described; thence West 5.04 feet; thence North on the East line of West 878.60
feet of the Southeast fractional quarter of said Section 33, a distance of 100
feet; thence Southerly, 100.07 feet to the place of beginning, in Cook County,
Illinois.
PARCEL 3:
- --------
That part of the East 356.50 feet of the West 1235.10 feet of the Southeast
fraction quarter, North of the Indian Boundary Line, of Section 33, Township 40
North, Range *** East of the Third Principal Meridian, described by beginning at
a point on the East *** of described tract, which is 618 feet North of the North
line of North Avenue as dedicated; thence West at right angles to said East
line, 351.46 feet; thence North [****] 100.07 feet to a point on the East line
of West 878.60 feet of aforesaid quarter [****] which is 100 feet North of first
above described line extended West; thence North **** described line, 220 feet;
thence Southeasterly on a line forming an angle of 6 degrees 02'40' measured
from South to Southeast with the East line of aforesaid West 878.60 feet, a
distance of 170.95 feet to a point on the East line of West 896.60 feet of said
quarter Section; thence South along said line, 30 feet; thence East along a line
120 feet North of and parallel with the first above described line, 338.50 feet
to the East line of West 1235.10 feet of the Southeast fractional quarter of
Section 33, aforesaid; thence South along said line 120 feet to the place of
beginning, all in the Village of Melrose Park, in Cook County, Illinois.
<PAGE>
Exhibit 10.9
EXHIBIT A
TO SHARE PURCHASE
AGREEMENT
AMENDMENT TO LEASE
------------------
THIS AMENDMENT TO LEASE, dated as of October 1, 1987, by and between
Chicago Title and Trust Company, not individually but as Trustee under a Trust
Agreement dated February 1, 1977, and known as Trust No. 1069185 ("Lessor"), and
AGI Incorporated, an Illinois corporation ("Lessee"),
W I T N E S S E T H:
WHEREAS, Lessor and Lessee are parties to a certain lease dated May
29, 1985 demising the real estate commonly known as 1950 Ruby Street, Melrose
Park, Illinois, including the industrial building containing 256,629 square
feet located thereon ("Lease"); and
WHEREAS, Lessor and Lessee mutually desire to amend the Lease in
certain respects,
NOW, THEREFORE, the Lease is hereby amended as follows:
1. Term. The initial term of the Lease set forth in paragraph 2
----
thereof is extended for four months through September 30, 1992.
<PAGE>
2. Renewal Option. Lessor hereby grants Lessee options to renew the
--------------
Lease for four consecutive periods of five years each; provided, however, that
so long as Chicago Title and Trust Company, as Trustee under Trust No. 1069185
remains the Lessor, and the beneficial interest of such trust has not been
transferred or assigned, in whole or in part, other than for collateral
purposes, Lessee's option to renew the Lease for the five year period commencing
on October 1, 1992 shall be expressly conditioned upon the audited financial
statements of Lessee as of December 31, 1991 evidencing a net worth and a debt
to equity ratio equal to or better than set forth in its audited financial
statements for the year ending December 31, 1984, and similarly, its options to
renew the Lease for each of the three additional renewal periods shall be
expressly conditioned upon the audited financial statements of Lessee as of
December 31, 1996, December 31, 2001, and December 31, 2006, respectively,
evidencing a net worth and a debt to equity ratio equal to or better than set
forth in such statements for the year ending December 31, 1984. Lessee shall
exercise any such option by giving Lessor not less than 180 days' notice of its
election to do so prior to the termination of the original term or renewal term,
as the case may be. In the event Lessee shall fail to exercise any such option,
any subsequent option or options shall automatically be deemed void.
-2-
<PAGE>
3. Rent During Extended Initial Term and Renewal Terms. The
---------------------------------------------------
annual Net Rent for the four months extension of the initial term shall be the
same as the existing annual Net Rent for the initial term. The annual Net rent
for each renewal term shall be the "fair market rental value" of the Premises as
determined substantially in accordance with the procedures set forth in
paragraph 23 of the Lease for the determination of "fair market value," less a
6.1% discount, computed on a monthly basis. Such net Rent shall be determined
prior to the commencement of the first and any subsequent renewal term.
4. Right of First Refusal. Lessor shall promptly notify Lessee in
----------------------
writing if Lessor becomes aware of the fact that a third party may be interested
in purchasing the Premises. Lessor shall promptly give Lessee written notice of,
and furnish Lessee with all terms and conditions of, any actual offer to
purchase the Premises which Lessor may receive and desire to accept. Lessee
shall have 30 days after notice of such actual offer within which to determine
whether it desires to purchase the Premises on substantially the same terms and
conditions, the Lessor hereby granting to the Lessee the first right to do so;
provided, however, that such 30 day period shall be reduced by the number of
days, if any, but not in excess of 15, that the Lessor had, prior to giving
Lessee written notice of such actual offer, given Lessee written notice of the
offeror's interest in purchasing
-3-
<PAGE>
the Premises as hereinabove provided. Lessee shall exercise such right by
giving Lessor written notice of its intent to do so prior to the end of the
foregoing 15 to 30 day period as the case may be. In the event Lessee exercises
such option, the transaction shall be closed substantially in accordance with
the terms and conditions of the actual offer received by Lessor; provided,
however, that in no event shall the Lessee be required to close the transaction
in less than 90 days from the date of the exercise of its option, and Lessee
shall have the right to substitute cash equivalent to the fair market value of
any non cash consideration included in the actual offer received by the Lessor.
5. Parking Facilities. The words "(in common with others)" in lines
------------------
seven and eight of paragraph 1 of the Lease are deleted.
6. Real Estate Taxes. Paragraph 4(a) of the Lease is "amended by
------------------
adding at the end thereof the following sentence: "The real estate taxes for the
calendar year in which the Lease expires by its terms shall be equitably
prorated between Lessor and Lessee."
7. Liens. Paragraph 9 of the Lease is amended by adding the
------
following sentence: "Notwithstanding the foregoing, Lessee shall have the right
to contest any liens or claims of lien provided Lessee deposits with Lessor
reasonable security
-4-
<PAGE>
to protect the Lessor and the Premises against such lien and any penalties and
interest related thereto."
8. Damage Or Destruction. Effective June 1, 1992, the provisions of
----------------------
paragraph 10 of the Lease are amended, and to the extent of any inconsistency
superseded, by the following: "(i) Lessee shall have the right to terminate this
Lease as of the date of any fire or other casualty if it can reasonably be
estimated that the time to repair will extend beyond 180 days, or if completion,
once any repairs have commenced, actually extends beyond 180 days; (ii) the
second sentence of the second paragraph is amended to read as follows: in the
event such damage shall occur during the last two years of any renewal term,
either Lessor or Lessee may elect to terminate this Lease upon giving written
notice to the other within 45 days of the casualty; provided, however, that if
the Lessor shall elect to terminate during the first two renewal terms, the
Lessee may void such termination by giving Lessor written notice within 30 days
thereafter that it has elected to exercise its option to renew this Lease for
the next succeeding renewal term; (iii) to the extent that rent insurance may be
in effect pursuant to paragraph 5(b)(iv) of the Lease, Net Rent shall equitably
abate until the Premises are fully repaired; and (iv) the provisions of the last
paragraph of paragraph 10 of the Lease shall relate solely to the mortgage of
record on the date of
-5-
<PAGE>
this Amendment to Lease and not to any subsequent mortgage of the Premises."
9. Alterations. The Lessor shall not unreasonably withhold its
-----------
consent to any alterations and improvements which may be requested by the Lessee
pursuant to paragraph 11 of the Lease.
10. Assignment of Lease. The Lessor's consent shall not be required in
-------------------
connection with an assignment of this Lease by reason of a merger, consolidation
or sale of substantially all of Lessee's assets, provided the surviving
corporation has a net worth equal to or greater than that of the Lessee
immediately prior thereto. Effective June 1, 1992, the Lessor agrees not to
unreasonably withhold its consent to any requested assignment of the Lease under
paragraph 14 thereof, and the Lessee shall be permitted to sublet all, as well
as portions, of the Premises.
11. Default of Lessee. The second full paragraph of paragraph 15 of
-----------------
the Lease is hereby deleted and the following substituted therefor: "Upon and
after entry into possession without terminating this Lease, Lessor may relet all
or any part of the Premises for such reasonable rent and upon such other
reasonable terms and conditions as Lessor shall determine. For the purpose of
reletting, Lessor may reasonably decorate and make reasonable repairs,
alterations
-6-
<PAGE>
and additions in or to the Premises. In the event the rent received by the
Lessor less the cost of such decorations, repairs, alterations and additions, is
less than the rent due hereunder, Lessee shall pay the difference as and when
due."
12. Eminent Domain. Paragraph 16 of the Lease is amended by deleting
--------------
the last paragraph thereof and by substituting for the words "more than 50% of
the floor area of the improvements in the Demised Premises" in lines one and two
of subparagraph (b) the words "sufficient floor area of the improvements to make
it impractical to operate Lessee's business."
13. Non-Disturbance Agreement. Paragraph 17 of the Lease is amended
-------------------------
by the deletion of the appointment of an agent for the Lessee. In addition,
Lessor agrees to exert its best efforts to obtain from the existing mortgagee an
agreement to the effect that it will recognize the Lessee's rights under this
Lease so long as Lessee is not in default.
14. Lessee's Option to Purchase. Paragraph 23 of the Lease is amended
---------------------------
as follows: (i) Lessee's option to purchase shall be in effect commencing on the
third anniversary of the date of this Amendment to Lease and thereafter
throughout the initial term, as extended, and any renewal term of the Lease, not
simply during the final 60 days thereof; (ii) "90" shall be substituted for
"180" in sub-
-7-
<PAGE>
paragraph 23 (a)(i) of the Lease, and such paragraph shall be further amended in
that the purchase price shall be the greater of (a) the scheduled principal
balance of the mortgage now of record at the time of the closing of the sale
plus any prepayment penalty then required to be paid with respect thereto if the
purchase occurs prior to the expiration of the initial term, or the scheduled
principal balance of such mortgage as of the third anniversary of this Amendment
to Lease plus any prepayment penalty which would have been required to have been
paid with respect thereto if it had been paid in full on such third anniversary,
in the event purchase occurs during any renewal term of this Lease, or (b) the
fair market value of the Premises, reduced by the unamortized cost at closing of
the sale, calculated in accordance with generally accepted accounting principles
as though Lessee were the owner of the building and other improvements, of any
capital improvements to the Premises made by Lessee after the date of this
Amendment to Lease with the prior written approval of the Lessor, unless such
capital improvements were made solely for the benefit of Lessee's business and
do not enhance the value of the Premises themselves, Lessor shall not
unreasonably withhold its consent to any capital improvements which Lessee may
desire to make. (iii) subparagraph 23(a)(ii) of the Lease is amended by adding
"In the event two of the three appraisers shall agree upon a value, such value
shall be the fair market value. If no two appraisers shall agree, the fair
market value shall be
-8-
<PAGE>
deemed to be the average of the three appraisals; (iv) subparagraph 23(a) (iii)
of the Lease is deleted; (v) subparagraph 23(c) of the Lease is amended to
provide that the $150,000 deposit shall be made to a joint order escrow at
Chicago Title and Trust Company; and (vi) paragraph 23(c) of the Lease is
amended to provide that the tile insurance policy in the amount of the purchase
price shall be paid for by Lessor and that it shall include extended coverage
insurance over the general exceptions; that a current ALTA plat of survey shall
be furnished by the Lessor showing all improvements to be located within the lot
lines and no encroachments from adjacent property; and Lessor's beneficiary
shall deliver to the Lessee at the closing a proper Warranty Bill of Sale
covering all personal property on the Premises owned by such beneficiary.
15. Arbitration. Paragraph 25 of the Lease should be renumbered
-----------
"24". The provision is amended by adding "in the event no two arbitrators can
agree, either party may commence litigation.
16. Access to Premises. Lessor shall give Lessee reasonable notice
------------------
of any proposed entry into the Premises, emergency situations expected. The
purpose of any such access should be reasonable.
-9-
<PAGE>
17. Attorney's Fees. Paragraph 36 of the Lease is amended by the
----------------
addition of the following paragraph:
"In case Lessee, its agents or employees or any of them shall be made
a party to any litigation commenced by or against Lessor or its beneficiaries,
and Lessee, its agents or employees are not found to be at fault, then Lessor
shall pay all costs, expenses and reasonable attorneys' fees incurred or paid by
Lessee, its agents and employees, in connection with such litigation. Lessor
shall also pay all costs, expenses and reasonable attorneys' fees that may be
incurred or paid by Lessee in enforcing the covenants and agreements of this
Lease."
18. Security Deposit. The Security Deposit which has been deposited
-----------------
with Lessor pursuant to paragraph 21 of the Lease is confirmed to be in the
amount of $339,508.80. Notwithstanding the provisions of paragraph 21 of the
Lease, the Security Deposit shall, during any renewal term, earn interest for
the benefit of the Lessee at a rate equal to the Prime Rate from time to time in
effect at the Continental Illinois National Bank and Trust Company of Chicago,
payable at least once in every lease year. The Security Deposit, with any
accrued and unpaid interest thereon, may be applied by the Lessee toward the
payment of Net Rent and any other payments due under the Lease (i) during the
twelve month period prior to its ascertained termination date, and (ii) in
-10-
<PAGE>
the event Lessor's beneficiary or any successor thereto shall, voluntarily or
involuntarily, come under the jurisdiction of the Bankruptcy courts.
19. Delinquent Rent. Lessee acknowledges that Lessor may be liable
----------------
to pay a 4% penalty to its existing mortgagee in the event its monthly mortgage
payment is not received by the mortgagee on or before the fifteenth day of any
month, and that Lessor utilizes the rent received from Lessee to make such
payment. Accordingly, and notwithstanding the grace period provided for in
paragraph 15 of the Lease, Lessee agrees to reimburse Lessor for any such
penalty which may be incurred by Lessor if such penalty results from the
inability of Lessor to make its mortgage payment on or before the fifteenth day
of any month solely by reason of a delay by Lessee in making any rental payment
due from it under the Lease.
20. Subordination to Mortgage. Lessee acknowledges that the Lease,
-------------------------
as amended by this Amendment To Lease, is subject and subordinate to the terms
and conditions of Lessor's existing mortgage to The Mutual Benefit Life
Insurance Company.
21. Continuing Effect. Except as otherwise specifically provided
-----------------
herein, all terms and conditions of the Lease remain in full force and effect.
-11-
<PAGE>
It is expressly understood and agreed that this Lease is executed by
the undersigned Trustee, not personally, but solely as Trustee under the terms
of that certain agreement dated the 1st day of February, 1997, creating Trust
No. 1069185; the covenants, undertakings, representations and agreements herein
made are made and intended not as personal covenants, undertakings,
representations and agreements of the Trustee or its beneficiaries,
individually, or for the purpose of binding them personally, but this instrument
is executed and delivered by Chicago Title and Trust Company as trustee, solely
in the exercise of the powers conferred upon it as such Trustee under said
agreement and no personal liability or personal responsibility is assumed by,
nor shall at any time be asserted or enforced against the Chicago Title and
Trust Company as trustee or its beneficiaries, on account hereof, or on account
of any covenant, undertaking, representation, warranty or agreement herein
contained, either expressed or implied, all such personal liability, if any,
being hereby expressly waived and released by the parties hereto, and by all
persons claiming by or through or under said parties.
IN WITNESS WHEREOF, said Chicago Title and Trust Company has caused
its name to be signed to these presents by a ___________________________________
and its corporate seal to be hereunto affixed and attested by
-12-
<PAGE>
its ______________________________________________________,
the day and year first above written.
LESSOR: CHICAGO TITLE AND TRUST COMPANY, not
individually, but as Trustee under Trust
Agreement dated February 1, 1977, and known
as Trust No. 1069185
By ______________________________________
Its______________________________________
ATTEST:
______________________________
Its __________________________
LESSEE: AGI INCORPORATED, an Illinois corporation
By _____________________________________
Its President
ATTEST:
_______________________________
Its ___________________________
-13-
<PAGE>
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
I, _______________________, a Notary Public, in and for said County in
the State aforesaid, DO HEREBY CERTIFY that ___________________________,
personally known to me to be the _______________________ of CHICAGO TITLE AND
TRUST COMPANY, a corporation of the State of Illinois, and __________________
personally known to me to be the ___________________ Secretary of said
corporation, and personally known to me to be the same persons whose names are
subscribed to the foregoing instrument appeared before me this day in person and
severally acknowledged that they signed and delivered the said instrument as
their own free and voluntary acts and as the free and voluntary act of said
corporation for the uses and purposes therein set forth, and the said
___________ Secretary did also then and there acknowledge that he as custodian
of the corporate seal of said corporation, did affix the said corporate seal of
the said corporation to said instrument as his own free and voluntary act and as
the free and voluntary act of said corporation for the uses and purposes therein
set forth.
GIVEN under my hand a notarial seal this _________ day of __________,
1987.
__________________________
Notary Public
<PAGE>
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
I, _______________________, a Notary Public, in and for said County in
the State aforesaid, DO HEREBY CERTIFY that ___________________________,
personally known to me to be the _______________________ of AGI INCORPORATED, a
corporation of the State of Illinois, and __________________ personally known to
me to be the Assistant Secretary of said corporation, and personally known to me
to be the same persons whose names are subscribed to the foregoing instrument
appeared before me this day in person and severally acknowledged that they
signed and delivered the said instrument as their own free and voluntary acts
and as the free and voluntary act of said corporation for the uses and purposes
therein set forth, and the said ___________ Secretary did also then and there
acknowledge that he as custodian of the corporate seal of said corporation, did
affix the said corporate seal of the said corporation to said instrument as his
own free and voluntary act and as the free and voluntary act of said corporation
for the uses and purposes therein set forth.
GIVEN under my hand a notarial seal this _________ day of __________,
1987.
__________________________
Notary Public
<PAGE>
<PAGE>
Exhibit 10.10
SECOND AMENDMENT TO LEASE
-------------------------
THIS SECOND AMENDMENT TO LEASE, dated as of April 30, 1992, is made by and
between Chicago Title and Trust Company, not individually but as Trustee under a
Trust Agreement dated February 1, 1977 and known as Trust No. 1069185
("Lessor"), and AGI Incorporated, an Illinois corporation ("Lessee").
R E C I T A L S:
- - - - - - - -
Lessor and Lessee are parties to a certain Lease (the "Original
Lease"), dated May 29, 1985, demising the real estate commonly known as 1950
Ruby Street, Melrose Park, Illinois, including the industrial building
containing 256,629 square feet located thereon.
The Lease was amended by an Amendment to Lease (the "Amendment to
Lease"), dated October 1, 1987, between Lessor and Lessee (the Original Lease
and the Amendment to Lease are hereinafter collectively referred to as the
"Amended Lease"), which, among other things, extended the term of the Amended
Lease through September 30, 1992 and provided for options to renew the Amended
Lease for four consecutive periods of five years each.
Lessor and Lessee desire to further amend the Amended Lease, all as
provided herein.
NOW, THEREFORE, the Amended Lease is further amended as follows:
<PAGE>
1. First Extension Period.
----------------------
A. Lessor and Lessee hereby agree to extend the term of the Amended
Lease for a five-year period through September 30, 1997 (the "First Extension
Period").
B. The annual Net Rent for the First Extension Period shall be
$474,763.58 per year ($1.85 per square foot), payable in monthly installments in
advance, in the amount of $39,563.64, on the first day of October 1992 and on
the first day of each month thereafter to and including September 1, 1997.
2. Renewal Options. Paragraph 2 of the Amendment to Lease is deleted and
---------------
the following is hereby inserted in lieu thereof:
2. Renewal Options. Lessor hereby grants Lessee options to renew
---------------
the Amended Lease for three consecutive periods of five (5) years each;
provided, however, that so long as Chicago Title and Trust Company, as
Trustee under Trust No. 1069185 remains the Lessor, and the beneficial
interest of such trust has not been transferred or assigned, in whole or in
part, other than for collateral purposes, Lessee's option to renew the
Lease for the five year period commencing on October 1, 1997 shall be
expressly conditioned upon the audited financial statements of Lessee as of
December 31, 1996 evidencing a net worth and a debt to equity ratio equal
to or better than set forth in its audited financial statements for the
year ending December 31, 1991, and, similarly, its options to renew the
Amended Lease for each of the two additional renewal periods shall be
expressly conditioned upon the audited financial statements of Lessee as of
December 31, 2001 and December 31, 2006, respectively, evidencing a net
worth and a debt to equity ratio equal to or better than set forth in such
statements for the year ending December 31, 1991. In the event any changes
------------------------
to generally accepted accounting principles which Lessee shall be required
--------------------------------------------------------------------------
to adopt after December 31, 1991 shall have any effect on the determination
---------------------------------------------------------------------------
of Lessee's net worth or debt to equity ratio, said determination shall be
--------------------------------------------------------------------------
made as if such changes in accounting
-------------------------------------
-2-
<PAGE>
principles had not been adopted. Lessee shall exercise any such option by
-------------------------------
giving Lessor not less than 270 days' notice ("Notice") of its election to
do so prior to the termination of the then current renewal term. In the
event Lessee (A) has been more than thirty (30) days past due in the
payment of any monthly installments of Net Rent during the twelve (12)
month period immediately preceding the date of the Notice, or (B) fails to
properly exercise any option, any subsequent, unexercised or improperly
exercised option or options shall automatically terminate and be deemed
void.
3. Second Extension Period. In the event Lessee properly exercises the
-----------------------
option to extend the term of the Amended Lease for an additional five (5) year
period, through September 30, 2002 (the "Second Extension Period") and
notwithstanding any provision to the contrary contained in Paragraph 3 of the
Amendment to Lease, the annual Net Rent for the Second Extension Period will be:
A. The amount set forth in Paragraph 1B, above for the First
Extension Period, plus or minus (as the case may be)
------------------
B. An amount equal to the difference, if any, between (1) the annual
interest cost incurred by Lessor on a $3,000,000 mortgage loan for the Premises
----------------
during the Second Extension Period (regardless of the actual principal amount of
--------------------------------------------
said mortgage loan), and (2) the annual interest cost incurred by Lessor on a
- --------------------
$3,000,000 mortgage loan for the Premises during the First Extension Period.
----------------
Lessor shall use its best efforts to obtain the most advantageous financing
terms and conditions, including the lowest
-3-
<PAGE>
possible interest rate for the Second Extension Period. Lessee reserves the
right to use its influence or mortgage resources to obtain financing for the
-------- -----------------
Premises at a lower interest rate than may otherwise be available to Lessor, and
- -----------
Lessor shall agree to accept such financing, if available, so long as all other
---------------------
terms and conditions are as advantageous as those otherwise available to Lessor.
---------
4. Security Deposit Notwithstanding any provisions to the contrary
----------------
contained in Paragraph 21 of the Original Lease or Paragraph 18 of the Amendment
to Lease, Lessee shall not be entitled to interest on the Security Deposit
during the First Extension Period or during the Second Extension Period.
5. Lessee's Option to Purchase. Clause (ii)(b) of Paragraph 14 of the
--------------------------- -- -
Amendment to Lease is deleted and the following is inserted in lieu thereof:
(b) the fair market value of the Premises, reduced by:
(1) the unamortized cost at closing of the sale, calculated in
accordance with generally accepted accounting principles as
though Lessee were the owner of the building and other
improvements, of any capital improvements to the Premises made by
Lessee after the date of the Amendment to Lease with the prior
written approval of Lessor, excluding the cost associated with a
------------------------------------
rebuild of Lessee's office space. Unless such capital
--------------------------------
improvements were made solely for the benefit of Lessee's
business and do not enhance the value of the Premises themselves,
Lessor shall not unreasonably withhold its consent to any capital
improvements which Lessee may desire to make; and
-4-
<PAGE>
(2) the unamortized increase in the fair market value of the Premises
associated with a rebuild of Lessee's office space. Lessee
------
hereby consents to such rebuild. The amount of such increase in
-------------------------------
value will be determined in advance of construction by a third
party appraiser chosen by Continental Bank's appraisal
department, based on design drawings and specifications. It is
understood by both parties that the total cost of the rebuilding
of such office space will not all automatically add to the fair
market value of the Premises on the day after completion thereof.
The fees for the appraiser will be paid by Lessee. The appraiser
will determine how much of the costs of rebuilding the office
space will increase the fair market value of the Premises as of
the day after completion.
6. Waiver of Claims for Reimbursement. Lessee agrees (A) to waive
----------------------------------
reimbursement of certain expenses totaling $57,100 that Lessor had previously
agreed to pay upon renewal of the Amended Lease and (B) that Lessee does not
---
currently have any additional claims for reimbursement from Lessor.
7. Continuing Effect. As amended hereby, the Amended Lease remains in
----------------- --------------------------------------------
full force and effect.
It is expressly understood and agreed that this Second Amendment to
Lease is executed by the undersigned Trustee, not personally, but solely as
Trustee under the terms of that certain agreement dated February 1, 1977,
creating Trust No. 1069185; the covenants, undertakings, representations and
agreements herein made are made and intended not as personal covenants,
undertakings, representations and agreements of the Trustee or its
beneficiaries, individually, or for the purpose of binding them personally, but
this instrument is executed and delivered by
-5-
<PAGE>
Chicago Title and Trust Company as trustee, solely in the exercise of the powers
conferred upon it as such Trustee under said agreement and no personal liability
or personal responsibility is assumed by, nor shall at any time be asserted or
enforced against Chicago Title and Trust Company as trustee or its
beneficiaries, on account hereof, or on account of any covenant, undertaking,
representation, warranty or agreement herein contained, either expressed or
implied, all such personal liability, if any, being hereby expressly waived and
released by the parties hereto, and by all persons claiming by or through or
under said parties.
IN WITNESS WHEREOF, said Chicago Title and Trust Company has caused its
name to be signed to these presents by an ____________ ____________________ and
its corporate seal to be hereunto affixed and attested by its
_________________________ the day and year first above written.
LESSOR: CHICAGO TITLE AND TRUST COMPANY,
not individually, but as Trustee
under Trust Agreement dated
February 1, 1977, and known as
Trust No. 1069185
ATTEST:
________________________________ By________________________________
Its ____________________________ Its_____________________________
-6-
<PAGE>
LESSEE: AGI INCORPORATED, an Illinois
corporation
ATTEST:
________________________________ By________________________________
Its ____________________________ Its_____________________________
-7-
<PAGE>
Exhibit 10.11
THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE (the "Third Amendment dated as of July 2,
1997, is made by and between, successor trustee to Chicago Title and Trust
Company. not individually but as Trustee under a Trust Agreement dated February
1, 1977 and known as Trust No. 1069185 ("Lessor") and AGI Incorporated, an
Illinois corporation ("Lessee").
RECITALS:
A. Lessor and Lessee are parties to a certain Lease (the "Original
Lease"), dated May 29, 1985, demising the real estate commonly known as 1950
Ruby Street, Melrose Park, Illinois, including the industrial building located
thereon.
B. The Lease was amended by an Agreement to Lease (the "Amendment to
Lease") dated October 1, 1987, between Lessor and Lessee, which, among other
things, extended the term of the Lease through September 30, 1992 and provided
for options to renew the Lease for four (4) consecutive periods of five (5)
years each.
C. The Lease was further amended by a Second Amendment to Lease (the
Second Amendment") dated April 30, 1992, between Lessor and Lessee, which, among
other things, extended the term of the Amended Lease through September 30, 1997
and provided for options to renew the Amended Lease for three (3) consecutive
periods of five (5) years each. (The Original Lease, the Amendment to Lease and
Second Amendment are collectively hereinafter referred to as the "Amended
Lease".)
D. Pursuant to Section 2 of the Second Amendment, Lessee exercised the
option to renew the term of the Amended Lease through September 30, 2002.
E. Lessor and Lessee desire to further amend and clarify the Amended
Lease, all as provided herein.
F. All capitalized terms not defined herein shall have the meanings
ascribed to them in the Amended Lease.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lessor and Lessee' further amend the Amended Lease as follows:
1. Extension of Term. The term of the Amended Lease is extended for a
-----------------
five (5) year period, commencing October 1, 1997 and ending on September 30,
2002 (the "Extension Period").
1
<PAGE>
2. Rent.
----
(a) Notwithstanding anything to the contrary contained in the Amended
Lease, the annual Net Rent (as defined in the Amended Lease) for the Extension
Period will be as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Total Annual
Lease Year Net Rent Monthly Rent
---------- -------- ------------
---------------------------------------------------------------------
<S> <C> <C>
October 1, 1997- $470,563.68 $39,213.64
September 30, 2002
---------------------------------------------------------------------
</TABLE>
(b) Lessor and Lessee acknowledge and agree that the Net Rent for the
Extension Period has been calculated in accordance with the provisions of
Section 3 of the Second Amendment.
3. Continuing Effect. As amended hereby, the Amended Lease remains
-----------------
unmodified and in full force and effect.
IT IS EXPRESSLY UNDERSTOOD AND AGREED that this Third Amendment to Lease
is executed by the undersigned Trustee, not personally, but solely as Trustee
under the terms of that certain Trust Agreement dated February 1, 1977, and
known as Trust No. 1069185. The covenants, undertakings, representations and
agreements herein made are made and intended not as personal covenants,
undertakings, representations and agreements of the Trustee or its
beneficiaries, individually, or for the purpose of binding them personally, but
this instrument is executed arid delivered by Chicago Title and Trust Company,
as Trustee, solely in the exercise of its powers conferred upon it as such
Trustee under said Agreement and no personal liability or personal
responsibility is assumed by, nor shall at any time be asserted or enforced
against Chicago Title and Trust Company, as Trustee or its beneficiaries, on
account thereof; or on account of any covenant, undertaking, representation,
warranty or agreement herein contained, either expressed or implied, and all
such personal liability, if ally, is hereby expressly waived arid released by
the parties hereto, and by all persons claiming by or through or under said
parties.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment
to Lease as of the day and year first written above.
LESSOR:
THE CHICAGO TRUST COMPANY, successor trustee to
CHICAGO TITLE AND TRUST COMPANY, not
individually, but as Trustee under Trust
Agreement dated February 1, 1977, and known as
Trust No. 1069185
By: /s/ Carolyn Pampenella
-------------------------------------
Name: Carolyn Pampenella
-----------------------------------
Its: Asst. Vice President
------------------------------------
LESSEE:
AGI INCORPORATED, an Illinois corporation
By: /s/ David C. Underwood
-------------------------------------
Name: David C. Underwood
-----------------------------------
Its: V.P. Finance
------------------------------------
3
<PAGE>
[LETTER HEAD APPEARS HERE]
September 24, 1997
Mr. Donald W. Kosterka
2765 Bella Vista Drive
Montecito, California 93108
David Underwood
Vice President-Finance
AGI Incorporated
1950 N. Ruby Street
Melrose Park, IL 60160
Dear Don and David:
I am forwarding to each of you a copy of the Second Amendment to Memorandum
of Lease, dated July 9, 1997, between the Chicago Trust Company, Successor
trustee to Chicago Title & Trust Company, as Trustee under Trust Agreement dated
February 1, 1977 and known as Trust No. 1069185, as Lessor, and AGI
Incorporated, as Lessee. It was recorded July 17, 1997 as document 97-514840.
The Second Amendment makes reference to the Third Amendment to Lease, which
extends the term of the Lease to September 30, 2002.
Very truly yours,
/s/ Herbert J. Linn
Herbert J. Linn
HJL/mb
Enclosures
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, ___________________________________________, a Notary Public in and for
said County, in the State aforesaid, DO HEREBY CERTIFY THAT CAROLYN PAMPENELLA,
of CHICAGO TITLE AND TRUST COMPANY, who is personally known to me to be the same
person whose name is subscribed to the foregoing instrument, as such Asst. Vice
President, appeared before me this day in person, and acknowledged that she
signed and delivered the said instrument as his own free and voluntary act and
as the act of said company for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal, this 8th day of July, 1997.
[SEAL APPEARS HERE] [SIGNATURE ILLEGIBLE]
-----------------------------
Notary Public
My Commission Expires:
4
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, Cynthia H. McCarthy, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY THAT David C. Underwood, of AGI INCORPORATED,
an Illinois corporation, who is personally known to me to be the same person
whose name is subscribed to the foregoing instrument, as such
_______________________, appeared before me this day in person, and acknowledged
that she signed and delivered the said instrument as his own free and voluntary
act and as the act of said company for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal, this 2nd day of July, 1997.
[SEAL APPEARS HERE] /s/ Cynthia H McCarthy
-----------------------------
Notary Public
My Commission Expires:
5
<PAGE>
SECOND AMENDMENT TO MEMORANDUM OF LEASE
---------------------------------------
This Second Amendment to Memorandum of Lease made as of this of 9th July,
1997, by and between THE CHICAGO TRUST COMPANY successor trustee to Chicago
Title and Trust Company, not individually, but as Trustee under Trust Agreement
dated February 1, 1977 and known as Trust Number 1069185, as Lessor and AGI
Incorporated, an Illinois corporation, as Lessee.
W I T N E S S E T H
- - - - - - - - - -
The parties hereto previously entered into a Memorandum of Lease, (the
"Lease") dated May 29, 1985, recorded with the Recorder of Cook County, Illinois
as Document No. 85-041318, which referred to a Lease, dated May 29, 1985 between
Lessor and Lessee, of certain real estate situated in the County of Cook, State
of Illinois and more particularly described on Exhibit A, attached hereto and
made a part hereof ("Demised Premises").
Additionally, the parties hereto previously entered into an Amendment to
Memorandum of Lease, (the "First Amendment") dated May 27, 1992, recorded with
the Recorder of Cook County, Illinois as document number 92-381246 which
referred to certain Amendment to Lease dated October 1, 1987 between Lessor and
Lessee and that certain Second Amendment to Lease dated April 30, 1992 between
Lessor and Lessee for the Demised Premises.
By virtue of that certain Third Amendment to Lease dated July 2, 1997
between Lessor and Lessee, the term of the Lease has been extended to
September 10, 2002.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Second
Amendment to Memorandum of Lease as of the day and year first written above.
LESSOR:
THE CHICAGO TRUST COMPANY, successor trustee to
[SEAL] CHICAGO TITLE AND TRUST COMPANY,
not personally, but as Trustee under Trust
Agreement dated the 1st day of February, 1977
and known as Trust Number 1069185
By: /s/ Carolyn Pampenella
-----------------------------------------
Its: Asst. Vice President
-------------------------------------
ATTEST:
By: /s/ Sheila Davenport
---------------------------
Its Asst. Secretary
----------------------
LESSEE:
AGI INCORPORATED
By___________________________________________
Its_______________________________________
ATTEST:
By:____________________________
Its__________________________
Tax ID Numbers: Address of property:
12-33-400-081 1950 N. Ruby Street
12-33-400-082 Melrose Park, IL 60160
Prepared by and when recorded mailed to:
Herbert J. Linn, Esq.
Pedersen & Houpt
161 North Clark Street
Suite 3100
Chicago, Illinois 60601
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Second
Amendment to Memorandum of Lease as of the day and year first written above.
LESSOR:
CHICAGO TITLE AND TRUST COMPANY,
not personally, but as Trustee under Trust
Agreement dated the 1st day of February, 1977
and known as Trust Number 1069185
By___________________________________________
Its________________________________________
ATTEST:
By:____________________________
Its_________________________
LESSEE:
AGI INCORPORATED
By /s/ David C. Underwood
------------------------------------------
Its Vice President-Finance
--------------------------------------
ATTEST:
By: [SIGNATURE ILLEGIBLE]
----------------------------
Its Controller
-------------------------
Tax ID Numbers: Address of property:
12-33-400-081 1950 N. Ruby Street
12-33-400-082 Melrose Park, IL 60160
Prepared by and when recorded mailed to:
Herbert J. Linn, Esq.
Pedersen & Houpt
161 North Clark Street
Suite 3100
Chicago, Illinois 60601
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Martha Lopez, a Notary Public, in and for said County, in the State
aforesaid, DO HEREBY CERTIFY THAT Carolyn Pampenella , personally known to me to
be Asst. Vice President, of CHICAGO TITLE AND TRUST COMPANY, a corporation of
the State of Illinois, and Sheila Davenport, personally known to me to be Asst.
Secretary of said corporation, and personally known to me to be the same persons
whose names are subscribed to the foregoing instrument appeared before me this
day in person and severally acknowledged that they signed and delivered the said
instrument as their own free and voluntary acts and as the free and voluntary
act of said corporation for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal, this 8th day of July, 1997.
[SEAL] /s/ Martha Lopez
-----------------------------
Notary Public
My Commission Expires:
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Cynthia H McCarthy, a Notary Public, in and for said County, in the
State aforesaid, DO HEREBY CERTIFY THAT David C. Underwood personally known to
me to be V. P Finance of AGI Incorporated, a corporation of the State of
Illinois, and hers, personally known to me to be the ____________________,
Secretary of said corporation, and personally known to me to be the same persons
whose names are subscribed to the foregoing instrument appeared before me this
day in person and severally acknowledge that they signed and delivered the said
instrument as their own free and voluntary acts and as the free and voluntary
act of said corporation for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal, this 9th day of July, 1997.
[SEAL] /s/ Cynthia H McCarthy
-----------------------------
Notary Public
My Commission Expires:
<PAGE>
EXCULPATORY CLAUSE FOR
THE CHICAGO TRUST COMPANY, AS TRUSTEE
It is expressly understood and agreed by and between the parties hereto,
anything to the contrary notwithstanding, that each and all of the warranties,
indemnities, representations, covenants, undertakings and agreements herein made
on the part of the Trustee while in form purporting to be the warranties,
indemnities, representations, covenants, undertakings and agreements of said
Trustee are nevertheless each and every one of them, made and intended not as
personal warranties, indemnities, representations, covenants, undertakings and
agreements by the Trustee or for the purpose or with the intention of binding
said Trustee personally but are made and intended for the purpose of binding
only that portion of the trust property specifically described herein, and this
instrument is executed and delivered by said Trustee not in its own right, but
solely in the exercise of the powers conferred upon it as such Trustee; and that
no personal liability or personal responsibility is assumed by nor shall at any
time be asserted or enforceable against The Chicago Trust Company, on account of
this instrument or on account of any warranty, indemnity, representation,
covenant or agreement of the said Trustee in this instrument contained, either
expressed or implied, all such personal liability, if any, being expressly
waived and released.
<PAGE>
EXHIBIT A
PARCEL 1-A:
THAT PART OF THE EAST 356.50 FEET OF THE WEST 1235.10 FEET OF THE SOUTH EAST
FRACTIONAL 1/4, NORTH OF THE INDIAN BOUNDARY LINE OF SECTION 33, TOWNSHIP 40
NORTH, RANGE 12, EAST OF THE THIRD PRINCIPAL MERIDIAN, LYING BETWEEN TWO LINES
DRAWN AT RIGHT ANGLES THROUGH POINTS WHICH ARE RESPECTIVELY 738 FEET NORTH oF
THE NORTH LINE OF NORTH AVENUE AS DEDICATED AND 1551.64 FEET SOUTH OF THE NORTH
LINE OF THE AFORESAID QUARTER SECTION OF SAID SECTION 33, EXCEPTING THEREFROM A
PARCEL OF LAND DESCRIBED BY BEGINNING AT THE SOUTH WEST CORNER OF THE ABOVE
DESCRIBED TRACT OF LAND; THENCE NORTH ALONG THE WEST LINE THEREOF, 200 FEET;
THENCE SOUTHEASTERLY 170.95 FEET TO A POINT 30 FEET NORTH OF THE SOUTH LINE AND
18 FEET EAST OF THE WEST LINE OF THE ABOVE DESCRIBED TRACT OF LAND: THENCE SOUTH
30 FEET; THENCE WEST 18 FEET TO THE PLACE OF BEGINNING; IN COOK COUNTY, ILLINOIS
PARCEL 1-B:
A PARCEL OF LAND IN THE AFORESAID SOUTH EAST FRACTIONAL 1/4 OF SAID SECTION 33,
DESCRIBED BY BEGINNING AT THE NORTH WEST CORNER OF THE ABOVE DESCRIBED TRACT OF
LAND; THENCE NORTH 155 FEET ALONG THE WEST LINE OF THE ABOVE DESCRIBED TRACT OF
LAND EXTENDED NORTH; THENCE SOUTHEASTERLY 121.34 FEET To A POINT 18 FEET EAST OF
THE EXTENDED WEST LINE AND 35 FEET NORTH OF THE NORTH LINE OF THE ABOVE
DESCRIBED TRACT OF LAND; THENCE SOUTH 35 FEET; THENCE WEST 18 FEET TO THE PLACE
OF BEGINNING, IN COOK COUNTY, ILLINOIS.
PARCEL 2-A:
THAT PART OF THE EAST 381 FEET OF THE WEST 1235.10 FEET OF THE SOUTH EAST
FRACTIONAL 1/4 NORTH OF THE INDIAN BOUNDARY LINE, OF SECTION 33, TOWNSHIP 10
NORTH, RANGE 12, EAST OF THE THIRD PRINCIPAL MERIDIAN, LYING SOUTH OF A LINE
DRAWN THROUGH A POINT ON THE EAST LINE OF THE AFORESAID WEST 1235.10 FEET WHICH
IS 618 FEET NORTH OF THE NORTH LINE OF NORTH AVENUE AS DEDICATED; EXCEPTING
THEREFROM A STRIP OF LAND 60 FEET WIDE NORTHWESTERLY OF AND ADJOINING THE INDIAN
BOUNDARY LINE AND ALSO EXCEPTING THE WEST 11 FEET OF THE NORTH 213.02 FEET OF
THE TRACT DESCRIBED; ALSO EXCEPTING: THAT PART OF THE EAST 7 FEET OF THE WEST
861.1 FEET OF THE SOUTH EAST FRACTIONAL 1/4, NORTH OF THE INDIAN BOUNDARY LINE
OF SECTION 33, TOWNSHIP 40 NORTH, RANGE 12 EAST OF THE THIRD PRINCIPAL MERIDIAN,
DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE NORTH LINE OF NORTH
AVENUE AS DEDICATED WITH THE EAST LINE OF THE WEST 854.1 FEET OF SAID 1/4
SECTION; THENCE NORTH ALONG SAID LINE 402.49 FEET; THENCE EAST AT RIGHT ANGLES 7
FEET; THENCE SOUTH ALONG THE EAST LINE OF THE WEST 861.1 FEET AFORESAID; 402.54
FEET TO THE NORTH LINE OF NORTH AVENUE; THENCE WEST ALONG THE NORTH LINE OF
NORTH AVENUE 7 FEET TO THE POINT OF BEGINNING, IN COOK COUNTY, ILLINOIS.
PARCEL 2-B:
A TRIANGULAR PARCEL OF LAND, IMMEDIATELY NORTH OF AND ADJOINING THE ABOVE
DESCRIBED TRACT OF LAND DESCRIBED BY BEGINNING AT A POINT ON THE NORTH LINE OF
SAID TRACT WHICH IS 29.54 FEET EAST OF THE NORTH WEST CORNER THEREOF AS FIRST
DESCRIBED; THENCE WEST 5.04 FEET; THENCE NORTH ON THE EAST LINE OF WEST 878.60
FEET OF THE SOUTH EAST FRACTIONAL 1/4 OF SAID SECTION 33, A DISTANCE OF 100
FEET; THENCE SOUTHERLY 100.07 FEET TO THE PLACE OF BEGINNING; IN COOK COUNTY,
ILLINOIS.
<PAGE>
PARCEL 3:
THAT PART OF THE EAST 356.5O FEET OF THE WEST 1235.10 FEET OF THE SOUTH EAST
FRACTIONAL 1/4 NORTH OF THE INDIAN BOUNDARY LINE; OF SECTION 33, TOWNSHIP 40
NORTH, RANGE 12, EAST OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED BY BEGINNING AT
A POINT ON THE EAST LINE OF DESCRIBED TRACT WHICH IS 618 FEET NORTH OF THE NORTH
LINE OF NORTH AVENUE AS DEDICATED; THENCE WEST AT RIGHT ANGLES TO SAID EAST
LINE, 351.46 FEET; THENCE NORTHWESTERLY 100.07 FEET TO A POINT ON THE EAST LINE
OF WEST 878.60 FEET OF AFORESAID QUARTER SECTION WHICH IS 100 FEET NORTH OF
FIRST ABOVE DESCRIBED LINE EXTENDED WEST; THENCE NORTH ALONG DESCRIBED LINE 220
FEET; THENCE SOUTHEASTERLY ON A LINE FORMING AN ANGLE OF 6 DEGREES 02 MINUTES 40
SECONDS MEASURED FROM SOUTH TO SOUTH EAST WITH THE EAST LINE OF AFORESAID WEST
878.60 FEET A DISTANCE OF 170.95 FEET TO A POINT ON THE EAST LINE OF WEST 896.60
FEET OF SAID QUARTER SECTION; THENCE SOUTH ALONG SAID LINE 30 FEET; THENCE EAST
ALONG A LINE 120 FEET NORTH OF AND PARALLEL WITH THE FIRST ABOVE DESCRIBED LINE
338.50 FEET TO THE EAST LINE OF WEST 1235.10 FEET OF THE SOUTH EAST FRACTIONAL
1/4 OF SECTION 33, AFORESAID; THENCE SOUTH ALONG SAID LINE 120 FEET TO PLACE OF
BEGINNING, ALL IN THE VILLAGE OF MELROSE PARK, IN COOK COUNTY, ILLINOIS.
PARCEL 4:
EASEMENT APPURTENANT TO AND FOR THE BENEFIT OF PARCEL 2-A AS CREATED BY GRANT
FROM CLEARING INDUSTRIAL DISTRICT INCORPORATED, TO MEL PARK REALTY COMPANY,
DATED MAY 28, 1950 AND RECORDED JULY 3, 1950 AS DOCUMENT 17251273, FOR INGRESS
AND EGRESS, OVER THE FOLLOWING DESCRIBED LAND: THE NORTH 156 FEET OF THAT PART
OF THE EAST 11.00 FEET OF THE WEST 861.1 FEET OF THE SOUTH EAST FRACTIONAL 1/4,
NORTH OF THE INDIAN BOUNDARY LINE, OF SECTION 33, TOWNSHIP 40 NORTH, RANGE 12,
EAST OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS: BEGINNING AT THE
INTERSECTION OF THE NORTH LINE OF NORTH AVENUE AS DEDICATED, WITH THE EAST LINE
OF THE WEST 850.1 FEET OF SAID QUARTER SECTION; THENCE NORTH ALONG SAID LINE
402.46 FEET, THENCE EAST AT A 11.00 FEET; THENCE SOUTH ALONG THE EAST LINE OF
THE WEST 861.1 FEET AFORESAID, 402.54 FEET TO THE NORTH LINE OF NORTH AVENUE,
THENCE WEST ALONG THE NORTH LINE OF NORTH AVENUE 11.00 FEET TO THE POINT OF
BEGINNING, IN COOK COUNTY, ILLINOIS.
P.I.N. Nos.
12-33-400-081
12-33-400-082
<PAGE>
Exhibit 10.12
EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT
This Employment, Non-Competition and Stock Repurchase Agreement (this
"Agreement") dated as of March ___, 1998, is by and between IMPAC Group, Inc., a
---------
Delaware corporation formerly known as KFI Holding Corporation, with its
principal executive offices at 1950 North Ruby Street, Melrose Park, Illinois
60160-1178 (the "Company"), and David C. Underwood (the "Employee"), an
------- --------
individual residing at _____________________________________________________.
This Agreement is being entered into in connection with (a) the Investment
Agreement dated as of February 19, 1998 (the "Investment Agreement"), by and
--------------------
among the Company, Heritage Fund I Investment Corporation, the Employee and
certain other investors in the Company, (b) the Agreement and Plan of Merger
dated as of February 19, 1998 (the "Merger Agreement"), by and among the
----------------
Company, Klearfold, Inc., AGI Incorporated, and the Principal Stockholders
referred to therein, and (c) the Stockholder Agreement of even date herewith
(the "Stockholder Agreement") among the Company, the Employee and certain other
---------------------
stockholders of the Company. Capitalized terms used and not otherwise defined
herein have the respective meanings ascribed to them in the Stockholder
Agreement.
The Company and the Employee agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
meanings specified below:
"Act" means the Security Act of 1933, as amended.
---
"Additional Severance Period" has the meanings specified in Sections 5(a)
---------------------------
and 5(b) hereof.
"AGI" means AGI Incorporated, an Illinois corporation.
---
"Base Severance Compensation" has the meaning specified in Section 5(a)
---------------------------
hereof.
"Board" means the Board of Directors of the Company.
-----
"Bonus Plan" has the meaning specified in Section 3(b) hereof.
----------
<PAGE>
-2-
"Cause" means the Employee's (i) commission of a breach of the provisions
-----
of Section 8 hereof, (ii) habitual and willful neglect of the performance of the
Employee's duties as set forth in Section 2(a) hereof, such neglect having
continued for a period of 30 days after written notice thereof is given by the
Board to the Employee, (iii) commission of an act of fraud, misappropriation, or
dishonesty in connection with his employment by the Company, or (iv) conviction
of or plea of nolo contendere to a felony. Notwithstanding any other provision
of this Agreement, the Employee shall not be terminated for Cause unless and
until there shall have been delivered to him a copy of a resolution duly adopted
by the Board by a vote of not less than 80% of the Directors (excluding the
Employee, if a member of the Board) at a meeting called and held for the purpose
(within twelve (12) months of the date of the Board's becoming aware of the
condition or conditions constituting Cause, as set forth in clauses (i) - (iv)
above, and after reasonable notice to the Employee and an opportunity for him,
together with his counsel, to be heard by the Board), finding that in the good
faith opinion of the Board, one of the conditions set forth above in this
definition of Cause had been fulfilled, and specifying the particulars thereof.
"Certificate of Value" has the meaning specified in the definition of "Fair
----------- -- -----
Market Value".
"Charter" means the Company's Amended and Restated Certificate of
-------
Incorporation and all amendments thereto.
"Closing Date" means the date of this Agreement.
------------
"Co-Manager Non-Repurchase Notice" has the meaning specified in Section
--------------------------------
6.2(b) hereof.
"Co-Manager Put Repurchase Participation Notice" has the meaning specified
---------- --- ---------- ------------- ------
in Section 6.3(a) hereof.
"Co-Manager Remainder Repurchase Notice" has the meaning specified in
---------- --------- ---------- ------
Section 6.2(d) hereof.
"Co-Manager Repurchase Notice" has the meaning specified in Section 6.2(b)
----------------------------
hereof.
"Co-Managers" means each of Richard Block, James Oppenheimer, Richard
-----------
Oppenheimer, Dean Henkel, Jacqueline Barry, Dennis McGuin and Mary Frances
Griffin, so long as such individual remains employed by the Company or any of
its Subsidiaries.
<PAGE>
-3-
"Common Stock" means the Company's Series A Common Stock, $0.001 par value
------------
per share, and any capital stock of the Company which is (a) not subject to
redemption, or (b) issued to the holders of shares of Common Stock upon any
reclassification thereof.
"Company" has the meaning specified in the preamble hereto, and, unless the
-------
context otherwise requires, shall include all Subsidiaries of the Company.
"Company Non-Repurchase Notice" has the meaning specified in Section 6.1(b)
-----------------------------
hereof.
"Company Priority Shares" has the meaning specified in Section 6.1(b)
------- -------- ------
hereof.
"Company Repurchase Notice" has the meaning specified in Section 6.1(b)
-------------------------
hereof.
"Company Repurchase Shares" has the meaning specified in Section 6.3(b)(i)
-------------------------
hereof.
"Delayed Closing Date" has the meaning specified in Section 7.1(b) hereof.
------- ------- ----
"Designated Term" has the meaning specified in Section 2(b) hereof.
---------------
"Disability" shall mean that an independent medical doctor (selected by the
----------
Company's health or disability insurer) certifies that the Employee has for 180
consecutive days or 240 non-consecutive days in any twelve (12) month period
been disabled in a manner which seriously interferes with his ability to perform
his duties under this Agreement and which is reasonably expected to continue
indefinitely.
"Disposition Event" shall mean any merger, consolidation or sale of more
----------- -----
than 50% of the Company's assets or other similar corporate action (including,
without limitation, a recapitalization) pursuant to which the holders of Common
Stock receive cash, securities or other property, or any transaction as a result
of which the Company is acquired by the purchase of more than a majority of its
common equity.
"Failed Put Notice" has the meaning specified in Section 6.3(c) hereof.
-----------------
<PAGE>
-4-
"Fair Market Value" means, unless otherwise specified in the definition of
---- ------ -----
"Market Value Per Share", the fair market value of the entire common stock
equity of the Company (without premium for control or discounts for minority
interests, restrictions on transfer or lack of voting rights), as determined in
good faith by the Board at a meeting at which a quorum of the Board is present
in accordance with the Stockholder Agreement, or by unanimous written consent,
calculated as of such date, provided that in making such determination the Board
may in its sole discretion rely upon an appraisal or valuation of an Independent
Appraiser selected in good faith by the Board and conducted within the six (6)
month period preceding the date of the Board's determination, and as certified
by a duly authorized officer of the Company in a Certificate of Value (a
"Certificate of Value") which shall be kept as part of the minutes and other
- ------------ -- -----
corporate records of the Company.
"Formula Value" means, with respect to any date, the amount which is equal
------- -----
to the aggregate of (a) the product obtained by multiplying EBITDA (as defined
below) during the 12 full calendar months immediately preceding such date by
--
five and seven-tenths (5.7), less (b) the sum of (i) the Company's consolidated
----
funded indebtedness outstanding on such date, including (without limitation)
obligations under capitalized leases, and (ii) the liquidation value of, and
accrued dividends on, any preferred stock of the Company outstanding on such
date, plus (c) the aggregate cash balances and cash equivalents of the Company
----
and its Subsidiaries on such date. As used in this definition, "EBITDA" for any
------
period, means the Consolidated Net Income (as defined below) of the Company and
its Subsidiaries for such period plus to the extent deducted in determining
Consolidated Net Income all (a) income taxes (including reserves for deferred
income taxes), (b) gross interest expense, (c) depreciation and (d)
amortization, all determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied for such period.
As used in this definition, "Consolidated Net Income" means, for any period, the
------------ --- ------
net income (or loss) of the Company and its Subsidiaries for such period on a
consolidated basis, after deducting all operating expenses, provisions for all
taxes and reserves (including reserves for deferred income taxes) and all other
proper deductions, all determined in accordance with generally accepted
accounting principles consistently applied, after eliminating all intercompany
items and after adjustment for any add-backs or other similar adjustments
properly made in connection with the transactions contemplated by the Merger
Agreement and the Investment Agreement, but excluding from the definition of
Consolidated Net Income any extraordinary gains and/or losses and any gains
and/or losses from the sale or other disposition of assets other than in the
ordinary course of business, all determined in accordance with generally
accepted accounting principles consistently applied.
<PAGE>
-5-
"Good Reason" means (i) diminution by the Board, or the President, or any
-----------
other senior executive officer of the Company, of the Employee's
responsibilities, duties or authority as Chief Financial Officer (or such other
senior executive position as may be offered by the Company and which the
Employee in his sole discretion may accept), or interference by any senior
executive employee of the Company (other than the President and/or such other
executive officer to whom the Employee is required to report if reporting to
such Person does not constitute Good Reason pursuant to clause (iv) below) with
the Employee's responsibilities, duties or authority as Chief Financial Officer
(or such other senior executive position as may be offered by the Company and
which the Employee in his sole discretion may accept), or assignment to the
Employee of any duties inconsistent with the Employee's position as Chief
Financial Officer (or such other senior executive position as may be offered by
the Company and which the Employee in his sole discretion may accept), in any
such case other than in an insignificant manner, and such diminution,
interference or mis-assignment is not remedied or corrected within 30 days after
reasonably detailed written notice thereof, setting forth sufficient information
to permit the Company to take action to remedy or correct such matter, is given
by the Employee to the Company, provided that upon the third occurrence of any
complained-of matter, the Employee shall be entitled to notify the Company
thereof and thereupon to terminate his employment with the Company for Good
Reason, (ii) failure by the Company to pay and provide to the Employee the
compensation or benefits provided for in Section 3 hereof, and, any time
following the end of the Designated Term, any decrease in the compensation or
benefits provided for in Section 3 hereof (including, without limitation, any
failure to provide cost of living increases even after the end of the Designated
Term) which failure or decrease is not cured or remedied within 30 days after
written notice thereof is given by the Employee to the Company, (iii) the Board
requires the Employee to be permanently based anywhere other than within 25
miles of the Employee's present office location in Melrose Park, Illinois
(excluding business-related travel), (iv) the Employee becoming obligated to
report to, or accept assignments from any Person other than the President of the
Company or a single Person who directly reports to the President of the Company,
or (v) at any time following the end of the Designated Term, a Termination of
Employment voluntarily by the Employee after he has reached the age of sixty-two
(62) (any Termination of Employment under this clause (v) also being referred to
as a "Termination upon Retirement").
----------- ---- ----------
"Independent Appraiser" means an investment banking or accounting firm or
----------- ---------
independent appraiser of nationally recognized standing and at least ten years
experience in evaluating businesses similar to the Company and its
<PAGE>
-6-
Subsidiaries, and not an Affiliate (as defined in the Stockholder Agreement) of
the Company or any of its Subsidiaries or any stockholder of the Company.
"Initial Post-Term Severance Period" has the meaning specified in Section
------- --------- --------- ------
5(b) hereof.
"Initial Severance Period" has the meaning specified in Section 5(a)
------- --------- ------
hereof.
"Insurance Policy" has the meaning specified in Section 6.3(b)(i) hereof.
----------------
"Investment Agreement" has the meaning specified in the preamble hereto.
--------------------
"Klearfold" means Klearfold, Inc., a Pennsylvania corporation.
---------
"Market Value Per Share" means, with respect to any date, the quotient
------ ----- --- -----
obtained by dividing (a) the sum of (i) the most recently determined Fair Market
Value of the Company plus (ii) an amount equal to the aggregate consideration
----
which would then be payable to the Company, assuming the exercise at such time
of all then outstanding and exercisable warrants, options, or convertible
securities pursuant to which the Company would, upon exercise, then be obligated
to issue Common Stock, other than warrants or options the strike or exercise
price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, by (b) the sum of (i) the number of shares of Common Stock then
--
outstanding, plus (ii) the number of shares of Common Stock then issuable upon
----
exercise of all then outstanding and exercisable warrants, options, or
convertible securities pursuant to which the Company would, upon exercise, then
be obligated to issue Common Stock, other than warrants or options the strike or
exercise price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, provided, however, that in the event that on the date with respect to
which Market Value Per Share is being determined, more than six (6) months shall
have elapsed since the date of execution of the most recent Certificate of
Value, then the Fair Market Value of the Company for purposes of clause (a)(i)
of this definition of Market Value Per Share shall be calculated as the Formula
Value of the Company as of the date with respect to which Market Value Per Share
is being determined. In the event that either (x) the Employee (for the
purposes of this definition, including any Personal Representative of the
Employee), or (y) if (and only if) the Fair Market Value of the Company would
otherwise be determined by reference to the Formula Value in accordance with the
foregoing proviso, the Company, so elects (the
<PAGE>
-7-
electing party being referred to as the "Requesting Party"), by written notice
---------- -----
to the Company (in the case of any election by the Employee) or to the Employee
(in the case of any election by the Company) (the party receiving such notice,
the "Non-Requesting Party") within five (5) days of any determination of Market
-------------- -----
Value Per Share in accordance with the preceding sentence, the Fair Market Value
of the Company shall be determined either by one Independent Appraiser selected
by the Requesting Party and acceptable to the Non-Requesting Party in its sole
discretion, or, if the Requesting Party and the Non-Requesting Party are unable
to agree upon the identity of such an Independent Appraiser within fifteen (15)
days after the date of the Requesting Party's notice to the Non-Requesting
Party, by two Independent Appraisers, selected one by the Requesting Party and
one by the Non-Requesting Party, who shall work together to determine in good
faith one Fair Market Value of the Company acceptable to both Independent
Appraisers. The appraisal of such Independent Appraiser(s) shall be delivered to
the Requesting Party and the Non-Requesting Party within 60 days after the date
of the Requesting Party's notice to the Non-Requesting Party requesting an
appraisal. In the event that two Independent Appraisers are appointed and they
are unable to reach an agreement as to the Fair Market Value of the Company
within such 60-day period, the Appraised Fair Market Value shall be calculated
by adding the two Fair Market Values of the Company, as determined in good faith
within such period by each of such Independent Appraisers, and dividing the sum
thereof by two. The Fair Market Value of the Company determined by such
Independent Appraiser(s) in accordance with this definition (the "Appraised Fair
--------- ----
Market Value") shall be conclusive and shall be used to determine the Market
- ------ -----
Value Per Share hereunder, and judgment thereon may be entered in any court of
competent jurisdiction. All expenses of the Independent Appraiser or Independent
Appraisers appointed pursuant to this definition shall be borne by the Company,
except that if the Appraised Fair Market Value is less than 115% of the Fair
Market Value of the Company determined pursuant to the first sentence of this
definition, all expenses of such Independent Appraiser(s) shall be borne by the
Requesting Party.
"Merger Agreement" has the meaning specified in the preamble hereto.
------ ---------
"Original Price Per Share" means, as to all Shares acquired pursuant to the
-------- ----- --- -----
Investment Agreement, $340.00 per Share, and as to all other Shares, the actual
price per Share paid by the Employee upon the acquisition of such Shares.
"Person" means an individual, partnership, corporation, limited liability
------
company, association, trust, joint venture, unincorporated
<PAGE>
-8-
organization, or any government, governmental department or agency or political
subdivision thereof.
"Personal Representative" means the successor or legal representative
-----------------------
(including without limitation, a guardian, executor, administrator or
conservator) of the Employee following his death or legal incompetence.
"Public Offering" means any sale of Common Stock to the public pursuant to
------ --------
a public offering registered under the Act.
"Public Sale" means any Public Offering or any sale of Common Stock to the
-----------
public through a broker or market-maker pursuant to the provisions of Rule 144
(or any successor rule) adopted under the Act.
"Put Closing" has the meaning specified in Section 6.3(a) hereof.
-----------
"Put Notice" has the meaning specified in Section 6.3(a) hereof.
----------
"Put Period" has the meaning specified in Section 6.3(a) hereof.
----------
"Qualified Public Offering" means an underwritten Public Offering, pursuant
--------- ------ --------
to an effective registration statement under the Securities Act, covering the
offer and sale of shares of Common Stock in which an aggregate of not less than
$25,000,000 of gross proceeds from such public offering are received by the
Company and the selling stockholders.
"Related Persons" means the Employee's parents, spouse, children and
------- -------
grandchildren.
"Remainder Shares" has the meaning specified in Section 6.2(c) hereof.
--------- ------
"Restricted Period" has the meaning specified in Section 8(b) hereof.
---------- ------
"Second Co-Manager Put Participation Notice" has the meaning specified in
------------------------------------------
Section 6.3(d) hereof.
"Severance Extension Notice" has the meaning specified in Section 5(a)
--------- --------- ------
hereof.
"Severance Notice" has the meaning specified in Section 5(b) hereof.
--------- ------
"Severance Release" has the meaning specified in Section 5(a) hereof.
-----------------
<PAGE>
-9-
"Shares" means (a) all shares of Common Stock acquired by the Employee from
------
time to time, whether pursuant to the Investment Agreement, upon exercise of any
rights of first refusal or pre-emptive rights under the Stockholder Agreement,
any repurchase rights as a Co-Manager under any Employment, Non-Competition and
Stock Repurchase Agreement between the Company and any other employee of the
Company, upon exercise of any options, warrants, or other rights to purchase
shares of Common Stock, or otherwise, (b) any shares of Common Stock into which
such shares of Common Stock have been converted, (c) any capital stock or other
securities into which or for which such shares of Common Stock shall have been
converted or exchanged pursuant to any recapitalization, reorganization or
merger of the Company, and (d) any shares of capital stock issued with respect
to the foregoing pursuant to a stock split or stock dividend , which at the time
of the Employee's Termination of Employment are owned by the Employee or any
Person owning shares transferred to him pursuant to Section 1.1(b) of the
Stockholder Agreement by the Employee or any (direct or indirect) transferees of
the Employee pursuant to that provision.
"Stockholder Agreement" has the meaning specified in the preamble hereto.
----------- ---------
"Subsidiary" means, with respect to the Company, any corporation a majority
----------
(by number of votes) of the outstanding shares of any class or classes of which
shall at the time be owned by the Company or by a Subsidiary of the Company, if
the holders of the shares of such class or classes (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are at the time entitled, as such holders, to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to vote exists by
reason of the happening of a contingency and including without limitation AGI
and Klearfold.
"Termination for Under-Performance" means a Termination of Employment of
---------------------------------
the Employee by the Company without Cause, where the Board shall have by
resolution duly adopted with the consent of the President of the Company,
identified such Termination of Employment as having occurred as a result of
under-performance by the Employee in his employment hereunder, provided however,
that except as expressly stated in Section 5 hereof, any such Termination of
Employment shall be treated as a Termination of Employment by the Company
without Cause for all purposes hereunder.
<PAGE>
-10-
"Termination of Employment" means the Employee's ceasing to be an employee
-------------------------
of the Company or any of its Subsidiaries, whether voluntary or involuntary, for
any reason or for no reason, including without limitation, for resignation,
death or Disability of the Stockholder, and whether or not for Cause or for Good
Reason.
"Termination upon Retirement" has the meaning specified in the definition
----------- ---- ----------
of "Good Reason".
"Unpurchased Shares" has the meaning specified in Section 6.3(c) hereof.
------------------
"Variable Severance Compensation" has the meaning specified in Section 5(a)
-------------------------------
hereof.
2. EMPLOYMENT.
(A) EMPLOYMENT. Subject to the terms and conditions of this Agreement, the
Company agrees to employ the Employee, and the Employee agrees to serve, as the
Chief Financial Officer of the Company with responsibility for the financal
functions of the Company, AGI and Klearfold, having such powers and duties as
are consistent with such position, subject to the directions of the President of
the Company and/or a single Person who directly reports to the President of the
Company.
(B) DESIGNATED TERM. The Employee's employment hereunder shall commence on
the date hereof, and shall continue until terminated in accordance with Section
4 hereof, provided that, subject to the other terms and conditions hereof, the
term of employment shall be at least until June 7, 2001 (such period being
referred to herein as the "Designated Term"), and provided, further that from
---------- ----
and after June 8, 2001, subject to the provisions of Section 5 hereof, the
Employee's employment hereunder shall be at will.
3. COMPENSATION. During the Designated Term, the Company shall pay and
provide to the Employee the compensation set forth below:
(A) BASE SALARY. The Company shall pay to the Employee a base salary,
prorated and payable in installments in accordance with AGI's usual payroll
practices. Such base salary shall be at the rate of $225,000 per annum for
1998, and thereafter such base salary shall be adjusted annually based upon the
percentage increase, if any, in the Consumer Price Index, All Items, Chicago, as
published by the Bureau of Labor Statistics (the "CPI"), as follows: The
---
Employee's base salary for each of the years 1999-2001 shall be
<PAGE>
-11-
calculated by multiplying the Employee's 1998 base salary by a fraction, the
numerator of which is the average CPI for the twelve months of the year
preceding the year for which such base salary is being calculated, and the
denominator of which is the CPI for December 1997. In no event will any such
adjustment reduce the Employee's base salary for any year below that in effect
for the preceding year. In addition, in the event that Scott Herrin terminates
his employment with the Company without Good Reason during the "Free Termination
Period" under his Employment, Non-Competition and Stock Repurchase Agreement
with the Company, the Employee's base salary under this Section 3(a) will be
increased by a portion, the amount of which shall be determined by the President
of the Company in his sole discretion and notified to the Employee in writing
within thirty (30) days after the date of Scott Herrin's Termination of
Employment, of the reduction in the Company's overall compensation expense
resulting from such Termination of Employment.
(B) BONUSES. The Employee shall be entitled to participate in the
Company's Executive Bonus Plan (the "Bonus Plan"), a copy of which is appended
----------
hereto and incorporated herein by this reference.
(C) FRINGE BENEFITS. In addition to the Employee's base salary and any
bonuses to which the Employee may become entitled under the Bonus Plan, the
Company shall provide to the Employee additional benefits as provided to other
employees of the Company and its Subsidiaries whose base salary and level of
responsibility are comparable to those of the Employee, including as described
in the attached Schedule of Benefits.
--------------------
(D) VACATION. The Employee shall be entitled to four (4) weeks vacation
each calendar year. Any vacation shall be taken at the reasonable and mutual
convenience of the Company and the Employee. Accrued vacation not taken in any
calendar year will not be carried forward or used in any subsequent calendar
year, provided, however, if any accrued vacation is not taken by the Employee in
any calendar year at the request of the Employer, then the Employee shall be
entitled to carry forward and use such accrued vacation in the immediately
following calendar year but not in any subsequent calendar year.
4. TERMINATION. The Employee's employment hereunder shall terminate upon
the occurrence of any of the following events:
(A) the Employee's death or DISABILITY; OR
(B) the termination of the Employee's employment hereunder by the Company,
for Cause, by written notice to the Employee; or
<PAGE>
-12-
(C) the termination of the Employee's employment hereunder by the Company,
without Cause, by written notice to the Employee; or
(D) the termination of the Employee's employment hereunder by the Employee,
for Good Reason, by written notice to the Company; or
(E) the termination of the Employee's employment hereunder by the Employee,
without Good Reason, by 30 days' prior written notice to the Company.
5. SEVERANCE. Notwithstanding any other provision of this Agreement:
(A) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) during the
Designated Term, then the Company shall, upon delivery to the Company of a
release of any claims of the Employee against the Company and its stockholders,
directors, officers, employees, agents or other affiliates arising out of his
employment relationship (other than claims to any compensation or benefits
payable under or to be provided pursuant to this Section 5, or any rights of the
Employee under Sections 6 or 7 hereof) executed by the Employee and reasonably
satisfactory in form and substance to the Company (a "Severance Release"),
--------- -------
continue to pay and provide to the Employee (A) the compensation payable to him
pursuant to Section 3(a) hereof, and (B) the benefits provided to him pursuant
to Section 3(c) hereof (the compensation and benefits described in clauses (A)
and (B), together, such Employee's "Base Severance Compensation"), and, unless
---------------------------
such Termination of Employment was a Termination for Under-Performance, (C) any
bonus accrued or earned by the Employee pursuant to the Bonus Plan and
attributable to the Employee's performance for the portion of the year prior to
his Termination of Employment, on a one-time only basis payable at the time of
payment of bonuses to other executive employees under the Bonus Plan, and (D)
for each year, 50% of an amount equal to the compensation payable to the
Employee pursuant to Section 3(a), multiplied by a fraction, the numerator of
which equals the aggregate bonus actually payable with respect to the preceding
year to the Company's other executive employees in the same bonus pay-out range
as the Employee was in prior to his Termination of Employment, and the
denominator of which equals the aggregate salary of such other executive
employees for such preceding year (the compensation described in clauses (C) and
(D) together, such Employee's "Variable Severance Compensation") for a period
-------------------------------
(the "Initial Severance Period") equal to the longer of (i) the remainder of the
------- --------- ------
Designated Term, and
<PAGE>
-13-
(ii) the one-year period following the date of such Termination of Employment,
but this clause (ii) only being applicable if, prior to the earlier of (x) the
last day of the Designated Term and (y) the thirtieth (30th) day from the date
of such Termination of Employment, the Company shall have notified the Employee
in writing of the Company's intention, in the Company's sole discretion, so to
extend the Initial Severance Period (such notice, a "Severance Extension
-------------------
Notice"). In the Company's sole discretion, the Company may elect, either in the
- ------
Severance Extension Notice, or by written notice to the Employee given no later
than thirty (30) days prior to the end of the Initial Severance Period (as it
may have been extended pursuant to the Severance Extension Notice), to continue
to pay and provide to the Employee his Base Severance Compensation for an
additional period (the "Additional Severance Period") of up to one year
---------- --------- ------
following the end of the Initial Severance Period (as it may have been extended
pursuant to the Severance Extension Notice), provided that the Additional
Severance Period shall in no event extend beyond the second anniversary of the
Employee's Termination of Employment. Upon payment in full of the Employee's
Base Severance Compensation and, if and when applicable, his Variable Severance
Compensation, as described in this Section 5(a), the Company's obligations to
pay and provide the Employee with any other compensation otherwise payable to
him pursuant to Section 3 hereof, and all other rights of the Employee under
Sections 2, 3 and 5 hereof, shall cease as of the date of such payment in full.
(B) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) at any time
after the end of the Designated Term, then if at the time of such Termination of
Employment or within thirty (30) days thereafter, the Company shall, in its sole
discretion, so have notified the Employee in writing (such notice, a "Severance
---------
Notice") and the Employee shall have executed and delivered to the Company a
- ------
Severance Release, the Company shall continue to pay and provide to the Employee
his Base Severance Compensation and, unless such Termination of Employee was a
Termination for Under-Performance, his Variable Severance Compensation for a
period of one year following the date of such Termination of Employment (the
"Initial Post-Term Severance Period"), provided that, unless the Company shall
-----------------------------------
have notified the Employee in writing at the time of his Termination of
Employment that it did not intend to deliver a Severance Notice, the Employee's
Base Severance Compensation shall be payable in any event for the portion of the
30-day period following the Termination of Employment prior to the Company's
delivery either of a Severance Notice or of notice that the Company did not
intend to deliver a Severance Notice. The Company may elect, in its sole
discretion, by written
<PAGE>
-14-
notice to the Employee given no later than ninety (90) days prior to the end of
the Initial Post-Term Severance Period to extend the period during which the
Employee's Base Severance Compensation shall be payable and provided to the
Employee for an additional period (also referred to herein as an "Additional
----------
Severance Period") of up to one year from the end of the Initial Post-Term
- --------- ------
Severance Period, provided that the total period during which his Base Severance
Compensation shall be payable and provided to the Employee under this Section
5(b) shall in no event extend beyond the second anniversary of the Employee's
Termination of Employment. In the event that no Severance Notice has been given
within thirty (30) days after the date of the Employee's Termination of
Employment pursuant to either Section 4(c) (by the Company without Cause) or
Section 4(d) (by the Employee for Good Reason) (other than a Termination upon
Retirement), then the Company's obligation to pay and provide the Employee with
any compensation shall cease in any event as of the thirtieth (30th) day
following the date of such Termination of Employment, and all other rights of
the Employee under Sections 2, 3 and 5 hereof, shall be deemed to have ceased as
of the date of such Termination of Employment. In the event that a Severance
Notice is given in accordance with this Section 5(b), then upon payment in full
of the Employee's Base Severance Compensation, and, if and when applicable, his
Variable Severance Compensation as described in this Section 5(b), the Company's
obligations to pay and provide the Employee with any of the compensation payable
to him pursuant to Section 3 hereof, and all other rights of the Employee under
Sections 2, 3 and 5 hereof, shall cease as of the date of such payment in full.
(C) If the Employee's employment with the Company terminates pursuant to
any of Sections 4(a) (death or Disability), 4(b) (by the Company for Cause), or
4(e) (by the Employee without Good Reason) hereof, or as a Termination upon
Retirement, then the Company's obligations to pay and provide the Employee with
any of the compensation payable to him pursuant to Section 3 hereof, and all
other rights of the Employee under Sections 2, 3 and 5 hereof, shall cease as of
the date of such Termination of Employment.
(D) The Employee shall not be required to mitigate the amount of any
compensation payable to him pursuant to Sections 5(a) or 5(b) hereof, by seeking
other employment or otherwise, provided, that in the event the Employee obtains
other employment during any period for which compensation is being paid pursuant
to Sections 5(a) or 5(b), the amount of compensation otherwise payable to the
Employee pursuant to either of such sections shall be reduced by 50% for the
period during which the Employee is so employed, provided, further, that in the
event that the Employee provides evidence reasonably satisfactory to the Company
that the amount of the resulting reduction in his compensation otherwise payable
pursuant to
<PAGE>
-15-
Sections 5(a) or 5(b) hereof, as the case may be, exceeds the level of his
compensation payable from such other employment, then his compensation pursuant
to Sections 5(a) or 5(b) hereof, as applicable, shall be reduced for the period
of such other employment by an amount equal to the aggregate amount of his
compensation from such other employment during such period. The Employee shall
promptly notify the Company if he obtains other employment during the applicable
period.
(E) Nothing in this Section 5 shall limit any other obligation which the
Company may owe the Employee under any insurance policy, employee benefit plan
or other retirement plan. Furthermore, upon any Termination of Employment of
any type, the Company shall remain obligated to the Employee for (i) any accrued
and unpaid base salary and vacation pay, (ii) reimbursement for reasonable out-
of-pocket expenses incurred by Employee by or on behalf of the Company or
otherwise in the performance of his duties and in accordance with applicable
Company policies then in effect, and (iii) unless otherwise specified in any
such plan, policy or program, payments or benefits explicitly provided under the
terms of any plan, policy or program of the Company in which the Employee was a
participant, or as otherwise required by applicable law.
6. REPURCHASE OF SHARES.
6.1. REPURCHASE RIGHTS OF THE COMPANY.
(A) Upon any Termination of Employment of the Employee at any time, the
Company may, at its option, repurchase from the holders thereof, and the
Employee will at the request of the Company sell to the Company, or procure the
sale to the Company of, all or any portion of the Shares specified in the
Company Repurchase Notice(s) (as defined below) at a purchase price per Share
determined pursuant to paragraphs (i) and (ii) below:
(i) in the event that such Termination of Employment is pursuant to
Section 4(b) (by the Company for Cause), at a purchase price per Share equal to
the lower of the Market Value Per Share, as of the date of such Termination of
Employment, and the Original Price Per Share; and
(ii) otherwise, at a purchase price per Share equal to the Market
Value Per Share, as of the date of such Termination of Employment.
(B) The Company's repurchase rights under Section 6.1(a) shall be
exercisable at any time and from time to time within the periods specified in
<PAGE>
-16-
clause (iii) below, by written notice from the Company to the Employee
specifying the number of Shares to be repurchased (each such notice, a "Company
-------
Repurchase Notice"), provided, however, that (i) if a Company Repurchase Notice
- -----------------
is delivered at any time within ninety (90) days following the Termination of
Employment of the Employee and prior to the delivery of a Co-Manager Repurchase
Notice or Co-Manager Non-Repurchase Notice pursuant to and in accordance with
Section 6.2 below, such Company Repurchase Notice shall not specify a number of
Shares in excess of 2,048, as such amount may be adjusted from time to time to
reflect stock splits, combinations or other similar recapitalizations affecting
the Common Stock (such amount of Shares, as so adjusted, being referred to
herein as the "Company Priority Shares"), (ii) if a Company Repurchase Notice is
------- -------- ------
delivered at any time after the delivery of a Co-Manager Repurchase Notice or a
Co-Manager Non-Repurchase Notice, or after ninety (90) days following the
Termination of Employment of the Employee, such Company Repurchase Notice shall
not specify a number of Shares in excess of the number of Shares then
outstanding, less the number of Shares referred to in the Co-Manager Repurchase
----
Notice, if any, previously delivered pursuant to and in accordance with Section
6.2(b) below, (iii) the Company's repurchase rights under Section 6.1(a) above
shall be exercisable with respect to the Company Priority Shares, only for a
period of ninety (90) days from the date of Termination of Employment of the
Employee, and with respect to all Shares other than the Company Priority Shares,
only for a period of sixty (60) days from the date upon which such rights first
become exercisable in accordance with the preceding clause (ii), and (iv) in the
event that the Company determines at any time prior to the expiration of the
period of ninety (90) days from the date of Termination of Employment of the
Employee that it does not intend to exercise its repurchase rights under Section
6.1(a) above with respect to all or any portion of the Company Priority Shares,
the Company shall promptly so notify the Co-Managers and the Employee in writing
(such notice, the "Company Non-Repurchase Notice"). The closing of the
------- -------------- ------
repurchase of Shares pursuant to each Company Repurchase Notice shall be held
not earlier than five (5) days nor later than thirty (30) days after delivery of
such Company Repurchase Notice. The Company's repurchase rights under Section
6.1(a) shall lapse if not exercised within the periods specified in clause (iii)
of this Section 6.1(b) in accordance with the provisions hereof, except as
otherwise provided in Section 7 hereof. Upon delivery by the Company of the
repurchase price for the Shares being repurchased under this Section 6.1(b) in
accordance with Section 7.2 hereof, all of the Shares being repurchased shall no
longer be deemed to be outstanding, all of the Employee's rights with respect to
such Shares will terminate, with the exception of the right of the Employee to
receive the repurchase price in exchange therefor pursuant to this Section
6.1(b), and payments pursuant to Section 6.4, if any, and the Employee (on his
own behalf and on behalf of any
<PAGE>
-17-
other holder of Shares) hereby irrevocably appoints the Company as his attorney-
in-fact to take all actions necessary and sign all documents required to cancel
such Shares on the Company's books and records.
6.2. REPURCHASE RIGHTS OF THE CO-MANAGERS.
(A) Upon any Termination of Employment of the Employee at any time, the Co-
Managers may, at their option, repurchase from the holders thereof, and the
Employee will at the request of the Co-Managers, or any of them, sell to such
Co-Managers, or procure the sale to such Co-Managers of, all or any portion of
the Shares, other than the Company Priority Shares, as specified in the Co-
Manager Repurchase Notice (as defined below), at a purchase price per Share
determined pursuant to paragraphs (i) and (ii) below:
(i) in the event that such Termination of Employment is pursuant to
Section 4(b) (by the Company for Cause), at a purchase price per Share
equal to the lower of the Market Value Per Share, as of the date of such
Termination of Employment, and the Original Price Per Share; and
(ii) otherwise, at a purchase price per Share equal to the Market
Value Per Share, as of the date of such Termination of Employment.
(B) The Co-Managers' repurchase rights under Section 6.2(a) above shall be
exercisable at any one time within ninety (90) days following the Termination of
Employment of the Employee, by written notice from the Co-Managers participating
in such repurchase to the Employee and the Company specifying the number of
Shares to be repurchased by each of such Co-Managers (the "Co-Manager Repurchase
---------------------
Notice"), provided, however, that in the event that the Co-Managers determine at
- ------
any time prior to the expiration of the period of ninety (90) days following the
Termination of Employment of the Employee that none of the Co-Managers intends
to exercise their respective repurchase rights under Section 6.2(a) above with
respect to all or any portion of the Shares available to be repurchased by the
Co-Managers, the Co-Managers shall promptly so notify the Company and the
Employee in writing (such notice, the "Co-Manager Non-Repurchase Notice"). The
---------- -------------- ------
closing of the repurchase of the Shares to be repurchased pursuant to the Co-
Manager Repurchase Notice shall be held not earlier than five (5) days nor later
than thirty (30) days after delivery to the Employee and the Company of the Co-
Manager Repurchase Notice. The Co-Managers' repurchase rights under Section
6.2(a) shall lapse if not exercised within the time period specified above in
accordance with the provisions hereof, except
<PAGE>
-18-
as otherwise provided in Sections 6.2(c) and 6.2(d) below. Each of the Co-
Managers participating in such repurchase shall purchase that number of the
Shares referred to in the relevant Co-Manager Repurchase Notice as to be
purchased by such Co-Manager, provided that, unless Co-Managers holding a
majority of the shares held by the participating Co-Managers otherwise agree, no
Co-Manager shall be entitled to purchase a number of Shares greater than such
Co-Manager's pro rata portion of the Shares available to be purchased by the Co-
--------
Managers, based on the total number of shares of Common Stock owned on the date
of the Co-Manager Repurchase Notice by the participating Co-Managers. Upon
delivery by the participating Co-Managers of the repurchase price, in cash, for
the Shares being repurchased under this Section 6.2(b) in accordance with
Section 7.2 hereof, all of the Employee's rights with respect to such Shares
will terminate, with the exception of the right of the Employee to receive the
repurchase price from the participating Co-Managers in exchange for such Shares
pursuant to this Section 6.2(b), and payments pursuant to Section 6.4, if any,
and the Employee (on his own behalf and on behalf of any other holder of Shares)
hereby irrevocably appoints the Company as his attorney-in-fact to take all
actions necessary and sign all documents required to transfer such Shares on the
Company's books and records into the name(s) of the respective participating Co-
Managers.
(C) In the event that either (i) the Company shall have failed to exercise
its repurchase rights under Section 6.1 above with respect to all or any portion
of the Company Priority Shares within the applicable period specified in Section
6.1(b)(iii) above (it being understood that a failure to complete such a
repurchase after a Company Repurchase Notice shall have been given shall not
constitute a failure to exercise the Company's repurchase rights for the
purposes of this Section 6.2(c)), unless such failure continues for 180 days
after the latest date upon which a closing of a purchase pursuant to Section 6.
1(b)(ii) could occur, without giving effect to Section 7.1, a failure which so
continues being referred to herein as a "180-Day Failure", or (ii) the Company
------- -------
shall have delivered a Company Non-Repurchase Notice indicating that the Company
does not intend to exercise its repurchase rights under Section 6.1 above with
respect to all or any portion of the Company Priority Shares, then the Co-
Managers, or any of them, may, at their option, repurchase from the holders
thereof, and the Employee will at the request of such Co-Managers sell to such
Co-Managers, or procure the sale to such Co-Managers of, those Company Priority
Shares (collectively the "Remainder Shares") as to which the Company shall have
--------- ------
failed to exercise its repurchase rights under Section 6.1 as described above,
or with respect to which the Company shall have delivered a Company Non-
Repurchase Notice indicating that it did not intend to exercise its repurchase
<PAGE>
-19-
rights under Section 6.1, at a purchase price per Remainder Share determined in
accordance with Section 6.1(a) above.
(D) The Co-Managers' repurchase rights under Section 6.2(c) above shall be
exercisable at any one time within the period of sixty (60) days following the
earlier of (i) the last day of the 90-day period applicable to the repurchase by
the Company of Company Priority Shares, as specified in Section 6.1(b)(iii)
above, (ii) the occurrence of a 180-Day Failure, and (iii) the date of receipt
of a Company Non-Repurchase Notice, by written notice from the Co-Managers
participating in such repurchase to the Employee and to the Company specifying
the number of Remainder Shares to be repurchased by each of such Co-Managers
(the "Co-Manager Remainder Repurchase Notice"). The closing of the repurchase
---------- --------- ---------- ------
of the Remainder Shares to be repurchased pursuant to the Co-Manager Remainder
Repurchase Notice shall be held not earlier than five (5) days nor later than
thirty (30) days after delivery to the Employee and the Company of the Co-
Manager Remainder Repurchase Notice. The Co-Managers' repurchase rights under
Section 6.2(c) above shall lapse if not exercised within the 30-day period
specified in this Section 6.2(d) in accordance with the provisions hereof. Each
of the Co-Managers participating in such repurchase shall purchase that number
of Remainder Shares referred to in the Co-Manager Remainder Repurchase Notice as
to be repurchased by such Co-Manager, provided that, unless Co-Managers holding
a majority of the Shares held by the participating Co-Managers otherwise agree,
no Co-Manager shall be entitled to purchase a number of Remainder Shares greater
than such Co-Manager's pro rata portion of the Remainder Shares available to be
--------
purchased by the Co-Managers, based on the total number of Shares of Common
Stock owned on the date of the Co-Manager Remainder Repurchase Notice by the
participating Co-Managers. Upon delivery by the participating Co-Managers of
the repurchase price, in cash, for the Remainder Shares being repurchased under
this Section 6.2(d) in accordance with Section 7.2 hereof, all of the Employee's
rights with respect to such Shares will terminate, with the exception of the
right of the Employee to receive the repurchase price from the participating Co-
Managers in exchange for such Shares pursuant to this Section 6.2(d), and
payments pursuant to Section 6.4, if any, and the Employee (on his own behalf
and on behalf of any other holder of Shares) hereby irrevocably appoints the
Company as his attorney-in-fact to take all actions necessary and sign all
documents required to transfer such Shares on the Company's books and records
into the name(s) of the respective participating Co-Managers.
6.3. REPURCHASE RIGHTS OF THE EMPLOYEE.
<PAGE>
-20-
(A) Upon any Termination of Employment pursuant to Sections 4(a) (death or
Disability), 4(c) (by the Company without Cause) or 4(d) (by the Employee with
Good Reason), the Employee will have the right, but not the obligation, to
request that the Company, together with, to the extent they so elect in
accordance with this Section 6.3, the Co-Managers, repurchase all (and not less
than all) of the Shares, for a purchase price per Share equal to the Market
Value Per Share as of the date of such Termination of Employment. The put
rights of the Employee under this Section 6.3 shall be exercisable at any time
within sixty (60) days after the date of such Termination of Employment or, if
such Termination of Employment is upon the death of such Employee, then sixty
(60) days after the appointment of a Personal Representative (or functional
equivalent) for such Employee (any such 60-day period being referred to as a
"Put Period") by notice to the Company and each of the Co-Managers (the "Put
---------- ---
Notice") specifying the date, time and place of the closing (the "Put Closing")
- ------ -----------
for such repurchase. The put rights of the Employee under this Section 6.3 will
lapse if not exercised by delivery of a Put Notice to the Company and to the Co-
Managers in care of the Company within the applicable Put Period. In the event
that any of the Co-Managers wish to participate in the proposed repurchase, such
Co-Managers shall notify the Employee and the Company within thirty (30) days
after delivery of the Put Notice of their intention (if any) to participate in
such repurchase, by written notice (the "Co-Manager Put Repurchase Participation
---------------------------------------
Notice") specifying the number of Shares to be repurchased by each of the Co-
- ------
Managers participating in such repurchase, provided however that the Co-Manager
Put Repurchase Participation Notice shall in no event specify any of the Company
Priority Shares as to be repurchased by the Co-Managers. Each of the Co-
Managers participating in such repurchase shall purchase that number of the
Shares referred to in the Co-Manager Put Repurchase Participation Notice as to
be repurchased by such Co-Manager, provided that unless Co-Managers holding a
majority of the shares held by the participating Co-Manager otherwise agree, no
Co-Manager shall be entitled to purchase a number of Shares greater than such
Co-Manager's pro rata portion of the Shares available to be purchased by the Co-
--------
Manager pursuant to this Section 6.3, based on the total number of shares of
Common Stock owned on the date of the Co-Manager Put Repurchase Participation
Notice by all of the participating Co-Managers.
(B) (i) If the Employee's Termination of Employment was pursuant to
Section 4(a) (death or Disability), or a Termination upon Retirement, then, in
the event that the number of Shares to be repurchased by the participating Co-
Managers pursuant to the Co-Manager Put Repurchase Participation Notice, if any,
is less than the number of Shares then outstanding, then the Company may, by
written notice to the Employee or his Personal Representative, given within
thirty (30) days after the
<PAGE>
-21-
delivery of the Put Notice or, if later, within fifteen (15) days after the
Company's receipt of the Co-Manager Put Repurchase Participation Notice, either
accept or reject the Employee's Put Notice with respect to those Shares (the
"Company Repurchase Shares") which the Co-Managers shall not have elected to
-------------------------
repurchase, provided that in the event of the Employee's death or Disability,
-------------
the Company shall be required to honor the put of such amount of the Company
Repurchase Shares as may be repurchased with the proceeds of the life or
disability insurance policy held by the Company on the Employee pursuant to and
in accordance with Section 7 of the Stockholder Agreement (the "Insurance
---------
Policy"), less the cash surrender value thereof at such time.
- ------
(ii) If the Employee's Termination of Employment was pursuant to
Section 4(e) (by the Company without Cause) or 4(d) (by the Employee with Good
Reason) (other than a Termination upon Retirement), then, subject to the
provisions of Sections 6.3(f) and 7 below, the Company shall be required to
honor the put of all of the Company Repurchase Shares.
(C) In the event that, pursuant to Section 6.3(b) above, the Company either
elects to or is required to honor the put of all of the Company Repurchase
Shares, or fails to deliver any notice pursuant to Section 6.3(b)(i) rejecting
all or any portion of such put within the fifteen-day period specified in such
section, then the Put Closing will be held no earlier than forty-five (45) days
nor later than sixty (60) days after delivery of the Put Notice. At the Put
Closing, subject to the provisions of Section 7 hereof, each of the Co-Managers
participating in the repurchase under this Section 6.3 (if any) shall purchase,
and the Employee shall sell, or procure the sale to each such Co-Manager of,
those shares referred to in the Co-Manager Put Repurchase Participation Notice
as to be repurchased by such Co-Manager, and the Company shall purchase, and the
Employee shall sell, or procure the sale to the Company of, all of the Company
Repurchase Shares other than those referred to in the Co-Manager Put Repurchase
Participation Notice, if any. Upon tender by the Company and the Co-Managers of
the purchase price for the Shares being repurchased hereunder in accordance with
Section 7 below, the Shares being repurchased by the Company shall no longer be
deemed to be outstanding, all of the Employee's rights with respect to the
Shares being repurchased shall terminate with the exception of the right of the
Employee to receive the repurchase price from the Company or the Co-Managers, as
the case may be, in exchange for such Shares pursuant to this Section 6.3, and
payments pursuant to Section 6.4, if any, and the Employee (on his own behalf
and on behalf of any other holder of Shares) hereby irrevocably appoints the
Company as his attorney-in-fact to take all actions necessary and sign all
documents required to cancel the Shares being transferred to the Company, and to
transfer the Shares being repurchased by the Co-Managers
<PAGE>
-22-
into the name(s) of the respective Co-Managers participating in such repurchase,
on the Company's books and records.
(D) In the event that, pursuant to Section 6.3(b)(i) above, the Company
notifies the Employee or his Personal Representative that the Company rejects
the Employee's Put Notice with respect to any of the Company Repurchase Shares,
then the Company shall promptly so notify the Co-Managers and, within thirty
(30) days of delivery of the Company's notice to the Co-Managers, the Co-
Managers may notify the Employee and the Company in writing (such notice, a
"Second Co-Manager Put Participation Notice") of their intention (if any) to
------------------------------------------
purchase all of the Company Repurchase Shares, specifying the number of Company
Repurchase Shares to be repurchased by each of the Co-Managers participating in
such repurchase, and in such event (whether or not the Co-Managers deliver a Co-
Manager Put Participation Notice in accordance with this Section 6.3(d)) the Put
Closing will be held no earlier than seventy-five (75) days nor later than
ninety (90) days after delivery of the Put Notice. At such Put Closing, subject
to the provisions of Section 7 hereof, each of the Co-Managers participating in
the repurchase shall purchase, and the Employee shall sell, or procure the sale
to each such Co-Manager of, those shares referred to in the Co-Manager Put
Repurchase Participation Notice and/or the Second Co-Manager Put Participation
Notice, if any, as to be repurchased by such Co-Manager, in accordance with the
procedures specified in Sections 6.3(a) and 6.3(c) applicable to purchases by
Co-Managers.
(E) In the event that the Co-Managers do not elect, within the 30-day
period specified in Section 6.3(d) above, to acquire all of the Company
Repurchase Shares as to which the Company shall have rejected the Employee's Put
Notice, then the transfer restrictions on any such Company Repurchase Shares
pursuant to Section 1 of the Stockholder Agreement will thereupon automatically
and without further notice be terminated, with effect from the end of such 30-
day period.
(F) Notwithstanding the foregoing, in the event that any payment by the
Company of any portion of the purchase price for any Shares that the Employee
has requested be repurchased pursuant to Section 6.3(a), and that the Company,
pursuant to Section 6.3(b), has either agreed to or is required to purchase, is,
at the time such payment would otherwise be due hereunder, limited or prohibited
by law or by the terms of any of the Company's or any of its Subsidiaries'
agreements with its or their lenders or any other contracts by which the Company
or any of its Subsidiaries is bound, the Company may complete the repurchase of
such Shares in accordance with Section 7 hereof, but in any event shall only be
required at such time to repurchase that portion of the Shares, if any, for
which payment of the purchase price
<PAGE>
-23-
therefor is not so prohibited. Notwithstanding the foregoing, in the event that
(i) the Company is unable to make payment of any portion of the purchase price
for Shares to be repurchased by it pursuant to this Section 6.3 for the reasons
specified in Section 7.1 hereof, and (ii) such failure continues for 180 days
from the last date upon which the closing of the purchase of such Shares was to
occur but for this Section 6.3(c) and Section 7.1, the Company shall send a
notice to the Co-Managers (a "Failed Put Notice") informing them of their right
-----------------
to purchase any or all of the Shares for which the Company was not able to pay
the purchase price (the "Unpurchased Shares"), such notice to specify the number
------------------
of such Unpurchased Shares and the Fair Market Value of such Shares on the date
of the Failed Put Notice. The Co-Managers shall then have the right to purchase
any or all of the Unpurchased Shares for their Fair Market Value on the date of
the Failed Put Notice. Such purchase shall be made in accordance with the
procedure pursuant to Sections 6.3(a) and 6.3(c) applicable to purchases by Co-
Managers, with the Co-Manager Put Repurchase Participation Notice required to be
delivered not less than thirty (30) days after delivery of the Failed Put Notice
and any closing to occur not less than forty-five (45) nor more than sixty (60)
days after delivery of the Failed Put Notice.
6.4. ADDITIONAL PAYMENTS UPON DISPOSITION EVENT, ETC. If, at any time
within six (6) months after any closing of a repurchase either (a) pursuant to
Sections 6.1 or 6.2 above following a Termination of Employment pursuant to
Sections 4(a) (death or Disability), 4(c) (by the Company without Cause) or 4(d)
(by the Employee with Good Reason), or (b) pursuant to Section 6.3 above
following a Termination of Employment pursuant to Section 4(a) (death or
Disability), the Company shall become party to a Disposition Event or the
Company completes any Public Offering, or the Company or any of its stockholders
enter into any written agreement or written letter of intent contemplating any
of the foregoing which transaction is consummated within 180 days thereafter,
then each of the Company and any Co-Managers who have purchased Shares pursuant
to Sections 6.1, 6.2 or 6.3 shall, simultaneously with the consummation of any
such transaction or at such later time as any payment described below is
received by the Company or any of its stockholders, make an additional payment
to the Employee in an amount per Share repurchased from the Employee by him, her
or it pursuant to any of Sections 6.1, 6.2 or 6.3 above, as the case may be,
equal to the excess, if any, of (i) the value per share of the cash, securities
and other property that the Employee would have received (or that the Company
received in which the Employee would have had a beneficial interest as a
stockholder of the Company) had the Employee's Shares not been previously so
repurchased over (ii) the payment received by the Employee with respect to each
such Share pursuant to any of Sections 6.1, 6.2 or 6.3 above, as the case may
be. Each payment to the Employee
<PAGE>
-24-
pursuant to this Section 6.4 shall be made either in cash or in the form of the
securities and other property received by the Company or the holders of Common
Stock, as the case may be.
6.5. TRANSFEREES OF THE EMPLOYEE; LEGEND. Any permitted transferee of the
Shares under the Stockholder Agreement, including without limitation any
Personal Representative or Family Member (as such terms are defined in the
Stockholder Agreement) of the Employee, shall also be bound by, and have the
benefit of, the provisions of this Section 6. Except as otherwise permitted by
this Section 6.5, each certificate representing the Shares shall, in addition to
any legends required under the Stockholder Agreement, bear a legend in or
substantially in the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN REPURCHASE
RIGHTS IN FAVOR OF THE COMPANY CONTAINED IN AN EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT, DATED AS OF MARCH ___, 1998, A COPY OF
WHICH WILL BE FURNISHED BY THE COMPANY TO THE HOLDER OF THE SHARES
EVIDENCED BY THIS CERTIFICATE UPON WRITTEN REQUEST AND WITHOUT CHARGE."
Whenever the requirements of this Section 6.5 shall terminate as to any Shares
pursuant to Section 7.3 below, the holder thereof shall be entitled to receive
from the Company, at the Company's expense, new certificates representing the
Shares without such legend.
6.6. DELAY FOR VALUATION OR RECEIPT OF INSURANCE PROCEEDS. In the event
that, (a) as a result of any requirement to determine the Fair Market Value of
the Company by means of an appraisal pursuant to and in accordance with the
definition of "Market Value Per Share", the Market Value Per Share has not been
determined at the time that the closing of any purchase and sale of Shares
pursuant to this Section 6 is otherwise scheduled to occur, or (b) as a result
of a delay in the Company's receipt of the proceeds from the Insurance Policy,
the Company is not able to pay the repurchase price at the time that the closing
of any purchase and sale of Shares pursuant to this Section 6 is otherwise
scheduled to occur then, and notwithstanding anything to the contrary set forth
in this Section 6 or in Section 7 below, such closing shall be delayed until, in
the case of clause (a) above, the Market Value Per Share has been determined
pursuant to and in accordance with the definition thereof, and such closing
shall in any event occur within thirty (30) days after the date of such
determination, and, in the case of clause (b), such insurance proceeds have been
received, provided that such closing shall in
<PAGE>
-25-
any event occur within ninety (90) days after the date of the applicable
determination of Market Value Per Share.
7. OTHER REPURCHASE PROVISIONS.
7.1. REPURCHASE RESTRICTIONS.
(A) REPURCHASE TERMS. Notwithstanding any provision to the contrary in
Section 6 above:
(x) with respect to any repurchase of Shares by the Company following a
Termination of Employment of the Employee (i) pursuant to Section 4(c) (by
the Company for Cause), the Company (but not the Co-Managers) shall be
entitled to complete the repurchase of such Shares in seven (7) annual
installments, with one-seventh of such Shares being repurchased on the date
for repurchase of such Shares specified in Section 6 above, and one-seventh
on each anniversary of such date from the first anniversary of such date to
the sixth anniversary of such date, or (ii) pursuant to Section 4(e) (by
the Employee without Good Reason), the Company (but not the Co-Managers)
shall be entitled to complete the repurchase of such Shares in three (3)
annual installments, with one-third of such Shares being repurchased on the
date for repurchase of such Shares specified in Section 6 above, and one-
third on each of the first and second anniversaries of such date, and the
Employee hereby agrees to execute and deliver to the Company, at the time
of the first such repurchase installment pursuant to clauses (i) or (ii)
above, an irrevocable proxy in favor of the Company with respect to all of
the Employee's Shares to be repurchased by the Company, granting to the
Company an irrevocable power of attorney, coupled with an interest, to
exercise all of the Employee's rights including voting rights and retain
all of the Employee's benefits in connection with the ownership of the
Shares to be repurchased by the Company from and after the date of such
first installment; and
(y) if the Company is prohibited by the terms of any of the Company's or
any of its Subsidiaries' agreements with its or their lenders (including,
without limitation, the Company's senior credit agreement with Bank of
America, N.T. & S.A., and the Indenture with respect to the Company's
Senior Subordinated Notes) (any such agreement, a "Subordinating
-------------
Agreement") from making any payments of any portion of the repurchase price
---------
for any of the Shares in cash, the Company shall be entitled to complete
the repurchase of such Shares as to which payment of the repurchase price
in cash is not so
<PAGE>
-26-
prohibited by delivering to the Employee a check for the repurchase price
thereof. The Company further shall be entitled to complete the repurchase
of the other Shares to be repurchased by it, or any portion thereof, on the
first date on which such payment is not so prohibited by any applicable
Subordinating Agreement, provided that if the closing date of such
repurchase is more than six (6) months after the Employee's Termination of
Employment, then, if the repurchase price for the Shares is based on the
Market Value Per Share, the repurchase price shall be calculated based on
the Market Value Per Share as of the date of such closing instead of as of
the date of the Employee's Termination of Employment.
The Company agrees that in the event that it is permitted by the terms of any
Subordinating Agreement to repurchase shares of its Common Stock in cash, it
shall promptly exercise its rights to complete any such repurchase delayed
pursuant to Section 7.1(a)(y), provided that any such repurchase shall be
pro rata with all other such delayed repurchases and then-current repurchases,
whether hereunder or under any other employment or stock repurchase agreement of
the Company in force from time to time (but not including any such repurchases
required to be completed in seven annual installments pursuant to Section
7.1(a)(x)(i) above, which shall be paid only after all other repurchases to be
made on or prior to the date of any such repurchase have been made in full).
(B) IMPAIRMENT OF CAPITAL. If, even after giving effect to the provisions
of Section 7.1(a) hereof, the Company is prohibited by law from repurchasing any
Shares which it is entitled to repurchase hereunder due to any existing or
prospective impairment of its capital, the closing of such repurchase shall be
delayed until the first date on which the Company has sufficient capital to
lawfully repurchase such Shares (the "Delayed Closing Date"), and when
------- ------- ----
completed, any payments of the repurchase price shall be applied pro rata in
accordance with the proviso to Section 7.1(a) above. In the event of any such
delay of a closing (other than a closing described in Section 7.1(a)(x) above),
the Company will be obligated to pay, on the Delayed Closing Date, interest on
the repurchase price for such Shares, at the Prime Rate as published from time
to time in the "Wall Street Journal" from the date on which the closing of the
repurchase of such Shares was originally scheduled to occur to the Delayed
Closing Date.
7.2. PAYMENT FOR SHARES. Subject to the provisions of Section 7.1 above,
at any closing held to consummate any repurchase of Shares hereunder, the
Employee shall deliver to the Co-Managers or the Company, as the case may be,
the stock certificates representing such Shares, duly endorsed in blank or with
duly executed stock powers attached, and free and
<PAGE>
-27-
clear of all Liens, and the Co-Managers or the Company, as the case may be,
shall deliver to the Employee a check or checks in the amount of the repurchase
price for such Shares calculated in accordance with the terms and provisions
hereof.
7.3. TERMINATION OF REPURCHASE PROVISIONS. All of the repurchase rights
and obligations contained in this Agreement (excluding, for the avoidance of
doubt, any rights arising under Section 6.4 above) shall terminate immediately
after the completion of any Disposition Event or Qualified Public Offering;
provided, however. that no such termination shall relieve the Company from any
obligation or liability with respect to (i) any note issued in accordance with
Section 7.1 hereof, or (ii) any repurchase which was deferred pursuant to
Section 7.1 and not honored on or before such termination.
7.4 ADJUSTMENT OF REPURCHASE PRICE. Upon any stock split, reverse stock
split, recombination of shares or other similar reorganization of the capital
structure of the Company, the repurchase price otherwise payable to the Employee
upon the repurchase of any Shares pursuant to Section 6 hereof shall be
proportionally adjusted, as appropriate, to reflect such reorganization.
8. CERTAIN COVENANTS. The Employee hereby covenants as follows, which
covenants shall be in addition and without prejudice to any other
confidentiality, noncompetition, nonsolicitation, and/or similar covenants to
which the Employee may be subject from time to time, including without
limitation those set forth in the Merger Agreement.
(A) CONFIDENTIALITY. Both during and following the term of this Agreement
and the Employee's employment hereunder, the Employee shall maintain the
confidentiality of all confidential, sensitive, or proprietary information of
the Company and/or its Subsidiaries, including without limitation with respect
to their respective businesses, finances, affairs, and/or technology, which
shall be and remain the exclusive property of the Company and/or its respective
Subsidiaries, as the case may be, and except as previously authorized in writing
by the Company, and except with respect to information that has otherwise become
public through no action or omission on the part of the Employee, shall not
disclose any such information to any third party, or use it for any purpose
other than in the discharge of his employment duties and responsibilities in the
ordinary course of the Company's business. Upon the termination of the
Employee's employment with the Company, the Employee shall promptly return to
the Company all documents and other tangible media that contain or reflect any
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries
<PAGE>
-28-
(including all copies, reproductions, digests, abstracts, analyses, and notes)
in his possession or control, and will destroy any related computer files on any
equipment not owned by the Company or its Subsidiaries. Notwithstanding the
foregoing, if the Employee is required by law or regulation to disclose any
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries, the Employee will provide the Company with prompt notice of such
disclosure obligation so that the Company may seek a protective order or take
other appropriate action and/or waive compliance with this Section 8(a) to the
extent of such required disclosure. In the absence of such a waiver, if the
Employee is, in the opinion of his counsel, compelled to disclose any such
information upon pain of liability for contempt or other censure or penalty, the
Employee may disclose such information to the relevant court or other tribunal
or governmental authority without liability hereunder, but notwithstanding such
disclosure, such information shall remain confidential under this Section 8(a)
after such disclosure.
(B) NON-COMPETITION. In consideration for, among other things, the
Company's agreements herein and the Company's and its Subsidiaries' agreements
in the Merger Agreement, and recognizing the Employee's status as an Investor in
the Company pursuant to the Investment Agreement and as a stockholder of the
Company, the Employee hereby agrees that, during any period during which the
Employee is employed by the Company, the period of one year following the date
of the Employee's Termination upon Retirement, and/or any period during which
the Employee is receiving any compensation pursuant to this Agreement,
including, without limitation, compensation pursuant to Section 5(a) and 5(b)
hereof during the Initial Severance Period, the Additional Severance Period, if
any, and any other period during which payments are being made to the Employee
pursuant to and in accordance with such Sections 5(a) and 5(b), and, if the
Employee's employment with the Company terminates pursuant to Section 4(b) (by
the Company for Cause) or Section 4(e) (by the Employee without Good Reason)
hereof, then also during the longer of (i) the period of one year commencing on
the date of such Termination of Employment, and (ii) the period of two years
from the Closing Date, all of which applicable periods shall automatically be
extended by a period of time equal to any period in which the Employee is in
breach of any obligations under this Section 8 (all of which applicable periods,
including any such extension, the "Restricted Period"), the Employee shall not
-----------------
engage, directly or indirectly (except as a stockholder, director, officer,
and/or employee of the Company and/or any of its Subsidiaries), as a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the outstanding capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative, or in any other
capacity: (A) in the manufacture of folding cartons or sleeves manufactured, at
least in part, of
<PAGE>
-29-
rigid plastic, (B) the manufacture, design, printing or production of specialty
packaging products for use in the cosmetics, entertainment (including recorded
music, video, software, multimedia and electronic gaming) or tobacco markets, in
each case anywhere in the world (the Employee hereby acknowledging that the
Company and its Subsidiaries do such business worldwide), or (C) in any other
business which the Company or any of its Subsidiaries may conduct at any time
during the period of the Employee's employment hereunder, anywhere that the
Company or any its Subsidiaries may conduct such business at any time during the
term of such non-competition obligations.
(C) NON-SOLICITATION OF EMPLOYEES, ETC. During the Restricted Period
(which, for the purposes of this Section 8(c) and Section 8(d) below, shall be
extended to include the maximum potential Additional Severance Period under
Section 5 above (regardless of whether or not compensation is paid to the
Employee with respect thereto), if prior to the commencement of such additional
period at least 50% of the Company Priority Shares shall have been repurchased
pursuant to Sections 6.1 - 6.3 above, the Company shall have become obligated
pursuant to Section 7.1 hereof to repurchase any of such Shares remaining
outstanding, and the Company shall not then be in breach of its obligations with
respect to such repurchase obligation under Section 7, the Employee shall not
directly or indirectly recruit, solicit, induce, or attempt to induce any of the
employees or independent contractors of the Company or any of its Subsidiaries
to terminate their employment or contractual relationship with the Company or
such Subsidiary; and shall not assist any other Person to do so, or be a
proprietor, equityholder, investor (except as a passive investor holding not
more than 3% of the capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative of any Person who
does or attempts to do so.
(D) NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. During the Restricted
Period (extended as described in Section 8(c) above), the Employee shall not
directly or indirectly solicit, divert, take away, or attempt to divert or take
away, from the Company or any of its Subsidiaries any of the business or
patronage of any of their respective customers, clients, accounts, vendors, or
suppliers, or induce or attempt to induce any such Person to reduce the amount
of business it does with the Company or any of its Subsidiaries, and the
Employee shall not assist any other Person to do so, or be a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the capital stock of a publicly held company), lender, partner, director,
officer, employee, consultant, or representative of any Person who does or
attempts to do so.
<PAGE>
-30-
(E) TERMINATION OF CERTAIN COVENANTS. The covenants of the Employee set
forth in Sections 8(b) - (d) hereof shall not apply at any time other than
during the Restricted Period (but the termination of such covenants shall be
without prejudice to any other confidentiality, noncompetition, nonsolicitation,
and/or similar covenants to which the Employee may be subject from time to time,
including without limitation those set forth in the Merger Agreement). For the
avoidance of doubt, in the event that the covenants set forth in Section 8(b)
are no longer binding upon the Employee, the fact of the Employee's engaging in
any activity which would have been prohibited to the Employee under Section 8(b)
shall not by itself constitute a violation of the Employee's covenants in any of
Sections 8(c), 8(d) and 8(f) hereof and it shall not be a violation of either
Section 8(c) or Section 8(d) for the Employee to provide services in any
capacity to another Person who may engage in conduct prohibited by either such
section, so long as Employee does not directly assist or participate in, or
provide consultation with respect to, such prohibited conduct.
(F) NON-DISPARAGEMENT. Both during and following the term of this
Agreement and the Employee's employment hereunder, the Employee shall not
disparage, deprecate, or make any negative comment with respect to the Company
or any of its Subsidiaries or their respective businesses, operations, or
properties.
(G) EQUITABLE REMEDIES. The Employee hereby acknowledges that any breach
by him of his obligations under this Section 8 would cause substantial and
irreparable damage to the Company, and that money damages would be an inadequate
remedy therefor, and accordingly, acknowledges and agrees that the Company shall
be entitled to an injunction, specific performance, and/or other equitable
relief to prevent the breach of such obligations (in addition to all other
rights and remedies to which the Company may be entitled in respect of any such
breach).
(H) MODIFICATION. In the event that a court of competent jurisdiction
determines that any of the provisions of this Section 8 would be unenforceable
as written because they cover too extensive a geographic area, too broad a range
of activities, or too long a period of time, or otherwise, then such provisions
shall automatically be modified to cover the maximum geographic area, range of
activities, and period of time as may be enforceable, and in addition, such
court is hereby expressly authorized so to modify this Agreement and to enforce
it as so modified. No invalidity or unenforceability of any section of this
Agreement or any portion thereof shall affect the validity or enforceability of
any other section or of the remainder of such section.
<PAGE>
-31-
9. MISCELLANEOUS.
(A) BENEFITS OF AGREEMENT; NO ASSIGNMENTS; THIRD-PARTY BENEFICIARIES.
(i) This Agreement shall bind and inure to the benefit of the
parties hereto, the Co-Managers, and the respective heirs, successors, and
permitted assigns of each of them.
(ii) Except to the extent expressly contemplated by Section 6.5
hereof and pursuant to the Stockholder Agreement, neither party hereto
shall assign any rights or delegate any obligations hereunder without the
consent of the other party (except that the Company may assign its rights
and delegate its obligations hereunder to any successor to its business,
whether by merger or consolidation, sale of stock or of all or
substantially all of assets, or otherwise), and any attempt to do so shall
be void.
(iii) Nothing in this Agreement is intended to or shall confer any
rights or remedies on any Person other than the parties hereto, the Co-
Managers, and their respective heirs, successors, and permitted assigns.
The parties hereto expressly agree that the Co-Managers shall be third-
party beneficiaries of the provisions of Sections 6 and 7 of this
Agreement.
(B) NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed to the recipient party at his or its address set forth in the
first paragraph hereof, to the attention of Richard Block, if the Company is the
intended recipient party, or to the Co-Managers in care of the Company, if a Co-
Manager is the intended recipient party (or to such other address or other
Person's attention as the recipient party may have furnished to the sending
party for the purpose pursuant to this section).
(C) COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall
<PAGE>
-32-
be an original, but all of which together shall constitute one and the same
agreement. In pleading or proving this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
(D) CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and shall not affect the interpretation or construction
of this Agreement.
(E) CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.
(F) WAIVERS; AMENDMENTS. No waiver of any breach or default hereunder
shall be valid unless in a writing signed by the waiving party. No failure or
other delay by any party exercising any right, power, or privilege hereunder
shall be or operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege. No amendment or modification of this
Agreement shall be valid or binding unless in a writing signed by both the
Employee and the Company.
(G) ENTIRE AGREEMENT. This Agreement and the Stockholder Agreement contain
the entire understanding and agreement between the parties, and supersede any
prior understandings or agreements between them, with respect to the subject
matter hereof.
(H) GOVERNING LAW. This Agreement shall to the maximum lawful extent be
governed by and interpreted and construed in accordance with the internal laws
of the State of Illinois, as applied to contracts under seal made, and entirely
to be performed, within Illinois, and without reference to principles of
conflicts or choice of law.
<PAGE>
-33-
IN WITNESS WHEREOF, each of the Company and the Employee has executed and
delivered this Employment, Non-Competition and Stock Repurchase Agreement as an
agreement under seal as of the date first above written.
COMPANY: IMPAC GROUP, INC.
By /s/ Richard Block
----------------------------------
Name: Richard Block
Title:
/s/ David C. Underwood
EMPLOYEE: ------------------------------------
Name: David C. Underwood
<PAGE>
Exhibit 10.13
EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT
This Employment, Non-Competition and Stock Repurchase Agreement (this
"Agreement") dated as of March ___, 1998, is by and between IMPAC Group, Inc., a
---------
Delaware corporation formerly known as KFI Holding Corporation, with its
principal executive offices at 1950 North Ruby Street, Melrose Park, Illinois
60160-1178 (the "Company"), and James H. Oppenheimer (the "Employee"), an
------- --------
individual residing at _________________________________________________
_____________________.
This Agreement is being entered into in connection with (a) the Investment
Agreement dated as of February 19, 1998 (the "Investment Agreement"), by and
---------- ---------
among the Company, Heritage Fund I Investment Corporation, the Employee and
certain other investors in the Company, (b) the Agreement and Plan of Merger
dated as of February 19, 1998 (the "Merger Agreement"), by and among the
------ ---------
Company, Klearfold, Inc., AGI Incorporated, and the Principal Stockholders
referred to therein, and (c) the Stockholder Agreement of even date herewith
(the "Stockholder Agreement") among the Company, the Employee and certain other
----------- ---------
stockholders of the Company. Capitalized terms used and not otherwise defined
herein have the respective meanings ascribed to them in the Stockholder
Agreement.
The Company and the Employee agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
meanings specified below:
"Act" means the Security Act of 1933, as amended.
---
"Additional Severance Period" has the meanings specified in Sections 5(a)
---------- --------- ------
and 5(b) hereof.
"AGI" means AGI Incorporated, an Illinois corporation.
---
"Base Severance Compensation" has the meaning specified in Section 5(a)
---- --------- ------------
hereof.
"Board" means the Board of Directors of the Company.
-----
"Bonus Plan" has the meaning specified in Section 3(b) hereof.
----- ----
<PAGE>
-2-
"Cause" means the Employee's (i) commission of a breach of the provisions
-----
of Section 8 hereof, (ii) habitual and willful neglect of the performance of the
Employee's duties as set forth in Section 2(a) hereof, such neglect having
continued for a period of 30 days after written notice thereof is given by the
Board to the Employee, (iii) commission of an act of fraud, misappropriation, or
dishonesty in connection with his employment by the Company, or (iv) conviction
of or plea of nolo contendere to a felony. Notwithstanding any other provision
of this Agreement, the Employee shall not be terminated for Cause unless and
until there shall have been delivered to him a copy of a resolution duly adopted
by the Board by a vote of not less than 80% of the Directors (excluding the
Employee, if a member of the Board) at a meeting called and held for the purpose
(within twelve (12) months of the date of the Board's becoming aware of the
condition or conditions constituting Cause, as set forth in clauses (i) - (iv)
above, and after reasonable notice to the Employee and an opportunity for him,
together with his counsel, to be heard by the Board), finding that in the good
faith opinion of the Board, one of the conditions set forth above in this
definition of Cause had been fulfilled, and specifying the particulars thereof.
"Certificate of Value" has the meaning specified in the definition of "Fair
----------- -- -----
Market Value".
"Charter" means the Company's Amended and Restated Certificate of
-------
Incorporation and all amendments thereto.
"Closing Date" means the date of this Agreement.
------- ----
"Co-Manager Non-Repurchase Notice" has the meaning specified in Section
---------- -------------- ------
6.2(b) hereof.
"Co-Manager Put Repurchase Participation Notice" has the meaning specified
---------- --- ---------- ------------- ------
in Section 6.3(a) hereof.
"Co-Manager Remainder Repurchase Notice" has the meaning specified in
---------- --------- ---------- ------
Section 6.2(d) hereof.
"Co-Manager Repurchase Notice" has the meaning specified in Section 6.2(b)
---------- ---------- ------
hereof.
"Co-Managers" means each of Richard Block, Richard Oppenheimer, Dean
-----------
Henkel, David Underwood, Jacqueline Barry, Dennis McGuin and Mary Frances
Griffin, so long as such individual remains employed by the Company or any of
its Subsidiaries.
<PAGE>
-3-
"Common Stock" means the Company's Series A Common Stock, $0.001 par value
------ -----
per share, and any capital stock of the Company which is (a) not subject to
redemption, or (b) issued to the holders of shares of Common Stock upon any
reclassification thereof.
"Company" has the meaning specified in the preamble hereto, and, unless the
-------
context otherwise requires, shall include all Subsidiaries of the Company.
"Company Non-Repurchase Notice" has the meaning specified in Section 6.1(b)
------- -------------- ------
hereof.
"Company Priority Shares" has the meaning specified in Section 6.1(b)
------- -------- ------
hereof.
"Company Repurchase Notice" has the meaning specified in Section 6.1(b)
------- ---------- ------
hereof.
"Company Repurchase Shares" has the meaning specified in Section 6.3(b)(i)
------- ---------- ------
hereof.
"Delayed Closing Date" has the meaning specified in Section 7.1(b) hereof.
------- ------- ----
"Designated Term" has the meaning specified in Section 2(b) hereof.
---------- ----
"Disability" shall mean that an independent medical doctor (selected by the
----------
Company's health or disability insurer) certifies that the Employee has for 180
consecutive days or 240 non-consecutive days in any twelve (12) month period
been disabled in a manner which seriously interferes with his ability to perform
his duties under this Agreement and which is reasonably expected to continue
indefinitely.
"Disposition Event" shall mean any merger, consolidation or sale of more
----------- -----
than 50% of the Company's assets or other similar corporate action (including,
without limitation, a recapitalization) pursuant to which the holders of Common
Stock receive cash, securities or other property, or any transaction as a result
of which the Company is acquired by the purchase of more than a majority of its
common equity.
"Failed Put Notice" has the meaning specified in Section 6.3(c) hereof.
------ --- ------
<PAGE>
-4-
"Fair Market Value" means, unless otherwise specified in the definition of
---- ------ -----
"Market Value Per Share", the fair market value of the entire common stock
equity of the Company (without premium for control or discounts for minority
interests, restrictions on transfer or lack of voting rights), as determined in
good faith by the Board at a meeting at which a quorum of the Board is present
in accordance with the Stockholder Agreement, or by unanimous written consent,
calculated as of such date, provided that in making such determination the Board
may in its sole discretion rely upon an appraisal or valuation of an Independent
Appraiser selected in good faith by the Board and conducted within the six (6)
month period preceding the date of the Board's determination, and as certified
by a duly authorized officer of the Company in a Certificate of Value (a
"Certificate of Value") which shall be kept as part of the minutes and other
- ------------ -- -----
corporate records of the Company.
"Formula Value" means, with respect to any date, the amount which is equal
------- -----
to the aggregate of (a) the product obtained by multiplying EBITDA (as defined
below) during the 12 full calendar months immediately preceding such date by
--
five and seven-tenths (5.7), less (b) the sum of (i) the Company's consolidated
----
funded indebtedness outstanding on such date, including (without limitation)
obligations under capitalized leases, and (ii) the liquidation value of, and
accrued dividends on, any preferred stock of the Company outstanding on such
date, plus (c) the aggregate cash balances and cash equivalents of the Company
----
and its Subsidiaries on such date. As used in this definition, "EBITDA" for any
------
period, means the Consolidated Net Income (as defined below) of the Company and
its Subsidiaries for such period plus to the extent deducted in determining
Consolidated Net Income all (a) income taxes (including reserves for deferred
income taxes), (b) gross interest expense, (c) depreciation and (d)
amortization, all determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied for such period.
As used in this definition, "Consolidated Net Income" means, for any period, the
------------ --- ------
net income (or loss) of the Company and its Subsidiaries for such period on a
consolidated basis, after deducting all operating expenses, provisions for all
taxes and reserves (including reserves for deferred income taxes) and all other
proper deductions, all determined in accordance with generally accepted
accounting principles consistently applied, after eliminating all intercompany
items and after adjustment for any add-backs or other similar adjustments
properly made in connection with the transactions contemplated by the Merger
Agreement and the Investment Agreement, but excluding from the definition of
Consolidated Net Income any extraordinary gains and/or losses and any gains
and/or losses from the sale or other disposition of assets other than in the
ordinary course of business, all determined in accordance with generally
accepted accounting principles consistently applied.
<PAGE>
-5-
"Good Reason" means (i) diminution by the Board, or the President, or any
---- ------
other senior executive officer of the Company, of the Employee's
responsibilities, duties or authority as Executive Vice President - Sales (or
such other senior executive position as may be offered by the Company and which
the Employee in his sole discretion may accept), or interference by any senior
executive employee of the Company (other than the President and/or such other
executive officer to whom the Employee is required to report if reporting to
such Person does not constitute Good Reason pursuant to clause (iv) below) with
the Employee's responsibilities, duties or authority as Executive Vice President
- - Sales (or such other senior executive position as may be offered by the
Company and which the Employee in his sole discretion may accept), or assignment
to the Employee of any duties inconsistent with the Employee's position as
Executive Vice President - Sales (or such other senior executive position as may
be offered by the Company and which the Employee in his sole discretion may
accept), in any such case other than in an insignificant manner, and such
diminution, interference or mis-assignment is not remedied or corrected within
30 days after reasonably detailed written notice thereof, setting forth
sufficient information to permit the Company to take action to remedy or correct
such matter, is given by the Employee to the Company, provided that upon the
third occurrence of any complained-of matter, the Employee shall be entitled to
notify the Company thereof and thereupon to terminate his employment with the
Company for Good Reason, (ii) failure by the Company to pay and provide to the
Employee the compensation or benefits provided for in Section 3 hereof, and, any
time following the end of the Designated Term, any decrease in the compensation
or benefits provided for in Section 3 hereof (including, without limitation, any
failure to provide cost of living increases even after the end of the Designated
Term) which failure or decrease is not cured or remedied within 30 days after
written notice thereof is given by the Employee to the Company, (iii) the Board
requires the Employee to be permanently based anywhere other than within 25
miles of the Employee's present office location in Melrose Park, Illinois
(excluding business-related travel), (iv) the Employee becoming obligated to
report to, or accept assignments from any Person other than the President of the
Company or a single Person other than Richard Oppenheimer who directly reports
to the President of the Company, or (v) at any time following the end of the
Designated Term, a Termination of Employment voluntarily by the Employee after
he has reached the age of sixty-two (62) (any Termination of Employment under
this clause (v) also being referred to as a "Termination upon Retirement").
----------- ---- ----------
"Independent Appraiser" means an investment banking or accounting firm or
----------- ---------
independent appraiser of nationally recognized standing and at least ten years
experience in evaluating businesses similar to the Company and its
<PAGE>
-6-
Subsidiaries, and not an Affiliate (as defined in the Stockholder Agreement) of
the Company or any of its Subsidiaries or any stockholder of the Company.
"Initial Post-Term Severance Period" has the meaning specified in Section
------- --------- --------- ------
5(b) hereof.
"Initial Severance Period" has the meaning specified in Section 5(a)
------- --------- ------
hereof.
"Insurance Policy" has the meaning specified in Section 6.3(b)(i) hereof.
--------- ------
"Investment Agreement" has the meaning specified in the preamble hereto.
---------- ---------
"Klearfold" means Klearfold, Inc., a Pennsylvania corporation.
---------
"Market Value Per Share" means, with respect to any date, the quotient
------ ----- --- -----
obtained by dividing (a) the sum of (i) the most recently determined Fair Market
Value of the Company plus (ii) an amount equal to the aggregate consideration
----
which would then be payable to the Company, assuming the exercise at such time
of all then outstanding and exercisable warrants, options, or convertible
securities pursuant to which the Company would, upon exercise, then be obligated
to issue Common Stock, other than warrants or options the strike or exercise
price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, by (b) the sum of (i) the number of shares of Common Stock then
--
outstanding, plus (ii) the number of shares of Common Stock then issuable upon
----
exercise of all then outstanding and exercisable warrants, options, or
convertible securities pursuant to which the Company would, upon exercise, then
be obligated to issue Common Stock, other than warrants or options the strike or
exercise price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, provided, however, that in the event that on the date with respect to
which Market Value Per Share is being determined, more than six (6) months shall
have elapsed since the date of execution of the most recent Certificate of
Value, then the Fair Market Value of the Company for purposes of clause (a)(i)
of this definition of Market Value Per Share shall be calculated as the Formula
Value of the Company as of the date with respect to which Market Value Per Share
is being determined. In the event that either (x) the Employee (for the
purposes of this definition, including any Personal Representative of the
Employee), or (y) if (and only if) the Fair Market Value of the Company would
otherwise be determined by reference to the Formula Value in accordance with the
foregoing proviso, the Company, so elects (the
<PAGE>
-7-
electing party being referred to as the "Requesting Party"), by written notice
---------- -----
to the Company (in the case of any election by the Employee) or to the Employee
(in the case of any election by the Company) (the party receiving such notice,
the "Non-Requesting Party") within five (5) days of any determination of Market
-------------- -----
Value Per Share in accordance with the preceding sentence, the Fair Market Value
of the Company shall be determined either by one Independent Appraiser selected
by the Requesting Party and acceptable to the Non-Requesting Party in its sole
discretion, or, if the Requesting Party and the Non-Requesting Party are unable
to agree upon the identity of such an Independent Appraiser within fifteen (15)
days after the date of the Requesting Party's notice to the Non-Requesting
Party, by two Independent Appraisers, selected one by the Requesting Party and
one by the Non-Requesting Party, who shall work together to determine in good
faith one Fair Market Value of the Company acceptable to both Independent
Appraisers. The appraisal of such Independent Appraiser(s) shall be delivered to
the Requesting Party and the Non-Requesting Party within 60 days after the date
of the Requesting Party's notice to the Non-Requesting Party requesting an
appraisal. In the event that two Independent Appraisers are appointed and they
are unable to reach an agreement as to the Fair Market Value of the Company
within such 60-day period, the Appraised Fair Market Value shall be calculated
by adding the two Fair Market Values of the Company, as determined in good faith
within such period by each of such Independent Appraisers, and dividing the sum
thereof by two. The Fair Market Value of the Company determined by such
Independent Appraiser(s) in accordance with this definition (the "Appraised Fair
--------- ----
Market Value") shall be conclusive and shall be used to determine the Market
- ------ -----
Value Per Share hereunder, and judgment thereon may be entered in any court of
competent jurisdiction. All expenses of the Independent Appraiser or Independent
Appraisers appointed pursuant to this definition shall be borne by the Company,
except that if the Appraised Fair Market Value is less than 115% of the Fair
Market Value of the Company determined pursuant to the first sentence of this
definition, all expenses of such Independent Appraiser(s) shall be borne by the
Requesting Party.
"Merger Agreement" has the meaning specified in the preamble hereto.
------ ---------
"Original Price Per Share" means, as to all Shares acquired pursuant to the
-------- ----- --- -----
Investment Agreement, $340.00 per Share, and as to all other Shares, the actual
price per Share paid by the Employee upon the acquisition of such Shares.
"Person" means an individual, partnership, corporation, limited liability
------
company, association, trust, joint venture, unincorporated
<PAGE>
-8-
organization, or any government, governmental department or agency or political
subdivision thereof.
"Personal Representative" means the successor or legal representative
-------- --------------
(including without limitation, a guardian, executor, administrator or
conservator) of the Employee following his death or legal incompetence.
"Public Offering" means any sale of Common Stock to the public pursuant to
------ --------
a public offering registered under the Act.
"Public Sale" means any Public Offering or any sale of Common Stock to the
------ ----
public through a broker or market-maker pursuant to the provisions of Rule 144
(or any successor rule) adopted under the Act.
"Put Closing" has the meaning specified in Section 6.3(a) hereof.
--- -------
"Put Notice" has the meaning specified in Section 6.3(a) hereof.
--- ------
"Put Period" has the meaning specified in Section 6.3(a) hereof.
--- ------
"Qualified Public Offering" means an underwritten Public Offering, pursuant
--------- ------ --------
to an effective registration statement under the Securities Act, covering the
offer and sale of shares of Common Stock in which an aggregate of not less than
$25,000,000 of gross proceeds from such public offering are received by the
Company and the selling stockholders.
"Related Persons" means the Employee's parents, spouse, children and
------- -------
grandchildren.
"Remainder Shares" has the meaning specified in Section 6.2(c) hereof.
--------- ------
"Restricted Period" has the meaning specified in Section 8(b) hereof.
---------- ------
"Second Co-Manager Put Participation Notice" has the meaning specified in
------ ---------- --- ------------- ------
Section 6.3(d) hereof.
"Severance Extension Notice" has the meaning specified in Section 5(a)
--------- --------- ------
hereof.
"Severance Notice" has the meaning specified in Section 5(b) hereof.
--------- ------
"Severance Release" has the meaning specified in Section 5(a) hereof.
--------- -------
<PAGE>
-9-
"Shares" means (a) all shares of Common Stock acquired by the Employee from
------
time to time, whether pursuant to the Investment Agreement, upon exercise of any
rights of first refusal or pre-emptive rights under the Stockholder Agreement,
any repurchase rights as a Co-Manager under any Employment, Non-Competition and
Stock Repurchase Agreement between the Company and any other employee of the
Company, upon exercise of any options, warrants, or other rights to purchase
shares of Common Stock, or otherwise, (b) any shares of Common Stock into which
such shares of Common Stock have been converted, (c) any capital stock or other
securities into which or for which such shares of Common Stock shall have been
converted or exchanged pursuant to any recapitalization, reorganization or
merger of the Company, and (d) any shares of capital stock issued with respect
to the foregoing pursuant to a stock split or stock dividend , which at the time
of the Employee's Termination of Employment are owned by the Employee or any
Person owning shares transferred to him pursuant to Section 1.1(b) of the
Stockholder Agreement by the Employee or any (direct or indirect) transferees of
the Employee pursuant to that provision.
"Stockholder Agreement" has the meaning specified in the preamble hereto.
----------- ---------
"Subsidiary" means, with respect to the Company, any corporation a majority
----------
(by number of votes) of the outstanding shares of any class or classes of which
shall at the time be owned by the Company or by a Subsidiary of the Company, if
the holders of the shares of such class or classes (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are at the time entitled, as such holders, to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to vote exists by
reason of the happening of a contingency and including without limitation AGI
and Klearfold.
"Termination for Under-Performance" means a Termination of Employment of
----------- --- -----------------
the Employee by the Company without Cause, where the Board shall have by
resolution duly adopted with the consent of the President of the Company,
identified such Termination of Employment as having occurred as a result of
under-performance by the Employee in his employment hereunder, provided however,
that except as expressly stated in Section 5 hereof, any such Termination of
Employment shall be treated as a Termination of Employment by the Company
without Cause for all purposes hereunder.
<PAGE>
-10-
"Termination of Employment" means the Employee's ceasing to be an employee
----------- -- ----------
of the Company or any of its Subsidiaries, whether voluntary or involuntary, for
any reason or for no reason, including without limitation, for resignation,
death or Disability of the Stockholder, and whether or not for Cause or for Good
Reason.
"Termination upon Retirement" has the meaning specified in the definition
----------- ---- ----------
of "Good Reason".
"Unpurchased Shares" has the meaning specified in Section 6.3(c) hereof.
----------- ------
"Variable Severance Compensation" has the meaning specified in Section 5(a)
-------- --------- ------------
hereof.
2. EMPLOYMENT.
(A) EMPLOYMENT. Subject to the terms and conditions of this Agreement, the
Company agrees to employ the Employee, and the Employee agrees to serve, as the
Executive Vice President - Sales of the Company with responsibility for the
sales function of the Company, AGI and Klearfold for all markets other than the
entertainment market, having such powers and duties as are consistent with such
position, subject to the directions of the President of the Company and/or a
single Person other than Richard Oppenheimer who directly reports to the
President of the Company.
(B) DESIGNATED TERM. The Employee's employment hereunder shall commence on
the date hereof, and shall continue until terminated in accordance with Section
4 hereof, provided that, subject to the other terms and conditions hereof, the
term of employment shall be at least until June 7, 2001 (such period being
referred to herein as the "Designated Term"), and provided, further that from
---------- ----
and after June 8, 2001, subject to the provisions of Section 5 hereof, the
Employee's employment hereunder shall be at will.
3. COMPENSATION. During the Designated Term, the Company shall pay and
provide to the Employee the compensation set forth below:
(A) BASE SALARY. The Company shall pay to the Employee a base salary,
prorated and payable in installments in accordance with AGI's usual payroll
practices. Such base salary shall be at the rate of $325,000 per annum for
1998, and thereafter such base salary shall be adjusted annually based upon the
percentage increase, if any, in the Consumer Price Index, All Items, Chicago, as
published by the Bureau of Labor Statistics (the "CPI"), as
---
<PAGE>
-11-
follows: The base salary for each of the years 1999-2001 shall be calculated by
multiplying the Employee's 1998 base salary by a fraction, the numerator of
which is the average CPI for the twelve months of the year preceding the year
for which such base salary is being calculated, and the denominator of which is
the CPI for December 1997. In no event will any such adjustment reduce the
Employee's base salary for any year below that in effect for the preceding year.
In addition, in the event that Scott Herrin terminates his employment with the
Company without Good Reason during the "Free Termination Period" under his
Employment, Non-Competition and Stock Repurchase Agreement with the Company, the
Employee's base salary under this Section 3(a) will be increased by a portion,
the amount of which shall be determined by the President of the Company in his
sole discretion and notified to the Employee in writing within thirty (30) days
after the date of Scott Herrin's Termination of Employment, of the reduction in
the Company's overall compensation expense resulting from such Termination of
Employment.
(B) BONUSES. The Employee shall be entitled to participate in the
Company's Executive Bonus Plan (the "Bonus Plan"), a copy of which is appended
----- ----
hereto and incorporated herein by this reference.
(C) FRINGE BENEFITS. In addition to the Employee's base salary and any
bonuses to which the Employee may become entitled under the Bonus Plan, the
Company shall provide to the Employee additional benefits as provided to other
employees of the Company and its Subsidiaries whose base salary and level of
responsibility are comparable to those of the Employee, including as described
in the attached Schedule of Benefits.
-------- -- --------
(D) VACATION. The Employee shall be entitled to four (4) weeks vacation
each calendar year. Any vacation shall be taken at the reasonable and mutual
convenience of the Company and the Employee. Accrued vacation not taken in any
calendar year will not be carried forward or used in any subsequent calendar
year, provided, however, if any accrued vacation is not taken by the Employee in
any calendar year at the request of the Employer, then the Employee shall be
entitled to carry forward and use such accrued vacation in the immediately
following calendar year but not in any subsequent calendar year.
4. TERMINATION. The Employee's employment hereunder shall terminate upon
the occurrence of any of the following events:
(A) the Employee's death or Disability; or
<PAGE>
-12-
(B) the termination of the Employee's employment hereunder by the Company,
for Cause, by written notice to the Employee; or
(C) the termination of the Employee's employment hereunder by the Company,
without Cause, by written notice to the Employee; or
(D) the termination of the Employee's employment hereunder by the
Employee, for Good Reason, by written notice to the Company; or
(E) the termination of the Employee's employment hereunder by the
Employee, without Good Reason, by 30 days' prior written notice to the Company.
5. SEVERANCE. Notwithstanding any other provision of this Agreement:
(A) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) during the
Designated Term, then the Company shall, upon delivery to the Company of a
release of any claims of the Employee against the Company and its stockholders,
directors, officers, employees, agents or other affiliates arising out of his
employment relationship (other than claims to any compensation or benefits
payable under or to be provided pursuant to this Section 5, or any rights of the
Employee under Sections 6 or 7 hereof) executed by the Employee and reasonably
satisfactory in form and substance to the Company (a "Severance Release"),
--------- -------
continue to pay and provide to the Employee (A) the compensation payable to him
pursuant to Section 3(a) hereof, and (B) the benefits provided to him pursuant
to Section 3(c) hereof (the compensation and benefits described in clauses (A)
and (B), together, such Employee's "Base Severance Compensation"), and, unless
---- --------- ------------
such Termination of Employment was a Termination for Under-Performance, (C) any
bonus accrued or earned by the Employee pursuant to the Bonus Plan and
attributable to the Employee's performance for the portion of the year prior to
his Termination of Employment, on a one-time only basis payable at the time of
payment of bonuses to other executive employees under the Bonus Plan, and (D)
for each year, 50% of an amount equal to the compensation payable to the
Employee pursuant to Section 3(a), multiplied by a fraction, the numerator of
which equals the aggregate bonus actually payable with respect to the preceding
year to the Company's other executive employees in the same bonus pay-out range
as the Employee was in prior to his Termination of Employment, and the
denominator of which equals the aggregate salary of such other executive
employees for such preceding year (the compensation described in clauses (C) and
(D) together, such Employee's
<PAGE>
-13-
"Variable Severance Compensation") for a period (the "Initial Severance Period")
-------- --------- ------------ ------------------------
equal to the longer of (i) the remainder of the Designated Term, and (ii) the
one-year period following the date of such Termination of Employment, but this
clause (ii) only being applicable if, prior to the earlier of (x) the last day
of the Designated Term and (y) the thirtieth (30th) day from the date of such
Termination of Employment, the Company shall have notified the Employee in
writing of the Company's intention, in the Company's sole discretion, so to
extend the Initial Severance Period (such notice, a "Severance Extension
--------- ---------
Notice"). In the Company's sole discretion, the Company may elect, either in
- ------
the Severance Extension Notice, or by written notice to the Employee given no
later than thirty (30) days prior to the end of the Initial Severance Period (as
it may have been extended pursuant to the Severance Extension Notice), to
continue to pay and provide to the Employee his Base Severance Compensation for
an additional period (the "Additional Severance Period") of up to one year
---------- --------- ------
following the end of the Initial Severance Period (as it may have been extended
pursuant to the Severance Extension Notice), provided that the Additional
Severance Period shall in no event extend beyond the second anniversary of the
Employee's Termination of Employment. Upon payment in full of the Employee's
Base Severance Compensation and, if and when applicable, his Variable Severance
Compensation, as described in this Section 5(a), the Company's obligations to
pay and provide the Employee with any other compensation otherwise payable to
him pursuant to Section 3 hereof, and all other rights of the Employee under
Sections 2, 3 and 5 hereof, shall cease as of the date of such payment in full.
(B) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) at any time
after the end of the Designated Term, then if at the time of such Termination of
Employment or within thirty (30) days thereafter, the Company shall, in its sole
discretion, so have notified the Employee in writing (such notice, a "Severance
---------
Notice") and the Employee shall have executed and delivered to the Company a
- ------
Severance Release, the Company shall continue to pay and provide to the Employee
his Base Severance Compensation and, unless such Termination of Employee was a
Termination for Under-Performance, his Variable Severance Compensation for a
period of one year following the date of such Termination of Employment (the
"Initial Post-Term Severance Period"), provided that, unless the Company shall
- -------- --------- --------- ------
have notified the Employee in writing at the time of his Termination of
Employment that it did not intend to deliver a Severance Notice, the Employee's
Base Severance Compensation shall be payable in any event for the portion of the
30-day period following the Termination of Employment prior to the Company's
delivery either of a
<PAGE>
-14-
Severance Notice or of notice that the Company did not intend to deliver a
Severance Notice. The Company may elect, in its sole discretion, by written
notice to the Employee given no later than ninety (90) days prior to the end of
the Initial Post-Term Severance Period to extend the period during which the
Employee's Base Severance Compensation shall be payable and provided to the
Employee for an additional period (also referred to herein as an "Additional
----------
Severance Period") of up to one year from the end of the Initial Post-Term
- --------- ------
Severance Period, provided that the total period during which his Base Severance
Compensation shall be payable and provided to the Employee under this Section
5(b) shall in no event extend beyond the second anniversary of the Employee's
Termination of Employment. In the event that no Severance Notice has been given
within thirty (30) days after the date of the Employee's Termination of
Employment pursuant to either Section 4(c) (by the Company without Cause) or
Section 4(d) (by the Employee for Good Reason) (other than a Termination upon
Retirement), then the Company's obligation to pay and provide the Employee with
any compensation shall cease in any event as of the thirtieth (30th) day
following the date of such Termination of Employment, and all other rights of
the Employee under Sections 2, 3 and 5 hereof, shall be deemed to have ceased as
of the date of such Termination of Employment. In the event that a Severance
Notice is given in accordance with this Section 5(b), then upon payment in full
of the Employee's Base Severance Compensation, and, if and when applicable, his
Variable Severance Compensation as described in this Section 5(b), the Company's
obligations to pay and provide the Employee with any of the compensation payable
to him pursuant to Section 3 hereof, and all other rights of the Employee under
Sections 2, 3 and 5 hereof, shall cease as of the date of such payment in full.
(C) If the Employee's employment with the Company terminates pursuant to
any of Sections 4(a) (death or Disability), 4(b) (by the Company for Cause), or
4(e) (by the Employee without Good Reason) hereof, or as a Termination upon
Retirement, then the Company's obligations to pay and provide the Employee with
any of the compensation payable to him pursuant to Section 3 hereof, and all
other rights of the Employee under Sections 2, 3 and 5 hereof, shall cease as of
the date of such Termination of Employment.
(D) The Employee shall not be required to mitigate the amount of any
compensation payable to him pursuant to Sections 5(a) or 5(b) hereof, by seeking
other employment or otherwise, provided, that in the event the Employee obtains
other employment during any period for which compensation is being paid pursuant
to Sections 5(a) or 5(b), the amount of compensation otherwise payable to the
Employee pursuant to either of such sections shall be reduced by 50% for the
period during which the Employee is so employed, provided, further, that in the
event that the Employee provides
<PAGE>
-15-
evidence reasonably satisfactory to the Company that the amount of the resulting
reduction in his compensation otherwise payable pursuant to Sections 5(a) or
5(b) hereof, as the case may be, exceeds the level of his compensation payable
from such other employment, then his compensation pursuant to Sections 5(a) or
5(b) hereof, as applicable, shall be reduced for the period of such other
employment by an amount equal to the aggregate amount of his compensation from
such other employment during such period. The Employee shall promptly notify the
Company if he obtains other employment during the applicable period.
(E) Nothing in this Section 5 shall limit any other obligation which the
Company may owe the Employee under any insurance policy, employee benefit plan
or other retirement plan. Furthermore, upon any Termination of Employment of
any type, the Company shall remain obligated to the Employee for (i) any accrued
and unpaid base salary and vacation pay, (ii) reimbursement for reasonable out-
of-pocket expenses incurred by Employee by or on behalf of the Company or
otherwise in the performance of his duties and in accordance with applicable
Company policies then in effect, and (iii) unless otherwise specified in any
such plan, policy or program, payments or benefits explicitly provided under the
terms of any plan, policy or program of the Company in which the Employee was a
participant, or as otherwise required by applicable law.
6. REPURCHASE OF SHARES.
6.1. REPURCHASE RIGHTS OF THE COMPANY.
(A) Upon any Termination of Employment of the Employee at any time, the
Company may, at its option, repurchase from the holders thereof, and the
Employee will at the request of the Company sell to the Company, or procure the
sale to the Company of, all or any portion of the Shares specified in the
Company Repurchase Notice(s) (as defined below) at a purchase price per Share
determined pursuant to paragraphs (i) and (ii) below:
(i) in the event that such Termination of Employment is pursuant to
Section 4(b) (by the Company for Cause), at a purchase price per Share equal to
the lower of the Market Value Per Share, as of the date of such Termination of
Employment, and the Original Price Per Share; and
(ii) otherwise, at a purchase price per Share equal to the Market
Value Per Share, as of the date of such Termination of Employment.
<PAGE>
-16-
(B) The Company's repurchase rights under Section 6.1(a) shall be
exercisable at any time and from time to time within the periods specified in
clause (iii) below, by written notice from the Company to the Employee
specifying the number of Shares to be repurchased (each such notice, a "Company
-------
Repurchase Notice"), provided, however, that (i) if a Company Repurchase Notice
- ---------- ------
is delivered at any time within ninety (90) days following the Termination of
Employment of the Employee and prior to the delivery of a Co-Manager Repurchase
Notice or Co-Manager Non-Repurchase Notice pursuant to and in accordance with
Section 6.2 below, such Company Repurchase Notice shall not specify a number of
Shares in excess of 2,491, as such amount may be adjusted from time to time to
reflect stock splits, combinations or other similar recapitalizations affecting
the Common Stock (such amount of Shares, as so adjusted, being referred to
herein as the "Company Priority Shares"), (ii) if a Company Repurchase Notice is
------- -------- ------
delivered at any time after the delivery of a Co-Manager Repurchase Notice or a
Co-Manager Non-Repurchase Notice, or after ninety (90) days following the
Termination of Employment of the Employee, such Company Repurchase Notice shall
not specify a number of Shares in excess of the number of Shares then
outstanding, less the number of Shares referred to in the Co-Manager Repurchase
----
Notice, if any, previously delivered pursuant to and in accordance with Section
6.2(b) below, (iii) the Company's repurchase rights under Section 6.1(a) above
shall be exercisable with respect to the Company Priority Shares, only for a
period of ninety (90) days from the date of Termination of Employment of the
Employee, and with respect to all Shares other than the Company Priority Shares,
only for a period of sixty (60) days from the date upon which such rights first
become exercisable in accordance with the preceding clause (ii), and (iv) in the
event that the Company determines at any time prior to the expiration of the
period of ninety (90) days from the date of Termination of Employment of the
Employee that it does not intend to exercise its repurchase rights under Section
6.1(a) above with respect to all or any portion of the Company Priority Shares,
the Company shall promptly so notify the Co-Managers and the Employee in writing
(such notice, the "Company Non-Repurchase Notice"). The closing of the
------- -------------- ------
repurchase of Shares pursuant to each Company Repurchase Notice shall be held
not earlier than five (5) days nor later than thirty (30) days after delivery of
such Company Repurchase Notice. The Company's repurchase rights under Section
6.1(a) shall lapse if not exercised within the periods specified in clause (iii)
of this Section 6.1(b) in accordance with the provisions hereof, except as
otherwise provided in Section 7 hereof. Upon delivery by the Company of the
repurchase price for the Shares being repurchased under this Section 6.1(b) in
accordance with Section 7.2 hereof, all of the Shares being repurchased shall no
longer be deemed to be outstanding, all of the Employee's rights with respect to
such Shares will terminate, with the exception of the right of the Employee to
receive the repurchase price in
<PAGE>
-17-
exchange therefor pursuant to this Section 6.1(b), and payments pursuant to
Section 6.4, if any, and the Employee (on his own behalf and on behalf of any
other holder of Shares) hereby irrevocably appoints the Company as his attorney-
in-fact to take all actions necessary and sign all documents required to cancel
such Shares on the Company's books and records.
6.2. REPURCHASE RIGHTS OF THE CO-MANAGERS.
(A) Upon any Termination of Employment of the Employee at any time, the
Co-Managers may, at their option, repurchase from the holders thereof, and the
Employee will at the request of the Co-Managers, or any of them, sell to such
Co-Managers, or procure the sale to such Co-Managers of, all or any portion of
the Shares, other than the Company Priority Shares, as specified in the Co-
Manager Repurchase Notice (as defined below), at a purchase price per Share
determined pursuant to paragraphs (i) and (ii) below:
(i) in the event that such Termination of Employment is pursuant to
Section 4(b) (by the Company for Cause), at a purchase price per Share equal to
the lower of the Market Value Per Share, as of the date of such Termination of
Employment, and the Original Price Per Share; and
(ii) otherwise, at a purchase price per Share equal to the Market
Value Per Share, as of the date of such Termination of Employment.
(B) The Co-Managers' repurchase rights under Section 6.2(a) above shall be
exercisable at any one time within ninety (90) days following the Termination of
Employment of the Employee, by written notice from the Co-Managers participating
in such repurchase to the Employee and the Company specifying the number of
Shares to be repurchased by each of such Co-Managers (the "Co-Manager Repurchase
--------- -----------
Notice"), provided, however, that in the event that the Co-Managers determine at
- ------
any time prior to the expiration of the period of ninety (90) days following the
Termination of Employment of the Employee that none of the Co-Managers intends
to exercise their respective repurchase rights under Section 6.2(a) above with
respect to all or any portion of the Shares available to be repurchased by the
Co-Managers, the Co-Managers shall promptly so notify the Company and the
Employee in writing (such notice, the "Co-Manager Non-Repurchase Notice"). The
---------- -------------- ------
closing of the repurchase of the Shares to be repurchased pursuant to the Co-
Manager Repurchase Notice shall be held not earlier than five (5) days nor later
than thirty (30) days after delivery to the Employee and the Company of the Co-
Manager Repurchase Notice. The Co-Managers'
<PAGE>
-18-
repurchase rights under Section 6.2(a) shall lapse if not exercised within the
time period specified above in accordance with the provisions hereof, except as
otherwise provided in Sections 6.2(c) and 6.2(d) below. Each of the Co-Managers
participating in such repurchase shall purchase that number of the Shares
referred to in the relevant Co-Manager Repurchase Notice as to be purchased by
such Co-Manager, provided that, unless Co-Managers holding a majority of the
shares held by the participating Co-Managers otherwise agree, no Co-Manager
shall be entitled to purchase a number of Shares greater than such Co-Manager's
pro rata portion of the Shares available to be purchased by the Co-Managers,
- --------
based on the total number of shares of Common Stock owned on the date of the Co-
Manager Repurchase Notice by the participating Co-Managers. Upon delivery by the
participating Co-Managers of the repurchase price, in cash, for the Shares being
repurchased under this Section 6.2(b) in accordance with Section 7.2 hereof, all
of the Employee's rights with respect to such Shares will terminate, with the
exception of the right of the Employee to receive the repurchase price from the
participating Co-Managers in exchange for such Shares pursuant to this Section
6.2(b), and payments pursuant to Section 6.4, if any, and the Employee (on his
own behalf and on behalf of any other holder of Shares) hereby irrevocably
appoints the Company as his attorney-in-fact to take all actions necessary and
sign all documents required to transfer such Shares on the Company's books and
records into the name(s) of the respective participating Co-Managers.
(C) In the event that either (i) the Company shall have failed to exercise
its repurchase rights under Section 6.1 above with respect to all or any portion
of the Company Priority Shares within the applicable period specified in Section
6.1(b)(iii) above (it being understood that a failure to complete such a
repurchase after a Company Repurchase Notice shall have been given shall not
constitute a failure to exercise the Company's repurchase rights for the
purposes of this Section 6.2(c)), unless such failure continues for 180 days
after the latest date upon which a closing of a purchase pursuant to Section 6.
1(b)(ii) could occur, without giving effect to Section 7.1, a failure which so
continues being referred to herein as a "180-Day Failure", or (ii) the Company
------- -------
shall have delivered a Company Non-Repurchase Notice indicating that the Company
does not intend to exercise its repurchase rights under Section 6.1 above with
respect to all or any portion of the Company Priority Shares, then the Co-
Managers, or any of them, may, at their option, repurchase from the holders
thereof, and the Employee will at the request of such Co-Managers sell to such
Co-Managers, or procure the sale to such Co-Managers of, those Company Priority
Shares (collectively the "Remainder Shares") as to which the Company shall have
--------- ------
failed to exercise its repurchase rights under Section 6.1 as described above,
or with respect to which the Company shall have delivered a Company Non-
<PAGE>
-19-
Repurchase Notice indicating that it did not intend to exercise its repurchase
rights under Section 6.1, at a purchase price per Remainder Share determined in
accordance with Section 6.1(a) above.
(D) The Co-Managers' repurchase rights under Section 6.2(c) above shall be
exercisable at any one time within the period of sixty (60) days following the
earlier of (i) the last day of the 90-day period applicable to the repurchase by
the Company of Company Priority Shares, as specified in Section 6.1(b)(iii)
above, (ii) the occurrence of a 180-Day Failure, and (iii) the date of receipt
of a Company Non-Repurchase Notice, by written notice from the Co-Managers
participating in such repurchase to the Employee and to the Company specifying
the number of Remainder Shares to be repurchased by each of such Co-Managers
(the "Co-Manager Remainder Repurchase Notice"). The closing of the repurchase
---------- --------- ---------- ------
of the Remainder Shares to be repurchased pursuant to the Co-Manager Remainder
Repurchase Notice shall be held not earlier than five (5) days nor later than
thirty (30) days after delivery to the Employee and the Company of the Co-
Manager Remainder Repurchase Notice. The Co-Managers' repurchase rights under
Section 6.2(c) above shall lapse if not exercised within the 30-day period
specified in this Section 6.2(d) in accordance with the provisions hereof. Each
of the Co-Managers participating in such repurchase shall purchase that number
of Remainder Shares referred to in the Co-Manager Remainder Repurchase Notice as
to be repurchased by such Co-Manager, provided that, unless Co-Managers holding
a majority of the Shares held by the participating Co-Managers otherwise agree,
no Co-Manager shall be entitled to purchase a number of Remainder Shares greater
than such Co-Manager's pro rata portion of the Remainder Shares available to be
--- ----
purchased by the Co-Managers, based on the total number of Shares of Common
Stock owned on the date of the Co-Manager Remainder Repurchase Notice by the
participating Co-Managers. Upon delivery by the participating Co-Managers of
the repurchase price, in cash, for the Remainder Shares being repurchased under
this Section 6.2(d) in accordance with Section 7.2 hereof, all of the Employee's
rights with respect to such Shares will terminate, with the exception of the
right of the Employee to receive the repurchase price from the participating Co-
Managers in exchange for such Shares pursuant to this Section 6.2(d), and
payments pursuant to Section 6.4, if any, and the Employee (on his own behalf
and on behalf of any other holder of Shares) hereby irrevocably appoints the
Company as his attorney-in-fact to take all actions necessary and sign all
documents required to transfer such Shares on the Company's books and records
into the name(s) of the respective participating Co-Managers.
6.3. REPURCHASE RIGHTS OF THE EMPLOYEE.
<PAGE>
-20-
(A) Upon any Termination of Employment pursuant to Sections 4(a) (death or
Disability), 4(c) (by the Company without Cause) or 4(d) (by the Employee with
Good Reason), the Employee will have the right, but not the obligation, to
request that the Company, together with, to the extent they so elect in
accordance with this Section 6.3, the Co-Managers, repurchase all (and not less
than all) of the Shares, for a purchase price per Share equal to the Market
Value Per Share as of the date of such Termination of Employment. The put
rights of the Employee under this Section 6.3 shall be exercisable at any time
within sixty (60) days after the date of such Termination of Employment or, if
such Termination of Employment is upon the death of such Employee, then sixty
(60) days after the appointment of a Personal Representative (or functional
equivalent) for such Employee (any such 60-day period being referred to as a
"Put Period") by notice to the Company and each of the Co-Managers (the "Put
--- ------ ---
Notice") specifying the date, time and place of the closing (the "Put Closing")
- ------ -----------
for such repurchase. The put rights of the Employee under this Section 6.3 will
lapse if not exercised by delivery of a Put Notice to the Company and to the Co-
Managers in care of the Company within the applicable Put Period. In the event
that any of the Co-Managers wish to participate in the proposed repurchase, such
Co-Managers shall notify the Employee and the Company within thirty (30) days
after delivery of the Put Notice of their intention (if any) to participate in
such repurchase, by written notice (the "Co-Manager Put Repurchase Participation
---------- --- ---------- -------------
Notice") specifying the number of Shares to be repurchased by each of the Co-
- ------
Managers participating in such repurchase, provided however that the Co-Manager
Put Repurchase Participation Notice shall in no event specify any of the Company
Priority Shares as to be repurchased by the Co-Managers.. Each of the Co-
Managers participating in such repurchase shall purchase that number of the
Shares referred to in the Co-Manager Put Repurchase Participation Notice as to
be repurchased by such Co-Manager, provided that unless Co-Managers holding a
majority of the shares held by the participating Co-Manager otherwise agree, no
Co-Manager shall be entitled to purchase a number of Shares greater than such
Co-Manager's pro rata portion of the Shares available to be purchased by the Co-
--- ----
Manager pursuant to this Section 6.3, based on the total number of shares of
Common Stock owned on the date of the Co-Manager Put Repurchase Participation
Notice by all of the participating Co-Managers.
(B) (i) If the Employee's Termination of Employment was pursuant to
Section 4(a) (death or Disability), or a Termination upon Retirement, then, in
the event that the number of Shares to be repurchased by the participating Co-
Managers pursuant to the Co-Manager Put Repurchase Participation Notice, if any,
is less than the number of Shares then outstanding, then the Company may, by
written notice to the Employee or his Personal Representative, given within
thirty (30) days after the
<PAGE>
-21-
delivery of the Put Notice or, if later, within fifteen (15) days after the
Company's receipt of the Co-Manager Put Repurchase Participation Notice, either
accept or reject the Employee's Put Notice with respect to those Shares (the
"Company Repurchase Shares") which the Co-Managers shall not have elected to
------- ---------- ------
repurchase, provided that in the event of the Employee's death or Disability,
-------- ----
the Company shall be required to honor the put of such amount of the Company
Repurchase Shares as may be repurchased with the proceeds of the life or
disability insurance policy held by the Company on the Employee pursuant to and
in accordance with Section 7 of the Stockholder Agreement (the "Insurance
---------
Policy"), less the cash surrender value thereof at such time.
- ------ ----
(ii) If the Employee's Termination of Employment was pursuant to
Section 4(e) (by the Company without Cause) or 4(d) (by the Employee with Good
Reason) (other than a Termination upon Retirement), then, subject to the
provisions of Sections 6.3(f) and 7 below, the Company shall be required to
honor the put of all of the Company Repurchase Shares.
(C) In the event that, pursuant to Section 6.3(b) above, the Company
either elects to or is required to honor the put of all of the Company
Repurchase Shares, or fails to deliver any notice pursuant to Section 6.3(b)(i)
rejecting all or any portion of such put within the fifteen-day period specified
in such section, then the Put Closing will be held no earlier than forty-five
(45) days nor later than sixty (60) days after delivery of the Put Notice. At
the Put Closing, subject to the provisions of Section 7 hereof, each of the Co-
Managers participating in the repurchase under this Section 6.3 (if any) shall
purchase, and the Employee shall sell, or procure the sale to each such Co-
Manager of, those shares referred to in the Co-Manager Put Repurchase
Participation Notice as to be repurchased by such Co-Manager, and the Company
shall purchase, and the Employee shall sell, or procure the sale to the Company
of, all of the Company Repurchase Shares other than those referred to in the Co-
Manager Put Repurchase Participation Notice, if any. Upon tender by the Company
and the Co-Managers of the purchase price for the Shares being repurchased
hereunder in accordance with Section 7 below, the Shares being repurchased by
the Company shall no longer be deemed to be outstanding, all of the Employee's
rights with respect to the Shares being repurchased shall terminate with the
exception of the right of the Employee to receive the repurchase price from the
Company or the Co-Managers, as the case may be, in exchange for such Shares
pursuant to this Section 6.3, and payments pursuant to Section 6.4, if any, and
the Employee (on his own behalf and on behalf of any other holder of Shares)
hereby irrevocably appoints the Company as his attorney-in-fact to take all
actions necessary and sign all documents required to cancel the Shares being
transferred to the Company, and to transfer the Shares being repurchased by the
Co-Managers
<PAGE>
-22-
into the name(s) of the respective Co-Managers participating in such repurchase,
on the Company's books and records.
(D) In the event that, pursuant to Section 6.3(b)(i) above, the Company
notifies the Employee or his Personal Representative that the Company rejects
the Employee's Put Notice with respect to any of the Company Repurchase Shares,
then the Company shall promptly so notify the Co-Managers and, within thirty
(30) days of delivery of the Company's notice to the Co-Managers, the Co-
Managers may notify the Employee and the Company in writing (such notice, a
"Second Co-Manager Put Participation Notice") of their intention (if any) to
------ ---------- --- ------------- ------
purchase all of the Company Repurchase Shares, specifying the number of Company
Repurchase Shares to be repurchased by each of the Co-Managers participating in
such repurchase, and in such event (whether or not the Co-Managers deliver a Co-
Manager Put Participation Notice in accordance with this Section 6.3(d)) the Put
Closing will be held no earlier than seventy-five (75) days nor later than
ninety (90) days after delivery of the Put Notice. At such Put Closing, subject
to the provisions of Section 7 hereof, each of the Co-Managers participating in
the repurchase shall purchase, and the Employee shall sell, or procure the sale
to each such Co-Manager of, those shares referred to in the Co-Manager Put
Repurchase Participation Notice and/or the Second Co-Manager Put Participation
Notice, if any, as to be repurchased by such Co-Manager, in accordance with the
procedures specified in Sections 6.3(a) and 6.3(c) applicable to purchases by
Co-Managers.
(E) In the event that the Co-Managers do not elect, within the 30-day
period specified in Section 6.3(d) above, to acquire all of the Company
Repurchase Shares as to which the Company shall have rejected the Employee's Put
Notice, then the transfer restrictions on any such Company Repurchase Shares
pursuant to Section 1 of the Stockholder Agreement will thereupon automatically
and without further notice be terminated, with effect from the end of such 30-
day period.
(F) Notwithstanding the foregoing, in the event that any payment by the
Company of any portion of the purchase price for any Shares that the Employee
has requested be repurchased pursuant to Section 6.3(a), and that the Company,
pursuant to Section 6.3(b), has either agreed to or is required to purchase, is,
at the time such payment would otherwise be due hereunder, limited or prohibited
by law or by the terms of any of the Company's or any of its Subsidiaries'
agreements with its or their lenders or any other contracts by which the Company
or any of its Subsidiaries is bound, the Company may complete the repurchase of
such Shares in accordance with Section 7 hereof, but in any event shall only be
required at such time to repurchase that portion of the Shares, if any, for
which payment of the purchase price
<PAGE>
-23-
therefor is not so prohibited. Notwithstanding the foregoing, in the event that
(i) the Company is unable to make payment of any portion of the purchase price
for Shares to be repurchased by it pursuant to this Section 6.3 for the reasons
specified in Section 7.1 hereof, and (ii) such failure continues for 180 days
from the last date upon which the closing of the purchase of such Shares was to
occur but for this Section 6.3(c) and Section 7.1, the Company shall send a
notice to the Co-Managers (a "Failed Put Notice") informing them of their right
------ --- ------
to purchase any or all of the Shares for which the Company was not able to pay
the purchase price (the "Unpurchased Shares"), such notice to specify the number
----------- ------
of such Unpurchased Shares and the Fair Market Value of such Shares on the date
of the Failed Put Notice. The Co-Managers shall then have the right to purchase
any or all of the Unpurchased Shares for their Fair Market Value on the date of
the Failed Put Notice. Such purchase shall be made in accordance with the
procedure pursuant to Sections 6.3(a) and 6.3(c) applicable to purchases by Co-
Managers, with the Co-Manager Put Repurchase Participation Notice required to be
delivered not less than thirty (30) days after delivery of the Failed Put Notice
and any closing to occur not less than forty-five (45) nor more than sixty (60)
days after delivery of the Failed Put Notice.
6.4. ADDITIONAL PAYMENTS UPON DISPOSITION EVENT, ETC. If, at any time
within six (6) months after any closing of a repurchase either (a) pursuant to
Sections 6.1 or 6.2 above following a Termination of Employment pursuant to
Sections 4(a) (death or Disability), 4(c) (by the Company without Cause) or 4(d)
(by the Employee with Good Reason), or (b) pursuant to Section 6.3 above
following a Termination of Employment pursuant to Section 4(a) (death or
Disability), the Company shall become party to a Disposition Event or the
Company completes any Public Offering, or the Company or any of its stockholders
enter into any written agreement or written letter of intent contemplating any
of the foregoing which transaction is consummated within 180 days thereafter,
then each of the Company and any Co-Managers who have purchased Shares pursuant
to Sections 6.1, 6.2 or 6.3 shall, simultaneously with the consummation of any
such transaction or at such later time as any payment described below is
received by the Company or any of its stockholders, make an additional payment
to the Employee in an amount per Share repurchased from the Employee by him, her
or it pursuant to any of Sections 6.1, 6.2 or 6.3 above, as the case may be,
equal to the excess, if any, of (i) the value per share of the cash, securities
and other property that the Employee would have received (or that the Company
received in which the Employee would have had a beneficial interest as a
stockholder of the Company) had the Employee's Shares not been previously so
repurchased over (ii) the payment received by the Employee with respect to each
such Share pursuant to any of Sections 6.1, 6.2 or 6.3 above, as the case may
be. Each payment to the Employee
<PAGE>
-24-
pursuant to this Section 6.4 shall be made either in cash or in the form of the
securities and other property received by the Company or the holders of Common
Stock, as the case may be.
6.5. TRANSFEREES OF THE EMPLOYEE; LEGEND. Any permitted transferee of the
Shares under the Stockholder Agreement, including without limitation any
Personal Representative or Family Member (as such terms are defined in the
Stockholder Agreement) of the Employee, shall also be bound by, and have the
benefit of, the provisions of this Section 6. Except as otherwise permitted by
this Section 6.5, each certificate representing the Shares shall, in addition to
any legends required under the Stockholder Agreement, bear a legend in or
substantially in the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN REPURCHASE
RIGHTS IN FAVOR OF THE COMPANY CONTAINED IN AN EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT, DATED AS OF MARCH ___, 1998, A COPY OF
WHICH WILL BE FURNISHED BY THE COMPANY TO THE HOLDER OF THE SHARES
EVIDENCED BY THIS CERTIFICATE UPON WRITTEN REQUEST AND WITHOUT CHARGE."
Whenever the requirements of this Section 6.5 shall terminate as to any Shares
pursuant to Section 7.3 below, the holder thereof shall be entitled to receive
from the Company, at the Company's expense, new certificates representing the
Shares without such legend.
6.6. DELAY FOR VALUATION OR RECEIPT OF INSURANCE PROCEEDS. In the event
that, (a) as a result of any requirement to determine the Fair Market Value of
the Company by means of an appraisal pursuant to and in accordance with the
definition of "Market Value Per Share", the Market Value Per Share has not been
determined at the time that the closing of any purchase and sale of Shares
pursuant to this Section 6 is otherwise scheduled to occur, or (b) as a result
of a delay in the Company's receipt of the proceeds from the Insurance Policy,
the Company is not able to pay the repurchase price at the time that the closing
of any purchase and sale of Shares pursuant to this Section 6 is otherwise
scheduled to occur then, and notwithstanding anything to the contrary set forth
in this Section 6 or in Section 7 below, such closing shall be delayed until, in
the case of clause (a) above, the Market Value Per Share has been determined
pursuant to and in accordance with the definition thereof, and such closing
shall in any event occur within thirty (30) days after the date of such
determination, and, in the case of clause (b), such insurance proceeds have been
received, provided that such closing shall in
<PAGE>
-25-
any event occur within ninety (90) days after the date of the applicable
determination of Market Value Per Share.
7. OTHER REPURCHASE PROVISIONS.
7.1. REPURCHASE RESTRICTIONS.
(A) REPURCHASE TERMS. Notwithstanding any provision to the contrary in
Section 6 above:
(x) with respect to any repurchase of Shares by the Company following a
Termination of Employment of the Employee (i) pursuant to Section 4(c) (by
the Company for Cause), the Company (but not the Co-Managers) shall be
entitled to complete the repurchase of such Shares in seven (7) annual
installments, with one-seventh of such Shares being repurchased on the date
for repurchase of such Shares specified in Section 6 above, and one-seventh
on each anniversary of such date from the first anniversary of such date to
the sixth anniversary of such date, or (ii) pursuant to Section 4(e) (by
the Employee without Good Reason), the Company (but not the Co-Managers)
shall be entitled to complete the repurchase of such Shares in three (3)
annual installments, with one-third of such Shares being repurchased on the
date for repurchase of such Shares specified in Section 6 above, and one-
third on each of the first and second anniversaries of such date, and the
Employee hereby agrees to execute and deliver to the Company, at the time
of the first such repurchase installment pursuant to clauses (i) or (ii)
above, an irrevocable proxy in favor of the Company with respect to all of
the Employee's Shares to be repurchased by the Company, granting to the
Company an irrevocable power of attorney, coupled with an interest, to
exercise all of the Employee's rights including voting rights and retain
all of the Employee's benefits in connection with the ownership of the
Shares to be repurchased by the Company from and after the date of such
first installment; and
(y) if the Company is prohibited by the terms of any of the Company's or
any of its Subsidiaries' agreements with its or their lenders (including,
without limitation, the Company's senior credit agreement with Bank of
America, N.T. & S.A., and the Indenture with respect to the Company's
Senior Subordinated Notes) (any such agreement, a "Subordinating
-------------
Agreement") from making any payments of any portion of the repurchase price
---------
for any of the Shares in cash, the Company shall be entitled to complete
the repurchase of such Shares as to which payment of the repurchase price
in cash is not so
<PAGE>
-26-
prohibited by delivering to the Employee a check for the repurchase price
thereof. The Company further shall be entitled to complete the repurchase
of the other Shares to be repurchased by it, or any portion thereof, on the
first date on which such payment is not so prohibited by any applicable
Subordinating Agreement, provided that if the closing date of such
repurchase is more than six (6) months after the Employee's Termination of
Employment, then, if the repurchase price for the Shares is based on the
Market Value Per Share, the repurchase price shall be calculated based on
the Market Value Per Share as of the date of such closing instead of as of
the date of the Employee's Termination of Employment.
The Company agrees that in the event that it is permitted by the terms of any
Subordinating Agreement to repurchase shares of its Common Stock in cash, it
shall promptly exercise its rights to complete any such repurchase delayed
pursuant to Section 7.1(a)(y), provided that any such repurchase shall be
pro rata with all other such delayed repurchases and then-current repurchases,
whether hereunder or under any other employment or stock repurchase agreement of
the Company in force from time to time (but not including any such repurchases
required to be completed in seven annual installments pursuant to Section
7.1(a)(x)(i) above, which shall be paid only after all other repurchases to be
made on or prior to the date of any such repurchase have been made in full).
(B) IMPAIRMENT OF CAPITAL. If, even after giving effect to the provisions
of Section 7.1(a) hereof, the Company is prohibited by law from repurchasing any
Shares which it is entitled to repurchase hereunder due to any existing or
prospective impairment of its capital, the closing of such repurchase shall be
delayed until the first date on which the Company has sufficient capital to
lawfully repurchase such Shares (the "Delayed Closing Date"), and when
------- ------- ----
completed, any payments of the repurchase price shall be applied pro rata in
accordance with the proviso to Section 7.1(a) above. In the event of any such
delay of a closing (other than a closing described in Section 7.1(a)(x) above),
the Company will be obligated to pay, on the Delayed Closing Date, interest on
the repurchase price for such Shares, at the Prime Rate as published from time
to time in the "Wall Street Journal" from the date on which the closing of the
repurchase of such Shares was originally scheduled to occur to the Delayed
Closing Date.
7.2. PAYMENT FOR SHARES. Subject to the provisions of Section 7.1 above,
at any closing held to consummate any repurchase of Shares hereunder, the
Employee shall deliver to the Co-Managers or the Company, as the case may be,
the stock certificates representing such Shares, duly endorsed in blank or with
duly executed stock powers attached, and free and
<PAGE>
-27-
clear of all Liens, and the Co-Managers or the Company, as the case may be,
shall deliver to the Employee a check or checks in the amount of the repurchase
price for such Shares calculated in accordance with the terms and provisions
hereof.
7.3. TERMINATION OF REPURCHASE PROVISIONS. All of the repurchase rights
and obligations contained in this Agreement (excluding, for the avoidance of
doubt, any rights arising under Section 6.4 above) shall terminate immediately
after the completion of any Disposition Event or Qualified Public Offering;
provided, however. that no such termination shall relieve the Company from any
obligation or liability with respect to (i) any note issued in accordance with
Section 7.1 hereof, or (ii) any repurchase which was deferred pursuant to
Section 7.1 and not honored on or before such termination.
7.4 ADJUSTMENT OF REPURCHASE PRICE. Upon any stock split, reverse stock
split, recombination of shares or other similar reorganization of the capital
structure of the Company, the repurchase price otherwise payable to the Employee
upon the repurchase of any Shares pursuant to Section 6 hereof shall be
proportionally adjusted, as appropriate, to reflect such reorganization.
8. CERTAIN COVENANTS. The Employee hereby covenants as follows, which
covenants shall be in addition and without prejudice to any other
confidentiality, noncompetition, nonsolicitation, and/or similar covenants to
which the Employee may be subject from time to time, including without
limitation those set forth in the Merger Agreement.
(A) CONFIDENTIALITY. Both during and following the term of this Agreement
and the Employee's employment hereunder, the Employee shall maintain the
confidentiality of all confidential, sensitive, or proprietary information of
the Company and/or its Subsidiaries, including without limitation with respect
to their respective businesses, finances, affairs, and/or technology, which
shall be and remain the exclusive property of the Company and/or its respective
Subsidiaries, as the case may be, and except as previously authorized in writing
by the Company, and except with respect to information that has otherwise become
public through no action or omission on the part of the Employee, shall not
disclose any such information to any third party, or use it for any purpose
other than in the discharge of his employment duties and responsibilities in the
ordinary course of the Company's business. Upon the termination of the
Employee's employment with the Company, the Employee shall promptly return to
the Company all documents and other tangible media that contain or reflect any
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries
<PAGE>
-28-
(including all copies, reproductions, digests, abstracts, analyses, and notes)
in his possession or control, and will destroy any related computer files on any
equipment not owned by the Company or its Subsidiaries. Notwithstanding the
foregoing, if the Employee is required by law or regulation to disclose any
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries, the Employee will provide the Company with prompt notice of such
disclosure obligation so that the Company may seek a protective order or take
other appropriate action and/or waive compliance with this Section 8(a) to the
extent of such required disclosure. In the absence of such a waiver, if the
Employee is, in the opinion of his counsel, compelled to disclose any such
information upon pain of liability for contempt or other censure or penalty, the
Employee may disclose such information to the relevant court or other tribunal
or governmental authority without liability hereunder, but notwithstanding such
disclosure, such information shall remain confidential under this Section 8(a)
after such disclosure.
(B) NON-COMPETITION. In consideration for, among other things, the
Company's agreements herein and the Company's and its Subsidiaries' agreements
in the Merger Agreement, and recognizing the Employee's status as an Investor in
the Company pursuant to the Investment Agreement and as a stockholder of the
Company, the Employee hereby agrees that, during any period during which the
Employee is employed by the Company, the period of one year following the date
of the Employee's Termination upon Retirement, and/or any period during which
the Employee is receiving any compensation pursuant to this Agreement,
including, without limitation, compensation pursuant to Section 5(a) and 5(b)
hereof during the Initial Severance Period, the Additional Severance Period, if
any, and any other period during which payments are being made to the Employee
pursuant to and in accordance with such Sections 5(a) and 5(b), and, if the
Employee's employment with the Company terminates pursuant to Section 4(b) (by
the Company for Cause) or Section 4(e) (by the Employee without Good Reason)
hereof, then also during the longer of (i) the period of one year commencing on
the date of such Termination of Employment, and (ii) the period of two years
from the Closing Date, all of which applicable periods shall automatically be
extended by a period of time equal to any period in which the Employee is in
breach of any obligations under this Section 8 (all of which applicable periods,
including any such extension, the "Restricted Period"), the Employee shall not
---------- ------
engage, directly or indirectly (except as a stockholder, director, officer,
and/or employee of the Company and/or any of its Subsidiaries), as a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the outstanding capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative, or in any other
capacity: (A) in the manufacture of folding cartons or sleeves manufactured, at
least in part, of
<PAGE>
-29-
rigid plastic, (B) the manufacture, design, printing or production of specialty
packaging products for use in the cosmetics, entertainment (including recorded
music, video, software, multimedia and electronic gaming) or tobacco markets, in
each case anywhere in the world (the Employee hereby acknowledging that the
Company and its Subsidiaries do such business worldwide), or (C) in any other
business which the Company or any of its Subsidiaries may conduct at any time
during the period of the Employee's employment hereunder, anywhere that the
Company or any its Subsidiaries may conduct such business at any time during the
term of such non-competition obligations.
(C) NON-SOLICITATION OF EMPLOYEES, ETC. During the Restricted Period
(which, for the purposes of this Section 8(c) and Section 8(d) below, shall be
extended to include the maximum potential Additional Severance Period under
Section 5 above (regardless of whether or not compensation is paid to the
Employee with respect thereto), if prior to the commencement of such additional
period at least 50% of the Company Priority Shares shall have been repurchased
pursuant to Sections 6.1 - 6.3 above, the Company shall have become obligated
pursuant to Section 7.1 hereof to repurchase any of such Shares remaining
outstanding, and the Company shall not then be in breach of its obligations with
respect to such repurchase obligation under Section 7, the Employee shall not
directly or indirectly recruit, solicit, induce, or attempt to induce any of the
employees or independent contractors of the Company or any of its Subsidiaries
to terminate their employment or contractual relationship with the Company or
such Subsidiary; and shall not assist any other Person to do so, or be a
proprietor, equityholder, investor (except as a passive investor holding not
more than 3% of the capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative of any Person who
does or attempts to do so.
(D) NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. During the Restricted
Period (extended as described in Section 8(c) above), the Employee shall not
directly or indirectly solicit, divert, take away, or attempt to divert or take
away, from the Company or any of its Subsidiaries any of the business or
patronage of any of their respective customers, clients, accounts, vendors, or
suppliers, or induce or attempt to induce any such Person to reduce the amount
of business it does with the Company or any of its Subsidiaries, and the
Employee shall not assist any other Person to do so, or be a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the capital stock of a publicly held company), lender, partner, director,
officer, employee, consultant, or representative of any Person who does or
attempts to do so.
<PAGE>
-30-
(E) TERMINATION OF CERTAIN COVENANTS. The covenants of the Employee set
forth in Sections 8(b) - (d) hereof shall not apply at any time other than
during the Restricted Period (but the termination of such covenants shall be
without prejudice to any other confidentiality, noncompetition, nonsolicitation,
and/or similar covenants to which the Employee may be subject from time to time,
including without limitation those set forth in the Merger Agreement). For the
avoidance of doubt, in the event that the covenants set forth in Section 8(b)
are no longer binding upon the Employee, the fact of the Employee's engaging in
any activity which would have been prohibited to the Employee under Section 8(b)
shall not by itself constitute a violation of the Employee's covenants in any of
Sections 8(c), 8(d) and 8(f) hereof and it shall not be a violation of either
Section 8(c) or Section 8(d) for the Employee to provide services in any
capacity to another Person who may engage in conduct prohibited by either such
section, so long as Employee does not directly assist or participate in, or
provide consultation with respect to, such prohibited conduct.
(F) NON-DISPARAGEMENT. Both during and following the term of this
Agreement and the Employee's employment hereunder, the Employee shall not
disparage, deprecate, or make any negative comment with respect to the Company
or any of its Subsidiaries or their respective businesses, operations, or
properties.
(G) EQUITABLE REMEDIES. The Employee hereby acknowledges that any breach
by him of his obligations under this Section 8 would cause substantial and
irreparable damage to the Company, and that money damages would be an inadequate
remedy therefor, and accordingly, acknowledges and agrees that the Company shall
be entitled to an injunction, specific performance, and/or other equitable
relief to prevent the breach of such obligations (in addition to all other
rights and remedies to which the Company may be entitled in respect of any such
breach).
(H) MODIFICATION. In the event that a court of competent jurisdiction
determines that any of the provisions of this Section 8 would be unenforceable
as written because they cover too extensive a geographic area, too broad a range
of activities, or too long a period of time, or otherwise, then such provisions
shall automatically be modified to cover the maximum geographic area, range of
activities, and period of time as may be enforceable, and in addition, such
court is hereby expressly authorized so to modify this Agreement and to enforce
it as so modified. No invalidity or unenforceability of any section of this
Agreement or any portion thereof shall affect the validity or enforceability of
any other section or of the remainder of such section.
<PAGE>
-31-
9. MISCELLANEOUS.
(A) BENEFITS OF AGREEMENT; NO ASSIGNMENTS; THIRD-PARTY BENEFICIARIES.
(i) This Agreement shall bind and inure to the benefit of the
parties hereto, the Co-Managers, and the respective heirs, successors, and
permitted assigns of each of them.
(ii) Except to the extent expressly contemplated by Section 6.5
hereof and pursuant to the Stockholder Agreement, neither party hereto
shall assign any rights or delegate any obligations hereunder without the
consent of the other party (except that the Company may assign its rights
and delegate its obligations hereunder to any successor to its business,
whether by merger or consolidation, sale of stock or of all or
substantially all of assets, or otherwise), and any attempt to do so shall
be void.
(iii) Nothing in this Agreement is intended to or shall confer any
rights or remedies on any Person other than the parties hereto, the Co-
Managers, and their respective heirs, successors, and permitted assigns.
The parties hereto expressly agree that the Co-Managers shall be third-
party beneficiaries of the provisions of Sections 6 and 7 of this
Agreement.
(B) NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed to the recipient party at his or its address set forth in the
first paragraph hereof, to the attention of Richard Block and David Underwood,
if the Company is the intended recipient party, or to the Co-Managers in care of
the Company, if a Co-Manager is the intended recipient party (or to such other
address or other Person's attention as the recipient party may have furnished
to the sending party for the purpose pursuant to this section).
(C) COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall
<PAGE>
-32-
be an original, but all of which together shall constitute one and the same
agreement. In pleading or proving this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
(D) CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and shall not affect the interpretation or construction
of this Agreement.
(E) CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.
(F) WAIVERS; AMENDMENTS. No waiver of any breach or default hereunder
shall be valid unless in a writing signed by the waiving party. No failure or
other delay by any party exercising any right, power, or privilege hereunder
shall be or operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege. No amendment or modification of this
Agreement shall be valid or binding unless in a writing signed by both the
Employee and the Company.
(G) ENTIRE AGREEMENT. This Agreement and the Stockholder Agreement contain
the entire understanding and agreement between the parties, and supersede any
prior understandings or agreements between them, with respect to the subject
matter hereof.
(H) GOVERNING LAW. This Agreement shall to the maximum lawful extent be
governed by and interpreted and construed in accordance with the internal laws
of the State of Illinois, as applied to contracts under seal made, and entirely
to be performed, within Illinois, and without reference to principles of
conflicts or choice of law.
<PAGE>
-33-
IN WITNESS WHEREOF, each of the Company and the Employee has executed and
delivered this Employment, Non-Competition and Stock Repurchase Agreement as an
agreement under seal as of the date first above written.
COMPANY: IMPAC GROUP, INC.
By /s/ Richard Block
-----------------------------
Name: Richard Block
Title: President
/s/ James H. Oppenheimer
EMPLOYEE: -------------------------------
Name: James H. Oppenheimer
<PAGE>
EXHIBIT 10.14
EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT
This Employment, Non-Competition and Stock Repurchase Agreement (this
"Agreement") dated as of March ___, 1998, is by and between IMPAC Group, Inc., a
---------
Delaware corporation formerly known as KFI Holding Corporation, with its
principal executive offices at 1950 North Ruby Street, Melrose Park, Illinois
60160-1178 (the "Company"), and Richard L. Oppenheimer (the "Employee"), an
------- --------
individual residing at _________________ _______________________.
This Agreement is being entered into in connection with (a) the Investment
Agreement dated as of February 19, 1998 (the "Investment Agreement"), by and
---------- ---------
among the Company, Heritage Fund I Investment Corporation, the Employee and
certain other investors in the Company, (b) the Agreement and Plan of Merger
dated as of February 19, 1998 (the "Merger Agreement"), by and among the
------ ---------
Company, Klearfold, Inc., AGI Incorporated, and the Principal Stockholders
referred to therein, and (c) the Stockholder Agreement of even date herewith
(the "Stockholder Agreement") among the Company, the Employee and certain other
----------- ---------
stockholders of the Company. Capitalized terms used and not otherwise defined
herein have the respective meanings ascribed to them in the Stockholder
Agreement.
The Company and the Employee agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
meanings specified below:
"Act" means the Security Act of 1933, as amended.
---
"Additional Severance Period" has the meanings specified in Sections 5(a)
---------- --------- ------
and 5(b) hereof.
"AGI" means AGI Incorporated, an Illinois corporation.
---
"Base Severance Compensation" has the meaning specified in Section 5(a)
---- --------- ------------
hereof.
"Board" means the Board of Directors of the Company.
-----
"Bonus Plan" has the meaning specified in Section 3(b) hereof.
----- ----
<PAGE>
-2-
"Cause" means the Employee's (i) commission of a breach of the provisions
-----
of Section 8 hereof, (ii) habitual and willful neglect of the performance of the
Employee's duties as set forth in Section 2(a) hereof, such neglect having
continued for a period of 30 days after written notice thereof is given by the
Board to the Employee, (iii) commission of an act of fraud, misappropriation, or
dishonesty in connection with his employment by the Company, or (iv) conviction
of or plea of nolo contendere to a felony. Notwithstanding any other provision
of this Agreement, the Employee shall not be terminated for Cause unless and
until there shall have been delivered to him a copy of a resolution duly adopted
by the Board by a vote of not less than 80% of the Directors (excluding the
Employee, if a member of the Board) at a meeting called and held for the purpose
(within twelve (12) months of the date of the Board's becoming aware of the
condition or conditions constituting Cause, as set forth in clauses (i) - (iv)
above, and after reasonable notice to the Employee and an opportunity for him,
together with his counsel, to be heard by the Board), finding that in the good
faith opinion of the Board, one of the conditions set forth above in this
definition of Cause had been fulfilled, and specifying the particulars thereof.
"Certificate of Value" has the meaning specified in the definition of "Fair
----------- -- -----
Market Value".
"Charter" means the Company's Amended and Restated Certificate of
-------
Incorporation and all amendments thereto.
"Closing Date" means the date of this Agreement.
------- ----
"Co-Manager Non-Repurchase Notice" has the meaning specified in Section
---------- -------------- ------
6.2(b) hereof.
"Co-Manager Put Repurchase Participation Notice" has the meaning specified
---------- --- ---------- ------------- ------
in Section 6.3(a) hereof.
"Co-Manager Remainder Repurchase Notice" has the meaning specified in
---------- --------- ---------- ------
Section 6.2(d) hereof.
"Co-Manager Repurchase Notice" has the meaning specified in Section 6.2(b)
---------- ---------- ------
hereof.
"Co-Managers" means each of Richard Block, James Oppenheimer, Dean Henkel,
-----------
David Underwood, Jacqueline Barry, Dennis McGuin and Mary Frances Griffin, so
long as such individual remains employed by the Company or any of its
Subsidiaries.
<PAGE>
-3-
"Common Stock" means the Company's Series A Common Stock, $0.001 par value
------ -----
per share, and any capital stock of the Company which is (a) not subject to
redemption, or (b) issued to the holders of shares of Common Stock upon any
reclassification thereof.
"Company" has the meaning specified in the preamble hereto, and, unless the
-------
context otherwise requires, shall include all Subsidiaries of the Company.
"Company Non-Repurchase Notice" has the meaning specified in Section 6.1(b)
------- -------------- ------
hereof.
"Company Priority Shares" has the meaning specified in Section 6.1(b)
------- -------- ------
hereof.
"Company Repurchase Notice" has the meaning specified in Section 6.1(b)
------- ---------- ------
hereof.
"Company Repurchase Shares" has the meaning specified in Section 6.3(b)(i)
------- ---------- ------
hereof.
"Delayed Closing Date" has the meaning specified in Section 7.1(b) hereof.
------- ------- ----
"Designated Term" has the meaning specified in Section 2(b) hereof.
---------- ----
"Disability" shall mean that an independent medical doctor (selected by the
----------
Company's health or disability insurer) certifies that the Employee has for 180
consecutive days or 240 non-consecutive days in any twelve (12) month period
been disabled in a manner which seriously interferes with his ability to perform
his duties under this Agreement and which is reasonably expected to continue
indefinitely.
"Disposition Event" shall mean any merger, consolidation or sale of more
----------- -----
than 50% of the Company's assets or other similar corporate action (including,
without limitation, a recapitalization) pursuant to which the holders of Common
Stock receive cash, securities or other property, or any transaction as a result
of which the Company is acquired by the purchase of more than a majority of its
common equity.
"Failed Put Notice" has the meaning specified in Section 6.3(c) hereof.
------ --- ------
<PAGE>
-4-
"Fair Market Value" means, unless otherwise specified in the definition of
---- ------ -----
"Market Value Per Share", the fair market value of the entire common stock
equity of the Company (without premium for control or discounts for minority
interests, restrictions on transfer or lack of voting rights), as determined in
good faith by the Board at a meeting at which a quorum of the Board is present
in accordance with the Stockholder Agreement, or by unanimous written consent,
calculated as of such date, provided that in making such determination the Board
may in its sole discretion rely upon an appraisal or valuation of an Independent
Appraiser selected in good faith by the Board and conducted within the six (6)
month period preceding the date of the Board's determination, and as certified
by a duly authorized officer of the Company in a Certificate of Value (a
"Certificate of Value") which shall be kept as part of the minutes and other
- ------------ -- -----
corporate records of the Company.
"Formula Value" means, with respect to any date, the amount which is equal
------- -----
to the aggregate of (a) the product obtained by multiplying EBITDA (as defined
below) during the 12 full calendar months immediately preceding such date by
--
five and seven-tenths (5.7), less (b) the sum of (i) the Company's consolidated
----
funded indebtedness outstanding on such date, including (without limitation)
obligations under capitalized leases, and (ii) the liquidation value of, and
accrued dividends on, any preferred stock of the Company outstanding on such
date, plus (c) the aggregate cash balances and cash equivalents of the Company
----
and its Subsidiaries on such date. As used in this definition, "EBITDA" for any
------
period, means the Consolidated Net Income (as defined below) of the Company and
its Subsidiaries for such period plus to the extent deducted in determining
Consolidated Net Income all (a) income taxes (including reserves for deferred
income taxes), (b) gross interest expense, (c) depreciation and (d)
amortization, all determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied for such period.
As used in this definition, "Consolidated Net Income" means, for any period, the
------------ --- ------
net income (or loss) of the Company and its Subsidiaries for such period on a
consolidated basis, after deducting all operating expenses, provisions for all
taxes and reserves (including reserves for deferred income taxes) and all other
proper deductions, all determined in accordance with generally accepted
accounting principles consistently applied, after eliminating all intercompany
items and after adjustment for any add-backs or other similar adjustments
properly made in connection with the transactions contemplated by the Merger
Agreement and the Investment Agreement, but excluding from the definition of
Consolidated Net Income any extraordinary gains and/or losses and any gains
and/or losses from the sale or other disposition of assets other than in the
ordinary course of business, all determined in accordance with generally
accepted accounting principles consistently applied.
<PAGE>
-5-
"Good Reason" means (i) diminution by the Board, or the President, or any
---- ------
other senior executive officer of the Company, of the Employee's
responsibilities, duties or authority as Executive Vice President - Sales (or
such other senior executive position as may be offered by the Company and which
the Employee in his sole discretion may accept), or interference by any senior
executive employee of the Company (other than the President and/or such other
executive officer to whom the Employee is required to report if reporting to
such Person does not constitute Good Reason pursuant to clause (iv) below) with
the Employee's responsibilities, duties or authority as Executive Vice
President-Sales (or such other senior executive position as may be offered by
the Company and which the Employee in his sole discretion may accept), or
assignment to the Employee of any duties inconsistent with the Employee's
position as Executive Vice President - Sales (or such other senior executive
position as may be offered by the Company and which the Employee in his sole
discretion may accept), in any such case other than in an insignificant manner,
and such diminution, interference or mis-assignment is not remedied or corrected
within 30 days after reasonably detailed written notice thereof, setting forth
sufficient information to permit the Company to take action to remedy or correct
such matter, is given by the Employee to the Company, provided that upon the
third occurrence of any complained-of matter, the Employee shall be entitled to
notify the Company thereof and thereupon to terminate his employment with the
Company for Good Reason, (ii) failure by the Company to pay and provide to the
Employee the compensation or benefits provided for in Section 3 hereof, and, any
time following the end of the Designated Term, any decrease in the compensation
or benefits provided for in Section 3 hereof (including, without limitation, any
failure to provide cost of living increases even after the end of the Designated
Term) which failure or decrease is not cured or remedied within 30 days after
written notice thereof is given by the Employee to the Company, (iii) the Board
requires the Employee to be permanently based anywhere other than within 25
miles of the Employee's present office location in Beverly Hills, California
(excluding business-related travel), (iv) the Employee becoming obligated to
report to, or accept assignments from any Person other than the President of the
Company or a single Person other than James Oppenheimer who directly reports to
the President of the Company, or (v) at any time following the end of the
Designated Term, a Termination of Employment voluntarily by the Employee after
he has reached the age of sixty-two (62) (any Termination of Employment under
this clause (v) also being referred to as a "Termination upon Retirement").
----------- ---- ----------
"Independent Appraiser" means an investment banking or accounting firm or
----------- ---------
independent appraiser of nationally recognized standing and at least ten years
experience in evaluating businesses similar to the Company and its
<PAGE>
-6-
Subsidiaries, and not an Affiliate (as defined in the Stockholder Agreement) of
the Company or any of its Subsidiaries or any stockholder of the Company.
"Initial Post-Term Severance Period" has the meaning specified in Section
------- --------- --------- ------
5(b) hereof.
"Initial Severance Period" has the meaning specified in Section 5(a)
------- --------- ------
hereof.
"Insurance Policy" has the meaning specified in Section 6.3(b)(i) hereof.
--------- ------
"Investment Agreement" has the meaning specified in the preamble hereto.
---------- ---------
"Klearfold" means Klearfold, Inc., a Pennsylvania corporation.
---------
"Market Value Per Share" means, with respect to any date, the quotient
------ ----- --- -----
obtained by dividing (a) the sum of (i) the most recently determined Fair Market
Value of the Company plus (ii) an amount equal to the aggregate consideration
----
which would then be payable to the Company, assuming the exercise at such time
of all then outstanding and exercisable warrants, options, or convertible
securities pursuant to which the Company would, upon exercise, then be obligated
to issue Common Stock, other than warrants or options the strike or exercise
price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, by (b) the sum of (i) the number of shares of Common Stock then
--
outstanding, plus (ii) the number of shares of Common Stock then issuable upon
----
exercise of all then outstanding and exercisable warrants, options, or
convertible securities pursuant to which the Company would, upon exercise, then
be obligated to issue Common Stock, other than warrants or options the strike or
exercise price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, provided, however, that in the event that on the date with respect to
which Market Value Per Share is being determined, more than six (6) months shall
have elapsed since the date of execution of the most recent Certificate of
Value, then the Fair Market Value of the Company for purposes of clause (a)(i)
of this definition of Market Value Per Share shall be calculated as the Formula
Value of the Company as of the date with respect to which Market Value Per Share
is being determined. In the event that either (x) the Employee (for the
purposes of this definition, including any Personal Representative of the
Employee), or (y) if (and only if) the Fair Market Value of the Company would
otherwise be determined by reference to the Formula Value in accordance with the
foregoing proviso, the Company, so elects (the
<PAGE>
-7-
electing party being referred to as the "Requesting Party"), by written notice
---------- -----
to the Company (in the case of any election by the Employee) or to the Employee
(in the case of any election by the Company) (the party receiving such notice,
the "Non-Requesting Party") within five (5) days of any determination of Market
-------------- -----
Value Per Share in accordance with the preceding sentence, the Fair Market Value
of the Company shall be determined either by one Independent Appraiser selected
by the Requesting Party and acceptable to the Non-Requesting Party in its sole
discretion, or, if the Requesting Party and the Non-Requesting Party are unable
to agree upon the identity of such an Independent Appraiser within fifteen (15)
days after the date of the Requesting Party's notice to the Non-Requesting
Party, by two Independent Appraisers, selected one by the Requesting Party and
one by the Non-Requesting Party, who shall work together to determine in good
faith one Fair Market Value of the Company acceptable to both Independent
Appraisers. The appraisal of such Independent Appraiser(s) shall be delivered to
the Requesting Party and the Non-Requesting Party within 60 days after the date
of the Requesting Party's notice to the Non-Requesting Party requesting an
appraisal. In the event that two Independent Appraisers are appointed and they
are unable to reach an agreement as to the Fair Market Value of the Company
within such 60-day period, the Appraised Fair Market Value shall be calculated
by adding the two Fair Market Values of the Company, as determined in good faith
within such period by each of such Independent Appraisers, and dividing the sum
thereof by two. The Fair Market Value of the Company determined by such
Independent Appraiser(s) in accordance with this definition (the "Appraised Fair
--------- ----
Market Value") shall be conclusive and shall be used to determine the Market
- ------ -----
Value Per Share hereunder, and judgment thereon may be entered in any court of
competent jurisdiction. All expenses of the Independent Appraiser or Independent
Appraisers appointed pursuant to this definition shall be borne by the Company,
except that if the Appraised Fair Market Value is less than 115% of the Fair
Market Value of the Company determined pursuant to the first sentence of this
definition, all expenses of such Independent Appraiser(s) shall be borne by the
Requesting Party.
"Merger Agreement" has the meaning specified in the preamble hereto.
------ ---------
"Original Price Per Share" means, as to all Shares acquired pursuant to the
-------- ----- --- -----
Investment Agreement, $340.00 per Share, and as to all other Shares, the actual
price per Share paid by the Employee upon the acquisition of such Shares.
"Person" means an individual, partnership, corporation, limited liability
------
company, association, trust, joint venture, unincorporated
<PAGE>
-8-
organization, or any government, governmental department or agency or political
subdivision thereof.
"Personal Representative" means the successor or legal representative
-------- --------------
(including without limitation, a guardian, executor, administrator or
conservator) of the Employee following his death or legal incompetence.
"Public Offering" means any sale of Common Stock to the public pursuant to
------ --------
a public offering registered under the Act.
"Public Sale" means any Public Offering or any sale of Common Stock to the
------ ----
public through a broker or market-maker pursuant to the provisions of Rule 144
(or any successor rule) adopted under the Act.
"Put Closing" has the meaning specified in Section 6.3(a) hereof.
--- -------
"Put Notice" has the meaning specified in Section 6.3(a) hereof.
--- ------
"Put Period" has the meaning specified in Section 6.3(a) hereof.
--- ------
"Qualified Public Offering" means an underwritten Public Offering, pursuant
--------- ------ --------
to an effective registration statement under the Securities Act, covering the
offer and sale of shares of Common Stock in which an aggregate of not less than
$25,000,000 of gross proceeds from such public offering are received by the
Company and the selling stockholders.
"Related Persons" means the Employee's parents, spouse, children and
------- -------
grandchildren.
"Remainder Shares" has the meaning specified in Section 6.2(c) hereof.
--------- ------
"Restricted Period" has the meaning specified in Section 8(b) hereof.
---------- ------
"Second Co-Manager Put Participation Notice" has the meaning specified in
------ ---------- --- --------------------
Section 6.3(d) hereof.
"Severance Extension Notice" has the meaning specified in Section 5(a)
--------- --------- ------
hereof.
"Severance Notice" has the meaning specified in Section 5(b) hereof.
--------- ------
"Severance Release" has the meaning specified in Section 5(a) hereof.
--------- -------
<PAGE>
-9-
"Shares" means (a) all shares of Common Stock acquired by the Employee from
------
time to time, whether pursuant to the Investment Agreement, upon exercise of any
rights of first refusal or pre-emptive rights under the Stockholder Agreement,
any repurchase rights as a Co-Manager under any Employment, Non-Competition and
Stock Repurchase Agreement between the Company and any other employee of the
Company, upon exercise of any options, warrants, or other rights to purchase
shares of Common Stock, or otherwise, (b) any shares of Common Stock into which
such shares of Common Stock have been converted, (c) any capital stock or other
securities into which or for which such shares of Common Stock shall have been
converted or exchanged pursuant to any recapitalization, reorganization or
merger of the Company, and (d) any shares of capital stock issued with respect
to the foregoing pursuant to a stock split or stock dividend , which at the time
of the Employee's Termination of Employment are owned by the Employee or any
Person owning shares transferred to him pursuant to Section 1.1(b) of the
Stockholder Agreement by the Employee or any (direct or indirect) transferees of
the Employee pursuant to that provision.
"Stockholder Agreement" has the meaning specified in the preamble hereto.
----------- ---------
"Subsidiary" means, with respect to the Company, any corporation a majority
----------
(by number of votes) of the outstanding shares of any class or classes of which
shall at the time be owned by the Company or by a Subsidiary of the Company, if
the holders of the shares of such class or classes (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are at the time entitled, as such holders, to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to vote exists by
reason of the happening of a contingency and including without limitation AGI
and Klearfold.
"Termination for Under-Performance" means a Termination of Employment of
----------- --- -----------------
the Employee by the Company without Cause, where the Board shall have by
resolution duly adopted with the consent of the President of the Company,
identified such Termination of Employment as having occurred as a result of
under-performance by the Employee in his employment hereunder, provided however,
that except as expressly stated in Section 5 hereof, any such Termination of
Employment shall be treated as a Termination of Employment by the Company
without Cause for all purposes hereunder.
<PAGE>
-10-
"Termination of Employment" means the Employee's ceasing to be an employee
----------- -- ----------
of the Company or any of its Subsidiaries, whether voluntary or involuntary, for
any reason or for no reason, including without limitation, for resignation,
death or Disability of the Stockholder, and whether or not for Cause or for Good
Reason.
"Termination upon Retirement" has the meaning specified in the definition
----------- ---- ----------
of "Good Reason".
"Unpurchased Shares" has the meaning specified in Section 6.3(c) hereof.
----------- ------
"Variable Severance Compensation" has the meaning specified in Section 5(a)
-------- --------- ------------
hereof.
2. EMPLOYMENT.
(A) EMPLOYMENT. Subject to the terms and conditions of this Agreement, the
Company agrees to employ the Employee, and the Employee agrees to serve, as the
Executive Vice President - Sales of the Company with responsibility for the
sales function of the Company, AGI and Klearfold for the entertainment market,
having such powers and duties as are consistent with such position, subject to
the directions of the President of the Company and/or a single Person other than
James Oppenheimer who directly reports to the President of the Company.
(B) DESIGNATED TERM. The Employee's employment hereunder shall commence on
the date hereof, and shall continue until terminated in accordance with Section
4 hereof, provided that, subject to the other terms and conditions hereof, the
term of employment shall be at least until June 7, 2001 (such period being
referred to herein as the "Designated Term"), and provided, further that from
---------- ----
and after June 8, 2001, subject to the provisions of Section 5 hereof, the
Employee's employment hereunder shall be at will.
3. COMPENSATION. During the Designated Term, the Company shall pay and
provide to the Employee the compensation set forth below:
(A) BASE SALARY. The Company shall pay to the Employee a base salary,
prorated and payable in installments in accordance with AGI's usual payroll
practices. Such base salary shall be at the rate of $325,000 per annum for 1998,
and thereafter such base salary shall be adjusted annually based upon the
percentage increase, if any, in the Consumer Price Index, All Items, Chicago, as
published by the Bureau of Labor Statistics (the "CPI"), as
---
<PAGE>
-11-
follows: The Employee's base salary for each of the years 1999-2001 shall be
calculated by multiplying the Employee's 1998 base salary by a fraction, the
numerator of which is the average CPI for the twelve months of the year
preceding the year for which such base salary is being calculated, and the
denominator of which is the CPI for December 1997. In no event will any such
adjustment reduce the Employee's base salary for any year below that in effect
for the preceding year. In addition, in the event that Scott Herrin terminates
his employment with the Company without Good Reason during the "Free Termination
Period" under his Employment, Non-Competition and Stock Repurchase Agreement
with the Company, the Employee's base salary under this Section 3(a) will be
increased by a portion, the amount of which shall be determined by the President
of the Company in his sole discretion and notified to the Employee in writing
within thirty (30) days after the date of Scott Herrin's Termination of
Employment, of the reduction in the Company's overall compensation expense
resulting from such Termination of Employment.
(B) BONUSES. The Employee shall be entitled to participate in the
Company's Executive Bonus Plan (the "Bonus Plan"), a copy of which is appended
----- ----
hereto and incorporated herein by this reference.
(C) FRINGE BENEFITS. In addition to the Employee's base salary and any
bonuses to which the Employee may become entitled under the Bonus Plan, the
Company shall provide to the Employee additional benefits as provided to other
employees of the Company and its Subsidiaries whose base salary and level of
responsibility are comparable to those of the Employee, including as described
in the attached Schedule of Benefits.
-------- -- --------
(D) VACATION. The Employee shall be entitled to four (4) weeks vacation
each calendar year. Any vacation shall be taken at the reasonable and mutual
convenience of the Company and the Employee. Accrued vacation not taken in any
calendar year will not be carried forward or used in any subsequent calendar
year, provided, however, if any accrued vacation is not taken by the Employee in
any calendar year at the request of the Employer, then the Employee shall be
entitled to carry forward and use such accrued vacation in the immediately
following calendar year but not in any subsequent calendar year.
4. TERMINATION. The Employee's employment hereunder shall terminate upon
the occurrence of any of the following events:
(A) the Employee's death or DISABILITY; OR
<PAGE>
-12-
(B) the termination of the Employee's employment hereunder by the Company,
for Cause, by written notice to the Employee; or
(C) the termination of the Employee's employment hereunder by the Company,
without Cause, by written notice to the Employee; or
(D) the termination of the Employee's employment hereunder by the Employee,
for Good Reason, by written notice to the Company; or
(E) the termination of the Employee's employment hereunder by the Employee,
without Good Reason, by 30 days' prior written notice to the Company.
5. SEVERANCE. Notwithstanding any other provision of this Agreement:
(A) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) during the
Designated Term, then the Company shall, upon delivery to the Company of a
release of any claims of the Employee against the Company and its stockholders,
directors, officers, employees, agents or other affiliates arising out of his
employment relationship (other than claims to any compensation or benefits
payable under or to be provided pursuant to this Section 5, or any rights of the
Employee under Sections 6 or 7 hereof) executed by the Employee and reasonably
satisfactory in form and substance to the Company (a "Severance Release"),
--------- -------
continue to pay and provide to the Employee (A) the compensation payable to him
pursuant to Section 3(a) hereof, and (B) the benefits provided to him pursuant
to Section 3(c) hereof (the compensation and benefits described in clauses (A)
and (B), together, such Employee's "Base Severance Compensation"), and, unless
---- --------- ------------
such Termination of Employment was a Termination for Under-Performance, (C) any
bonus accrued or earned by the Employee pursuant to the Bonus Plan and
attributable to the Employee's performance for the portion of the year prior to
his Termination of Employment, on a one-time only basis payable at the time of
payment of bonuses to other executive employees under the Bonus Plan, and (D)
for each year, 50% of an amount equal to the compensation payable to the
Employee pursuant to Section 3(a), multiplied by a fraction, the numerator of
which equals the aggregate bonus actually payable with respect to the preceding
year to the Company's other executive employees in the same bonus pay-out range
as the Employee was in prior to his Termination of Employment, and the
denominator of which equals the aggregate salary of such other executive
employees for such preceding year (the compensation described in clauses (C) and
(D) together, such Employee's
<PAGE>
-13-
"Variable Severance Compensation") for a period (the "Initial Severance Period")
-------- --------- ------------ ------- --------- ------
equal to the longer of (i) the remainder of the Designated Term, and (ii) the
one-year period following the date of such Termination of Employment, but this
clause (ii) only being applicable if, prior to the earlier of (x) the last day
of the Designated Term and (y) the thirtieth (30th) day from the date of such
Termination of Employment, the Company shall have notified the Employee in
writing of the Company's intention, in the Company's sole discretion, so to
extend the Initial Severance Period (such notice, a "Severance Extension
--------- ---------
Notice"). In the Company's sole discretion, the Company may elect, either in the
- ------
Severance Extension Notice, or by written notice to the Employee given no later
than thirty (30) days prior to the end of the Initial Severance Period (as it
may have been extended pursuant to the Severance Extension Notice), to continue
to pay and provide to the Employee his Base Severance Compensation for an
additional period (the "Additional Severance Period") of up to one year
---------- --------- ------
following the end of the Initial Severance Period (as it may have been extended
pursuant to the Severance Extension Notice), provided that the Additional
Severance Period shall in no event extend beyond the second anniversary of the
Employee's Termination of Employment. Upon payment in full of the Employee's
Base Severance Compensation and, if and when applicable, his Variable Severance
Compensation, as described in this Section 5(a), the Company's obligations to
pay and provide the Employee with any other compensation otherwise payable to
him pursuant to Section 3 hereof, and all other rights of the Employee under
Sections 2, 3 and 5 hereof, shall cease as of the date of such payment in full.
(B) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) at any time
after the end of the Designated Term, then if at the time of such Termination of
Employment or within thirty (30) days thereafter, the Company shall, in its sole
discretion, so have notified the Employee in writing (such notice, a "Severance
---------
Notice") and the Employee shall have executed and delivered to the Company a
- ------
Severance Release, the Company shall continue to pay and provide to the Employee
his Base Severance Compensation and, unless such Termination of Employee was a
Termination for Under-Performance, his Variable Severance Compensation for a
period of one year following the date of such Termination of Employment (the
"Initial Post-Term Severance Period"), provided that, unless the Company shall
------- --------- --------- ------
have notified the Employee in writing at the time of his Termination of
Employment that it did not intend to deliver a Severance Notice, the Employee's
Base Severance Compensation shall be payable in any event for the portion of the
30-day period following the Termination of Employment prior to the Company's
delivery either of a
<PAGE>
-14-
Severance Notice or of notice that the Company did not intend to deliver a
Severance Notice. The Company may elect, in its sole discretion, by written
notice to the Employee given no later than ninety (90) days prior to the end of
the Initial Post-Term Severance Period to extend the period during which the
Employee's Base Severance Compensation shall be payable and provided to the
Employee for an additional period (also referred to herein as an "Additional
----------
Severance Period") of up to one year from the end of the Initial Post-Term
- --------- ------
Severance Period, provided that the total period during which his Base Severance
Compensation shall be payable and provided to the Employee under this Section
5(b) shall in no event extend beyond the second anniversary of the Employee's
Termination of Employment. In the event that no Severance Notice has been given
within thirty (30) days after the date of the Employee's Termination of
Employment pursuant to either Section 4(c) (by the Company without Cause) or
Section 4(d) (by the Employee for Good Reason) (other than a Termination upon
Retirement), then the Company's obligation to pay and provide the Employee with
any compensation shall cease in any event as of the thirtieth (30th) day
following the date of such Termination of Employment, and all other rights of
the Employee under Sections 2, 3 and 5 hereof, shall be deemed to have ceased as
of the date of such Termination of Employment. In the event that a Severance
Notice is given in accordance with this Section 5(b), then upon payment in full
of the Employee's Base Severance Compensation, and, if and when applicable, his
Variable Severance Compensation as described in this Section 5(b), the Company's
obligations to pay and provide the Employee with any of the compensation payable
to him pursuant to Section 3 hereof, and all other rights of the Employee under
Sections 2, 3 and 5 hereof, shall cease as of the date of such payment in full.
(C) If the Employee's employment with the Company terminates pursuant to
any of Sections 4(a) (death or Disability), 4(b) (by the Company for Cause), or
4(e) (by the Employee without Good Reason) hereof, or as a Termination upon
Retirement, then the Company's obligations to pay and provide the Employee with
any of the compensation payable to him pursuant to Section 3 hereof, and all
other rights of the Employee under Sections 2, 3 and 5 hereof, shall cease as of
the date of such Termination of Employment.
(D) The Employee shall not be required to mitigate the amount of any
compensation payable to him pursuant to Sections 5(a) or 5(b) hereof, by seeking
other employment or otherwise, provided, that in the event the Employee obtains
other employment during any period for which compensation is being paid pursuant
to Sections 5(a) or 5(b), the amount of compensation otherwise payable to the
Employee pursuant to either of such sections shall be reduced by 50% for the
period during which the Employee is so employed, provided, further, that in the
event that the Employee provides
<PAGE>
-15-
evidence reasonably satisfactory to the Company that the amount of the resulting
reduction in his compensation otherwise payable pursuant to Sections 5(a) or
5(b) hereof, as the case may be, exceeds the level of his compensation payable
from such other employment, then his compensation pursuant to Sections 5(a) or
5(b) hereof, as applicable, shall be reduced for the period of such other
employment by an amount equal to the aggregate amount of his compensation from
such other employment during such period. The Employee shall promptly notify the
Company if he obtains other employment during the applicable period.
(E) Nothing in this Section 5 shall limit any other obligation which the
Company may owe the Employee under any insurance policy, employee benefit plan
or other retirement plan. Furthermore, upon any Termination of Employment of
any type, the Company shall remain obligated to the Employee for (i) any accrued
and unpaid base salary and vacation pay, (ii) reimbursement for reasonable out-
of-pocket expenses incurred by Employee by or on behalf of the Company or
otherwise in the performance of his duties and in accordance with applicable
Company policies then in effect, and (iii) unless otherwise specified in any
such plan, policy or program, payments or benefits explicitly provided under the
terms of any plan, policy or program of the Company in which the Employee was a
participant, or as otherwise required by applicable law.
6. REPURCHASE OF SHARES.
6.1. REPURCHASE RIGHTS OF THE COMPANY.
(A) Upon any Termination of Employment of the Employee at any time, the
Company may, at its option, repurchase from the holders thereof, and the
Employee will at the request of the Company sell to the Company, or procure the
sale to the Company of, all or any portion of the Shares specified in the
Company Repurchase Notice(s) (as defined below) at a purchase price per Share
determined pursuant to paragraphs (i) and (ii) below:
(i) in the event that such Termination of Employment is pursuant to
Section 4(b) (by the Company for Cause), at a purchase price per Share
equal to the lower of the Market Value Per Share, as of the date of such
Termination of Employment, and the Original Price Per Share; and
(ii) otherwise, at a purchase price per Share equal to the Market
Value Per Share, as of the date of such Termination of Employment.
<PAGE>
-16-
(B) The Company's repurchase rights under Section 6.1(a) shall be
exercisable at any time and from time to time within the periods specified in
clause (iii) below, by written notice from the Company to the Employee
specifying the number of Shares to be repurchased (each such notice, a "Company
-------
Repurchase Notice"), provided, however, that (i) if a Company Repurchase Notice
- ---------- ------
is delivered at any time within ninety (90) days following the Termination of
Employment of the Employee and prior to the delivery of a Co-Manager Repurchase
Notice or Co-Manager Non-Repurchase Notice pursuant to and in accordance with
Section 6.2 below, such Company Repurchase Notice shall not specify a number of
Shares in excess of 2,960, as such amount may be adjusted from time to time to
reflect stock splits, combinations or other similar recapitalizations affecting
the Common Stock (such amount of Shares, as so adjusted, being referred to
herein as the "Company Priority Shares"), (ii) if a Company Repurchase Notice is
------- -------- ------
delivered at any time after the delivery of a Co-Manager Repurchase Notice or a
Co-Manager Non-Repurchase Notice, or after ninety (90) days following the
Termination of Employment of the Employee, such Company Repurchase Notice shall
not specify a number of Shares in excess of the number of Shares then
outstanding, less the number of Shares referred to in the Co-Manager Repurchase
----
Notice, if any, previously delivered pursuant to and in accordance with Section
6.2(b) below, (iii) the Company's repurchase rights under Section 6.1(a) above
shall be exercisable with respect to the Company Priority Shares, only for a
period of ninety (90) days from the date of Termination of Employment of the
Employee, and with respect to all Shares other than the Company Priority Shares,
only for a period of sixty (60) days from the date upon which such rights first
become exercisable in accordance with the preceding clause (ii), and (iv) in the
event that the Company determines at any time prior to the expiration of the
period of ninety (90) days from the date of Termination of Employment of the
Employee that it does not intend to exercise its repurchase rights under Section
6.1(a) above with respect to all or any portion of the Company Priority Shares,
the Company shall promptly so notify the Co-Managers and the Employee in writing
(such notice, the "Company Non-Repurchase Notice"). The closing of the
------- -------------- ------
repurchase of Shares pursuant to each Company Repurchase Notice shall be held
not earlier than five (5) days nor later than thirty (30) days after delivery of
such Company Repurchase Notice. The Company's repurchase rights under Section
6.1(a) shall lapse if not exercised within the periods specified in clause (iii)
of this Section 6.1(b) in accordance with the provisions hereof, except as
otherwise provided in Section 7 hereof. Upon delivery by the Company of the
repurchase price for the Shares being repurchased under this Section 6.1(b) in
accordance with Section 7.2 hereof, all of the Shares being repurchased shall no
longer be deemed to be outstanding, all of the Employee's rights with respect to
such Shares will terminate, with the exception of the right of the Employee to
receive the repurchase price in
<PAGE>
-17-
exchange therefor pursuant to this Section 6.1(b), and payments pursuant to
Section 6.4, if any, and the Employee (on his own behalf and on behalf of any
other holder of Shares) hereby irrevocably appoints the Company as his attorney-
in-fact to take all actions necessary and sign all documents required to cancel
such Shares on the Company's books and records.
6.2. REPURCHASE RIGHTS OF THE CO-MANAGERS.
(A) Upon any Termination of Employment of the Employee at any time, the
Co-Managers may, at their option, repurchase from the holders thereof, and the
Employee will at the request of the Co-Managers, or any of them, sell to such
Co-Managers, or procure the sale to such Co-Managers of, all or any portion of
the Shares, other than the Company Priority Shares, as specified in the Co-
Manager Repurchase Notice (as defined below), at a purchase price per Share
determined pursuant to paragraphs (i) and (ii) below:
(i) in the event that such Termination of Employment is pursuant to
Section 4(b) (by the Company for Cause), at a purchase price per Share equal to
the lower of the Market Value Per Share, as of the date of such Termination of
Employment, and the Original Price Per Share; and
(ii) otherwise, at a purchase price per Share equal to the Market
Value Per Share, as of the date of such Termination of Employment.
(B) The Co-Managers' repurchase rights under Section 6.2(a) above shall be
exercisable at any one time within ninety (90) days following the Termination of
Employment of the Employee, by written notice from the Co-Managers participating
in such repurchase to the Employee and the Company specifying the number of
Shares to be repurchased by each of such Co-Managers (the "Co-Manager Repurchase
---------- ----------
Notice"), provided, however, that in the event that the Co-Managers determine at
- ------
any time prior to the expiration of the period of ninety (90) days following the
Termination of Employment of the Employee that none of the Co-Managers intends
to exercise their respective repurchase rights under Section 6.2(a) above with
respect to all or any portion of the Shares available to be repurchased by the
Co-Managers, the Co-Managers shall promptly so notify the Company and the
Employee in writing (such notice, the "Co-Manager Non-Repurchase Notice"). The
---------- -------------- ------
closing of the repurchase of the Shares to be repurchased pursuant to the Co-
Manager Repurchase Notice shall be held not earlier than five (5) days nor later
than thirty (30) days after delivery to the Employee and the Company of the Co-
Manager Repurchase Notice. The Co-Managers'
<PAGE>
-18-
repurchase rights under Section 6.2(a) shall lapse if not exercised within the
time period specified above in accordance with the provisions hereof, except as
otherwise provided in Sections 6.2(c) and 6.2(d) below. Each of the Co-Managers
participating in such repurchase shall purchase that number of the Shares
referred to in the relevant Co-Manager Repurchase Notice as to be purchased by
such Co-Manager, provided that, unless Co-Managers holding a majority of the
shares held by the participating Co-Managers otherwise agree, no Co-Manager
shall be entitled to purchase a number of Shares greater than such Co-Manager's
pro rata portion of the Shares available to be purchased by the Co-Managers,
- --- ----
based on the total number of shares of Common Stock owned on the date of the Co-
Manager Repurchase Notice by the participating Co-Managers. Upon delivery by the
participating Co-Managers of the repurchase price, in cash, for the Shares being
repurchased under this Section 6.2(b) in accordance with Section 7.2 hereof, all
of the Employee's rights with respect to such Shares will terminate, with the
exception of the right of the Employee to receive the repurchase price from the
participating Co-Managers in exchange for such Shares pursuant to this Section
6.2(b), and payments pursuant to Section 6.4, if any, and the Employee (on his
own behalf and on behalf of any other holder of Shares) hereby irrevocably
appoints the Company as his attorney-in-fact to take all actions necessary and
sign all documents required to transfer such Shares on the Company's books and
records into the name(s) of the respective participating Co-Managers.
(C) In the event that either (i) the Company shall have failed to exercise
its repurchase rights under Section 6.1 above with respect to all or any portion
of the Company Priority Shares within the applicable period specified in Section
6.1(b)(iii) above (it being understood that a failure to complete such a
repurchase after a Company Repurchase Notice shall have been given shall not
constitute a failure to exercise the Company's repurchase rights for the
purposes of this Section 6.2(c)), unless such failure continues for 180 days
after the latest date upon which a closing of a purchase pursuant to Section 6.
1(b)(ii) could occur, without giving effect to Section 7.1, a failure which so
continues being referred to herein as a "180-Day Failure", or (ii) the Company
------- -------
shall have delivered a Company Non-Repurchase Notice indicating that the Company
does not intend to exercise its repurchase rights under Section 6.1 above with
respect to all or any portion of the Company Priority Shares, then the Co-
Managers, or any of them, may, at their option, repurchase from the holders
thereof, and the Employee will at the request of such Co-Managers sell to such
Co-Managers, or procure the sale to such Co-Managers of, those Company Priority
Shares (collectively the "Remainder Shares") as to which the Company shall have
--------- ------
failed to exercise its repurchase rights under Section 6.1 as described above,
or with respect to which the Company shall have delivered a Company Non-
<PAGE>
-19-
Repurchase Notice indicating that it did not intend to exercise its repurchase
rights under Section 6.1, at a purchase price per Remainder Share determined in
accordance with Section 6.1(a) above.
(D) The Co-Managers' repurchase rights under Section 6.2(c) above shall be
exercisable at any one time within the period of sixty (60) days following the
earlier of (i) the last day of the 90-day period applicable to the repurchase by
the Company of Company Priority Shares, as specified in Section 6.1(b)(iii)
above, (ii) the occurrence of a 180-Day Failure, and (iii) the date of receipt
of a Company Non-Repurchase Notice, by written notice from the Co-Managers
participating in such repurchase to the Employee and to the Company specifying
the number of Remainder Shares to be repurchased by each of such Co-Managers
(the "Co-Manager Remainder Repurchase Notice"). The closing of the repurchase
---------- --------- ---------- ------
of the Remainder Shares to be repurchased pursuant to the Co-Manager Remainder
Repurchase Notice shall be held not earlier than five (5) days nor later than
thirty (30) days after delivery to the Employee and the Company of the Co-
Manager Remainder Repurchase Notice. The Co-Managers' repurchase rights under
Section 6.2(c) above shall lapse if not exercised within the 30-day period
specified in this Section 6.2(d) in accordance with the provisions hereof. Each
of the Co-Managers participating in such repurchase shall purchase that number
of Remainder Shares referred to in the Co-Manager Remainder Repurchase Notice as
to be repurchased by such Co-Manager, provided that, unless Co-Managers holding
a majority of the Shares held by the participating Co-Managers otherwise agree,
no Co-Manager shall be entitled to purchase a number of Remainder Shares greater
than such Co-Manager's pro rata portion of the Remainder Shares available to be
--- ----
purchased by the Co-Managers, based on the total number of Shares of Common
Stock owned on the date of the Co-Manager Remainder Repurchase Notice by the
participating Co-Managers. Upon delivery by the participating Co-Managers of
the repurchase price, in cash, for the Remainder Shares being repurchased under
this Section 6.2(d) in accordance with Section 7.2 hereof, all of the Employee's
rights with respect to such Shares will terminate, with the exception of the
right of the Employee to receive the repurchase price from the participating Co-
Managers in exchange for such Shares pursuant to this Section 6.2(d), and
payments pursuant to Section 6.4, if any, and the Employee (on his own behalf
and on behalf of any other holder of Shares) hereby irrevocably appoints the
Company as his attorney-in-fact to take all actions necessary and sign all
documents required to transfer such Shares on the Company's books and records
into the name(s) of the respective participating Co-Managers.
6.3. REPURCHASE RIGHTS OF THE EMPLOYEE.
<PAGE>
-20-
(A) Upon any Termination of Employment pursuant to Sections 4(a) (death or
Disability), 4(c) (by the Company without Cause) or 4(d) (by the Employee with
Good Reason), the Employee will have the right, but not the obligation, to
request that the Company, together with, to the extent they so elect in
accordance with this Section 6.3, the Co-Managers, repurchase all (and not less
than all) of the Shares, for a purchase price per Share equal to the Market
Value Per Share as of the date of such Termination of Employment. The put
rights of the Employee under this Section 6.3 shall be exercisable at any time
within sixty (60) days after the date of such Termination of Employment or, if
such Termination of Employment is upon the death of such Employee, then sixty
(60) days after the appointment of a Personal Representative (or functional
equivalent) for such Employee (any such 60-day period being referred to as a
"Put Period") by notice to the Company and each of the Co-Managers (the "Put
--- ------ ---
Notice") specifying the date, time and place of the closing (the "Put Closing")
- ------ -----------
for such repurchase. The put rights of the Employee under this Section 6.3 will
lapse if not exercised by delivery of a Put Notice to the Company and to the Co-
Managers in care of the Company within the applicable Put Period. In the event
that any of the Co-Managers wish to participate in the proposed repurchase, such
Co-Managers shall notify the Employee and the Company within thirty (30) days
after delivery of the Put Notice of their intention (if any) to participate in
such repurchase, by written notice (the "Co-Manager Put Repurchase Participation
---------- --- ---------- -------------
Notice") specifying the number of Shares to be repurchased by each of the Co-
- ------
Managers participating in such repurchase, provided however that the Co-Manager
Put Repurchase Participation Notice shall in no event specify any of the Company
Priority Shares as to be repurchased by the Co-Managers. Each of the Co-Managers
participating in such repurchase shall purchase that number of the Shares
referred to in the Co-Manager Put Repurchase Participation Notice as to be
repurchased by such Co-Manager, provided that unless Co-Managers holding a
majority of the shares held by the participating Co-Manager otherwise agree, no
Co-Manager shall be entitled to purchase a number of Shares greater than such
Co-Manager's pro rata portion of the Shares available to be purchased by the
--- ----
Co-Manager pursuant to this Section 6.3, based on the total number of shares of
Common Stock owned on the date of the Co-Manager Put Repurchase Participation
Notice by all of the participating Co-Managers.
(B) (i) If the Employee's Termination of Employment was pursuant to
Section 4(a) (death or Disability), or a Termination upon Retirement, then, in
the event that the number of Shares to be repurchased by the participating Co-
Managers pursuant to the Co-Manager Put Repurchase Participation Notice, if any,
is less than the number of Shares then outstanding, then the Company may, by
written notice to the Employee or his Personal Representative, given within
thirty (30) days after the
<PAGE>
-21-
delivery of the Put Notice or, if later, within fifteen (15) days after the
Company's receipt of the Co-Manager Put Repurchase Participation Notice, either
accept or reject the Employee's Put Notice with respect to those Shares (the
"Company Repurchase Shares") which the Co-Managers shall not have elected to
------- ---------- ------
repurchase, provided that in the event of the Employee's death or Disability,
the Company shall be required to honor the put of such amount of the Company
-------
Repurchase Shares as may be repurchased with the proceeds of the life or
- ---------- ------
disability insurance policy held by the Company on the Employee pursuant to and
in accordance with Section 7 of the Stockholder Agreement (the "Insurance
---------
Policy"), less the cash surrender value thereof at such time.
- ------
(ii) If the Employee's Termination of Employment was pursuant to
Section 4(e) (by the Company without Cause) or 4(d) (by the Employee with Good
Reason) (other than a Termination upon Retirement), then, subject to the
provisions of Sections 6.3(f) and 7 below, the Company shall be required to
honor the put of all of the Company Repurchase Shares.
(C) In the event that, pursuant to Section 6.3(b) above, the Company
either elects to or is required to honor the put of all of the Company
Repurchase Shares, or fails to deliver any notice pursuant to Section 6.3(b)(i)
rejecting all or any portion of such put within the fifteen-day period specified
in such section, then the Put Closing will be held no earlier than forty-five
(45) days nor later than sixty (60) days after delivery of the Put Notice. At
the Put Closing, subject to the provisions of Section 7 hereof, each of the Co-
Managers participating in the repurchase under this Section 6.3 (if any) shall
purchase, and the Employee shall sell, or procure the sale to each such Co-
Manager of, those shares referred to in the Co-Manager Put Repurchase
Participation Notice as to be repurchased by such Co-Manager, and the Company
shall purchase, and the Employee shall sell, or procure the sale to the Company
of, all of the Company Repurchase Shares other than those referred to in the Co-
Manager Put Repurchase Participation Notice, if any. Upon tender by the Company
and the Co-Managers of the purchase price for the Shares being repurchased
hereunder in accordance with Section 7 below, the Shares being repurchased by
the Company shall no longer be deemed to be outstanding, all of the Employee's
rights with respect to the Shares being repurchased shall terminate with the
exception of the right of the Employee to receive the repurchase price from the
Company or the Co-Managers, as the case may be, in exchange for such Shares
pursuant to this Section 6.3, and payments pursuant to Section 6.4, if any, and
the Employee (on his own behalf and on behalf of any other holder of Shares)
hereby irrevocably appoints the Company as his attorney-in-fact to take all
actions necessary and sign all documents required to cancel the Shares being
transferred to the Company, and to transfer the Shares being repurchased by the
Co-Managers
<PAGE>
-22-
into the name(s) of the respective Co-Managers participating in such repurchase,
on the Company's books and records.
(D) In the event that, pursuant to Section 6.3(b)(i) above, the Company
notifies the Employee or his Personal Representative that the Company rejects
the Employee's Put Notice with respect to any of the Company Repurchase Shares,
then the Company shall promptly so notify the Co-Managers and, within thirty
(30) days of delivery of the Company's notice to the Co-Managers, the Co-
Managers may notify the Employee and the Company in writing (such notice, a
"Second Co-Manager Put Participation Notice") of their intention (if any) to
------ ---------- --- ------------- ------
purchase all of the Company Repurchase Shares, specifying the number of Company
Repurchase Shares to be repurchased by each of the Co-Managers participating in
such repurchase, and in such event (whether or not the Co-Managers deliver a Co-
Manager Put Participation Notice in accordance with this Section 6.3(d)) the Put
Closing will be held no earlier than seventy-five (75) days nor later than
ninety (90) days after delivery of the Put Notice. At such Put Closing, subject
to the provisions of Section 7 hereof, each of the Co-Managers participating in
the repurchase shall purchase, and the Employee shall sell, or procure the sale
to each such Co-Manager of, those shares referred to in the Co-Manager Put
Repurchase Participation Notice and/or the Second Co-Manager Put Participation
Notice, if any, as to be repurchased by such Co-Manager, in accordance with the
procedures specified in Sections 6.3(a) and 6.3(c) applicable to purchases by
Co-Managers.
(E) In the event that the Co-Managers do not elect, within the 30-day
period specified in Section 6.3(d) above, to acquire all of the Company
Repurchase Shares as to which the Company shall have rejected the Employee's Put
Notice, then the transfer restrictions on any such Company Repurchase Shares
pursuant to Section 1 of the Stockholder Agreement will thereupon automatically
and without further notice be terminated, with effect from the end of such 30-
day period.
(F) Notwithstanding the foregoing, in the event that any payment by the
Company of any portion of the purchase price for any Shares that the Employee
has requested be repurchased pursuant to Section 6.3(a), and that the Company,
pursuant to Section 6.3(b), has either agreed to or is required to purchase, is,
at the time such payment would otherwise be due hereunder, limited or prohibited
by law or by the terms of any of the Company's or any of its Subsidiaries'
agreements with its or their lenders or any other contracts by which the Company
or any of its Subsidiaries is bound, the Company may complete the repurchase of
such Shares in accordance with Section 7 hereof, but in any event shall only be
required at such time to repurchase that portion of the Shares, if any, for
which payment of the purchase price
<PAGE>
-23-
therefor is not so prohibited. Notwithstanding the foregoing, in the event that
(i) the Company is unable to make payment of any portion of the purchase price
for Shares to be repurchased by it pursuant to this Section 6.3 for the reasons
specified in Section 7.1 hereof, and (ii) such failure continues for 180 days
from the last date upon which the closing of the purchase of such Shares was to
occur but for this Section 6.3(c) and Section 7.1, the Company shall send a
notice to the Co-Managers (a "Failed Put Notice") informing them of their right
------ --- ------
to purchase any or all of the Shares for which the Company was not able to pay
the purchase price (the "Unpurchased Shares"), such notice to specify the number
----------- ------
of such Unpurchased Shares and the Fair Market Value of such Shares on the date
of the Failed Put Notice. The Co-Managers shall then have the right to purchase
any or all of the Unpurchased Shares for their Fair Market Value on the date of
the Failed Put Notice. Such purchase shall be made in accordance with the
procedure pursuant to Sections 6.3(a) and 6.3(c) applicable to purchases by Co-
Managers, with the Co-Manager Put Repurchase Participation Notice required to be
delivered not less than thirty (30) days after delivery of the Failed Put Notice
and any closing to occur not less than forty-five (45) nor more than sixty (60)
days after delivery of the Failed Put Notice.
6.4. ADDITIONAL PAYMENTS UPON DISPOSITION EVENT, ETC. If, at any time
within six (6) months after any closing of a repurchase either (a) pursuant to
Sections 6.1 or 6.2 above following a Termination of Employment pursuant to
Sections 4(a) (death or Disability), 4(c) (by the Company without Cause) or 4(d)
(by the Employee with Good Reason), or (b) pursuant to Section 6.3 above
following a Termination of Employment pursuant to Section 4(a) (death or
Disability), the Company shall become party to a Disposition Event or the
Company completes any Public Offering, or the Company or any of its stockholders
enter into any written agreement or written letter of intent contemplating any
of the foregoing which transaction is consummated within 180 days thereafter,
then each of the Company and any Co-Managers who have purchased Shares pursuant
to Sections 6.1, 6.2 or 6.3 shall, simultaneously with the consummation of any
such transaction or at such later time as any payment described below is
received by the Company or any of its stockholders, make an additional payment
to the Employee in an amount per Share repurchased from the Employee by him, her
or it pursuant to any of Sections 6.1, 6.2 or 6.3 above, as the case may be,
equal to the excess, if any, of (i) the value per share of the cash, securities
and other property that the Employee would have received (or that the Company
received in which the Employee would have had a beneficial interest as a
stockholder of the Company) had the Employee's Shares not been previously so
repurchased over (ii) the payment received by the Employee with respect to each
such Share pursuant to any of Sections 6.1, 6.2 or 6.3 above, as the case may
be. Each payment to the Employee
<PAGE>
-24-
pursuant to this Section 6.4 shall be made either in cash or in the form of the
securities and other property received by the Company or the holders of Common
Stock, as the case may be.
6.5. TRANSFEREES OF THE EMPLOYEE; LEGEND. Any permitted transferee of the
Shares under the Stockholder Agreement, including without limitation any
Personal Representative or Family Member (as such terms are defined in the
Stockholder Agreement) of the Employee, shall also be bound by, and have the
benefit of, the provisions of this Section 6. Except as otherwise permitted by
this Section 6.5, each certificate representing the Shares shall, in addition to
any legends required under the Stockholder Agreement, bear a legend in or
substantially in the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN REPURCHASE
RIGHTS IN FAVOR OF THE COMPANY CONTAINED IN AN EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT, DATED AS OF MARCH ___, 1998, A COPY OF
WHICH WILL BE FURNISHED BY THE COMPANY TO THE HOLDER OF THE SHARES
EVIDENCED BY THIS CERTIFICATE UPON WRITTEN REQUEST AND WITHOUT CHARGE."
Whenever the requirements of this Section 6.5 shall terminate as to any Shares
pursuant to Section 7.3 below, the holder thereof shall be entitled to receive
from the Company, at the Company's expense, new certificates representing the
Shares without such legend.
6.6. DELAY FOR VALUATION OR RECEIPT OF INSURANCE PROCEEDS. In the event
that, (a) as a result of any requirement to determine the Fair Market Value of
the Company by means of an appraisal pursuant to and in accordance with the
definition of "Market Value Per Share", the Market Value Per Share has not been
determined at the time that the closing of any purchase and sale of Shares
pursuant to this Section 6 is otherwise scheduled to occur, or (b) as a result
of a delay in the Company's receipt of the proceeds from the Insurance Policy,
the Company is not able to pay the repurchase price at the time that the closing
of any purchase and sale of Shares pursuant to this Section 6 is otherwise
scheduled to occur then, and notwithstanding anything to the contrary set forth
in this Section 6 or in Section 7 below, such closing shall be delayed until, in
the case of clause (a) above, the Market Value Per Share has been determined
pursuant to and in accordance with the definition thereof, and such closing
shall in any event occur within thirty (30) days after the date of such
determination, and, in the case of clause (b), such insurance proceeds have been
received, provided that such closing shall in
<PAGE>
-25-
any event occur within ninety (90) days after the date of the applicable
determination of Market Value Per Share.
7. OTHER REPURCHASE PROVISIONS.
7.1. REPURCHASE RESTRICTIONS.
(A) REPURCHASE TERMS. Notwithstanding any provision to the contrary in
Section 6 above:
(x) with respect to any repurchase of Shares by the Company following a
Termination of Employment of the Employee (i) pursuant to Section 4(c) (by
the Company for Cause), the Company (but not the Co-Managers) shall be
entitled to complete the repurchase of such Shares in seven (7) annual
installments, with one-seventh of such Shares being repurchased on the date
for repurchase of such Shares specified in Section 6 above, and one-seventh
on each anniversary of such date from the first anniversary of such date to
the sixth anniversary of such date, or (ii) pursuant to Section 4(e) (by
the Employee without Good Reason), the Company (but not the Co-Managers)
shall be entitled to complete the repurchase of such Shares in three (3)
annual installments, with one-third of such Shares being repurchased on the
date for repurchase of such Shares specified in Section 6 above, and one-
third on each of the first and second anniversaries of such date, and the
Employee hereby agrees to execute and deliver to the Company, at the time
of the first such repurchase installment pursuant to clauses (i) or (ii)
above, an irrevocable proxy in favor of the Company with respect to all of
the Employee's Shares to be repurchased by the Company, granting to the
Company an irrevocable power of attorney, coupled with an interest, to
exercise all of the Employee's rights including voting rights and retain
all of the Employee's benefits in connection with the ownership of the
Shares to be repurchased by the Company from and after the date of such
first installment; and
(y) if the Company is prohibited by the terms of any of the Company's or
any of its Subsidiaries' agreements with its or their lenders (including,
without limitation, the Company's senior credit agreement with Bank of
America, N.T. & S.A., and the Indenture with respect to the Company's
Senior Subordinated Notes) (any such agreement, a "Subordinating
-------------
Agreement") from making any payments of any portion of the repurchase price
---------
for any of the Shares in cash, the Company shall be entitled to complete
the repurchase of such Shares as to which payment of the repurchase price
in cash is not so
<PAGE>
-26-
prohibited by delivering to the Employee a check for the repurchase price
thereof. The Company further shall be entitled to complete the repurchase
of the other Shares to be repurchased by it, or any portion thereof, on the
first date on which such payment is not so prohibited by any applicable
Subordinating Agreement, provided that if the closing date of such
repurchase is more than six (6) months after the Employee's Termination of
Employment, then, if the repurchase price for the Shares is based on the
Market Value Per Share, the repurchase price shall be calculated based on
the Market Value Per Share as of the date of such closing instead of as of
the date of the Employee's Termination of Employment.
The Company agrees that in the event that it is permitted by the terms of any
Subordinating Agreement to repurchase shares of its Common Stock in cash, it
shall promptly exercise its rights to complete any such repurchase delayed
pursuant to Section 7.1(a)(y), provided that any such repurchase shall be
pro rata with all other such delayed repurchases and then-current repurchases,
- --- ----
whether hereunder or under any other employment or stock repurchase agreement of
the Company in force from time to time (but not including any such repurchases
required to be completed in seven annual installments pursuant to Section
7.1(a)(x)(i) above, which shall be paid only after all other repurchases to be
made on or prior to the date of any such repurchase have been made in full).
(B) IMPAIRMENT OF CAPITAL. If, even after giving effect to the provisions
of Section 7.1(a) hereof, the Company is prohibited by law from repurchasing any
Shares which it is entitled to repurchase hereunder due to any existing or
prospective impairment of its capital, the closing of such repurchase shall be
delayed until the first date on which the Company has sufficient capital to
lawfully repurchase such Shares (the "Delayed Closing Date"), and when
------- ------- ----
completed, any payments of the repurchase price shall be applied pro rata in
accordance with the proviso to Section 7.1(a) above. In the event of any such
delay of a closing (other than a closing described in Section 7.1(a)(x) above),
the Company will be obligated to pay, on the Delayed Closing Date, interest on
the repurchase price for such Shares, at the Prime Rate as published from time
to time in the "Wall Street Journal" from the date on which the closing of the
repurchase of such Shares was originally scheduled to occur to the Delayed
Closing Date.
7.2. PAYMENT FOR SHARES. Subject to the provisions of Section 7.1 above,
at any closing held to consummate any repurchase of Shares hereunder, the
Employee shall deliver to the Co-Managers or the Company, as the case may be,
the stock certificates representing such Shares, duly endorsed in blank or with
duly executed stock powers attached, and free and
<PAGE>
-27-
clear of all Liens, and the Co-Managers or the Company, as the case may be,
shall deliver to the Employee a check or checks in the amount of the repurchase
price for such Shares calculated in accordance with the terms and provisions
hereof.
7.3. TERMINATION OF REPURCHASE PROVISIONS. All of the repurchase rights
and obligations contained in this Agreement (excluding, for the avoidance of
doubt, any rights arising under Section 6.4 above) shall terminate immediately
after the completion of any Disposition Event or Qualified Public Offering;
provided, however. that no such termination shall relieve the Company from any
obligation or liability with respect to (i) any note issued in accordance with
Section 7.1 hereof, or (ii) any repurchase which was deferred pursuant to
Section 7.1 and not honored on or before such termination.
7.4 ADJUSTMENT OF REPURCHASE PRICE. Upon any stock split, reverse stock
split, recombination of shares or other similar reorganization of the capital
structure of the Company, the repurchase price otherwise payable to the Employee
upon the repurchase of any Shares pursuant to Section 6 hereof shall be
proportionally adjusted, as appropriate, to reflect such reorganization.
8. CERTAIN COVENANTS. The Employee hereby covenants as follows, which
covenants shall be in addition and without prejudice to any other
confidentiality, noncompetition, nonsolicitation, and/or similar covenants to
which the Employee may be subject from time to time, including without
limitation those set forth in the Merger Agreement.
(A) CONFIDENTIALITY. Both during and following the term of this Agreement
and the Employee's employment hereunder, the Employee shall maintain the
confidentiality of all confidential, sensitive, or proprietary information of
the Company and/or its Subsidiaries, including without limitation with respect
to their respective businesses, finances, affairs, and/or technology, which
shall be and remain the exclusive property of the Company and/or its respective
Subsidiaries, as the case may be, and except as previously authorized in writing
by the Company, and except with respect to information that has otherwise become
public through no action or omission on the part of the Employee, shall not
disclose any such information to any third party, or use it for any purpose
other than in the discharge of his employment duties and responsibilities in the
ordinary course of the Company's business. Upon the termination of the
Employee's employment with the Company, the Employee shall promptly return to
the Company all documents and other tangible media that contain or reflect any
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries
<PAGE>
-28-
(including all copies, reproductions, digests, abstracts, analyses, and notes)
in his possession or control, and will destroy any related computer files on any
equipment not owned by the Company or its Subsidiaries. Notwithstanding the
foregoing, if the Employee is required by law or regulation to disclose any
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries, the Employee will provide the Company with prompt notice of such
disclosure obligation so that the Company may seek a protective order or take
other appropriate action and/or waive compliance with this Section 8(a) to the
extent of such required disclosure. In the absence of such a waiver, if the
Employee is, in the opinion of his counsel, compelled to disclose any such
information upon pain of liability for contempt or other censure or penalty, the
Employee may disclose such information to the relevant court or other tribunal
or governmental authority without liability hereunder, but notwithstanding such
disclosure, such information shall remain confidential under this Section 8(a)
after such disclosure.
(B) NON-COMPETITION. In consideration for, among other things, the
Company's agreements herein and the Company's and its Subsidiaries' agreements
in the Merger Agreement, and recognizing the Employee's status as an Investor in
the Company pursuant to the Investment Agreement and as a stockholder of the
Company, the Employee hereby agrees that, during any period during which the
Employee is employed by the Company, the period of one year following the date
of the Employee's Termination upon Retirement, and/or any period during which
the Employee is receiving any compensation pursuant to this Agreement,
including, without limitation, compensation pursuant to Section 5(a) and 5(b)
hereof during the Initial Severance Period, the Additional Severance Period, if
any, and any other period during which payments are being made to the Employee
pursuant to and in accordance with such Sections 5(a) and 5(b), and, if the
Employee's employment with the Company terminates pursuant to Section 4(b) (by
the Company for Cause) or Section 4(e) (by the Employee without Good Reason)
hereof, then also during the longer of (i) the period of one year commencing on
the date of such Termination of Employment, and (ii) the period of two years
from the Closing Date, all of which applicable periods shall automatically be
extended by a period of time equal to any period in which the Employee is in
breach of any obligations under this Section 8 (all of which applicable periods,
including any such extension, the "Restricted Period"), the Employee shall not
---------- ------
engage, directly or indirectly (except as a stockholder, director, officer,
and/or employee of the Company and/or any of its Subsidiaries), as a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the outstanding capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative, or in any other
capacity: (A) in the manufacture of folding cartons or sleeves manufactured, at
least in part, of
<PAGE>
-29-
rigid plastic, (B) the manufacture, design, printing or production of specialty
packaging products for use in the cosmetics, entertainment (including recorded
music, video, software, multimedia and electronic gaming) or tobacco markets, in
each case anywhere in the world (the Employee hereby acknowledging that the
Company and its Subsidiaries do such business worldwide), or (C) in any other
business which the Company or any of its Subsidiaries may conduct at any time
during the period of the Employee's employment hereunder, anywhere that the
Company or any its Subsidiaries may conduct such business at any time during the
term of such non-competition obligations.
(C) NON-SOLICITATION OF EMPLOYEES, ETC. During the Restricted Period
(which, for the purposes of this Section 8(c) and Section 8(d) below, shall be
extended to include the maximum potential Additional Severance Period under
Section 5 above (regardless of whether or not compensation is paid to the
Employee with respect thereto), if prior to the commencement of such additional
period at least 50% of the Company Priority Shares shall have been repurchased
pursuant to Sections 6.1 - 6.3 above, the Company shall have become obligated
pursuant to Section 7.1 hereof to repurchase any of such Shares remaining
outstanding, and the Company shall not then be in breach of its obligations with
respect to such repurchase obligation under Section 7, the Employee shall not
directly or indirectly recruit, solicit, induce, or attempt to induce any of the
employees or independent contractors of the Company or any of its Subsidiaries
to terminate their employment or contractual relationship with the Company or
such Subsidiary; and shall not assist any other Person to do so, or be a
proprietor, equityholder, investor (except as a passive investor holding not
more than 3% of the capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative of any Person who
does or attempts to do so.
(D) NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. During the Restricted
Period (extended as described in Section 8(c) above), the Employee shall not
directly or indirectly solicit, divert, take away, or attempt to divert or take
away, from the Company or any of its Subsidiaries any of the business or
patronage of any of their respective customers, clients, accounts, vendors, or
suppliers, or induce or attempt to induce any such Person to reduce the amount
of business it does with the Company or any of its Subsidiaries, and the
Employee shall not assist any other Person to do so, or be a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the capital stock of a publicly held company), lender, partner, director,
officer, employee, consultant, or representative of any Person who does or
attempts to do so.
<PAGE>
-30-
(E) TERMINATION OF CERTAIN COVENANTS. The covenants of the Employee set
forth in Sections 8(b) - (d) hereof shall not apply at any time other than
during the Restricted Period (but the termination of such covenants shall be
without prejudice to any other confidentiality, noncompetition, nonsolicitation,
and/or similar covenants to which the Employee may be subject from time to time,
including without limitation those set forth in the Merger Agreement). For the
avoidance of doubt, in the event that the covenants set forth in Section 8(b)
are no longer binding upon the Employee, the fact of the Employee's engaging in
any activity which would have been prohibited to the Employee under Section 8(b)
shall not by itself constitute a violation of the Employee's covenants in any of
Sections 8(c), 8(d) and 8(f) hereof and it shall not be a violation of either
Section 8(c) or Section 8(d) for the Employee to provide services in any
capacity to another Person who may engage in conduct prohibited by either such
section, so long as Employee does not directly assist or participate in, or
provide consultation with respect to, such prohibited conduct.
(F) NON-DISPARAGEMENT. Both during and following the term of this
Agreement and the Employee's employment hereunder, the Employee shall not
disparage, deprecate, or make any negative comment with respect to the Company
or any of its Subsidiaries or their respective businesses, operations, or
properties.
(G) EQUITABLE REMEDIES. The Employee hereby acknowledges that any breach
by him of his obligations under this Section 8 would cause substantial and
irreparable damage to the Company, and that money damages would be an inadequate
remedy therefor, and accordingly, acknowledges and agrees that the Company shall
be entitled to an injunction, specific performance, and/or other equitable
relief to prevent the breach of such obligations (in addition to all other
rights and remedies to which the Company may be entitled in respect of any such
breach).
(H) MODIFICATION. In the event that a court of competent jurisdiction
determines that any of the provisions of this Section 8 would be unenforceable
as written because they cover too extensive a geographic area, too broad a range
of activities, or too long a period of time, or otherwise, then such provisions
shall automatically be modified to cover the maximum geographic area, range of
activities, and period of time as may be enforceable, and in addition, such
court is hereby expressly authorized so to modify this Agreement and to enforce
it as so modified. No invalidity or unenforceability of any section of this
Agreement or any portion thereof shall affect the validity or enforceability of
any other section or of the remainder of such section.
<PAGE>
-31-
9. MISCELLANEOUS.
(A) BENEFITS OF AGREEMENT; NO ASSIGNMENTS; THIRD-PARTY BENEFICIARIES.
(i) This Agreement shall bind and inure to the benefit of the
parties hereto, the Co-Managers, and the respective heirs, successors, and
permitted assigns of each of them.
(ii) Except to the extent expressly contemplated by Section 6.5
hereof and pursuant to the Stockholder Agreement, neither party hereto
shall assign any rights or delegate any obligations hereunder without the
consent of the other party (except that the Company may assign its rights
and delegate its obligations hereunder to any successor to its business,
whether by merger or consolidation, sale of stock or of all or
substantially all of assets, or otherwise), and any attempt to do so shall
be void.
(iii) Nothing in this Agreement is intended to or shall confer any
rights or remedies on any Person other than the parties hereto, the Co-
Managers, and their respective heirs, successors, and permitted assigns.
The parties hereto expressly agree that the Co-Managers shall be third-
party beneficiaries of the provisions of Sections 6 and 7 of this
Agreement.
(B) NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed to the recipient party at his or its address set forth in the
first paragraph hereof, to the attention of Richard Block and David Underwood,
if the Company is the intended recipient party, or to the Co-Managers in care of
the Company, if a Co-Manager is the intended recipient party (or to such other
address or other Person's attention as the recipient party may have furnished
to the sending party for the purpose pursuant to this section).
(C) COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall
<PAGE>
-32-
be an original, but all of which together shall constitute one and the same
agreement. In pleading or proving this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
(D) CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and shall not affect the interpretation or construction
of this Agreement.
(E) CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.
(F) WAIVERS; AMENDMENTS. No waiver of any breach or default hereunder
shall be valid unless in a writing signed by the waiving party. No failure or
other delay by any party exercising any right, power, or privilege hereunder
shall be or operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege. No amendment or modification of this
Agreement shall be valid or binding unless in a writing signed by both the
Employee and the Company.
(G) ENTIRE AGREEMENT. This Agreement and the Stockholder Agreement contain
the entire understanding and agreement between the parties, and supersede any
prior understandings or agreements between them, with respect to the subject
matter hereof.
(H) GOVERNING LAW. This Agreement shall to the maximum lawful extent be
governed by and interpreted and construed in accordance with the internal laws
of the State of Illinois, as applied to contracts under seal made, and entirely
to be performed, within Illinois, and without reference to principles of
conflicts or choice of law.
<PAGE>
-33-
IN WITNESS WHEREOF, each of the Company and the Employee has executed and
delivered this Employment, Non-Competition and Stock Repurchase Agreement as an
agreement under seal as of the date first above written.
COMPANY: IMPAC GROUP, INC.
By /s/ Richard Block
---------------------------
Name: Richard Block
Title: President
EMPLOYEE: /s/ Richard L. Oppenheimer
-----------------------------
Name: Richard L. Oppenheimer
<PAGE>
EXHIBIT 10.15
EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT
This Employment, Non-Competition and Stock Repurchase Agreement (this
"Agreement") dated as of March ___, 1998, is by and between IMPAC Group, Inc., a
- ----------
Delaware corporation formerly known as KFI Holding Corporation, with its
principal executive offices at 1950 North Ruby Street, Melrose Park, Illinois
60160-1178 (the "Company"), and Dean J. Henkel (the "Employee"), an individual
------- --------
residing at _____________________________________________________.
This Agreement is being entered into in connection with (a) the Investment
Agreement dated as of February 19, 1998 (the "Investment Agreement"), by and
--------------------
among the Company, Heritage Fund I Investment Corporation, the Employee and
certain other investors in the Company, (b) the Agreement and Plan of Merger
dated as of February 19, 1998 (the "Merger Agreement"), by and among the
------ ---------
Company, Klearfold, Inc., AGI Incorporated, and the Principal Stockholders
referred to therein, and (c) the Stockholder Agreement of even date herewith
(the "Stockholder Agreement") among the Company, the Employee and certain other
----------- ---------
stockholders of the Company. Capitalized terms used and not otherwise defined
herein have the respective meanings ascribed to them in the Stockholder
Agreement.
The Company and the Employee agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
meanings specified below:
"Act" means the Security Act of 1933, as amended.
---
"Additional Severance Period" has the meanings specified in Sections 5(a)
---------- --------- ------
and 5(b) hereof.
"AGI" means AGI Incorporated, an Illinois corporation.
---
"Base Severance Compensation" has the meaning specified in Section 5(a)
---------------------------
hereof.
"Board" means the Board of Directors of the Company.
-----
"Bonus Plan" has the meaning specified in Section 3(b) hereof.
----------
<PAGE>
-2-
"Cause" means the Employee's (i) commission of a breach of the provisions
-----
of Section 8 hereof, (ii) habitual and willful neglect of the performance of the
Employee's duties as set forth in Section 2(a) hereof, such neglect having
continued for a period of 30 days after written notice thereof is given by the
Board to the Employee, (iii) commission of an act of fraud, misappropriation, or
dishonesty in connection with his employment by the Company, or (iv) conviction
of or plea of nolo contendere to a felony. Notwithstanding any other provision
of this Agreement, the Employee shall not be terminated for Cause unless and
until there shall have been delivered to him a copy of a resolution duly adopted
by the Board by a vote of not less than 80% of the Directors (excluding the
Employee, if a member of the Board) at a meeting called and held for the purpose
(within twelve (12) months of the date of the Board's becoming aware of the
condition or conditions constituting Cause, as set forth in clauses (i) - (iv)
above, and after reasonable notice to the Employee and an opportunity for him,
together with his counsel, to be heard by the Board), finding that in the good
faith opinion of the Board, one of the conditions set forth above in this
definition of Cause had been fulfilled, and specifying the particulars thereof.
"Certificate of Value" has the meaning specified in the definition of "Fair
----------- -- -----
Market Value".
"Charter" means the Company's Amended and Restated Certificate of
-------
Incorporation and all amendments thereto.
"Closing Date" means the date of this Agreement.
------- ----
"Co-Manager Non-Repurchase Notice" has the meaning specified in Section
---------- -------------- ------
6.2(b) hereof.
"Co-Manager Put Repurchase Participation Notice" has the meaning specified
---------- --- ---------- ------------- ------
in Section 6.3(a) hereof.
"Co-Manager Remainder Repurchase Notice" has the meaning specified in
---------- --------- ---------- ------
Section 6.2(d) hereof.
"Co-Manager Repurchase Notice" has the meaning specified in Section 6.2(b)
---------- ---------- ------
hereof.
"Co-Managers" means each of Richard Block, James Oppenheimer, Richard
-----------
Oppenheimer, David Underwood, Jacqueline Barry, Dennis McGuin and Mary Frances
Griffin, so long as such individual remains employed by the Company or any of
its Subsidiaries.
<PAGE>
-3-
"Common Stock" means the Company's Series A Common Stock, $0.001 par value
------ -----
per share, and any capital stock of the Company which is (a) not subject to
redemption, or (b) issued to the holders of shares of Common Stock upon any
reclassification thereof.
"Company" has the meaning specified in the preamble hereto, and, unless the
-------
context otherwise requires, shall include all Subsidiaries of the Company.
"Company Non-Repurchase Notice" has the meaning specified in Section 6.1(b)
------- -------------- ------
hereof.
"Company Priority Shares" has the meaning specified in Section 6.1(b)
------- -------- ------
hereof.
"Company Repurchase Notice" has the meaning specified in Section 6.1(b)
------- ---------- ------
hereof.
"Company Repurchase Shares" has the meaning specified in Section 6.3(b)(i)
------- ---------- ------
hereof.
"Delayed Closing Date" has the meaning specified in Section 7.1(b) hereof.
------- ------- ----
"Designated Term" has the meaning specified in Section 2(b) hereof.
---------- ----
"Disability" shall mean that an independent medical doctor (selected by the
----------
Company's health or disability insurer) certifies that the Employee has for 180
consecutive days or 240 non-consecutive days in any twelve (12) month period
been disabled in a manner which seriously interferes with his ability to perform
his duties under this Agreement and which is reasonably expected to continue
indefinitely.
"Disposition Event" shall mean any merger, consolidation or sale of more
----------- -----
than 50% of the Company's assets or other similar corporate action (including,
without limitation, a recapitalization) pursuant to which the holders of Common
Stock receive cash, securities or other property, or any transaction as a result
of which the Company is acquired by the purchase of more than a majority of its
common equity.
"Failed Put Notice" has the meaning specified in Section 6.3(c) hereof.
------ --- ------
"Fair Market Value" means, unless otherwise specified in the definition of
---- ------ -----
"Market Value Per Share", the fair market value of the entire
<PAGE>
-4-
common stock equity of the Company (without premium for control or discounts for
minority interests, restrictions on transfer or lack of voting rights), as
determined in good faith by the Board at a meeting at which a quorum of the
Board is present in accordance wit the Stockholder Agreement, or by unanimous
written consent, calculated as of such date, provided that in making such
determination the Board may in its sole discretion rely upon an appraisal or
valuation of an Independent Appraiser selected in good faith by the Board and
conducted within the six (6) month period preceding the date of the Board's
determination, and as certified by a duly authorized officer of the Company in a
Certificate of Value (a "Certificate of Value") which shall be kept as part of
----------- -- -----
the minutes and other corporate records of the Company.
"Formula Value" means, with respect to any date, the amount which is equal
------- -----
to the aggregate of (a) the product obtained by multiplying EBITDA (as defined
below) during the 12 full calendar months immediately preceding such date by
--
five and seven-tenths (5.7), less (b) the sum of (i) the Company's consolidated
----
funded indebtedness outstanding on such date, including (without limitation)
obligations under capitalized leases, and (ii) the liquidation value of, and
accrued dividends on, any preferred stock of the Company outstanding on such
date, plus (c) the aggregate cash balances and cash equivalents of the Company
----
and its Subsidiaries on such date. As used in this definition, "EBITDA" for any
------
period, means the Consolidated Net Income (as defined below) of the Company and
its Subsidiaries for such period plus to the extent deducted in determining
Consolidated Net Income all (a) income taxes (including reserves for deferred
income taxes), (b) gross interest expense, (c) depreciation and (d)
amortization, all determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied for such period.
As used in this definition, "Consolidated Net Income" means, for any period, the
------------ --- ------
net income (or loss) of the Company and its Subsidiaries for such period on a
consolidated basis, after deducting all operating expenses, provisions for all
taxes and reserves (including reserves for deferred income taxes) and all other
proper deductions, all determined in accordance with generally accepted
accounting principles consistently applied, after eliminating all intercompany
items and after adjustment for any add-backs or other similar adjustments
properly made in connection with the transactions contemplated by the Merger
Agreement and the Investment Agreement, but excluding from the definition of
Consolidated Net Income any extraordinary gains and/or losses and any gains
and/or losses from the sale or other disposition of assets other than in the
ordinary course of business, all determined in accordance with generally
accepted accounting principles consistently applied.
<PAGE>
-5-
"Good Reason" means (i) diminution by the Board, or the President, or any
---- ------
other senior executive officer of the Company, of the Employee's
responsibilities, duties or authority as Executive Vice President - Operations
(or such other senior executive position as may be offered by the Company and
which the Employee in his sole discretion may accept), or interference by any
senior executive employee of the Company (other than the President and/or such
other executive officer to whom the Employee is required to report if reporting
to such Person does not constitute Good Reason pursuant to clause (iv) below)
with the Employee's responsibilities, duties or authority as Executive Vice
President - Operations (or such other senior executive position as may be
offered by the Company and which the Employee in his sole discretion may
accept), or assignment to the Employee of any duties inconsistent with the
Employee's position as Executive Vice President - Operations (or such other
senior executive position as may be offered by the Company and which the
Employee in his sole discretion may accept), in any such case other than in an
insignificant manner, and such diminution, interference or mis-assignment is not
remedied or corrected within 30 days after reasonably detailed written notice
thereof, setting forth sufficient information to permit the Company to take
action to remedy or correct such matter, is given by the Employee to the
Company, provided that upon the third occurrence of any complained-of matter,
the Employee shall be entitled to notify the Company thereof and thereupon to
terminate his employment with the Company for Good Reason, (ii) failure by the
Company to pay and provide to the Employee the compensation or benefits provided
for in Section 3 hereof, and, any time following the end of the Designated Term,
any decrease in the compensation or benefits provided for in Section 3 hereof
(including, without limitation, any failure to provide cost of living increases
even after the end of the Designated Term) which failure or decrease is not
cured or remedied within 30 days after written notice thereof is given by the
Employee to the Company, (iii) the Board requires the Employee to be permanently
based anywhere other than within 25 miles of the Employee's present office
location in Melrose Park, Illinois (excluding business-related travel), (iv) the
Employee becoming obligated to report to, or accept assignments from any Person
other than the President of the Company or a single Person who directly reports
to the President of the Company, or (v) at any time following the end of the
Designated Term, a Termination of Employment voluntarily by the Employee after
he has reached the age of sixty-two (62) (any Termination of Employment under
this clause (v) also being referred to as a "Termination upon Retirement").
----------- ---- ----------
"Independent Appraiser" means an investment banking or accounting firm or
----------- ---------
independent appraiser of nationally recognized standing and at least ten years
experience in evaluating businesses similar to the Company and its
<PAGE>
-6-
Subsidiaries, and not an Affiliate (as defined in the Stockholder Agreement) of
the Company or any of its Subsidiaries or any stockholder of the Company.
"Initial Post-Term Severance Period" has the meaning specified in Section
------- --------- --------- ------
5(b) hereof.
"Initial Severance Period" has the meaning specified in Section 5(a)
------- --------- ------
hereof.
"Insurance Policy" has the meaning specified in Section 6.3(b)(i) hereof.
--------- ------
"Investment Agreement" has the meaning specified in the preamble hereto.
--------------------
"Klearfold" means Klearfold, Inc., a Pennsylvania corporation.
---------
"Market Value Per Share" means, with respect to any date, the quotient
------ ----- --- -----
obtained by dividing (a) the sum of (i) the most recently determined Fair Market
Value of the Company plus (ii) an amount equal to the aggregate consideration
----
which would then be payable to the Company, assuming the exercise at such time
of all then outstanding and exercisable warrants, options, or convertible
securities pursuant to which the Company would, upon exercise, then be obligated
to issue Common Stock, other than warrants or options the strike or exercise
price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, by (b) the sum of (i) the number of shares of Common Stock then
--
outstanding, plus (ii) the number of shares of Common Stock then issuable upon
----
exercise of all then outstanding and exercisable warrants, options, or
convertible securities pursuant to which the Company would, upon exercise, then
be obligated to issue Common Stock, other than warrants or options the strike or
exercise price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, provided, however, that in the event that on the date with respect to
which Market Value Per Share is being determined, more than six (6) months shall
have elapsed since the date of execution of the most recent Certificate of
Value, then the Fair Market Value of the Company for purposes of clause (a)(i)
of this definition of Market Value Per Share shall be calculated as the Formula
Value of the Company as of the date with respect to which Market Value Per Share
is being determined. In the event that either (x) the Employee (for the
purposes of this definition, including any Personal Representative of the
Employee), or (y) if (and only if) the Fair Market Value of the Company would
otherwise be determined by reference to the Formula Value in accordance with the
foregoing proviso, the Company, so elects (the
<PAGE>
-7-
electing party being referred to as the "Requesting Party"), by written notice
---------- -----
to the Company (in the case of any election by the Employee) or to the Employee
(in the case of any election by the Company) (the party receiving such notice,
the "Non-Requesting Party") within five (5) days of any determination of Market
-------------- -----
Value Per Share in accordance with the preceding sentence, the Fair Market Value
of the Company shall be determined either by one Independent Appraiser selected
by the Requesting Party and acceptable to the Non-Requesting Party in its sole
discretion, or, if the Requesting Party and the Non-Requesting Party are unable
to agree upon the identity of such an Independent Appraiser within fifteen (15)
days after the date of the Requesting Party's notice to the Non-Requesting
Party, by two Independent Appraisers, selected one by the Requesting Party and
one by the Non-Requesting Party, who shall work together to determine in good
faith one Fair Market Value of the Company acceptable to both Independent
Appraisers. The appraisal of such Independent Appraiser(s) shall be delivered to
the Requesting Party and the Non-Requesting Party within 60 days after the date
of the Requesting Party's notice to the Non-Requesting Party requesting an
appraisal. In the event that two Independent Appraisers are appointed and they
are unable to reach an agreement as to the Fair Market Value of the Company
within such 60-day period, the Appraised Fair Market Value shall be calculated
by adding the two Fair Market Values of the Company, as determined in good faith
within such period by each of such Independent Appraisers, and dividing the sum
thereof by two. The Fair Market Value of the Company determined by such
Independent Appraiser(s) in accordance with this definition (the "Appraised Fair
--------- ----
Market Value") shall be conclusive and shall be used to determine the Market
- ------ ------
Value Per Share hereunder, and judgment thereon may be entered in any court of
competent jurisdiction. All expenses of the Independent Appraiser or Independent
Appraisers appointed pursuant to this definition shall be borne by the Company,
except that if the Appraised Fair Market Value is less than 115% of the Fair
Market Value of the Company determined pursuant to the first sentence of this
definition, all expenses of such Independent Appraiser(s) shall be borne by the
Requesting Party.
"Merger Agreement" has the meaning specified in the preamble hereto.
------ ---------
"Original Price Per Share" means, as to all Shares acquired pursuant to the
-------- ----- --- -----
Investment Agreement, $340.00 per Share, and as to all other Shares, the actual
price per Share paid by the Employee upon the acquisition of such Shares.
"Person" means an individual, partnership, corporation, limited liability
------
company, association, trust, joint venture, unincorporated
<PAGE>
-8-
organization, or any government, governmental department or agency or political
subdivision thereof.
"Personal Representative" means the successor or legal representative
-------- --------------
(including without limitation, a guardian, executor, administrator or
conservator) of the Employee following his death or legal incompetence.
"Public Offering" means any sale of Common Stock to the public pursuant to
------ --------
a public offering registered under the Act.
"Public Sale" means any Public Offering or any sale of Common Stock to the
------ ----
public through a broker or market-maker pursuant to the provisions of Rule 144
(or any successor rule) adopted under the Act.
"Put Closing" has the meaning specified in Section 6.3(a) hereof.
--- -------
"Put Notice" has the meaning specified in Section 6.3(a) hereof.
--- ------
"Put Period" has the meaning specified in Section 6.3(a) hereof.
--- ------
"Qualified Public Offering" means an underwritten Public Offering, pursuant
--------- ------ --------
to an effective registration statement under the Securities Act, covering the
offer and sale of shares of Common Stock in which an aggregate of not less than
$25,000,000 of gross proceeds from such public offering are received by the
Company and the selling stockholders.
"Related Persons" means the Employee's parents, spouse, children and
------- -------
grandchildren.
"Remainder Shares" has the meaning specified in Section 6.2(c) hereof.
--------- ------
"Restricted Period" has the meaning specified in Section 8(b) hereof.
---------- ------
"Second Co-Manager Put Participation Notice" has the meaning specified in
------------------------------------------
Section 6.3(d) hereof.
"Severance Extension Notice" has the meaning specified in Section 5(a)
--------- --------- ------
hereof.
"Severance Notice" has the meaning specified in Section 5(b) hereof.
--------- ------
"Severance Release" has the meaning specified in Section 5(a) hereof.
-----------------
<PAGE>
-9-
"Shares" means (a) all shares of Common Stock acquired by the Employee from
------
time to time, whether pursuant to the Investment Agreement, upon exercise of any
rights of first refusal or pre-emptive rights under the Stockholder Agreement,
any repurchase rights as a Co-Manager under any Employment, Non-Competition and
Stock Repurchase Agreement between the Company and any other employee of the
Company, upon exercise of any options, warrants, or other rights to purchase
shares of Common Stock, or otherwise, (b) any shares of Common Stock into which
such shares of Common Stock have been converted, (c) any capital stock or other
securities into which or for which such shares of Common Stock shall have been
converted or exchanged pursuant to any recapitalization, reorganization or
merger of the Company, and (d) any shares of capital stock issued with respect
to the foregoing pursuant to a stock split or stock dividend , which at the time
of the Employee's Termination of Employment are owned by the Employee or any
Person owning shares transferred to him pursuant to Section 1.1(b) of the
Stockholder Agreement by the Employee or any (direct or indirect) transferees of
the Employee pursuant to that provision.
"Stockholder Agreement" has the meaning specified in the preamble hereto.
----------- ---------
"Subsidiary" means, with respect to the Company, any corporation a majority
----------
(by number of votes) of the outstanding shares of any class or classes of which
shall at the time be owned by the Company or by a Subsidiary of the Company, if
the holders of the shares of such class or classes (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are at the time entitled, as such holders, to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to vote exists by
reason of the happening of a contingency and including without limitation AGI
and Klearfold.
"Termination for Under-Performance" means a Termination of Employment of
----------- --- -----------------
the Employee by the Company without Cause, where the Board shall have by
resolution duly adopted with the consent of the President of the Company,
identified such Termination of Employment as having occurred as a result of
under-performance by the Employee in his employment hereunder, provided however,
that except as expressly stated in Section 5 hereof, any such Termination of
Employment shall be treated as a Termination of Employment by the Company
without Cause for all purposes hereunder.
<PAGE>
-10-
"Termination of Employment" means the Employee's ceasing to be an employee
----------- -- ----------
of the Company or any of its Subsidiaries, whether voluntary or involuntary, for
any reason or for no reason, including without limitation, for resignation,
death or Disability of the Stockholder, and whether or not for Cause or for Good
Reason.
"Termination upon Retirement" has the meaning specified in the definition
----------- ---- ----------
of "Good Reason".
"Unpurchased Shares" has the meaning specified in Section 6.3(c) hereof.
----------- ------
"Variable Severance Compensation" has the meaning specified in Section 5(a)
-------- --------- ------------
hereof.
2. EMPLOYMENT.
(A) EMPLOYMENT. Subject to the terms and conditions of this Agreement, the
Company agrees to employ the Employee, and the Employee agrees to serve, as the
Executive Vice President - Operations of the Company with responsibility for
manufacturing operations at AGI initially, having such powers and duties as are
consistent with such position, subject to the directions of the President of the
Company and/or a single Person who directly reports to the President of the
Company.
(B) DESIGNATED TERM. The Employee's employment hereunder shall commence on
the date hereof, and shall continue until terminated in accordance with Section
4 hereof, provided that, subject to the other terms and conditions hereof, the
term of employment shall be at least until June 7, 2001 (such period being
referred to herein as the "Designated Term"), and provided, further that from
---------- ----
and after June 8, 2001, subject to the provisions of Section 5 hereof, the
Employee's employment hereunder shall be at will.
3. COMPENSATION. During the Designated Term, the Company shall pay and
provide to the Employee the compensation set forth below:
(A) BASE SALARY. The Company shall pay to the Employee a base salary,
prorated and payable in installments in accordance with AGI's usual payroll
practices. Such base salary shall be at the rate of $225,000 per annum for
1998, and thereafter such base salary shall be adjusted annually based upon the
percentage increase, if any, in the Consumer Price Index, All Items, Chicago, as
published by the Bureau of Labor Statistics (the "CPI"), as follows: The
---
Employee's base salary for each of the years 1999-2001 shall be
<PAGE>
-11-
calculated by multiplying the Employee's 1998 base salary by a fraction, the
numerator of which is the average CPI for the twelve months of the year
preceding the year for which such base salary is being calculated, and the
denominator of which is the CPI for December 1997. In no event will any such
adjustment reduce the Employee's base salary for any year below that in effect
for the preceding year. In addition, in the event that Scott Herrin terminates
his employment with the Company without Good Reason during the "Free Termination
Period" under his Employment, Non-Competition and Stock Repurchase Agreement
with the Company, the Employee's base salary under this Section 3(a) will be
increased by a portion, the amount of which shall be determined by the President
of the Company in his sole discretion and notified to the Employee in writing
within thirty (30) days after the date of Scott Herrin's Termination of
Employment, of the reduction in the Company's overall compensation expense
resulting from such Termination of Employment.
(B) BONUSES. The Employee shall be entitled to participate in the
Company's Executive Bonus Plan (the "Bonus Plan"), a copy of which is appended
----- ----
hereto and incorporated herein by this reference.
(C) FRINGE BENEFITS. In addition to the Employee's base salary and any
bonuses to which the Employee may become entitled under the Bonus Plan, the
Company shall provide to the Employee additional benefits as provided to other
employees of the Company and its Subsidiaries whose base salary and level of
responsibility are comparable to those of the Employee, including as described
in the attached Schedule of Benefits.
-------- -- --------
(D) VACATION. The Employee shall be entitled to four (4) weeks vacation
each calendar year. Any vacation shall be taken at the reasonable and mutual
convenience of the Company and the Employee. Accrued vacation not taken in any
calendar year will not be carried forward or used in any subsequent calendar
year, provided, however, if any accrued vacation is not taken by the Employee in
any calendar year at the request of the Employer, then the Employee shall be
entitled to carry forward and use such accrued vacation in the immediately
following calendar year but not in any subsequent calendar year.
4. TERMINATION. The Employee's employment hereunder shall terminate upon
the occurrence of any of the following events:
(A) the Employee's death or DISABILITY; OR
(B) the termination of the Employee's employment hereunder by the Company,
for Cause, by written notice to the Employee; or
<PAGE>
-12-
(C) the termination of the Employee's employment hereunder by the Company,
without Cause, by written notice to the Employee; or
(D) the termination of the Employee's employment hereunder by the Employee,
for Good Reason, by written notice to the Company; or
(E) the termination of the Employee's employment hereunder by the Employee,
without Good Reason, by 30 days' prior written notice to the Company.
5. SEVERANCE. Notwithstanding any other provision of this Agreement:
(A) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) during the
Designated Term, then the Company shall, upon delivery to the Company of a
release of any claims of the Employee against the Company and its stockholders,
directors, officers, employees, agents or other affiliates arising out of his
employment relationship (other than claims to any compensation or benefits
payable under or to be provided pursuant to this Section 5, or any rights of the
Employee under Sections 6 or 7 hereof) executed by the Employee and reasonably
satisfactory in form and substance to the Company (a "Severance Release"),
--------- -------
continue to pay and provide to the Employee (A) the compensation payable to him
pursuant to Section 3(a) hereof, and (B) the benefits provided to him pursuant
to Section 3(c) hereof (the compensation and benefits described in clauses (A)
and (B), together, such Employee's "Base Severance Compensation"), and, unless
---- --------- ------------
such Termination of Employment was a Termination for Under-Performance, (C) any
bonus accrued or earned by the Employee pursuant to the Bonus Plan and
attributable to the Employee's performance for the portion of the year prior to
his Termination of Employment, on a one-time only basis payable at the time of
payment of bonuses to other executive employees under the Bonus Plan, and (D)
for each year, 50% of an amount equal to the compensation payable to the
Employee pursuant to Section 3(a), multiplied by a fraction, the numerator of
which equals the aggregate bonus actually payable with respect to the preceding
year to the Company's other executive employees in the same bonus pay-out range
as the Employee was in prior to his Termination of Employment, and the
denominator of which equals the aggregate salary of such other executive
employees for such preceding year (the compensation described in clauses (C) and
(D) together, such Employee's "Variable Severance Compensation") for a period
-------- --------- ------------
(the "Initial Severance Period") equal to the longer of (i) the remainder of the
------- --------- ------
Designated Term, and
<PAGE>
-13-
(ii) the one-year period following the date of such Termination of Employment,
but this clause (ii) only being applicable if, prior to the earlier of (x) the
last day of the Designated Term and (y) the thirtieth (30th) day from the date
of such Termination of Employment, the Company shall have notified the Employee
in writing of the Company's intention, in the Company's sole discretion, so to
extend the Initial Severance Period (such notice, a "Severance Extension
--------- ---------
Notice"). In the Company's sole discretion, the Company may elect, either in the
- ------
Severance Extension Notice, or by written notice to the Employee given no later
than thirty (30) days prior to the end of the Initial Severance Period (as it
may have been extended pursuant to the Severance Extension Notice), to continue
to pay and provide to the Employee his Base Severance Compensation for an
additional period (the "Additional Severance Period") of up to one year
---------- --------- ------
following the end of the Initial Severance Period (as it may have been extended
pursuant to the Severance Extension Notice), provided that the Additional
Severance Period shall in no event extend beyond the second anniversary of the
Employee's Termination of Employment. Upon payment in full of the Employee's
Base Severance Compensation and, if and when applicable, his Variable Severance
Compensation, as described in this Section 5(a), the Company's obligations to
pay and provide the Employee with any other compensation otherwise payable to
him pursuant to Section 3 hereof, and all other rights of the Employee under
Sections 2, 3 and 5 hereof, shall cease as of the date of such payment in full.
(B) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) at any time
after the end of the Designated Term, then if at the time of such Termination of
Employment or within thirty (30) days thereafter, the Company shall, in its sole
discretion, so have notified the Employee in writing (such notice, a "Severance
---------
Notice") and the Employee shall have executed and delivered to the Company a
- ------
Severance Release, the Company shall continue to pay and provide to the Employee
his Base Severance Compensation and, unless such Termination of Employee was a
Termination for Under-Performance, his Variable Severance Compensation for a
period of one year following the date of such Termination of Employment (the
"Initial Post-Term Severance Period"), provided that, unless the Company shall
- -------- --------- --------- ------
have notified the Employee in writing at the time of his Termination of
Employment that it did not intend to deliver a Severance Notice, the Employee's
Base Severance Compensation shall be payable in any event for the portion of the
30-day period following the Termination of Employment prior to the Company's
delivery either of a Severance Notice or of notice that the Company did not
intend to deliver a Severance Notice. The Company may elect, in its sole
discretion, by written
<PAGE>
-14-
notice to the Employee given no later than ninety (90) days prior to the end of
the Initial Post-Term Severance Period to extend the period during which the
Employee's Base Severance Compensation shall be payable and provided to the
Employee for an additional period (also referred to herein as an "Additional
----------
Severance Period") of up to one year from the end of the Initial Post-Term
- --------- ------
Severance Period, provided that the total period during which his Base Severance
Compensation shall be payable and provided to the Employee under this Section
5(b) shall in no event extend beyond the second anniversary of the Employee's
Termination of Employment. In the event that no Severance Notice has been given
within thirty (30) days after the date of the Employee's Termination of
Employment pursuant to either Section 4(c) (by the Company without Cause) or
Section 4(d) (by the Employee for Good Reason) (other than a Termination upon
Retirement), then the Company's obligation to pay and provide the Employee with
any compensation shall cease in any event as of the thirtieth (30th) day
following the date of such Termination of Employment, and all other rights of
the Employee under Sections 2, 3 and 5 hereof, shall be deemed to have ceased as
of the date of such Termination of Employment. In the event that a Severance
Notice is given in accordance with this Section 5(b), then upon payment in full
of the Employee's Base Severance Compensation, and, if and when applicable, his
Variable Severance Compensation as described in this Section 5(b), the Company's
obligations to pay and provide the Employee with any of the compensation payable
to him pursuant to Section 3 hereof, and all other rights of the Employee under
Sections 2, 3 and 5 hereof, shall cease as of the date of such payment in full.
(C) If the Employee's employment with the Company terminates pursuant to
any of Sections 4(a) (death or Disability), 4(b) (by the Company for Cause), or
4(e) (by the Employee without Good Reason) hereof, or as a Termination upon
Retirement, then the Company's obligations to pay and provide the Employee with
any of the compensation payable to him pursuant to Section 3 hereof, and all
other rights of the Employee under Sections 2, 3 and 5 hereof, shall cease as of
the date of such Termination of Employment.
(D) The Employee shall not be required to mitigate the amount of any
compensation payable to him pursuant to Sections 5(a) or 5(b) hereof, by seeking
other employment or otherwise, provided, that in the event the Employee obtains
other employment during any period for which compensation is being paid pursuant
to Sections 5(a) or 5(b), the amount of compensation otherwise payable to the
Employee pursuant to either of such sections shall be reduced by 50% for the
period during which the Employee is so employed, provided, further, that in the
event that the Employee provides evidence reasonably satisfactory to the Company
that the amount of the resulting reduction in his compensation otherwise payable
pursuant to
<PAGE>
-15-
Sections 5(a) or 5(b) hereof, as the case may be, exceeds the level of his
compensation payable from such other employment, then his compensation pursuant
to Sections 5(a) or 5(b) hereof, as applicable, shall be reduced for the period
of such other employment by an amount equal to the aggregate amount of his
compensation from such other employment during such period. The Employee shall
promptly notify the Company if he obtains other employment during the applicable
period.
(E) Nothing in this Section 5 shall limit any other obligation which the
Company may owe the Employee under any insurance policy, employee benefit plan
or other retirement plan. Furthermore, upon any Termination of Employment of
any type, the Company shall remain obligated to the Employee for (i) any accrued
and unpaid base salary and vacation pay, (ii) reimbursement for reasonable out-
of-pocket expenses incurred by Employee by or on behalf of the Company or
otherwise in the performance of his duties and in accordance with applicable
Company policies then in effect, and (iii) unless otherwise specified in any
such plan, policy or program, payments or benefits explicitly provided under the
terms of any plan, policy or program of the Company in which the Employee was a
participant, or as otherwise required by applicable law.
6. REPURCHASE OF SHARES.
6.1. REPURCHASE RIGHTS OF THE COMPANY.
(A) Upon any Termination of Employment of the Employee at any time, the
Company may, at its option, repurchase from the holders thereof, and the
Employee will at the request of the Company sell to the Company, or procure the
sale to the Company of, all or any portion of the Shares specified in the
Company Repurchase Notice(s) (as defined below) at a purchase price per Share
determined pursuant to paragraphs (i) and (ii) below:
(i) in the event that such Termination of Employment is pursuant to
Section 4(b) (by the Company for Cause), at a purchase price per Share equal to
the lower of the Market Value Per Share, as of the date of such Termination of
Employment, and the Original Price Per Share; and
(ii) otherwise, at a purchase price per Share equal to the Market
Value Per Share, as of the date of such Termination of Employment.
(B) The Company's repurchase rights under Section 6.1(a) shall be
exercisable at any time and from time to time within the periods specified in
<PAGE>
-16-
clause (iii) below, by written notice from the Company to the Employee
specifying the number of Shares to be repurchased (each such notice, a "Company
-------
Repurchase Notice"), provided, however, that (i) if a Company Repurchase Notice
- ---------- ------
is delivered at any time within ninety (90) days following the Termination of
Employment of the Employee and prior to the delivery of a Co-Manager Repurchase
Notice or Co-Manager Non-Repurchase Notice pursuant to and in accordance with
Section 6.2 below, such Company Repurchase Notice shall not specify a number of
Shares in excess of 2,521, as such amount may be adjusted from time to time to
reflect stock splits, combinations or other similar recapitalizations affecting
the Common Stock (such amount of Shares, as so adjusted, being referred to
herein as the "Company Priority Shares"), (ii) if a Company Repurchase Notice is
------- -------- ------
delivered at any time after the delivery of a Co-Manager Repurchase Notice or a
Co-Manager Non-Repurchase Notice, or after ninety (90) days following the
Termination of Employment of the Employee, such Company Repurchase Notice shall
not specify a number of Shares in excess of the number of Shares then
outstanding, less the number of Shares referred to in the Co-Manager Repurchase
----
Notice, if any, previously delivered pursuant to and in accordance with Section
6.2(b) below, (iii) the Company's repurchase rights under Section 6.1(a) above
shall be exercisable with respect to the Company Priority Shares, only for a
period of ninety (90) days from the date of Termination of Employment of the
Employee, and with respect to all Shares other than the Company Priority Shares,
only for a period of sixty (60) days from the date upon which such rights first
become exercisable in accordance with the preceding clause (ii), and (iv) in the
event that the Company determines at any time prior to the expiration of the
period of ninety (90) days from the date of Termination of Employment of the
Employee that it does not intend to exercise its repurchase rights under Section
6.1(a) above with respect to all or any portion of the Company Priority Shares,
the Company shall promptly so notify the Co-Managers and the Employee in writing
(such notice, the "Company Non-Repurchase Notice"). The closing of the
------- -------------- ------
repurchase of Shares pursuant to each Company Repurchase Notice shall be held
not earlier than five (5) days nor later than thirty (30) days after delivery of
such Company Repurchase Notice. The Company's repurchase rights under Section
6.1(a) shall lapse if not exercised within the periods specified in clause (iii)
of this Section 6.1(b) in accordance with the provisions hereof, except as
otherwise provided in Section 7 hereof. Upon delivery by the Company of the
repurchase price for the Shares being repurchased under this Section 6.1(b) in
accordance with Section 7.2 hereof, all of the Shares being repurchased shall no
longer be deemed to be outstanding, all of the Employee's rights with respect to
such Shares will terminate, with the exception of the right of the Employee to
receive the repurchase price in exchange therefor pursuant to this Section
6.1(b), and payments pursuant to Section 6.4, if any, and the Employee (on his
own behalf and on behalf of any
<PAGE>
-17-
other holder of Shares) hereby irrevocably appoints the Company as his attorney-
in-fact to take all actions necessary and sign all documents required to cancel
such Shares on the Company's books and records.
6.2. REPURCHASE RIGHTS OF THE CO-MANAGERS.
(A) Upon any Termination of Employment of the Employee at any time, the
Co-Managers may, at their option, repurchase from the holders thereof, and the
Employee will at the request of the Co-Managers, or any of them, sell to such
Co-Managers, or procure the sale to such Co-Managers of, all or any portion of
the Shares, other than the Company Priority Shares, as specified in the Co-
Manager Repurchase Notice (as defined below), at a purchase price per Share
determined pursuant to paragraphs (i) and (ii) below:
(i) in the event that such Termination of Employment is pursuant to
Section 4(b) (by the Company for Cause), at a purchase price per Share equal to
the lower of the Market Value Per Share, as of the date of such Termination of
Employment, and the Original Price Per Share; and
(ii) otherwise, at a purchase price per Share equal to the Market
Value Per Share, as of the date of such Termination of Employment.
(B) The Co-Managers' repurchase rights under Section 6.2(a) above shall be
exercisable at any one time within ninety (90) days following the Termination of
Employment of the Employee, by written notice from the Co-Managers participating
in such repurchase to the Employee and the Company specifying the number of
Shares to be repurchased by each of such Co-Managers (the "Co-Manager Repurchase
---------- ----------
Notice"), provided, however, that in the event that the Co-Managers determine at
- ------
any time prior to the expiration of the period of ninety (90) days following the
Termination of Employment of the Employee that none of the Co-Managers intends
to exercise their respective repurchase rights under Section 6.2(a) above with
respect to all or any portion of the Shares available to be repurchased by the
Co-Managers, the Co-Managers shall promptly so notify the Company and the
Employee in writing (such notice, the "Co-Manager Non-Repurchase Notice"). The
---------- -------------- ------
closing of the repurchase of the Shares to be repurchased pursuant to the Co-
Manager Repurchase Notice shall be held not earlier than five (5) days nor later
than thirty (30) days after delivery to the Employee and the Company of the Co-
Manager Repurchase Notice. The Co-Managers' repurchase rights under Section
6.2(a) shall lapse if not exercised within the time period specified above in
accordance with the provisions hereof, except
<PAGE>
-18-
as otherwise provided in Sections 6.2(c) and 6.2(d) below. Each of the Co-
Managers participating in such repurchase shall purchase that number of the
Shares referred to in the relevant Co-Manager Repurchase Notice as to be
purchased by such Co-Manager, provided that, unless Co-Managers holding a
majority of the shares held by the participating Co-Managers otherwise agree, no
Co-Manager shall be entitled to purchase a number of Shares greater than such
Co-Manager's pro rata portion of the Shares available to be purchased by the Co-
--- ----
Managers, based on the total number of shares of Common Stock owned on the date
of the Co-Manager Repurchase Notice by the participating Co-Managers. Upon
delivery by the participating Co-Managers of the repurchase price, in cash, for
the Shares being repurchased under this Section 6.2(b) in accordance with
Section 7.2 hereof, all of the Employee's rights with respect to such Shares
will terminate, with the exception of the right of the Employee to receive the
repurchase price from the participating Co-Managers in exchange for such Shares
pursuant to this Section 6.2(b), and payments pursuant to Section 6.4, if any,
and the Employee (on his own behalf and on behalf of any other holder of Shares)
hereby irrevocably appoints the Company as his attorney-in-fact to take all
actions necessary and sign all documents required to transfer such Shares on the
Company's books and records into the name(s) of the respective participating Co-
Managers.
(C) In the event that either (i) the Company shall have failed to exercise
its repurchase rights under Section 6.1 above with respect to all or any portion
of the Company Priority Shares within the applicable period specified in Section
6.1(b)(iii) above (it being understood that a failure to complete such a
repurchase after a Company Repurchase Notice shall have been given shall not
constitute a failure to exercise the Company's repurchase rights for the
purposes of this Section 6.2(c)), unless such failure continues for 180 days
after the latest date upon which a closing of a purchase pursuant to Section 6.
1(b)(ii) could occur, without giving effect to Section 7.1, a failure which so
continues being referred to herein as a "180-Day Failure", or (ii) the Company
------- -------
shall have delivered a Company Non-Repurchase Notice indicating that the Company
does not intend to exercise its repurchase rights under Section 6.1 above with
respect to all or any portion of the Company Priority Shares, then the Co-
Managers, or any of them, may, at their option, repurchase from the holders
thereof, and the Employee will at the request of such Co-Managers sell to such
Co-Managers, or procure the sale to such Co-Managers of, those Company Priority
Shares (collectively the "Remainder Shares") as to which the Company shall have
--------- ------
failed to exercise its repurchase rights under Section 6.1 as described above,
or with respect to which the Company shall have delivered a Company Non-
Repurchase Notice indicating that it did not intend to exercise its repurchase
<PAGE>
-19-
rights under Section 6.1, at a purchase price per Remainder Share determined in
accordance with Section 6.1(a) above.
(D) The Co-Managers' repurchase rights under Section 6.2(c) above shall be
exercisable at any one time within the period of sixty (60) days following the
earlier of (i) the last day of the 90-day period applicable to the repurchase by
the Company of Company Priority Shares, as specified in Section 6.1(b)(iii)
above, (ii) the occurrence of a 180-Day Failure, and (iii) the date of receipt
of a Company Non-Repurchase Notice, by written notice from the Co-Managers
participating in such repurchase to the Employee and to the Company specifying
the number of Remainder Shares to be repurchased by each of such Co-Managers
(the "Co-Manager Remainder Repurchase Notice"). The closing of the repurchase
---------- --------- ---------- ------
of the Remainder Shares to be repurchased pursuant to the Co-Manager Remainder
Repurchase Notice shall be held not earlier than five (5) days nor later than
thirty (30) days after delivery to the Employee and the Company of the Co-
Manager Remainder Repurchase Notice. The Co-Managers' repurchase rights under
Section 6.2(c) above shall lapse if not exercised within the 30-day period
specified in this Section 6.2(d) in accordance with the provisions hereof. Each
of the Co-Managers participating in such repurchase shall purchase that number
of Remainder Shares referred to in the Co-Manager Remainder Repurchase Notice as
to be repurchased by such Co-Manager, provided that, unless Co-Managers holding
a majority of the Shares held by the participating Co-Managers otherwise agree,
no Co-Manager shall be entitled to purchase a number of Remainder Shares greater
than such Co-Manager's pro rata portion of the Remainder Shares available to be
--- ----
purchased by the Co-Managers, based on the total number of Shares of Common
Stock owned on the date of the Co-Manager Remainder Repurchase Notice by the
participating Co-Managers. Upon delivery by the participating Co-Managers of
the repurchase price, in cash, for the Remainder Shares being repurchased under
this Section 6.2(d) in accordance with Section 7.2 hereof, all of the Employee's
rights with respect to such Shares will terminate, with the exception of the
right of the Employee to receive the repurchase price from the participating Co-
Managers in exchange for such Shares pursuant to this Section 6.2(d), and
payments pursuant to Section 6.4, if any, and the Employee (on his own behalf
and on behalf of any other holder of Shares) hereby irrevocably appoints the
Company as his attorney-in-fact to take all actions necessary and sign all
documents required to transfer such Shares on the Company's books and records
into the name(s) of the respective participating Co-Managers.
6.3. REPURCHASE RIGHTS OF THE EMPLOYEE.
<PAGE>
-20-
(A) Upon any Termination of Employment pursuant to Sections 4(a) (death or
Disability), 4(c) (by the Company without Cause) or 4(d) (by the Employee with
Good Reason), the Employee will have the right, but not the obligation, to
request that the Company, together with, to the extent they so elect in
accordance with this Section 6.3, the Co-Managers, repurchase all (and not less
than all) of the Shares, for a purchase price per Share equal to the Market
Value Per Share as of the date of such Termination of Employment. The put
rights of the Employee under this Section 6.3 shall be exercisable at any time
within sixty (60) days after the date of such Termination of Employment or, if
such Termination of Employment is upon the death of such Employee, then sixty
(60) days after the appointment of a Personal Representative (or functional
equivalent) for such Employee (any such 60-day period being referred to as a
"Put Period") by notice to the Company and each of the Co-Managers (the "Put
--- ------ ---
Notice") specifying the date, time and place of the closing (the "Put Closing")
- ------ --- -------
for such repurchase. The put rights of the Employee under this Section 6.3 will
lapse if not exercised by delivery of a Put Notice to the Company and to the Co-
Managers in care of the Company within the applicable Put Period. In the event
that any of the Co-Managers wish to participate in the proposed repurchase, such
Co-Managers shall notify the Employee and the Company within thirty (30) days
after delivery of the Put Notice of their intention (if any) to participate in
such repurchase, by written notice (the "Co-Manager Put Repurchase Participation
---------- -------------- -------------
Notice") specifying the number of Shares to be repurchased by each of the Co-
- ------
Managers participating in such repurchase, provided however that the Co-Manager
Put Repurchase Participation Notice shall in no event specify any of the Company
Priority Shares as to be repurchased by the Co-Managers.. Each of the Co-
Managers participating in such repurchase shall purchase that number of the
Shares referred to in the Co-Manager Put Repurchase Participation Notice as to
be repurchased by such Co-Manager, provided that unless Co-Managers holding a
majority of the shares held by the participating Co-Manager otherwise agree, no
Co-Manager shall be entitled to purchase a number of Shares greater than such
Co-Manager's pro rata portion of the Shares available to be purchased by the Co-
--- ----
Manager pursuant to this Section 6.3, based on the total number of shares of
Common Stock owned on the date of the Co-Manager Put Repurchase Participation
Notice by all of the participating Co-Managers.
(B) (i) If the Employee's Termination of Employment was pursuant to
Section 4(a) (death or Disability), or a Termination upon Retirement, then, in
the event that the number of Shares to be repurchased by the participating Co-
Managers pursuant to the Co-Manager Put Repurchase Participation Notice, if any,
is less than the number of Shares then outstanding, then the Company may, by
written notice to the Employee or his Personal Representative, given within
thirty (30) days after the
<PAGE>
-21-
delivery of the Put Notice or, if later, within fifteen (15) days after the
Company's receipt of the Co-Manager Put Repurchase Participation Notice, either
accept or reject the Employee's Put Notice with respect to those Shares (the
"Company Repurchase Shares") which the Co-Managers shall not have elected to
------- ---------- ------
repurchase, provided that in the event of the Employee's death or Disability,
-------- ----
the Company shall be required to honor the put of such amount of the Company
Repurchase Shares as may be repurchased with the proceeds of the life or
disability insurance policy held by the Company on the Employee pursuant to and
in accordance with Section 7 of the Stockholder Agreement (the "Insurance
---------
Policy"), less the cash surrender value thereof at such time.
- ------ ----
(ii) If the Employee's Termination of Employment was pursuant to
Section 4(e) (by the Company without Cause) or 4(d) (by the Employee with Good
Reason) (other than a Termination upon Retirement), then, subject to the
provisions of Sections 6.3(f) and 7 below, the Company shall be required to
honor the put of all of the Company Repurchase Shares.
(C) In the event that, pursuant to Section 6.3(b) above, the Company
either elects to or is required to honor the put of all of the Company
Repurchase Shares, or fails to deliver any notice pursuant to Section 6.3(b)(i)
rejecting all or any portion of such put within the fifteen-day period specified
in such section, then the Put Closing will be held no earlier than forty-five
(45) days nor later than sixty (60) days after delivery of the Put Notice. At
the Put Closing, subject to the provisions of Section 7 hereof, each of the Co-
Managers participating in the repurchase under this Section 6.3 (if any) shall
purchase, and the Employee shall sell, or procure the sale to each such Co-
Manager of, those shares referred to in the Co-Manager Put Repurchase
Participation Notice as to be repurchased by such Co-Manager, and the Company
shall purchase, and the Employee shall sell, or procure the sale to the Company
of, all of the Company Repurchase Shares other than those referred to in the Co-
Manager Put Repurchase Participation Notice, if any. Upon tender by the Company
and the Co-Managers of the purchase price for the Shares being repurchased
hereunder in accordance with Section 7 below, the Shares being repurchased by
the Company shall no longer be deemed to be outstanding, all of the Employee's
rights with respect to the Shares being repurchased shall terminate with the
exception of the right of the Employee to receive the repurchase price from the
Company or the Co-Managers, as the case may be, in exchange for such Shares
pursuant to this Section 6.3, and payments pursuant to Section 6.4, if any, and
the Employee (on his own behalf and on behalf of any other holder of Shares)
hereby irrevocably appoints the Company as his attorney-in-fact to take all
actions necessary and sign all documents required to cancel the Shares being
transferred to the Company, and to transfer the Shares being repurchased by the
Co-Managers
<PAGE>
-22-
into the name(s) of the respective Co-Managers participating in such repurchase,
on the Company's books and records.
(D) In the event that, pursuant to Section 6.3(b)(i) above, the Company
notifies the Employee or his Personal Representative that the Company rejects
the Employee's Put Notice with respect to any of the Company Repurchase Shares,
then the Company shall promptly so notify the Co-Managers and, within thirty
(30) days of delivery of the Company's notice to the Co-Managers, the Co-
Managers may notify the Employee and the Company in writing (such notice, a
"Second Co-Manager Put Participation Notice") of their intention (if any) to
------ ---------- --- ------------- ------
purchase all of the Company Repurchase Shares, specifying the number of Company
Repurchase Shares to be repurchased by each of the Co-Managers participating in
such repurchase, and in such event (whether or not the Co-Managers deliver a Co-
Manager Put Participation Notice in accordance with this Section 6.3(d)) the Put
Closing will be held no earlier than seventy-five (75) days nor later than
ninety (90) days after delivery of the Put Notice. At such Put Closing, subject
to the provisions of Section 7 hereof, each of the Co-Managers participating in
the repurchase shall purchase, and the Employee shall sell, or procure the sale
to each such Co-Manager of, those shares referred to in the Co-Manager Put
Repurchase Participation Notice and/or the Second Co-Manager Put Participation
Notice, if any, as to be repurchased by such Co-Manager, in accordance with the
procedures specified in Sections 6.3(a) and 6.3(c) applicable to purchases by
Co-Managers.
(E) In the event that the Co-Managers do not elect, within the 30-day
period specified in Section 6.3(d) above, to acquire all of the Company
Repurchase Shares as to which the Company shall have rejected the Employee's Put
Notice, then the transfer restrictions on any such Company Repurchase Shares
pursuant to Section 1 of the Stockholder Agreement will thereupon automatically
and without further notice be terminated, with effect from the end of such 30-
day period.
(F) Notwithstanding the foregoing, in the event that any payment by the
Company of any portion of the purchase price for any Shares that the Employee
has requested be repurchased pursuant to Section 6.3(a), and that the Company,
pursuant to Section 6.3(b), has either agreed to or is required to purchase, is,
at the time such payment would otherwise be due hereunder, limited or prohibited
by law or by the terms of any of the Company's or any of its Subsidiaries'
agreements with its or their lenders or any other contracts by which the Company
or any of its Subsidiaries is bound, the Company may complete the repurchase of
such Shares in accordance with Section 7 hereof, but in any event shall only be
required at such time to repurchase that portion of the Shares, if any, for
which payment of the purchase price
<PAGE>
-23-
therefor is not so prohibited. Notwithstanding the foregoing, in the event that
(i) the Company is unable to make payment of any portion of the purchase price
for Shares to be repurchased by it pursuant to this Section 6.3 for the reasons
specified in Section 7.1 hereof, and (ii) such failure continues for 180 days
from the last date upon which the closing of the purchase of such Shares was to
occur but for this Section 6.3(c) and Section 7.1, the Company shall send a
notice to the Co-Managers (a "Failed Put Notice") informing them of their right
------ --- ------
to purchase any or all of the Shares for which the Company was not able to pay
the purchase price (the "Unpurchased Shares"), such notice to specify the
----------- ------
number of such Unpurchased Shares and the Fair Market Value of such Shares on
the date of the Failed Put Notice. The Co-Managers shall then have the right to
purchase any or all of the Unpurchased Shares for their Fair Market Value on the
date of the Failed Put Notice. Such purchase shall be made in accordance with
the procedure pursuant to Sections 6.3(a) and 6.3(c) applicable to purchases by
Co-Managers, with the Co-Manager Put Repurchase Participation Notice required to
be delivered not less than thirty (30) days after delivery of the Failed Put
Notice and any closing to occur not less than forty-five (45) nor more than
sixty (60) days after delivery of the Failed Put Notice.
6.4. ADDITIONAL PAYMENTS UPON DISPOSITION EVENT, ETC. If, at any time
within six (6) months after any closing of a repurchase either (a) pursuant to
Sections 6.1 or 6.2 above following a Termination of Employment pursuant to
Sections 4(a) (death or Disability), 4(c) (by the Company without Cause) or 4(d)
(by the Employee with Good Reason), or (b) pursuant to Section 6.3 above
following a Termination of Employment pursuant to Section 4(a) (death or
Disability), the Company shall become party to a Disposition Event or the
Company completes any Public Offering, or the Company or any of its stockholders
enter into any written agreement or written letter of intent contemplating any
of the foregoing which transaction is consummated within 180 days thereafter,
then each of the Company and any Co-Managers who have purchased Shares pursuant
to Sections 6.1, 6.2 or 6.3 shall, simultaneously with the consummation of any
such transaction or at such later time as any payment described below is
received by the Company or any of its stockholders, make an additional payment
to the Employee in an amount per Share repurchased from the Employee by him, her
or it pursuant to any of Sections 6.1, 6.2 or 6.3 above, as the case may be,
equal to the excess, if any, of (i) the value per share of the cash, securities
and other property that the Employee would have received (or that the Company
received in which the Employee would have had a beneficial interest as a
stockholder of the Company) had the Employee's Shares not been previously so
repurchased over (ii) the payment received by the Employee with respect to each
such Share pursuant to any of Sections 6.1, 6.2 or 6.3 above, as the case may
be. Each payment to the Employee
<PAGE>
-24-
pursuant to this Section 6.4 shall be made either in cash or in the form of the
securities and other property received by the Company or the holders of Common
Stock, as the case may be.
6.5. TRANSFEREES OF THE EMPLOYEE; LEGEND. Any permitted transferee of the
Shares under the Stockholder Agreement, including without limitation any
Personal Representative or Family Member (as such terms are defined in the
Stockholder Agreement) of the Employee, shall also be bound by, and have the
benefit of, the provisions of this Section 6. Except as otherwise permitted by
this Section 6.5, each certificate representing the Shares shall, in addition to
any legends required under the Stockholder Agreement, bear a legend in or
substantially in the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN REPURCHASE
RIGHTS IN FAVOR OF THE COMPANY CONTAINED IN AN EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT, DATED AS OF MARCH ___, 1998, A COPY OF
WHICH WILL BE FURNISHED BY THE COMPANY TO THE HOLDER OF THE SHARES
EVIDENCED BY THIS CERTIFICATE UPON WRITTEN REQUEST AND WITHOUT CHARGE."
Whenever the requirements of this Section 6.5 shall terminate as to any Shares
pursuant to Section 7.3 below, the holder thereof shall be entitled to receive
from the Company, at the Company's expense, new certificates representing the
Shares without such legend.
6.6. DELAY FOR VALUATION OR RECEIPT OF INSURANCE PROCEEDS. In the event
that, (a) as a result of any requirement to determine the Fair Market Value of
the Company by means of an appraisal pursuant to and in accordance with the
definition of "Market Value Per Share", the Market Value Per Share has not been
determined at the time that the closing of any purchase and sale of Shares
pursuant to this Section 6 is otherwise scheduled to occur, or (b) as a result
of a delay in the Company's receipt of the proceeds from the Insurance Policy,
the Company is not able to pay the repurchase price at the time that the closing
of any purchase and sale of Shares pursuant to this Section 6 is otherwise
scheduled to occur then, and notwithstanding anything to the contrary set forth
in this Section 6 or in Section 7 below, such closing shall be delayed until, in
the case of clause (a) above, the Market Value Per Share has been determined
pursuant to and in accordance with the definition thereof, and such closing
shall in any event occur within thirty (30) days after the date of such
determination, and, in the case of clause (b), such insurance proceeds have been
received, provided that such closing shall in
<PAGE>
-25-
any event occur within ninety (90) days after the date of the applicable
determination of Market Value Per Share.
7. OTHER REPURCHASE PROVISIONS.
7.1. REPURCHASE RESTRICTIONS.
(A) REPURCHASE TERMS. Notwithstanding any provision to the contrary in
Section 6 above:
(x) with respect to any repurchase of Shares by the Company following a
Termination of Employment of the Employee (i) pursuant to Section 4(c) (by
the Company for Cause), the Company (but not the Co-Managers) shall be
entitled to complete the repurchase of such Shares in seven (7) annual
installments, with one-seventh of such Shares being repurchased on the date
for repurchase of such Shares specified in Section 6 above, and one-seventh
on each anniversary of such date from the first anniversary of such date to
the sixth anniversary of such date, or (ii) pursuant to Section 4(e) (by
the Employee without Good Reason), the Company (but not the Co-Managers)
shall be entitled to complete the repurchase of such Shares in three (3)
annual installments, with one-third of such Shares being repurchased on the
date for repurchase of such Shares specified in Section 6 above, and one-
third on each of the first and second anniversaries of such date, and the
Employee hereby agrees to execute and deliver to the Company, at the time
of the first such repurchase installment pursuant to clauses (i) or (ii)
above, an irrevocable proxy in favor of the Company with respect to all of
the Employee's Shares to be repurchased by the Company, granting to the
Company an irrevocable power of attorney, coupled with an interest, to
exercise all of the Employee's rights including voting rights and retain
all of the Employee's benefits in connection with the ownership of the
Shares to be repurchased by the Company from and after the date of such
first installment; and
(y) if the Company is prohibited by the terms of any of the Company's or
any of its Subsidiaries' agreements with its or their lenders (including,
without limitation, the Company's senior credit agreement with Bank of
America, N.T. & S.A., and the Indenture with respect to the Company's
Senior Subordinated Notes) (any such agreement, a "Subordinating
-------------
Agreement") from making any payments of any portion of the repurchase price
---------
for any of the Shares in cash, the Company shall be entitled to complete
the repurchase of such Shares as to which payment of the repurchase price
in cash is not so
<PAGE>
-26-
prohibited by delivering to the Employee a check for the repurchase price
thereof. The Company further shall be entitled to complete the repurchase
of the other Shares to be repurchased by it, or any portion thereof, on the
first date on which such payment is not so prohibited by any applicable
Subordinating Agreement, provided that if the closing date of such
repurchase is more than six (6) months after the Employee's Termination of
Employment, then, if the repurchase price for the Shares is based on the
Market Value Per Share, the repurchase price shall be calculated based on
the Market Value Per Share as of the date of such closing instead of as of
the date of the Employee's Termination of Employment.
The Company agrees that in the event that it is permitted by the terms of any
Subordinating Agreement to repurchase shares of its Common Stock in cash, it
shall promptly exercise its rights to complete any such repurchase delayed
pursuant to Section 7.1(a)(y), provided that any such repurchase shall be
pro rata with all other such delayed repurchases and then-current repurchases,
whether hereunder or under any other employment or stock repurchase agreement of
the Company in force from time to time (but not including any such repurchases
required to be completed in seven annual installments pursuant to Section
7.1(a)(x)(i) above, which shall be paid only after all other repurchases to be
made on or prior to the date of any such repurchase have been made in full).
(B) IMPAIRMENT OF CAPITAL. If, even after giving effect to the provisions
of Section 7.1(a) hereof, the Company is prohibited by law from repurchasing any
Shares which it is entitled to repurchase hereunder due to any existing or
prospective impairment of its capital, the closing of such repurchase shall be
delayed until the first date on which the Company has sufficient capital to
lawfully repurchase such Shares (the "Delayed Closing Date"), and when
------- ------- ----
completed, any payments of the repurchase price shall be applied pro rata in
accordance with the proviso to Section 7.1(a) above. In the event of any such
delay of a closing (other than a closing described in Section 7.1(a)(x) above),
the Company will be obligated to pay, on the Delayed Closing Date, interest on
the repurchase price for such Shares, at the Prime Rate as published from time
to time in the "Wall Street Journal" from the date on which the closing of the
repurchase of such Shares was originally scheduled to occur to the Delayed
Closing Date.
7.2. PAYMENT FOR SHARES. Subject to the provisions of Section 7.1 above,
at any closing held to consummate any repurchase of Shares hereunder, the
Employee shall deliver to the Co-Managers or the Company, as the case may be,
the stock certificates representing such Shares, duly endorsed in blank or with
duly executed stock powers attached, and free and
<PAGE>
-27-
clear of all Liens, and the Co-Managers or the Company, as the case may be,
shall deliver to the Employee a check or checks in the amount of the repurchase
price for such Shares calculated in accordance with the terms and provisions
hereof.
7.3. TERMINATION OF REPURCHASE PROVISIONS. All of the repurchase rights
and obligations contained in this Agreement (excluding, for the avoidance of
doubt, any rights arising under Section 6.4 above) shall terminate immediately
after the completion of any Disposition Event or Qualified Public Offering;
provided, however. that no such termination shall relieve the Company from any
obligation or liability with respect to (i) any note issued in accordance with
Section 7.1 hereof, or (ii) any repurchase which was deferred pursuant to
Section 7.1 and not honored on or before such termination.
7.4 ADJUSTMENT OF REPURCHASE PRICE. Upon any stock split, reverse stock
split, recombination of shares or other similar reorganization of the capital
structure of the Company, the repurchase price otherwise payable to the Employee
upon the repurchase of any Shares pursuant to Section 6 hereof shall be
proportionally adjusted, as appropriate, to reflect such reorganization.
8. CERTAIN COVENANTS. The Employee hereby covenants as follows, which
covenants shall be in addition and without prejudice to any other
confidentiality, noncompetition, nonsolicitation, and/or similar covenants to
which the Employee may be subject from time to time, including without
limitation those set forth in the Merger Agreement.
(A) CONFIDENTIALITY. Both during and following the term of this Agreement
and the Employee's employment hereunder, the Employee shall maintain the
confidentiality of all confidential, sensitive, or proprietary information of
the Company and/or its Subsidiaries, including without limitation with respect
to their respective businesses, finances, affairs, and/or technology, which
shall be and remain the exclusive property of the Company and/or its respective
Subsidiaries, as the case may be, and except as previously authorized in writing
by the Company, and except with respect to information that has otherwise become
public through no action or omission on the part of the Employee, shall not
disclose any such information to any third party, or use it for any purpose
other than in the discharge of his employment duties and responsibilities in the
ordinary course of the Company's business. Upon the termination of the
Employee's employment with the Company, the Employee shall promptly return to
the Company all documents and other tangible media that contain or reflect any
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries
<PAGE>
-28-
(including all copies, reproductions, digests, abstracts, analyses, and notes)
in his possession or control, and will destroy any related computer files on any
equipment not owned by the Company or its Subsidiaries. Notwithstanding the
foregoing, if the Employee is required by law or regulation to disclose any
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries, the Employee will provide the Company with prompt notice of such
disclosure obligation so that the Company may seek a protective order or take
other appropriate action and/or waive compliance with this Section 8(a) to the
extent of such required disclosure. In the absence of such a waiver, if the
Employee is, in the opinion of his counsel, compelled to disclose any such
information upon pain of liability for contempt or other censure or penalty, the
Employee may disclose such information to the relevant court or other tribunal
or governmental authority without liability hereunder, but notwithstanding such
disclosure, such information shall remain confidential under this Section 8(a)
after such disclosure.
(B) NON-COMPETITION. In consideration for, among other things, the
Company's agreements herein and the Company's and its Subsidiaries' agreements
in the Merger Agreement, and recognizing the Employee's status as an Investor in
the Company pursuant to the Investment Agreement and as a stockholder of the
Company, the Employee hereby agrees that, during any period during which the
Employee is employed by the Company, the period of one year following the date
of the Employee's Termination upon Retirement, and/or any period during which
the Employee is receiving any compensation pursuant to this Agreement,
including, without limitation, compensation pursuant to Section 5(a) and 5(b)
hereof during the Initial Severance Period, the Additional Severance Period, if
any, and any other period during which payments are being made to the Employee
pursuant to and in accordance with such Sections 5(a) and 5(b), and, if the
Employee's employment with the Company terminates pursuant to Section 4(b) (by
the Company for Cause) or Section 4(e) (by the Employee without Good Reason)
hereof, then also during the longer of (i) the period of one year commencing on
the date of such Termination of Employment, and (ii) the period of two years
from the Closing Date, all of which applicable periods shall automatically be
extended by a period of time equal to any period in which the Employee is in
breach of any obligations under this Section 8 (all of which applicable periods,
including any such extension, the "Restricted Period"), the Employee shall not
---------- ------
engage, directly or indirectly (except as a stockholder, director, officer,
and/or employee of the Company and/or any of its Subsidiaries), as a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the outstanding capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative, or in any other
capacity: (A) in the manufacture of folding cartons or sleeves manufactured, at
least in part, of
<PAGE>
-29-
rigid plastic, (B) the manufacture, design, printing or production of specialty
packaging products for use in the cosmetics, entertainment (including recorded
music, video, software, multimedia and electronic gaming) or tobacco markets, in
each case anywhere in the world (the Employee hereby acknowledging that the
Company and its Subsidiaries do such business worldwide), or (C) in any other
business which the Company or any of its Subsidiaries may conduct at any time
during the period of the Employee's employment hereunder, anywhere that the
Company or any its Subsidiaries may conduct such business at any time during the
term of such non-competition obligations.
(C) NON-SOLICITATION OF EMPLOYEES, ETC. During the Restricted Period
(which, for the purposes of this Section 8(c) and Section 8(d) below, shall be
extended to include the maximum potential Additional Severance Period under
Section 5 above (regardless of whether or not compensation is paid to the
Employee with respect thereto), if prior to the commencement of such additional
period at least 50% of the Company Priority Shares shall have been repurchased
pursuant to Sections 6.1 - 6.3 above, the Company shall have become obligated
pursuant to Section 7.1 hereof to repurchase any of such Shares remaining
outstanding, and the Company shall not then be in breach of its obligations with
respect to such repurchase obligation under Section 7, the Employee shall not
directly or indirectly recruit, solicit, induce, or attempt to induce any of the
employees or independent contractors of the Company or any of its Subsidiaries
to terminate their employment or contractual relationship with the Company or
such Subsidiary; and shall not assist any other Person to do so, or be a
proprietor, equityholder, investor (except as a passive investor holding not
more than 3% of the capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative of any Person who
does or attempts to do so.
(D) NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. During the Restricted
Period (extended as described in Section 8(c) above), the Employee shall not
directly or indirectly solicit, divert, take away, or attempt to divert or take
away, from the Company or any of its Subsidiaries any of the business or
patronage of any of their respective customers, clients, accounts, vendors, or
suppliers, or induce or attempt to induce any such Person to reduce the amount
of business it does with the Company or any of its Subsidiaries, and the
Employee shall not assist any other Person to do so, or be a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the capital stock of a publicly held company), lender, partner, director,
officer, employee, consultant, or representative of any Person who does or
attempts to do so.
<PAGE>
-30-
(E) TERMINATION OF CERTAIN COVENANTS. The covenants of the Employee set
forth in Sections 8(b) - (d) hereof shall not apply at any time other than
during the Restricted Period (but the termination of such covenants shall be
without prejudice to any other confidentiality, noncompetition, nonsolicitation,
and/or similar covenants to which the Employee may be subject from time to time,
including without limitation those set forth in the Merger Agreement). For the
avoidance of doubt, in the event that the covenants set forth in Section 8(b)
are no longer binding upon the Employee, the fact of the Employee's engaging in
any activity which would have been prohibited to the Employee under Section 8(b)
shall not by itself constitute a violation of the Employee's covenants in any of
Sections 8(c), 8(d) and 8(f) hereof and it shall not be a violation of either
Section 8(c) or Section 8(d) for the Employee to provide services in any
capacity to another Person who may engage in conduct prohibited by either such
section, so long as Employee does not directly assist or participate in, or
provide consultation with respect to, such prohibited conduct.
(F) NON-DISPARAGEMENT. Both during and following the term of this
Agreement and the Employee's employment hereunder, the Employee shall not
disparage, deprecate, or make any negative comment with respect to the Company
or any of its Subsidiaries or their respective businesses, operations, or
properties.
(G) EQUITABLE REMEDIES. The Employee hereby acknowledges that any breach
by him of his obligations under this Section 8 would cause substantial and
irreparable damage to the Company, and that money damages would be an inadequate
remedy therefor, and accordingly, acknowledges and agrees that the Company shall
be entitled to an injunction, specific performance, and/or other equitable
relief to prevent the breach of such obligations (in addition to all other
rights and remedies to which the Company may be entitled in respect of any such
breach).
(H) MODIFICATION. In the event that a court of competent jurisdiction
determines that any of the provisions of this Section 8 would be unenforceable
as written because they cover too extensive a geographic area, too broad a range
of activities, or too long a period of time, or otherwise, then such provisions
shall automatically be modified to cover the maximum geographic area, range of
activities, and period of time as may be enforceable, and in addition, such
court is hereby expressly authorized so to modify this Agreement and to enforce
it as so modified. No invalidity or unenforceability of any section of this
Agreement or any portion thereof shall affect the validity or enforceability of
any other section or of the remainder of such section.
<PAGE>
-31-
9. MISCELLANEOUS.
(A) BENEFITS OF AGREEMENT; NO ASSIGNMENTS; THIRD-PARTY BENEFICIARIES.
(i) This Agreement shall bind and inure to the benefit of the
parties hereto, the Co-Managers, and the respective heirs, successors, and
permitted assigns of each of them.
(ii) Except to the extent expressly contemplated by Section 6.5
hereof and pursuant to the Stockholder Agreement, neither party hereto
shall assign any rights or delegate any obligations hereunder without the
consent of the other party (except that the Company may assign its rights
and delegate its obligations hereunder to any successor to its business,
whether by merger or consolidation, sale of stock or of all or
substantially all of assets, or otherwise), and any attempt to do so shall
be void.
(iii) Nothing in this Agreement is intended to or shall confer any
rights or remedies on any Person other than the parties hereto, the Co-
Managers, and their respective heirs, successors, and permitted assigns.
The parties hereto expressly agree that the Co-Managers shall be third-
party beneficiaries of the provisions of Sections 6 and 7 of this
Agreement.
(B) NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed to the recipient party at his or its address set forth in the
first paragraph hereof, to the attention of Richard Block and David Underwood,
if the Company is the intended recipient party, or to the Co-Managers in care of
the Company, if a Co-Manager is the intended recipient party (or to such other
address or other Person's attention as the recipient party may have furnished
to the sending party for the purpose pursuant to this section).
(C) COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall
<PAGE>
-32-
be an original, but all of which together shall constitute one and the same
agreement. In pleading or proving this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
(D) CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and shall not affect the interpretation or construction
of this Agreement.
(E) CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.
(F) WAIVERS; AMENDMENTS. No waiver of any breach or default hereunder
shall be valid unless in a writing signed by the waiving party. No failure or
other delay by any party exercising any right, power, or privilege hereunder
shall be or operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege. No amendment or modification of this
Agreement shall be valid or binding unless in a writing signed by both the
Employee and the Company.
(G) ENTIRE AGREEMENT. This Agreement and the Stockholder Agreement contain
the entire understanding and agreement between the parties, and supersede any
prior understandings or agreements between them, with respect to the subject
matter hereof.
(H) GOVERNING LAW. This Agreement shall to the maximum lawful extent be
governed by and interpreted and construed in accordance with the internal laws
of the State of Illinois, as applied to contracts under seal made, and entirely
to be performed, within Illinois, and without reference to principles of
conflicts or choice of law.
<PAGE>
-33-
IN WITNESS WHEREOF, each of the Company and the Employee has executed and
delivered this Employment, Non-Competition and Stock Repurchase Agreement as an
agreement under seal as of the date first above written.
COMPANY: IMPAC GROUP, INC.
By /s/ Richard Block
-------------------------------
Name: Richard Block
Title: President
/s/ Dean J. Henkel
EMPLOYEE: ---------------------------------
Name: Dean J. Henkel
<PAGE>
EXHIBIT 10.16
EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT
This Employment, Non-Competition and Stock Repurchase Agreement (this
"Agreement") dated as of March 12, 1998, is by and between IMPAC Group, Inc., a
---------
Delaware corporation formerly known as KFI Holding Corporation, with its
principal executive offices at 1950 North Ruby Street, Melrose Park, Illinois
60160-1178 (the "Company"), and H. Scott Herrin (the "Employee"), an individual
------- --------
residing at _____________________________________________________________.
This Agreement is being entered into in connection with (a) the Investment
Agreement dated as of February 19, 1998 (the "Investment Agreement"), by and
---------- ---------
among the Company, Heritage Fund I Investment Corporation ("Heritage"), the
--------
Employee and certain other investors in the Company, (b) the Agreement and Plan
of Merger dated as of February 19, 1998 (the "Merger Agreement"), by and among
------ ---------
the Company, Klearfold, Inc., AGI Incorporated, and others, and (c) the
Stockholder Agreement of even date herewith (the "Stockholder Agreement") among
----------- ---------
the Company, the Employee and certain other stockholders of the Company.
Capitalized terms used and not otherwise defined herein have the respective
meanings ascribed to them in the Stockholder Agreement.
The Company and the Employee agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
meanings specified below:
"Act" means the Security Act of 1933, as amended.
---
"Additional Severance Period" has the meanings specified in Sections 5(a)
---------- --------- ------
and 5(b) hereof.
"AGI" means AGI Incorporated, an Illinois corporation.
---
"Base Severance Compensation" has the meaning specified in Section 5(a)
---- --------- ------------
hereof.
"Board" means the Board of Directors of the Company.
-----
"Board Right Period" means the period during which the Employee shall not
------------------
have irrevocably waived by written notice to the Company and the other Herrin
<PAGE>
-2-
Stockholders (as defined in the Stockholder Agreement), or granted an
irrevocable proxy in favor of the other Herrin Stockholders to exercise, his
rights to participate with the other Herrin Stockholders in designating one or
more directors of the Company pursuant to Section 3.1 of the Stockholder
Agreement or to attend board meetings pursuant to Section 6.2(l) of the
Investment Agreement.
"Bonus Plan" has the meaning specified in Section 3(b) hereof.
----- ----
"Cause" means the Employee's (i) commission of a breach of the provisions
-----
of Section 8 hereof, (ii) habitual and willful neglect of the performance of the
Employee's duties as set forth in Section 2(a) hereof, such neglect having
continued for a period of 30 days after written notice thereof is given by the
Board to the Employee, (iii) commission of an act of fraud, misappropriation, or
dishonesty in connection with his employment by the Company, or (iv) conviction
of or plea of nolo contendere to a felony. Notwithstanding any other provision
of this Agreement, the Employee shall not be terminated for Cause unless and
until there shall have been delivered to him a copy of a resolution duly adopted
by the Board by a vote of not less than 80% of the Directors (excluding the
Employee, if a member of the Board) at a meeting called and held for the purpose
(within twelve (12) months of the date of the Board's becoming aware of the
condition or conditions constituting Cause, as set forth in clauses (i) - (iv)
above, and after reasonable notice to the Employee and an opportunity for him,
together with his counsel, to be heard by the Board), finding that in the good
faith opinion of the Board, one of the conditions set forth above in this
definition of Cause had been fulfilled, and specifying the particulars thereof.
"Certificate of Value" has the meaning specified in the definition of "Fair
----------- -- -----
Market Value".
"Charter" means the Company's Amended and Restated Certificate of
-------
Incorporation and all amendments thereto.
"Closing Date" means the date of this Agreement.
------- ----
"Common Stock" means the Company's Series A Common Stock, $.001 par value
------ -----
per share, and any capital stock of the Company which is (a) not subject to
redemption, or (b) issued to the holders of shares of Common Stock upon any
reclassification thereof.
"Company" has the meaning specified in the preamble hereto, and, unless the
-------
context otherwise requires, shall include all Subsidiaries of the Company.
"Company Non-Repurchase Notice" has the meaning specified in Section 6.1(b)
------- -------------- ------
hereof.
<PAGE>
-3-
"Company Repurchase Notice" has the meaning specified in Section 6.1(b)
------- ---------- ------
hereof.
"Delayed Closing Date" has the meaning specified in Section 7.1(b) hereof.
------- ------- ----
"Designated Term" has the meaning specified in Section 2(b) hereof.
---------- ----
"Disability" shall mean that an independent medical doctor (selected by the
----------
Company's health or disability insurer) certifies that the Employee has for 180
consecutive days or 240 non-consecutive days in any twelve (12) month period
been disabled in a manner which seriously interferes with his ability to perform
his duties under this Agreement and which is reasonably expected to continue
indefinitely.
"Disposition Event" shall mean any merger, consolidation or sale of more
----------- -----
than 50% of the Company's assets or other similar corporate action (including,
without limitation, a recapitalization) pursuant to which the holders of Common
Stock receive cash, securities or other property, or any transaction as a result
of which the Company is acquired by the purchase of more than a majority of its
common equity.
"Fair Market Value" means, unless otherwise specified in the definition of
---- ------
"Market Value Per Share", the fair market value of the entire common stock
equity of the Company (without premium for control or discounts for minority
interests, restrictions on transfer or lack of voting rights), as determined in
good faith by the Board at a meeting at which a quorum of the Board is present
in accordance with the Stockholder Agreement, or by unanimous written consent,
calculated as of such date, provided that in making such determination the Board
may in its sole discretion rely upon an appraisal or valuation of an Independent
Appraiser selected in good faith by the Board and conducted within the six (6)
month period preceding the date of the Board's determination, and as certified
by a duly authorized officer of the Company in a Certificate of Value (a
"Certificate of Value") which shall be kept as part of the minutes and other
----------- -- -----
corporate records of the Company.
"Formula Value" means, with respect to any date, the amount which is equal
------- -----
to the aggregate of (a) the product obtained by multiplying EBITDA (as defined
below) during the 12 full calendar months immediately preceding such date by
five and seven-tenths (5.7), less (b) the sum of (i) the Company's consolidated
----
funded indebtedness outstanding on such date, including (without limitation)
obligations under capitalized leases, and (ii) the liquidation value of, and
accrued dividends on, any preferred stock of the Company outstanding on such
date, plus (c) the aggregate cash balances and cash equivalents of the Company
----
and its Subsidiaries on such date. As used in this definition, "EBITDA" for any
------
period, means
<PAGE>
-4-
the Consolidated Net Income (as defined below) of the Company and its
Subsidiaries for such period plus to the extent deducted in determining
Consolidated Net Income all (a) income taxes (including reserves for deferred
income taxes), (b) gross interest expense, (c) depreciation and (d)
amortization, all determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied for such period.
As used in this definition, "Consolidated Net Income" means, for any period, the
------------ --- ------
net income (or loss) of the Company and its Subsidiaries for such period on a
consolidated basis, after deducting all operating expenses, provisions for all
taxes and reserves (including reserves for deferred income taxes) and all other
proper deductions, all determined in accordance with generally accepted
accounting principles consistently applied, after eliminating all intercompany
items and after adjustment for any add-backs or other similar adjustments
properly made in connection with the transactions contemplated by the Merger
Agreement and the Investment Agreement, but excluding from the definition of
Consolidated Net Income any extraordinary gains and/or losses and any gains
and/or losses from the sale or other disposition of assets other than in the
ordinary course of business, all determined in accordance with generally
accepted accounting principles consistently applied.
"Free Termination Period" means the calendar month of May, 1999.
---- ----------- ------
"Good Reason" means (i) (A) diminution by the Board or the President of the
---- ------
Employee's responsibilities, duties or authority as President of Klearfold and
Executive Vice President of the Company, or any other senior executive position
as may be offered by the Company and which the Employee in his sole discretion
may accept in accordance with Section 2(c) below, provided that maintenance by
the Company of the Employee in a position with the same responsibilities, duties
and authority as enjoyed by the Employee in his capacity as President of
Klearfold and Executive Vice President of the Company, but without the title of
President of Klearfold, shall not constitute Good Reason, so long as no other
person holds the title President of Klearfold and no such change is made prior
to December 31, 1998, or (B) interference by any senior executive employee of
the Company (other than the President and/or such other executive officer to
whom the Employee is required to report, if reporting to such Person does not
constitute Good Reason pursuant to clause (iv) below) with the Employee's
responsibilities, duties or authority in the Employee's position as described
above, or (C) assignment to the Employee of any duties inconsistent with the
Employee's position as described above, in any such case other than in an
insignificant manner, and any such diminution (as described in clause (A) above)
occurring after the Employee's acceptance of another position pursuant to and in
accordance with Section 2(c) below, interference (as described in clause (B)
above), or mis-assignment (as described in clause (C) above) is not remedied or
corrected within 30 days after reasonably detailed written notice thereof,
setting forth sufficient information to permit the Company to take action to
remedy or correct such matter, is given by the
<PAGE>
-5-
Employee to the Company, provided that upon the third occurrence of any
complained-of matter, the Employee shall be entitled to notify the Company
thereof and thereupon to terminate his employment with the Company for Good
Reason; (ii) failure by the Company to pay and provide to the Employee the
compensation or benefits provided for in Section 3 hereof, and, any time
following the end of the Designated Term, any decrease in the compensation or
benefits provided for in Section 3 hereof (including, without limitation, any
failure to provide cost of living increases even after the end of the Designated
Term) which failure or decrease is not cured or remedied within 30 days after
written notice thereof is given by the Employee to the Company; (iii) the Board
requiring the Employee to be permanently based anywhere other than within 25
miles of the Employee's present office location in Warrington, Pennsylvania
(excluding business-related travel); or (iv) the Employee becoming obligated to
report to or accept assignments from any Person other than the President of the
Company or a single Person who directly reports to the President of the Company.
Heritage" has the meaning specified in the preamble.
--------
"Herrin Shares" means the Shares hereunder, and the Shares under and
------ ------
as defined in the Employment, Non-Competition and Stock Repurchase Agreement
between the Company and Melvin B. Herrin.
"Independent Appraiser" means an investment banking or accounting firm
----------- ---------
or independent appraiser of nationally recognized standing and at least ten
years experience in evaluating businesses similar to the Company and its
Subsidiaries, and not an Affiliate (as defined in the Stockholder Agreement) of
the Company or any of its Subsidiaries or any stockholder of the Company.
"Initial Post-Term Severance Period" has the meaning
------- --------- --------- ------
specified in Section 5(b) hereof.
"Initial Severance Period" has the meaning specified in
------- --------- ------
Section 5(a) hereof.
"Insurance Policy" means an insurance policy purchased or to be
--------- ------
purchased by the Company insuring against the occurrence of the Repurchase
Event, with the Company as beneficiary, the proceeds of which policies are to be
used exclusively to fund the payment of the repurchase price for the Herrin
Shares.
"Investment Agreement" has the meaning specified in the
---------- ---------
preamble hereto.
"Klearfold" means Klearfold, Inc., a Pennsylvania
---------
corporation.
<PAGE>
-6-
"Klearfold Merger Agreement" means the Agreement and Plan of Merger
--------- ------ ---------
dated as of June 6, 1996, by and among Heritage, the Company, KFI/Heritage
Acquisition Corporation, Klearfold, the Employee and Melvin B. Herrin.
"Market Value Per Share" means, with respect to any date, the quotient
------ ----- --- -----
obtained by dividing (a) the sum of (i) the most recently determined Fair Market
Value of the Company plus (ii) an amount equal to the aggregate consideration
----
which would then be payable to the Company, assuming the exercise at such time
of all then outstanding and exercisable warrants, options, or convertible
securities pursuant to which the Company would, upon exercise, then be obligated
to issue Common Stock, other than warrants or options the strike or exercise
price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, by (b) the sum of (i) the number of shares of Common Stock then
--
outstanding, plus (ii) the number of shares of Common Stock then issuable upon
----
exercise of all then outstanding and exercisable warrants, options, or
convertible securities pursuant to which the Company would, upon exercise, then
be obligated to issue Common Stock, other than warrants or options the strike or
exercise price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, provided, however, that in the event that on the date with respect to
which Market Value Per Share is being determined, more than six (6) months shall
have elapsed since the date of execution of the most recent Certificate of
Value, then the Fair Market Value of the Company for purposes of clause (a)(i)
of this definition of Market Value Per Share shall be calculated as the Formula
Value of the Company as of the date with respect to which Market Value Per Share
is being determined. In the event that either (x) the Employee (for the purposes
of this definition, including any Personal Representative of the Employee), or
(y) if (and only if) the Fair Market Value of the Company would otherwise be
determined by reference to the Formula Value in accordance with the foregoing
proviso, the Company, so elects (the electing party being referred to as the
"Requesting Party"), by written notice to the Company (in the case of any
---------- -----
election by the Employee) or to the Employee (in the case of any election by the
Company) (the party receiving such notice, the "Non-Requesting Party") within
-------------- -----
five (5) days of any determination of Market Value Per Share in accordance with
the preceding sentence, the Fair Market Value of the Company shall be determined
either by one Independent Appraiser selected by the Requesting Party and
acceptable to the Non-Requesting Party in its sole discretion, or, if the
Requesting Party and the Non-Requesting Party are unable to agree upon the
identity of such an Independent Appraiser within fifteen (15) days after the
date of the Requesting Party's notice to the Non-Requesting Party, by two
Independent Appraisers, selected one by the Requesting Party and one by the Non-
Requesting Party, who shall work together to determine in good faith one Fair
Market Value of the Company acceptable to both Independent Appraisers. The
appraisal of such Independent Appraiser(s) shall be delivered to the Requesting
Party and the Non-
<PAGE>
-7-
Requesting Party within 60 days after the date of the Requesting Party's notice
to the Non-Requesting Party requesting an appraisal. In the event that two
Independent Appraisers are appointed and they are unable to reach an agreement
as to the Fair Market Value of the Company within such 60 day period, the
Appraised Fair Market Value shall be calculated by adding the two Fair Market
Values of the Company, as determined in good faith within such period by each of
such Independent Appraisers, and dividing the sum thereof by two. The Fair
Market Value of the Company determined by such Independent Appraiser(s) in
accordance with this definition (the "Appraised Fair Market Value") shall be
--------- ---- ------ -----
conclusive and shall be used to determine the Market Value Per Share hereunder,
and judgment thereon may be entered in any court of competent jurisdiction. All
expenses of the Independent Appraiser or Independent Appraisers appointed
pursuant to this definition shall be borne by the Company, except that if the
Appraised Fair Market Value is less than 115% of the Fair Market Value of the
Company determined pursuant to the first sentence of this definition, all
expenses of such Independent Appraiser(s) shall be borne by the Requesting
Party.
"Merger Agreement" has the meaning specified in the preamble hereto.
------ ---------
"Original Employment Agreement" means the Executive Employee Agreement
-----------------------------
dated as of June 7, 1996, between the Employee and the Company.
"Original Price Per Share" means, as to all Shares acquired pursuant
-------- --------- -----
to the Investment Agreement, $340.00 per Share, and as to all other Shares, the
actual price per Share paid by the Employee upon the acquisition of such Shares.
"Other Executive" means the other senior executive employees of the
---------------
Company and the Subsidiaries who are party to Employment, Non-Competition and
Stock Repurchase Agreements with the Company dated of even date herewith, i.e.
James Oppenheimer, Richard Oppenheimer, David Underwood and Dean Henkel.
"Person" means an individual, partnership, corporation, limited liability
------
company, association, trust, joint venture, unincorporated organization, or any
government, governmental department or agency or political subdivision thereof.
"Personal Representative" means the successor or legal representative
-------- --------------
(including without limitation, a guardian, executor, administrator or
conservator) of the Employee following his death or legal incompetence.
"Public Offering" means any sale of Common Stock to the public pursuant
------ --------
to a public offering registered under the Act.
<PAGE>
-8-
"Public Sale" means any Public Offering or any sale of Common Stock to
------ ----
the public through a broker or market-maker pursuant to the provisions of Rule
144 (or any successor rule) adopted under the Act.
"Put Closing" has the meaning specified in Section 6.2(a) hereof.
--- -------
"Put Notice" has the meaning specified in Section 6.2(a) hereof.
--- ------
"Put Period" has the meaning specified in Section 6.2(a) hereof.
--- ------
"Put Rejection Notice" has the meaning specified in Section 6.2(d) hereof.
--- --------- ------
"Qualified Public Offering" means an underwritten Public Offering,
--------- ------ --------
pursuant to an effective registration statement under the Securities Act,
covering the offer and sale of shares of Common Stock in which an aggregate of
not less than $25,000,000 of gross proceeds from such public offering are
received by the Company and the selling stockholders.
"Related Persons" means the Employee's parents, spouse, children and
------- -------
grandchildren.
"Repurchase Event" has the meaning specified in Section 6.1 (a) hereof.
---------- -----
"Restricted Period" has the meaning specified in Section 8(b) hereof.
---------- ------
"Severance Extension Notice" has the meaning specified in Section 5(a)
--------- --------- ------
hereof.
"Severance Notice" has the meaning specified in Section 5(b) hereof.
--------- ------
"Severance Release" has the meaning specified in Section 5(a) hereof.
-----------------
"Shares" means (a) all shares of Common Stock acquired by the Employee
------
from time to time, whether pursuant to the Investment Agreement, upon exercise
of any rights of first refusal or pre-emptive rights under the Stockholder
Agreement, any repurchase rights as a Co-Manager under any Agreement relating to
Employment and Stock Ownership between the Company and any other employee of the
Company, upon exercise of any options, warrants, or other rights to purchase
shares of Common Stock, or otherwise, (b) any shares of Common Stock into which
such shares of Common Stock have been converted, (c) any capital stock or other
securities into which or for which such shares of Common Stock shall have been
converted or exchanged pursuant to any recapitalization, reorganization or
merger of the Company, and (d) any shares of capital stock issued with respect
to the foregoing pursuant to a stock split or stock dividend, which at the time
of the
<PAGE>
-9-
Employee's Termination of Employment are owned by the Employee or any Person
owning shares transferred to him pursuant to Section 1.1(b) and 1.1(e) of the
Stockholder Agreement by the Employee or any other Herrin Stockholder, as
defined pursuant to the Stockholder Agreement or any (direct or indirect)
transferees of the Employee or any other Herrin Stockholder pursuant to that
provision.
"Stockholder Agreement" has the meaning specified in the preamble hereto.
----------- ---------
"Subsidiary" means, with respect to the Company, any corporation a majority
----------
(by number of votes) of the outstanding shares of any class or classes of which
shall at the time be owned by the Company or by a Subsidiary of the Company, if
the holders of the shares of such class or classes (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are at the time entitled, as such holders, to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to vote exists by
reason of the happening of a contingency and including without limitation AGI
and Klearfold.
"Termination for Under-Performance" means a Termination of Employment
--------------- -----------------
of the Employee by the Company without Cause, where the Board shall have by
resolution duly adopted by a vote of not less than 80% of the Directors
(excluding the Employee, if then a member of the Board), identified such
Termination of Employment as having occurred as a result of under-performance by
the Employee in his employment hereunder, provided however, that except as
expressly stated in Section 5 hereof, any such Termination of Employment shall
be treated as a Termination of Employment by the Company without Cause for all
purposes hereunder.
"Termination of Employment" means the Employee's ceasing to be an
----------- -- ----------
employee of the Company or any of its Subsidiaries, whether voluntary or
involuntary, for any reason or for no reason, including without limitation, for
resignation, death or Disability of the Stockholder, and whether or not for
Cause or for Good Reason.
"Variable Severance Compensation" has the meaning specified in Section 5
-------- --------- ------------
(a) hereof.
2. EMPLOYMENT.
(A) EMPLOYMENT. Subject to the terms and conditions of this Agreement, the
Company agrees to employ the Employee, and the Employee agrees to serve, as
<PAGE>
-10-
the President of Klearfold and the Executive Vice President of the Company, or
such senior executive position with the Company, bearing a title other than
President of Klearfold, as may have been offered to the Employee and accepted by
him in his sole discretion pursuant to and in accordance with Section 2(c)
below, in each case having such powers and duties as are consistent with such
position(s), subject to the directions of the Board, the President of the
Company and/or another Person designated by the President who reports directly
to the President.
(B) DESIGNATED TERM. The Employee's employment by the Company hereunder,
which commenced on the date of the Original Employment Agreement, shall continue
until terminated in accordance with Section 4 hereof, provided that, subject to
the other terms and conditions hereof, the term of employment shall be at least
until June 7, 2001 (the period from the date hereof to June 7, 2001 being
referred to herein as the "Designated Term"), and provided, further
---------- ----
that from and after June 8, 2001, subject to the provisions of Section 5 hereof,
the Employee's employment hereunder shall be at will.
(C) CHANGE IN POSITION. In the event that the President of the Company
offers to the Employee an alternative position to his position as President of
Klearfold (it being agreed that the Employee's title of Executive Vice President
of the Company shall be maintained in any such event), such offer shall be made
in writing to the Employee, setting forth the Employee's proposed additional
title, together with a brief description of his proposed alternative position
and its duties and responsibilities. In the event that the Employee either (i)
accepts the proposed title and position by written notice to the Company, or
(ii) maintains his employment with the Company for a period of ninety (90) days
following the date of the President's offer of such title and position, then,
and notwithstanding any reservation at such time of the Employee's right to
terminate his employment for Good Reason at a time subsequent thereto, the
Employee shall be deemed to have accepted such title and position for purposes
of Section 2(a) above and clause (i) of the definition of "Good Reason".
(D) TERMINATION OF ORIGINAL EMPLOYMENT AGREEMENT. The parties agree that
upon the date hereof, the Original Employment Agreement shall terminate and be
of no further force and effect, provided that no compensation shall be payable
to the Employee as a result of such termination other than compensation accrued
and unpaid under Section 2(a) of the Original Employment Agreement at the time
of such termination.
3. COMPENSATION. During the Designated Term, the Company shall pay and
provide to the Employee the compensation set forth below:
(A) BASE SALARY. The Company shall pay to the Employee a base salary,
prorated and payable in installments in accordance with Klearfold's usual
payroll
<PAGE>
-11-
practices. Such base salary shall be at the rate of $325,000 per annum
for 1998, and thereafter such base salary shall be adjusted annually based upon
the percentage increase, if any, in the Consumer Price Index, All Items,
Philadelphia as published by the Bureau of Labor Statistics (the "CPI"), as
---
follows: The Employee's base salary for each of the years 1999-2001 shall be
calculated by multiplying the Employee's 1998 base salary by a fraction, the
numerator of which is the average CPI for the twelve months of the year
preceding the year for which such base salary is being calculated, and the
denominator of which is the CPI for December 1997. In no event will any such
adjustment reduce the Employee's base salary for any year below that in effect
for the preceding year.
(B) BONUSES. The Employee shall be entitled to participate in the
Company's Executive Bonus Plan (the "Bonus Plan"), a copy of which is appended
----- ----
hereto and incorporated herein by this reference.
(C) FRINGE BENEFITS. In addition to the Employee's base salary and any
bonuses to which the Employee may become entitled under the Bonus Plan, the
Company shall provide to the Employee additional benefits as provided to other
employees of the Company and its Subsidiaries whose base salary and level of
responsibility are comparable to those of the Employee, including as described
in the attached Schedule of Benefits.
-------- -- --------
(D) VACATION. The Employee shall be entitled to four (4) weeks vacation
each calendar year. Any vacation shall be taken at the reasonable and mutual
convenience of the Company and the Employee. Accrued vacation not taken in any
calendar year will not be carried forward or used in any subsequent calendar
year, provided, however, if any accrued vacation is not taken by the Employee in
any calendar year at the request of the Employer, then the Employee shall be
entitled to carry forward and use such accrued vacation in the immediately
following calendar year but not in any subsequent calendar year.
4. TERMINATION. The Employee's employment hereunder shall terminate upon
the occurrence of any of the following events:
(A) the Employee's death or Disability; or
(B) the termination of the Employee's employment hereunder by the Company,
for Cause by written notice to the Employee; or
(C) the termination of the Employee's employment hereunder by the Company,
without Cause, by written notice to the Employee; or
(D) the termination of the Employee's employment hereunder by the
Employee, for Good Reason, by written notice to the Company; or
<PAGE>
-12-
(E) the termination of the Employee's employment hereunder by the
Employee, without Good Reason, by 30 days' prior written notice to the Company
or;
(F) the termination of the Employee's employment hereunder by the Employee
during the Free Termination Period, which termination shall be accomplished by
delivery of written notice to the Company.
5. SEVERANCE. Notwithstanding any other provision of this Agreement:
(A) If the Employee's employment with the Company terminates pursuant to
either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) during the Designated Term, then the Company shall,
upon delivery to the Company of a release of any claims of the Employee against
the Company and its stockholders, directors, officers, employees, agents or
other affiliates arising out of his employment relationship (other than claims
to any compensation or benefits payable under or to be provided pursuant to this
Section 5, or any rights of the Employee under Sections 6 or 7 hereof) executed
by the Employee and reasonably satisfactory in form and substance to the Company
(a "Severance Release"), continue to pay and provide to the Employee (A) the
--------- -------
compensation payable to him pursuant to Section 3(a) hereof, and (B) the
benefits provided to him pursuant to Section 3(c) hereof (the compensation and
benefits described in clauses (A) and (B), together, such Employee's "Base
----
Severance Compensation"), and, unless such Termination of Employment was a
- --------- ------------
Termination for Under-Performance, (C) any bonus accrued or earned by the
Employee pursuant to the Bonus Plan and attributable to the Employee's
performance for the portion of the year prior to his Termination of Employment,
on a one-time only basis payable at the time of payment of bonuses to other
executive employees under the Bonus Plan, and (D) for each year, 50% of an
amount equal to the compensation payable to the Employee pursuant to Section
3(a), multiplied by a fraction, the numerator of which equals the aggregate
bonus actually payable with respect to the preceding year to the Company's other
executive employees in the same bonus pay-out range as the Employee was in prior
to his Termination of Employment, and the denominator of which equals the
aggregate salary of such other executive employees for such preceding year (the
compensation described in clauses (C) and (D) together, such Employee's
"Variable Severance Compensation") for a period (the "Initial Severance Period")
-------- --------- ------------ ------- --------- ------
equal to the longer of (i) the remainder of the Designated Term, and (ii) the
one-year period following the date of such Termination of Employment, but this
clause only being applicable if, prior to the earlier of (x) the last day of the
Designated Term and (y) the thirtieth (30th) day from the date of such
Termination of Employment, the Company shall have notified the Employee in
writing of the Company's intention, in the Company's sole discretion, so to
extend the Initial Severance Period (such notice, a "Severance
---------
<PAGE>
-13-
Extension Notice"). In the Company's sole discretion, the Company may elect,
either in the Severance Extension Notice, or by written notice to the Employee
given no later than thirty (30) days prior to the end of the Initial Severance
Period (as it may have been extended pursuant to the Severance Extension
Notice), to continue to pay and provide to the Employee his Base Severance
Compensation for an additional period (the "Additional Severance Period") of up
---------- --------- ------
to one year following the end of the Initial Severance Period (as it may have
been extended pursuant to the Severance Extension Notice), provided that the
Additional Severance Period shall in no event extend beyond the second
anniversary of the Employee's Termination of Employment. Upon payment in full of
the Employee's Base Severance Compensation and, if and when applicable, his
Variable Severance Compensation, as described in this Section 5(a), the
Company's obligations to pay and provide the Employee with any other
compensation otherwise payable to him pursuant to Section 3 hereof, and all
other rights of the Employee under Sections 2 and 3 hereof and this Section 5,
shall cease as of the date of such payment in full.
(B) If the Employee's employment with the Company terminates pursuant to
either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) at any time after the end of the Designated Term, then
if at the time of such Termination of Employment or within thirty (30) days
thereafter, the Company shall, in its sole discretion, so have notified the
Employee in writing (such notice, a "Severance Notice") and the Employee shall
--------- ------
have executed and delivered to the Company a Severance Release, the Company
shall continue to pay and provide to the Employee his Base Severance
Compensation and, unless such Termination of Employee was a Termination for
Under-Performance, his Variable Severance Compensation for a period of one year
following the date of such Termination of Employment (the "Initial Post-Term
------- ---------
Severance Period"), provided that, unless the Company shall have notified the
- --------- ------
Employee in writing at the time of his Termination of Employment that it did not
intend to deliver a Severance Notice, the Employee's Base Severance Compensation
shall be payable in any event for the portion of the 30-day period following the
Termination of Employment prior to the Company's delivery either of a Severance
Notice or of notice that the Company did not intend to deliver a Severance
Notice. The Company may elect, in its sole discretion, by written notice to the
Employee given no later than ninety (90) days prior to the end of the Initial
Post-Term Severance Period to extend the period during which the Employee's Base
Severance Compensation shall be payable and provided to the Employee for an
additional period (also referred to herein as an "Additional Severance Period")
-------------------- ------
of up to one year from the end of the Initial Post-Term Severance Period,
provided that the total period during which his Base Severance Compensation
shall be payable and provided to the Employee under this Section 5(b) shall in
no event extend beyond the second anniversary of the Employee's Termination of
Employment. In the event that no Severance Notice has been given within thirty
(30) days after the date of the Employee's Termination of Employment pursuant to
either Section 4(c) (by
<PAGE>
-14-
the Company without Cause) or Section 4(d) (by the Employee for Good Reason),
then the Company's obligation to pay and provide the Employee with any
compensation shall cease in any event as of the thirtieth (30th) day following
the date of such Termination of Employment, and all other rights of the Employee
under Sections 2, 3 and 5 hereof, shall be deemed to have ceased as of the date
of such Termination of Employment. In the event that a Severance Notice is given
in accordance with this Section 5(b), then upon payment in full of the
Employee's Base Severance Compensation, and, if and when applicable, his
Variable Severance Compensation as described in this Section 5(b), the Company's
obligations to pay and provide the Employee with any of the compensation payable
to him pursuant to Section 3 hereof, and all other rights of the Employee under
Sections 2 and 3 hereof and this Section 5, shall cease as of the date of such
payment in full.
(C) If the Employee's employment with the Company terminates pursuant to
any of Sections 4(a) (death or Disability), 4(b) (by the Company for Cause), or
4(e) (by the Employee without Good Reason) hereof, then the Company's
obligations to pay and provide the Employee with any of the compensation payable
to him pursuant to Section 3 hereof, and all other rights of the Employee under
Sections 2 and 3 hereof and this Section 5, shall cease as of the date of such
Termination of Employment.
(D) If the Employee's employment with the Company terminates pursuant to
Section 4(f) (by the Employee during the Free Termination Period), the Company
shall continue to pay and provide to the Employee, for the remainder of the
Designated Term, (i) 80% of the compensation payable to him pursuant to Section
3(a) hereof during the twelve (12) months preceding the beginning of the Free
Termination Period, (ii) the benefits provided to him pursuant to Section 3(c)
hereof at the levels provided during the twelve (12) months preceding the
beginning of the Free Termination Period, and (iii) 80% of the Employee's
Variable Severance Compensation (except that the full amount of any bonus
accrued or earned by the Employee pursuant to the Bonus Plan and attributable to
the Employee's performance for the portion of the year prior to his Termination
of Employment shall be payable on a one-time only basis at the time of payment
of bonuses to other executive employees under the Bonus Plan). Upon payment in
full of the amounts, and provision in full of the benefits as described in this
Section 5(d), the Company's obligations to pay and provide the Employee with any
other compensation otherwise payable to him pursuant to Section 3 hereof, and
all other rights of the Employee under Sections 2 and 3 hereof and this Section
5, shall cease as of the date of such payment and provision in full.
(E) The Employee shall not be required to mitigate the amount of any
compensation payable to him pursuant to Sections 5(a) or 5(b) hereof, by seeking
other employment or otherwise, provided, that in the event the Employee obtains
other employment during any period for which compensation is being paid pursuant
<PAGE>
-15-
to Sections 5(a) or 5(b), the amount of compensation otherwise payable to the
Employee pursuant to either of such sections shall be reduced by 50% for the
period during which the Employee is so employed, provided, further, that in the
event that the Employee provides evidence reasonably satisfactory to the Company
that the amount of the resulting reduction in his compensation otherwise payable
pursuant to Sections 5(a) or 5(b) hereof, as the case may be, exceeds the level
of his compensation payable from such other employment, then his compensation
pursuant to Sections 5(a) or 5(b) hereof, as applicable, shall be reduced for
the period of such other employment by an amount equal to the aggregate amount
of his compensation from such other employment during such period. The Employee
shall promptly notify the Company if he obtains other employment during the
applicable period.
(F) Nothing in this Section 5 shall limit any other obligation which
the Company may owe the Employee under any insurance policy, employee benefit
plan or other retirement plan. Furthermore, upon any Termination of Employment
of any type, the Company shall remain obligated to the Employee for (i) any
accrued and unpaid base salary and vacation pay, (ii) reimbursement for
reasonable out-of-pocket expenses incurred by Employee by or on behalf of the
Company or otherwise in the performance of his duties and in accordance with
applicable Company policies then in effect, and (iii) unless otherwise specified
in any such plan, policy or program, payments or benefits explicitly provided
under the terms of any plan, policy or program of the Company in which the
Employee was a participant, or as otherwise required by applicable law.
6. REPURCHASE OF SHARES.
6.1. REPURCHASE RIGHTS OF THE COMPANY.
(A) Upon the later to occur of the death of Melvin Herrin and the death
of the Employee (the "Repurchase Event") the Company may, at its option,
---------- -----
repurchase from the holders thereof, and the Personal Representative of the
Employee will at the request of the Company sell to the Company, or procure the
sale to the Company of, all or any portion of the Shares specified in the
Company Repurchase Notice (as defined below) at a purchase price per Share equal
to the Market Value Per Share as of the date of the Repurchase Event.
(B) The Company's repurchase rights under Section 6.1(a) shall be
exercisable at any time and from time to time within ninety (90) days after the
date of the Repurchase Event by written notice from the Company to the Personal
Representative of the Employee specifying the number of Shares to be repurchased
(such notice, a "Company Repurchase Notice"), provided, however, that in the
------- ---------- ------
event that the Company determines at any time prior to the expiration of the
period of ninety (90) days from the date of the Repurchase Event that it does
not intend to
<PAGE>
-16-
exercise its repurchase rights under Section 6.1(a) above with respect to all or
any portion of the Shares, the Company shall promptly so notify the Personal
Representative of the Employee in writing (such notice, the "Company Non-
------------
Repurchase Notice"). The closing of the repurchase of Shares
- ---------- ------
pursuant to the Company Repurchase Notice shall be held not earlier than five
(5) days nor later than thirty (30) days after delivery of the Company
Repurchase Notice. The Company's repurchase rights under Section 6.1(a) shall
lapse if not exercised within the 90-day period specified in this Section 6.1(b)
in accordance with the provisions hereof, except as otherwise provided in
Section 7 hereof. Upon delivery by the Company of the repurchase price for the
Shares being repurchased under this Section 6.1(b) in accordance with Section
7.2 hereof, all of the Shares being repurchased shall no longer be deemed to be
outstanding, all of the rights of the prior holders thereof with respect to such
Shares will terminate, with the exception of the right of such holders to
receive the repurchase price in exchange therefor pursuant to this Section
6.1(b), and payments pursuant to Section 6.3, if any, and the Employee (on his
own behalf and on behalf of his Personal Representative and any other holder of
Shares) hereby irrevocably appoints the Company as his attorney-in-fact to take
all actions necessary and sign all documents required to cancel such Shares on
the Company's books and records.
6.2. PUT RIGHTS OF THE EMPLOYEE'S ESTATE.
(A) Upon the occurrence of the Repurchase Event, the Personal
Representative of the Employee will have the right, but not the obligation, to
request that the Company repurchase all (and not less than all) of the Shares,
for a purchase price per Share equal to the Market Value Per Share as of the
date of the Repurchase Event. The put rights of the Employee' estate under this
Section 6.2 shall be exercisable at any time within sixty (60) days after the
date of the Repurchase Event or, if the Repurchase Event is upon the death of
the Employee, then sixty (60) days after the appointment of a Personal
Representative of the Employee (any such 60-day period being referred to as a
"Put Period") by notice to the Company (the "Put Notice") specifying the date,
--- ------ --- ------
time and place of the closing (the "Put Closing") for such repurchase. The put
--- -------
rights of the Employee's estate under this Section 6.2 will lapse if not
exercised by delivery of a Put Notice to the Company within the applicable Put
Period. Within fifteen (15) days of its receipt of the Put Notice, the Company
shall notify the Employee's Personal Representative in writing whether or not
the Company accepts the put request set forth in the Put Notice, provided that
the Company shall be required to repurchase such Shares as the Company is able
to pay the purchase price for by using the proceeds of the Insurance Policy,
less the cash surrender value thereof at such time.
- ----
(B) In the event the Company accepts the Put Notice, or fails to reject
the Put Notice within the 15-day period described in the last sentence of
Section 6.2(a), the Put Closing will be held no earlier than forty-five (45)
days nor later than sixty
<PAGE>
-17-
(60) days after delivery of the Put Notice. At the Put Closing, subject to the
provisions of Section 7 hereof, Company shall purchase, and the Personal
Representative of the Employee shall sell, or procure the sale to the Company
of, all of the Shares. Upon tender by the Company of the purchase price for the
Shares in accordance with Section 7.2 below, the Shares shall no longer be
deemed to be outstanding, all of the rights of the prior holders thereof with
respect to the Shares shall terminate with the exception of the right of such
holders to receive the repurchase price from the Company in exchange for such
Shares pursuant to this Section 6.2, and payments pursuant to Section 6.3, if
any, and the Employee (on his own behalf and on behalf of his Personal
Representative and any other holder of Shares) hereby irrevocably appoints the
Company as his attorney-in-fact to take all actions necessary and sign all
documents required to cancel such Shares on the Company's books and records.
(C) Notwithstanding the foregoing, in the event that any payment by the
Company of any portion of the purchase price for any Shares that the Employee
has requested and the Company has agreed be repurchased pursuant to Section
6.2(a) is, at the time such payment would otherwise be due hereunder, limited or
prohibited by law or by the terms of any of the Company's or any of its
Subsidiaries' agreements with its or their lenders or any other contracts by
which the Company or any of its Subsidiaries is bound, the Company may complete
the repurchase of such Shares in accordance with Section 7 hereof, but in any
event shall only be required at such time to repurchase that portion of the
Shares, if any, for which payment of the purchase price therefor is not so
prohibited.
(D) In the event the Company rejects the Put Notice with respect to any
Shares the Employee has requested be repurchased pursuant to Section 6.2(a) by
written notice in accordance with the last sentence of Section 6.2(a) (notice of
such rejection, a "Put Rejection Notice"), then the transfer restrictions
--- ----------------
pursuant to Section 1 of the Stockholder Agreement on the Shares in which the
Company refuses to repurchase will thereupon automatically and without further
notice be terminated, with effect from the date of delivery of the Put Rejection
Notice.
6.3. ADDITIONAL PAYMENTS UPON DISPOSITION EVENT, ETC. If, at any time
within six (6) months after any closing of a repurchase by the Company pursuant
to either Section 6.1 or 6.2 above the Company shall become party to a
Disposition Event or the Company completes any Public Offering, or the Company
or any of its stockholders enter into any written agreement or written letter of
intent contemplating any of the foregoing which transaction is consummated
within 180 days thereafter, then the Company shall, simultaneously with the
consummation of any such transaction or at such later time as any payment
described below is received by the Company or any of its stockholders, make an
additional payment to the Personal Representative of the Employee in an amount
per Share repurchased from the Personal Representative of the Employee by the
Company pursuant to
<PAGE>
-18-
Section 6.1 or 6.2 above, as the case may be, equal to the excess, if any, of
(i) the value per share of the cash, securities and other property that the
Personal Representative of the Employee would have received (or that the Company
received in which the Personal Representative of the Employee would have had a
beneficial interest as a stockholder of the Company) had the Shares not been
previously so repurchased over (ii) the payment received by the Personal
Representative of the Employee with respect to each such Share pursuant to
Section 6.1 or 6.2 above, as the case may be. Each payment to the Personal
Representative of the Employee pursuant to this Section 6.3 shall be made either
in cash or in the form of the securities and other property received by the
Company or its stockholders, as the case may be.
6.4. TRANSFEREES OF THE EMPLOYEE; LEGEND. Any permitted transferee of the
Shares under the Stockholder Agreement, including without limitation any
Personal Representative or Family Member (as such terms are defined in the
Stockholder Agreement) of the Employee, shall be bound by, and have the benefit
of, the provisions of this Section 6. Except as otherwise permitted by this
Section 6.4, each certificate representing the Shares shall, in addition to any
legends required under the Stockholder Agreement, bear a legend in or
substantially in the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
REPURCHASE RIGHTS IN FAVOR OF THE COMPANY CONTAINED IN AN
EMPLOYMENT, NON-COMPETITION AND STOCK REPURCHASE AGREEMENT, DATED
AS OF __________, 1998, A COPY OF WHICH WILL BE FURNISHED BY THE
COMPANY TO THE HOLDER OF THE SHARES EVIDENCED BY THIS CERTIFICATE
UPON WRITTEN REQUEST AND WITHOUT CHARGE."
Whenever the requirements of this Section 6.4 shall terminate as to any Shares
pursuant to Section 7.3 below, the holder thereof shall be entitled to receive
from the Company, at the Company's expense, new certificates representing the
Shares without such legend.
6.5. DELAY FOR VALUATION OR RECEIPT OF INSURANCE PROCEEDS. In the event
that, (a) as a result of any requirement to determine the Fair Market Value of
the Company by means of an appraisal pursuant to and in accordance with the
definition of "Market Value Per Share", the Market Value Per Share has not been
determined at the time that the closing of any purchase and sale of Shares
pursuant to this Section 6 is otherwise scheduled to occur, or (b) as a result
of the Company's failure to receive the proceeds from the Insurance Policy, the
Company is not able to pay the repurchase price at the time that the closing of
any purchase and sale of Shares pursuant to this Section 6 is otherwise
scheduled to occur then,
<PAGE>
-19-
and notwithstanding anything to the contrary set forth in this Section 6 or in
Section 7 below, such closing shall be delayed until, in the case of clause (a)
above, the Market Value Per Share has been determined pursuant to and in
accordance with the definition thereof, and such closing shall in any event
occur within thirty (30) days after the date of such determination, and, in the
case of clause (b), such insurance proceeds have been received, provided that
such closing shall in any event occur within ninety (90) days after the date of
the applicable determination of Market Value Per Share.
7. OTHER REPURCHASE PROVISIONS.
7.1. REPURCHASE RESTRICTIONS.
(A) REPURCHASE TERMS. Notwithstanding any provision to the contrary in
Section 6 above, if the Company is prohibited by the terms of any of the
Company's or any of its Subsidiaries' agreements with its or their lenders
(including, without limitation, the Company's senior credit agreement with Bank
of America, N.T. & S.A., and the Indenture with respect to the Company's Senior
Subordinated Notes) (any such agreement, a "Subordinating Agreement") from
-----------------------
making any payments of any portion of the repurchase price for any of the Shares
in cash, the Company shall be entitled to complete the repurchase of such Shares
as to which payment of the repurchase price in cash is not so prohibited by
delivering to the Employee a check for the repurchase price thereof. The Company
further shall be entitled to complete the repurchase of the other Shares to be
repurchased by it, or any portion thereof, on the first date on which such
payment is not so prohibited by any applicable Subordinating Agreement, provided
that if the closing date of such repurchase is more than six (6) months after
the Employee's Termination of Employment, then, if the repurchase price for the
Shares is based on the Market Value Per Share, the repurchase price shall be
calculated based on the Market Value Per Share as of the date of such closing
instead of as of the date of the Employee's Termination of Employment. The
Company agrees that in the event that it is permitted by the terms of any
Subordinating Agreement to repurchase shares of its Common Stock in cash, it
shall promptly exercise its rights to complete any such repurchase delayed
pursuant to this Section 7.1(a), provided that any such repurchase shall be
pro rata with all other such delayed repurchases and then-current repurchases,
whether hereunder or under any other employment or stock repurchase agreement of
the Company in force from time to time.
(B) IMPAIRMENT OF CAPITAL. If, even after giving effect to the provisions
of Section 7.1(a) hereof, the Company is prohibited by law from repurchasing any
Shares which it is entitled to repurchase hereunder due to any existing or
prospective impairment of its capital, the closing of such repurchase shall be
delayed until the first date on which the Company has sufficient capital to
lawfully repurchase such Shares (the "Delayed Closing Date"), and when
------- ------- ----
completed, any
<PAGE>
-20-
payments of the repurchase price shall be applied pro rata in accordance with
the proviso to Section 7.1(a) above. In the event of any such delay of a
closing, the Company will be obligated to pay, on the Delayed Closing Date,
interest on the repurchase price for such Shares, at the Prime Rate as published
from time to time in the "Wall Street Journal" from the date on which the
closing of the repurchase of such Shares was originally scheduled to occur to
the Delayed Closing Date.
7.2. PAYMENT FOR SHARES. Subject to the provisions of Sections 6.5 and 7.1
above, at any closing held to consummate any repurchase of Shares hereunder, the
Employee's Personal Representative shall deliver to the Company, the stock
certificates representing such Shares, duly endorsed in blank or with duly
executed stock powers attached, and free and clear of all Liens, and the Company
shall deliver to the Employee's Personal Representative a check or checks in an
amount equal to such amount of the repurchase price for such Shares calculated
in accordance with the terms and provisions hereof.
7.3. TERMINATION OF REPURCHASE PROVISIONS. All of the repurchase rights
and obligations contained in this Agreement (excluding, for the avoidance of
doubt, any rights arising under Section 6.3 above) shall terminate immediately
after the completion of any Disposition Event or Qualified Public Offering;
provided, however. that no such termination shall relieve the Company from any
obligation or liability with respect to (i) any note issued in accordance with
Section 7.1 hereof, or (ii) any repurchase which was deferred pursuant to
Section 7.1 and not honored on or before such termination.
7.4 ADJUSTMENT OF REPURCHASE PRICE. Upon any stock split, reverse stock
split, recombination of shares or other similar reorganization of the capital
structure of the Company, the repurchase price otherwise payable upon the
repurchase of any Shares pursuant to Section 6 hereof shall be proportionally
adjusted, as appropriate, to reflect such reorganization.
8. CERTAIN COVENANTS. The Employee hereby covenants as follows, which
covenants shall be in addition and without prejudice to any other
confidentiality, noncompetition, nonsolicitation, and/or similar covenants to
which the Employee may be subject from time to time including without limitation
those set forth in the Klearfold Merger Agreement:
(A) CONFIDENTIALITY. Both during and following the term of this Agreement
and the Employee's employment hereunder, and thereafter during any Board Right
Period, the Employee shall maintain the confidentiality of all confidential,
sensitive, or proprietary information of the Company and/or its Subsidiaries,
including without limitation with respect to their respective businesses,
finances, affairs, and/or technology, which shall be and remain the exclusive
property of the Company and/or its respective Subsidiaries, as the case
<PAGE>
-21-
may be, and except as previously authorized in writing by the Company, and
except with respect to information that has otherwise become public through no
action or omission on the part of the Employee, shall not disclose any such
information to any third party, or use it for any purpose other than in the
discharge of his employment duties and responsibilities in the ordinary course
of the Company's business. Upon the termination of the Employee's employment
with the Company, the Employee shall promptly return to the Company all
documents and other tangible media that contain or reflect any confidential,
sensitive, or proprietary information of the Company and/or its Subsidiaries
(including all copies, reproductions, digests, abstracts, analyses, and notes)
in his possession or control, and will destroy any related computer files on any
equipment not owned by the Company or its Subsidiaries. Notwithstanding the
foregoing, if the Employee is required by law or regulation to disclose any
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries, the Employee will provide the Company with prompt notice of such
disclosure obligation so that the Company may seek a protective order or take
other appropriate action and/or waive compliance with this Section 8(a) to the
extent of such required disclosure. In the absence of such a waiver, if the
Employee is, in the opinion of his counsel, compelled to disclose any such
information upon pain of liability for contempt or other censure or penalty, the
Employee may disclose such information to the relevant court or other tribunal
or governmental authority without liability hereunder, but notwithstanding such
disclosure, such information shall remain confidential under this Section 8(a)
after such disclosure.
(B) NON-COMPETITION. In consideration for, among other things, the
Company's agreements herein and recognizing the Employee's status as an Investor
in the Company pursuant to the Investment Agreement and as a stockholder of the
Company, the Employee hereby agrees that, (i) during any period during which the
Employee is employed by the Company and/or receiving any compensation pursuant
to this Agreement, including, without limitation, compensation pursuant to
Section 5(a) and 5(b) hereof during the Initial Severance Period, the Additional
Severance Period, if any, and any other period during which payments are being
made to the Employee pursuant to and in accordance with such Sections 5(a) and
5(b) or Section 5(d) hereof, (ii) during any Board Right Period, and (iii) if
the Employee's employment with the Company terminates pursuant to Section 4(b)
(by the Company for Cause) or Section 4(e) (by the Employee without Good Reason)
hereof, then also during the longer of (x) the period of one year commencing on
the date of such Termination of Employment, and (y) the period of two years from
the Closing Date, all of which applicable periods shall automatically be
extended by a period of time equal to any period in which the Employee is in
breach of any obligations under this Section 8 (all of which applicable periods,
including any such extension, the "Restricted Period"), the Employee shall not
---------- ------
engage, directly or indirectly (except as a stockholder, director, officer,
and/or employee of the Company and/or any of its Subsidiaries), as a proprietor,
equityholder, investor
<PAGE>
-22-
(except as a passive investor holding not more than 3% of the outstanding
capital stock of a publicly held company), lender, partner, director, officer,
employee, consultant, or representative, or in any other capacity: (A) in the
manufacture of folding cartons or sleeves manufactured, at least in part, of
rigid plastic, (B) the manufacture, design, printing or production of specialty
packaging products for use in the cosmetics, entertainment (including recorded
music, video, software, multimedia and electronic gaming) or tobacco markets, in
each case anywhere in the world (the Employee hereby acknowledging that the
Company and its Subsidiaries do such business worldwide), or (C) in any other
business which the Company or any of its Subsidiaries may conduct at any time
during the period of the Employee's employment hereunder, anywhere that the
Company or any its Subsidiaries may conduct such business at any time during the
term of such noncompetition obligations.
(C) NON-SOLICITATION OF EMPLOYEES, ETC. During the Restricted Period, the
Employee shall not directly or indirectly recruit, solicit, induce, or attempt
to induce any of the employees or independent contractors of the Company or any
of its Subsidiaries to terminate their employment or contractual relationship
with the Company or such Subsidiary; and shall not assist any other Person to do
so, or be a proprietor, equityholder, investor (except as a passive investor
holding not more than 3% of the capital stock of a publicly held company),
lender, partner, director, officer, employee, consultant, or representative of
any Person who does or attempts to do so.
(D) NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. During the Restricted
Period (extended as described in Section 8(c) above), the Employee shall not
directly or indirectly solicit, divert, take away, or attempt to divert or take
away, from the Company or any of its Subsidiaries any of the business or
patronage of any of their respective customers, clients, accounts, vendors, or
suppliers, or induce or attempt to induce any such Person to reduce the amount
of business it does with the Company or any of its Subsidiaries, and the
Employee shall not assist any other Person to do so, or be a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the capital stock of a publicly held company), lender, partner, director,
officer, employee, consultant, or representative of any Person who does or
attempts to do so.
(E) TERMINATION OF CERTAIN COVENANTS. The covenants of the Employee set
forth in Sections 8(b) - (d) hereof shall not apply at any time other than
during the Restricted Period (but the termination of such covenants shall be
without prejudice to any other confidentiality, noncompetition, nonsolicitation,
and/or similar covenants to which the Employee may be subject from time to time,
including without limitation those set forth in the Klearfold Merger Agreement).
For the avoidance of doubt, in the event that the covenants set forth in Section
8(b) are no longer binding upon the Employee, the fact of the Employee's
engaging in
<PAGE>
-23-
any activity which would have been prohibited to the Employee under Section 8(b)
shall not by itself constitute a violation of the Employee's covenants in any of
Sections 8(c), 8(d) and 8(f) hereof and it shall not be a violation of either
Section 8(c) or Section 8(d) for the Employee to provide services in any
capacity to another Person who may engage in conduct prohibited by either such
section, so long as Employee does not directly assist or participate in, or
provide consultation with respect to, such prohibited conduct.
(F) NON-DISPARAGEMENT. Both during and following the term of this
Agreement and the Employee's employment hereunder, the Employee shall not
disparage, deprecate, or make any negative comment with respect to the Company
or any of its Subsidiaries or their respective businesses, operations, or
properties.
(G) EQUITABLE REMEDIES. The Employee hereby acknowledges that any breach
by him of his obligations under this Section 8 would cause substantial and
irreparable damage to the Company, and that money damages would be an inadequate
remedy therefor, and accordingly, acknowledges and agrees that the Company shall
be entitled to an injunction, specific performance, and/or other equitable
relief to prevent the breach of such obligations (in addition to all other
rights and remedies to which the Company may be entitled in respect of any such
breach).
(H) MODIFICATION. In the event that a court of competent jurisdiction
determines that any of the provisions of this Section 8 would be unenforceable
as written because they cover too extensive a geographic area, too broad a range
of activities, or too long a period of time, or otherwise, then such provisions
shall automatically be modified to cover the maximum geographic area, range of
activities, and period of time as may be enforceable, and in addition, such
court is hereby expressly authorized so to modify this Agreement and to enforce
it as so modified. No invalidity or unenforceability of any section of this
Agreement or any portion thereof shall affect the validity or enforceability of
any other section or of the remainder of such section.
9. MISCELLANEOUS.
(A) BENEFITS OF AGREEMENT; NO ASSIGNMENTS; THIRD-PARTY BENEFICIARIES.
(i) This Agreement shall bind and inure to the benefit of the parties
hereto, and the respective heirs, successors, and permitted assigns of each of
them.
(ii) Except to the extent expressly contemplated by Section 6.4 hereof and,
subject to Section 6.2(d) hereof, pursuant to the Stockholder Agreement, neither
party hereto shall assign any rights or delegate any obligations hereunder
<PAGE>
-24-
without the consent of the other party (except that the Company may assign its
rights and delegate its obligations hereunder to any successor to its business,
whether by merger or consolidation, sale of stock or of all or substantially all
of assets, or otherwise), and any attempt to do so shall be void.
(iii) Nothing in this Agreement is intended to or shall confer any rights
or remedies on any Person other than the parties hereto and their respective
heirs, successors, and permitted assigns.
(B) NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed to the recipient party at his or its address set forth in the
first paragraph hereof, to the attention of Richard Block and David Underwood,
if the Company is the intended recipient party, (or to such other address or
other Person's attention as the recipient party may have furnished to the
sending party for the purpose pursuant to this section).
(C) COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same agreement.
In pleading or proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart.
(D) CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and shall not affect the interpretation or construction
of this Agreement.
(E) CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.
(F) WAIVERS; AMENDMENTS. No waiver of any breach or default hereunder
shall be valid unless in a writing signed by the waiving party. No failure or
other delay by any party exercising any right, power, or privilege hereunder
shall be or operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege. No amendment or modification of this
Agreement shall
<PAGE>
-25-
be valid or binding unless in a writing signed by both the Employee and the
Company.
(G) ENTIRE AGREEMENT. This Agreement and the Stockholder Agreement contain
the entire understanding and agreement between the parties, and supersede any
prior understandings or agreements between them, with respect to the subject
matter hereof.
(H) GOVERNING LAW. This Agreement shall to the maximum lawful
extent be governed by and interpreted and construed in accordance with the
internal laws of the Commonwealth of Pennsylvania, as applied to contracts under
seal made, and entirely to be performed, within Pennsylvania, and without
reference to principles of conflicts or choice of law.
<PAGE>
-26-
IN WITNESS WHEREOF, each of the Company and the Employee has executed and
delivered this Employment, Non-Competition and Stock Repurchase Agreement as an
agreement under seal as of the date first above written.
COMPANY: IMPAC GROUP, INC.
/s/ Richard Block
-----------------------------
By
Name: Richard Block
Title:
/s/ H. Scott Herrin
EMPLOYEE: ------------------------------
Name: H. Scott Herrin
<PAGE>
EXHIBIT 10.17
EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT
This Employment, Non-Competition and Stock Repurchase Agreement (this
"Agreement") dated as of March 12, 1998, is by and between IMPAC Group, Inc., a
- ----------
Delaware corporation formerly known as KFI Holding Corporation with its
principal executive offices at 1950 North Ruby Street, Melrose Park, Illinois
60160-1178 (the "Company"), and Melvin B. Herrin (the "Employee"), an individual
------- --------
residing at __________________________________________________.
This Agreement is being entered into in connection with (a) the Investment
Agreement dated as of February 19, 1998 (the "Investment Agreement"), by and
---------- ---------
among the Company, Heritage Fund I Investment Corporation ("Heritage"), the
--------
Employee and certain other investors in the Company, (b) the Agreement and Plan
of Merger dated as of February 19, 1998 (the "Merger Agreement"), by and among
------ ---------
the Company, Klearfold, Inc., AGI Incorporated, and others, and (c) the
Stockholder Agreement of even date herewith (the "Stockholder Agreement") among
----------- ---------
the Company, the Employee and certain other stockholders of the Company.
Capitalized terms used and not otherwise defined herein have the respective
meanings ascribed to them in the Stockholder Agreement.
The Company and the Employee agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
meanings specified below:
"Act" means the Security Act of 1933, as amended.
---
"Additional Severance Period" has the meanings specified in Sections 5(a)
---------- --------- ------
and 5(b) hereof.
"AGI" means AGI Incorporated, an Illinois corporation.
---
"Base Severance Compensation" has the meaning specified in Section 5(a)
---- --------- ------------
hereof.
"Board" means the Board of Directors of the Company.
-----
"Board Right Period" means the period during which the Employee shall not
----- ----- ------
have irrevocably waived by written notice to the Company and the other Herrin
<PAGE>
-2-
Stockholders, or granted an irrevocable proxy in favor of the other Herrin
Stockholders to exercise, his rights to participate with the other Herrin
Stockholders in designating one or more directors of the Company pursuant to
Section 3.1 of the Stockholder Agreement or to attend board meetings pursuant to
Section 6.2(l) of the Investment Agreement; provided, however, the Employee
-------- -------
shall be deemed to have irrevocably waived such rights at any time, and so long
as, none of the Employee, the Herrin Family Trust or any other Herrin
Stockholder (other than H. Scott Herrin or the Scott Trust) owns any Common
Stock or other Securities (each of the defined terms used in this definition and
not otherwise defined in this Agreement having the same meanings herein as in
the Stockholder Agreement).
"Bonus Plan" has the meaning specified in Section 3(b) hereof.
----- ----
"Cause" means the Employee's (i) commission of a breach of the provisions
-----
of Section 8 hereof, (ii) habitual and willful neglect of the performance of the
Employee's duties as set forth in Section 2(a) hereof, such neglect having
continued for a period of 30 days after written notice thereof is given by the
Board to the Employee, (iii) commission of an act of fraud, misappropriation, or
dishonesty in connection with his employment by the Company, or (iv) conviction
of or plea of nolo contendere to a felony. Notwithstanding any other provision
of this Agreement, the Employee shall not be terminated for Cause unless and
until there shall have been delivered to him a copy of a resolution duly adopted
by the Board by a vote of not less than 80% of the Directors (excluding the
Employee, if a member of the Board) at a meeting called and held for the purpose
(within twelve (12) months of the date of the Board's becoming aware of the
condition or conditions constituting Cause, as set forth in clauses (i) - (iv)
above, and after reasonable notice to the Employee and an opportunity for him,
together with his counsel, to be heard by the Board), finding that in the good
faith opinion of the Board, one of the conditions set forth above in this
definition of Cause had been fulfilled, and specifying the particulars thereof.
"Certificate of Value" has the meaning specified in the definition of "Fair
----------- -- -----
Market Value".
"Charter" means the Company's Amended and Restated Certificate of
-------
Incorporation and all amendments thereto.
"Closing Date" means the date of this Agreement.
------- ----
"Common Stock" means the Company's Series A Common Stock, $.001 par value
------ -----
per share, and any capital stock of the Company which is (a) not subject to
redemption, or (b) issued to the holders of shares of Common Stock upon any
reclassification thereof.
<PAGE>
-3-
"Company" has the meaning specified in the preamble hereto, and, unless the
-------
context otherwise requires, shall include all Subsidiaries of the Company.
"Company Non-Repurchase Notice" has the meaning specified in Section 6.1(b)
------- -------------- ------
hereof.
"Company Repurchase Notice" has the meaning specified in Section 6.1(b)
------- ---------- ------
hereof.
"Delayed Closing Date" has the meaning specified in Section 7.1(b) hereof.
------- ------- ----
"Designated Term" has the meaning specified in Section 2(b) hereof.
---------- ----
"Disability" shall mean that an independent medical doctor (selected by the
----------
Company's health or disability insurer) certifies that the Employee has for 180
consecutive days or 240 non-consecutive days in any twelve (12) month period
been disabled in a manner which seriously interferes with his ability to perform
his duties under this Agreement and which is reasonably expected to continue
indefinitely.
"Disposition Event" shall mean any merger, consolidation or sale of more
----------- -----
than 50% of the Company's assets or other similar corporate action (including,
without limitation, a recapitalization) pursuant to which the holders of Common
Stock receive cash, securities or other property, or any transaction as a result
of which the Company is acquired by the purchase of more than a majority of its
common equity.
"Fair Market Value" means, unless otherwise specified in the definition of
---- ------
"Market Value Per Share", the fair market value of the entire common stock
equity of the Company (without premium for control or discounts for minority
interests, restrictions on transfer or lack of voting rights), as determined in
good faith by the Board at a meeting at which a quorum of the Board is present
in accordance with the Stockholder Agreement, or by unanimous written consent,
calculated as of such date, provided that in making such determination the Board
may in its sole discretion rely upon an appraisal or valuation of an Independent
Appraiser selected in good faith by the Board and conducted within the six (6)
month period preceding the date of the Board's determination, and as certified
by a duly authorized officer of the Company in a Certificate of Value (a
"Certificate of Value") which shall be kept as part of the minutes and other
- ------------ -- -----
corporate records of the Company.
"Formula Value" means, with respect to any date, the amount which is equal
------- -----
to the aggregate of (a) the product obtained by multiplying EBITDA (as defined
below) during the 12 full calendar months immediately preceding such date by
five
<PAGE>
-4-
and seven-tenths (5.7), less (b) the sum of (i) the Company's consolidated
----
funded indebtedness outstanding on such date, including (without limitation)
obligations under capitalized leases, and (ii) the liquidation value of, and
accrued dividends on, any preferred stock of the Company outstanding on such
date, plus (c) the aggregate cash balances and cash equivalents of the Company
----
and its Subsidiaries on such date. As used in this definition, "EBITDA" for any
------
period, means the Consolidated Net Income (as defined below) of the Company and
its Subsidiaries for such period plus to the extent deducted in determining
Consolidated Net Income all (a) income taxes (including reserves for deferred
income taxes), (b) gross interest expense, (c) depreciation and (d)
amortization, all determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied for such period.
As used in this definition, "Consolidated Net Income" means, for any period, the
------------ --- ------
net income (or loss) of the Company and its Subsidiaries for such period on a
consolidated basis, after deducting all operating expenses, provisions for all
taxes and reserves (including reserves for deferred income taxes) and all other
proper deductions, all determined in accordance with generally accepted
accounting principles consistently applied, after eliminating all intercompany
items and after adjustment for any add-backs or other similar adjustments
properly made in connection with the transactions contemplated by the Merger
Agreement and the Investment Agreement, but excluding from the definition of
Consolidated Net Income any extraordinary gains and/or losses and any gains
and/or losses from the sale or other disposition of assets other than in the
ordinary course of business, all determined in accordance with generally
accepted accounting principles consistently applied.
"Good Reason" means (i) failure of the Company to maintain the Employee in
---- ------
the position of Chairman of its Board of Directors (or such other senior
executive position as may be offered by the Company and the President of the
Company and which the Employee in his sole discretion may accept); (ii) failure
by the Company to pay and provide to the Employee the compensation or benefits
provided for in Section 3 hereof, and, any time following the end of the
Designated Term, any decrease in the compensation or benefits provided for in
Section 3 hereof (including, without limitation, any failure to provide cost of
living increases even after the end of the Designated Term) which failure or
decrease is not cured or remedied within 30 days after written notice thereof is
given by the Employee to the Company; (iii) the Board requiring the Employee to
be permanently based anywhere other than within 25 miles of the Employee's
present office location in Warrington, Pennsylvania (excluding business-related
travel); or (iv) the Employee becoming obligated to report to or accept
assignments from any Person other than the Board of Directors of the Company.
"Heritage" has the meaning specified in the preamble.
--------
<PAGE>
-5-
"Herrin Shares" means the Shares hereunder, and the Shares under and as
------ ------
defined in the Employment, Non-Competition and Stock Repurchase Agreement
between the Company and Scott Herrin.
"Independent Appraiser" means an investment banking or accounting firm or
----------- ---------
independent appraiser of nationally recognized standing and at least ten years
experience in evaluating businesses similar to the Company and its Subsidiaries,
and not an Affiliate (as defined in the Stockholder Agreement) of the Company or
any of its Subsidiaries or any stockholder of the Company.
"Initial Post-Term Severance Period" has the meaning specified in Section
------- --------- --------- ------
5(b) hereof.
"Initial Severance Period" has the meaning specified in Section 5(a)
------- --------- ------
hereof.
"Insurance Policy" means an insurance policy purchased or to be purchased
--------- ------
by the Company insuring against the occurrence of the Repurchase Event, with the
Company as beneficiary, the proceeds of which policies are to be used
exclusively to fund the payment of the repurchase price for the Herrin Shares.
"Investment Agreement" has the meaning specified in the preamble hereto.
---------- ---------
"Klearfold" means Klearfold, Inc., a Pennsylvania corporation.
---------
"Klearfold Merger Agreement" means the Agreement and Plan of Merger dated
--------- ------ ---------
as of June 6, 1996, by and among Heritage, the Company, KFI/Heritage Acquisition
Corporation, Klearfold, the Employee and Scott Herrin.
"Market Value Per Share" means, with respect to any date, the quotient
------ ----- --- -----
obtained by dividing (a) the sum of (i) the most recently determined Fair Market
Value of the Company plus (ii) an amount equal to the aggregate consideration
----
which would then be payable to the Company, assuming the exercise at such time
of all then outstanding and exercisable warrants, options, or convertible
securities pursuant to which the Company would, upon exercise, then be obligated
to issue Common Stock, other than warrants or options the strike or exercise
price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, by (b) the sum of (i) the number of shares of Common Stock then
--
outstanding, plus (ii) the number of shares of Common Stock then issuable upon
----
exercise of all then outstanding and exercisable warrants, options, or
convertible securities pursuant to which the Company would, upon exercise, then
be obligated to issue Common Stock, other than warrants or options the strike or
exercise price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, provided, however, that in the event that on
<PAGE>
-6-
the date with respect to which Market Value Per Share is being determined, more
than six (6) months shall have elapsed since the date of execution of the most
recent Certificate of Value, then the Fair Market Value of the Company for
purposes of clause (a)(i) of this definition of Market Value Per Share shall be
calculated as the Formula Value of the Company as of the date with respect to
which Market Value Per Share is being determined. In the event that either (x)
the Employee (for the purposes of this definition, including any Personal
Representative of the Employee), or (y) if (and only if) the Fair Market Value
of the Company would otherwise be determined by reference to the Formula Value
in accordance with the foregoing proviso, the Company, so elects (the electing
party being referred to as the "Requesting Party"), by written notice to the
---------- -----
Company (in the case of any election by the Employee) or to the Employee (in the
case of any election by the Company) (the party receiving such notice, the "Non-
----
Requesting Party") within five (5) days of any determination of Market Value Per
- ---------- -----
Share in accordance with the preceding sentence, the Fair Market Value of the
Company shall be determined either by one Independent Appraiser selected by the
Requesting Party and acceptable to the Non-Requesting Party in its sole
discretion, or, if the Requesting Party and the Non-Requesting Party are unable
to agree upon the identity of such an Independent Appraiser within fifteen (15)
days after the date of the Requesting Party's notice to the Non-Requesting
Party, by two Independent Appraisers, selected one by the Requesting Party and
one by the Non-Requesting Party, who shall work together to determine in good
faith one Fair Market Value of the Company acceptable to both Independent
Appraisers. The appraisal of such Independent Appraiser(s) shall be delivered to
the Requesting Party and the Non-Requesting Party within 60 days after the date
of the Requesting Party's notice to the Non-Requesting Party requesting an
appraisal. In the event that two Independent Appraisers are appointed and they
are unable to reach an agreement as to the Fair Market Value of the Company
within such 60 day period, the Appraised Fair Market Value shall be calculated
by adding the two Fair Market Values of the Company, as determined in good faith
within such period by each of such Independent Appraisers, and dividing the sum
thereof by two. The Fair Market Value of the Company determined by such
Independent Appraiser(s) in accordance with this definition (the "Appraised Fair
--------- ----
Market Value") shall be conclusive and shall be used to determine the Market
- ------ -----
Value Per Share hereunder, and judgment thereon may be entered in any court of
competent jurisdiction. All expenses of the Independent Appraiser or Independent
Appraisers appointed pursuant to this definition shall be borne by the Company,
except that if the Appraised Fair Market Value is less than 115% of the Fair
Market Value of the Company determined pursuant to the first sentence of this
definition, all expenses of such Independent Appraiser(s) shall be borne by the
Requesting Party.
"Merger Agreement" has the meaning specified in the preamble hereto.
------ ---------
<PAGE>
-7-
"Original Employment Agreement" means the Executive Employee Agreement
-------- ---------- ---------
dated as of June 7, 1996, between the Employee and the Company.
"Original Price Per Share" means, as to all Shares acquired pursuant to the
-------- --------- -----
Investment Agreement, $340.00 per Share, and as to all other Shares, the actual
price per Share paid by the Employee upon the acquisition of such Shares.
"Other Executive" means the other senior executive employees of the Company
----- ---------
and the Subsidiaries who are party to Employment, Non-Competition and Stock
Repurchase Agreements with the Company dated of even date herewith, i.e. James
Oppenheimer, Richard Oppenheimer, David Underwood and Dean Henkel.
"Person" means an individual, partnership, corporation, limited liability
------
company, association, trust, joint venture, unincorporated organization, or any
government, governmental department or agency or political subdivision thereof.
"Personal Representative" means the successor or legal representative
-------- --------------
(including without limitation, a guardian, executor, administrator or
conservator) of the Employee following his death or legal incompetence.
"Public Offering" means any sale of Common Stock to the public pursuant to
------ --------
a public offering registered under the Act.
"Public Sale" means any Public Offering or any sale of Common Stock to the
------ ----
public through a broker or market-maker pursuant to the provisions of Rule 144
(or any successor rule) adopted under the Act.
"Put Closing" has the meaning specified in Section 6.2(a) hereof.
--- -------
"Put Notice" has the meaning specified in Section 6.2(a) hereof.
--- ------
"Put Period" has the meaning specified in Section 6.2(a) hereof.
--- ------
"Put Rejection Notice" has the meaning specified in Section 6.2(d) hereof.
--- --------- ------
"Qualified Public Offering" means an underwritten Public Offering, pursuant
--------- ------ --------
to an effective registration statement under the Securities Act, covering the
offer and sale of shares of Common Stock in which an aggregate of not less than
$25,000,000 of gross proceeds from such public offering are received by the
Company and the selling stockholders.
"Related Persons" means the Employee's parents, spouse, children and
------- -------
grandchildren.
<PAGE>
-8-
"Repurchase Event" has the meaning specified in Section 6.1 (a) hereof.
---------- -----
"Restricted Period" has the meaning specified in Section 8(b) hereof.
---------- ------
"Severance Extension Notice" has the meaning specified in Section 5(a)
--------- --------- ------
hereof.
"Severance Notice" has the meaning specified in Section 5(b) hereof.
--------- ------
"Severance Release" has the meaning specified in Section 5(a) hereof.
--------- -------
"Shares" means (a) all shares of Common Stock acquired by the Employee from
------
time to time, whether pursuant to the Investment Agreement, upon exercise of any
rights of first refusal or pre-emptive rights under the Stockholder Agreement,
any repurchase rights as a Co-Manager under any Agreement relating to Employment
and Stock Ownership between the Company and any other employee of the Company,
upon exercise of any options, warrants, or other rights to purchase shares of
Common Stock, or otherwise, (b) any shares of Common Stock into which such
shares of Common Stock have been converted, (c) any capital stock or other
securities into which or for which such shares of Common Stock shall have been
converted or exchanged pursuant to any recapitalization, reorganization or
merger of the Company, and (d) any shares of capital stock issued with respect
to the foregoing pursuant to a stock split or stock dividend, which at the time
of the Employee's Termination of Employment are owned by the Employee or any
Person owning shares transferred to him pursuant to Section 1.1(b) and 1.1(e) of
the Stockholder Agreement by the Employee or any other Herrin Stockholder, as
defined pursuant to the Stockholder Agreement or any (direct or indirect)
transferees of the Employee or any other Herrin Stockholder pursuant to that
provision.
"Stockholder Agreement" has the meaning specified in the preamble hereto.
----------- ---------
"Subsidiary" means, with respect to the Company, any corporation a majority
----------
(by number of votes) of the outstanding shares of any class or classes of which
shall at the time be owned by the Company or by a Subsidiary of the Company, if
the holders of the shares of such class or classes (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are at the time entitled, as such holders, to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to vote exists by
reason of the happening of a contingency and including without limitation AGI
and Klearfold.
<PAGE>
-9-
"Termination of Employment" means the Employee's ceasing to be an employee
----------- -- ----------
of the Company or any of its Subsidiaries, whether voluntary or involuntary, for
any reason or for no reason, including without limitation, for resignation,
death or Disability of the Stockholder, and whether or not for Cause or for Good
Reason.
"Variable Severance Compensation" has the meaning specified in Section 5(a)
-------- --------- ------------
hereof.
2. EMPLOYMENT.
(A) EMPLOYMENT. Subject to the terms and conditions of this Agreement, the
Company agrees to employ the Employee, and the Employee agrees to serve, as the
Chairman of the Board of the Company, having only such powers and duties as may
be mutually agreed by the Board and the Employee. The Employee agrees to devote
such time and attention to his duties as Chairman of the Board as may be
mutually agreed from time to time by the Board and the Employee, and the Company
recognizes and agrees that the Employee shall not be required to devote any
specified level of time and attention to his position as Chairman of the Board.
(B) DESIGNATED TERM. The Employee's employment by the Company hereunder,
which commenced on the date of the Original Employment Agreement, shall continue
until terminated in accordance with Section 4 hereof, provided that, subject to
the other terms and conditions hereof, the term of employment shall be at least
until June 7, 2001 (the period from the date hereof to June 7, 2001 being
referred to herein as the "Designated Term"), and provided, further that from
---------- ----
and after June 8, 2001, subject to the provisions of Section 5 hereof, the
Employee's employment hereunder shall be at will.
(C) TERMINATION OF ORIGINAL EMPLOYMENT AGREEMENT. The parties agree that
upon the date hereof, the Original Employment Agreement shall terminate and be
of no further force and effect, provided that no compensation shall be payable
to the Employee as a result of such termination other than compensation accrued
and unpaid under Section 2(a) of the Original Employment Agreement at the time
of such termination.
3. COMPENSATION. During the Designated Term, the Company shall pay and
provide to the Employee the compensation set forth below:
(A) BASE SALARY. The Company shall pay to the Employee a base salary,
prorated and payable in installments in accordance with Klearfold's usual
payroll practices. Such base salary shall be at the rate of $325,000 per annum
for 1998, and thereafter such base salary shall be adjusted annually based upon
the percentage increase, if any, in the Consumer Price Index, All Items,
Philadelphia as published
<PAGE>
-10-
by the Bureau of Labor Statistics (the "CPI"), as follows: The Employee's base
---
salary for each of the years 1999-2001 shall be calculated by multiplying the
Employee's 1998 base salary by a fraction, the numerator of which is the average
CPI for the twelve months of the year preceding the year for which such base
salary is being calculated, and the denominator of which is the CPI for December
1997. In no event will any such adjustment reduce the Employee's base salary for
any year below that in effect for the preceding year.
(B) BONUSES. The Employee shall be entitled to participate in the
Company's Executive Bonus Plan (the "Bonus Plan"), a copy of which is appended
----- ----
hereto and incorporated herein by this reference.
(C) FRINGE BENEFITS. In addition to the Employee's base salary and any
bonuses to which the Employee may become entitled under the Bonus Plan, the
Company shall provide to the Employee additional benefits as provided to other
employees of the Company and its Subsidiaries whose base salary and level of
responsibility are comparable to those of the Employee, including as described
in the attached Schedule of Benefits.
-------- -- --------
4. TERMINATION. The Employee's employment hereunder shall terminate upon
the occurrence of any of the following events:
(A) the Employee's death or Disability; or
(B) the termination of the Employee's employment hereunder by the Company,
for Cause by written notice to the Employee; or
(C) the termination of the Employee's employment hereunder by the Company,
without Cause, by written notice to the Employee; or
(D) the termination of the Employee's employment hereunder by the Employee,
for Good Reason, by written notice to the Company; or
(E) the termination of the Employee's employment hereunder by the Employee,
without Good Reason, by 30 days' prior written notice to the Company.
5. SEVERANCE. Notwithstanding any other provision of this Agreement:
(A) If the Employee's employment with the Company terminates pursuant to
either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) during the Designated Term, then the Company shall,
upon delivery to the Company of a release of any claims of the Employee against
the Company and its stockholders, directors, officers, employees, agents or
other affiliates arising out of his employment relationship (other than claims
to any
<PAGE>
-11-
compensation or benefits payable under or to be provided pursuant to this
Section 5, or any rights of the Employee under Sections 6 or 7 hereof) executed
by the Employee and reasonably satisfactory in form and substance to the Company
(a "Severance Release"), continue to pay and provide to the Employee (A) the
--------- -------
compensation payable to him pursuant to Section 3(a) hereof, and (B) the
benefits provided to him pursuant to Section 3(c) hereof (the compensation and
benefits described in clauses (A) and (B), together, such Employee's "Base
----
Severance Compensation"), and (C) any bonus accrued or earned by the Employee
- --------- ------------
pursuant to the Bonus Plan and attributable to the Employee's performance for
the portion of the year prior to his Termination of Employment, on a one-time
only basis payable at the time of payment of bonuses to other executive
employees under the Bonus Plan, and (D) for each year, 50% of an amount equal to
the compensation payable to the Employee pursuant to Section 3(a), multiplied by
a fraction, the numerator of which equals the aggregate bonus actually payable
with respect to the preceding year to the Company's other executive employees in
the same bonus pay-out range as the Employee was in prior to his Termination of
Employment, and the denominator of which equals the aggregate salary of such
other executive employees for such preceding year (the compensation described in
clauses (C) and (D) together, such Employee's "Variable Severance Compensation")
-------- --------- ------------
for a period (the "Initial Severance Period") equal to the longer of (i) the
------- --------- ------
remainder of the Designated Term, and (ii) the one-year period following the
date of such Termination of Employment, but this clause only being applicable
if, prior to the earlier of (x) the last day of the Designated Term and (y) the
thirtieth (30th) day from the date of such Termination of Employment, the
Company shall have notified the Employee in writing of the Company's intention,
in the Company's sole discretion, so to extend the Initial Severance Period
(such notice, a "Severance Extension Notice"). In the Company's sole
--------- --------- ------
discretion, the Company may elect, either in the Severance Extension Notice, or
by written notice to the Employee given no later than thirty (30) days prior to
the end of the Initial Severance Period (as it may have been extended pursuant
to the Severance Extension Notice), to continue to pay and provide to the
Employee his Base Severance Compensation for an additional period (the
"Additional Severance Period") of up to one year following the end of the
- ----------- --------- ------
Initial Severance Period (as it may have been extended pursuant to the Severance
Extension Notice), provided that the Additional Severance Period shall in no
event extend beyond the second anniversary of the Employee's Termination of
Employment. Upon payment in full of the Employee's Base Severance Compensation
and, if and when applicable, his Variable Severance Compensation, as described
in this Section 5(a), the Company's obligations to pay and provide the Employee
with any other compensation otherwise payable to him pursuant to Section 3
hereof, and all other rights of the Employee under Sections 2 and 3 hereof and
this Section 5, shall cease as of the date of such payment in full.
(B) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
<PAGE>
-12-
Employee for Good Reason) at any time after the end of the Designated Term, then
if at the time of such Termination of Employment or within thirty (30) days
thereafter, the Company shall, in its sole discretion, so have notified the
Employee in writing (such notice, a "Severance Notice") and the Employee shall
--------- ------
have executed and delivered to the Company a Severance Release, the Company
shall continue to pay and provide to the Employee his Base Severance
Compensation and his Variable Severance Compensation for a period of one year
following the date of such Termination of Employment (the "Initial Post-Term
------- ---------
Severance Period"), provided that, unless the Company shall have notified the
- --------- ------
Employee in writing at the time of his Termination of Employment that it did not
intend to deliver a Severance Notice, the Employee's Base Severance Compensation
shall be payable in any event for the portion of the 30-day period following the
Termination of Employment prior to the Company's delivery either of a Severance
Notice or of notice that the Company did not intend to deliver a Severance
Notice. The Company may elect, in its sole discretion, by written notice to the
Employee given no later than ninety (90) days prior to the end of the Initial
Post-Term Severance Period to extend the period during which the Employee's Base
Severance Compensation shall be payable and provided to the Employee for an
additional period (also referred to herein as an "Additional Severance Period")
---------- --------- ------
of up to one year from the end of the Initial Post-Term Severance Period,
provided that the total period during which his Base Severance Compensation
shall be payable and provided to the Employee under this Section 5(b) shall in
no event extend beyond the second anniversary of the Employee's Termination of
Employment. In the event that no Severance Notice has been given within thirty
(30) days after the date of the Employee's Termination of Employment pursuant to
either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason), then the Company's obligation to pay and provide the
Employee with any compensation shall cease in any event as of the thirtieth
(30th) day following the date of such Termination of Employment, and all other
rights of the Employee under Sections 2, 3 and 5 hereof, shall be deemed to have
ceased as of the date of such Termination of Employment. In the event that a
Severance Notice is given in accordance with this Section 5(b), then upon
payment in full of the Employee's Base Severance Compensation, and, if and when
applicable, his Variable Severance Compensation as described in this Section
5(b), the Company's obligations to pay and provide the Employee with any of the
compensation payable to him pursuant to Section 3 hereof, and all other rights
of the Employee under Sections 2 and 3 hereof and this Section 5, shall cease as
of the date of such payment in full.
(C) If the Employee's employment with the Company terminates pursuant
to any of Sections 4(a) (death or Disability), 4(b) (by the Company for Cause),
or 4(e) (by the Employee without Good Reason) hereof, then the Company's
obligations to pay and provide the Employee with any of the compensation payable
to him pursuant to Section 3 hereof, and all other rights of the Employee under
<PAGE>
-13-
Sections 2 and 3 hereof and this Section 5, shall cease as of the date of such
Termination of Employment.
(D) The Employee shall not be required to mitigate the amount of any
compensation payable to him pursuant to Sections 5(a) or 5(b) hereof, by seeking
other employment or otherwise, provided, that in the event the Employee obtains
other employment during any period for which compensation is being paid pursuant
to Sections 5(a) or 5(b), the amount of compensation otherwise payable to the
Employee pursuant to either of such sections shall be reduced by 50% for the
period during which the Employee is so employed, provided, further, that in the
event that the Employee provides evidence reasonably satisfactory to the Company
that the amount of the resulting reduction in his compensation otherwise payable
pursuant to Sections 5(a) or 5(b) hereof, as the case may be, exceeds the level
of his compensation payable from such other employment, then his compensation
pursuant to Sections 5(a) or 5(b) hereof, as applicable, shall be reduced for
the period of such other employment by an amount equal to the aggregate amount
of his compensation from such other employment during such period. The Employee
shall promptly notify the Company if he obtains other employment during the
applicable period.
(E) Nothing in this Section 5 shall limit any other obligation which
the Company may owe the Employee under any insurance policy, employee benefit
plan or other retirement plan. Furthermore, upon any Termination of Employment
of any type, the Company shall remain obligated to the Employee for (i) any
accrued and unpaid base salary and vacation pay, (ii) reimbursement for
reasonable out-of-pocket expenses incurred by Employee by or on behalf of the
Company or otherwise in the performance of his duties and in accordance with
applicable Company policies then in effect, and (iii) unless otherwise specified
in any such plan, policy or program, payments or benefits explicitly provided
under the terms of any plan, policy or program of the Company in which the
Employee was a participant, or as otherwise required by applicable law.
6. REPURCHASE OF SHARES.
6.1. REPURCHASE RIGHTS OF THE COMPANY.
(A) Upon the later to occur of the death of Scott Herrin and the death
of the Employee (the "Repurchase Event") the Company may, at its option,
---------- -----
repurchase from the holders thereof, and the Personal Representative of the
Employee will at the request of the Company sell to the Company, or procure the
sale to the Company of, all or any portion of the Shares specified in the
Company Repurchase Notice (as defined below) at a purchase price per Share equal
to the Market Value Per Share as of the date of the Repurchase Event.
<PAGE>
-14-
(B) The Company's repurchase rights under Section 6.1(a) shall be
exercisable at any time and from time to time within ninety (90) days after the
date of the Repurchase Event by written notice from the Company to the Personal
Representative of the Employee specifying the number of Shares to be repurchased
(such notice, a "Company Repurchase Notice"), provided, however, that in the
------- ---------- ------
event that the Company determines at any time prior to the expiration of the
period of ninety (90) days from the date of the Repurchase Event that it does
not intend to exercise its repurchase rights under Section 6.1(a) above with
respect to all or any portion of the Shares, the Company shall promptly so
notify the Personal Representative of the Employee in writing (such notice, the
"Company Non-Repurchase Notice"). The closing of the repurchase of Shares
------- -------------- ------
pursuant to the Company Repurchase Notice shall be held not earlier than five
(5) days nor later than thirty (30) days after delivery of the Company
Repurchase Notice. The Company's repurchase rights under Section 6.1(a) shall
lapse if not exercised within the 90-day period specified in this Section 6.1(b)
in accordance with the provisions hereof, except as otherwise provided in
Section 7 hereof. Upon delivery by the Company of the repurchase price for the
Shares being repurchased under this Section 6.1(b) in accordance with Section
7.2 hereof, all of the Shares being repurchased shall no longer be deemed to be
outstanding, all of the rights of the prior holders thereof with respect to such
Shares will terminate, with the exception of the right of such holders to
receive the repurchase price in exchange therefor pursuant to this Section
6.1(b), and payments pursuant to Section 6.3, if any, and the Employee (on his
own behalf and on behalf of his Personal Representative and any other holder of
Shares) hereby irrevocably appoints the Company as his attorney-in-fact to take
all actions necessary and sign all documents required to cancel such Shares on
the Company's books and records.
6.2. PUT RIGHTS OF THE EMPLOYEE'S ESTATE.
(A) Upon the occurrence of the Repurchase Event, the Personal
Representative of the Employee will have the right, but not the obligation, to
request that the Company repurchase all (and not less than all) of the Shares,
for a purchase price per Share equal to the Market Value Per Share as of the
date of the Repurchase Event. The put rights of the Employee' estate under this
Section 6.2 shall be exercisable at any time within sixty (60) days after the
date of the Repurchase Event or, if the Repurchase Event is upon the death of
the Employee, then sixty (60) days after the appointment of a Personal
Representative of the Employee (any such 60-day period being referred to as a
"Put Period") by notice to the Company (the "Put Notice") specifying the date,
---- ------ --- ------
time and place of the closing (the "Put Closing") for such repurchase. The put
--- -------
rights of the Employee's estate under this Section 6.2 will lapse if not
exercised by delivery of a Put Notice to the Company within the applicable Put
Period. Within fifteen (15) days of its receipt of the Put Notice, the Company
shall notify the Employee's Personal Representative in writing whether or not
the Company accepts the put request set
<PAGE>
-15-
forth in the Put Notice, provided that the Company shall be required to
repurchase such Shares as the Company is able to pay the purchase price for by
using the proceeds of the Insurance Policy, less the cash surrender value
----
thereof at such time.
(B) In the event the Company accepts the Put Notice, or fails to
reject the Put Notice within the 15-day period described in the last sentence of
Section 6.2(a), the Put Closing will be held no earlier than forty-five (45)
days nor later than sixty (60) days after delivery of the Put Notice. At the
Put Closing, subject to the provisions of Section 7 hereof, Company shall
purchase, and the Personal Representative of the Employee shall sell, or procure
the sale to the Company of, all of the Shares. Upon tender by the Company of
the purchase price for the Shares in accordance with Section 7.2 below, the
Shares shall no longer be deemed to be outstanding, all of the rights of the
prior holders thereof with respect to the Shares shall terminate with the
exception of the right of such holders to receive the repurchase price from the
Company in exchange for such Shares pursuant to this Section 6.2, and payments
pursuant to Section 6.3, if any, and the Employee (on his own behalf and on
behalf of his Personal Representative and any other holder of Shares) hereby
irrevocably appoints the Company as his attorney-in-fact to take all actions
necessary and sign all documents required to cancel such Shares on the Company's
books and records.
(C) Notwithstanding the foregoing, in the event that any payment by
the Company of any portion of the purchase price for any Shares that the
Employee has requested and the Company has agreed be repurchased pursuant to
Section 6.2(a) is, at the time such payment would otherwise be due hereunder,
limited or prohibited by law or by the terms of any of the Company's or any of
its Subsidiaries' agreements with its or their lenders or any other contracts by
which the Company or any of its Subsidiaries is bound, the Company may complete
the repurchase of such Shares in accordance with Section 7 hereof, but in any
event shall only be required at such time to repurchase that portion of the
Shares, if any, for which payment of the purchase price therefor is not so
prohibited.
(D) In the event the Company rejects the Put Notice with respect to
any Shares the Employee has requested be repurchased pursuant to Section 6.2(a)
by written notice in accordance with the last sentence of Section 6.2(a) (notice
of such rejection, a "Put Rejection Notice"), then the transfer restrictions
--- ----------------
pursuant to Section 1 of the Stockholder Agreement on the Shares in which the
Company refuses to repurchase will thereupon automatically and without further
notice be terminated, with effect from the date of delivery of the Put Rejection
Notice.
6.3. ADDITIONAL PAYMENTS UPON DISPOSITION EVENT, ETC. If, at any
time within six (6) months after any closing of a repurchase by the Company
pursuant to either Section 6.1 or 6.2 above the Company shall become party to a
Disposition Event or the Company completes any Public Offering, or the Company
or any of its
<PAGE>
-16-
stockholders enter into any written agreement or written letter of intent
contemplating any of the foregoing which transaction is consummated within 180
days thereafter, then the Company shall, simultaneously with the consummation of
any such transaction or at such later time as any payment described below is
received by the Company or any of its stockholders, make an additional payment
to the Personal Representative of the Employee in an amount per Share
repurchased from the Personal Representative of the Employee by the Company
pursuant to Section 6.1 or 6.2 above, as the case may be, equal to the excess,
if any, of (i) the value per share of the cash, securities and other property
that the Personal Representative of the Employee would have received (or that
the Company received in which the Personal Representative of the Employee would
have had a beneficial interest as a stockholder of the Company) had the Shares
not been previously so repurchased over (ii) the payment received by the
Personal Representative of the Employee with respect to each such Share pursuant
to Section 6.1 or 6.2 above, as the case may be. Each payment to the Personal
Representative of the Employee pursuant to this Section 6.3 shall be made either
in cash or in the form of the securities and other property received by the
Company or its stockholders, as the case may be.
6.4. TRANSFEREES OF THE EMPLOYEE; LEGEND. Any permitted transferee
of the Shares under the Stockholder Agreement, including without limitation any
Personal Representative or Family Member (as such terms are defined in the
Stockholder Agreement) of the Employee, shall be bound by, and have the benefit
of, the provisions of this Section 6. Except as otherwise permitted by this
Section 6.4, each certificate representing the Shares shall, in addition to any
legends required under the Stockholder Agreement, bear a legend in or
substantially in the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
REPURCHASE RIGHTS IN FAVOR OF THE COMPANY CONTAINED IN AN EMPLOYMENT,
NON-COMPETITION AND STOCK REPURCHASE AGREEMENT, DATED AS OF
_____________, 1998, A COPY OF WHICH WILL BE FURNISHED BY THE COMPANY
TO THE HOLDER OF THE SHARES EVIDENCED BY THIS CERTIFICATE UPON WRITTEN
REQUEST AND WITHOUT CHARGE."
Whenever the requirements of this Section 6.4 shall terminate as to any Shares
pursuant to Section 7.3 below, the holder thereof shall be entitled to receive
from the Company, at the Company's expense, new certificates representing the
Shares without such legend.
6.5. DELAY FOR VALUATION OR RECEIPT OF INSURANCE PROCEEDS. In the
event that, (a) as a result of any requirement to determine the Fair Market
Value of
<PAGE>
-17-
the Company by means of an appraisal pursuant to and in accordance with the
definition of "Market Value Per Share", the Market Value Per Share has not been
determined at the time that the closing of any purchase and sale of Shares
pursuant to this Section 6 is otherwise scheduled to occur, or (b) as a result
of the Company's failure to receive the proceeds from the Insurance Policy, the
Company is not able to pay the repurchase price at the time that the closing of
any purchase and sale of Shares pursuant to this Section 6 is otherwise
scheduled to occur then, and notwithstanding anything to the contrary set forth
in this Section 6 or in Section 7 below, such closing shall be delayed until, in
the case of clause (a) above, the Market Value Per Share has been determined
pursuant to and in accordance with the definition thereof, and such closing
shall in any event occur within thirty (30) days after the date of such
determination, and, in the case of clause (b), such insurance proceeds have been
received, provided that such closing shall in any event occur within ninety (90)
days after the date of the applicable determination of Market Value Per Share.
7. OTHER REPURCHASE PROVISIONS.
7.1. REPURCHASE RESTRICTIONS.
(A) REPURCHASE TERMS. Notwithstanding any provision to the contrary
in Section 6 above, if the Company is prohibited by the terms of any of the
Company's or any of its Subsidiaries' agreements with its or their lenders
(including, without limitation, the Company's senior credit agreement with Bank
of America, N.T. & S.A., and the Indenture with respect to the Company's Senior
Subordinated Notes) (any such agreement, a "Subordinating Agreement") from
------------- ---------
making any payments of any portion of the repurchase price for any of the Shares
in cash, the Company shall be entitled to complete the repurchase of such Shares
as to which payment of the repurchase price in cash is not so prohibited by
delivering to the Employee a check for the repurchase price thereof. The
Company further shall be entitled to complete the repurchase of the other Shares
to be repurchased by it, or any portion thereof, on the first date on which such
payment is not so prohibited by any applicable Subordinating Agreement, provided
that if the closing date of such repurchase is more than six (6) months after
the Employee's Termination of Employment, then, if the repurchase price for the
Shares is based on the Market Value Per Share, the repurchase price shall be
calculated based on the Market Value Per Share as of the date of such closing
instead of as of the date of the Employee's Termination of Employment. The
Company agrees that in the event that it is permitted by the terms of any
Subordinating Agreement to repurchase shares of its Common Stock in cash, it
shall promptly exercise its rights to complete any such repurchase delayed
pursuant to this Section 7.1(a), provided that any such repurchase shall be
pro rata with all other such delayed repurchases and then-current repurchases,
whether hereunder or under any other employment or stock repurchase agreement of
the Company in force from time to time.
<PAGE>
-18-
(B) IMPAIRMENT OF CAPITAL. If, even after giving effect to the
provisions of Section 7.1(a) hereof, the Company is prohibited by law from
repurchasing any Shares which it is entitled to repurchase hereunder due to any
existing or prospective impairment of its capital, the closing of such
repurchase shall be delayed until the first date on which the Company has
sufficient capital to lawfully repurchase such Shares (the "Delayed Closing
------- -------
Date"), and when completed, any payments of the repurchase price shall be
- ----
applied pro rata in accordance with the proviso to Section 7.1(a) above. In the
event of any such delay of a closing, the Company will be obligated to pay, on
the Delayed Closing Date, interest on the repurchase price for such Shares, at
the Prime Rate as published from time to time in the "Wall Street Journal" from
the date on which the closing of the repurchase of such Shares was originally
scheduled to occur to the Delayed Closing Date.
7.2. PAYMENT FOR SHARES. Subject to the provisions of Sections 6.5
and 7.1 above, at any closing held to consummate any repurchase of Shares
hereunder, the Employee's Personal Representative shall deliver to the Company,
the stock certificates representing such Shares, duly endorsed in blank or with
duly executed stock powers attached, and free and clear of all Liens, and the
Company shall deliver to the Employee's Personal Representative a check or
checks in an amount equal to such amount of the repurchase price for such Shares
calculated in accordance with the terms and provisions hereof.
7.3. TERMINATION OF REPURCHASE PROVISIONS. All of the repurchase
rights and obligations contained in this Agreement (excluding, for the avoidance
of doubt, any rights arising under Section 6.3 above) shall terminate
immediately after the completion of any Disposition Event or Qualified Public
Offering; provided, however. that no such termination shall relieve the Company
from any obligation or liability with respect to (i) any note issued in
accordance with Section 7.1 hereof, or (ii) any repurchase which was deferred
pursuant to Section 7.1 and not honored on or before such termination.
7.4 ADJUSTMENT OF REPURCHASE PRICE. Upon any stock split, reverse
stock split, recombination of shares or other similar reorganization of the
capital structure of the Company, the repurchase price otherwise payable upon
the repurchase of any Shares pursuant to Section 6 hereof shall be
proportionally adjusted, as appropriate, to reflect such reorganization.
8. CERTAIN COVENANTS. The Employee hereby covenants as follows,
which covenants shall be in addition and without prejudice to any other
confidentiality, noncompetition, nonsolicitation, and/or similar covenants to
which the Employee may be subject from time to time including without limitation
those set forth in the Klearfold Merger Agreement:
<PAGE>
-19-
(A) CONFIDENTIALITY. Both during and following the term of this
Agreement and the Employee's employment hereunder, and thereafter during any
Board Right Period, the Employee shall maintain the confidentiality of all
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries, including without limitation with respect to their respective
businesses, finances, affairs, and/or technology, which shall be and remain the
exclusive property of the Company and/or its respective Subsidiaries, as the
case may be, and except as previously authorized in writing by the Company, and
except with respect to information that has otherwise become public through no
action or omission on the part of the Employee, shall not disclose any such
information to any third party, or use it for any purpose other than in the
discharge of his employment duties and responsibilities in the ordinary course
of the Company's business. Upon the termination of the Employee's employment
with the Company, the Employee shall promptly return to the Company all
documents and other tangible media that contain or reflect any confidential,
sensitive, or proprietary information of the Company and/or its Subsidiaries
(including all copies, reproductions, digests, abstracts, analyses, and notes)
in his possession or control, and will destroy any related computer files on any
equipment not owned by the Company or its Subsidiaries. Notwithstanding the
foregoing, if the Employee is required by law or regulation to disclose any
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries, the Employee will provide the Company with prompt notice of such
disclosure obligation so that the Company may seek a protective order or take
other appropriate action and/or waive compliance with this Section 8(a) to the
extent of such required disclosure. In the absence of such a waiver, if the
Employee is, in the opinion of his counsel, compelled to disclose any such
information upon pain of liability for contempt or other censure or penalty, the
Employee may disclose such information to the relevant court or other tribunal
or governmental authority without liability hereunder, but notwithstanding such
disclosure, such information shall remain confidential under this Section 8(a)
after such disclosure.
(B) NON-COMPETITION. In consideration for, among other things, the
Company's agreements herein and recognizing the Employee's status as an Investor
in the Company pursuant to the Investment Agreement and as a stockholder of the
Company, the Employee hereby agrees that, (i) during any period during which the
Employee is employed by the Company and/or receiving any compensation pursuant
to this Agreement, including, without limitation, compensation pursuant to
Section 5(a) and 5(b) hereof during the Initial Severance Period, the Additional
Severance Period, if any, and any other period during which payments are being
made to the Employee pursuant to and in accordance with such Sections 5(a) and
5(b) or Section 5(d) hereof, (ii) during any Board Right Period, and (iii) if
the Employee's employment with the Company terminates pursuant to Section 4(b)
(by the Company for Cause) or Section 4(e) (by the Employee without Good Reason)
hereof, then also during the longer of (x) the period of one year commencing on
the
<PAGE>
-20-
date of such Termination of Employment, and (y) the period of two years from the
Closing Date, all of which applicable periods shall automatically be extended by
a period of time equal to any period in which the Employee is in breach of any
obligations under this Section 8 (all of which applicable periods, including any
such extension, the "Restricted Period"), the Employee shall not engage,
---------- ------
directly or indirectly (except as a stockholder, director, officer, and/or
employee of the Company and/or any of its Subsidiaries), as a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the outstanding capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative, or in any other
capacity: (A) in the manufacture of folding cartons or sleeves manufactured, at
least in part, of rigid plastic, (B) the manufacture, design, printing or
production of specialty packaging products for use in the cosmetics,
entertainment (including recorded music, video, software, multimedia and
electronic gaming) or tobacco markets, in each case anywhere in the world (the
Employee hereby acknowledging that the Company and its Subsidiaries do such
business worldwide), or (C) in any other business which the Company or any of
its Subsidiaries may conduct at any time during the period of the Employee's
employment hereunder, anywhere that the Company or any its Subsidiaries may
conduct such business at any time during the term of such noncompetition
obligations.
(C) NON-SOLICITATION OF EMPLOYEES, ETC. During the Restricted Period,
the Employee shall not directly or indirectly recruit, solicit, induce, or
attempt to induce any of the employees or independent contractors of the Company
or any of its Subsidiaries to terminate their employment or contractual
relationship with the Company or such Subsidiary; and shall not assist any other
Person to do so, or be a proprietor, equityholder, investor (except as a passive
investor holding not more than 3% of the capital stock of a publicly held
company), lender, partner, director, officer, employee, consultant, or
representative of any Person who does or attempts to do so.
(D) NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. During the
Restricted Period (extended as described in Section 8(c) above), the Employee
shall not directly or indirectly solicit, divert, take away, or attempt to
divert or take away, from the Company or any of its Subsidiaries any of the
business or patronage of any of their respective customers, clients, accounts,
vendors, or suppliers, or induce or attempt to induce any such Person to reduce
the amount of business it does with the Company or any of its Subsidiaries, and
the Employee shall not assist any other Person to do so, or be a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the capital stock of a publicly held company), lender, partner, director,
officer, employee, consultant, or representative of any Person who does or
attempts to do so.
<PAGE>
-21-
(E) TERMINATION OF CERTAIN COVENANTS. The covenants of the Employee
set forth in Sections 8(b) - (d) hereof shall not apply at any time other than
during the Restricted Period (but the termination of such covenants shall be
without prejudice to any other confidentiality, noncompetition, nonsolicitation,
and/or similar covenants to which the Employee may be subject from time to time,
including without limitation those set forth in the Klearfold Merger Agreement).
For the avoidance of doubt, in the event that the covenants set forth in Section
8(b) are no longer binding upon the Employee, the fact of the Employee's
engaging in any activity which would have been prohibited to the Employee under
Section 8(b) shall not by itself constitute a violation of the Employee's
covenants in any of Sections 8(c), 8(d) and 8(f) hereof and it shall not be a
violation of either Section 8(c) or Section 8(d) for the Employee to provide
services in any capacity to another Person who may engage in conduct prohibited
by either such section, so long as Employee does not directly assist or
participate in, or provide consultation with respect to, such prohibited
conduct.
(F) NON-DISPARAGEMENT. Both during and following the term of this
Agreement and the Employee's employment hereunder, the Employee shall not
disparage, deprecate, or make any negative comment with respect to the Company
or any of its Subsidiaries or their respective businesses, operations, or
properties.
(G) EQUITABLE REMEDIES. The Employee hereby acknowledges that any
breach by him of his obligations under this Section 8 would cause substantial
and irreparable damage to the Company, and that money damages would be an
inadequate remedy therefor, and accordingly, acknowledges and agrees that the
Company shall be entitled to an injunction, specific performance, and/or other
equitable relief to prevent the breach of such obligations (in addition to all
other rights and remedies to which the Company may be entitled in respect of any
such breach).
(H) MODIFICATION. In the event that a court of competent jurisdiction
determines that any of the provisions of this Section 8 would be unenforceable
as written because they cover too extensive a geographic area, too broad a range
of activities, or too long a period of time, or otherwise, then such provisions
shall automatically be modified to cover the maximum geographic area, range of
activities, and period of time as may be enforceable, and in addition, such
court is hereby expressly authorized so to modify this Agreement and to enforce
it as so modified. No invalidity or unenforceability of any section of this
Agreement or any portion thereof shall affect the validity or enforceability of
any other section or of the remainder of such section.
<PAGE>
-22-
9. MISCELLANEOUS.
(A) BENEFITS OF AGREEMENT; NO ASSIGNMENTS; THIRD-PARTY BENEFICIARIES.
(i) This Agreement shall bind and inure to the benefit of the
parties hereto, and the respective heirs, successors, and permitted assigns of
each of them.
(ii) Except to the extent expressly contemplated by Section 6.4
hereof and, subject to Section 6.2(d) hereof, pursuant to the Stockholder
Agreement, neither party hereto shall assign any rights or delegate any
obligations hereunder without the consent of the other party (except that the
Company may assign its rights and delegate its obligations hereunder to any
successor to its business, whether by merger or consolidation, sale of stock or
of all or substantially all of assets, or otherwise), and any attempt to do so
shall be void.
(iii) Nothing in this Agreement is intended to or shall confer any
rights or remedies on any Person other than the parties hereto and their
respective heirs, successors, and permitted assigns.
(B) NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed to the recipient party at his or its address set forth in the
first paragraph hereof, to the attention of Richard Block and David Underwood,
if the Company is the intended recipient party, (or to such other address or
other Person's attention as the recipient party may have furnished to the
sending party for the purpose pursuant to this section).
(C) COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same agreement.
In pleading or proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart.
(D) CAPTIONS. The captions of sections or subsections of this
Agreement are for reference only and shall not affect the interpretation or
construction of this Agreement.
<PAGE>
-23-
(E) CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.
(F) WAIVERS; AMENDMENTS. No waiver of any breach or default hereunder
shall be valid unless in a writing signed by the waiving party. No failure or
other delay by any party exercising any right, power, or privilege hereunder
shall be or operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege. No amendment or modification of this
Agreement shall be valid or binding unless in a writing signed by both the
Employee and the Company.
(G) ENTIRE AGREEMENT. This Agreement and the Stockholder Agreement
contain the entire understanding and agreement between the parties, and
supersede any prior understandings or agreements between them, with respect to
the subject matter hereof.
(H) GOVERNING LAW. This Agreement shall to the maximum lawful extent be
governed by and interpreted and construed in accordance with the internal laws
of the Commonwealth of Pennsylvania, as applied to contracts under seal made,
and entirely to be performed, within Pennsylvania, and without reference to
principles of conflicts or choice of law.
<PAGE>
-24-
IN WITNESS WHEREOF, each of the Company and the Employee has executed and
delivered this Employment, Non-Competition and Stock Repurchase Agreement as an
agreement under seal as of the date first above written.
COMPANY: IMPAC GROUP, INC.
/s/ Richard Block
-----------------------------
By
Name: Richard Block
Title:
/s/ Melvin B. Herrin
EMPLOYEE: -----------------------------
Name: Melvin B. Herrin
<PAGE>
EXHIBIT 10.18
EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT
This Employment, Non-Competition and Stock Repurchase Agreement (this
"Agreement") dated as of March ___, 1998, is by and between IMPAC Group, Inc., a
- ----------
Delaware corporation formerly known as KFI Holding Corporation, with its
principal executive offices at 1950 North Ruby Street, Melrose Park, Illinois
60160-1178 (the "Company"), and Richard H. Block (the "Employee"), an individual
------- --------
residing at ______________________________ ____________________________.
This Agreement is being entered into in connection with (a) the Investment
Agreement dated as of February 19, 1998 (the "Investment Agreement"), by and
--------------------
among the Company, Heritage Fund I Investment Corporation, the Employee and
certain other investors in the Company, (b) the Agreement and Plan of Merger
dated as of February 19, 1998 (the "Merger Agreement"), by and among the
------ ---------
Company, Klearfold, Inc., AGI Incorporated, and the Principal Stockholders
referred to therein, and (c) the Stockholder Agreement of even date herewith
(the "Stockholder Agreement") among the Company, the Employee and certain other
----------- ---------
stockholders of the Company. Capitalized terms used and not otherwise defined
herein have the respective meanings ascribed to them in the Stockholder
Agreement.
The Company and the Employee agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
meanings specified below:
"Act" means the Security Act of 1933, as amended.
---
"Additional Severance Period" has the meanings specified in Sections 5(a)
---------- --------- ------
and 5(b) hereof.
"AGI" means AGI Incorporated, an Illinois corporation.
---
"Base Severance Compensation" has the meaning specified in Section 5(a)
---- --------- ------------
hereof.
"Board" means the Board of Directors of the Company.
-----
"Bonus Plan" has the meaning specified in Section 3(b) hereof.
----- ----
<PAGE>
-2-
"Cause" means the Employee's (i) commission of a breach of the provisions
-----
of Section 8 hereof, (ii) habitual and willful neglect of the performance of the
Employee's duties as set forth in Section 2(a) hereof, such neglect having
continued for a period of 30 days after written notice thereof is given by the
Board to the Employee, (iii) commission of an act of fraud, misappropriation, or
dishonesty in connection with his employment by the Company, or (iv) conviction
of or plea of nolo contendere to a felony. Notwithstanding any other provision
of this Agreement, the Employee shall not be terminated for Cause unless and
until there shall have been delivered to him a copy of a resolution duly adopted
by the Board by a vote of not less than 80% of the Directors (excluding the
Employee, if a member of the Board) at a meeting called and held for the purpose
(within twelve (12) months of the date of the Board's becoming aware of the
condition or conditions constituting Cause, as set forth in clauses (i) - (iv)
above, and after reasonable notice to the Employee and an opportunity for him,
together with his counsel, to be heard by the Board), finding that in the good
faith opinion of the Board, one of the conditions set forth above in this
definition of Cause had been fulfilled, and specifying the particulars thereof.
"Certificate of Value" has the meaning specified in the definition of "Fair
----------- -- -----
Market Value".
"Charter" means the Company's Amended and Restated Certificate of
-------
Incorporation and all amendments thereto.
"Closing Date" means the date of this Agreement.
------- ----
"Co-Manager Non-Repurchase Notice" has the meaning specified in Section
---------- -------------- ------
6.2(b) hereof.
"Co-Manager Put Repurchase Participation Notice" has the meaning specified
---------- --- ---------- ------------- ------
in Section 6.3(a) hereof.
"Co-Manager Remainder Repurchase Notice" has the meaning specified in
---------- --------- ---------- ------
Section 6.2(d) hereof.
"Co-Manager Repurchase Notice" has the meaning specified in Section 6.2(b)
---------- ---------- ------
hereof.
"Co-Managers" means each of James Oppenheimer, Richard Oppenheimer, Dean
-----------
Henkel, David Underwood, Jacqueline Barry, Dennis McGuin and Mary Frances
Griffin, so long as such individual remains employed by the Company or any of
its Subsidiaries.
<PAGE>
-3-
"Common Stock" means the Company's Series A Common Stock, $0.001 par value
------ -----
per share, and any capital stock of the Company which is (a) not subject to
redemption, or (b) issued to the holders of shares of Common Stock upon any
reclassification thereof.
"Company" has the meaning specified in the preamble hereto, and, unless the
-------
context otherwise requires, shall include all Subsidiaries of the Company.
"Company Non-Repurchase Notice" has the meaning specified in Section 6.1(b)
-----------------------------
hereof.
"Company Priority Shares" has the meaning specified in Section 6.1(b)
------- -------- ------
hereof.
"Company Repurchase Notice" has the meaning specified in Section 6.1(b)
------- ---------- ------
hereof.
"Company Repurchase Shares" has the meaning specified in Section 6.3(b)(i)
------- ---------- ------
hereof.
"Delayed Closing Date" has the meaning specified in Section 7.1(b) hereof.
------- ------- ----
"Designated Term" has the meaning specified in Section 2(b) hereof.
---------- ----
"Disability" shall mean that an independent medical doctor (selected by the
----------
Company's health or disability insurer) certifies that the Employee has for 180
consecutive days or 240 non-consecutive days in any twelve (12) month period
been disabled in a manner which seriously interferes with his ability to perform
his duties under this Agreement and which is reasonably expected to continue
indefinitely.
"Disposition Event" shall mean any merger, consolidation or sale of more
----------- -----
than 50% of the Company's assets or other similar corporate action (including,
without limitation, a recapitalization) pursuant to which the holders of Common
Stock receive cash, securities or other property, or any transaction as a result
of which the Company is acquired by the purchase of more than a majority of its
common equity.
"Failed Put Notice" has the meaning specified in Section 6.3(c) hereof.
------ --- ------
<PAGE>
-4-
"Fair Market Value" means, unless otherwise specified in the definition of
---- ------ -----
"Market Value Per Share", the fair market value of the entire common stock
equity of the Company (without premium for control or discounts for minority
interests, restrictions on transfer or lack of voting rights), as determined in
good faith by the Board at a meeting at which a quorum of the Board is present
in accordance with the Stockholder Agreement, or by unanimous written consent,
calculated as of such date, provided that in making such determination the Board
may in its sole discretion rely upon an appraisal or valuation of an Independent
Appraiser selected in good faith by the Board and conducted within the six (6)
month period preceding the date of the Board's determination, and as certified
by a duly authorized officer of the Company in a Certificate of Value (a
"Certificate of Value") which shall be kept as part of the minutes and other
- ------------ -- -----
corporate records of the Company.
"Formula Value" means, with respect to any date, the amount which is equal
------- -----
to the aggregate of (a) the product obtained by multiplying EBITDA (as defined
below) during the 12 full calendar months immediately preceding such date by
--
five and seven-tenths (5.7), less (b) the sum of (i) the Company's consolidated
----
funded indebtedness outstanding on such date, including (without limitation)
obligations under capitalized leases, and (ii) the liquidation value of, and
accrued dividends on, any preferred stock of the Company outstanding on such
date, plus (c) the aggregate cash balances and cash equivalents of the Company
----
and its Subsidiaries on such date. As used in this definition, "EBITDA" for any
------
period, means the Consolidated Net Income (as defined below) of the Company and
its Subsidiaries for such period plus to the extent deducted in determining
Consolidated Net Income all (a) income taxes (including reserves for deferred
income taxes), (b) gross interest expense, (c) depreciation and (d)
amortization, all determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied for such period.
As used in this definition, "Consolidated Net Income" means, for any period, the
------------ --- ------
net income (or loss) of the Company and its Subsidiaries for such period on a
consolidated basis, after deducting all operating expenses, provisions for all
taxes and reserves (including reserves for deferred income taxes) and all other
proper deductions, all determined in accordance with generally accepted
accounting principles consistently applied, after eliminating all intercompany
items and after adjustment for any add-backs or other similar adjustments
properly made in connection with the transactions contemplated by the Merger
Agreement and the Investment Agreement, but excluding from the definition of
Consolidated Net Income any extraordinary gains and/or losses and any gains
and/or losses from the sale or other disposition of assets other than in the
ordinary course of business, all determined in accordance with generally
accepted accounting principles consistently applied.
<PAGE>
-5-
"Good Reason" means (i) diminution by the Board of the Employee's
---- ------
responsibilities, duties or authority as President of the Company and Chief
Executive Officer (or such other senior executive position as may be offered by
the Company and which the Employee in his sole discretion may accept), or
interference by any senior executive employee of the Company with the Employee's
responsibilities, duties or authority as President of the Company and Chief
Executive Officer (or such other senior executive position as may be offered by
the Company and which the Employee in his sole discretion may accept), or
assignment to the Employee of any duties inconsistent with the Employee's
position as President of the Company and Chief Executive Officer (or such other
senior executive position as may be offered by the Company and which the
Employee in his sole discretion may accept), in any such case other than in an
insignificant manner, and such diminution, interference or mis-assignment is not
remedied or corrected within 30 days after reasonably detailed written notice
thereof, setting forth sufficient information to permit the Company to take
action to remedy or correct such matter, is given by the Employee to the
Company, provided that upon the third occurrence of any complained-of matter,
the Employee shall be entitled to notify the Company thereof and thereupon to
terminate his employment with the Company for Good Reason, (ii) failure by the
Company to pay and provide to the Employee the compensation or benefits provided
for in Section 3 hereof, and, any time following the end of the Designated Term,
any decrease in the compensation or benefits provided for in Section 3 hereof
(including, without limitation, any failure to provide cost of living increases
even after the end of the Designated Term) which failure or decrease is not
cured or remedied within 30 days after written notice thereof is given by the
Employee to the Company, (iii) the Board requires the Employee to be permanently
based anywhere other than within 25 miles of the Employee's present office
location in Melrose Park, Illinois, (iv) the Employee ceases to (x) be the
senior most officer of the Company and each of its Subsidiaries or (y) report
only to the Board or (z) have all of the officers of the Company and each of its
Subsidiaries (other than Melvin Herrin in his role as Chairman of the Company's
Board) subject to his direct or indirect supervision, or (v) at any time
following the end of the Designated Term, a Termination of Employment
voluntarily by the Employee after he has reached the age of sixty-two (62) (any
Termination of Employment under this clause (v) also being referred to as a
"Termination upon Retirement").
----------- ---- ----------
"Independent Appraiser" means an investment banking or accounting firm or
----------- ---------
independent appraiser of nationally recognized standing and at least ten years
experience in evaluating businesses similar to the Company and its Subsidiaries,
and not an Affiliate (as defined in the Stockholder Agreement) of the Company or
any of its Subsidiaries or any stockholder of the Company.
<PAGE>
-6-
"Initial Post-Term Severance Period" has the meaning specified in Section
------- --------- --------- ------
5(b) hereof.
"Initial Severance Period" has the meaning specified in Section 5(a)
------- --------- ------
hereof.
"Insurance Policy" has the meaning specified in Section 6.3(b)(i) hereof.
--------- ------
"Investment Agreement" has the meaning specified in the preamble hereto.
---------- ---------
"Klearfold" means Klearfold, Inc., a Pennsylvania corporation.
---------
"Market Value Per Share" means, with respect to any date, the quotient
------ ----- --- -----
obtained by dividing (a) the sum of (i) the most recently determined Fair Market
Value of the Company plus (ii) an amount equal to the aggregate consideration
----
which would then be payable to the Company, assuming the exercise at such time
of all then outstanding and exercisable warrants, options, or convertible
securities pursuant to which the Company would, upon exercise, then be obligated
to issue Common Stock, other than warrants or options the strike or exercise
price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, by (b) the sum of (i) the number of shares of Common Stock then
--
outstanding, plus (ii) the number of shares of Common Stock then issuable upon
----
exercise of all then outstanding and exercisable warrants, options, or
convertible securities pursuant to which the Company would, upon exercise, then
be obligated to issue Common Stock, other than warrants or options the strike or
exercise price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, provided, however, that in the event that on the date with respect to
which Market Value Per Share is being determined, more than six (6) months shall
have elapsed since the date of execution of the most recent Certificate of
Value, then the Fair Market Value of the Company for purposes of clause (a)(i)
of this definition of Market Value Per Share shall be calculated as the Formula
Value of the Company as of the date with respect to which Market Value Per Share
is being determined. In the event that either (x) the Employee (for the
purposes of this definition, including any Personal Representative of the
Employee), or (y) if (and only if) the Fair Market Value of the Company would
otherwise be determined by reference to the Formula Value in accordance with the
foregoing proviso, the Company, so elects (the electing party being referred to
as the "Requesting Party"), by written notice to the Company (in the case of any
---------- -----
election by the Employee) or to the Employee (in the case of any election by the
Company) (the party receiving
<PAGE>
-7-
such notice, the "Non-Requesting Party") within five (5) days of any
-------------- -----
determination of Market Value Per Share in accordance with the preceding
sentence, the Fair Market Value of the Company shall be determined either by one
Independent Appraiser selected by the Requesting Party and acceptable to the
Non-Requesting Party in its sole discretion, or, if the Requesting Party and the
Non-Requesting Party are unable to agree upon the identity of such an
Independent Appraiser within fifteen (15) days after the date of the Requesting
Party's notice to the Non-Requesting Party, by two Independent Appraisers,
selected one by the Requesting Party and one by the Non-Requesting Party, who
shall work together to determine in good faith one Fair Market Value of the
Company acceptable to both Independent Appraisers. The appraisal of such
Independent Appraiser(s) shall be delivered to the Requesting Party and the Non-
Requesting Party within 60 days after the date of the Requesting Party's notice
to the Non-Requesting Party requesting an appraisal. In the event that two
Independent Appraisers are appointed and they are unable to reach an agreement
as to the Fair Market Value of the Company within such 60-day period, the
Appraised Fair Market Value shall be calculated by adding the two Fair Market
Values of the Company, as determined in good faith within such period by each of
such Independent Appraisers, and dividing the sum thereof by two. The Fair
Market Value of the Company determined by such Independent Appraiser(s) in
accordance with this definition (the "Appraised Fair Market Value") shall be
--------- ---- ------ -----
conclusive and shall be used to determine the Market Value Per Share hereunder,
and judgment thereon may be entered in any court of competent jurisdiction. All
expenses of the Independent Appraiser or Independent Appraisers appointed
pursuant to this definition shall be borne by the Company, except that if the
Appraised Fair Market Value is less than 115% of the Fair Market Value of the
Company determined pursuant to the first sentence of this definition, all
expenses of such Independent Appraiser(s) shall be borne by the Requesting
Party.
"Merger Agreement" has the meaning specified in the preamble hereto.
------ ---------
"Original Price Per Share" means, as to all Shares acquired pursuant to the
-------- ----- --- -----
Investment Agreement, $340.00 per Share, and as to all other Shares, the actual
price per Share paid by the Employee upon the acquisition of such Shares.
"Person" means an individual, partnership, corporation, limited liability
------
company, association, trust, joint venture, unincorporated organization, or any
government, governmental department or agency or political subdivision thereof.
<PAGE>
-8-
"Personal Representative" means the successor or legal representative
-------- --------------
(including without limitation, a guardian, executor, administrator or
conservator) of the Employee following his death or legal incompetence.
"Public Offering" means any sale of Common Stock to the public pursuant to
------ --------
a public offering registered under the Act.
"Public Sale" means any Public Offering or any sale of Common Stock to the
------ ----
public through a broker or market-maker pursuant to the provisions of Rule 144
(or any successor rule) adopted under the Act.
"Put Closing" has the meaning specified in Section 6.3(a) hereof.
--- -------
"Put Notice" has the meaning specified in Section 6.3(a) hereof.
--- ------
"Put Period" has the meaning specified in Section 6.3(a) hereof.
--- ------
"Qualified Public Offering" means an underwritten Public Offering, pursuant
--------- ------ --------
to an effective registration statement under the Securities Act, covering the
offer and sale of shares of Common Stock in which an aggregate of not less than
$25,000,000 of gross proceeds from such public offering are received by the
Company and the selling stockholders.
"Related Persons" means the Employee's parents, spouse, children and
------- -------
grandchildren.
"Remainder Shares" has the meaning specified in Section 6.2(c) hereof.
--------- ------
"Restricted Period" has the meaning specified in Section 8(b) hereof.
---------- ------
"Second Co-Manager Put Participation Notice" has the meaning specified in
------ ---------- --- ------------- ------
Section 6.3(d) hereof.
"Severance Extension Notice" has the meaning specified in Section 5(a)
--------- --------- ------
hereof.
"Severance Notice" has the meaning specified in Section 5(b) hereof.
--------- ------
"Severance Release" has the meaning specified in Section 5(a) hereof.
-----------------
"Shares" means (a) all shares of Common Stock acquired by the Employee from
------
time to time, whether pursuant to the Investment Agreement, upon exercise of any
rights of first refusal or pre-emptive rights under the Stockholder Agreement,
any repurchase rights as a Co-Manager
<PAGE>
-9-
under any Employment, Non-Competition and Stock Repurchase Agreement between the
Company and any other employee of the Company, upon exercise of any options,
warrants, or other rights to purchase shares of Common Stock, or otherwise, (b)
any shares of Common Stock into which such shares of Common Stock have been
converted, (c) any capital stock or other securities into which or for which
such shares of Common Stock shall have been converted or exchanged pursuant to
any recapitalization, reorganization or merger of the Company, and (d) any
shares of capital stock issued with respect to the foregoing pursuant to a stock
split or stock dividend , which at the time of the Employee's Termination of
Employment are owned by the Employee or any Person owning shares transferred to
him pursuant to Section 1.1(b) and 1.1(e) of the Stockholder Agreement by the
Employee or any other Block Stockholder, as defined pursuant to the Stockholder
Agreement or any (direct or indirect) transferees of the Employee or any other
Block Stockholder pursuant to those provisions.
"Stockholder Agreement" has the meaning specified in the preamble hereto.
----------- ---------
"Subsidiary" means, with respect to the Company, any corporation a majority
----------
(by number of votes) of the outstanding shares of any class or classes of which
shall at the time be owned by the Company or by a Subsidiary of the Company, if
the holders of the shares of such class or classes (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are at the time entitled, as such holders, to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to vote exists by
reason of the happening of a contingency and including without limitation AGI
and Klearfold.
"Termination for Under-Performance" means a Termination of Employment of
----------- --- -----------------
the Employee by the Company without Cause, where the Board shall have by
resolution duly adopted by a vote of not less than 80% of the Directors
(excluding the Employee, if then a member of the Board) identified such
Termination of Employment as having occurred as a result of under-performance by
the Employee in his employment hereunder, provided however, that except as
expressly stated in Section 5 hereof, any such Termination of Employment shall
be treated as a Termination of Employment by the Company without Cause for all
purposes hereunder.
"Termination of Employment" means the Employee's ceasing to be an employee
----------- -- ----------
of the Company or any of its Subsidiaries, whether voluntary or
<PAGE>
-10-
involuntary, for any reason or for no reason, including without limitation, for
resignation, death or Disability of the Stockholder, and whether or not for
Cause or for Good Reason.
"Termination upon Retirement" has the meaning specified in the definition
----------- ---- ----------
of "Good Reason".
"Unpurchased Shares" has the meaning specified in Section 6.3(c) hereof.
----------- ------
"Variable Severance Compensation" has the meaning specified in Section 5(a)
-------- --------- ------------
hereof.
2. EMPLOYMENT.
(A) EMPLOYMENT. Subject to the terms and conditions of this Agreement, the
Company agrees to employ the Employee, and the Employee agrees to serve, as the
President of the Company and Chief Executive Officer of the Company and each of
its Subsidiaries, having such powers and duties as are consistent with such
position, subject to the directions of the Board (the Employee hereby agreeing
to abstain, if a director of the Company, from voting as such on any matter
relating to any such directions).
(B) DESIGNATED TERM. The Employee's employment hereunder shall commence on
the date hereof, and shall continue until terminated in accordance with Section
4 hereof, provided that, subject to the other terms and conditions hereof, the
term of employment shall be at least until June 7, 2001 (such period being
referred to herein as the "Designated Term"), and provided, further that from
---------- ----
and after June 8, 2001, subject to the provisions of Section 5 hereof, the
Employee's employment hereunder shall be at will.
3. COMPENSATION. During the Designated Term, the Company shall pay and
provide to the Employee the compensation set forth below:
(A) BASE SALARY. The Company shall pay to the Employee a base salary,
prorated and payable in installments in accordance with AGI's usual payroll
practices. Such base salary shall be at the rate of $350,000 per annum for
1998, and thereafter such base salary shall be adjusted annually based upon the
percentage increase, if any, in the Consumer Price Index, All Items, Chicago as
published by the Bureau of Labor Statistics (the "CPI"), as follows: The
---
Employee's base salary for each of the years 1999-2001 shall be calculated by
multiplying the Employee's 1998 base salary by a fraction, the numerator of
which is the average CPI for the twelve months of the year preceding the year
for which such base salary is being calculated, and the
<PAGE>
-11-
denominator of which is the CPI for December 1997. In no event will any such
adjustment reduce the Employee's base salary for any year below that in effect
for the preceding year.
(B) BONUSES. The Employee shall be entitled to participate in the Company's
Executive Bonus Plan (the "Bonus Plan"), a copy of which is appended hereto and
----- ----
incorporated herein by this reference.
(C) FRINGE BENEFITS. In addition to the Employee's base salary and any
bonuses to which the Employee may become entitled under the Bonus Plan, the
Company shall provide to the Employee additional benefits as provided to other
employees of the Company and its Subsidiaries whose base salary and level of
responsibility are comparable to those of the Employee, including as described
in the attached Schedule of Benefits.
-------- -- --------
(D) VACATION. The Employee shall be entitled to four (4) weeks vacation
each calendar year. Any vacation shall be taken at the reasonable and mutual
convenience of the Company and the Employee. Accrued vacation not taken in any
calendar year will not be carried forward or used in any subsequent calendar
year, provided, however, if any accrued vacation is not taken by the Employee in
any calendar year at the request of the Employer, then the Employee shall be
entitled to carry forward and use such accrued vacation in the immediately
following calendar year but not in any subsequent calendar year.
4. TERMINATION. The Employee's employment hereunder shall terminate upon
the occurrence of any of the following events:
(A) the Employee's death or Disability; OR
(B) the termination of the Employee's employment hereunder by the Company,
for Cause, by written notice to the Employee; or
(C) the termination of the Employee's employment hereunder by the Company,
without Cause, by written notice to the Employee; or
(D) the termination of the Employee's employment hereunder by the Employee,
for Good Reason, by written notice to the Company; or
(E) the termination of the Employee's employment hereunder by the Employee,
without Good Reason, by 30 days' prior written notice to the Company.
<PAGE>
-12-
5. SEVERANCE. Notwithstanding any other provision of this Agreement:
(A) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) during the
Designated Term, then the Company shall, upon delivery to the Company of a
release of any claims of the Employee against the Company and its stockholders,
directors, officers, employees, agents or other affiliates arising out of his
employment relationship (other than claims to any compensation or benefits
payable under or to be provided pursuant to this Section 5, or any rights of the
Employee under Sections 6 or 7 hereof) executed by the Employee and reasonably
satisfactory in form and substance to the Company (a "Severance Release"),
--------- -------
continue to pay and provide to the Employee (A) the compensation payable to him
pursuant to Section 3(a) hereof, and (B) the benefits provided to him pursuant
to Section 3(c) hereof (the compensation and benefits described in clauses (A)
and (B), together, such Employee's "Base Severance Compensation"), and, unless
---- --------- ------------
such Termination of Employment was a Termination for Under-Performance, (C) any
bonus accrued or earned by the Employee pursuant to the Bonus Plan and
attributable to the Employee's performance for the portion of the year prior to
his Termination of Employment, on a one-time only basis payable at the time of
payment of bonuses to other executive employees under the Bonus Plan, and (D)
for each year, 50% of an amount equal to the compensation payable to the
Employee pursuant to Section 3(a), multiplied by a fraction, the numerator of
which equals the aggregate bonus actually payable with respect to the preceding
year to the Company's other executive employees in the same bonus pay-out range
as the Employee was in prior to his Termination of Employment, and the
denominator of which equals the aggregate salary of such other executive
employees for such preceding year (the compensation described in clauses (C) and
(D) together, such Employee's "Variable Severance Compensation") for a period
-------- --------- ------------
(the "Initial Severance Period") equal to the longer of (i) the remainder of the
------- --------- ------
Designated Term, and (ii) the one-year period following the date of such
Termination of Employment, but this clause (ii) only being applicable if, prior
to the earlier of (x) the last day of the Designated Term and (y) the thirtieth
(30th) day from the date of such Termination of Employment, the Company shall
have notified the Employee in writing of the Company's intention, in the
Company's sole discretion, so to extend the Initial Severance Period (such
notice, a "Severance Extension Notice"). In the Company's sole discretion, the
--------- --------- ------
Company may elect, either in the Severance Extension Notice, or by written
notice to the Employee given no later than thirty (30) days prior to the end of
the Initial Severance Period (as it may have been extended pursuant to the
Severance Extension Notice), to continue to pay and provide
<PAGE>
-13-
to the Employee his Base Severance Compensation for an additional period (the
"Additional Severance Period") of up to one year following the end of the
--------- --------- ------
Initial Severance Period (as it may have been extended pursuant to the Severance
Extension Notice), provided that the Additional Severance Period shall in no
event extend beyond the second anniversary of the Employee's Termination of
Employment. Upon payment in full of the Employee's Base Severance Compensation
and, if and when applicable, his Variable Severance Compensation, as described
in this Section 5(a), the Company's obligations to pay and provide the Employee
with any other compensation otherwise payable to him pursuant to Section 3
hereof, and all other rights of the Employee under Sections 2, 3 and 5 hereof,
shall cease as of the date of such payment in full.
(B) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) at any time
after the end of the Designated Term, then if at the time of such Termination of
Employment or within thirty (30) days thereafter, the Company shall, in its sole
discretion, so have notified the Employee in writing (such notice, a "Severance
---------
Notice") and the Employee shall have executed and delivered to the Company a
- ------
Severance Release, the Company shall continue to pay and provide to the Employee
his Base Severance Compensation and, unless such Termination of Employee was a
Termination for Under-Performance, his Variable Severance Compensation for a
period of one year following the date of such Termination of Employment (the
"Initial Post-Term Severance Period"), provided that, unless the Company shall
- -------- --------- --------- ------
have notified the Employee in writing at the time of his Termination of
Employment that it did not intend to deliver a Severance Notice, the Employee's
Base Severance Compensation shall be payable in any event for the portion of the
30-day period following the Termination of Employment prior to the Company's
delivery either of a Severance Notice or of notice that the Company did not
intend to deliver a Severance Notice. The Company may elect, in its sole
discretion, by written notice to the Employee given no later than ninety (90)
days prior to the end of the Initial Post-Term Severance Period to extend the
period during which the Employee's Base Severance Compensation shall be payable
and provided to the Employee for an additional period (also referred to herein
as an "Additional Severance Period") of up to one year from the end of the
---------- --------- ------
Initial Post-Term Severance Period, provided that the total period during which
his Base Severance Compensation shall be payable and provided to the Employee
under this Section 5(b) shall in no event extend beyond the second anniversary
of the Employee's Termination of Employment. In the event that no Severance
Notice has been given within thirty (30) days after the date of the Employee's
Termination of Employment pursuant to either
<PAGE>
-14-
Section 4(c) (by the Company without Cause) or Section 4(d) (by the Employee for
Good Reason) (other than a Termination upon Retirement), then the Company's
obligation to pay and provide the Employee with any compensation shall cease in
any event as of the thirtieth (30th) day following the date of such Termination
of Employment, and all other rights of the Employee under Sections 2, 3 and 5
hereof, shall be deemed to have ceased as of the date of such Termination of
Employment. In the event that a Severance Notice is given in accordance with
this Section 5(b), then upon payment in full of the Employee's Base Severance
Compensation, and, if and when applicable, his Variable Severance Compensation
as described in this Section 5(b), the Company's obligations to pay and provide
the Employee with any of the compensation payable to him pursuant to Section 3
hereof, and all other rights of the Employee under Sections 2, 3 and 5 hereof,
shall cease as of the date of such payment in full.
(C) If the Employee's employment with the Company terminates pursuant to
any of Sections 4(a) (death or Disability), 4(b) (by the Company for Cause), or
4(e) (by the Employee without Good Reason) hereof, or as a Termination upon
Retirement, then the Company's obligations to pay and provide the Employee with
any of the compensation payable to him pursuant to Section 3 hereof, and all
other rights of the Employee under Sections 2, 3 and 5 hereof, shall cease as of
the date of such Termination of Employment.
(D) The Employee shall not be required to mitigate the amount of any
compensation payable to him pursuant to Sections 5(a) or 5(b) hereof, by seeking
other employment or otherwise, provided, that in the event the Employee obtains
other employment during any period for which compensation is being paid pursuant
to Sections 5(a) or 5(b), the amount of compensation otherwise payable to the
Employee pursuant to either of such sections shall be reduced by 50% for the
period during which the Employee is so employed, provided, further, that in the
event that the Employee provides evidence reasonably satisfactory to the Company
that the amount of the resulting reduction in his compensation otherwise payable
pursuant to Sections 5(a) or 5(b) hereof, as the case may be, exceeds the level
of his compensation payable from such other employment, then his compensation
pursuant to Sections 5(a) or 5(b) hereof, as applicable, shall be reduced for
the period of such other employment by an amount equal to the aggregate amount
of his compensation from such other employment during such period. The Employee
shall promptly notify the Company if he obtains other employment during the
applicable period.
(E) Nothing in this Section 5 shall limit any other obligation which the
Company may owe the Employee under any insurance policy, employee benefit plan
or other retirement plan. Furthermore, upon any Termination of
<PAGE>
-15-
Employment of any type, the Company shall remain obligated to the Employee for
(i) any accrued and unpaid base salary and vacation pay, (ii) reimbursement for
reasonable out-of-pocket expenses incurred by Employee by or on behalf of the
Company or otherwise in the performance of his duties and in accordance with
applicable Company policies then in effect, and (iii) unless otherwise specified
in any such plan, policy or program, payments or benefits explicitly provided
under the terms of any plan, policy or program of the Company in which the
Employee was a participant, or as otherwise required by applicable law.
6. REPURCHASE OF SHARES.
6.1. REPURCHASE RIGHTS OF THE COMPANY.
(A) Upon any Termination of Employment of the Employee at any time, the
Company may, at its option, repurchase from the holders thereof, and the
Employee will at the request of the Company sell to the Company, or procure the
sale to the Company of, all or any portion of the Shares specified in the
Company Repurchase Notice(s) (as defined below) at a purchase price per Share
determined pursuant to paragraphs (i) and (ii) below:
(i) in the event that such Termination of Employment is pursuant to
Section 4(b) (by the Company for Cause), at a purchase price per Share equal to
the lower of the Market Value Per Share, as of the date of such Termination of
Employment, and the Original Price Per Share; and
(ii) otherwise, at a purchase price per Share equal to the Market
Value Per Share, as of the date of such Termination of Employment.
(B) The Company's repurchase rights under Section 6.1(a) shall be
exercisable at any time and from time to time within the periods specified in
clause (iii) below, by written notice from the Company to the Employee
specifying the number of Shares to be repurchased (each such notice, a "Company
-------
Repurchase Notice"), provided, however, that (i) if a Company Repurchase Notice
- ---------- ------
is delivered at any time within ninety (90) days following the Termination of
Employment of the Employee and prior to the delivery of a Co-Manager Repurchase
Notice or Co-Manager Non-Repurchase Notice pursuant to and in accordance with
Section 6.2 below, such Company Repurchase Notice shall not specify a number of
Shares in excess of 9,050, as such amount may be adjusted from time to time to
reflect stock splits, combinations or other similar recapitalizations affecting
the Common Stock (such amount of Shares, as so adjusted, being referred to
herein as the
<PAGE>
-16-
"Company Priority Shares"), (ii) if a Company Repurchase Notice is delivered at
------- -------- ------
any time after the delivery of a Co-Manager Repurchase Notice or a Co-Manager
Non-Repurchase Notice, or after ninety (90) days following the Termination of
Employment of the Employee, such Company Repurchase Notice shall not specify a
number of Shares in excess of the number of Shares then outstanding, less the
----
number of Shares referred to in the Co-Manager Repurchase Notice, if any,
previously delivered pursuant to and in accordance with Section 6.2(b) below,
(iii) the Company's repurchase rights under Section 6.1(a) above shall be
exercisable with respect to the Company Priority Shares, only for a period of
ninety (90) days from the date of Termination of Employment of the Employee, and
with respect to all Shares other than the Company Priority Shares, only for a
period of sixty (60) days from the date upon which such rights first become
exercisable in accordance with the preceding clause (ii), and (iv) in the event
that the Company determines at any time prior to the expiration of the period of
ninety (90) days from the date of Termination of Employment of the Employee that
it does not intend to exercise its repurchase rights under Section 6.1(a) above
with respect to all or any portion of the Company Priority Shares, the Company
shall promptly so notify the Co-Managers and the Employee in writing (such
notice, the "Company Non-Repurchase Notice"). The closing of the repurchase of
------- -------------- ------
Shares pursuant to each Company Repurchase Notice shall be held not earlier than
five (5) days nor later than thirty (30) days after delivery of such Company
Repurchase Notice. The Company's repurchase rights under Section 6.1(a) shall
lapse if not exercised within the periods specified in clause (iii) of this
Section 6.1(b) in accordance with the provisions hereof, except as otherwise
provided in Section 7 hereof. Upon delivery by the Company of the repurchase
price for the Shares being repurchased under this Section 6.1(b) in accordance
with Section 7.2 hereof, all of the Shares being repurchased shall no longer be
deemed to be outstanding, all of the Employee's rights with respect to such
Shares will terminate, with the exception of the right of the Employee to
receive the repurchase price in exchange therefor pursuant to this Section
6.1(b), and payments pursuant to Section 6.4, if any, and the Employee (on his
own behalf and on behalf of any other holder of Shares) hereby irrevocably
appoints the Company as his attorney-in-fact to take all actions necessary and
sign all documents required to cancel such Shares on the Company's books and
records.
6.2. REPURCHASE RIGHTS OF THE CO-MANAGERS.
(A) Upon any Termination of Employment of the Employee at any time, the
Co-Managers may, at their option, repurchase from the holders thereof, and the
Employee will at the request of the Co-Managers, or any of them, sell to such
Co-Managers, or procure the sale to such Co-Managers of, all or any portion of
the Shares, other than the Company Priority Shares, as
<PAGE>
-17-
specified in the Co-Manager Repurchase Notice (as defined below), at a purchase
price per Share determined pursuant to paragraphs (i) and (ii) below:
(i) in the event that such Termination of Employment is pursuant to
Section 4(b) (by the Company for Cause), at a purchase price per Share equal to
the lower of the Market Value Per Share, as of the date of such Termination of
Employment, and the Original Price Per Share; and
(ii) otherwise, at a purchase price per Share equal to the Market
Value Per Share, as of the date of such Termination of Employment.
(B) The Co-Managers' repurchase rights under Section 6.2(a) above shall be
exercisable at any one time within ninety (90) days following the Termination of
Employment of the Employee, by written notice from the Co-Managers participating
in such repurchase to the Employee and the Company specifying the number of
Shares to be repurchased by each of such Co-Managers (the "Co-Manager Repurchase
---------- ----------
Notice"), provided, however, that in the event that the Co-Managers determine at
- ------
any time prior to the expiration of the period of ninety (90) days following the
Termination of Employment of the Employee that none of the Co-Managers intends
to exercise their respective repurchase rights under Section 6.2(a) above with
respect to all or any portion of the Shares available to be repurchased by the
Co-Managers, the Co-Managers shall promptly so notify the Company and the
Employee in writing (such notice, the "Co-Manager Non-Repurchase Notice"). The
---------- -------------- ------
closing of the repurchase of the Shares to be repurchased pursuant to the Co-
Manager Repurchase Notice shall be held not earlier than five (5) days nor later
than thirty (30) days after delivery to the Employee and the Company of the Co-
Manager Repurchase Notice. The Co-Managers' repurchase rights under Section
6.2(a) shall lapse if not exercised within the time period specified above in
accordance with the provisions hereof, except as otherwise provided in Sections
6.2(c) and 6.2(d) below. Each of the Co-Managers participating in such
repurchase shall purchase that number of the Shares referred to in the relevant
Co-Manager Repurchase Notice as to be purchased by such Co-Manager, provided
that, unless Co-Managers holding a majority of the shares held by the
participating Co-Managers otherwise agree, no Co-Manager shall be entitled to
purchase a number of Shares greater than such Co-Manager's pro rata portion of
--- ----
the Shares available to be purchased by the Co-Managers, based on the total
number of shares of Common Stock owned on the date of the Co-Manager Repurchase
Notice by the participating Co-Managers. Upon delivery by the participating Co-
Managers of the repurchase price, in cash, for the Shares being repurchased
<PAGE>
-18-
under this Section 6.2(b) in accordance with Section 7.2 hereof, all of the
Employee's rights with respect to such Shares will terminate, with the exception
of the right of the Employee to receive the repurchase price from the
participating Co-Managers in exchange for such Shares pursuant to this Section
6.2(b), and payments pursuant to Section 6.4, if any, and the Employee (on his
own behalf and on behalf of any other holder of Shares) hereby irrevocably
appoints the Company as his attorney-in-fact to take all actions necessary and
sign all documents required to transfer such Shares on the Company's books and
records into the name(s) of the respective participating Co-Managers.
(C) In the event that either (i) the Company shall have failed to exercise
its repurchase rights under Section 6.1 above with respect to all or any portion
of the Company Priority Shares within the applicable period specified in Section
6.1(b)(iii) above (it being understood that a failure to complete such a
repurchase after a Company Repurchase Notice shall have been given shall not
constitute a failure to exercise the Company's repurchase rights for the
purposes of this Section 6.2(c)), unless such failure continues for 180 days
after the latest date upon which a closing of a purchase pursuant to Section 6.
1(b)(ii) could occur, without giving effect to Section 7.1, a failure which so
continues being referred to herein as a "180-Day Failure", or (ii) the Company
------- -------
shall have delivered a Company Non-Repurchase Notice indicating that the Company
does not intend to exercise its repurchase rights under Section 6.1 above with
respect to all or any portion of the Company Priority Shares, then the Co-
Managers, or any of them, may, at their option, repurchase from the holders
thereof, and the Employee will at the request of such Co-Managers sell to such
Co-Managers, or procure the sale to such Co-Managers of, those Company Priority
Shares (collectively the "Remainder Shares") as to which the Company shall have
--------- ------
failed to exercise its repurchase rights under Section 6.1 as described above,
or with respect to which the Company shall have delivered a Company Non-
Repurchase Notice indicating that it did not intend to exercise its repurchase
rights under Section 6.1, at a purchase price per Remainder Share determined in
accordance with Section 6.1(a) above.
(D) The Co-Managers' repurchase rights under Section 6.2(c) above shall be
exercisable at any one time within the period of sixty (60) days following the
earlier of (i) the last day of the 90-day period applicable to the repurchase by
the Company of Company Priority Shares, as specified in Section 6.1(b)(iii)
above, (ii) the occurrence of a 180-Day Failure, and (iii) the date of receipt
of a Company Non-Repurchase Notice, by written notice from the Co-Managers
participating in such repurchase to the Employee and to the Company specifying
the number of Remainder Shares to be repurchased by each of such Co-Managers
(the "Co-Manager Remainder Repurchase
---------- --------- ----------
<PAGE>
-19-
Notice"). The closing of the repurchase of the Remainder Shares to be
- ------
repurchased pursuant to the Co-Manager Remainder Repurchase Notice shall be held
not earlier than five (5) days nor later than thirty (30) days after delivery to
the Employee and the Company of the Co-Manager Remainder Repurchase Notice. The
Co-Managers' repurchase rights under Section 6.2(c) above shall lapse if not
exercised within the 30-day period specified in this Section 6.2(d) in
accordance with the provisions hereof. Each of the Co-Managers participating in
such repurchase shall purchase that number of Remainder Shares referred to in
the Co-Manager Remainder Repurchase Notice as to be repurchased by such Co-
Manager, provided that, unless Co-Managers holding a majority of the Shares held
by the participating Co-Managers otherwise agree, no Co-Manager shall be
entitled to purchase a number of Remainder Shares greater than such Co-Manager's
pro rata portion of the Remainder Shares available to be purchased by the Co-
- --- ----
Managers, based on the total number of Shares of Common Stock owned on the date
of the Co-Manager Remainder Repurchase Notice by the participating Co-Managers.
Upon delivery by the participating Co-Managers of the repurchase price, in cash,
for the Remainder Shares being repurchased under this Section 6.2(d) in
accordance with Section 7.2 hereof, all of the Employee's rights with respect to
such Shares will terminate, with the exception of the right of the Employee to
receive the repurchase price from the participating Co-Managers in exchange for
such Shares pursuant to this Section 6.2(d), and payments pursuant to Section
6.4, if any, and the Employee (on his own behalf and on behalf of any other
holder of Shares) hereby irrevocably appoints the Company as his attorney-in-
fact to take all actions necessary and sign all documents required to transfer
such Shares on the Company's books and records into the name(s) of the
respective participating Co-Managers.
6.3. REPURCHASE RIGHTS OF THE EMPLOYEE.
(A) Upon any Termination of Employment pursuant to Sections 4(a) (death or
Disability), 4(c) (by the Company without Cause) or 4(d) (by the Employee with
Good Reason), the Employee will have the right, but not the obligation, to
request that the Company, together with, to the extent they so elect in
accordance with this Section 6.3, the Co-Managers, repurchase all (and not less
than all) of the Shares, for a purchase price per Share equal to the Market
Value Per Share as of the date of such Termination of Employment. The put
rights of the Employee under this Section 6.3 shall be exercisable at any time
within sixty (60) days after the date of such Termination of Employment or, if
such Termination of Employment is upon the death of such Employee, then sixty
(60) days after the appointment of a Personal Representative (or functional
equivalent) for such Employee (any such 60-day period being referred to as a
"Put Period") by notice to the
--- ------
<PAGE>
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Company and each of the Co-Managers (the "Put Notice") specifying the date, time
--- ------
and place of the closing (the "Put Closing") for such repurchase. The put rights
--- -------
of the Employee under this Section 6.3 will lapse if not exercised by delivery
of a Put Notice to the Company and to the Co-Managers in care of the Company
within the applicable Put Period. In the event that any of the Co-Managers wish
to participate in the proposed repurchase, such Co-Managers shall notify the
Employee and the Company within thirty (30) days after delivery of the Put
Notice of their intention (if any) to participate in such repurchase, by written
notice (the "Co-Manager Put Repurchase Participation Notice") specifying the
---------- --- ---------- ------------- ------
number of Shares to be repurchased by each of the Co-Managers participating in
such repurchase, provided however that the Co-Manager Put Repurchase
Participation Notice shall in no event specify any of the Company Priority
Shares as to be repurchased by the Co-Managers.. Each of the Co-Managers
participating in such repurchase shall purchase that number of the Shares
referred to in the Co-Manager Put Repurchase Participation Notice as to be
repurchased by such Co-Manager, provided that unless Co-Managers holding a
majority of the shares held by the participating Co-Manager otherwise agree, no
Co-Manager shall be entitled to purchase a number of Shares greater than such
Co-Manager's pro rata portion of the Shares available to be purchased by the Co-
--- ----
Manager pursuant to this Section 6.3, based on the total number of shares of
Common Stock owned on the date of the Co-Manager Put Repurchase Participation
Notice by all of the participating Co-Managers.
(B) (i) If the Employee's Termination of Employment was pursuant to
Section 4(a) (death or Disability), or a Termination upon Retirement, then, in
the event that the number of Shares to be repurchased by the participating Co-
Managers pursuant to the Co-Manager Put Repurchase Participation Notice, if any,
is less than the number of Shares then outstanding, then the Company may, by
written notice to the Employee or his Personal Representative, given within
thirty (30) days after the delivery of the Put Notice or, if later, within
fifteen (15) days after the Company's receipt of the Co-Manager Put Repurchase
Participation Notice, either accept or reject the Employee's Put Notice with
respect to those Shares (the "Company Repurchase Shares") which the Co-Managers
------- ---------- -------
shall not have elected to repurchase, provided that in the event of the
-------- ----
Employee's death or Disability, the Company shall be required to honor the put
of such amount of the Company Repurchase Shares as may be repurchased with the
proceeds of the life or disability insurance policy held by the Company on the
Employee pursuant to and in accordance with Section 7 of the Stockholder
Agreement (the "Insurance Policy"), less the cash surrender value thereof at
--------- ------ ----
such time.
(ii) If the Employee's Termination of Employment was pursuant to
Section 4(e) (by the Company without Cause) or 4(d) (by the
<PAGE>
-21-
Employee with Good Reason) (other than a Termination upon Retirement), then,
subject to the provisions of Sections 6.3(f) and 7 below, the Company shall be
required to honor the put of all of the Company Repurchase Shares.
(C) In the event that, pursuant to Section 6.3(b) above, the Company
either elects to or is required to honor the put of all of the Company
Repurchase Shares, or fails to deliver any notice pursuant to Section 6.3(b)(i)
rejecting all or any portion of such put within the fifteen-day period specified
in such section, then the Put Closing will be held no earlier than forty-five
(45) days nor later than sixty (60) days after delivery of the Put Notice. At
the Put Closing, subject to the provisions of Section 7 hereof, each of the Co-
Managers participating in the repurchase under this Section 6.3 (if any) shall
purchase, and the Employee shall sell, or procure the sale to each such Co-
Manager of, those shares referred to in the Co-Manager Put Repurchase
Participation Notice as to be repurchased by such Co-Manager, and the Company
shall purchase, and the Employee shall sell, or procure the sale to the Company
of, all of the Company Repurchase Shares other than those referred to in the Co-
Manager Put Repurchase Participation Notice, if any. Upon tender by the Company
and the Co-Managers of the purchase price for the Shares being repurchased
hereunder in accordance with Section 7 below, the Shares being repurchased by
the Company shall no longer be deemed to be outstanding, all of the Employee's
rights with respect to the Shares being repurchased shall terminate with the
exception of the right of the Employee to receive the repurchase price from the
Company or the Co-Managers, as the case may be, in exchange for such Shares
pursuant to this Section 6.3, and payments pursuant to Section 6.4, if any, and
the Employee (on his own behalf and on behalf of any other holder of Shares)
hereby irrevocably appoints the Company as his attorney-in-fact to take all
actions necessary and sign all documents required to cancel the Shares being
transferred to the Company, and to transfer the Shares being repurchased by the
Co-Managers into the name(s) of the respective Co-Managers participating in such
repurchase, on the Company's books and records.
(D) In the event that, pursuant to Section 6.3(b)(i) above, the Company
notifies the Employee or his Personal Representative that the Company rejects
the Employee's Put Notice with respect to any of the Company Repurchase Shares,
then the Company shall promptly so notify the Co-Managers and, within thirty
(30) days of delivery of the Company's notice to the Co-Managers, the Co-
Managers may notify the Employee and the Company in writing (such notice, a
"Second Co-Manager Put Participation Notice") of their intention (if any) to
------ ---------- --- ------------- ------
purchase all of the Company Repurchase Shares, specifying the number of Company
Repurchase Shares to be repurchased by each of the Co-Managers participating in
such repurchase, and in such event (whether or not the Co-Managers deliver a Co-
Manager
<PAGE>
-22-
Put Participation Notice in accordance with this Section 6.3(d)) the Put
Closing will be held no earlier than seventy-five (75) days nor later than
ninety (90) days after delivery of the Put Notice. At such Put Closing, subject
to the provisions of Section 7 hereof, each of the Co-Managers participating in
the repurchase shall purchase, and the Employee shall sell, or procure the sale
to each such Co-Manager of, those shares referred to in the Co-Manager Put
Repurchase Participation Notice and/or the Second Co-Manager Put Participation
Notice, if any, as to be repurchased by such Co-Manager, in accordance with the
procedures specified in Sections 6.3(a) and 6.3(c) applicable to purchases by
Co-Managers.
(E) In the event that the Co-Managers do not elect, within the 30-day
period specified in Section 6.3(d) above, to acquire all of the Company
Repurchase Shares as to which the Company shall have rejected the Employee's Put
Notice, then the transfer restrictions on any such Company Repurchase Shares
pursuant to Section 1 of the Stockholder Agreement will thereupon automatically
and without further notice be terminated, with effect from the end of such 30-
day period.
(F) Notwithstanding the foregoing, in the event that any payment by the
Company of any portion of the purchase price for any Shares that the Employee
has requested be repurchased pursuant to Section 6.3(a), and that the Company,
pursuant to Section 6.3(b), has either agreed to or is required to purchase, is,
at the time such payment would otherwise be due hereunder, limited or prohibited
by law or by the terms of any of the Company's or any of its Subsidiaries'
agreements with its or their lenders or any other contracts by which the Company
or any of its Subsidiaries is bound, the Company may complete the repurchase of
such Shares in accordance with Section 7 hereof, but in any event shall only be
required at such time to repurchase that portion of the Shares, if any, for
which payment of the purchase price therefor is not so prohibited.
Notwithstanding the foregoing, in the event that (i) the Company is unable to
make payment of any portion of the purchase price for Shares to be repurchased
by it pursuant to this Section 6.3 for the reasons specified in Section 7.1
hereof, and (ii) such failure continues for 180 days from the last date upon
which the closing of the purchase of such Shares was to occur but for this
Section 6.3(c) and Section 7.1, the Company shall send a notice to the Co-
Managers (a "Failed Put Notice") informing them of their right to purchase any
------ --- ------
or all of the Shares for which the Company was not able to pay the purchase
price (the "Unpurchased Shares"), such notice to specify the number of such
----------- ------
Unpurchased Shares and the Fair Market Value of such Shares on the date of the
Failed Put Notice. The Co-Managers shall then have the right to purchase any or
all of the Unpurchased Shares for their Fair Market Value on the date of the
Failed Put Notice. Such purchase shall be made in accordance with the procedure
<PAGE>
-23-
pursuant to Sections 6.3(a) and 6.3(c) applicable to purchases by Co-Managers,
with the Co-Manager Put Repurchase Participation Notice required to be delivered
not less than thirty (30) days after delivery of the Failed Put Notice and any
closing to occur not less than forty-five (45) nor more than sixty (60) days
after delivery of the Failed Put Notice.
6.4. ADDITIONAL PAYMENTS UPON DISPOSITION EVENT, ETC. If, at any time
within six (6) months after any closing of a repurchase either (a) pursuant to
Sections 6.1 or 6.2 above following a Termination of Employment pursuant to
Sections 4(a) (death or Disability), 4(c) (by the Company without Cause) or 4(d)
(by the Employee with Good Reason), or (b) pursuant to Section 6.3 above
following a Termination of Employment pursuant to Section 4(a) (death or
Disability), the Company shall become party to a Disposition Event or the
Company completes any Public Offering, or the Company or any of its stockholders
enter into any written agreement or written letter of intent contemplating any
of the foregoing which transaction is consummated within 180 days thereafter,
then each of the Company and any Co-Managers who have purchased Shares pursuant
to Sections 6.1, 6.2 or 6.3 shall, simultaneously with the consummation of any
such transaction or at such later time as any payment described below is
received by the Company or any of its stockholders, make an additional payment
to the Employee in an amount per Share repurchased from the Employee by him, her
or it pursuant to any of Sections 6.1, 6.2 or 6.3 above, as the case may be,
equal to the excess, if any, of (i) the value per share of the cash, securities
and other property that the Employee would have received (or that the Company
received in which the Employee would have had a beneficial interest as a
stockholder of the Company) had the Employee's Shares not been previously so
repurchased over (ii) the payment received by the Employee with respect to each
such Share pursuant to any of Sections 6.1, 6.2 or 6.3 above, as the case may
be. Each payment to the Employee pursuant to this Section 6.4 shall be made
either in cash or in the form of the securities and other property received by
the Company or the holders of Common Stock, as the case may be.
6.5. TRANSFEREES OF THE EMPLOYEE; LEGEND. Any permitted transferee of the
Shares under the Stockholder Agreement, including without limitation any
Personal Representative or Family Member (as such terms are defined in the
Stockholder Agreement) of the Employee, shall also be bound by, and have the
benefit of, the provisions of this Section 6. Except as otherwise permitted by
this Section 6.5, each certificate representing the Shares shall, in addition to
any legends required under the Stockholder Agreement, bear a legend in or
substantially in the following form:
<PAGE>
-24-
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN REPURCHASE
RIGHTS IN FAVOR OF THE COMPANY CONTAINED IN AN EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT, DATED AS OF MARCH ___, 1998, A COPY OF
WHICH WILL BE FURNISHED BY THE COMPANY TO THE HOLDER OF THE SHARES
EVIDENCED BY THIS CERTIFICATE UPON WRITTEN REQUEST AND WITHOUT CHARGE."
Whenever the requirements of this Section 6.5 shall terminate as to any Shares
pursuant to Section 7.3 below, the holder thereof shall be entitled to receive
from the Company, at the Company's expense, new certificates representing the
Shares without such legend.
6.6. DELAY FOR VALUATION OR RECEIPT OF INSURANCE PROCEEDS. In the event
that, (a) as a result of any requirement to determine the Fair Market Value of
the Company by means of an appraisal pursuant to and in accordance with the
definition of "Market Value Per Share", the Market Value Per Share has not been
determined at the time that the closing of any purchase and sale of Shares
pursuant to this Section 6 is otherwise scheduled to occur, or (b) as a result
of a delay in the Company's receipt of the proceeds from the Insurance Policy,
the Company is not able to pay the repurchase price at the time that the closing
of any purchase and sale of Shares pursuant to this Section 6 is otherwise
scheduled to occur then, and notwithstanding anything to the contrary set forth
in this Section 6 or in Section 7 below, such closing shall be delayed until, in
the case of clause (a) above, the Market Value Per Share has been determined
pursuant to and in accordance with the definition thereof, and such closing
shall in any event occur within thirty (30) days after the date of such
determination, and, in the case of clause (b), such insurance proceeds have been
received, provided that such closing shall in any event occur within ninety (90)
days after the date of the applicable determination of Market Value Per Share.
7. OTHER REPURCHASE PROVISIONS.
7.1. REPURCHASE RESTRICTIONS.
(A) REPURCHASE TERMS. Notwithstanding any provision to the contrary in
Section 6 above:
(x) with respect to any repurchase of Shares by the Company following a
Termination of Employment of the Employee (i) pursuant to Section 4(c) (by
the Company for Cause), the Company (but not the Co-Managers) shall be
entitled to complete the repurchase of such
<PAGE>
-25-
Shares in seven (7) annual installments, with one-seventh of such Shares
being repurchased on the date for repurchase of such Shares specified in
Section 6 above, and one-seventh on each anniversary of such date from the
first anniversary of such date to the sixth anniversary of such date, or
(ii) pursuant to Section 4(e) (by the Employee without Good Reason), the
Company (but not the Co-Managers) shall be entitled to complete the
repurchase of such Shares in three (3) annual installments, with one-third
of such Shares being repurchased on the date for repurchase of such Shares
specified in Section 6 above, and one-third on each of the first and second
anniversaries of such date, and the Employee hereby agrees to execute and
deliver to the Company, at the time of the first such repurchase
installment pursuant to clauses (i) or (ii) above, an irrevocable proxy in
favor of the Company with respect to all of the Employee's Shares to be
repurchased by the Company, granting to the Company an irrevocable power of
attorney, coupled with an interest, to exercise all of the Employee's
rights including voting rights and retain all of the Employee's benefits in
connection with the ownership of the Shares to be repurchased by the
Company from and after the date of such first installment; and
(y) if the Company is prohibited by the terms of any of the Company's or
any of its Subsidiaries' agreements with its or their lenders (including,
without limitation, the Company's senior credit agreement with Bank of
America, N.T. & S.A., and the Indenture with respect to the Company's
Senior Subordinated Notes) (any such agreement, a "Subordinating
-------------
Agreement") from making any payments of any portion of the repurchase price
---------
for any of the Shares in cash, the Company shall be entitled to complete
the repurchase of such Shares as to which payment of the repurchase price
in cash is not so prohibited by delivering to the Employee a check for the
repurchase price thereof. The Company further shall be entitled to complete
the repurchase of the other Shares to be repurchased by it, or any portion
thereof, on the first date on which such payment is not so prohibited by
any applicable Subordinating Agreement, provided that if the closing date
of such repurchase is more than six (6) months after the Employee's
Termination of Employment, then, if the repurchase price for the Shares is
based on the Market Value Per Share, the repurchase price shall be
calculated based on the Market Value Per Share as of the date of such
closing instead of as of the date of the Employee's Termination of
Employment.
The Company agrees that in the event that it is permitted by the terms of any
Subordinating Agreement to repurchase shares of its Common Stock in
<PAGE>
-26-
cash, it shall promptly exercise its rights to complete any such repurchase
delayed pursuant to Section 7.1(a)(y), provided that any such repurchase shall
be pro rata with all other such delayed repurchases and then-current
--- ----
repurchases, whether hereunder or under any other employment or stock repurchase
agreement of the Company in force from time to time (but not including any such
repurchases required to be completed in seven annual installments pursuant to
Section 7.1(a)(x)(i) above, which shall be paid only after all other repurchases
to be made on or prior to the date of any such repurchase have been made in
full).
(B) IMPAIRMENT OF CAPITAL. If, even after giving effect to the provisions
of Section 7.1(a) hereof, the Company is prohibited by law from repurchasing any
Shares which it is entitled to repurchase hereunder due to any existing or
prospective impairment of its capital, the closing of such repurchase shall be
delayed until the first date on which the Company has sufficient capital to
lawfully repurchase such Shares (the "Delayed Closing Date"), and when
------- ------- ----
completed, any payments of the repurchase price shall be applied pro rata in
accordance with the proviso to Section 7.1(a) above. In the event of any such
delay of a closing (other than a closing described in Section 7.1(a)(x) above),
the Company will be obligated to pay, on the Delayed Closing Date, interest on
the repurchase price for such Shares, at the Prime Rate as published from time
to time in the "Wall Street Journal" from the date on which the closing of the
repurchase of such Shares was originally scheduled to occur to the Delayed
Closing Date.
7.2. PAYMENT FOR SHARES. Subject to the provisions of Section 7.1 above,
at any closing held to consummate any repurchase of Shares hereunder, the
Employee shall deliver to the Co-Managers or the Company, as the case may be,
the stock certificates representing such Shares, duly endorsed in blank or with
duly executed stock powers attached, and free and clear of all Liens, and the
Co-Managers or the Company, as the case may be, shall deliver to the Employee a
check or checks in the amount of the repurchase price for such Shares calculated
in accordance with the terms and provisions hereof.
7.3. TERMINATION OF REPURCHASE PROVISIONS. All of the repurchase rights
and obligations contained in this Agreement (excluding, for the avoidance of
doubt, any rights arising under Section 6.4 above) shall terminate immediately
after the completion of any Disposition Event or Qualified Public Offering;
provided, however. that no such termination shall relieve the Company from any
obligation or liability with respect to (i) any note issued in accordance with
Section 7.1 hereof, or (ii) any repurchase which was deferred pursuant to
Section 7.1 and not honored on or before such termination.
<PAGE>
-27-
7.4 ADJUSTMENT OF REPURCHASE PRICE. Upon any stock split, reverse stock
split, recombination of shares or other similar reorganization of the capital
structure of the Company, the repurchase price otherwise payable to the Employee
upon the repurchase of any Shares pursuant to Section 6 hereof shall be
proportionally adjusted, as appropriate, to reflect such reorganization.
8. CERTAIN COVENANTS. The Employee hereby covenants as follows, which
covenants shall be in addition and without prejudice to any other
confidentiality, noncompetition, nonsolicitation, and/or similar covenants to
which the Employee may be subject from time to time, including without
limitation those set forth in the Merger Agreement.
(A) CONFIDENTIALITY. Both during and following the term of this Agreement
and the Employee's employment hereunder, the Employee shall maintain the
confidentiality of all confidential, sensitive, or proprietary information of
the Company and/or its Subsidiaries, including without limitation with respect
to their respective businesses, finances, affairs, and/or technology, which
shall be and remain the exclusive property of the Company and/or its respective
Subsidiaries, as the case may be, and except as previously authorized in writing
by the Company, and except with respect to information that has otherwise become
public through no action or omission on the part of the Employee, shall not
disclose any such information to any third party, or use it for any purpose
other than in the discharge of his employment duties and responsibilities in the
ordinary course of the Company's business. Upon the termination of the
Employee's employment with the Company, the Employee shall promptly return to
the Company all documents and other tangible media that contain or reflect any
confidential, sensitive, or proprietary information of the Company and/or its
Subsidiaries (including all copies, reproductions, digests, abstracts, analyses,
and notes) in his possession or control, and will destroy any related computer
files on any equipment not owned by the Company or its Subsidiaries.
Notwithstanding the foregoing, if the Employee is required by law or regulation
to disclose any confidential, sensitive, or proprietary information of the
Company and/or its Subsidiaries, the Employee will provide the Company with
prompt notice of such disclosure obligation so that the Company may seek a
protective order or take other appropriate action and/or waive compliance with
this Section 8(a) to the extent of such required disclosure. In the absence of
such a waiver, if the Employee is, in the opinion of his counsel, compelled to
disclose any such information upon pain of liability for contempt or other
censure or penalty, the Employee may disclose such information to the relevant
court or other tribunal or governmental authority without liability hereunder,
but
<PAGE>
-28-
notwithstanding such disclosure, such information shall remain confidential
under this Section 8(a) after such disclosure.
(B) NON-COMPETITION. In consideration for, among other things, the
Company's agreements herein and the Company's and its Subsidiaries' agreements
in the Merger Agreement, and recognizing the Employee's status as an Investor in
the Company pursuant to the Investment Agreement and as a stockholder of the
Company, the Employee hereby agrees that, during any period during which the
Employee is employed by the Company, the period of one year following the date
of the Employee's Termination upon Retirement, and/or any period during which
the Employee is receiving any compensation pursuant to this Agreement,
including, without limitation, compensation pursuant to Section 5(a) and 5(b)
hereof during the Initial Severance Period, the Additional Severance Period, if
any, and any other period during which payments are being made to the Employee
pursuant to and in accordance with such Sections 5(a) and 5(b), and, if the
Employee's employment with the Company terminates pursuant to Section 4(b) (by
the Company for Cause) or Section 4(e) (by the Employee without Good Reason)
hereof, then also during the longer of (i) the period of one year commencing on
the date of such Termination of Employment, and (ii) the period of two years
from the Closing Date, all of which applicable periods shall automatically be
extended by a period of time equal to any period in which the Employee is in
breach of any obligations under this Section 8 (all of which applicable periods,
including any such extension, the "Restricted Period"), the Employee shall not
-----------------
engage, directly or indirectly (except as a stockholder, director, officer,
and/or employee of the Company and/or any of its Subsidiaries), as a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the outstanding capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative, or in any other
capacity: (A) in the manufacture of folding cartons or sleeves manufactured, at
least in part, of rigid plastic, (B) the manufacture, design, printing or
production of specialty packaging products for use in the cosmetics,
entertainment (including recorded music, video, software, multimedia and
electronic gaming) or tobacco markets, in each case anywhere in the world (the
Employee hereby acknowledging that the Company and its Subsidiaries do such
business worldwide), or (C) in any other business which the Company or any of
its Subsidiaries may conduct at any time during the period of the Employee's
employment hereunder, anywhere that the Company or any its Subsidiaries may
conduct such business at any time during the term of such non-competition
obligations.
(C) NON-SOLICITATION OF EMPLOYEES, ETC. During the Restricted Period
(which, for the purposes of this Section 8(c) and Section 8(d) below,
<PAGE>
-29-
shall be extended to include the maximum potential Additional Severance Period
under Section 5 above (regardless of whether or not compensation is paid to the
Employee with respect thereto), if prior to the commencement of such additional
period at least 50% of the Company Priority Shares shall have been repurchased
pursuant to Sections 6.1 - 6.3 above, the Company shall have become obligated
pursuant to Section 7.1 hereof to repurchase any of such Shares remaining
outstanding, and the Company shall not then be in breach of its obligations with
respect to such repurchase obligation under Section 7, the Employee shall not
directly or indirectly recruit, solicit, induce, or attempt to induce any of the
employees or independent contractors of the Company or any of its Subsidiaries
to terminate their employment or contractual relationship with the Company or
such Subsidiary; and shall not assist any other Person to do so, or be a
proprietor, equityholder, investor (except as a passive investor holding not
more than 3% of the capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative of any Person who
does or attempts to do so.
(D) NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. During the Restricted
Period (extended as described in Section 8(c) above), the Employee shall not
directly or indirectly solicit, divert, take away, or attempt to divert or take
away, from the Company or any of its Subsidiaries any of the business or
patronage of any of their respective customers, clients, accounts, vendors, or
suppliers, or induce or attempt to induce any such Person to reduce the amount
of business it does with the Company or any of its Subsidiaries, and the
Employee shall not assist any other Person to do so, or be a proprietor,
equityholder, investor (except as a passive investor holding not more than 3% of
the capital stock of a publicly held company), lender, partner, director,
officer, employee, consultant, or representative of any Person who does or
attempts to do so.
(E) TERMINATION OF CERTAIN COVENANTS. The covenants of the Employee set
forth in Sections 8(b) - (d) hereof shall not apply at any time other than
during the Restricted Period (but the termination of such covenants shall be
without prejudice to any other confidentiality, noncompetition, nonsolicitation,
and/or similar covenants to which the Employee may be subject from time to time,
including without limitation those set forth in the Merger Agreement). For the
avoidance of doubt, in the event that the covenants set forth in Section 8(b)
are no longer binding upon the Employee, the fact of the Employee's engaging in
any activity which would have been prohibited to the Employee under Section 8(b)
shall not by itself constitute a violation of the Employee's covenants in any of
Sections 8(c), 8(d) and 8(f) hereof and it shall not be a violation of either
Section 8(c) or Section 8(d) for the Employee to provide services in any
capacity to another Person who may engage in conduct prohibited by either such
section, so long
<PAGE>
-30-
as Employee does not directly assist or participate in, or provide consultation
with respect to, such prohibited conduct.
(F) NON-DISPARAGEMENT. Both during and following the term of this
Agreement and the Employee's employment hereunder, the Employee shall not
disparage, deprecate, or make any negative comment with respect to the Company
or any of its Subsidiaries or their respective businesses, operations, or
properties.
(G) EQUITABLE REMEDIES. The Employee hereby acknowledges that any breach
by him of his obligations under this Section 8 would cause substantial and
irreparable damage to the Company, and that money damages would be an inadequate
remedy therefor, and accordingly, acknowledges and agrees that the Company shall
be entitled to an injunction, specific performance, and/or other equitable
relief to prevent the breach of such obligations (in addition to all other
rights and remedies to which the Company may be entitled in respect of any such
breach).
(H) MODIFICATION. In the event that a court of competent jurisdiction
determines that any of the provisions of this Section 8 would be unenforceable
as written because they cover too extensive a geographic area, too broad a range
of activities, or too long a period of time, or otherwise, then such provisions
shall automatically be modified to cover the maximum geographic area, range of
activities, and period of time as may be enforceable, and in addition, such
court is hereby expressly authorized so to modify this Agreement and to enforce
it as so modified. No invalidity or unenforceability of any section of this
Agreement or any portion thereof shall affect the validity or enforceability of
any other section or of the remainder of such section.
9. MISCELLANEOUS.
(A) BENEFITS OF AGREEMENT; NO ASSIGNMENTS; THIRD-PARTY BENEFICIARIES.
(i) This Agreement shall bind and inure to the benefit of the
parties hereto, the Co-Managers, and the respective heirs, successors, and
permitted assigns of each of them.
(ii) Except to the extent expressly contemplated by Section 6.5
hereof and pursuant to the Stockholder Agreement, neither party hereto
shall assign any rights or delegate any obligations hereunder without the
consent of the other party (except that the Company may assign its rights
and delegate its obligations hereunder to any
<PAGE>
-31-
successor to its business, whether by merger or consolidation, sale of
stock or of all or substantially all of assets, or otherwise), and any
attempt to do so shall be void.
(iii) Nothing in this Agreement is intended to or shall confer any
rights or remedies on any Person other than the parties hereto, the Co-
Managers, and their respective heirs, successors, and permitted assigns.
The parties hereto expressly agree that the Co-Managers shall be third-
party beneficiaries of the provisions of Sections 6 and 7 of this
Agreement.
(B) NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed to the recipient party at his or its address set forth in the
first paragraph hereof, to the attention of David Underwood, if the Company is
the intended recipient party, or to the Co-Managers in care of the Company, if a
Co-Manager is the intended recipient party (or to such other address or other
Person's attention as the recipient party may have furnished to the sending
party for the purpose pursuant to this section).
(C) COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same agreement.
In pleading or proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart.
(D) CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and shall not affect the interpretation or construction
of this Agreement.
(E) CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.
(F) WAIVERS; AMENDMENTS. No waiver of any breach or default hereunder
shall be valid unless in a writing signed by the waiving party. No
<PAGE>
-32-
failure or other delay by any party exercising any right, power, or privilege
hereunder shall be or operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. No amendment or modification
of this Agreement shall be valid or binding unless in a writing signed by both
the Employee and the Company.
(G) ENTIRE AGREEMENT. This Agreement and the Stockholder Agreement contain
the entire understanding and agreement between the parties, and supersede any
prior understandings or agreements between them, with respect to the subject
matter hereof.
(H) GOVERNING LAW. This Agreement shall to the maximum lawful extent be
governed by and interpreted and construed in accordance with the internal laws
of the State of Illinois, as applied to contracts under seal made, and entirely
to be performed, within Illinois, and without reference to principles of
conflicts or choice of law.
<PAGE>
-33-
IN WITNESS WHEREOF, each of the Company and the Employee has executed and
delivered this Employment, Non-Competition and Stock Repurchase Agreement as an
agreement under seal as of the date first above written.
COMPANY: IMPAC GROUP, INC.
By /s/ Richard Block
--------------------------
Name: Richard Block
Title: President
EMPLOYEE: /s/ Richard H. Block
----------------------------
Name: Richard H. Block
<PAGE>
EXHIBIT 10.19
================================================================================
- --------------------------------------------------------------------------------
$53,000,000
CREDIT AGREEMENT
DATED AS OF MARCH 12, 1998
AMONG
IMPAC GROUP, INC.,
AGI INCORPORATED,
KLEARFOLD, INC.,
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
AS AGENT
AND
LETTER OF CREDIT ISSUING BANK,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BANCAMERICA ROBERTSON STEPHENS
================================================================================
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- -------
<S> <C>
ARTICLE I
DEFINITIONS..................................................... 1
-----------
1.01 Certain Defined Terms............................................. 1
---------------------
1.02 Other Interpretive Provisions..................................... 27
-----------------------------
1.03 Accounting Principles............................................. 27
---------------------
ARTICLE II
THE CREDITS..................................................... 28
-----------
2.01 Amounts and Terms of Commitment................................... 28
-------------------------------
2.02 Loan Accounts..................................................... 28
-------------
2.03 Procedure for Revolving Loan Borrowing............................ 29
--------------------------------------
2.04 Conversion and Continuation Elections for Revolving Loans......... 30
---------------------------------------------------------
2.05 Voluntary Termination or Reduction of Commitments................. 31
-------------------------------------------------
2.06 Optional Prepayments.............................................. 32
--------------------
2.07 Mandatory Prepayments of Loans; Mandatory Commitment Reductions... 32
---------------------------------------------------------------
2.08 Repayment of Loans................................................ 33
------------------
2.09 Interest.......................................................... 34
--------
2.10 Fees.............................................................. 35
----
(a) Agency Fees................................................ 35
-----------
(b) Commitment Fees............................................ 35
---------------
2.11 Computation of Fees and Interest.................................. 35
--------------------------------
2.12 Payments by Credit Parties........................................ 35
--------------------------
2.13 Payments by the Lenders to the Agent.............................. 36
------------------------------------
2.14 Sharing of Payments, Etc.......................................... 37
-------------------------
ARTICLE III
THE LETTERS OF CREDIT........................................... 37
--------------------
3.01 The Letter of Credit Facility..................................... 37
-----------------------------
3.02 Issuance, Amendment and Renewal of Letters of Credit.............. 39
----------------------------------------------------
3.03 Risk Participations, Drawings, L/C Loan Borrowings
--------------------------------------------------
and Reimbursements............................................... 41
------------------
3.04 Repayment of Participations....................................... 46
---------------------------
3.05 Role of the Issuing Bank.......................................... 46
------------------------
3.06 Obligations Absolute.............................................. 47
--------------------
3.07 Cash Collateral Pledge............................................ 48
----------------------
3.08 Letter of Credit Fees............................................. 48
---------------------
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
3.09 Uniform Customs and Practice...................................... 49
----------------------------
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY.......................... 49
--------------------------------------
4.01 Taxes............................................................. 49
-----
4.02 Illegality........................................................ 50
----------
4.03 Increased Costs and Reduction of Return........................... 51
---------------------------------------
4.04 Funding Losses.................................................... 51
--------------
4.05 Inability to Determine Rates...................................... 52
----------------------------
4.06 Reserves on Offshore Rate Loans................................... 52
-------------------------------
4.07 Certificates of Lenders........................................... 53
-----------------------
4.08 Substitution of Lenders........................................... 53
-----------------------
4.09 Survival.......................................................... 53
--------
ARTICLE V
CONDITIONS PRECEDENT............................................ 53
--------------------
5.01 Conditions of Initial Credit Extensions........................... 53
---------------------------------------
(a) Credit Agreement and Notes................................. 53
--------------------------
(b) Resolutions; Incumbency.................................... 53
-----------------------
(c) Organization Documents; Good Standing...................... 54
-------------------------------------
(d) Legal Opinions............................................. 54
--------------
(e) Payment of Fees............................................ 54
---------------
(f) Certificate................................................ 54
-----------
(g) Collateral Documents....................................... 55
--------------------
(h) Lender Payoff Letter....................................... 55
--------------------
(i) Pro Forma Balance Sheet and Projections.................... 56
---------------------------------------
(k) Applicable Margin Certificate.............................. 56
-----------------------------
(l) Senior Subordinated Note Documents......................... 56
----------------------------------
(m) Combination................................................ 56
-----------
(n) Merger..................................................... 57
------
(o) Other Documents............................................ 57
---------------
5.02 Conditions to All Credit Extensions............................... 57
-----------------------------------
(a) Notice, Application........................................ 57
-------------------
(b) Continuation of Representations and Warranties............. 57
----------------------------------------------
(c) No Existing Default........................................ 57
-------------------
ARTICLE VI
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
REPRESENTATIONS AND WARRANTIES.................................... 58
------------------------------
6.01 Corporate Existence and Power..................................... 58
-----------------------------
6.02 Corporate Authorization; No Contravention......................... 58
-----------------------------------------
6.03 Governmental Authorization........................................ 58
--------------------------
6.04 Binding Effect.................................................... 58
--------------
6.05 Litigation........................................................ 59
----------
6.06 No Default........................................................ 59
----------
6.07 ERISA Compliance.................................................. 59
----------------
6.08 Use of Proceeds; Margin Regulations............................... 60
-----------------------------------
6.09 Title to Properties............................................... 60
-------------------
6.10 Taxes............................................................. 60
-----
6.11 Financial Condition............................................... 60
-------------------
6.12 Environmental Matters............................................. 60
---------------------
6.13 Collateral Documents.............................................. 61
--------------------
6.14 Regulated Entities................................................ 62
------------------
6.15 No Burdensome Restrictions........................................ 62
--------------------------
6.16 Solvency.......................................................... 62
--------
6.17 Labor Relations................................................... 62
---------------
6.18 Copyrights, Patents, Trademarks and Licenses, etc................. 63
--------------------------------------------------
6.19 Capitalization; Subsidiaries...................................... 63
----------------------------
6.20 Broker's; Transaction Fees........................................ 63
--------------------------
6.21 Insurance......................................................... 63
---------
6.22 Swap Obligations.................................................. 63
----------------
6.23 Full Disclosure................................................... 63
---------------
6.24 Subordination Provisions.......................................... 64
------------------------
6.25 Transaction Agreements............................................ 64
----------------------
6.26 Merger............................................................ 64
------
6.27 Year 2000 Compliance.............................................. 64
--------------------
ARTICLE VII
AFFIRMATIVE COVENANTS............................................. 64
---------------------
7.01 Financial Statements.............................................. 65
--------------------
7.02 Certificates; Other Information................................... 65
-------------------------------
7.03 Notices........................................................... 66
-------
7.04 Preservation of Corporate Existence, Etc.......................... 67
----------------------------------------
7.05 Maintenance of Property........................................... 67
-----------------------
7.06 Insurance......................................................... 67
---------
7.07 Payment of Obligations............................................ 67
----------------------
7.08 Compliance with Laws.............................................. 68
--------------------
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
7.09 Compliance with ERISA............................................. 68
---------------------
7.10 Inspection of Property and Books and Records...................... 68
--------------------------------------------
7.11 Environmental Laws................................................ 68
------------------
7.12 Use of Proceeds................................................... 68
---------------
7.13 Solvency.......................................................... 69
--------
7.14 Further Assurances................................................ 69
------------------
7.15 Foreign Subsidiaries Security..................................... 69
-----------------------------
7.16 Klearfold IRB Letter of Credit.................................... 70
------------------------------
ARTICLE VIII
NEGATIVE COVENANTS................................................ 70
------------------
8.01 Limitation on Liens............................................... 70
-------------------
8.02 Disposition of Assets............................................. 72
---------------------
8.03 Acquisitions, Consolidations and Mergers.......................... 72
----------------------------------------
8.04 Loans and Investments............................................. 73
---------------------
8.05 Limitation on Indebtedness........................................ 74
--------------------------
8.06 Transactions with Affiliates...................................... 75
----------------------------
8.07 Use of Proceeds................................................... 75
---------------
8.08 Contingent Obligations............................................ 75
----------------------
8.09 Joint Ventures; Foreign Assets; New Subsidiaries.................. 76
------------------------------------------------
8.10 Lease Obligations................................................. 76
-----------------
8.11 Restricted Payments; No Permitted Restrictions for Subsidiaries... 76
---------------------------------------------------------------
8.12 ERISA............................................................. 77
-----
8.13 Change in Business................................................ 78
------------------
8.14 Accounting Changes................................................ 78
------------------
8.15 Leverage Ratio.................................................... 78
--------------
8.16 Senior Leverage Ratio............................................. 78
---------------------
8.17 Interest Coverage Ratio........................................... 79
-----------------------
8.18 Net Assets Ratio.................................................. 79
----------------
8.19 Minimum Net Worth................................................. 79
-----------------
8.20 Amendments to Charter Documents, Subordinated Debt and IRB Debt;
-----------------------------------------------------------------
No Preferred Stock............................................... 80
------------------
8.21 Intercompany Loans................................................ 81
-------------------
ARTICLE IX
EVENTS OF DEFAULT................................................. 81
-----------------
9.01 Event of Default.................................................. 81
----------------
(a) Non-Payment.................................................. 81
-----------
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
(b) Representation or Warranty................................... 81
--------------------------
(c) Specific Defaults............................................ 82
-----------------
(d) Other Defaults............................................... 82
--------------
(e) Cross-Default................................................ 82
-------------
(f) Insolvency; Voluntary Proceedings............................ 82
---------------------------------
(g) Involuntary Proceedings...................................... 83
-----------------------
(h) ERISA........................................................ 83
-----
(i) Monetary Judgments........................................... 83
------------------
(j) Non-Monetary Judgments....................................... 83
----------------------
(k) Collateral................................................... 83
----------
(l) Change of Control............................................ 84
-----------------
(m) Guaranty Defaults............................................ 84
-----------------
(n) Invalidity of Subordination Provisions....................... 84
--------------------------------------
(o) Cross Default to IRBs........................................ 84
----------------------
9.02 Remedies.......................................................... 84
--------
9.03 Rights Not Exclusive.............................................. 86
--------------------
9.04 Permitted Swap Contract Remedies.................................. 86
--------------------------------
ARTICLE X
THE AGENT......................................................... 86
---------
10.01 Appointment and Authorization; "Agent"............................ 86
--------------------------------------
10.02 Delegation of Duties.............................................. 87
--------------------
10.03 Liability of Agent................................................ 87
------------------
10.04 Reliance by Agent................................................. 87
-----------------
10.05 Notice of Default................................................. 88
-----------------
10.06 Credit Decision................................................... 88
---------------
10.07 Indemnification of Agent.......................................... 89
------------------------
10.08 Agent in Individual Capacity...................................... 89
----------------------------
10.09 Successor Agent................................................... 89
---------------
10.10 Withholding Tax................................................... 90
---------------
10.11 Collateral Matters................................................ 91
------------------
ARTICLE XI
MISCELLANEOUS................................................... 92
-------------
11.01 Amendments and Waivers............................................ 92
----------------------
11.02 Notices........................................................... 93
-------
11.03 No Waiver; Cumulative Remedies.................................... 93
------------------------------
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
Section Page
<S> <C>
11.04 Costs and Expenses................................................ 94
------------------
11.05 Company Indemnification........................................... 94
-----------------------
11.06 Payments Set Aside................................................ 94
------------------
11.07 Successors and Assigns............................................ 95
----------------------
11.08 Assignments, Participations, etc.................................. 95
---------------------------------
11.09 Confidentiality................................................... 97
---------------
11.10 Set-off........................................................... 97
-------
11.11 Automatic Debits of Fees.......................................... 97
------------------------
11.12 Notification of Addresses, Lending Offices, Etc................... 98
------------------------------------------------
11.13 Counterparts...................................................... 98
------------
11.14 Severability...................................................... 98
------------
11.15 No Third Parties Benefited........................................ 98
--------------------------
11.16 Governing Law and Jurisdiction.................................... 98
------------------------------
11.17 Waiver of Jury Trial.............................................. 99
--------------------
11.18 Entire Agreement.................................................. 100
----------------
11.19 Agent for Service of Process...................................... 100
----------------------------
</TABLE>
vi
<PAGE>
SCHEDULES
Schedule 2.01 Commitments
Schedule 6.05 Litigation
Schedule 6.11 Permitted Liabilities
Schedule 6.12 Environmental Matters
Schedule 6.18 Exceptions to Title for Intellectual Property
Schedule 6.19 Capitalization; Subsidiaries and Minority Interests
Schedule 6.20 Brokers' and Transaction Fees
Schedule 8.01 Existing Liens
Schedule 8.04 Existing Investments
Schedule 8.05 Existing Indebtedness
Schedule 8.06 Affiliate Transactions
Schedule 8.08 Contingent Obligations
Schedule 11.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Credit Parties' Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F-1 Form of Revolving Note
Exhibit F-2 Form of L/C Loan Note
Exhibit G Form of AGI Letter of Credit
Exhibit H-1 Form of Back-Up Klearfold Letter of Credit
Exhibit H-2 Form of Replacement Klearfold Letter of Credit
Exhibit H-3 Mellon Bank, N.A. Letter of Credit
Exhibit I Form of AGI Pledge and Security Agreement
vii
<PAGE>
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT is entered into as of March 12, 1998, among IMPAC
GROUP, INC. (f/k/a KFI Holding Corporation), a Delaware corporation (the
"Company"), AGI INCORPORATED, an Illinois corporation ("AGI"), KLEARFOLD, INC.,
- -------- ---
a Pennsylvania corporation ("Klearfold", and together with AGI, each a "L/C
--------- ---
Borrower" and collectively, the "L/C Borrowers"), the several financial
- -------- -------------
institutions from time to time party to this Agreement (collectively, the
"Lenders"; individually, a "Lender"), and Bank of America National Trust &
- -------- ------
Savings Association, as letter of credit issuing bank and as agent for the
Lenders.
WHEREAS, the Company intends to enter into a recapitalization transaction
pursuant to which the existing holders of the common stock of the Company will
make a capital contribution of not less than $4,300,000 in cash to the Company
and certain current equity investors in AGI will contribute to the Company
certain shares of common stock of AGI, and thereafter the Company's newly formed
subsidiary, AGI Acquisition Corp., will merge (the "Merger") with and into AGI
------
with AGI as the surviving corporation, and AGI will become a wholly-owned
subsidiary of the Company; and the Company anticipates that all dividends and
cash consideration payable in consideration of the Merger and the repayment of
certain existing indebtedness for money borrowed of AGI and Klearfold will be
funded with the proceeds of the capital contribution referred to above and from
its offering of $100,000,000 of senior unsecured subordinated notes due 2008
(the "Senior Subordinated Notes"), and that the Company and its Subsidiaries
-------------------------
will thereafter need certain additional credit facilities to finance their
proposed future acquisitions, certain working capital needs and to assume, back-
stop and/or replace certain existing letters of credit which credit enhance
existing industrial development revenue bonds of the Company's Subsidiaries, AGI
and Klearfold;
WHEREAS, in connection with the transactions referenced above, the Lenders
have agreed to make available to the Company a revolving credit facility and to
the L/C Borrowers a letter of credit facility upon the terms and conditions set
forth in this Agreement;
WHEREAS, simultaneous with the consummation of the Merger and the offering
of the Senior Subordinated Notes, the Company has changed its name from KFI
Holding Corporation to IMPAC Group, Inc.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.0 Certain Defined Terms. The following terms have the following
---------------------
meanings:
"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
<PAGE>
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 its Subsidiary is the surviving
entity.
"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, but shall with respect to
a Credit Party specifically exclude BofA.
"Agent" means BofA in its capacity as agent for the Lenders hereunder,
-----
and any successor agent arising under Section 10.09.
-------------
"Agent-Related Persons" means BofA and any successor agent arising
---------------------
under Section 10.09 and any successor letter of credit issuing bank
-------------
hereunder, together with their respective Affiliates, and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agent's Payment Office" means the address for payments set forth
----------------------
on Schedule 11.02 or such other address as the Agent may from time to time
--------------
specify.
"AGI" means AGI Incorporated, an Illinois corporation, as the
---
survivor corporation of the Merger.
"AGI Bond Documents" means collectively, the AGI Bonds, the AGI
------------------
Indenture, AGI Remarketing Agreement, AGI Pledge and Security Agreement and
any other agreements or instruments relating thereto.
"AGI-A Drawing (Purchase)" means a demand for payment under the AGI
------------------------
IRB Letter of Credit made by presentation of a document in the form of
Exhibit A-1 (Next Day Purchase) or Exhibit A-2 (Same Day Purchase) to the
AGI IRB Letter of Credit.
"AGI-B Drawing (Principal)" means a demand for payment under the AGI
-------------------------
IRB Letter of Credit made by presentation of a document in the form of
Exhibit B (Principal) to the AGI IRB Letter of Credit.
"AGI Bond Issuer" means The City of Jacksonville, Illinois.
---------------
"AGI Bonds" means the Multi-Mode Industrial Project Revenue Bonds,
---------
Series 1995 issued by the AGI Bond Issuer pursuant to the AGI Indenture.
2
<PAGE>
"AGI-C Drawing (Interest)" means a demand for payment under the AGI
------------------------
IRB Letter of Credit made by presentation of a document in the form of
Exhibit C (Interest) to the AGI IRB Letter of Credit.
"AGI-D Drawing (Premium)" means a demand for payment under the AGI
-----------------------
IRB Letter of Credit made by presentation of a document in the form of
Exhibit D (Premium) to the AGI IRB Letter of Credit.
"AGI-E Drawing (Acceleration)" means a demand for payment under the
----------------------------
AGI IRB Letter of Credit made by presentation of a document in the form of
Exhibit E (Acceleration) to the AGI IRB Letter of Credit.
"AGI Indenture" means the Trust Indenture, dated as of January 1,
-------------
1995, between the AGI Bond Issuer and the AGI Trustee.
"AGI IRB Letter of Credit" means the letter of credit issued by the
------------------------
Issuing Bank in substantially the form of Exhibit G hereto.
---------
"AGI Letters of Credit" means (a) the AGI IRB Letter of Credit and
---------------------
(b) any other Letter of Credit issued for the account of AGI pursuant to
Article III.
-----------
"AGI L/C Sublimit" means the commitment of the Issuing Bank to
----------------
Issue, and the commitment of the L/C Lenders with L/C Loan Commitments
severally to participate in, the AGI Letters of Credit Issued or
outstanding under Article III, in an aggregate amount not to exceed on any
-----------
date the amount of $8,571,019 plus the Trade L/C Sublimit (to the
extent not then used by Klearfold), as the same shall be reduced as a
result of a reduction in the L/C Commitment pursuant to Section 2.07(b).
---------------
"AGI L/C Loan" means a L/C Loan made by a L/C Lender to AGI.
------------
"AGI L/C Obligations" means at any time the sum of (a) the aggregate
-------------------
undrawn amount of the AGI Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under the AGI Letters of Credit,
including all outstanding AGI L/C Loans.
"AGI LOC Termination Tender Date" has the meaning specified in the
-------------------------------
AGI Indenture.
"AGI Pledged Bonds" has the meaning specified in Section 3.03(b).
----------------- ---------------
"AGI Pledge and Security Agreement" has the meaning specified in
---------------------------------
Section 3.03(b).
---------------
"AGI Reimbursement Agreement" means that certain Reimbursement
---------------------------
Agreement between AGI and BofA (f/k/a Bank of America Illinois) dated as of
January 1, 1995.
3
<PAGE>
"AGI Remarketing Agent" means William Blair & Company.
---------------------
"AGI Remarketing Agreement" means the Remarketing Agreement, dated
-------------------------
as of January 1, 1995, between the Company and the AGI Remarketing Agent.
"AGI Tender Price" has the meaning specified in the AGI Indenture.
----------------
"AGI Trustee" means Bank One, Springfield.
-----------
"Agreement" means this Credit Agreement.
---------
"Applicable Margin" shall mean on any date the applicable percentage
-----------------
set forth below based upon the Level as shown in the Compliance Certificate
then most recently delivered to the Lenders:
<TABLE>
<CAPTION>
Offshore Base Letter of Commitment
Level Rate Rate Credit Fee Fee
------- -------- ---- ---------- ----------
<S> <C> <C> <C> <C>
I 2.25% 1.25% 1.625% .500%
II 2.00% 1.00% 1.625% .375%
III 1.75% .75% 1.625% .250%
IV 1.50% .50% 1.500% .250%
</TABLE>
; provided, however that for the period from the date hereof until the date
-------- -------
that is the first Business Day after the date the first Compliance
Certificate is delivered to the Lenders pursuant to Section 7.02(b), the
---------------
Applicable Margin shall be deemed to be the Level determined pursuant to
the certificate referred to in Section 5.01(k); provided further that, if
--------------- -------- -------
the Company shall have failed to deliver to the Lenders by the date
required hereunder any Compliance Certificate pursuant to Section 7.02(b)
---------------
or if any other Event of Default shall have occurred and be continuing,
then from the date such Compliance Certificate was required to be delivered
until the date of such delivery or the cure or waiver in writing of such
other Event of Default, as the case may be, the Applicable Margin shall be
deemed to be Level I. Each change in the Applicable Margin shall take
effect with respect to all outstanding Loans and fees on the first Business
Day immediately succeeding the day on which such Compliance Certificate is
received by the Agent. Notwithstanding the foregoing, no reduction in the
Applicable Margin shall be effected if an Event of Default shall have
occurred and be continuing on the date when such change would otherwise
occur, it being understood that on the first Business Day immediately
succeeding the day on which such Event of Default is either waived or cured
(assuming no other Event of Default shall be then pending), the Applicable
Margin shall be reduced (on a prospective basis) in accordance with the
then most recently delivered Compliance Certificate.
4
<PAGE>
"Assignee" has the meaning specified in Section 11.08(a).
-------- ----------------
"Attorney Costs" means and includes all reasonable and customary
--------------
fees and disbursements of any law firm or other external counsel, the
reasonable allocated cost of internal legal services and all reasonable
disbursements of internal counsel.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978
---------------
(11 U.S.C. (S)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
Chicago, Illinois 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 Loan" means a Revolving Loan or an L/C Loan that bears
--------------
interest based on the Base Rate.
"BofA" means Bank of America National Trust & Savings Association, a
----
national banking association, individually.
"Borrowing" means a borrowing hereunder consisting of Loans of the
---------
same Type made to a Credit Party on the same day by the Lenders under
Article II or III, and, in the case of Offshore Rate Loans, having the same
-----------------
Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under
--------------
Sections 2.03 and 3.03.
-------------- ----
"Business Day" means any day other than a Saturday, Sunday or other
------------
day on which commercial banks in Chicago 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 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.
"Capital Expenditures" means, for any period and with respect to any
--------------------
Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing of fixed or capital assets or
additions to equipment (including replacements,
5
<PAGE>
capitalized repairs and improvements during such period) which should be
capitalized under GAAP on a consolidated balance sheet of such Person and
its Subsidiaries.
"Capital Lease" has the meaning specified in the definition of
-------------
"Capital Lease Obligations."
"Capital Lease Obligations" means all monetary obligations of a
-------------------------
Credit Party or any of its Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, is classified as a capital
lease ("Capital Lease") .
"Cash Collateralize" means to pledge and deposit with or deliver to
------------------
the Agent, for the benefit of the Agent, the Issuing Bank and the L/C
Lenders, as additional collateral for the Obligations, cash or deposit
account balances pursuant to documentation in form and substance
satisfactory to the Agent (which documents are hereby consented to by the
L/C Lenders). Derivatives of such term shall have corresponding meaning.
"Cash Equivalents" means:
----------------
(a) securities issued or fully guaranteed or insured by the
United States Government or any agency thereof and backed by the full
faith and credit of the United States having maturities of not more
than one year from the date of acquisition;
(b) certificates of deposit, time deposits, Eurodollar time
deposits, repurchase agreements, reverse repurchase agreements, or
bankers' acceptances, having in each case a tenor of not more than one
year, issued by any Lender, or by any U.S. commercial bank having
combined capital and surplus of not less than $100,000,000 whose short
term securities are rated at least A-1 by Standard & Poor's
Corporation and P-1 by Moody's Investors Service, Inc.;
(c) commercial paper of an issuer rated at least A-1 by Standard
& Poor's Corporation or P-1 by Moody's Investors Service Inc. and in
either case having a tenor of not more than six months.
"Change of Control" means the occurrence of any of the following: (i)
-----------------
the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act) other than one or more Principals or
Related Parties of one or more Principals or a Management Group, (ii) the
consummation of any transaction (including, without limitation, any merger
or consolidation) the result of which is that any "person" (as defined
above), other than one or more Principals and their Related Parties or a
Management Group, becomes the "beneficial owner" (as such term is defined
in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a person
shall be deemed to have
6
<PAGE>
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only
upon the occurrence of a subsequent condition), directly or indirectly, of
more than 50% of the Voting Stock of the Company (measured by voting power
rather than number of shares), (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of
which is that any "person" (as defined above) other than a Management Group
becomes the "beneficial owner" (as defined above), directly or indirectly,
of 35% or more of the Voting Stock of the Company (measured by voting power
rather than number of shares) and the Principals and their Related Parties
in the aggregate "beneficially own" (as defined above) less than 35% of the
Voting Stock of the Company (measured by voting power rather than number of
shares), (iv) the first day on which a majority of the members of the Board
of Directors of the Company are not Continuing Directors or (v) any other
event or occurrence constituting a "Change of Control" under the Senior
Subordinated Note Indenture.
"Closing Date" means March 12, 1998.
------------
"Code" means the Internal Revenue Code of 1986, and regulations
----
promulgated thereunder.
"Collateral" means all property and interests in property and proceeds
----------
thereof now owned or hereafter acquired by a Credit Party or any Subsidiary
Guarantor in or upon which a Lien now or hereafter exists in favor of the
Lenders, or the Agent on behalf of the Lenders, whether under this
Agreement or under any other documents executed by any such Persons and
delivered to the Agent.
"Collateral Documents" means, collectively, (a) the Security
--------------------
Agreements, the Guaranties, the Pledge Agreements, the AGI Pledge and
Security Agreement, the Intellectual Property Assignments, the Mortgages
(if and when required to be executed and delivered hereunder) and all other
security agreements, patent and trademark assignments, guarantees and other
similar agreements between a Credit Party or its Subsidiaries and the
Lenders or the Agent, for the benefit of the Lenders, now or hereafter
delivered to the Lenders or the Agent pursuant to or in connection with the
transactions contemplated hereby, and all financing statements (or
comparable documents now or hereafter filed in accordance with the Uniform
Commercial Code or comparable law) against a Credit Party or any of its
Subsidiaries as debtor in favor of the Lenders or the Agent, for the
benefit of the Lenders, as secured party and (b) any amendments,
supplements, modifications, renewals, replacements, consolidations,
substitutions and extensions of any of the foregoing.
"Combination" means, collectively, (a) the contribution by the
-----------
stockholders of the Company of (x) 100% of the capital stock of the Company
and a warrant to purchase capital stock of the Company and (y) at least
$4,300,000 in cash to the capital of the Company and (b) the contribution
by certain of the stockholders and holders of stock appreciation rights of
AGI of at least 26.8% of the capital stock of AGI and the investment of the
proceeds of
7
<PAGE>
stock appreciation rights to the capital of the Company, in each case in
exchange for common stock of the Company pursuant to the terms of the
Combination Documents.
"Combination Documents" means the Investment Agreement, dated as of
---------------------
February 19, 1998, among the Company, the stockholders of the Company, and
certain stockholders, members of the management and holders of stock
appreciation rights of AGI, and all other documents entered into or
delivered in connection with the Combination.
"Commitments" means, collectively, the Revolving Loan Commitment and
-----------
the L/C Commitment.
"Commitment Fee" has the meaning specified in Section 2.10(b).
-------------- ---------------
"Company" means IMPAC Group, Inc. (f/k/a KFI Holding Corporation), a
-------
Delaware corporation.
"Compliance Certificate" means a certificate substantially in the form
----------------------
of Exhibit C.
---------
"Consolidated Interest Expense" means, for any period, gross
-----------------------------
consolidated interest expense for the period (including all commissions,
discounts, fees and other charges in connection with standby letters of
credit and similar instruments) for the Company and its Subsidiaries.
"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 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
-------------------
(other than any Letter of Credit) 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
8
<PAGE>
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.
"Continuing Directors" means, as of any date of determination, any
--------------------
member of the Board of Directors of the Company who (i) was a member of
such Board of Directors on the Closing Date, (ii) was nominated for
election or elected to such Board of Directors with the approval of a
majority of the Continuing Directors who were members of such Board at the
time of such nomination or election or (iii) was elected to such Board of
Directors pursuant to a designation made pursuant to the Stockholder
Agreement, provided that at such time the Principals, any Management Group
and their Related Parties own more than 50% of the Voting Stock of the
Company.
"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 Revolving Loans of one Type to another Type,
----
or (b) continues as Revolving Loans of the same Type, but with a new
Interest Period, Loans having Interest Periods expiring on such date.
"Credit Extension" means and includes (a) the making of any Loans
----------------
hereunder, and (b) the Issuance of any Letters of Credit hereunder.
"Credit Party" means each of the Company and each L/C Borrower.
------------
"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.
"Domestic Subsidiary" means each Subsidiary of the Company that is
-------------------
organized under the laws of the United States or any state thereof.
"EBITDA" means, for any period, for the Company and its Subsidiaries
------
on a consolidated basis, determined in accordance with GAAP, the sum of (a)
Net Income for such period plus (b) Consolidated Interest Expenses and all
----
amounts treated as expenses for depreciation and amortization of
intangibles of any kind to the extent deducted in the
9
<PAGE>
determination of such Net Income, plus (c) all taxes based on income or
----
profits to the extent such taxes were included in computing Net Income,
plus (d) with respect to any business acquired during the period of
----
determination, an amount equal to the sum of (x) the total compensation
paid to each management equity holder of such acquired business during the
twelve month period immediately preceding the date such business was
acquired less the base compensation (which must, in any event, reflect at
----
least a reasonable market base salary for such types of managers and
executives) paid to each such Person during such twelve month period plus
----
(y) the aggregate amount of management fees paid to management equity
holders or Affiliates thereof during such twelve month period to the extent
that such management fee is no longer required to be paid after the date of
such acquisition, plus or minus (e) such amounts, if any, as from time to
---- -----
time agreed to between the Company and the Lenders in connection with an
Acquisition related to reasonably projected savings from such Acquisition
applied on a pro forma basis; and provided further, that for the purpose of
----------------
computations under Sections 8.15, 8.16 and 8.17 for any business acquired
------------- ---- ----
during the period of determination, EBITDA for such period shall be
determined on a pro forma basis as if such acquisition had occurred as of
the beginning of such period.
"Effective Amount" means:
----------------
(a) with respect to any Revolving Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any Borrowing
and prepayments or repayments of Revolving Loans occurring on such date;
(b) with respect to any AGI L/C Loan on any date, the aggregate
outstanding principal amount thereof after giving effect to any Borrowing
and prepayments or repayments of AGI L/C Loans occurring on such date;
(c) with respect to any outstanding AGI L/C Obligations on any date,
the amount of such AGI L/C Obligations on such date after giving effect to
any Issuances of AGI Letters of Credit occurring on such date and any other
changes in the aggregate amount of the AGI L/C Obligations as of such date,
including as a result of any reimbursements of outstanding unpaid drawings
under any AGI Letters of Credit or any reductions in the maximum amount
available for drawing under AGI Letters of Credit taking effect on such
date;
(d) with respect to any Klearfold L/C Loan on any date, the aggregate
outstanding principal amount thereof after giving effect to any Borrowing
and prepayments or repayments of Klearfold L/C Loans occurring on such
date; and
(e) with respect to any outstanding Klearfold L/C Obligations on any
date, the amount of such Klearfold L/C Obligations on such date after
giving effect to any Issuances of Klearfold Letters of Credit occurring on
such date and any other changes in the aggregate amount of the Klearfold
L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Klearfold Letters
of Credit or any
10
<PAGE>
reductions in the maximum amount available for drawing under Klearfold
Letters of Credit taking effect on such date.
For purposes of Section 2.07, the Effective Amount shall be determined
------------
without giving effect to any mandatory prepayments to be made under said
Section.
"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 $100,000,000; (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 $100,000,000, provided that such bank is acting
through a branch or agency located in the United States; (c) a Person that
is primarily engaged in the business of commercial banking and that is (i)
a Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender
is a Subsidiary, or (iii) a Person of which a Lender is a Subsidiary; (d) a
commercial finance company or finance subsidiary of a corporation organized
under the laws of the United States of America, or any State thereof, and
having total assets in excess of $100,000,000; (e) a savings bank or
savings and loan association organized under the laws of the United States
of America, or any State thereof, and having total assets in excess of
$100,000,000; and (f) any other entity approved by the Company and the
Agent.
"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.
"Environmental Permits" has the meaning specified in Section 6.12(b).
--------------------- ---------------
"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
11
<PAGE>
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 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 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 9.01.
------------
"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 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 Agent.
"Fee Letter" has the meaning specified in Section 2.10(a).
---------- ---------------
"Foreign Subsidiary" means each Subsidiary of the Company that is not
------------------
a Domestic Subsidiary.
"FRB" means the Board of Governors of the Federal Reserve System, and
---
any Governmental Authority succeeding to any of its principal functions.
"Further Taxes" means any and all present or future taxes, levies,
-------------
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including, without
12
<PAGE>
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 4.01.
------------
"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 to
the circumstances as of the date of determination; provided, however, that
-------- -------
for purposes of all computations required to be made with respect to
compliance by the Company with Sections 8.15, 8.16, 8.17 and 8.18, such
------------- ---- ---- ----
term shall mean generally accepted accounting principles as in effect on
the date of this Agreement, applied in a manner consistent with those used
in preparing the financial statements referred to in Section 6.11.
------------
"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.
"Guaranty" means, collectively, each Guaranty, dated as of the date
--------
hereof, duly executed and delivered by each Credit Party and the Subsidiary
Guarantors in favor of the Agent, on behalf of itself and the Lenders, as
the same may be amended, supplemented or otherwise modified from time to
time.
"Guaranty Obligation" has the meaning specified in the definition of
-------------------
"Contingent Obligation."
"Hazardous Materials" means any toxic or hazardous waste, substance or
-------------------
chemical or any pollutant, contaminant, chemical or other substance defined
or regulated pursuant to any Environmental Law, including, without
limitation, asbestos, petroleum, crude oil or any fraction thereof.
"Honor Date" shall mean the date that any amount is paid by the
----------
Issuing Bank under any Letter of Credit.
"IBOR" has the meaning specified in the definition "Offshore Rate".
---- -------------
"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 in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments and all L/C Obligations; (d) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred
13
<PAGE>
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 Lender 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; and (h) all Guaranty
Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (f) above.
"Indemnified Liabilities" has the meaning specified in Section 11.05.
----------------------- -------------
"Indemnified Person" has the meaning specified in Section 11.05.
------------------ -------------
"Independent Auditor" has the meaning specified in Section 7.01(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, marshaling 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.
"Intellectual Property Assignments" means, collectively, each Patent
---------------------------------
Assignment, Trademark Assignment and Copyright Assignment duly executed and
delivered by each of the Company and each Guarantor in favor of the Agent,
for the benefit of itself and the Lenders, as the same may be amended,
supplemented or otherwise modified from time to time.
"Interest Coverage Ratio" means, with respect to any period, the ratio
-----------------------
of EBITDA for that period to Consolidated Interest Expense for that period.
"Interest Payment Date" means, as to any Offshore Rate Loan, the last
---------------------
day of each Interest Period applicable to such Offshore Rate Loan and, as
to any Base Rate Loan, the last Business Day of each March, June, September
and December; provided, however, that if any Interest Period 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.
"Interest Period" means, as to any Offshore Rate Loan, the period
---------------
commencing on the Borrowing Date of such Offshore Rate Loan or on the
Conversion/Continuation Date on
14
<PAGE>
which the relevant Revolving Loan is converted into or continued as an
Offshore Rate Loan, and ending on the date one, two, three or six months
thereafter as selected by the Company in its Notice of Borrowing or Notice
of Conversion/Continuation;
provided that:
--------
(a) 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 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;
(b) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period; and
(c) no Interest Period for any Loan shall extend beyond the
Termination Date.
"IRB Debt" means, collectively, the AGI Bonds and the Klearfold Bonds.
--------
"IRS" means the Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
"Issuance Date" means the date upon which the Issuing Bank Issues a
-------------
Letter of Credit.
"Issue" means, with respect to any Letter of Credit, to issue or to
-----
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
------ ------- --------
meanings.
"Issuing Bank" means BofA in its capacity as issuer of the Letters of
------------
Credit hereunder, together with any replacement letter of credit issuer
arising under Section 10.01(b) or Section 10.09.
---------------- -------------
"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.
"Klearfold" means Klearfold, Inc., a Pennsylvania corporation.
---------
15
<PAGE>
"Klearfold Bond Documents" means, collectively, the Klearfold Bonds,
------------------------
the Klearfold Indenture, the Klearfold Remarketing Agreement, the Klearfold
Placement Agreement and any other agreements or instruments relating
thereto.
"Klearfold Bond Issuer" means the Bucks County Industrial Development
---------------------
Authority.
"Klearfold Bonds" means the $4,000,000 Variable Rate Demand Revenue
---------------
Bonds, Series 1997, issued by the Klearfold Bond Issuer pursuant to the
Klearfold Indenture.
"Klearfold Indenture" means the Trust Indenture, dated as of August 1,
-------------------
1997, among the Klearfold Bond Issuer, the Klearfold Trustee and Klearfold.
"Klearfold Interest Drawing" means a "C Drawing" as defined in the
--------------------------
Klearfold IRB Letter of Credit.
"Klearfold IRB Letter of Credit" means (a) until replaced pursuant to
------------------------------
Section 7.16, the letter of credit Issued by the Issuing Bank in the form
------------
of Exhibit H-1 and (b) thereafter, the letter of credit Issued by the
-----------
Issuing Bank in the form of Exhibit H-2.
-----------
"Klearfold L/C Interest Payment Date" means the "Interest Payment
-----------------------------------
Date" as defined in the Klearfold IRB Letter of Credit.
"Klearfold L/C Sublimit" means the commitment of the Issuing Bank to
----------------------
Issue, and the commitment of the L/C Lenders with an L/C Commitment
severally to participate in, the Klearfold Letters of Credit Issued or
outstanding under Article III, in an aggregate amount not to exceed on any
-----------
date the amount of $4,078,440 plus the Trade L/C Sublimit (to the extent
not then used by AGI), as the same shall be reduced as a result of a
reduction in the L/C Commitment pursuant to Section 2.07(d).
---------------
"Klearfold L/C Loan" means a L/C Loan made by a L/C Lender to
------------------
Klearfold.
"Klearfold L/C Obligations" means at any time the sum of (a) the
-------------------------
aggregate undrawn amount of the Klearfold Letters of Credit then
outstanding, plus (b) the amount of all unreimbursed drawings under the
Klearfold Letters of Credit, including all outstanding Klearfold L/C Loans.
"Klearfold Letters of Credit" means (a) the Klearfold IRB Letter of
---------------------------
Credit and (b) any other Letter of Credit issued for the account of
Klearfold pursuant to Article III.
-----------
"Klearfold Placement Agreement" means the Bond Placement Agreement,
-----------------------------
dated August 1, 1997, among Mellon Bank, N.A. as placement agent, the
Klearfold Bond Issuer and Klearfold.
"Klearfold Pledged Bonds" has the meaning specified in Section
----------------------- -------
3.03(c).
16
<PAGE>
"Klearfold Redemption Drawing" means a "B Drawing" as defined in the
----------------------------
Klearfold IRB Letter of Credit.
"Klearfold Remarketing Agent" means the Remarketing Agent appointed
---------------------------
and serving pursuant to section 918 of the Klearfold Indenture.
"Klearfold Tender Drawing" means an "A Drawing" as defined in the
------------------------
Klearfold IRB Letter of Credit.
"Klearfold Trustee" means the Mellon Bank, N.A.
-----------------
"Klearfold Unremarketed Tendered Bonds" means Klearfold Bonds which
-------------------------------------
(a) have been delivered for purchase pursuant to the provisions of such
Klearfold Bonds and the Klearfold Indenture and (b) have not been
successfully remarketed by the Klearfold Remarketing Agent prior to 10:00
a.m. on the required purchase date.
"L/C Amendment Application" means an application form for amendment of
-------------------------
outstanding Letters of Credit as shall at any time be in use at the Issuing
Bank, as the Issuing Bank shall request.
"L/C Application" means an application form for issuances of Letters
---------------
of Credit as shall at any time be in use at the Issuing Bank, as the
Issuing Bank shall request.
"L/C Lender" has the meaning specified in Section 2.01(b).
---------- ---------------
"L/C Borrower" means each of AGI and Klearfold.
------------
"L/C Commitment" has the meaning specified in Section 2.01(b).
-------------- ---------------
"L/C Loan" has the meaning specified in Section 2.01(b).
-------- ---------------
"L/C-Related Documents" means the Letters of Credit, the L/C
---------------------
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing Bank's
standard form documents for letter of credit issuances.
"L/C Obligations" means, collectively, the Klearfold L/C Obligations
---------------
and the AGI L/C Obligations.
"Lender" has the meaning specified in the introductory clause hereto.
------
References to the "Lenders" shall include BofA, including in its capacity
as Issuing Bank; for purposes of clarification only, to the extent that
BofA may have any rights or obligations in addition to those of the Lenders
due to its status as Issuing Bank, its status as such will be specifically
referenced.
17
<PAGE>
"Lending Office" means, as to any Lender, the office or offices of
--------------
such Lender specified as its "Lending Office" or "Domestic Lending Office"
or "Offshore Lending Office", as the case may be, on Schedule 11.02, or
--------------
such other office or offices as such Lender may from time to time notify
the Company and the Agent.
"Letters of Credit" means, collectively, the AGI Letters of Credit and
-----------------
the Klearfold Letters of Credit as issued by Issuing Bank hereunder, and
any amendments thereto or replacements thereof pursuant to Article III.
-----------
"Level" means, and includes, Level I, Level II, Level III or Level
-----
IV, whichever is in effect at the relevant time.
"Level I" shall exist at any time the Leverage Ratio is greater than
-------
4.00:1.0.
"Level II" shall exist at any time the Leverage Ratio is equal to or
--------
less than 4:00:1.0 but greater than 3.50:1.0.
"Level III" shall exist at any time the Leverage Ratio is equal to or
---------
less than 3.50:1.0 but greater than 3.00:1.0.
"Level IV shall exist at any time the Leverage Ratio is equal to or
--------
less than 3.00:1.0.
"Leverage Ratio" means, with respect to any period, the ratio of
--------------
total consolidated Indebtedness for borrowed money as of the end of that
period to EBITDA for that period.
"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, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, 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 by a Lender to a Credit Party
----
under Article II or Article III in the form of a Revolving Loan or L/C
---------- -----------
Loan.
"Loan Documents" means this Agreement, any Notes, the Fee Letter, the
--------------
L/C-Related Documents, the Collateral Documents and all other documents
delivered to the Agent or any Lender in connection herewith.
18
<PAGE>
"Management Group" means a group consisting of Richard Block and his
----------------
Related Parties and any other Person that is a member of the Company's
management as of the date of the Senior Subordinated Note Indenture and
each of their Related Parties; provided that Richard Block, together with
--------
his Related Parties, owns at least 25% of the Voting Stock of the Company.
"Majority Lenders" means (a) at any time two Lenders are party to
----------------
this Agreement, both Lenders, and (b) at any other time, prior to the
termination of the Commitment, Lenders holding at least 66-2/3% of the then
aggregate Commitments or, if the Commitments have been terminated, Lenders
holding at least 66-2/3% of the then unpaid principal amount of Loans, AGI
L/C Obligations and Klearfold L/C Obligations.
"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,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of
the Company or any Subsidiary 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 or
any Subsidiary of any Loan Document.
"Mellon Letter of Credit" shall mean the letter of credit issued by
-----------------------
Mellon Bank, N.A. and attached as Exhibit H-3.
-----------
"Merger" means the merger of AGI Acquisition Corporation with, and
------
into, AGI Incorporated, with AGI Incorporated as the surviving corporation
thereof, pursuant to the Merger Documents.
"Merger Documents" means the Agreement and Plan of Merger, dated as of
----------------
February 19, 1998, among the Company, AGI Acquisition Corporation, AGI
Incorporated and certain shareholders of AGI Incorporated and the Company,
and all other documents entered into or delivered in connection with the
Merger.
"Mortgage" means any deed of trust, mortgage, leasehold deed of trust,
--------
leasehold mortgage or other document creating a Lien on real property or
any interest in real property.
"Mortgaged Property" means the real property owned or leased by a
------------------
Credit Party or any of its Subsidiaries subject to a Mortgage in favor of
the Agent, for the benefit of itself and the Lenders.
"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
19
<PAGE>
is obligated to make contributions or, during the preceding three calendar
years, has made, or been obligated to make, contributions.
"Net Assets Ratio" means, as of the time of any determination, the
----------------
ratio of (i) the sum of accounts receivable, inventory, and the net
property, plant and equipment of the Company and its Subsidiaries (as
calculated in accordance with GAAP consistently applied and net of any
depreciation required to be recorded by GAAP) to (ii) Senior Debt of the
Company and its Subsidiaries, all as calculated on a consolidated basis.
"Net Income" shall mean for any period, the net income (or loss) of
----------
the Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP;
provided that there shall be excluded (i) the income (or loss) of any
--------
entity accrued prior to the date it becomes a Subsidiary of the Company or
is merged into or consolidated with the Company or any Subsidiary or on
which its assets are acquired by the Company or any Subsidiary of the
Company and (ii) the income of any Subsidiary of the Company to the extent
that the declaration or payment of dividends or similar distributions by
that Subsidiary of that income is not at the time permitted by operation of
the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that
Subsidiary; provided, further, that Net Income shall be computed for these
-------- -------
purposes without giving effect to extraordinary losses or extraordinary
gains.
"Net Proceeds" means with respect to any sale or issuance of equity
------------
securities of the Company, cash or readily marketable cash equivalents
received (but excluding any other non-cash form) therefrom at the time of
such sale or issuance, net, in either case, of all tax expenses,
commissions, legal fees, accounting fees, and underwriting fees and other
fees, and all costs and expenses incurred and all federal, state, local and
other taxes required to be accrued as a liability as a consequence of such
transactions.
"Net Worth" means shareholders' equity as determined in accordance
---------
with GAAP.
"Note" means a promissory note executed by the Company in favor of a
----
Lender pursuant to Section 2.02(b), in substantially the form of Exhibit F-
--------------- ---------
1, with respect to Revolving Loans, and Exhibit F-2, with respect to L/C
- -----------
Loans.
"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 Lender, the 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.
20
<PAGE>
"Offshore Rate" means, for any Interest Period, with respect to
-------------
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by
the 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 or Lender) 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
"IBOR" means the rate of interest per annum determined by the 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
11:00 a.m. (Chicago 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 Loan" means a Revolving Loan that bears interest based
------------------
on the Offshore Rate.
"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 Section 11.08(d).
----------- ----------------
21
<PAGE>
"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 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 8.01.
--------------- ------------
"Permitted Seller Debt" has the meaning specified in Section 8.05(h).
--------------------- ---------------
"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;"
(b) such Swap Contracts do not contain (i) any provision ("walk-away"
provision) exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party, or (ii) any
provision creating or permitting the declaration of an event of default,
termination event or similar event upon the occurrence of an Event of
Default hereunder (other than an Event of Default under Section 9.01(a)).
---------------
"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.
"Pledge Agreements" means, collectively, each Pledge Agreement, duly
-----------------
executed and delivered by each Credit Party and the Subsidiary Guarantors
pledging the stock of their respective Subsidiaries to the Agent, for the
benefit of itself and the Lenders, as the same may be amended, supplemented
or otherwise modified from time to time.
"Pledged Collateral" has the meaning specified in the relevant Pledge
------------------
Agreement.
"Principals" means Heritage Partners, Inc., Heritage Fund I Investment
----------
Corporation, Melvin B. Herrin, Richard Block and H. Scott Herrin.
22
<PAGE>
"Projections" means the Company's forecasted consolidated: (a)
-----------
balance sheets; (b) income statements; and (c) cash flow statements, all
prepared on a basis consistent with the Company's historical financial
statements.
"Property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, and whether tangible or intangible.
"Pro Rata Share" means, as to any Lender at any time, the percentage
--------------
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of (a) with respect to the Revolving Loan Commitment, such
Lender's Revolving Loan Commitment divided by the combined Revolving Loan
Commitments of all Lenders and, (b) with respect to the L/C Commitment,
such Lender's L/C Commitment divided by the combined L/C Commitments of all
Lenders.
"Qualified Public Offering" means a public offering of common stock by
-------------------------
the Company pursuant to a registration statement under the Securities
Act of 1933 and the rules and regulations in connection therewith (as
the same may be amended from time to time), resulting in aggregate
gross proceeds of at least $15,000,000 and the Company's stock being
listed (or continuing to be listed, in the case of a secondary
offering) on the New York Stock Exchange, NASDAQ or another major
stock exchange.
"Related Party" with respect to any Principal or member of a
-------------
Management Group means (a) any controlling stockholder, 80% (or more) owned
Subsidiary, or spouse or ex-spouse or immediate family member (in the case
of an individual) of such Principal or member of a Management Group, or (b)
any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% (or
more) controlling interest of which consist of such Principal or member of
a Management Group and/or such other Persons referred to in the immediately
preceding clause (a), or (c) any investment fund, whether a limited
----------
partnership, limited liability company or corporation, managed and
controlled by Heritage Partners Management Co., Inc. d/b/a Heritage
Partners, Inc.
"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.
"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 or the
-------------------
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
23
<PAGE>
treasurer of the Company, or any other officer having substantially the
same authority and responsibility.
"Revolving Lender" has the meaning specified in Section 2.01(a).
---------------- ---------------
"Revolving Loan" has the meaning specified in Section 2.01(a).
-------------- ---------------
"Revolving Loan Commitment" has the meaning specified in Section
------------------------- -------
2.01(a).
-------
"SEC" means the Securities and Exchange Commission, or any
---
Governmental Authority succeeding to any of its principal functions.
"Security Agreements" means, collectively, each Security Agreement,
-------------------
duly executed and delivered by each Credit Party and the Subsidiary
Guarantors in favor of the Agent, for the benefit of itself and the
Lenders, as the same may be amended, supplemented or otherwise modified
from time to time.
"Senior Debt" means the total consolidated Indebtedness (other than
-----------
Subordinated Debt and any other Indebtedness of the Company incurred after
the Closing Date and subordinated to the prior payment in full in cash of
the Obligations on terms and conditions acceptable to the Agent) of the
Company and its Subsidiaries.
"Senior Leverage Ratio" means, with respect to any period, the ratio
---------------------
of Senior Debt as of the end of that period to EBITDA for that period.
"Senior Subordinated Note Documents" shall mean and include each of
----------------------------------
the documents, instruments (including the Senior Subordinated Notes) and
other agreements entered into by the Company (including, without
limitation, the Senior Subordinated Note Indenture) and/or any Subsidiary
relating to the issuance by the Company of the Senior Subordinated Notes
and any guaranties or other documents related thereto, as in effect on the
Closing Date and as the same may be supplemented, amended or modified from
time to time in accordance with the terms hereof (including, without
limitation, Section 8.20) and thereof.
------------
"Senior Subordinated Note Indenture" shall mean the Indenture, dated
----------------------------------
as of the Closing Date entered into by and between the Company and State
Street Bank and Trust Company, as trustee thereunder, with respect to the
Senior Subordinated Notes, as in effect on the Closing Date and as the same
may be modified, amended or supplemented from time to time in accordance
with the terms hereof (including, without limitation, Section 8.20) and
------------
thereof.
"Senior Subordinated Notes" shall mean $100,000,000 of the 10% Senior
-------------------------
Subordinated Notes due 2008 issued by the Company under the Senior
Subordinated Note Indenture, as in effect on the Closing Date and as the
same may be supplemented, amended or modified from time to time in
accordance with the terms thereof and hereof.
24
<PAGE>
"Solvent" means, when used with respect to a Person, that (a) the fair
-------
saleable value of the assets of such Person is in excess of the total
amount of the present value of its liabilities (including for purposes of
this definition all liabilities (including loss reserves as determined by
such Person), whether or not reflected on a balance sheet prepared in
accordance with GAAP and whether direct or indirect, fixed or contingent,
secured or unsecured, disputed or undisputed), (b) such Person is able to
pay its debts or obligations in the ordinary course as they mature and (c)
such Person does not have unreasonably small capital to carry out its
business as conducted and as proposed to be conducted. "Solvency" shall
--------
have a correlative meaning.
"Stated Amount" means the stated or face amount of a Letter of Credit
-------------
to the extent available at the time for drawing (subject to presentment of
all requested documents), as the same may be increased or decreased from
time to time in accordance with the terms of such Letter of Credit
"Stockholder Agreement" means the Stockholder Agreement, dated as of
---------------------
the Closing Date, among the Company and its stockholders, as in effect on
the Closing Date and as the same may be modified, amended or supplemented
from time to time; provided that for purposes of the definition of
--------
"Continuing Directors," no such amendment shall alter the provisions
relating to the designation and election of members of the Company's Board
of Directors.
"Subordinated Debt" means, collectively, the Senior Subordinated Notes
-----------------
and Permitted Seller Debt.
"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; provided, that for purposes of the
--------
definitions of "Change of Control" and "Related Parties", Subsidiary shall
also include any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantor" means each Domestic Subsidiary of the Company
--------------------
(other than a L/C Borrower), KF-International, Inc. and, to the extent
requested pursuant to Section 7.15, each other Foreign Subsidiary of the
------------
Company.
"Surety Instruments" means all letters of credit (including standby
------------------
and documentary), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
25
<PAGE>
"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
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 Lender).
"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 Lender and the Agent, respectively, taxes imposed on or measured by
its net income by the jurisdiction (or any political subdivision thereof)
under the laws of which such Lender or the Agent, as the case may be, is
organized or maintains a lending office.
"Termination Date" means the earlier to occur of:
----------------
(a) the fifth (5th) anniversary of the Closing Date; and
(b) the date on which the Commitments terminate in accordance
with the provisions of this Agreement.
"Trade L/C Sublimit" has the meaning specified in Section 3.01(c).
------------------ ---------------
"Transaction" shall include (a) the Combination, (b) the Merger, (c)
-----------
the issuance of the Senior Subordinated Notes, (d) the Credit Extensions
made on the Closing Date and (e) the refinancing of certain Indebtedness of
the Company and its Subsidiaries on the Closing Date.
"Type" means, with respect to any Borrowing of Revolving Loans, its
----
nature as a Base Rate Loan or an Offshore Rate 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
26
<PAGE>
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.
------------- ----
"Voting Stock" of any Person as of any date means the capital stock of
------------
such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
"Wholly-Owned Subsidiary" means any corporation, association,
-----------------------
partnership, limited liability company, joint venture or other business
entity in which (other than directors' qualifying shares required by law)
100% of the equity interests of each class having ordinary voting power,
and 100% of the equity interests 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.
1.0 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 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) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and
27
<PAGE>
measurements are cumulative and shall each be performed in accordance with their
terms. Unless otherwise expressly provided, any reference to any action of the
Agent or the Lenders 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 Agent, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Lenders or the Agent merely because of the
Agent's or Lenders' involvement in their preparation.
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 Commitment.
-------------------------------
(a) Each Lender with a Revolving Loan Commitment (each such Lender, a
"Revolving Lender") severally agrees, on the terms and conditions set forth
----------------
herein, to make loans to the Company (each such loan, a "Revolving Loan") 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 2.05 or 2.07, or as a result of one or more assignments under
------------ ----
Section 10.08, the Revolving Lender's "Revolving Loan Commitment"); provided,
- ------------- ------------------------- --------
however, that, after giving effect to any Borrowing of Revolving Loans
- -------
(exclusive of Revolving Loans which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of Revolving
Loans), the Effective Amount of all outstanding Revolving Loans shall not at any
time exceed the combined Revolving Loan Commitments of all Revolving Lenders;
and provided further, that the Effective Amount of the Revolving Loans of any
- --- -------- -------
Revolving Lender shall not at any time exceed such Revolving Lender's Revolving
Loan Commitment. Within the limits of each Revolving Lender's Commitment, and
subject to the other terms and conditions hereof, the Company may borrow under
this Section 2.01, prepay under Section 2.06 and reborrow under this Section
------------ ------------ -------
2.01.
- ----
(b) Each Lender with an L/C Commitment (each such Lender, an "L/C
---
Lender") severally agrees, on the terms and conditions set forth herein, to make
- ------
loans to AGI and Klearfold, as the case may be, pursuant to Sections 3.03(b) and
----------------
(c) (each such loan an "L/C Loan") 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
-------------
28
<PAGE>
(such amount, as the same may be reduced under Section 2.05 or 2.07, or as a
------------ ----
result of one or more assignments under Section 10.08, the Lender's "L/C
------------- ---
Commitment"); provided, however, that after giving effect to (i) any Borrowing
- ---------- -------- -------
of AGI L/C Loans, the Effective Amount of all AGI L/C Obligations shall not at
any time exceed the AGI L/C Sublimit; (ii) any Borrowing of Klearfold L/C Loans,
the Effective Amount of all Klearfold L/C Obligations shall not at any time
exceed the Klearfold L/C Sublimit; and (iii) any Borrowing of L/C Loans, the
Effective Amount of the L/C Obligations of any L/C Lender shall not at any time
exceed such L/C Lender's L/C Loan Commitment.
2.02 Loan Accounts.
-------------
(a) The Loans made by each Lender and the Letters of Credit Issued
by the Issuing Bank shall be evidenced by one or more accounts or records
maintained by such Lender or Issuing Bank, as the case may be, in the ordinary
course of business. The accounts or records maintained by the Agent, the Issuing
Bank and each Lender shall be prima facie evidence of the amount of the Loans
made by the Lenders to a Credit Party and the Letters of Credit Issued for the
account of an L/C Borrower, 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 a Credit Party hereunder to pay any amount owing with
respect to the Loans or any Letter of Credit.
(b) Upon the request of any Lender made through the Agent, the
Loans made by such Lender may be evidenced by one or more Notes, instead of or
in addition to loan accounts. Each such Lender shall record 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 applicable Credit Party with
respect thereto. Each such Lender is irrevocably authorized by each Credit Party
to make such recordations on its Note(s) and each Lender's record shall be
deemed prima facie correct; provided, however, that the failure of a Lender to
make, or an error in making, a notation thereon with respect to any Loan shall
not limit or otherwise affect the obligations any Credit Party hereunder or
under any such Note to such Lender.
2.03 Procedure for Revolving Loan Borrowing.
--------------------------------------
(a) Each Borrowing of Revolving Loans shall be made upon the
Company's irrevocable written notice delivered to the Agent in the form of a
Notice of Borrowing (which notice must be received by the Agent prior to (i)
11:00 a.m. (Chicago time) two Business Days prior to the requested Borrowing
Date, in the case of Offshore Rate Loans and (ii) 12:00 noon (Chicago time) on
the date of the requested Borrowing, in the case of Base Rate Loans, specifying:
(i) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $100,000, or any multiple of $10,000 in
excess thereof, in the case of Base Rate Loans, and $250,000, or
any multiple of $100,000 in excess thereof, in the case of Offshore
Rate Loans;
(ii) the requested Borrowing Date, which shall be a Business
Day;
29
<PAGE>
(iii) the Type of Revolving Loans comprising the Borrowing; and
(iv) if the Revolving Loan then requested is to be an Offshore
Rate Loan, the duration of the Interest Period applicable to such
Revolving Loans included in such notice. If the Notice of Borrowing
fails to specify the duration of the Interest Period for any Borrowing
comprised of Offshore Rate Loans, such Interest Period shall be three
months;
provided, however, that with respect to the Borrowing to be made on the Closing
- -------- -------
Date, the Notice of Borrowing shall be delivered to the Agent not later than
10:00 a.m. (Chicago time) on the Closing Date and such Borrowing will consist of
Base Rate Loans only; and provided further, all Borrowings during the first 90
-------- -------
days following the Closing Date (or such shorter period as determined by the
Agent) shall have the same Interest Period and shall be Base Rate Loans or
Offshore Rate Loans for Interest Periods no longer than one month.
(b) The Agent will promptly notify each Revolving Lender of its
receipt of any Notice of Borrowing and of the amount of such Revolving Lender's
Pro Rata Share of that Borrowing.
(c) Each Revolving Lender will make the amount of its Pro Rata
Share of each Borrowing available to the Agent for the account of the Company at
the Agent's Payment Office by 2:00 p.m. (Chicago time) on the Borrowing Date
requested by the Company in funds immediately available to the Agent. The
proceeds of all such Revolving Loans will then be made available to the Company
by the 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 Agent by the
Revolving Lenders and in like funds as received by the Agent.
(d) After giving effect to any Borrowing, unless the Agent shall
otherwise consent, there may not be more than seven different Interest Periods
in effect with respect to Offshore Rate Loans.
2.04 Conversion and Continuation Elections for Revolving Loans.
---------------------------------------------------------
(a) The Company may, upon irrevocable written notice to the Agent
in accordance with Section 2.04(b):
---------------
(i) elect, as of any Business Day, in the case of Base Rate
Loans (other than L/C Loans), or as of the last day of the applicable
Interest Period, in the case of Offshore Rate Loans, to convert any such
Loans (or any part thereof in an aggregate minimum amount of $100,000, or
any multiple of $10,000 in excess thereof, in the case of Base Rate Loans
(other than L/C Loans), and $250,000, or any multiple of $100,000 in
excess thereof, in the case of Offshore Rate Loans) into Loans of any
other Type; or
30
<PAGE>
(ii) elect as of the last day of the applicable Interest
Period with respect of any Offshore Rate Loan, to continue any Loans having
Interest Periods expiring on such day (or any part thereof in an amount not
less than $250,000, or that is in an integral multiple of $100,000 in
excess thereof) as Loans of the same Type;
provided, that if at any time the aggregate amount of Offshore Rate Loans in
- --------
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $250,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans as of the last day of the Interest
Period applicable thereto, and on and after such date the right of the Company
to continue such Revolving Loans as, and convert such Revolving Loans into,
Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation to
be received by the Agent not later than 11:00 a.m. (Chicago time) at least (i)
two Business Days in advance of the Conversion/ Continuation Date, if the
Revolving Loans are to be converted into or continued as Offshore Rate Loans and
(ii) on the date of the Conversion/Continuation Date, if the Revolving Loans are
to be converted into Base Rate Loans, specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Revolving Loans to be converted or
continued;
(iii) the Type of Revolving Loans resulting from the proposed
conversion or continuation; and
(iv) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select a new Interest Period to
be applicable to such Offshore Rate Loans by the time specified in Section
-------
2.04(b), or if any Default or Event of Default then exists, the Company shall be
- -------
deemed to have elected to convert such Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Revolving Lender of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Agent will promptly notify each Revolving Lender of
the details of any automatic conversion. All conversions and continuations
shall be made ratably according to the respective outstanding principal amounts
of the Revolving Loans, with respect to which the notice was given, held by each
Revolving Lender.
(e) Unless the Majority Lenders otherwise consent, during the
existence of a Default or Event of Default, the Company may not elect to have a
Revolving Loan converted into or continued as an Offshore Rate Loan.
31
<PAGE>
(f) After giving effect to any conversion or continuation of
Revolving Loans, unless the Agent shall otherwise consent, there may not be more
than seven different Interest Periods in effect with respect to Offshore Rate
Loans.
(g) Notwithstanding anything else to the contrary in this
Agreement, L/C Loans may only be Base Rate Loans
2.05 Voluntary Termination or Reduction of Commitments. A Credit Party
-------------------------------------------------
may, upon not less than two Business Days' prior notice to the Agent, terminate
the Commitments of all Lenders ratably, or permanently reduce the Commitments of
all Lenders ratably by an aggregate minimum amount of $250,000 or any multiple
of $250,000 in excess thereof; unless, after giving effect thereto and to any
------
prepayments of Revolving Loans made on the effective date thereof, (a) the
Effective Amount of all Revolving Loans would exceed the amount of the combined
Revolving Loan Commitments of all Revolving Lenders then in effect, (b) the
Effective Amount of all L/C Obligations would exceed the amount of the combined
L/C Commitment then in effect or (c) the Effective Amount of all Klearfold L/C
Obligations or AGI L/C Obligations would exceed the amount of the Klearfold L/C
Sublimit or AGI L/C Sublimit, as the case may be, 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 Lender according to its
Pro Rata Share. All accrued commitment and letter of credit fees to, but not
including, the effective date of any reduction or termination of the Commitments
shall be paid on the effective date of such reduction or termination.
2.06 Optional Prepayments. Subject to Section 4.04, any Credit Party, may,
-------------------- -------------
at any time or from time to time, upon irrevocable notice to the Agent, prepay
(but not permanently reduce the Commitments) the Loans ratably among the Lenders
in whole or in part, in minimum aggregate amounts of $100,000, or any multiple
of $10,000 in excess thereof, in the case of Base Rate Loans, and $250,000, or
any multiple of $100,000 in excess thereof, in the case of Offshore Rate Loans.
Such notice of prepayment shall specify the date and amount of such prepayment,
the ratable amount to be prepaid against Revolving Loans and L/C Loans (if
outstanding) and the Type(s) of Loans to be prepaid. The Agent will promptly
notify each Lender of its receipt of any such notice, and of such Lender's Pro
Rata Share of such prepayment. If such notice is given by a Credit Party, such
Credit Party 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 to each such date on the amount prepaid and any amounts
required pursuant to Section 4.04.
------------
2.07 Mandatory Prepayments of Loans; Mandatory Commitment Reductions.
---------------------------------------------------------------
(a) If on any date the Effective Amount of all AGI L/C
Obligations exceeds the AGI L/C Sublimit, AGI shall either (i) Cash
Collateralize on such date the outstanding AGI Letters of Credit in an amount
equal to the excess of the maximum amount then available to be drawn under the
AGI Letters of Credit over the AGI L/C Sublimit or (ii) immediately, and without
notice or demand, prepay the outstanding principal amount of the AGI L/C Loans
by an amount equal to the applicable excess (or take any combination of the
actions specified in clauses (i) and (ii) if necessary to cover such excess).
--------------------
32
<PAGE>
(b) The L/C Commitment and the AGI L/C Sublimit shall be
automatically reduced from time to time on the date, and in the amount, that the
stated amount of the AGI IRB Letter of Credit is reduced pursuant to the terms
of the AGI IRB Letter of Credit.
(c) If on any date the Effective Amount of all Klearfold L/C
Obligations exceeds the Klearfold L/C Sublimit, Klearfold shall either (i) Cash
Collateralize on such date the outstanding Klearfold Letters of Credit in an
amount equal to the excess of the maximum amount then available to be drawn
under the Klearfold Letters of Credit over the aggregate Klearfold L/C Sublimit
or (ii) immediately, and without notice or demand, prepay the outstanding
principal amount of the Klearfold L/C Loans and Klearfold L/C Advances by an
amount equal to the applicable excess (or take any combination of the actions
specified in clauses (i) and (ii) if necessary to cover such excess).
--------------------
(d) The L/C Commitment and the Klearfold L/C Sublimit shall be
automatically reduced from time to time on the date, and in the amount, that the
stated amount of the Klearfold IRB Letter of Credit is reduced pursuant to the
terms of the Klearfold IRB Letter of Credit.
(e) If on any date the Effective Amount of Revolving Loans
exceeds the Revolving Loan Commitment, the Company shall immediately, and
without notice or demand, prepay the principal amount of Revolving Loans in an
amount equal to such excess, and the Lenders shall apply such amounts first to
repay Base Rate Loans and thereafter to repay Offshore Rate Loans.
(f) Each Credit Party hereby grants to the Agent, for the
benefit of the Agent, the Issuing Bank and the Lenders, a security interest in
all cash and deposit account balances subject to Cash Collateralization. Cash
collateral subject to Cash Collateralization shall be maintained in blocked
deposit accounts at BofA. BofA shall invest any and all available funds
deposited in such deposit accounts, within five (5) business days after the date
the relevant funds become available, in securities issued or fully guaranteed or
insured by the United States Government or any agency thereof backed by the full
faith and credit of the United States having maturities of no greater than three
months from the date of acquisition thereof (collectively, "Government
Obligations"). Each Credit Party hereby acknowledges and agrees that BofA shall
not have any liability with respect to, and each Credit Party hereby indemnifies
BofA against, any loss resulting from the acquisition of the Government
Obligations and BofA shall not have any obligation to monitor the trading
activity of any such Governmental Obligations on and after the acquisition
thereof for the purpose of obtaining the highest possible return with respect
thereto, BofA's responsibility being limited to acquiring such Governmental
Obligations.
(g) The relevant Credit Party shall pay, together with each
prepayment under this Section 2.07, accrued interest on the amount prepaid.
------------
(h) If any Credit Party shall suffer a casualty loss or other
event resulting in the payment of insurance proceeds (other than liability
insurance) to the Agent on behalf of the Lenders, the Agent shall, if such
proceeds are equal to or less than $5,000,000, apply such proceeds to repay the
Revolving Loans (but not reduce the commitments), or otherwise in the event such
proceeds are
33
<PAGE>
in excess of $5,000,000, the Agent shall, unless otherwise agreed to by the
Majority Lenders, use such proceeds to repay to outstanding Obligations of the
Lenders pro rata, and reduce their commitments by a like amount.
2.08 Repayment of Loans. (a) The Company shall repay to the Revolving
------------------
Lenders on the Termination Date the aggregate principal amount of Revolving
Loans outstanding on such date.
(b) AGI shall repay to the L/C Lenders on the Termination Date
the aggregate principal amount of AGI L/C Loans outstanding on such date;
provided, however, that with respect to any AGI L/C Loan made (A) in respect of
- -------- -------
an AGI-B Drawing (Principal) or an AGI-C Drawing (Interest), AGI shall repay the
unpaid principal amount of such AGI L/C Loan on or before the earliest of (i)
the Termination Date, (ii) the 5th day following the date of such AGI L/C Loan,
and (B) in respect of any AGI-A Drawing (Purchase), AGI shall repay the unpaid
principal amount of such AGI L/C Loan on the same date on which the AGI Pledged
Bonds acquired by the proceeds of an AGI-A Drawing (Purchase) (which AGI-A
Drawing (Purchase) was financed by such AGI L/C Loan) are sold as a result of a
remarketing with any deficiency in the amount due paid by AGI.
(c) Klearfold shall repay to the L/C Lenders on the Termination
Date the aggregate principal amount of Klearfold L/C Loans outstanding on such
date; provided, however, that with respect to any L/C Loan made (A) in respect
-------- -------
of any Klearfold Interest Drawing (or C Drawing), Klearfold shall repay the
unpaid principal amount of such Klearfold L/C Loan on or before the earliest of
(i) the Termination Date, (ii) the 5th day following the date of such Klearfold
L/C Loan, and (B) in respect of any Klearfold Tender Drawing (or A Drawing)
Klearfold shall repay the unpaid principal amount of such L/C Loan on the same
date on which the Klearfold Pledged Bonds acquired by the proceeds of a
Klearfold Tender Drawing (which Klearfold Tender Drawing was financed by such
Klearfold L/C Loan) are sold as a result of a remarketing with any deficiency in
the amount due paid by Klearfold.
2.09 Interest.
--------
(a) Each (i) Revolving 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 Revolving Loans
under Section 2.04), plus the Applicable Margin and (ii) L/C Loan shall bear
------------ ----
interest on the outstanding principal amount thereof from the applicable
Borrowing Date at a rate per annum equal to the Base Rate, plus the Applicable
----
Margin.
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of the conversion
of an Offshore Rate Loan into a Base Rate Loan, on the date of any prepayment of
Loans under Section 2.06 or 2.07 for the portion of the Loans so prepaid and
------------ ----
upon payment (including prepayment) in full thereof and, during the existence of
any Event of Default, interest shall be paid on demand of the Agent at the
request or with the consent of the Majority Lenders.
34
<PAGE>
(c) Notwithstanding Section 2.09(a), while any Event of Default
---------------
exists or after acceleration, each Credit Party shall pay interest or additional
fees (after as well as before entry of judgment thereon to the extent permitted
by law) on the principal amount of all outstanding Obligations, at a rate per
annum which is determined by adding 2% per annum to the Applicable Margin then
in effect for such Obligations; provided, however, that, on and after the
-------- -------
expiration of any Interest Period applicable to any Offshore Rate Loan
outstanding on the date of occurrence of such Event of Default or acceleration,
the principal amount of such Offshore Rate Loan shall, during the continuation
of such Event of Default or after acceleration, bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin plus 2%.
(d) Anything herein to the contrary notwithstanding, the
obligations of each Credit Party to any Lender 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 Lender would be contrary
to the provisions of any law applicable to such Lender limiting the highest rate
of interest that may be lawfully contracted for, charged or received by such
Lender, and in such event the Credit Parties shall pay such Lender interest at
the highest rate permitted by applicable law.
2.10 Fees. In addition to certain fees described in Section 3.08:
---- ------------
(a) Agency Fees. The Company shall pay the fees to the Agent for
-----------
the Agent's own account, as required by the letter agreement ("Fee Letter")
----------
between the Company and the Agent, dated as of February 17, 1998.
(b) Commitment Fees. The Company shall pay to the Agent for the
---------------
account of each Lender with a Revolving Loan Commitment or L/C Commitment a
commitment fee ("Commitment Fee") on the average daily unused portion of such
--------------
Revolving Lender's Revolving Loan Commitment or L/C Lender's L/C Commitment (as
the case may be), computed on a quarterly basis in arrears on the last Business
Day of each calendar quarter based upon the daily utilization for that quarter
as calculated by the Agent, equal to the Applicable Margin per annum applicable
to the Commitment Fee. For purposes of calculating utilization under this
Section, the Revolving Loan Commitments shall be deemed used to the extent of
the Effective Amount of Revolving Loans then outstanding and the L/C Commitments
shall be deemed used to the extent of the Effective Amount of all L/C
Obligations then outstanding. Such commitment fee shall accrue from the Closing
Date to the Termination Date and shall be due and payable quarterly in arrears
on the last Business Day of each March, June, September and December through the
Termination Date, with the final payment to be made on the Termination Date. The
commitment fees provided in this Section shall accrue at all times after the
above-mentioned commencement date, including at any time during which one or
more conditions in Article V are not met.
---------
2.11 Computation of Fees and Interest.
--------------------------------
(a) All computations of interest for Base Rate 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
35
<PAGE>
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 Agent shall be
conclusive and binding on each Credit Party and the Lenders in the absence of
manifest error. The Agent will, at the request of a Credit Party or any Lender,
deliver to such Credit Party or such Lender, as the case may be, a statement
showing the quotations used by the Agent in determining any interest rate and
the resulting interest rate.
2.12 Payments by Credit Parties.
--------------------------
(a) All payments to be made by a Credit Party shall be made
without set-off, recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by a Credit Party shall be made to the Agent for
the account of the Lenders at the Agent's Payment Office, and shall be made in
dollars and in immediately available funds, no later than 12:00 Noon (Chicago
time) on the date specified herein. The Agent will promptly distribute to each
Lender 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
Agent later than 12:00 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 for the day actually received.
(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 Agent receives notice from a Credit Party prior
to the date on which any payment is due to the Lenders that such Credit Party
will not make such payment in full as and when required, the Agent may assume
that such Credit Party has made such payment in full to the Agent on such date
in immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent a Credit
Party has not made such payment in full to the Agent, each Lender shall repay to
the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
2.13 Payments by the Lenders to the Agent.
------------------------------------
(a) Unless the Agent receives notice from a Lender on or prior
to the Closing Date or, with respect to any Borrowing after the Closing Date, at
least one Business Day prior to the date of such Borrowing, that such Lender
will not make available as and when required hereunder to the Agent for the
account of the relevant Credit Party the amount of that Lender's Pro Rata Share
of the
36
<PAGE>
Borrowing, the Agent may assume that each Lender has made such amount available
to the Agent in immediately available funds on the Borrowing Date and the Agent
may (but shall not be so required), in reliance upon such assumption, make
available to the relevant Credit Party on such date a corresponding amount. If
and to the extent any Lender shall not have made its full amount available to
the Agent in immediately available funds and the Agent in such circumstances has
made available to the relevant Credit Party such amount, that Lender shall on
the Business Day following such Borrowing Date make such amount available to the
Agent, together with interest at the Federal Funds Rate for each day during such
period. A notice of the Agent submitted to any Lender with respect to amounts
owing under this clause (a) shall be conclusive, absent manifest error. If such
----------
amount is so made available, such payment to the Agent shall constitute such
Lender's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Agent on the Business Day following the
Borrowing Date, the Agent will notify the relevant Credit Party of such failure
to fund and, upon demand by the Agent, the relevant Credit Party shall pay such
amount to the Agent for the Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any Borrowing
Date shall not relieve any other Lender of any obligation hereunder to make a
Loan on such Borrowing Date, but no Lender shall be responsible for the failure
of any other Lender to make the Loan to be made by such other Lender on any
Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly provided
-------------------------
elsewhere herein, any Lender shall obtain on account of the 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 Lender shall immediately (a) notify the Agent of
such fact, and (b) purchase from the other Lenders such participations in the
Loans made by them as shall be necessary to cause such purchasing Lender 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 Lender, such purchase shall to that extent be rescinded and each
other Lender shall repay to the purchasing Lender the purchase price paid
therefor, together with an amount equal to such paying Lender's ratable share
(according to the proportion of (i) the amount of such paying Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Each Credit Party agrees that any Lender so
purchasing a participation from another Lender may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 11.10) with respect to such participation as
-------------
fully as if such Lender were the direct creditor of the relevant Credit Party in
the amount of such participation. The Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Lenders following
any such purchases or repayments.
37
<PAGE>
ARTICLE III
THE LETTERS OF CREDIT
---------------------
3.01 The Letter of Credit Facility.
-----------------------------
(a) On the terms and conditions set forth herein (i) the Issuing
Bank agrees, (A) on the Closing Date to permit the AGI IRB Letter of Credit to
become an obligation under and be deemed to have been issued under this
Agreement for the account of AGI in the amount and to the beneficiary as set
forth on Exhibit G hereto, and subject to the satisfaction of the conditions in
---------
Section 5.02, to amend or renew the AGI IRB Letter of Credit in accordance with
- ------------
Sections 3.02(c) and (d), and (B) to honor drafts under the AGI IRB Letter of
- ---------------- -
Credit; and (ii) the L/C Lenders severally agree to participate in the AGI IRB
Letter of Credit; provided that the Issuing Bank shall not be obligated to
--------
Issue, and no L/C Lender shall be obligated to participate in, the AGI IRB
Letter of Credit if, as of the Issuance Date of the AGI IRB Letter of Credit,
(1) the Effective Amount of all L/C Obligations exceeds the combined L/C
Commitments of all L/C Lenders, (2) the participation of any L/C Lender in the
Effective Amount of all L/C Obligations of such L/C Lender exceeds such L/C
Lender's L/C Commitment or (3) the Effective Amount of AGI L/C Obligations
exceeds the AGI L/C Sublimit. The parties hereto acknowledge and agree that the
AGI IRB Letter of Credit is not being reissued on the Closing Date, and that as
such it will be deemed to be a continuing obligation of AGI hereunder and that
this Agreement will henceforth constitute, among other things, an amendment and
restatement of the AGI Reimbursement Agreement for purposes of the AGI Bond
Documents and shall supersede and replace such Reimbursement Agreement in its
entirety.
(b) On the terms and conditions set forth herein (i) the Issuing
Bank agrees, (A) on the Closing Date to issue the Klearfold IRB Letter of Credit
for the account of Klearfold in the amount and to the beneficiary as set forth
herein, and subject to the satisfaction of the conditions in Section 5.02, to
------------
amend or renew the Klearfold IRB Letter of Credit in accordance with Sections
--------
3.02(c) and (d), and (B) to honor drafts under the Klearfold IRB Letter of
- ------- ---
Credit; and (ii) the L/C Lenders severally agree to participate in the Klearfold
IRB Letter of Credit; provided, that the Issuing Bank shall not be obligated to
--------
Issue, and no L/C Lender shall be obligated to participate in, the Klearfold IRB
Letter of Credit if as of the Issuance Date of such Klearfold IRB Letter of
Credit (1) the Effective Amount of all L/C Obligations exceeds the combined L/C
Commitments of all L/C Lenders, (2) the participation of any L/C Lender in the
Effective Amount of all L/C Obligations exceeds such Lender's L/C Loan
Commitment or (3) the Effective Amount of Klearfold L/C Obligations exceeds the
Klearfold L/C Sublimit.
(c) On the terms and conditions set forth herein (i) the Issuing
Bank agrees, (A) from time to time on any Business Day during the period from
the Closing Date to the day which is thirty (30) days prior to the Termination
Date, to issue standby or trade Letters of Credit for the account of the L/C
Borrowers in an aggregate Stated Amount in Dollars not in excess of $350,000 (as
such amount shall be reduced by any increase in the Stated Amount of the
Klearfold IRB Letter of Credit or the AGI IRB Letter of Credit after the Closing
Date) (the "Trade L/C Sublimit") and to amend or renew Letters of Credit
------------------
previously issued by it under this clause (c), in accordance with
----------
38
<PAGE>
Sections 3.02(c) and 3.02(d), and (B) to honor drafts under the Letters of
- ---------------- -------
Credit issued under this clause (c); and (ii) the L/C Lenders severally agree to
----------
participate in Letters of Credit Issued for the account of either L/C Borrower
under this clause (c); provided, that the Issuer shall not be obligated to Issue
---------- --------
any Letter of Credit under this clause (c), if as of the Issuance Date of such
----------
Letter of Credit (1) the Effective Amount of all L/C Obligations exceeds the
combined L/C Commitments of all L/C Lenders, (2) the participation of any L/C
Lender in the Effective Amount of all L/C Obligations of such L/C Lender exceeds
such Lender's Commitment, (3) the Effective Amount of AGI L/C Obligations or
Klearfold L/C Obligation (as the case may be) exceeds the AGI L/C Sublimit or
Klearfold L/C Sublimit or (4) the Effective Amount of all L/C Obligations
related to Letters of Credit issued under this clause (c) exceeds the Trade L/C
----------
Sublimit. Within the foregoing limits, and subject to the other terms and
conditions hereof, the L/C Borrowers' ability to obtain standby and trade
Letters of Credit under this clause (c) shall be fully revolving, and,
----------
accordingly, the L/C Borrowers may, during the foregoing period, obtain under
this clause (c) new Letters of Credit, or replacement Letters of Credit for
Letters of Credit which have expired or which have been drawn upon and
reimbursed, provided all such Letters of Credit are issued in compliance with
this Agreement.
(d) The Issuing Bank is under no obligation to Issue, amend or
renew any Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the
Issuing Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction
over the Issuing Bank shall prohibit, or request that the Issuing Bank
refrain from, the Issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to
such Letter of Credit any restriction, reserve or capital requirement (for
which the Issuing Bank is not otherwise compensated hereunder) not in effect
on the Closing Date, or shall impose upon the Issuing Bank any unreimbursed
loss, cost or expense which was not applicable on the Closing Date and which
the Issuing Bank in good faith deems material to it;
(ii) the Issuing Bank has received written notice from any
L/C Lender, the Agent or any Credit Party, on or prior to the Business Day
prior to the requested Issuance Date of such Letter of Credit, that one or
more of the applicable conditions contained in Article V is not then
---------
satisfied;
(iii) the expiry date of any requested Letter of Credit is
after the Termination Date; or
(iv) any requested Letter of Credit does not provide for
drafts, or is not otherwise in form and substance acceptable to the Issuing
Bank, or the Issuance of a Letter of Credit shall violate any applicable
policies of the Issuing Bank.
39
<PAGE>
3.02 Issuance, Amendment and Renewal of Letters of Credit.
----------------------------------------------------
(a) Each Letter of Credit shall be issued upon the irrevocable
written request of the relevant L/C Borrower received by the Issuing Bank (with
a copy sent by the relevant L/C Borrower to the Agent) at least five (5) days
(or such shorter time as the Issuing Bank may agree in a particular instance in
its sole discretion) prior to the proposed Issuance Date. Each such request for
issuance of a Letter of Credit shall be in writing or by facsimile, confirmed
immediately in an original writing, in the form of an L/C Application, and shall
specify in form and detail satisfactory to the Issuing Bank: (i) the proposed
Issuance Date of the Letter of Credit (which shall be a Business Day); (ii) the
face amount of the Letter of Credit; (iii) the expiry date of the Letter of
Credit; (iv) the name and address of the beneficiary thereof; (v) the documents
to be presented by the beneficiary of the Letter of Credit in case of any
drawing thereunder; (vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and (vii) such other matters as
the Issuing Bank may require.
(b) Prior to the Issuance of any Letter of Credit, the Issuing
Bank will confirm with the Agent (by telephone or in writing) that the Agent has
received a copy of the L/C Application or L/C Amendment Application from the
relevant L/C Borrower and, if not, the Issuing Bank will provide the Agent with
a copy thereof. Unless the Issuing Bank has received notice on or before the
Business Day the Issuing Bank is to issue a requested Letter of Credit from the
Agent (A) directing the Issuing Bank not to issue such Letter of Credit because
such issuance is not then permitted under Section 3.01(a) as a result of the
---------------
limitations set forth in clauses (1) through (3) thereof, Section 3.01(b) as a
---------------
result of the limitations set forth in clauses (1) through (3) thereof, Section
-------
3.01(c) as a result of the limitations set forth in clauses (1) through (4)
- -------
thereof or Section 3.01(d)(ii); or (B) that one or more conditions specified in
-------------------
Article V are not then satisfied; then, subject to the terms and conditions
- ---------
hereof, the Issuing Bank shall, with the approval of the Agent, on the requested
date, issue a Letter of Credit for the account of the relevant L/C Borrower in
accordance with the Issuing Bank's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding
and prior to the Termination Date, the Issuing Bank will, upon the written
request of the relevant L/C Borrower received by the Issuing Bank (with a copy
sent by the relevant L/C Borrower to the Agent) at least five (5) days (or such
shorter time as the Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of amendment, amend any Letter of Credit
issued by it. Each such request for amendment of a Letter of Credit shall be
made in writing or by facsimile, confirmed immediately in an original writing,
made in the form of an L/C Amendment Application and shall specify in form and
detail satisfactory to the Issuing Bank: (i) the Letter of Credit to be amended;
(ii) the proposed date of amendment of the Letter of Credit (which shall be a
Business Day); (iii) the nature of the proposed amendment; and (iv) such other
matters as the Issuing Bank may require. The Issuing Bank shall be under no
obligation to amend any Letter of Credit if: (A) the Issuing Bank would have no
obligation at such time to issue such Letter of Credit in its amended form under
the terms of this Agreement; or (B) the beneficiary of any such Letter of Credit
does not accept the proposed amendment to the Letter of Credit. The Agent will
promptly notify the L/C Lenders of the receipt by it of any L/C Application or
L/C Amendment Application.
40
<PAGE>
(d) The Issuing Bank and the L/C Lenders agree that, while a
Letter of Credit is outstanding and prior to the Termination Date, at the option
of the relevant L/C Borrower and upon the written request of the relevant L/C
Borrower received by the Issuing Bank (with a copy sent by the relevant L/C
Borrower to the Agent) at least five (5) days (or such shorter time as the
Issuing Bank may agree in a particular instance in its sole discretion) prior to
the proposed date of notification of renewal, the Issuing Bank shall be entitled
to authorize the automatic renewal of any Letter of Credit issued by it. Each
such request for renewal of a Letter of Credit shall be made in writing or by
facsimile, confirmed immediately in an original writing, in the form of an L/C
Amendment Application, and shall specify in form and detail satisfactory to the
Issuing Bank: (i) the Letter of Credit to be renewed; (ii) the proposed date of
notification of renewal of the Letter of Credit (which shall be a Business Day);
(iii) the revised expiry date of the Letter of Credit; and (iv) such other
matters as the Issuing Bank may require. The Issuing Bank shall be under no
obligation so to renew any Letter of Credit if: (A) the Issuing Bank would have
no obligation at such time to issue or amend such Letter of Credit in its
renewed form under the terms of this Agreement; or (B) the beneficiary of any
such Letter of Credit does not accept the proposed renewal of the Letter of
Credit. If any outstanding Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice from the
Issuing Bank that such Letter of Credit shall not be renewed, and if at the time
of renewal the Issuing Bank would be entitled to authorize the automatic renewal
of such Letter of Credit in accordance with this clause (d) upon the request of
----------
the relevant L/C Borrower but the Issuing Bank shall not have received any L/C
Amendment Application from the relevant L/C Borrower with respect to such
renewal or other written direction by the relevant L/C Borrower with respect
thereto, the Issuing Bank shall nonetheless be permitted to allow such Letter of
Credit to renew, and the relevant L/C Borrower and the L/C Lenders hereby
authorize such renewal, and, accordingly, the Issuing Bank shall be deemed to
have received an L/C Amendment Application from the L/C Borrower requesting such
renewal.
(e) The Issuing Bank may, at its election (or as required by the
Agent at the direction of the Majority Lenders), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Termination Date.
(f) This Agreement shall control in the event of any conflict
with any L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Bank will also deliver to the Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or amendment
to or renewal of a Letter of Credit.
3.03 Risk Participations, Drawings, L/C Loan Borrowings and
------------------------------------------------------
Reimbursements.
- --------------
(a) Immediately upon the Issuance of each Letter of Credit, each
L/C Lender shall be deemed to, and hereby irrevocably and unconditionally agrees
to, purchase from the Issuing Bank
41
<PAGE>
a participation in such Letter of Credit and each drawing thereunder in an
amount equal to the product of (i) the Pro Rata Share of such L/C Lender, times
(ii) the maximum amount available to be drawn under such Letter of Credit and
the amount of such drawing, respectively. For purposes of Section 2.01(b), the
---------------
Issuance of the AGI Letter of Credit shall be deemed to utilize the L/C
Commitment of each L/C Lender by an amount equal to the amount of such
participation. For purposes of Section 2.01(c), the Issuance of the Klearfold
---------------
Letter of Credit shall be deemed to utilize the L/C Commitment of each L/C
Lender by an amount equal to the amount of such participation.
(b)(i) In the event of any request for a drawing under the AGI
Letter of Credit by the beneficiary or transferee thereof, the Issuing Bank
will promptly notify AGI. AGI will automatically be deemed to have requested
and received an L/C Loan in an amount equal to any drawing actually made
under the AGI Letter of Credit. Such L/C Loan shall be automatic whether the
drawing is pursuant to any AGI-A Drawing (Purchase) to pay the AGI Tender
Price of the AGI Bonds, which AGI Bonds are purchased (other than on an AGI
LOC Termination Tender Date) pursuant to Section 202 or Section 503 of the
AGI Indenture, any AGI-B Drawing (Principal), any AGI-C Drawing (Interest),
any AGI-D Drawing (Premium) to pay principal of or interest or premium on
the AGI Bonds, as applicable, any AGI-E Drawing (Acceleration) to pay
principal of or interest or premium, if any on the AGI Bonds, or any other
drawing under the AGI IRB Letter of Credit or any other AGI Letter of Credit
in each case in full and without demand on the date of drawing.
(ii) As additional security for the payment of the obligations
of AGI pursuant to Section 3.03(b)(i) and otherwise under the Loan
------------------
Documents, AGI will pledge to the Agent, and grant to the Agent, for the
benefit of itself, the Issuing Bank and the Lenders, a security interest in
its right, title and interest in and to AGI Bonds delivered to the Issuing
Bank in connection with an AGI-A Drawing (Purchase) (any such AGI Bonds,
"AGI Pledged Bonds"), pursuant to a pledge and security agreement in the
-----------------
form of Exhibit I (the "AGI Pledge and Security Agreement").
--------- ---------------------------------
(iii) Upon indefeasible reimbursement in full of an AGI-A
Drawing (Purchase) (including, without limitation the payment in full, in
cash, of any AGI L/C Loan made by the L/C Lenders pursuant to Section
-------
3.03(b)(i) in respect thereof), together with accrued interest to the date
----------
of such payment on the amount to be paid and provided that no Event of
Default shall then have occurred and be continuing or would result after
giving effect thereto, the AGI Pledged Bonds (but only in authorized
denominations) held by the Agent pursuant to the AGI Pledge and Security
Agreement corresponding and equal to the principal amount of such AGI
Pledged Bonds included in the AGI-A Drawing (Purchase) (or the AGI L/C Loan
in respect thereof) reimbursed by such payment shall be released by the
Agent and returned to AGI.
(iv) The Issuing Bank will reinstate the amount under the AGI
IRB Letter of Credit of any AGI-C Drawing (Interest) that does not relate to
a redemption or purchase and cancellation of the AGI Bonds on the fourth
Business Day after the repayment of any L/C Loan made in respect of such
AGI-C Drawing (Interest) unless on or prior thereto the Agent and the
Issuing Bank notify AGI that an Event of Default has occurred and is
continuing.
42
<PAGE>
Upon reimbursement as contemplated in Section 3.03(b)(iii) and upon the
--------------------
release of the AGI Pledged Bonds as specified therein, the Issuing Bank will
reinstate the AGI IRB Letter of Credit by an amount equal to the total
potential AGI Tender Price of the AGI Pledged Bonds so released.
(v) Payments by the AGI Bond Issuer of interest due on the
AGI Pledged Bonds received by the Issuing Bank shall be credited against
payments of interest due under Section 2.09(a).
---------------
(vi) Notwithstanding any other term or provision of this
Agreement, each AGI L/C Lender shall have an irrevocable obligation to make
any AGI L/C Loan whether or not the conditions set forth in Section 5.02
------------
have been satisfied as of such date.
(vii) In the event AGI fails to reimburse the Issuing Bank for
the full amount of any drawing under any AGI Letter of Credit by 10:00 a.m.
(Chicago time) on the Honor Date, the Issuing Bank will promptly notify the
Agent and the Agent will promptly notify each L/C Lender thereof, and AGI
shall be deemed to have requested that Base Rate Loans in an aggregate
amount equal to the unreimbursed drawing be made by the AGI L/C Lender. Any
notice given by the Issuing Bank or the Agent pursuant to this clause (vii)
------------
may be oral if immediately confirmed in writing (including by facsimile);
provided that the lack of such an immediate confirmation shall not affect
--------
the conclusiveness or binding effect of such notice. Each L/C Lender shall
upon any notice pursuant to this clause (vii) make available to the Agent
------------
for the account of the Issuing Bank an amount in Dollars and in immediately
available funds equal to its Pro Rata Share of the amount of the drawing,
whereupon the participating L/C Lenders shall each be deemed to have made an
AGI L/C Loan consisting of a Base Rate Loan to AGI in that amount. If any
AGI L/C Lender so notified fails to make available to the Agent for the
account of the Issuing Bank the amount of such L/C Lender's Pro Rata Share
of the amount of the drawing by no later than 2:00 p.m. (Chicago time) on
the Honor Date, then interest shall accrue on such L/C Lender's obligation
to make such payment, from the Honor Date to the date such L/C Lender makes
such payment, at a rate per annum equal to the Federal Funds Rate in effect
from time to time during such period. The Agent will promptly give notice to
the L/C Lenders of AGI's failure to reimburse the Issuing Bank on the Honor
Date, but failure of the Agent to give any such notice on the Honor Date or
in sufficient time to enable any L/C Lender to effect such payment on such
date shall not relieve such L/C Lender from its obligations under this
Section 3.03.
------------
(c)(i) In the event of any request for a drawing under the
Klearfold Letter of Credit by the beneficiary or transferee thereof, the
Issuing Bank will promptly notify Klearfold. Klearfold will automatically be
deemed to have requested and received a L/C Loan in an amount equal to any
drawing actually made under the Klearfold Letter of Credit. Such L/C Loan
shall be automatic whether the drawing is pursuant to any Klearfold Interest
Drawing (or C Drawing), Klearfold Redemption Drawing (or B Drawing),
Klearfold Tender Drawing (or A Drawing) or any other drawing under the
Klearfold IRB Letter of Credit or any other Klearfold Letter of Credit in
each case in full without demand on the date of drawing.
43
<PAGE>
(ii) Klearfold and the Issuing Bank intend that in the event
of one or more drawings under the Klearfold IRB Letter of Credit and the
application thereof to the payment of Klearfold Bonds, subject to the
provisions of the Klearfold Indenture, the Agent (on behalf of the Lenders)
and the Issuing Bank will be subrogated pro tanto to the rights of the
--- -----
Klearfold Trustee and the holders of such Klearfold Bonds in and to all
funds (except rebate and bond purchase funds) and security held by the
Klearfold Trustee under the Klearfold Bond Documents for the payment of the
principal of and interest on such Klearfold Bonds, including without
limitation all bond funds, construction funds, revenue funds, debt service
funds, and other funds (except rebate and bond purchase funds) and
securities and other instrument comprising investments thereof. In addition,
the Agent (on behalf of the Lenders) and the Issuing Bank shall have all
other subrogation rights available to the Issuing Bank at law and in equity
(or by agreement prior to the replacement of the Mellon Letter of Credit),
to the extent such rights do not violate any other agreements of Klearfold.
(iii) To secure Klearfold's obligations to the Issuing Bank and
the Klearfold L/C Lenders under this Agreement and all Klearfold L/C
Obligations, Klearfold hereby pledges and grants to the Agent, for the
benefit of itself, the Issuing Bank and the Lenders, a security interest in
all of Klearfold's right, title and interest in and to all funds (except
rebate and bond purchase funds) and investments thereof now or hereafter
held by the Klearfold Trustee under the Klearfold Indenture as security for
the payment of the Klearfold Bonds, including, without limitation, any and
all bond funds, reserve funds, revenue funds, debt service funds, and other
funds and securities and other instruments comprising investments thereof
and interest and other income derived therefrom held as security for the
payment of the Klearfold Bonds; such pledge, assignment and grant being
under and subject only to the rights to the Klearfold Trustee under the
Klearfold Indenture. Klearfold covenants and agrees that it will defend the
Agent's rights and security interests created by this clause (iii) against
------------
the claims and demands of all persons. In addition to its other rights and
remedies under this Agreement and the Klearfold Bond Documents, the Agent
shall have all the rights and remedies of a secured party under the Uniform
Commercial Code or other applicable law with respect to the security
interests created by this clause (iii). The Agent's rights under this clause
------------ ------
(iii) are in addition to, and not in lieu of, its rights described in
-----
Section 3.03(c)(ii).
-------------------
(iv) (1) To secure Klearfold's obligations to the Issuing Bank
and the Lenders under this Agreement with respect the Klearfold Letters
of Credit, all Klearfold L/C Obligations and otherwise under the Loan
Documents, Klearfold hereby pledges and assigns to the Agent, for the
benefit of itself, the Issuing Bank and the Lenders, and grants to the
Agent, for the benefit of itself, the Issuing Bank and the Lenders, a
security interest in all of the right, title and interest of Klearfold,
now owned or hereafter acquired, in and to any and all Klearfold
Unremarketed Tendered Bonds (together with all income therefrom and
proceeds thereof) which are purchased pursuant to the Klearfold
Indenture with funds derived in whole or in part from a drawing under
the Klearfold IRB Letter of Credit for which full reimbursement has not
been made. Such Klearfold Unremarketed Tendered Bonds shall be pledged
to the Agent, registered in Klearfold's name and delivered to and held
by the Klearfold
44
<PAGE>
Trustee as agent for the Agent under this clause (iv)(1) or, at the
--------------
option of the Agent by written notice to Klearfold and the Klearfold
Trustee, the pledged Klearfold Unremarketed Tendered Bonds specified in
such notice shall be delivered to and held by the Agent; provided that,
if the Klearfold Unremarketed Tendered Bonds are held in uncertificated
form pursuant to an agreement with The Depository Trust Company or a
successor securities depository, then such pledge to the Agent shall be
recorded in the registration books maintained by the Klearfold Trustee
and in the records of ownership maintained by the securities depository
and/or the participant through which such Klearfold Unremarketed
Tendered Bonds are held together with irrevocable notice (acknowledged
by the Person holding such Klearfold Bonds) that the Agent has the
unilateral right to direct the disposition of such Klearfold
Unremarketed Tendered Bonds without further notice to, consent of or
direction from Klearfold. Klearfold Unremarketed Tendered Bonds which
are so pledged to the Agent are herein referred to as "Klearfold Pledged
-----------------
Bonds." The Klearfold Indenture provides that the Klearfold Trustee will
-----
act as agent for the Agent with respect to Klearfold Pledged Bonds as
provided in this clause (iv)(1).
--------------
(2) Any principal of, premium on and interest on Klearfold
Pledged Bonds which becomes due and payable shall be paid to the Agent.
All sums of money so paid to the Agent in respect of Klearfold Pledged
Bonds shall be credited against the obligation of Klearfold to repay
outstanding Klearfold L/C Loans, with interest, for the amount drawn
with a Klearfold Tender Draft to fund the purchase of such Klearfold
Pledged Bonds pursuant to the Klearfold Indenture.
(3) In the event that Klearfold pays or causes to be paid in
full the relevant Klearfold L/C Loan (which Loan was originally made to
reimburse an amount drawn under the Klearfold IRB Letter of Credit as a
Klearfold Tender Drawing to fund the purchase of Klearfold Pledged Bonds
pursuant to the Klearfold Indenture) and provided no Event of Default
has occurred and is continuing or would result after giving effect
thereto, the Agent will release and will deliver, or cause its agent to
deliver, such Klearfold Pledged Bonds to such Person or Persons as
Klearfold or the Klearfold Remarketing Agent may direct. Upon receipt by
the Klearfold Trustee from the Issuing Bank of confirmation that the
Klearfold IRB Letter of Credit has been reinstated with respect to
Klearfold Pledged Bonds, such Klearfold Pledged Bonds shall be
automatically deemed released and the Klearfold Trustee shall be
automatically authorized to deliver such Klearfold Pledged Bonds free
from the pledge granted pursuant to this Section 3.03(c)(iv), unless the
-------------------
Klearfold Trustee has received from the Agent written or telephonic
notice (which shall thereafter be confirmed in writing) that such
release shall not occur.
(4) The Agent shall not be liable for failure to collect or
realize upon the obligations secured by the Klearfold Pledged Bonds or
any collateral security or guarantee therefor, or any part thereof, or
for any delay in so doing, and the Agent shall not be under any
obligation to take any action whatsoever with regard thereto.
45
<PAGE>
(5) Klearfold covenants and agrees that it will defend the
Agent's right, title and interest in and to the Klearfold Pledged
Bonds and the proceeds thereof against the claims and demands of all
Persons. In addition to its other rights and remedies under this
Agreement and the Klearfold Indenture, the Agent shall have all the
rights and remedies of a secured party under the Uniform Commercial
Code or other applicable law with respect to the security interests
created by this Section 3.03(c)(iv).
-------------------
(v) Notwithstanding any other term or provision of this Agreement,
each Klearfold L/C Lender shall have an irrevocable obligation to make any
Klearfold L/C Loan whether or not the conditions set forth in Section 5.02
------------
have been satisfied as of such date.
(vi) In the event Klearfold fails to reimburse the Issuing Bank for
the full amount of any drawing under any Klearfold Letter of Credit by
10:00 a.m. (Chicago time) on the Honor Date, the Issuing Bank will promptly
notify the Agent and the Agent will promptly notify each L/C Lender
thereof, and Klearfold shall be deemed to have requested that Base Rate
Loans in an aggregate amount equal to the unreimbursed drawing be made by
the Klearfold L/C Lenders. Any notice given by the Issuing Bank or the
Agent pursuant to this clause (vi) may be oral if immediately confirmed in
-----------
writing (including by facsimile); provided that the lack of such an
--------
immediate confirmation shall not affect the conclusiveness or binding
effect of such notice. Each L/C Lender shall upon any notice pursuant to
this clause (vi) make available to the Agent for the account of the Issuing
Bank an amount in Dollars and in immediately available funds equal to its
Pro Rata Share of the amount of the drawing, whereupon the participating
L/C Lenders shall each be deemed to have made a Klearfold L/C Loan
consisting of a Base Rate Loan to Klearfold in that amount. If any
Klearfold L/C Lender so notified fails to make available to the Agent for
the account of the Issuing Bank the amount of such L/C Lender's Pro Rata
Share of the amount of the drawing by no later than 2:00 p.m. (Chicago
time) on the Honor Date, then interest shall accrue on such L/C Lender's
obligation to make such payment, from the Honor Date to the date such L/C
Lender makes such payment, at a rate per annum equal to the Federal Funds
Rate in effect from time to time during such period. The Agent will
promptly give notice to the L/C Lenders of Klearfold's failure to reimburse
the Issuing Bank on the Honor Date, but failure of the Agent to give any
such notice on the Honor Date or in sufficient time to enable any L/C
Lender to effect such payment on such date shall not relieve such L/C
Lender from its obligations under this Section 3.03.
------------
(d) Each L/C Lender's obligation in accordance with this Agreement to
make the L/C Loans, as contemplated by this Section 3.03, as a result of a
------------
drawing under a Letter of Credit, shall be absolute and unconditional and
without recourse to the Issuing Bank and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such L/C Lender may have against the Issuing Bank, a L/C
Borrower or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse Effect; or
(iii) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
3.04 Repayment of Participations.
---------------------------
46
<PAGE>
(a) Upon (and only upon) receipt by the Agent for the account of the
Issuing Bank of immediately available funds from the relevant L/C Borrower (i)
in reimbursement of any payment made by the Issuing Bank under the Letter of
Credit with respect to which any L/C Lender has paid the Agent for the account
of the Issuing Bank for such L/C Lender's participation in the Letter of Credit
pursuant to Section 3.03 or (ii) in payment of interest thereon, the Agent will
------------
pay to each L/C Lender, in the same funds as those received by the Agent for the
account of the Issuing Bank, the amount of such L/C Lender's Pro Rata Share of
such funds, and the Issuing Bank shall receive the amount of the Pro Rata Share
of such funds of any L/C Lender that did not so pay the Agent for the account of
the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to
return to a L/C Borrower, or to a trustee, receiver, liquidator, custodian, or
any official in any Insolvency Proceeding, any portion of the payments made by
such L/C Borrower to the Agent for the account of the Issuing Bank pursuant to
Section 3.04(a) in reimbursement of a payment made under the Letter of Credit or
- ---------------
interest or fee thereon, each L/C Lender shall, on demand of the Agent,
forthwith return to the Agent or the Issuing Bank the amount of its Pro Rata
Share of any amounts so returned by the Agent or the Issuing Bank plus interest
thereon from the date such demand is made to the date such amounts are returned
by such Lender L/C to the Agent or the Issuing Bank, at a rate per annum equal
to the Federal Funds Rate in effect from time to time.
3.05 Role of the Issuing Bank.
------------------------
(a) Each L/C Lender and such L/C Borrower agree that, in paying any
drawing under a Letter of Credit, the Issuing Bank shall not have any
responsibility to obtain any document (other than any sight draft and
certificates expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective correspondents,
participants or assignees of the Issuing Bank shall be liable to any L/C Lender
for: (i) any action taken or omitted in connection herewith at the request or
with the approval of the L/C Lenders (including the Majority Lenders, as
applicable); (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) Each L/C Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any Letter
of Credit; provided, however, that this assumption is not intended to, and shall
--------
not, preclude an L/C Borrower's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of the Issuing Bank, shall be liable or responsible for any of the
matters described in clauses (i) through (vii) of Section 3.06; provided, in
----------- --- ------------ --------
however, anything in such clauses to the contrary notwithstanding, that an L/C
Borrower may have a claim against the Issuing Bank, and the Issuing Bank may be
liable
47
<PAGE>
to such L/C Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by such L/C Borrower
which such L/C Borrower proves were caused by the Issuing Bank's willful
misconduct or gross negligence or the Issuing Bank's willful failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of a
sight draft and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) the Issuing Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary; and (ii) the Issuing Bank shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.
3.06 Obligations Absolute. The obligations of each L/C Borrower under
--------------------
this Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit converted into L/C Loans, shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances
(unless due to gross negligence or wilful misconduct of the Issuing Bank),
including the following:
(i) any lack of validity or enforceability of this Agreement or
any L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of a L/C Borrower in
respect of any Letter of Credit or any other amendment or waiver of or any
consent to departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other right
that a L/C Borrower may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C-Related Documents or any unrelated
transaction;
(iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit;
(v) any payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of any Letter of Credit; or any payment made by the
Issuing Bank under any Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
48
<PAGE>
creditors, liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from any
other guarantee, for all or any of the obligations of the Company in
respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, a L/C
Borrower or a guarantor.
3.07 Cash Collateral Pledge. If, as of the Termination Date, any Letters
----------------------
of Credit may for any reason remain outstanding and partially or wholly undrawn,
or upon the occurrence and continuation of the circumstances described in
Sections 2.07(a) or (c) requiring the relevant L/C Borrower to Cash
- ---------------- ---
Collateralize Letters of Credit, then, the relevant L/C Borrower shall
immediately Cash Collateralize the L/C Obligations in an amount equal to such
L/C Obligations.
3.08 Letter of Credit Fees.
---------------------
(a) The relevant L/C Borrower shall pay to the Agent for the account
of each of the L/C Lenders a letter of credit fee with respect to the Letters of
Credit of such L/C Borrower equal to the Applicable Margin per annum specified
for Letter of Credit fees on the average daily maximum amount available to be
drawn on the outstanding Letters of Credit, computed on a quarterly basis in
arrears on the last Business Day of each March, June, September and December
based upon Letters of Credit outstanding for that quarter as calculated by the
Agent. Such letter of credit fees shall be due and payable quarterly in arrears
on the last Business Day of each calendar quarter during which Letters of Credit
are outstanding, commencing on the first such quarterly date to occur after the
Closing Date, through the Termination Date (or such later date upon which the
outstanding Letters of Credit shall expire), with the final payment to be made
on the Termination Date (or such later expiration date).
(b) The relevant L/C Borrower shall pay to the Issuing Bank from time
to time on demand the normal issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the Issuing Bank
relating to letters of credit as from time to time in effect.
3.09 Uniform Customs and Practice. The Uniform Customs and Practice for
----------------------------
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to the Letters of Credit.
49
<PAGE>
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
4.01 Taxes.
-----
(a) Any and all payments by a Credit Party to each Lender or the
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
relevant Credit Party shall pay all Other Taxes.
(b) If a Credit Party 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 Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section),
such Lender or the 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) such Credit Party shall make such deductions and
withholdings;
(iii) such Credit Party shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) such Credit Party shall also pay to each Lender or the
Agent for the account of such Lender, at the time interest is paid, Further
Taxes in the amount that the respective Lender specifies as necessary to
preserve the after-tax yield the Lender would have received if such Taxes,
Other Taxes or Further Taxes had not been imposed.
(c) Each Credit Party agrees to indemnify and hold harmless each
Lender and the Agent for the full amount of i) Taxes, ii) Other Taxes, and iii)
Further Taxes in the amount that the respective Lender specifies as necessary to
preserve the after-tax yield the Lender 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 Lender or the Agent makes written demand
therefor.
(d) Within 30 days after the date of any payment pursuant to this
Section by a Credit Party of Taxes, Other Taxes or Further Taxes, such Credit
Party shall furnish to each Lender or the Agent the original or a certified copy
of a receipt evidencing payment thereof, or other evidence of payment
satisfactory to such Lender or the Agent.
50
<PAGE>
(e) If a Credit Party is required to pay any amount to any Lender or
the Agent pursuant to clauses (b) or (c) of this Section, then such Lender 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 such Credit Party which may thereafter accrue, if such
change in the sole judgment of such Lender is not otherwise disadvantageous to
such Lender.
4.02 Illegality.
----------
(a) If any Lender 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 Lender or other Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make Offshore Rate Loans,
then, on notice thereof by the Lender to the Company through the Agent, any
obligation of that Lender to make Offshore Rate Loans shall be suspended until
the Lender notifies the Agent and the Company that the circumstances giving rise
to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact
and demand from such Lender (with a copy to the Agent), prepay in full such
Offshore Rate Loans of that Lender then outstanding, together with interest
accrued thereon and amounts required under Section 4.04, either on the last day
of the Interest Period thereof, if the Lender may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Lender may not
lawfully continue to maintain such Offshore Rate Loan. If the Company is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Company may borrow from the affected Lender, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain Offshore Rate
Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Lender through the Agent that all Loans which would otherwise be
made by the Lender as Offshore Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Lender 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 Lender, be
illegal or otherwise disadvantageous to the Lender.
4.03 Increased Costs and Reduction of Return.
---------------------------------------
(a) If any Lender determines that, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation or (ii)
the compliance by that Lender with any guideline or request 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 Lender of agreeing to make or
making, funding or maintaining any Offshore Rate Loans or participating in
Letters of Credit, or, in the case of the Issuing Bank, any increase in the cost
to the Issuing Bank of agreeing to issue,
51
<PAGE>
issuing or maintaining any Letter of Credit or of agreeing to make or making,
funding or maintaining any unpaid drawing under any Letter of Credit, then the
relevant Credit Party shall be liable for, and shall from time to time, upon
demand (with a copy of such demand to be sent to the Agent), pay to the Agent
for the account of such Lender, additional amounts as are sufficient to
compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (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, or (iv) compliance by
the Lender (or its Lending Office) or any corporation controlling the Lender
with any Capital Adequacy Regulation, affects or would affect the amount of
capital required or expected to be maintained by the Lender or any corporation
controlling the Lender and (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy and such Lender'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 Lender to the Company through
the Agent, the relevant Credit Party shall pay to the Lender, from time to time
as specified by the Lender, additional amounts sufficient to compensate the
Lender for such increase.
4.04 Funding Losses. Each Credit Party shall reimburse each Lender and
--------------
hold each Lender harmless from any loss or expense which the Lender may sustain
or incur (other than as a result of Section 4.05) as a consequence of:
------------
(i) the failure of the Company to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(ii) the failure of such Credit Party to borrow, continue or
convert a Loan after the Company has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/ Continuation;
(iii) the failure of such Credit Party to make any prepayment in
accordance with any notice delivered under Section 2.06;
------------
(iv) the prepayment or other payment (including after
acceleration thereof) of an Offshore Rate Loan on a day that is not the
last day of the relevant Interest Period; or
(v) the automatic conversion under Section 2.04 of any Offshore
------------
Rate Loan to a Base Rate Loan on a day that is not the last day of the
relevant Interest Period;
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. For purposes of
calculating amounts payable by the Company to the Lenders under this Section and
under Section 4.03(a), each Offshore Rate Loan made by a Lender
---------------
52
<PAGE>
(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.
4.05 Inability to Determine Rates. If the Agent determines 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 Section 2.09(a) for any
---------------
requested Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to the Lenders of funding such Loan, the
Agent will promptly so notify the Company and each Lender. Thereafter, the
obligation of the Lenders to make or maintain Offshore Rate Loans hereunder
shall be suspended until the Agent 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. If the Company does not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed
by the Company, in the amount specified in the applicable notice submitted by
the Company, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loans.
4.06 Reserves on Offshore Rate Loans. The Company shall pay to each
-------------------------------
Lender, as long as such Lender shall be required under regulations of the FRB to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as "Eurocurrency
------------
liabilities"), additional costs on the unpaid principal amount of each Offshore
- -----------
Rate Loan equal to the actual costs of such reserves allocated to such Loan by
the Lender (as determined by the Lender in good faith, which determination shall
be conclusive, but without duplication to any costs recovered by way of the
imposition of or increase in the reserve requirements included in the
calculation of the Offshore Rate), payable on each date on which interest is
payable on such Loan, provided the Company shall have received at least 15 days'
prior written notice (with a copy to the Agent) of such additional interest from
the Lender. If a Lender fails to give notice 15 days prior to the relevant
Interest Payment Date, such additional interest shall be payable 15 days from
receipt of such notice.
4.07 Certificates of Lenders. Any Lender claiming reimbursement or
-----------------------
compensation under this Article IV shall deliver to the Company (with a copy to
----------
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Lender hereunder and such certificate shall be conclusive and binding on
the Company in the absence of manifest error.
4.08 Substitution of Lenders. Upon the receipt by a Credit Party from any
-----------------------
Lender (an "Affected Lender") of a claim for compensation under Section 4.03,
--------------- ------------
such Credit Party may: (i) request the Affected Lender to use commercially
reasonable efforts to obtain a replacement Lender or financial institution
satisfactory to such Credit Party to acquire and assume all or a ratable part of
all of such Affected Lender's Loans, Commitment and participations in Letters of
Credit (a "Replacement Lender"); (ii) request one more of the other Lenders to
------------------
acquire and assume all or part of such Affected Lender's Loans, Commitment and
participations in Letters of Credit; or (iii) designate a Replacement Lender.
Any such designation of a Replacement Lender under clause (i)
53
<PAGE>
or (iii) shall be subject to the prior written consent of the Agent (which
consent shall not be unreasonably withheld), and any such substitution shall in
any event be effective upon satisfaction of the conditions set forth in Section
-------
11.08.
- -----
4.09 Survival. The agreements and obligations of the Company in this
--------
Article IV shall survive the payment of all other Obligations.
- ----------
ARTICLE V
CONDITIONS PRECEDENT
--------------------
5.01 Conditions of Initial Credit Extensions. The obligation of each
---------------------------------------
Lender to make its initial Credit Extension hereunder is subject to the
condition that the Agent shall have received on or before the Closing Date all
of the following, in form and substance satisfactory to the Agent, and in
sufficient copies for each Lender:
(a) Credit Agreement and Notes. This Agreement and the Notes
--------------------------
executed by each party thereto;
(b) Resolutions; Incumbency.
-----------------------
(i) Copies of the resolutions of the board of directors of each
Credit Party and each Subsidiary that may become party to a Loan Document
authorizing the Transactions and the transactions contemplated hereby,
certified as of the Closing Date by the Secretary or an Assistant Secretary
of such Person; and
(ii) A certificate of the Secretary or Assistant Secretary of
each Credit Party and each Subsidiary that may become party to a Loan
Document certifying the names and true signatures of the officers of such
Person 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, the bylaws and
board of directors resolutions of each Credit Party and each Subsidiary as
in effect on the Closing Date, certified by the Secretary or Assistant
Secretary of such Person as of the Closing Date; and
(ii) a good standing certificate for each Credit Party and each
Subsidiary party to any Loan Document from the Secretary of State (or
similar, applicable Governmental Authority) of its state of incorporation
and each state where such Person 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;
54
<PAGE>
(d) Legal Opinions. (i) An opinion addressed to the Agent and the
--------------
Lenders (x) of Bingham Dana LLP, counsel to the Credit Parties and Subsidiary
Guarantors, substantially in the form of Exhibit D, and (y) from local counsel
---------
in such jurisdictions as the Agent may request, such opinion to be in form and
substance acceptable to the Agent and (ii) reliance letters addressed to the
Agent and the Lenders from each counsel delivering a legal opinion in connection
with the Transaction.
(e) Payment of Fees. Evidence of payment by each Credit Party of all
---------------
accrued and unpaid fees, costs and expenses to the extent then 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 each Credit
Party and BofA); including any such costs, fees and expenses arising under or
referenced in Sections 2.10 and 11.04;
------------- -----
(f) Certificate. A certificate signed by a Responsible Officer of
-----------
each Credit Party, dated as of the Closing Date:
(i) stating that the representations and warranties contained in
Article VI are true and correct on and as of such date, as though made on
----------
and as of such date;
(ii) stating that no Default or Event of Default exists or would
result from the Credit Extension or the consummation of the Transactions;
and
(iii) stating that there has occurred since December 31, 1997, no
event or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(g) Collateral Documents. The Collateral Documents, executed by each
--------------------
Credit Party and each Subsidiary party to such Collateral Document, in
appropriate form for recording, where necessary, together with:
(i) copies of all UCC-l financing statements filed, registered
or recorded to perfect the security interests of the Agent for the benefit
of the Lenders, or other evidence satisfactory to the Agent that there has
been or will be filed, registered or recorded all financing statements and
other filings, registrations and recordings necessary and advisable to
perfect the Liens of the Agent for the benefit of the Lenders in accordance
with applicable law;
(ii) written advice relating to such Lien and judgment searches
as the Agent shall have requested of a Credit Party, and such termination
statements or other documents as may be necessary to confirm that the
Collateral is subject to no other Liens in favor of any Persons (other than
Permitted Liens);
55
<PAGE>
(iii) all certificates and instruments representing the Pledged
Collateral, stock transfer powers executed in blank as the Agent or the
Lenders may specify;
(iv) evidence that all other actions necessary or, in the
reasonable opinion of the Agent or the Lenders, desirable to perfect and
protect the first priority security interest created by the Collateral
Documents have been taken;
(v) funds sufficient to pay any filing or recording tax or fee
in connection with any and all UCC-1 financing statements;
(vi) evidence that the Agent (on behalf of the Lenders) has
been named as loss payee under all policies of casualty insurance, and that
Agent and all Lenders have been named as additional insureds under all
policies of liability insurance;
(vii) such consents, estoppels, subordination agreements and
other documents and instruments executed by landlords, tenants and other
Persons party to material contracts relating to any Collateral as to which
the Agent shall be granted a Lien for the benefit of the Lenders, as
requested by the Agent; and
(viii) evidence that all other actions necessary or, in the
opinion of the Agent or the Lenders, desirable to perfect and protect the
first priority Lien created by the Collateral Documents, and to enhance the
Agent's ability to preserve and protect its interests in and access to the
Collateral, have been taken;
(h) Lender Payoff Letter. A bank payoff letter, or other evidence of
--------------------
satisfaction, in form and substance acceptable to the Agent from Bank of America
National Trust & Savings Association and BankBoston, N.A. and National
Westminster Bank Plc., to the effect that the total amount due under a Credit
Party's or any Subsidiary's agreements with such lenders howsoever due and owing
(whether as principal, interest or premium) shall be satisfied (and such
agreements terminated) upon payment of an amount certain, together with such
lien releases and other documents as the Agent shall require. No Credit Party
nor any of its Subsidiaries shall have any outstanding Indebtedness for borrowed
money after giving effect to the Transaction other than Indebtedness permitted
under Section 8.05.
------------
(i) Pro Forma Balance Sheet and Projections. (I) A pro forma
---------------------------------------
consolidated and consolidating balance sheet of the Company and its
Subsidiaries, after giving effect to the Transaction and the related
financing thereof, together with a Compliance Certificate executed by a
Responsible Officer, demonstrating compliance by the Company with Sections
--------
8.15, 8.16, 8.17 and 8.18 as of December 31, 1997 (after giving effect to
---- ---- ---- ----
the Transaction and the related financing thereof), which pro forma balance
sheet and Compliance Certificate shall be in form and substance acceptable
to the Agent.
(II) Projections for the period commencing as of January 1,
1998 and concluding on the date approximately five years thereafter.
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<PAGE>
(j) Solvency Certificate. A written solvency certificate from the
--------------------
chief financial officer of each Credit Party in form and content satisfactory to
the Lenders, dated the initial Borrowing Date, with respect to the value,
Solvency and other factual information of, or relating to, as the case may be,
such Credit Party, after giving effect to the initial Borrowing.
(k) Applicable Margin Certificate. The Company shall have delivered
-----------------------------
to the Agent a certificate, executed by a Responsible Officer, delineating the
Applicable Margin after giving pro forma effect to the Loans to be incurred on
the Closing Date and the consummation of the Transaction, the form and substance
of such certificate to be satisfactory to the Agent.
(l) Senior Subordinated Note Documents. The Company shall have
----------------------------------
delivered to the Agent all Senior Subordinated Note Documents, certified as true
and correct by a Responsible Officer, which Senior Subordinated Note Documents
shall provide that the Loans and all other Obligations are entitled to the
benefits of the subordination provisions contained in such Senior Subordinated
Note Documents and shall otherwise be in form and substance satisfactory to the
Lenders, and the Company shall have received not less than $93,000,000 cash
proceeds from the issuance of the Senior Subordinated Notes after deduction of
all charges, fees, expenses and discounts in connection with the Transaction.
(m) Combination. The Company shall have delivered to the Agent all
-----------
Combination Documents, certified as true and correct by a Responsible Office,
all of which Combination Documents shall be in form and substance reasonably
satisfactory to the Agent's, and each of the conditions precedent to each
Person's obligations under the Combination Documents to consummate the
Combination shall have been satisfied (without any waiver thereto not agreed to
by the Agent) to the reasonable satisfaction of the Agent together with a
certification that at least $4,300,000 in cash shall have been received as an
additional capital contribution for common stock in connection with the
consummation of such transaction. The Combination shall have been consummated in
substantial compliance with the terms of the Combination Documents and all
applicable laws.
(n) Merger. AGI shall have delivered to the Agent all Merger
------
Documents, certified as true and correct by a Responsible Officer, all of which
Merger Documents shall be in form and substance reasonably satisfactory to the
Agent, and each of the conditions precedent to each Person's obligations under
the Merger Documents to consummate the Merger shall have been satisfied (without
any waiver thereto not agreed to by the Agent) to the reasonable satisfaction of
the Agent together with a certification that (i) at least $14,000,000 of common
stock of the Company was distributed to certain members of the management of
AGI, (ii) the aggregate cash payment to the shareholders of AGI did not exceed
$56,000,000 and (iii) the aggregate principal amount of Indebtedness of AGI
assumed by AGI Acquisition Corporation pursuant to the Merger did not exceed
$24,000,000. The Merger shall have been consummated in substantial compliance
with the terms of the Merger Documents and all applicable laws.
(o) Other Documents. Such other approvals, opinions, documents or
---------------
materials as the Agent or any Lender may reasonably request.
57
<PAGE>
5.02 Conditions to All Credit Extensions. The obligation of each Lender
-----------------------------------
to make any Loan to be made by it (including its initial Loan) or to continue or
convert any Loan under Section 2.04 and the obligation of the Issuing Bank to
------------
Issue, renew or amend any Letter of Credit (including the initial Letters of
Credit) is subject to the satisfaction of the following conditions precedent on
the relevant Borrowing Date or Issuance Date:
(a) Notice, Application. The Agent shall have received (with, in
-------------------
the case of the initial Loans only, a copy for each Lender) a Notice of
Borrowing or, in the case of any Issuance of any Letter of Credit, the Issuing
Bank and the Agent shall have received an L/C Application or L/C Amendment
Application, as required under Section 3.02;
------------
(b) Continuation of Representations and Warranties. The
----------------------------------------------
representations and warranties in Article VI shall be true and correct in all
----------
material respects on and as of such Borrowing Date or Issuance Date with the
same effect as if made on and as of such Borrowing Date or Issuance Date (except
to the extent such 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 after giving effect to such Borrowing or continuation or
conversion or Issuance.
Each Notice of Borrowing, L/C Application or L/C Amendment Application submitted
by a Credit Party hereunder shall constitute a representation and warranty by
the Company hereunder, as of the date of each such notice and as of each
Borrowing Date or Issuance Date, as applicable, that the conditions in this
Section 5.02 are satisfied.
- ------------
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
Each Credit Party represents and warrants to the Agent and each Lender
that:
6.01 Corporate Existence and Power. Each Credit Party 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
58
<PAGE>
(d) is in compliance with all Requirements of Law; except, 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.
6.02 Corporate Authorization; No Contravention. The execution, delivery
-----------------------------------------
and performance by a Credit Party and its Subsidiaries of this Agreement, each
other Loan Document and each other Transaction Agreement to which such Person is
party, have been duly authorized by all necessary corporate action, and do not
and will not:
(a) contravene the terms of any of such Person'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 such Person is a party or any order, injunction, writ
or decree of any Governmental Authority to which such Person or its
property is subject; or
(c) violate any Requirement of Law.
6.03 Governmental Authorization. No approval, consent, exemption,
--------------------------
authorization, or other action by, or notice to, or filing (other than pursuant
to the Collateral Documents) with, any Governmental Authority is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, a Credit Party or any of its Subsidiaries of the Agreement,
any other Loan Document or any other Transaction Agreement other than those
approvals, consents, exemptions and authorizations which have already been
obtained.
6.04 Binding Effect. This Agreement and each other Loan Document to which
--------------
a Credit Party or any of its Subsidiaries is a party constitute the legal, valid
and binding obligations of such Person to the extent it is a party thereto,
enforceable against such Person 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.
6.05 Litigation. Except as listed on Schedule 6.05, there are no actions,
---------- -------------
suits, proceedings, claims or disputes pending, or to the best knowledge of a
Credit Party, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against a Credit Party, or 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) if determined adversely to a Credit Party
or its Subsidiaries, would reasonably be expected to have a Material Adverse
Effect. No injunction, writ, temporary restraining order or any order of any
nature has been issued by any court or other Governmental Authority purporting
to enjoin or restrain the execution, delivery or performance of this Agreement
or any other Loan Document, or directing that the transactions provided for
herein or therein not be consummated as herein or therein provided.
59
<PAGE>
6.06 No Default. No Default or Event of Default exists or would result
----------
from the incurring of any Obligations by a Credit Party. As of the Closing
Date, no Credit Party nor any of its Subsidiaries is in default under or with
respect to any Contractual Obligation or any Transaction Agreement 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 Section
-------
9.01(e).
- -------
6.07 ERISA Compliance.
----------------
(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 and to the best knowledge of each
Credit Party, nothing has occurred which would cause the loss of such
qualification. Each Credit Party 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 best knowledge of each Credit
Party, 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; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) no Credit
Party 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); (iv) no Credit
Party 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 (v) no Credit Party nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
6.08 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 7.12
------------
and Section 8.07. No Credit Party 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.
6.09 Title to Properties. Each Credit Party and each of its Subsidiaries
-------------------
have good record and marketable title in fee simple to, or valid leasehold
interests in, all property necessary or used in the ordinary conduct of their
respective businesses, except for such defects in title as could not,
individually or in the aggregate, have a Material Adverse Effect. As of the
Closing Date, the property of each Credit Party and its Subsidiaries is subject
to no Liens, other than Permitted Liens.
60
<PAGE>
6.10 Taxes. Each Credit Party and each of 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 accordance with GAAP. There is no proposed tax assessment against a
Credit Party or any of its Subsidiaries that would, if made, have a Material
Adverse Effect.
6.11 Financial Condition. (a) The audited consolidated financial
-------------------
statements of the Company and its Subsidiaries (other than AGI), dated December
31, 1997, and the audited consolidated financial statements of AGI, dated
December 31, 1997, in each case including the related consolidated statements of
income or operations, shareholders' equity and cash flows for the period ended
on that date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;
(ii) fairly present the financial condition of such Person as of
the date thereof and results of operations for the period covered thereby;
and
(iii) except as specifically disclosed in Schedule 6.11, show all
-------------
material indebtedness and other liabilities, direct or contingent, of such
Person and its consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent Obligations.
(b) Since December 31, 1997, there has been no Material Adverse
Effect.
6.12 Environmental Matters.
---------------------
(a) The on-going operations of each Credit Party and each of its
Subsidiaries comply in all respects with all Environmental Laws, except such
non-compliance which would not (if enforced in accordance with applicable law)
result in liability in excess of $375,000 in the aggregate.
(b) Each Credit Party and each of its Subsidiaries have obtained all
licenses, permits, authorizations and registrations required under any
Environmental Law ("Environmental Permits") and necessary for their respective
---------------------
ordinary course operations, all such Environmental Permits are in good standing,
and each Credit Party and each of its Subsidiaries are in compliance with all
material terms and conditions of such Environmental Permits.
(c) Except as set forth on Schedule 6.12, no Credit Party, any of its
-------------
Subsidiaries or any of their respective present Property or operations, is
subject to any outstanding written order from or agreement with any Governmental
Authority, nor subject to any judicial or docketed
61
<PAGE>
administrative proceeding, respecting any Environmental Law, Environmental Claim
or Hazardous Material.
(d) Except as set forth on Schedule 6.12, there are no Hazardous
-------------
Materials or other conditions or circumstances existing with respect to any
Property, or arising from operations prior to the Closing Date, of any Credit
Party or any of its Subsidiaries, and in any event, no such materials,
conditions or circumstances (whether or not disclosed) would reasonably be
expected to give rise to Environmental Claims with a potential liability of a
Credit Party and its Subsidiaries in excess of $1,000,000 in the aggregate for
any such condition, circumstance or Property. In addition, (i) no Credit Party
nor any of its Subsidiaries has any underground storage tanks (x) that are not
properly registered or permitted under applicable Environmental Laws, or (y) to
their knowledge that are leaking or disposing of Hazardous Materials off-site
or, whether known or not, could reasonably be expected to result in or cause a
Material Adverse Effect, and (ii) each Credit Party and its Subsidiaries have
notified all of their employees of the existence, if any, of any health hazard
known to them arising from the conditions of their employment and have met all
notification requirements under Title III of CERCLA and all other Environmental
Laws.
6.13 Collateral Documents.
--------------------
(a) The provisions of each of the Collateral Documents are effective
to create in favor of the Agent for the benefit of the Lenders, a legal, valid
and enforceable first priority security interest in all right, title and
interest of a Credit Party and its Subsidiaries in the collateral described
therein (except (i) up to $500,000 of AGI's inventory, which is on consignment
with Avon at Avon's facility in Ohio, (ii) up to $500,000 of Klearfold's
inventory, which is on consignment with Colgate at Colgate's facility in Puerto
Rico and (iii) such other inventory held on consignment as the Agent shall
approve in writing); and financing statements have been delivered to the Agent
on the Closing Date to be filed in the offices in all of the jurisdictions
listed in the schedule to the Security Agreement, and each Intellectual Property
Assignment has been delivered to the Agent on the Closing Date to be filed in
the U.S. Patent and Trademark Office and the U.S. Copyright Office.
(b) Each Mortgage, if and when delivered, will be effective to grant
to the Agent for the benefit of the Lenders a legal, valid and enforceable Lien
on all the right, title and interest of the mortgagor under such Mortgage in the
Mortgaged Property described therein. If and when each such Mortgage is duly
recorded in the offices listed on the schedule to such Mortgage and the
recording fees and taxes in respect thereof are paid and compliance is otherwise
had with the formal requirements of state law applicable to the recording of
real estate mortgages generally, each such Mortgaged Property, subject to the
encumbrances and exceptions to title set forth therein and except as noted in
the title policies delivered to the Agent and Permitted Liens, will be subject
to a legal, valid, enforceable and perfected first priority mortgagor or deed of
trust, as the case may be; and when financing statements have been filed in the
offices listed in the schedule to such Mortgage, such Mortgage will also create
a legal, valid, enforceable and perfected first lien on, and security interest
in, all right, title and interest of such Credit Party or such Subsidiary under
such Mortgage in all personal property and fixtures which is covered by such
Mortgage, subject to no other Liens,
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<PAGE>
except the encumbrances and exceptions to title set forth therein and except as
noted in the title policies delivered to the Agent and Permitted Liens.
(c) The provisions of each Pledge Agreement are effective to create,
in favor of the Agent for the benefit of the Lenders, a legal, valid and
enforceable security interest in all of the collateral described therein; and
the Pledged Collateral was delivered to the Agent or its nominee in accordance
with the terms thereof. The Lien of each Pledge Agreement constitutes a
perfected, first priority security interest in all right, title and interest of
a Credit Party or its Subsidiary, as the case may be, in the Collateral
described therein, prior and superior to all other Liens and interests.
(d) All representations and warranties of a Credit Party and any of
its Subsidiaries party thereto contained in the Collateral Documents are true
and correct.
6.14 Regulated Entities. No Credit Party nor any of its Subsidiaries, is
------------------
an "Investment Company" within the meaning of the Investment Company Act of
1940. No Credit Party is 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.
6.15 No Burdensome Restrictions. Neither the Company nor any Subsidiary
--------------------------
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.
6.16 Solvency. The Company and its Subsidiaries, on a consolidated basis,
--------
are Solvent.
6.17 Labor Relations. There are no strikes, lockouts or other labor
---------------
disputes against a Credit Party or any of its Subsidiaries, or, to the best of
the Credit Party's knowledge, threatened against or affecting a Credit Party or
any of its Subsidiaries, and no significant unfair labor practice complaint is
pending against the Credit Party or any of its Subsidiaries or, to the best
knowledge of the Company, threatened against any of them before any Governmental
Authority.
6.18 Copyrights, Patents, Trademarks and Licenses, etc. Except as set
-------------------------------------------------
forth on Schedule 6.18 hereof, a Credit Party 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. To
the best knowledge of the Credit Party, no slogan or other advertising device,
product, process, method, substance, part or other material employed by a Credit
Party or any of its Subsidiaries infringes upon any rights held by any other
Person. Except as set forth on Schedule 6.18 hereof, no claim or litigation
-------------
regarding any of the foregoing is pending or to the knowledge of a Credit Party
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.
63
<PAGE>
6.19 Capitalization; Subsidiaries. As of the Closing Date and after
----------------------------
giving effect to the Transaction, no Credit Party has any Subsidiaries other
than those specifically disclosed in part (a) of Schedule 6.19 hereto and has no
-------------
equity investments in any other corporation or entity other than those
specifically disclosed in part (b) of Schedule 6.19. All of the issued and
-------------
outstanding capital stock of each Credit Party and each of its Subsidiaries is
owned by each of the stockholders named on Schedule 6.19. Except as set forth on
-------------
Schedule 6.19, there are no outstanding rights to purchase, options, warrants or
- -------------
similar rights or agreements pursuant to which a Credit Party may be required to
issue or sell any capital stock or other equity security.
6.20 Broker's; Transaction Fees. No Credit Party nor any of its
--------------------------
Subsidiaries has any obligation to any Person in respect of any finder's,
broker's or investment banker's fee in connection with the Transaction except as
disclosed on Schedule 6.20.
-------------
6.21 Insurance. The properties of each Credit Party and its Subsidiaries
---------
are insured with financially sound and reputable insurance companies not
Affiliates of a Credit Party, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where such Credit Party
or such Subsidiary operates.
6.22 Swap Obligations. No Credit Party nor any of its Subsidiaries has
----------------
incurred any outstanding obligations under any Swap Contracts, other than
Permitted Swap Obligations. Each Credit Party has undertaken its own independent
assessment of its consolidated assets, liabilities and commitments and has
considered appropriate means of mitigating and managing risks associated with
such matters and has not relied on any swap counterparty or any Affiliate of any
swap counterparty in determining whether to enter into any Swap Contract.
6.23 Full Disclosure. None of the representations or warranties made by a
---------------
Credit Party or any of its Subsidiaries 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 a Credit Party or any of its Subsidiaries in connection with
the Loan Documents (including the offering and disclosure materials delivered by
or on behalf of a Credit Party to the Lenders 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.
6.24 Subordination Provisions. The subordination provisions contained in
------------------------
the Senior Subordinated Note Documents and in any Permitted Seller Debt are
enforceable against the issuer of the respective security and the holders
thereof, and the Loans and all other Obligations entitled to the benefits of any
Loan Document and any related guaranty are within the definitions of "Senior
Indebtedness" included in such provisions.
6.25 Transaction Agreements. The agreements in connection with the
----------------------
Transaction ("Transaction Agreements") are in full force and effect as of the
----------------------
date hereof, has not been terminated,
64
<PAGE>
rescinded or withdrawn, and no material portion thereof has been amended or
waived by any party. All requisite approvals by governmental authorities and
regulatory bodies having jurisdiction over a Credit Party and other Persons
referenced therein, with respect to the transactions contemplated by the
Transaction Agreements, have been obtained, and no such approvals impose any
conditions to the consummation of the transactions contemplated by the
Transaction Agreements or to the conduct in any material respect by a Credit
Party and its Subsidiaries of its business thereafter. To the best of each
Credit Party's knowledge, none of any Person's representations or warranties in
the Transaction Agreements contain any untrue statement of a material fact or
omit any fact necessary to make the facts therein not misleading.
6.26 Merger. The Merger Documents are in form and substance satisfactory
------
for effecting the Merger pursuant to such agreements under the laws of the State
of Illinois; the Merger Documents have been filed with the Secretary of State in
the State of Illinois; and the Merger has been effected and are valid in
accordance with the terms thereof and the laws of the State of Illinois.
6.27 Year 2000 Compliance. On the basis of an inquiry made of each Credit
--------------------
Party and each of its Subsidiaries, each Credit Party to the best of their
knowledge reasonably believes that the "Year 2000 problem" (that is, the risk
that computer applications used by the Credit Parties and their Subsidiaries may
be unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999) will not result in
a Material Adverse Effect.
ARTICLE VII
AFFIRMATIVE COVENANTS
---------------------
So long as any Lender shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Lenders waive compliance in
writing:
7.01 Financial Statements. The Company shall deliver to the Agent, in
--------------------
form and detail satisfactory to the Agent and the Majority Lenders, with
sufficient copies for the Agent and each Lender:
(a) as soon as available, but not later than 90 days after the end of
each fiscal year (commencing with the fiscal year ended December 31, 1998),
to the extent prepared to comply with SEC requirements, a copy of the SEC
Form 10-K's filed by the Company with the SEC for such fiscal year, or, if
no such Form 10-K was so filed by the Company for such fiscal year, a copy
of the audited consolidated and unaudited consolidating balance sheet of
the Company and its Subsidiaries as at the end of such year and the related
consolidated and consolidating 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 Price Waterhouse LLP or another nationally-
recognized
65
<PAGE>
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. 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; and
(b) as soon as available, but not later than 45 days after the end of
each fiscal quarter of each fiscal year (commencing with the fiscal quarter
ended March 31, 1998), to the extent prepared to comply with SEC
requirements, a copy of the SEC Form 10-Q's filed by the Company with the
SEC for such fiscal quarter, together with a copy of the unaudited
consolidated and consolidating balance sheet of the Company and its
Subsidiaries as of the end of such quarter and the related consolidated and
consolidating statements of income, 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 the Subsidiaries.
7.02 Certificates; Other Information. The Company shall furnish to the
-------------------------------
Agent, with sufficient copies for each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 7.01(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 Sections 7.01(a) and (b), a Compliance Certificate executed
---------------- ---
by a Responsible Officer;
(c) promptly, 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;
(d) as soon as available, but in any event not later than 45 days
after the start of each fiscal year, a copy of the plan and forecast
(including a projected consolidated and consolidating balance sheet, income
statement and cash flow statement) of the Company and its Subsidiaries for
the next fiscal year;
(e) within 10 days prior to the expiry date of any existing insurance
policy, a new certificate satisfying the requirements of Section
5.01(g)(vi) with respect to each such policy; and
(f) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the
Agent, at the request of any Lender, may from time to time request.
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7.03 Notices. Each Credit Party shall promptly notify the Agent and each
-------
Lender:
(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 a Credit
Party or any of its Subsidiaries; (ii) any dispute, litigation,
investigation, proceeding or suspension between a Credit Party or any of
its Subsidiaries and any Governmental Authority; or (iii) the commencement
of, or any material development in, any litigation or proceeding affecting
a Credit Party or any of its Subsidiaries; including pursuant to any
applicable Environmental Laws;
(c) of the occurrence of any of the following events affecting a
Credit Party or any ERISA Affiliate (but in no event more than 10 days
after such event), and deliver to the Agent and each Lender 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:
(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 a Credit Party 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 a Credit Party or any of its consolidated
Subsidiaries; and
(e) upon the request from time to time of the Agent, the Swap
Termination Values, together with a description of the method by which such
values were determined, relating to any then-outstanding Swap Contracts to
which a Credit Party or any of its Subsidiaries is party.
Each notice under this Section shall be accompanied by a written by a
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the affected Person proposes to
take with respect thereto and at what time. Each notice under Section 7.03(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.
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7.04 Preservation of Corporate Existence, Etc. Each Credit Party
----------------------------------------
shall, and shall cause each of its Subsidiaries to:
(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 material
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business,
except in connection with transactions permitted by Section 8.03 and sales
------------
of assets permitted by Section 8.02;
------------
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) 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.
7.05 Maintenance of Property. Each Credit Party shall maintain, and
-----------------------
shall cause each of its Subsidiaries 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.
7.06 Insurance. Each Credit Party shall maintain, and shall cause each
---------
of its Subsidiaries to maintain or be covered by, with financially sound and
reputable independent insurers, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons.
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<PAGE>
7.07 Payment of Obligations. Each Credit Party shall, and shall cause
----------------------
each of its Subsidiaries to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including:
(a) all 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 such Credit Party or such
Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
(other than a Permitted Lien) upon its property; and
(c) all indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.
7.08 Compliance with Laws. Each Credit Party shall comply, and shall
--------------------
cause each of its Subsidiaries to comply, in all material respects 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.
7.09 Compliance with ERISA. Each Credit Party 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 unless such Plan is
terminated; and (c) make all required contributions to any Plan subject to
Section 412 of the Code.
7.10 Inspection of Property and Books and Records. Each Credit Party
--------------------------------------------
shall maintain and shall cause each of its Subsidiaries 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 such Person. Each
Credit Party shall permit, and shall cause each of its Subsidiaries to permit,
representatives and independent contractors of the Agent or any Lender (if
accompanied by the Agent) 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, all at the expense of the Company
and 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 Agent or any Lender may do any of
- -------
the foregoing at the expense of the Company at any time during normal business
hours and without advance notice.
7.11 Environmental Laws. Each Credit Party shall, and shall cause each
------------------
of its Subsidiaries to, conduct its operations and keep and maintain its
property in compliance in all material respects with all Environmental Laws.
7.12 Use of Proceeds. The Company shall use the proceeds of the
---------------
Revolving Loans for working capital and other general corporate purposes (other
than for the purpose of financing a
69
<PAGE>
hostile Acquisition), the refinancing or prepayment of certain Indebtedness on
the Closing Date in connection with the Transaction and the payment of fees and
expenses relating thereto, in each case not in contravention of any Requirement
of Law or of any Loan Document. Each L/C Borrower shall use the proceeds of L/C
Loans solely for the purpose of financing a reimbursement obligation owing to
the Issuing Bank in connection with a drawing under a Letter of Credit.
7.13 Solvency. The Company and its Subsidiaries, on a consolidated
--------
basis, shall at all times be Solvent.
7.14 Further Assurances.
------------------
(a) Each Credit Party shall ensure that all written information,
exhibits and reports furnished to the Agent or the Lenders do not and will not
contain any untrue statement of a material fact and do not and will not omit to
state any material fact or any fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made, and will
promptly disclose to the Agent and the Lenders and correct any defect or error
that may be discovered therein or in any Loan Document or in the execution,
acknowledgment or recordation thereof.
(b) Promptly upon the written request of the Agent or the Majority
Lenders, each Credit Party shall (and shall cause any of its Subsidiaries to)
do, execute, acknowledge, deliver, record, re-record, file, re-file, register
and re-register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, leasehold mortgages, landlord waivers, assignments,
estoppel certificates, financing statements and continuations thereof,
termination statements, notices of assignment, transfers, certificates,
assurances and other instruments the Agent or such Lenders, as the case may be,
may reasonably require from time to time in order (i) to carry out more
effectively the purposes of this Agreement or any other Loan Document, (ii) to
subject any of the properties, rights or interests covered by any of the
Collateral Documents to the Liens created by any of the Collateral Documents,
(iii) to perfect and maintain the validity, effectiveness and priority of any of
the Collateral Documents and the Liens intended to be created thereby, (iv) to
grant to the Agent, on behalf of the Lenders, mortgages and leasehold mortgages
conveying a first priority lien and security interest (subject to Permitted
Liens) on all owned and leased real property interests of the Credit Parties and
their Subsidiaries, and to further provide title insurance and surveys (all at
the Company's cost and expense) to insure such mortgages and leasehold
mortgages, and all such documents and agreements shall be in form and substance
acceptable to the Agent, and (v) to better assure, convey, grant, assign,
transfer, preserve, protect and confirm to the Agent and the Lenders the rights
granted or now or hereafter intended to be granted to the Agent and the Lenders
under any Loan Document or under any other document executed in connection
therewith.
7.15 Foreign Subsidiaries Security. If following a change in the
-----------------------------
relevant sections of the Code, the regulations and rules promulgated thereunder
and any rulings issued thereunder and at the request of the Agent or the
Majority Lenders, counsel for the Company acceptable to the Agent and the
Majority Lenders does not within 30 days after such request deliver evidence
satisfactory to the Agent, with respect to any Foreign Subsidiary which is a
Wholly-Owned Subsidiary of the Company, that (i) a pledge of 66-2/3% or more of
the total combined voting power of all classes of capital stock of such Foreign
Subsidiary entitled to vote, (ii) the entering into by such Foreign
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<PAGE>
Subsidiary of a guaranty in substantially the form of the Guaranty or (iii) the
entering into by such Foreign Subsidiary of a security agreement in
substantially the form of the Security Agreement, in either case would cause the
earnings of such Foreign Subsidiary to be treated as a deemed dividend to such
Foreign Subsidiary's United States parent or would otherwise violate a material
applicable law, then in the case of a failure to deliver the evidence described
in clause (i) above, that portion of such Foreign Subsidiary's outstanding
----------
capital stock not theretofore pledged pursuant to the Pledge Agreement shall be
pledged to the Agent for the benefit of the Lenders pursuant to the Pledge
Agreement (or another pledge agreement in substantially similar form, if
needed), (ii) in the case of a failure to deliver the evidence described in
clause (ii) above, such Foreign Subsidiary shall execute and deliver a guaranty
- -----------
of the Obligations of the Company under the Loan Documents and (iii) in the case
of a failure to deliver the evidence described in clause (iii) above, such
------------
Foreign Subsidiary shall execute and deliver a security agreement granting the
Agent for the benefit of the Lenders a security interest in all of such Foreign
Subsidiary's assets, in each case with all documents delivered pursuant to this
Section 7.15 to be in form and substance satisfactory to the Agent and the
- ------------
Majority Lenders.
7.16 Klearfold IRB Letter of Credit. Within ninety (90) days (or such
------------------------------
longer period as is reasonably acceptable to Agent) after the Closing Date,
Klearfold shall have taken all steps, received all necessary consents and legal
opinions and received back the original copy of the Mellon Letter of Credit
stamped canceled such that the Klearfold IRB Letter of Credit in substantially
the form of Exhibit H-2 shall have been substituted for the Mellon Letter of
-----------
Credit, in accordance with the Klearfold Indenture.
ARTICLE VIII
NEGATIVE COVENANTS
------------------
So long as any Lender shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Lenders waive compliance in
writing:
8.01 Limitation on Liens. No Credit Party shall, nor shall suffer or
-------------------
permit any of its Subsidiaries 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 a Credit Party or any of its
Subsidiaries on the Closing Date and set forth in Schedule 8.01 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
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permitted by Section 7.07, provided that no notice of lien has been filed
------------
or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of
business which are not delinquent or remain payable without penalty or
which are being contested in good faith and by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale of
the property subject thereto;
(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 a Credit Party or its Subsidiaries
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 would not (even if
enforced) cause a Material Adverse Effect;
(g) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all
such liens in the aggregate at any time outstanding for the Credit Parties
and their Subsidiaries does not exceed $375,000;
(h) 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 a Credit Party and
its Subsidiaries;
(i) 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 do not in the aggregate at any time
outstanding exceed $750,000;
(j) purchase money security interests on any property acquired or held
by a Credit Party or its Subsidiaries in the ordinary course of business,
securing Indebtedness incurred or assumed for the purpose of financing all
or any part of the cost of acquiring such property; provided that (i) any
-------- ----
such Lien attaches to such property concurrently with or within 20 days
after the acquisition thereof, (ii) such Lien attaches solely to the
property so acquired in such transaction and (iii) the principal amount of
the Indebtedness secured by any and all such purchase money security
interests shall not at any time exceed, together with Indebtedness
permitted under Section 8.05(i), $750,000;
---------------
(k) Liens securing Capital Lease Obligations on assets subject to such
Capital Leases, provided that such Capital Leases are otherwise permitted
under Section 8.10(a) or (c); and
----------------------
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<PAGE>
(l) 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 a Credit Party in excess of those set forth by
regulations promulgated by the FRB, and (ii) such deposit account is not
intended by a Credit Party or any of its Subsidiaries to provide collateral
to the depository institution.
8.02 Disposition of Assets. No Credit Party shall, nor shall suffer or
---------------------
permit any of its Subsidiaries to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property or assets (including accounts and notes receivable,
with or without recourse) or enter into any agreement to do any of the
foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus equipment,
all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to
the purchase price of such replacement equipment;
(c) dispositions of inventory and/or equipment by a Credit Party or
any Subsidiary Guarantor to a Credit Party or any Subsidiary Guarantor
pursuant to reasonable and ordinary course business requirements; and
(d) any Subsidiary (other than a Credit Party) may sell all or
substantially all of its assets (upon voluntary liquidation or otherwise),
to a Credit Party or another Wholly-Owned Subsidiary that is a Domestic
Subsidiary;
; provided, however, in no event will any such asset sales, leases, conveyances
-------- -------
or dispositions be permitted under this Section 8.02 to the extent they would
------------
result in or require the Company to make an offer to or otherwise prepay or
repay any of the Subordinated Debt.
8.03 Acquisitions, Consolidations and Mergers. No Credit Party shall,
----------------------------------------
nor shall suffer or permit any of its Subsidiaries to, enter into any
Acquisition, merge, consolidate with or into, or acquire (whether in one
transaction or in a series of transactions) any Person or all or substantially
all of its assets of any Person, except:
(a) any Domestic Subsidiary may merge with a Credit Party (provided
--------
that such Credit Party shall be the continuing or surviving corporation),
or with any one or more Subsidiaries, provided that if any transaction
--------
shall be between a Domestic Subsidiary and a Wholly-Owned Subsidiary that
is a Domestic Subsidiary, the Wholly-Owned Subsidiary that is a Domestic
Subsidiary shall be the continuing or surviving corporation;
(b) a Credit Party may enter into an Acquisition provided that (i) any
such Acquisition (whether in one transaction or a series of related
transactions) the aggregate consideration of which exceeds $10,000,000
shall not be permitted without the prior written
73
<PAGE>
approval of the Majority Lenders, (ii) no Default or Event of Default is in
existence both before and after giving effect to such Acquisition (and/or
as set forth in clause (vi) below, the creation of a new Subsidiary),
-----------
(iii) such Acquisition is undertaken in all material respects in accordance
with all applicable Requirements of Law, (iv) the target business of, or
the assets subject to, such Acquisition are shown in good faith by the
Company to have generated positive EBITDA on a pro forma basis for the
twelve month period immediately preceding the date of such Acquisition
based on assumptions showing cost savings reasonably acceptable to the
Agent, (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, (vi) such Acquisition shall be structured as an asset
acquisition by a Credit Party or the purchase of all of the capital stock
of the target of such Acquisition by a Credit Party, provided that such
target will be merged with and into a Credit Party on the date of the
Acquisition or shall execute a counterpart of and become a party to a
Guaranty (pursuant to documentation reasonably acceptable to the Agent),
(vii) the business being acquired is otherwise permitted by Section 8.13
------------
and (viii) the Agent (on behalf of the Lenders) will be granted a first
priority perfected security interest (subject to Permitted Liens) in any
assets being so acquired and any capital stock if a new Subsidiary is being
formed;
(c) any Foreign Subsidiary may be merged with and into, or be
dissolved or liquidated into, or transfer any of its assets to, any Foreign
Subsidiary so long as in each case at least 65% of the total combined
voting power of all classes of capital stock of all first-tier Foreign
Subsidiaries are pledged pursuant to the relevant Pledge Agreement;
(d) the assets of any Foreign Subsidiary may be transferred to a
Credit Party or any of its Domestic Subsidiaries, and any Foreign
Subsidiary may be merged with and into, or be dissolved or liquidated into,
a Credit Party or any of its Domestic Subsidiaries so long as such Credit
Party or such Domestic Subsidiary is the surviving corporation of any such
merger, dissolution or liquidation; and
(e) the Merger shall be permitted on the Closing Date.
8.04 Loans and Investments. No Credit Party shall purchase or acquire,
---------------------
nor suffer or permit any of its Subsidiaries 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 a Credit Party (together, "Investments"), except for:
-----------
(a) Investments held by a Credit Party or any of its Subsidiaries in
the form of Cash Equivalents;
(b) 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;
(c) Investments in Joint Ventures permitted by Section 8.09 and
------------
Investments constituting intercompany loans permitted by Section 8.21;
------------
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<PAGE>
(d) Investments, subject to Section 8.09, incurred in order to
------------
consummate Acquisitions otherwise permitted herein;
(e) Investments constituting Permitted Swap Obligations or payments or
advances under Swap Contracts relating to Permitted Swap Obligations;
(f) Investments existing as of the Closing Date and listed on Schedule
--------
8.04;
----
(g) shares of stock, obligations or other securities received in
settlement of claims arising in the ordinary course of business;
(h) advances or loans to officers, directors, and employees of a
Credit Party or any of its Subsidiaries in an amount not to exceed
$1,750,000 in the aggregate for all such loans and advances to all such
Persons;
(i) advances to employees of a Credit Party or any of its Subsidiaries
in respect of reasonable relocation expenses incurred by such employees;
(j) advances to employees of a Credit Party or any of its Subsidiaries
in the nature of advances against anticipated sales commissions and
advances for travel and/or other ordinary business expenses, provided that
the aggregate principal amount of all such employee advances outstanding at
any time shall not exceed $75,000; and
(k) other Investments permitted by this Agreement (but not otherwise
permitted under this Section 8.04) not to exceed $1,000,000 in the
------------
aggregate for all such Investments made in any fiscal year.
8.05 Limitation on Indebtedness. No Credit Party shall, nor shall
--------------------------
suffer or permit any of its Subsidiaries to, create, incur, assume, suffer to
exist, or otherwise become or remain directly or indirectly liable with respect
to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 8.08 or of intercompany loans permitted under Section
------------ -------
8.21;
----
(c) Indebtedness (other than evidenced by the Mellon Letter of Credit)
existing on the Closing Date and set forth in Schedule 8.05;
-------------
(d) Indebtedness evidenced by the Mellon Letter of Credit which is
otherwise permitted to be outstanding in accordance with Section 7.16;
------------
(e) Indebtedness incurred in connection with leases permitted pursuant
to Section 8.10;
------------
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<PAGE>
(f) $100,000,000 principal amount of Indebtedness of the Company
evidenced by the Senior Subordinated Note Documents;
(g) Indebtedness of AGI and Klearfold with respect to the IRB Debt
with a principal amount of $11,640,000;
(h) unsecured Indebtedness incurred in connection with Acquisitions
permitted under Section 8.03 hereof, provided such indebtedness is incurred
------------
pursuant to promissory notes and other agreements containing terms and
conditions satisfactory to the Agent and fully subordinated to the prior
payment in full in cash of the Loans and the other Obligations on terms and
conditions satisfactory to the Agent (any such Indebtedness, "Permitted
---------
Seller Debt") including, without limitation, terms related to aggregate
-----------
outstanding principal amounts, interest rates and payment terms acceptable
to Agent; and
(i) other Indebtedness in addition to Indebtedness permitted above in
an aggregate amount outstanding not to exceed $3,500,000 (including
Indebtedness secured by Liens permitted by Section 8.01(i) and (j));
--------------- ---
provided, however, that in no event will any Credit Party or any of its
- -------- -------
Subsidiaries incur more than $3,500,000 of Indebtedness under Section 4.09(x) of
the Senior Subordinated Note Indenture as in effect on the Closing Date
(whether or not permitted by this Section 8.05) except Indebtedness incurred
------------
pursuant to this Agreement.
8.06 Transactions with Affiliates. Except as set forth on Schedule
---------------------------- --------
8.06, no Credit Party shall, nor shall suffer or permit any of its Subsidiaries
- ----
to, enter into any transaction with any Affiliate (other than a Wholly-Owned
Subsidiary) of a Credit Party, except upon fair and reasonable terms no less
favorable to such Credit Party or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of such
Credit Party or such Subsidiary.
8.07 Use of Proceeds. No Credit Party shall, nor shall suffer or
---------------
permit any of its Subsidiaries to, use any portion of the Loan proceeds or any
Letter of Credit, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance indebtedness of the Company or others
incurred to purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.
8.08 Contingent Obligations. No Credit Party shall, nor shall suffer
----------------------
or permit any of its Subsidiaries 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) Unsecured and subordinated guarantees by a Subsidiary of the
Company of the Company's obligations with respect to the Senior
Subordinated Notes incurred pursuant to and subject to the subordination
terms of the Senior Subordinated Note Indenture;
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<PAGE>
(d) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 8.08; and
-------------
(e) Guarantees by the Credit Parties and their subsidiaries of the
Obligations under this Agreement.
8.09 Joint Ventures; Foreign Assets; New Subsidiaries. No Credit Party
------------------------------------------------
shall, nor shall suffer or permit any of its Subsidiaries to, (a) enter into
Joint Ventures requiring an aggregate investment for all such joint ventures
(whether in cash, property, or contributions of personnel or management or
otherwise) in excess of $1,000,000, (b) permit any of their assets or properties
to be maintained outside the United States of America except that KF-
International, Inc. may maintain up to $1,000,000 of assets outside the United
States of America and Klearfold may maintain up to $500,000 of inventory assets
in Puerto Rico or (c) create or acquire any Subsidiary except in connection with
a transaction permitted by clause (a) above or in connection with an Acquisition
permitted by Section 8.03(b).
---------------
8.10 Lease Obligations. No Credit Party shall, nor shall suffer or
-----------------
permit any of its Subsidiaries to, create or suffer to exist any obligations for
the payment of rent for any property under lease or agreement to lease, except
for:
(a) leases of a Credit Party and of its Subsidiaries in existence on
the Closing Date and any renewal, extension or refinancing thereof;
(b) operating leases entered into by a Credit Party or any of its
Subsidiaries after the Closing Date in the ordinary course of business;
provided that the aggregate annual rental payments for all such operating
--------
leases shall not exceed in any fiscal year $750,000; and
(c) Capital Leases other than those permitted under clause (a) of this
----------
Section, entered into by a Credit Party or any of its Subsidiaries after
the Closing Date to finance the acquisition of equipment; provided that the
--------
aggregate Capital Lease Obligations for all such Capital Leases shall not
at any time exceed $750,000.
8.11 Restricted Payments; No Permitted Restrictions for Subsidiaries.
---------------------------------------------------------------
(a) No Credit Party shall, nor shall suffer or permit any of its Subsidiaries
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 (i) any Wholly-
Owned Subsidiary may declare and make dividend payments or other distributions
to a Credit Party or a Wholly-Owned Subsidiary of a Credit Party and (ii) AGI
may dividend up to $22,500,000 to its shareholders existing immediately prior to
closing as contemplated as part of the Merger on the Closing Date and (iii) so
long as no Default or Event of Default then exists or would result after giving
effect thereto and such Restricted Payment is permitted under Section 4.07 of
------------
the Senior Subordinated Note Indenture (as in effect on the Closing Date), the
Company may purchase, redeem, acquire or retire any common stock of the Company
(or options in respect thereof) held by any member of the Company's management
(who were employed full time by the Company immediately prior to such
transaction) pursuant to any management equity
77
<PAGE>
subscription agreement, stock option agreement or employment agreement
("Management Equity Redemption") provided that such Management Equity Redemption
----------------------------
together with the aggregate amount of all other Management Equity Redemptions
made by the Company after the Closing Date is less than the sum, without
duplication, of (I) 50% of the Net Income of the Company for the period (taken
as one accounting period) from the beginning of the first fiscal quarter
commencing after the Closing Date to the end of the Company's most recently
ended fiscal quarter for which financial statements in accordance with Section
-------
7.01 are available and have been delivered to the Agent at the time of such
- ----
Management Equity Redemptions (or, if such Net Income for such period is a
deficit, less 100% of such deficit) plus (II) 100% of the aggregate Net Proceeds
----
received by the Company from the sale or issuance of its common stock after the
Closing Date to the extent such Net Proceeds have not already been counted or
used under Section 8.20(b) to permit the prepayment of the Subordinated Debt;
---------------
provided, that the restrictions in clause (iii) above will not prohibit any
- -------- ------------
Management Equity Redemptions so long as (A) the aggregate amount paid for all
such Management Equity Redemptions shall not exceed $2,500,000 in any twelve-
month period or (B) such Management Equity Redemptions are funded with the net
cash proceeds received by the Company from any key man life insurance or
disability insurance policies purchased by the Company to specifically finance
such Management Equity Redemption and no Default or Event of Default shall have
occurred and be continuing immediately after each such transaction.
(b) The Company shall not permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any such Subsidiary to (I) pay
dividends or make any other distributions to the Company or any of its other
Subsidiaries (1) on its capital stock or (2) with respect to any other interest
or participation in, or measured by, its profits, (II) pay any indebtedness owed
to the Company or any of its other Subsidiaries, (III) make loans or advances to
the Company or any of its other Subsidiaries, or (IV) transfer any of its
properties or assets to the Company or any of its other Subsidiaries
(collectively, "Encumbrances"), except for such Encumbrances existing under or
------------
by reason of (1) this Agreement, (2) applicable law, (3) customary non-
assignment provisions in leases entered into in the ordinary course of business
and consistent with past practices, or (4) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in paragraph (b)(IV) above on the property so acquired.
-----------------
8.12 ERISA. No Credit Party shall, nor shall suffer or permit any of
-----
its Subsidiaries to, (i) terminate any Plan subject to Title IV of ERISA so as
to result in any material (in the opinion of the Majority Lenders) liability to
a Credit Party or any ERISA Affiliate, (ii) permit to exist any ERISA Event or
any other event or condition, which presents the risk of a material (in the
opinion of the Majority Lenders) liability to any member of the Controlled
Group, (iii) make a complete or partial withdrawal (within the meaning of ERISA
Section 4201) from any Multiemployer Plan so as to result in any material (in
the opinion of the Majority Lenders) liability to a Credit Party or any ERISA
Affiliate, (iv) enter into any new Plan or modify any existing Plan so as to
increase its obligations thereunder which could result in any material (in the
opinion of the Majority Lenders) liability to any member of the Controlled
Group, or (v) permit the present value of all nonforfeitable accrued benefits
under any Plan (using the actuarial assumptions utilized by the PBGC upon
termination of a Plan) materially (in the opinion of the Majority Lenders) to
exceed the fair market value of Plan assets allocable to such benefits, all
determined as of the most recent valuation date for each such Plan.
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<PAGE>
8.13 Change in Business. No Credit Party shall, nor shall suffer or
------------------
permit any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business carried on by a Credit
Party and its Subsidiaries on the date hereof and lines of business reasonably
ancillary or complimentary to such current lines of business.
8.14 Accounting Changes. No Credit Party shall, nor shall suffer or
------------------
permit any of its Subsidiaries to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year or fiscal quarter of such Person.
8.15 Leverage Ratio. The Company shall not permit, as of the last day
--------------
of each calendar quarter during the periods listed below, its Leverage Ratio at
such time for the twelve month period (taken as one accounting period) then
ended, to be greater than the ratio set forth below opposite the respective
period in which the determination is being made:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including the Closing Date through 6.00:1.0
and including December 31, 1998
From and including January 1, 1999 through 5.50:1.0
and including December 31, 1999
From and including January 1, 2000 through 5.00:1.0
and including December 31, 2000
Thereafter 4.50:1.0
</TABLE>
8.16 Senior Leverage Ratio. The Company shall not permit, as of the
---------------------
last day of each calendar quarter during the periods listed below, its Senior
Leverage Ratio at such time for the twelve month period (taken as one accounting
period) then ended, to be greater than the ratio set forth below opposite the
respective period in which the determination is being made:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including the Closing Date 3.50:1.00
through and including December 31, 1998
From and including January 1, 1999 through and 3.00:1.0
including December 31, 1999
From and including January 1, 2000 through and 2.50:1.0
including December 31, 2000
Thereafter 2.00:1.0
</TABLE>
79
<PAGE>
8.17 Interest Coverage Ratio. The Company shall not permit, as of the
-----------------------
last day of each calendar quarter during the periods listed below, its Interest
Coverage Ratio at such time for the twelve month period (taken as one accounting
period) then ended, to be less than the ratio set forth below opposite the
respective period in which the determination is being made:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including the Closing Date 1.75:1.0
through and including
December 31, 1998
Thereafter 2.00:1.0
</TABLE>
8.18 Net Assets Ratio. The Company shall not permit, at any time
----------------
during a period listed below, its Net Assets Ratio to be less than the ratio set
forth below opposite the respective period in which the determination is being
made:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including the Closing Date through 1.75:1.0
and including December 31, 1998
From and including January 1, 1999 through and 2.00:1.0
including December 31, 2000
Thereafter 2.50:1.0
</TABLE>
8.19 Minimum Net Worth. The Company shall not permit its consolidated
-----------------
Net Worth at any time to be less than an amount equal to the sum of (a)
$3,500,000 plus (b) 50% of the Company's positive Net Income, if any, for each
----
fiscal quarter ending after the date hereof and prior to the date of
determination plus (c) an amount equal to 75% of the cash and non-cash proceeds
----
of any equity securities issued by the Company after the Closing Date and prior
to the date of determination.
8.20 Amendments to Charter Documents, Subordinated Debt and IRB Debt;
-----------------------------------------------------------------
No Preferred Stock. No Credit Party shall, nor shall it cause or permit any of
- ------------------
its Subsidiaries to do any of the following:
(A) change or amend the terms of any Subordinated Debt or IRB Debt (or
any indenture, note or other agreement in connection therewith, including,
without limitation, the Senior Subordinated Note Indenture) if the effect
of such amendment is to: (1) increase the interest rate on such
Subordinated Debt or IRB Debt; (2) change the dates upon which
80
<PAGE>
payments of principal or interest are due on such Subordinated Debt or IRB
Debt other than to extend such dates; (3) change any default or event of
default relating thereto other than to delete or make less restrictive any
default provision therein, or add any covenant with respect to such
Subordinated Debt or IRB Debt; (4) change the redemption or prepayment
provisions of such Subordinated Debt or IRB Debt other than to extend the
dates therefor or to reduce the premiums payable in connection therewith;
(5) grant any security or Lien to secure such Subordinated Debt or IRB Debt
other than the pledge of the Klearfold Bonds or the AGI Bonds or the
delivery of a Letter of Credit by Issuing Bank as security for the IRB
Debt; (6) change any subordination provisions, terms or conditions; or (7)
change or amend any other term if such change or amendment would materially
increase the obligations of the obligor or confer additional material
rights to the holder of such Subordinated Debt or IRB Debt in a manner
adverse to a Credit Party or any of its Subsidiaries, the Agent or any
Lender;
(B) prepay, defease or purchase any Subordinated Debt except (1) for
entering into the Exchange Offer with respect to the Senior Subordinated
Notes whereby the Senior Subordinated Notes are exchanged for "Exchange
Notes" (as defined in the Senior Subordinated Note Indenture) and provided
that the terms of the Exchange Notes are identical to those of the Senior
Subordinated Notes except that the Exchange Notes may not contain identical
transfer restrictions, (2) if a "Change of Control" as specified in the
Senior Subordinated Note Indenture with respect to the Senior Subordinated
Notes as in effect on the Closing Date shall occur, or if the Company or
its Subsidiaries shall have received "Excess Proceeds" in an amount so as
to require it to make an "Asset Sale Offer" (as such terms are defined in
the Senior Subordinated Note Indenture), then in any such case the Company
may prepay such Senior Subordinated Notes if required only after payment in
full of the Obligations hereunder (whether or not then due and owing) and
the termination of the Commitments and financing arrangements contemplated
hereby, (3) so long as no Default or Event of Default then exists or would
result after giving effect thereto, the Company may repay (but not prepay)
the Permitted Seller Debt in accordance with the stated repayment terms for
such Permitted Seller Debt as approved under Section 8.05(h), and (4) the
---------------
Company may apply the Net Proceeds (in excess of amounts required under
clause (ii) below) it receives in cash after the Closing Date upon any sale
-----------
of any common stock equity securities of the Company issued in a Qualified
Public Offering to the prepayment or repurchase of all or part of the
Senior Subordinated Notes so long as (i) no Event of Default or Default has
occurred and is continuing or would result after giving effect thereto and
(ii) the Company has first repaid in full all outstanding Revolving Loans
(without any requirement that the Commitments be reduced in like amount)
unless otherwise consented to by the Agent and the Majority Lenders;
(C) change the mode of interest or interest rate period in effect on
the Closing Date with respect to any IRB Debt; or
(D) make any amendment or modification to any terms or provisions of
its Certificate or Articles of Incorporation or bylaws which is materially
adverse to the Agent or the Lenders or issue any preferred stock.
81
<PAGE>
8.21 Intercompany Loans. In addition to the other restrictions
------------------
contained in this Article VIII, each Credit Party may make loans to its
------------
Subsidiaries (and such Persons may incur the Indebtedness related thereto and
repay such Indebtedness) after the Closing Date subject to the following terms
and conditions:
(i) such loans are unsecured and available on a revolving
credit basis, evidenced by a promissory note and payable on demand, and
each Credit Party agrees that all such Indebtedness shall be subordinated
in right of payment to the final payment in full in cash of the Obligations
at all times after the occurrence of any Event of Default;
(ii) no Default or Event of Default shall then exist and be
continuing or would result after giving effect thereto, and after giving
effect to each such intercompany loan, both the Credit Party making such
loan and the recipient thereof shall be Solvent;
(iii) each recipient of such a loan shall use the proceeds
thereof solely for its own working capital requirements arising in the
ordinary course of its business;
(iv) the Company shall deliver to the Agent at the end of each
fiscal quarter a current list of intercompany loans outstanding; and
(v) in no event shall the aggregate amount of such intercompany
Indebtedness owing by (or to) the Subsidiaries other than the Credit
Parties to (or from) the Credit Parties exceed $1,000,000.
ARTICLE IX
EVENTS OF DEFAULT
-----------------
9.01 Event of Default. Any of the following shall constitute an "Event
---------------- -----
of Default":
- ----------
(a) Non-Payment. Any Credit Party fails to pay, (i) when and as
-----------
required to be paid herein, any amount of principal of any Loan or of any L/C
Obligation, or (ii) within five 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 a
--------------------------
Credit Party or any of its Subsidiaries made or deemed made herein, in any other
Loan Document, or which is contained in any certificate, document or financial
or other statement by a Credit Party or any of its Subsidiaries, 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. Any Credit Party fails to perform or observe
-----------------
any term, covenant or agreement contained in any of Section 7.01, 7.02, 7.03,
------------ ---- ----
7.06 or 7.16 or in Article VIII; or
- ---- ---- ------------
82
<PAGE>
(d) Other Defaults. Any Credit Party or any of its Subsidiaries
--------------
party thereto 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 (i) the date upon which
a Responsible Officer knew or reasonably should have known of such failure or
(ii) the date upon which written notice thereof is given to the Company by the
Agent or any Lender; or
(e) Cross-Default. (i) Any Credit Party or any of its Subsidiaries
-------------
(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 $3,000,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any, specified in the
relevant document on the date of such failure; 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, and such failure continues after the
applicable grace or notice period, if any, specified in the relevant document on
the date of such failure 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 such
Credit Party or such Subsidiary as a result thereof is greater than $3,000,000;
or
(f) Insolvency; Voluntary Proceedings. Any Credit Party or any of its
---------------------------------
Subsidiaries (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 any Credit Party or any of its
Subsidiaries, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of such Person'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) any Credit Party or any of its Subsidiaries 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 ordered in any Insolvency
Proceeding; or (iii) any Credit Party or any of its Subsidiaries acquiesces in
the appointment of a receiver, trustee,
83
<PAGE>
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
(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 a Credit Party under Title IV of ERISA to the Pension
Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$375,000 the aggregate amount of Unfunded Pension Liability among all Pension
Plans at any time exceeds $375,000; or (iii) any Credit Party 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 $375,000; or
(i) Monetary Judgments. One or more non-interlocutory judgments, non-
------------------
interlocutory orders, decrees or arbitration awards is entered against any
Credit Party or any of its Subsidiaries 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 $1,500,000 or more, and the same shall
remain unsatisfied, unvacated or unstayed pending appeal for a period of 30 days
after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
----------------------
decree is entered against any Credit Party or any of its Subsidiaries which does
or would reasonably be expected to have a Material Adverse Effect, and there
shall be any period of 10 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; or
(k) Collateral.
----------
(i) any provision of any Collateral Document shall for any
reason cease to be valid and binding on or enforceable against any Credit
Party or any of its Subsidiaries party thereto or any such Person shall so
state in writing or bring an action to limit its obligations or liabilities
thereunder; or
(ii) any Collateral Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest in
the Collateral purported to be covered thereby or such security interest
shall for any reason cease to be a perfected and first priority security
interest subject only to Permitted Liens; or
(l) Change of Control. There occurs any Change of Control; or
-----------------
(m) Guaranty Defaults. Any Person party thereto fails in any material
-----------------
respect to perform or observe any term, covenant or agreement in any Guaranty or
any Guaranty is for any reason partially (including with respect to future
advances) or wholly revoked or invalidated, or otherwise ceases to be in full
force and effect, or any Person party thereto or any other Person contests in
any manner the validity or enforceability thereof or denies that it has any
further liability or obligation thereunder; or any event described at clauses
-------
(f) or (g) of this Section occurs with respect to such Person party to a
- --- ---
Guaranty; or
84
<PAGE>
(n) Invalidity of Subordination Provisions. The subordination
--------------------------------------
provisions of any Subordinated Debt is for any reason revoked or invalidated,
or otherwise ceases to be in full force and effect or enforceable or any
noteholder or trustee with respect thereto denies that it has any further
liability or obligation thereunder, or the Loans and the other Obligations
hereunder entitled to receive the benefits of any Loan Document are for any
reason subordinated or do not have the priority contemplated by this Agreement
or such subordination provisions; or
(o) Cross Default to IRBs. Any default, violation, material breach or
---------------------
tax event (which causes or requires a redemption of the AGI Bonds or Klearfold
Bonds) of any kind shall occur under any AGI Bond Documents or Klearfold Bond
Documents resulting in or permitting a redemption of the AGI Bonds or the
Klearfold Bonds, or an acceleration of the loans with respect thereto.
9.02 Remedies. (a) If any Event of Default occurs, the Agent shall,
--------
at the request of, or may, with the consent of, the Majority Lenders:
(i) declare the commitment and obligation of each Lender to make
Loans and any obligation of the Issuing Bank to Issue Letters of Credit to
be terminated, whereupon such commitments and obligation shall be
terminated;
(ii) declare an amount equal to the maximum aggregate amount that is
or at any time thereafter may become available for drawing under any
outstanding Letters of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or
other documents required to draw under such Letters of Credit) to be
immediately due and payable (including, without limitation, satisfying the
obligations under paragraph (c) below), and 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;
(iii) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or
applicable law;
(iv) notify the AGI Bond Issuer, Klearfold Bond Issuer, the AGI
Trustee and/or the Klearfold Trustee that an Event of Default has occurred
hereunder (including without limitation delivering the notice in the form
Exhibit 6 to the AGI IRB Letter of Credit, which shall be deemed to include
---------
a default under Section 6 of the AGI Reimbursement Agreement) and ask them
to take any and all appropriate actions including, without limitation,
accelerating the maturity of the AGI Bonds and Klearfold Bonds and
requiring drawings against the AGI IRB Letter of Credit and Klearfold IRB
Letter of Credit in respect thereof;
(b) If an Event of Default exists: (i) the Agent shall have for the
benefit of the Lenders, in addition to all other rights of the Agent and
the Lenders, the rights and remedies of a secured party under the UCC; (ii)
the Agent may, at any time, take possession of the Collateral and keep it
on the applicable Credit Party's or any Subsidiary Guarantor's
85
<PAGE>
premises, at no cost to the Agent or any Lenders, or remove any part of it
to such other place or places as the Agent may desire, or the Company
shall, upon the Agent's demand, at the Credit Party's cost, assemble the
Collateral and make it available to the Agent at a place reasonably
convenient to the Agent; and (iii) the Agent may sell and deliver any
Collateral at public or private sales, for cash, upon credit or otherwise,
at such prices and upon such terms as the Agent deems advisable, in its
sole discretion, and may, if the Agent deems it reasonable, postpone or
adjourn any sale of the Collateral by an announcement at the time and place
of sale or of such postponed or adjourned sale without giving a new notice
of sale. Without in any way requiring notice to be given in the following
manner, each Credit Party agrees that any notice by the Agent of sale,
disposition or other intended action hereunder or in connection herewith,
whether required by the UCC or otherwise, shall constitute reasonable
notice to a Credit Party if such notice is mailed by registered or
certified mail, return receipt requested, postage prepaid, or is delivered
personally against receipt, at least ten (10) Business Days prior to such
action. The Agent is hereby granted a license or other right to use,
without charge, the Credit Parties' and the Subsidiary Guarantors' labels,
patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production of,
advertising or selling any Collateral, and the Credit Parties' and the
Guarantors' rights under all licenses and all franchise agreements shall
inure to the Agent's benefit. The proceeds of sale shall be applied in
accordance with this Agreement and the Credit Parties shall remain liable
for any deficiency.
(c) If any Letter of Credit is outstanding upon the termination of
this Agreement or the Commitments, then upon such termination the relevant
L/C Borrower shall with respect to each Letter of Credit then outstanding,
as the Majority Lenders, in their sole discretion shall specify, either (A)
deposit with Agent a standby letter of credit (a "Supporting Letter of
--------------------
Credit") in form and substance satisfactory to the Agent, issued by an
------
issuer satisfactory to the Agent and in an amount equal to the greatest
amount for which such Letter of Credit may be drawn, under which Supporting
Letter of Credit the Agent is entitled to draw amounts necessary to
reimburse the Agent and the Lenders for payments made by the Agent and the
Lenders under such Letter of Credit or under any credit support or
enhancement provided through the Agent with respect thereto, or (B) deposit
with BofA cash in amounts necessary to reimburse the Agent and the Lenders
for payments made or to be made (including, without limitation, the amount
that the Agent estimates will be necessary to cover its expenses and legal
fees in connection therewith) by the Agent or the Lenders under such Letter
of Credit or under any credit support or enhancement provided through the
Agent with respect thereto, and grant the Agent (on behalf of the Lenders)
a security interest in such deposited funds. Such Supporting Letter of
Credit shall be held by Agent and any deposit of cash shall be held by
BofA, pursuant to Section 2.07(f), for the ratable benefit of the Agent and
---------------
the Lenders, as security for, and to provide for the payment of, the
aggregate undrawn amount of such Letters of Credit remaining outstanding.
(d) Notwithstanding the foregoing, upon the occurrence of any event
specified in Sections 9.01(f) or (g) (in the case of clause (i) of Section
---------------- --- ---------- -------
9.01(g) upon the expiration of the 60-day period mentioned therein), the
-------
commitment and obligation of each Lender to make Loans and any obligation
of the Issuing Bank to Issue Letters of Credit shall automatically
terminate and the unpaid principal amount of all outstanding Loans and all
86
<PAGE>
interest and other amounts and obligations as aforesaid (including, without
limitation, under paragraph (c) above) shall automatically become due and
-------------
payable without further act of the Agent, the Issuing Bank or any Lender.
9.03 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.
9.04 Permitted Swap Contract Remedies. Notwithstanding any other
--------------------------------
provision of this Article IX, each swap provider shall have the right, with
----------
prior notice to the Agent, but without the approval or consent of the Agent or
the Lenders, with respect to any Permitted Swap Obligations of such swap
provider, (a) to declare an event of default, termination event or other similar
event thereunder, (b) to determine net termination amounts in accordance with
the terms of such Permitted Swap Obligation, and (c) to prosecute any legal
action against any Credit Party to enforce net amounts owing to such swap
provider.
ARTICLE X
THE AGENT
---------
10.01 Appointment and Authorization; "Agent".
-------------------------------------
(a) Each Lender hereby irrevocably (subject to Section 10.09)
-------------
appoints, designates and authorizes the 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 Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the 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.
(b) The Issuing Bank shall act on behalf of the Lenders with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Agent may agree at the
request of the Majority Lenders to act for such Issuing Bank with respect
thereto; provided, however, that the Issuing Bank shall have all of the benefits
-------- --------
and immunities (i) provided to the Agent in this Article X with respect to any
---------
acts taken or omissions suffered by the Issuing Bank in connection with Letters
of Credit Issued by it or proposed to be Issued by it and the application and
agreements for letters of credit pertaining to the Letters of Credit
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as fully as if the term "Agent", as used in this Article X, included the Issuing
---------
Bank with respect to such acts or omissions, and (ii) as additionally provided
in this Agreement with respect to the Issuing Bank.
10.02 Delegation of Duties. The 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 Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.03 Liability of Agent. None of the 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 Lenders for any recital,
statement, representation or warranty made by any Credit Party or any Subsidiary
or Affiliate of any Credit Party, 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
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 any Credit Party or
any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Credit Party or
any of Subsidiary or Affiliate of any Credit Party.
10.04 Reliance by Agent.
-----------------
(a) The 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 Credit
Parties), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Majority
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Lender 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 Agent
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to such Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Lender.
10.05 Notice of Default. The 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 Agent for the account of the Lenders, unless the Agent shall
have received written notice from a Lender or the a Credit Party referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with Article IX; provided, however, that unless and until the Agent
---------- -------- -------
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of the Lenders.
10.06 Credit Decision. Each Lender acknowledges that none of the
---------------
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of each
Credit Party and each of its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any 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
creditworthiness of each Credit Party and each of 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 each Credit Party and each of its Subsidiaries hereunder. Each Lender
also represents that it will, independently and without reliance upon any 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 creditworthiness of each Credit Party. Except for notices, reports
and other documents expressly herein required to be furnished to the Lenders by
the Agent, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of any
Credit Party which may come into the possession of any of the Agent-Related
Persons.
10.07 Indemnification of Agent. Whether or not the transactions
------------------------
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of a Credit
Party and without limiting the obligation of such Credit Party to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
-------- -------
that no Lender shall be liable for the payment to the 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 Lender shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification,
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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 the Agent is not reimbursed for such
expenses by or on behalf of a Credit Party. The undertaking in this Section
shall survive the payment of all Obligations hereunder and the resignation or
replacement of the Agent.
10.08 Agent in Individual Capacity. BofA and its Affiliates may make
----------------------------
loans to, issue letters of credit for the account of, accept deposits from,
enter into Swap Contracts with, acquire equity interests in and generally engage
in any kind of banking, trust, financial advisory, underwriting or other
business with a Credit Party and its Subsidiaries and Affiliates as though BofA
were not the Agent or the Issuing Bank hereunder and without notice to or
consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, BofA or its Affiliates may receive information regarding a Credit
Party or its Affiliates (including information that may be subject to
confidentiality obligations in favor of such Credit Party or such Affiliate) and
acknowledge that the 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 Lender and may exercise the same as
though it were not the Agent or the Issuing Bank.
10.09 Successor Agent. The Agent may, and at the request of the
---------------
Majority Lenders shall, resign as Agent upon 30 days' notice to the Lenders. If
the Agent resigns under this Agreement, the Majority Lenders shall appoint from
among the Lenders a successor agent for the Lenders which successor agent shall
be approved by the Credit Parties. If no successor agent is appointed prior to
the effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and the Credit Parties, a successor agent from among
the Lenders. 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 Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article X and Sections 11.04 and 11.05 shall inure to its
--------- -------------- -----
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent by
the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Agent hereunder until
such time, if any, as the Majority Lenders appoint a successor agent as provided
for above. Notwithstanding the foregoing, however, BofA may not be removed as
the Agent at the request of the Majority Lenders unless BofA shall also
simultaneously be replaced as "Issuing Bank" hereunder pursuant to documentation
in form and substance reasonably satisfactory to BofA.
10.10 Withholding Tax
---------------
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Lender claims exemption from, or
a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Lender agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, two
properly completed and executed copies of IRS
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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 Lender 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
Lender, 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 Lender
and in each succeeding taxable year of such Lender 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 to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of a Credit Party to such Lender, such Lender agrees to notify
the Agent of the percentage amount in which it is no longer the beneficial owner
of Obligations of a Credit Party to such Lender. To the extent of such
percentage amount, the Agent will treat such Lender's IRS Form 1001 as no longer
valid.
(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of a
Credit Party to such Lender, such Lender agrees to undertake sole responsibility
for complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. However, if the forms or other documentation required by clause
------
(a) of this Section are not delivered to the Agent, then the Agent may withhold
- ---
from any interest payment to such Lender 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 Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered or was not properly executed, or because such
Lender failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any
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jurisdiction on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
Lenders under this Section shall survive the payment of all Obligations and the
resignation or replacement of the Agent.
10.11 Collateral Matters. (a) The Agent is authorized on behalf of
------------------
all the Lenders, without the necessity of any notice to or further consent from
the Lenders, from time to time to take any action with respect to any Collateral
or the Collateral Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral granted
pursuant to the Collateral Documents.
(b) The Lenders irrevocably authorize the Agent, at its option and in
its discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment in full of all
Loans and all other Obligations known to the Agent and payable under this
Agreement or any other Loan Document; (ii) constituting property sold or to be
sold or disposed of as part of or in connection with any disposition permitted
hereunder; (iii) constituting property in which the Company or any Subsidiary
owned no interest at the time the Lien was granted or at any time thereafter;
(iv) constituting property leased to the Company or any Subsidiary under a lease
which has expired or been terminated in a transaction not prohibited under this
Agreement or is about to expire and which has not been, and is not intended by
the Company or such Subsidiary to be, renewed or extended; (v) consisting of an
instrument evidencing Indebtedness or other debt instrument, if the indebtedness
evidenced thereby has been paid in full; or (vi) if approved, authorized or
ratified in writing by the Majority Lenders or all the Lenders, as the case may
be, as provided in subsection 11.01(f). Upon request by the Agent at any time,
-------------------
the Lenders will confirm in writing the Agent's authority to release particular
types or items of Collateral pursuant to this subsection 10.11(b), provided that
-------------------
the absence of any such confirmation for whatever reason shall not affect the
Agent's rights under this Section 10.11.
-------------
(c) While an Event of Default has occurred and is continuing, the
Agent shall deliver a "Payment Blockage Notice" (as defined in the Senior
Subordinated Note Indenture) to the trustee under the Senior Subordinated Note
Indenture at the direction or with the consent of the Majority Lenders.
ARTICLE XI
MISCELLANEOUS
-------------
11.01 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 applicable Credit Party or any applicable Subsidiary therefrom,
shall be effective unless the same shall be in writing and signed by the
Majority Lenders (or by the Agent at the written request of the Majority
Lenders) and the applicable Credit Party and acknowledged by the 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
Lenders and the Credit Parties and acknowledged by the Agent, do any of the
following:
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(a) increase or extend the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 9.02);
------------
(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 Lenders (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 (iii) 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 Lenders or
any of them to take any action hereunder;
(e) amend this Section, or Section 2.14, the definition of "Majority
------------
Lenders" or any provision herein providing for consent or other action by
all Lenders; or
(f) release all or substantially all of the Collateral except in
connection with a repayment in full of all Obligations and Loans and a
termination of the Commitments.
and, provided further, that (i) no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by the Issuing Bank in addition to the Majority Lenders or
all the Lenders, as the case may be, affect the rights or duties of the Issuing
Bank under this Agreement or any L/C-Related Document relating to any Letter of
Credit Issued or to be Issued by it, (ii) no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Majority Lenders
orall the Lenders, as the case may be, affect the rights or duties of the Agent
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.
11.02 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
matter transmitted by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on Schedule 11.02, 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 11.02; or, as directed to a Credit Party or the 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
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
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pursuant to Article II, III or X to the Agent shall not be effective
---------- --- -
until actually received by the Agent, and notices pursuant to Article III to the
-----------
Issuing Bank shall not be effective until actually received by the Issuing Bank
at the address specified for the "Issuing Bank" on the applicable signature page
hereof.
(c) Any agreement of the Agent and the Lenders herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of a Credit Party. The Agent and the Lenders shall be entitled to
rely on the authority of any Person purporting to be a Person authorized by the
relevant Credit Party to give such notice and the Agent and the Lenders shall
not have any liability to such Credit Party or other Person on account of any
action taken or not taken by the Agent or the Lenders in reliance upon such
telephonic or facsimile notice. The obligation of each Credit Party to repay the
Loans and L/C Obligations shall not be affected in any way or to any extent by
any failure by the Agent and the Lenders to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Agent and the Lenders of a
confirmation which is at variance with the terms understood by the Agent and the
Lenders to be contained in the telephonic or facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder, 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.
11.04 Costs and Expenses. Each Credit Party:
------------------
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent and
Issuing Bank) within five Business Days after demand (subject to Section
-------
5.01(e)) for all reasonable out-of-pocket costs and expenses incurred by BofA
(including in its capacity as Agent and Issuing Bank) 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, without limitation, reasonable
Attorney Costs incurred by BofA (including in its capacity as Agent and Issuing
Bank) with respect thereto and all fees and expenses for title and lien
searches, appraisals, surveys, title commitment and insurance costs and
corporate search fees; and
(b) pay or reimburse the Agent and each Lender within five
Business Days after demand for all reasonable out-of-pocket 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 a Default or 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).
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11.05 Company Indemnification. Whether or not the transactions
-----------------------
contemplated hereby are consummated, each Credit Party shall indemnify, defend
and hold the Agent-Related Persons, and each Lender 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, 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, the termination of the Letters of Credit and the
termination, resignation or replacement of the Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such Person in any
way relating to or arising out of a Credit Party entering into 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 Letters of Credit 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 no Credit Party shall have any
- ------------------------ --------
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities which have been finally determined by a court of competent
jurisdiction to be the direct and sole result of the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
11.06 Payments Set Aside. To the extent that a Credit Party makes a
------------------
payment to the Agent or the Lenders, or the Agent or the Lenders 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
Agent or such Lender 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 Lender severally agrees to pay to the Agent upon demand its pro rata share
of any amount so recovered from or repaid by the Agent.
11.07 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 no Credit Party may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agent and each Lender.
11.08 Assignments, Participations, etc.
---------------------------------
(a) Any Lender may, with the written consent of the Agent, the
Issuing Bank and, so long as no Default or Event of Default has occurred and is
continuing, each Credit Party, 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 Agent, the Issuing Bank or any Credit
Party shall be required in connection with any assignment and delegation by a
Lender to an Eligible Assignee that is an Affiliate of such Lender) (each an
"Assignee") all of, or any part of, the Loans, the Commitments, the L/C
- ---------
Obligations and the other rights and obligations of such Lender hereunder,
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in a minimum aggregate amount of $5,000,000 (or, if less, the entire amount of
such Lender's Loans and Commitments, and such Loans and Commitments may consist
of either or both of the Revolving Loan Commitments or L/C Commitments as
determined by the assigning Lender); provided, however, that each Credit Party
-------- -------
and the Agent may continue to deal solely and directly with such Lender 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 each Credit
Party and the Agent by such Lender and the Assignee; (ii) such Lender and its
Assignee shall have delivered to each Credit Party and the Agent an Assignment
and Acceptance in the form of Exhibit E ("Assignment and Acceptance") together
--------- -------------------------
with any Note or Notes subject to such assignment and (iii) the assignor Lender
or Assignee has paid to the Agent a processing fee in the amount of $3,000.
(b) From and after the date that the Agent notifies the assignor
Lender 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
Lender under the Loan Documents, and (ii) the assignor Lender 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 five Business Days after its receipt of notice by the 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 Section 11.08(a)), the relevant Credit Party shall execute and deliver to
----------------
the Agent, new Notes evidencing such Assignee's assigned Loans and Commitment
and, if the assignor Lender has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the Loans retained by
the assignor Lender (such Notes to be in exchange for, but not in payment of,
the Notes held by such Lender). 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 Lender pro tanto.
--- -----
(d) Any Lender may at any time sell to one or more commercial banks or
other Persons not Affiliates of a Credit Party (a "Participant") participating
-----------
interests in any Loans, the Commitment of that Lender and the other interests of
that Lender (the "originating Lender") hereunder and under the other Loan
Documents; provided, however, that (i) the originating Lender's obligations
-------- -------
under this Agreement shall remain unchanged, (ii) the originating Lender shall
remain solely responsible for the performance of such obligations, (iii) each
Credit Party, the Issuing Bank and the Agent shall continue to deal solely and
directly with the originating Lender in connection with the originating Lender's
rights and obligations under this Agreement and the other Loan Documents, and
(iv) no Lender 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 Lenders
as required pursuant to the first proviso to Section
----- ------- -------
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11.01. In the case of any such participation, the Participant shall not have any
- -----
rights under this Agreement, or any of the other Loan Documents, and all amounts
payable by the Credit Parties hereunder shall be determined as if such Lender
had not sold such participation; except that, 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 Lender under
this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Lender
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 the 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 (S)203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
(f) No assignee, participant or other transferee of any Lender's
rights shall be entitled to receive any greater payment under Article IV than
such Lender would have been entitled to receive with respect to the rights
transferred or by reason of the provisions of Article IV requiring such Lender
to designate a different Applicable Lending office under certain circumstances
or at a time when the circumstances giving rise to such greater payment did not
exist.
11.09 Confidentiality. Each Lender agrees to take and to cause its
---------------
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by a Credit Party and provided to it by a Credit Party or any
Subsidiary of a Credit Party, or by the Agent on such Person'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 any Credit Party
or any of its Subsidiaries; except to the extent such information (i) was or
becomes generally available to the public other than as a result of disclosure
by the Lender, or (ii) was or becomes available on a non-confidential basis from
a source other than a Credit Party, provided that such source is not bound by a
confidentiality agreement with a Credit Party known to the Lender; provided,
--------
however, that any Lender may disclose such information (A) at the
- -------
request or pursuant to any requirement of any Governmental Authority to which
the Lender is subject or in connection with an examination of such Lender 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 Agent, any Lender 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 Lender'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 Lenders hereunder; (H) as to any Lender or its Affiliate, as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which a Credit Party or any Subsidiary of a Credit Party is
party or is deemed party with such Lender or such Affiliate; and (I) to its
Affiliates.
97
<PAGE>
11.10 Set-off. In addition to any rights and remedies of the Lenders
-------
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to a Credit Party, any such notice being waived by each
Credit Party 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 Lender to or
for the credit or the account of the relevant Credit Party against any and all
Obligations owing to such Lender, now or hereafter existing, irrespective of
whether or not the Agent or such Lender shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent
or unmatured. Each Lender agrees promptly to notify the relevant Credit Party
and the Agent after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
- -------- -------
validity of such set-off and application.
11.11 Automatic Debits of Fees. With respect to any principal or
------------------------
interest due on the Loans, unreimbursed L/C Obligation, Commitment Fees,
arrangement fee, letter of credit fee or other fee, or any other cost or expense
(including Attorney Costs) due and payable to the Agent, the Issuing Bank or
BofA under the Loan Documents, each Credit Party hereby irrevocably authorizes
BofA to debit any deposit account of the relevant Credit Party with BofA in an
amount such that the aggregate amount debited from all such deposit accounts
does not exceed such fee or other cost or expense. If there are insufficient
funds in such deposit accounts to cover the amount of the fee or other cost or
expense then due, such debits will be reversed (in whole or in part, in BofA's
sole discretion) and such amount not debited shall be deemed to be unpaid. No
such debit under this Section shall be deemed a set-off.
11.12 Notification of Addresses, Lending Offices, Etc. Each Lender
------------------------------------------------
shall notify the Agent in writing of any changes in the address to which notices
to the Lender 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 Agent shall reasonably request.
11.13 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.
11.14 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.
11.15 No Third Parties Benefited. This Agreement is made and entered
--------------------------
into for the sole protection and legal benefit of the Credit Parties, the
Lenders, the Agent and the 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.
11.16 Governing Law and Jurisdiction.
------------------------------
98
<PAGE>
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF ILLINOIS; PROVIDED THAT THE
PARTIES SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(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, EACH OF THE CREDIT PARTIES, THE AGENT, THE ISSUING
BANK AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE CREDIT PARTIES, THE
AGENT AND THE LENDERS 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. EACH
CREDIT PARTY, THE AGENT AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY ILLINOIS LAW.
(c) EACH OF THE COMPANY AND KLEARFOLD HEREBY IRREVOCABLY DESIGNATES,
APPOINTS AND EMPOWERS AGI WITH OFFICES ON THE DATE HEREOF AT 1950 RUBY ROAD,
MELROSE PARK, ILLINOIS 60160, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE,
ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY,
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY
BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE,
APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH OF THE
COMPANY AND KLEARFOLD AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN
ILLINOIS ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE
AGENT UNDER THIS AGREEMENT. EACH OF THE COMPANY AND KLEARFOLD FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AND KLEARFOLD AT
ITS ADDRESS SET FORTH ON SCHEDULE 11.02, SUCH SERVICE TO BECOME EFFECTIVE 10
--------------
DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT
UNDER THIS AGREEMENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.
11.17 Waiver of Jury Trial. EACH CREDIT PARTY, THE LENDERS AND THE
--------------------
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
99
<PAGE>
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 AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE COMPANY, THE LENDERS AND THE 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.
11.18 Entire Agreement. This Agreement, together with the other Loan
----------------
Documents, embodies the entire agreement and understanding among the Credit
Parties, the Lenders and the Agent, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof including, without limitation, the
commitment letter among BofA, BancAmerica Robertson Stephens and the Company,
dated February 17, 1998.
11.19 Agent for Service of Process. AGI hereby irrevocably accepts its
----------------------------
appointment as agent for service of process for the Company and Klearfold set
forth in Section 11.16(c) and agrees that it (i) shall inform the Agent promptly
----------------
in writing of any change of its address in the State of Illinois, (ii) shall
terminate any of the agency relationships created by Section 11.16(c) only upon
----------------
60 days prior written notice to the Agent, and (iii) shall perform its
-----
obligations as such agent in accordance with the provisions of Section 11.16(c).
---------------
AGI, as process agent, and its successor or successors agrees to discharge the
above-mentioned obligations (and similar duties and obligations to the extent
AGI is appointed by any Subsidiary of a Credit Party under any Loan Document
from time to time) and will not refuse fulfillment of such obligations under
Section 11.16(c) or the Loan Documents, as the case may be. AGI agrees that it
- ----------------
will maintain an office in Melrose Park, Illinois until such time as the Company
and Klearfold shall have entered into a letter agreement in form and substance
satisfactory to the Agent appointing another agent for service of process in the
State of Illinois, which agent shall be acceptable to the Agent.
[Signature Page Follows]
100
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
IMPAC GROUP, INC.
By: /s/ Richard Block
-------------------------------------
Title: President
----------------------------------
AGI INCORPORATED
By: /s/ Richard Block
-------------------------------------
Title: President
----------------------------------
KLEARFOLD, INC.
By: /s/ Richard Block
-------------------------------------
Title: President
----------------------------------
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By: /s/ David A. Johanson
-------------------------------------
Title: Vice President
----------------------------------
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION,
Individually as a Lender and as the Issuing Bank
By: [SIGNATURE ILLEGIBLE]
-------------------------------------
Title:
----------------------------------
101
<PAGE>
SCHEDULE 2.01
-------------
COMMITMENTS
-----------
AND PRO RATA SHARES
-------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Revolving
Loan Pro Rata L/C Pro Rata
Lender Commitment Share Commitment Share
------ ----------- --------- ----------- ---------
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bank of America
National Trust &
Savings Association $40,000,000 100% $13,000,000 100%
----------- -----------
- ---------------------------------------------------------------------
TOTAL $40,000,000 100% $13,000,000 100%
=========== ===========
- ---------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 11.02
--------------
AGENT AND LENDER NOTICE INFORMATION
-----------------------------------
BANK OF AMERICA NATIONAL TRUST
- ------------------------------
& SAVINGS ASSOCIATION,
---------------------
as Agent
Bank of America National Trust &
Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Agency Management Services
Tel: 312/828-6228
Fax: 312/974-9102
AGENT'S PAYMENT OFFICE:
- -----------------------
Bank of America National Trust &
Savings Association
Concorde, California
ABA No.: 121-000-358
Account No.: 12334-16101
Attn: AMS #33499
BANK OF AMERICA NATIONAL TRUST
- ------------------------------
& SAVINGS ASSOCIATION,
---------------------
as a Lender
Bank of America National Trust &
Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Agency Management Services
Tel: 312/828-6228
Fax: 312/974-9102
<PAGE>
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Bank of America National Trust &
Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attn: George Lyman
Tel: 312/828-6773
Fax: 312/828-1974
Payment Instructions:
- ---------------------
Bank of America NT & SA
Concorde, California
ABA No.: 121-000-358
Account No.: 12334-16101
Attn: AMS #33499
BANK OF AMERICA NATIONAL TRUST
- ------------------------------
& SAVINGS ASSOCIATION,
---------------------
as Issuing Bank
Bank of America National Trust &
Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Gail Miller
Tel: 312/923-5924
Fax: 312/987-6828
Payment Instructions:
- ---------------------
Bank of America NT & SA
Concorde, California
ABA No.: 121-000-358
Account No.:12334-16101
Attn: AMS #33499
<PAGE>
CREDIT PARTY NOTICE INFORMATION
-------------------------------
IMPAC Group, Inc.
1950 N. Ruby Street
Melrose Park, Illinois 60160
Attn: David Underwood
Tel: (708) 344-9100
Fax: (708) 344-0083
AGI Incorporated
1950 N. Ruby Street
Melrose Park, Illinois 60160
Attn: David Underwood
Tel: (708) 344-9100
Fax: (708) 344-0083
Klearfold, Inc.
364 Valley Road
Warrington, Pennsylvania 18976
Attn: Daniel Santry
Tel: (215) 443-5065
Fax: (215) 443-7012
<PAGE>
EXHIBIT A
FORM OF NOTICE OF BORROWING
---------------------------
[Date]
Bank of America National Trust
& Savings Association,
as Agent for the Lenders party to the
Credit Agreement referred to below
231 South LaSalle Street
Chicago, Illinois 60697
Attn:
Ladies and Gentlemen:
The undersigned, IMPAC Group, Inc., refers to the Credit Agreement,
dated as of March 12, 1998 (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the "Credit Agreement"; the terms
defined therein being used herein as therein defined), among the undersigned,
AGI Incorporated, Klearfold, Inc., the financial institutions party thereto (the
"Lenders"), and Bank of America National Trust & Savings Association, as Agent
for such Lenders, and hereby gives you notice pursuant to Section 2.03 of the
Credit Agreement that the undersigned hereby requests a Borrowing of Revolving
Loans under the Credit Agreement and, in that connection, sets forth below the
information relating to such Borrowing, as required by Section 2.03(a) of the
Credit Agreement:
(i) The requested Borrowing Date for the proposed Borrowing (which
is a Business Day) is ______________, ____.
(ii) The aggregate amount of the proposed Borrowing is
$______________.
(iii) The Type of Revolving Loans comprising the proposed Borrowing
are [Base] [Offshore] Rate Loans.
(iv) The duration of the Interest Period for each Offshore Rate Loan
made as part of the proposed Borrowing, if applicable, is
___________ months (which shall be 1, 2, 3 or 6 months).
<PAGE>
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) The representations and warranties contained in Article VI in the
Credit Agreement are true and correct as though made on and as of
such date (except to the extent such representations and
warranties expressly refer to an earlier date, in which case such
representations and warranties are true and correct as of such
earlier date); and
(b) No Default or Event of Default has occurred and is continuing, or
would result from such proposed Borrowing; and
(c) The proposed Borrowing will not cause the aggregate principal
amount of all outstanding Revolving Loans, to exceed the combined
Revolving Loan Commitments of the Revolving Lenders.
Very truly yours,
IMPAC GROUP, INC.
By:________________________________________
Name:______________________________________
Title:_____________________________________
2
<PAGE>
EXHIBIT B
FORM OF NOTICE OF CONVERSION/CONTINUATION
-----------------------------------------
[Date]
Bank of America National Trust
& Savings Association,
as Agent for the Lenders party to the
Credit Agreement referred to below
231 South LaSalle Street
Chicago, Illinois 60697
Attn:
Ladies and Gentlemen:
The undersigned, IMPAC Group, Inc., refers to the Credit Agreement,
dated as of March 12, 1998 (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the "Credit Agreement"; the terms
defined therein being used herein as therein defined), among the undersigned,
AGI Incorporated, Klearfold, Inc. the financial institutions party thereto (the
"Lenders"), and Bank of America National Trust & Savings Association, as Agent
for such Lenders, and hereby gives you notice pursuant to Section 2.04 of the
Credit Agreement that the undersigned hereby requests a [conversion]
[continuation] of Revolving Loans under the Credit Agreement, and in that
connection sets forth below the information relating to such [conversion]
[continuation], as required by Section 2.04 of the Credit Agreement:
(i) The date of the proposed [conversion] [continuation] is
______________, 199__ (which shall be a Business Day).
(ii) The aggregate amount of the Revolving Loans proposed to be
[converted] [continued] is $______________. [Specify which part
is to be converted and which part is to be continued, if
appropriate.]
(iii) The Type of Revolving Loans to be [continued] [converted] are
[Base Rate Loans] [Offshore Rate Loans] and the Type of
Revolving Loans resulting from the proposed [conversion]
[continuation] are [Base Rate Loans] [Offshore Rate Loans].
<PAGE>
(iv) The duration of the requested Interest Period for each Offshore
Rate Loan made as part of the proposed [conversion] [continuation] is
___________ months (which shall be 1, 2, 3 or 6 months).
The undersigned hereby certifies that before and after giving effect
to the proposed [conversion][continuation] and to the application of the
proceeds therefrom, no Default or Event of Default has occurred and is
continuing, or would result from such proposed [conversion] [continuation].
Very truly yours,
IMPAC GROUP, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
2
<PAGE>
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
------------------------------
Bank of America National Trust
& Savings Association,
as Agent for the Lenders party to the
Credit Agreement referred to below
231 South LaSalle Street
Chicago, Illinois 60697
Attn:
Ladies and Gentlemen:
This certificate is furnished to you by IMPAC Group, Inc. (the "Company"),
pursuant to Section 7.02(b) of that certain Credit Agreement, dated as of March
12, 1998, among the Company, AGI Incorporated, Klearfold, Inc., the financial
institutions party thereto (the "Lenders"), and Bank of America National Trust &
Savings Association, as agent for such Lenders (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), concurrently with the delivery of the financial statements required
pursuant to Section 7.01 of the Credit Agreement. Terms not otherwise defined
herein are used herein as defined in the Credit Agreement.
The undersigned, on behalf of the Company, hereby certifies that:
(A) no Default or Event of Default has occurred and is continuing, except
as described in Attachment 1 hereto;
(B) the financial data and computations set forth in Schedule I below,
evidencing compliance with the covenants set forth in Sections 8.01(g), (i) and
(j), 8.04(h), (i), (k) and (l), 8.05(f), (h), (i) and (j), 8.10 (b) and (c),
8.15, 8.16, 8.17, 8.18, 8.19 and 8.21 of the Credit Agreement, are true and
correct as of ________________, ____/1// (the "Computation Date"); and
(C) if the financial statements of the Company being concurrently
delivered were not prepared in accordance with GAAP, Attachment 2 hereto sets
forth any derivations required to conform the relevant data in such financial
statements to the computations set forth below.
___________________
/1// The last day of the accounting period for which financial statements are
being concurrently delivered.
<PAGE>
The foregoing certifications, together with the computations set forth in
Schedule 1 hereto and the financial statements delivered with this Compliance
Certificate in support hereof, are made and delivered as of this ________ day
of ______________, ____.
IMPAC GROUP, INC.
By:_______________________________________
Name:_____________________________________
Its:______________________________________/2//
___________________
/2// To be executed by a Responsible Officer of the Company.
2
<PAGE>
SCHEDULE 1
----------
Computations
------------
<TABLE>
- ----------------------------------------------------------------------------------------
<S> <C>
I. Section 8.01 Liens
------------------
- ----------------------------------------------------------------------------------------
A. Clause (q)
---------
- ----------------------------------------------------------------------------------------
1. Aggregate amount of obligations permitted to be $ 375,000
secured:
- ----------------------------------------------------------------------------------------
2. Actual amount of obligations secured as of the date of $_________
determination:
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
B. Clause (i)
----------
- ----------------------------------------------------------------------------------------
1. Aggregate amount of obligations permitted to be $ 750,000
secured:
- ----------------------------------------------------------------------------------------
2. Actual amount of obligations secured as of the date of $_________
determination:
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
C. Clause (j)
----------
- ----------------------------------------------------------------------------------------
1. Aggregate amount of obligations permitted to be $ 750,000
secured:
- ----------------------------------------------------------------------------------------
2. Actual amount of obligations secured as of the date of $_________
determination:
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
II. Section 8.04 Loans and Investments
----------------------------------
- ----------------------------------------------------------------------------------------
A. Clause (h)
----------
- ----------------------------------------------------------------------------------------
1. Aggregate amount of advances permitted: $1,750,000
- ----------------------------------------------------------------------------------------
2. Actual amount of advances outstanding as of the date of $_________
determination:
- ----------------------------------------------------------------------------------------
B. Clause (i)
----------
- ----------------------------------------------------------------------------------------
1. Aggregate amount of advances permitted: $ 75,000
- ----------------------------------------------------------------------------------------
2. Actual amount of advances outstanding as of the date of $ ________
determination:
- ----------------------------------------------------------------------------------------
C. Clause (k)
----------
- ----------------------------------------------------------------------------------------
1. Aggregate amount of Investments permitted: $1,000,000
- ----------------------------------------------------------------------------------------
</TABLE>
I-1
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------
<S> <C>
2. Actual amount of Investments outstanding as of the date $_________
of determination:
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
III. Section 8.05 Indebtedness
-------------------------
- ----------------------------------------------------------------------------------------
A. Clause (i)
---------
- ----------------------------------------------------------------------------------------
1. Aggregate principal amount of Indebtedness permitted: $3,500,000
- ----------------------------------------------------------------------------------------
2. Aggregate principal amount of Indebtedness outstanding $________
as of the date of determination:
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
IV. Section 8.10 Lease Obligations
------------------------------
- ----------------------------------------------------------------------------------------
A. Clause (b)
----------
- ----------------------------------------------------------------------------------------
1. Aggregate amount of rental payments permitted in any $ 750,000
fiscal year:
- ----------------------------------------------------------------------------------------
2. Aggregate amount of rental payments to be made during $_________
the current fiscal year:
- ----------------------------------------------------------------------------------------
B. Clause (c)
----------
- ----------------------------------------------------------------------------------------
1. Aggregate amount of Capital Lease Obligations $ 750,000
permitted:
- ----------------------------------------------------------------------------------------
2. Aggregate amount of Capital Lease Obligations as of the $_________
date of determination:
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
V. Section 8.15 Leverage Ratio
---------------------------
- ----------------------------------------------------------------------------------------
Period: Twelve months ended _________ __, _____.
- ----------------------------------------------------------------------------------------
1. Required: _____: 1.0
- ----------------------------------------------------------------------------------------
2. Actual:
- ----------------------------------------------------------------------------------------
(a) Indebtedness for borrowed money as of the end of the $_________
period referred to above:
- ----------------------------------------------------------------------------------------
(b) EBITDA for the period referred to above: $_________
- ----------------------------------------------------------------------------------------
(c) Ratio of (a) to (b): _____: 1.0
--
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
VI. Section 8.16 Senior Leverage Ratio
----------------------------------
- ----------------------------------------------------------------------------------------
Period: Twelve months ended _________ __, _____.
- ----------------------------------------------------------------------------------------
</TABLE>
I-2
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------
<S> <C>
1. Required: _____: 1.0
- ----------------------------------------------------------------------------------------
2. Actual:
- ----------------------------------------------------------------------------------------
(a) Senior Debt as of the end of the period referred to above: $_________
- ----------------------------------------------------------------------------------------
(b) EBITDA for the period referred to above: $_________
- ----------------------------------------------------------------------------------------
(c) Ratio of (a) to (b): _____: 1.0
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
VII. Section 8.17 Interest Coverage Ratio
------------------------------------
- ----------------------------------------------------------------------------------------
Period: Twelve months ended _________ __, _____.
- ----------------------------------------------------------------------------------------
1. Required: _____: 1.0
- ----------------------------------------------------------------------------------------
2. Actual:
- ----------------------------------------------------------------------------------------
(a) EBITDA for the period referred to above: $_________
- ----------------------------------------------------------------------------------------
(b) Consolidated Interest Expense for the period referred to $_________
above:
- ----------------------------------------------------------------------------------------
(c) Ratio of (a) to (b): _____: 1.0
- ----------------------------------------------------------------------------------------
VIII. Section 8.18 Net Asset Ratio
----------------------------
- ----------------------------------------------------------------------------------------
Period: Twelve months ended ________ ___, _____.
- ----------------------------------------------------------------------------------------
1. Required: _____: 1.0
- ----------------------------------------------------------------------------------------
2. Actual:
- ----------------------------------------------------------------------------------------
(a) sum of accounts receivable, inventory and the net $_________
property, plant and equipment as of the date of
determination:
- ----------------------------------------------------------------------------------------
(b) Senior Debt as of the date of determination: $_________
- ----------------------------------------------------------------------------------------
(c) Ratio of (a) to (b): _____: 1.0
--
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
IX. Section 8.19 Minimum Net Worth
------------------------------
- ----------------------------------------------------------------------------------------
1. Required Net Worth:
- ----------------------------------------------------------------------------------------
(a) Base Amount: $5,400,000
- ----------------------------------------------------------------------------------------
(b) 50% of the sum of the positive Net Income of the $_________
Company for each fiscal quarter ending on and after
March 31, 1998:
- ----------------------------------------------------------------------------------------
</TABLE>
I-3
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------
<S> <C>
(c) 100% of the amount of the cash and non-cash proceeds $_________
of any equity securities issued by the Company after the
Closing Date:
- ----------------------------------------------------------------------------------------
(d) The sum of (a) plus (b) plus (c) $_________
---- ----
- ----------------------------------------------------------------------------------------
2. Actual Net Worth: $_________
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
X. Section 8.21 Intercompany Loans
-------------------------------
- ----------------------------------------------------------------------------------------
A. Owing by (or to) Subsidiaries other than Credit Parties
-------------------------------------------------------
- ----------------------------------------------------------------------------------------
1. Aggregate amount permitted: $1,000,000
- ----------------------------------------------------------------------------------------
2. Aggregate amount outstanding as of the date of $_________
determination:
- ----------------------------------------------------------------------------------------
</TABLE>
I-4
<PAGE>
ATTACHMENT 1
------------
DESCRIPTION OF ANY DEFAULTS OR EVENTS OF DEFAULT
------------------------------------------------
A-1
<PAGE>
ATTACHMENT 2
------------
DERIVATIONS REQUIRED TO CONFORM RELEVANT DATA IF FINANCIAL
STATEMENTS WERE NOT PREPARED IN ACCORDANCE WITH GAAP
----------------------------------------------------
A-2
<PAGE>
EXHIBIT D
FORM OF LEGAL OPINION OF COMPANY'S COUNSEL
March __, 1998
Bank of America National Trust
& Savings Association,
as Agent and a Lender, and each
Lender party to the Credit Agreement
referred to below
Ladies and Gentlemen:
We have acted as special counsel to IMPAC Group, Inc., a Delaware
corporation, f/k/a KFI Holding Corporation ("IMPAC"), AGI Incorporated, an
Illinois corporation ("AGI"), Klearfold, Inc., a Pennsylvania corporation
("Klearfold"), AGI Acquisition Corporation, an Illinois corporation ("AGI
Acquisition"), KF-Delaware, Inc., a Delaware corporation ("KFD"), and KF-
International Inc., a United States Virgin Islands corporation ("KFI"; and
together with IMPAC, AGI, Klearfold, AGI Acquisition and KFD, each a "Company"
and collectively, the "Companies"), in connection with that certain Credit
Agreement, dated as of even date herewith (the "Credit Agreement"), among IMPAC,
AGI, Klearfold, the financial institutions from time to time party thereto (the
"Lenders") and Bank of America National Trust & Savings Association, as agent
(the "Agent"). Capitalized terms used herein, but not otherwise defined herein,
shall have the meanings ascribed to such terms in the Credit Agreement. This
opinion is delivered to you at our clients' request pursuant to Section
5.01(d)(i) of the Credit Agreement.
In rendering the opinions set forth herein, we have examined:
(i) each Company's organizational documents;
(ii) resolutions of the board of directors and shareholders consents, as
applicable, of each Company with respect to the transactions referred
to herein ;
(iii) the Credit Agreement;
(iv) each Note executed by IMPAC, AGI and Klearfold;
<PAGE>
(v) each financing statement (the "Financing Statements") executed by
each Company and delivered to the Agent;
(vi) each Pledge Agreement;
(vii) the AGI Pledge and Security Agreement;
(viii) each Security Agreement;
(ix) each Intellectual Property Assignment;
(x) each Guaranty;
(xi) Fee Letter;
(xii) Assignment of Representations and Warranties;
(xiii) Agreement and Plan of Merger;
(xiv) Combination Documents;
(xv) Senior Subordinated Note Indenture and the other Senior Subordinated
Note Documents;
(xvi) Articles of Merger between AGI and AGI Acquisition; and
(xvii) such other agreements, instruments and documents, and such questions
of law as we have deemed necessary or appropriate to enable us to
render the opinions expressed below.
Items (iii) - (xii) above are collectively hereinafter defined as the "Loan
Documents" and items (xiii) to (xvi) above are collectively hereinafter defined
as the "Acquisition Documents", and the Acquisition Documents and the Loan
Documents are sometimes hereafter collectively referred to as the "Transaction
Documents".
Additionally, we have examined originals or copies, certified to our
satisfaction, of such certificates of public officials and officers and
representatives of each Company and we have made such inquiries of officers and
representatives of each Company as we have deemed relevant or necessary, as the
basis for the opinions set forth herein.
In rendering the opinions expressed below, we have, with your consent,
assumed that the signatures of persons signing all documents (other than of each
Company) in connection with which this opinion is rendered are genuine, all
documents submitted to us as originals or duplicate originals are authentic and
all documents submitted to us as copies, whether certified or not, conform to
-2-
<PAGE>
authentic original documents. Additionally, we have, with your consent, assumed
and relied upon, the following:
(a) the accuracy and completeness of all facts set forth in all
certificates and other statements, documents, records, financial statements and
papers reviewed by us, and the accuracy and completeness of all factual
representations, warranties, schedules and exhibits contained in the Transaction
Documents, with respect to the factual matters set forth therein;
(b) all parties to the documents reviewed by us (other than each Company)
are duly organized, validly existing and in good standing under the laws of all
jurisdictions where they are conducting their businesses or otherwise required
to be so qualified, and have full power and authority to execute, deliver and
perform under such documents and all such documents have been duly authorized,
executed and delivered by such parties;
(c) neither the Agent, any Lender nor any of their representatives have any
knowledge (actual or constructive) of any adverse claim, lien, security
interest, claim, encumbrance, interest or other condition of title affecting any
of the Collateral, except for Liens described in Schedule 8.01 to the Credit
-------------
Agreement;
(d) all items of Collateral for which possession must be taken by a secured
party in order to perfect its security interest under section 9-304 of the
Uniform Commercial Code of Illinois (the "Code") are in the possession or
constructive possession of the Agent and not in the possession of any Company,
affiliates or agents or any other person acting on behalf of any Company;
(e) each Company has acquired good and sufficient title to each existing
item of Collateral existing on the date hereof and has "rights" in and to such
Collateral within the meaning of section 9-203 of the Code consistent with and
sufficient for purposes of the Transaction Documents, and the same will be true
of each item of Collateral arising after the date hereof;
(f) the proceeds of the Loans have been disbursed and each Transaction
Document constitutes the valid and binding obligation of each party thereto
(other than of each Company) enforceable against such party in accordance with
its terms; and
(g) the descriptions of the Collateral in the relevant Transaction Document
reasonably describes the property intended to be described as Collateral
therein.
Whenever our opinion with respect to the existence or absence of facts is
indicated to be based on our knowledge or awareness, we are referring to the
knowledge of the particular Bingham Dana LLP attorneys who have represented the
Companies during the course of our representation of the Companies in connection
with the Transaction Documents. Except as expressly set forth herein, we have
not undertaken any independent investigation, examination or inquiry to
determine the existence or absence of any facts (and have not caused the review
of any court file or indices) and no inference as to our knowledge concerning
any facts should be drawn as a result of the limited representation undertaken
by us.
-3-
<PAGE>
Based upon the foregoing and subject to the qualifications stated herein,
we are of the opinion that:
1. Each Company: (a) is a 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 Transaction Document to which it is a party;
(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
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.
2. The execution, delivery and performance by each Company of the
Transaction Document to which it is a party, has been duly authorized by all
necessary corporate action, and no Transaction Document: (a) contravenes the
terms of any of such 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 such Company is a party
(other than pursuant to the Transaction Documents) or any order, injunction,
writ or decree of any Governmental Authority to which such Person or its
property is subject; or (c) violate any Requirement of Law (including, without
limitation, Regulation X or U of the Board of Governors of the Federal Reserve
System).
3. Each Transaction Document to which a Company is a party constitutes
the legal, valid and binding obligations of such Company and any of its
Subsidiaries to the extent it is a party thereto, enforceable against such
Company in accordance with their respective terms.
4. 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, any Company of any Transaction Document.
5. There are no actions, suits, proceedings, claims or disputes pending,
or to our knowledge after due inquiry, threatened or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, against any Company
or any of their respective properties which: (a) purport to affect or pertain to
any Transaction Document, or any of the transactions contemplated thereby; or
(b) if determined adversely to such Company, would reasonably be expected to
have a Material Adverse Effect. No injunction, writ, temporary restraining order
or any order of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery or
performance of any Transaction Document, or directing that the transactions
provided for therein not be consummated as therein provided.
6. None of IMPAC, any single Person controlling IMPAC, or any Subsidiary
of IMPAC, is an "Investment Company" within the meaning of the Investment
Company Act of 1940. No Company is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal
-4-
<PAGE>
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.
7. As of the Closing Date and after giving effect to the Transaction,
IMPAC has no Subsidiaries other than those specifically disclosed in part (a) of
Schedule 6.19 to the Credit Agreement and has no equity investments in any other
- -------------
corporation or entity other than those specifically disclosed in part (b) of
Schedule 6.19 to the Credit Agreement. All of the issued and outstanding
- -------------
capital stock of IMPAC and any Subsidiary thereof is owned by each of the
stockholders named on Schedule 6.19 to the Credit Agreement. Except as set
-------------
forth on Schedule 6.19 to the Credit Agreement, there are no outstanding rights
-------------
to purchase, options, warrants or similar rights or agreements pursuant to which
IMPAC or any of its Subsidiaries may be required to issue or sell any capital
stock or other equity security.
8. The subordination provisions contained in the Senior Subordinated Note
Documents in existence on the Closing Date are enforceable against IMPAC and the
holders thereof, and the Loans and all other Obligations are entitled to the
benefits of any Loan Document and any related guaranty are within the
definitions of "Senior Debt", included in such provisions.
9. The Transaction Agreements are in full force and effect as of the date
hereof, have not been terminated, rescinded or withdrawn, and no material
portion thereof has been amended or waived by any party. All requisite
approvals by governmental authorities and regulatory bodies having jurisdiction
over IMPAC and other Persons referenced therein, with respect to the
transactions contemplated by the Transaction Agreements, have been obtained, and
no such approvals impose any conditions to the consummation of the transactions
contemplated by the Transaction Agreements or to the conduct by IMPAC and its
Subsidiaries of its business thereafter.
10. The Merger Documents are in form and substance satisfactory for
effecting the Merger pursuant to such agreements under the laws of the State of
Illinois; the Articles of Merger have been filed with the Secretary of State in
the State of Illinois; and the Merger has been effected and is valid in
accordance with the terms thereof and the laws of the State of Illinois.
11. Assuming that the Agent has taken and is remaining in possession of
the stock certificates evidencing the Pledged Shares (as defined in the relevant
Pledge Agreement) and the Agent and the Lenders have taken such Pledged Shares
in good faith without notice (actual or constructive) of any adverse claim
within the meaning of the Code, there has been created under each Pledge
Agreement, and there has been granted to the Agent, on behalf of the Lenders, a
valid and perfected first priority security interest and lien upon such Pledged
Shares to the extent a security interest may be obtained by possession under the
Code.
12. The provisions of each Security Agreement are sufficient to create in
the Agent's favor a legal, valid and enforceable security interest in all right,
title and interest of each Company in those items and types of Collateral
referred to therein in which a security interest may be created under Article 9
of the Code. The Financing Statements are in proper form for filing with the
relevant office listed on Schedule I hereto (each a "Filing Office"), and the
----------
description of the Collateral set forth in the Financing Statements is
sufficient to perfect a security interest in the items and types of
-5-
<PAGE>
Collateral in which a security interest may be perfected by the filing of a
financing statement under the Code. Upon filing of the Financing Statement in
the relevant Filing Office, the security interests created under each Security
Agreement in favor of the Agent in and to the Collateral referred to therein
will be perfected to the extent that creation of a security interest therein is
subject to Article 9 of the UCC and a security interest may be perfected in such
Collateral by filing a financing statement with such Filing Office under the
UCC. With respect to the jurisdictions other than Illinois and Pennsylvania,
with your consent, we have relied solely on our review of the CCH UCC
Transactions Guide, copies of which are attached hereto as Schedule II, without
-----------
any investigation of the legal decisions or statutory provisions in effect in
those jurisdictions that may affect the filing of financing statements or
perfection of security interests in those jurisdictions.
13. Neither the Agent nor any Lender is required to be qualified to do
business or file any designation for service of process or file any reports or
pay any taxes in the States of Illinois or Pennsylvania, or comply with any
statutory or regulatory requirements applicable only to financial institutions
chartered or qualified or required to be chartered or qualified to do business
in the States of Illinois or Pennsylvania, solely by virtue of making the Loans
or taking a lien on property in Illinois or Pennsylvania.
14. There are no state or local taxes, fees or other charges payable in
connection with the execution or delivery of the Transaction Documents or the
recordation, filing or enforcement of the Financing Statements other than
nominal recording fees in the appropriate state or county offices.
15. The interest rates applicable to the obligations of IMPAC, AGI and
Klearfold under the Credit Agreement do not violate any law, rule or regulation
prescribing a maximum rate of interest.
16. Upon the proper and timely recording of the Intellectual Property
Assignments with the United States Patent and Trademark Office and upon payment
of the related applicable filing fees and charges, the security interest of the
Agent (on behalf of the Lenders) in the patents, trademark registrations, patent
applications and trademark applications described therein will be valid and
continuing security interest to the full extent such security interests can be
perfected under federal law.
The opinions as expressed herein are subject to the following
qualifications:
(a) the enforceability of the Transaction Documents and the obligations of
each Company thereunder and the availability of certain rights and remedial
provisions provided for in the Transaction Documents are subject to the effect
of bankruptcy, fraudulent conveyance or transfer, insolvency, reorganization,
arrangement, liquidation, conservatorship, and moratorium laws and are subject
to limitations imposed by other laws and judicial decisions relating to or
affecting the rights of creditors or secured creditors generally, and general
principles of equity (regardless of whether enforcement is considered in
proceedings at law or in equity) upon the availability of injunctive relief or
other equitable remedies, including, without limitation, where (i) the breach of
such covenants or provisions imposes restrictions or burdens upon a debtor and
it cannot be demonstrated that the enforcement of such remedies, restrictions or
burdens is reasonably necessary for the protection of
-6-
<PAGE>
a creditor; (ii) a creditor's enforcement of such remedies, covenants or
provisions under the circumstances, or the manner of such enforcement, would
violate such creditor's implied covenant of good faith and fair dealing, or
would be commercially unreasonable; or (iii) a court having jurisdiction finds
that such remedies, covenants or provisions were, at the time made, or are in
application, unconscionable as a matter of law or contrary to public policy;
[OTHER EXCEPTIONS TO BE INCLUDED BY PARTY DELIVERING
THIS OPINION, SUBJECT TO REVIEW BY WINSTON & STRAWN]
The opinions expressed herein are based upon and are limited to the laws of
the States of Illinois and Pennsylvania, the laws of the United States of
America and the General Corporation Law of the State of Delaware and (except as
set forth in paragraph 12 above) we express no opinion with respect to the laws
------------
of any other state or jurisdiction.
Our opinions set forth in this letter are based upon the facts in existence
and laws in effect on the date hereof and we expressly disclaim any obligation
to update our opinions herein, regardless of whether changes in such facts or
laws come to our attention after the delivery hereof.
This opinion is solely for the benefit of the addressee hereof in
connection with the execution and delivery of the Credit Agreement. This
opinion may not be relied upon in any manner by any other person (other than a
participant under the Credit Agreement).
Very truly yours,
-7-
<PAGE>
EXHIBIT E
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
-------------------------------------------
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
--------------
Acceptance") dated as of ___________, ____ is made between _____________
- ----------
__________________________ (the "Assignor") and _________________________ (the
--------
"Assignee").
- ---------
RECITALS
WHEREAS, the Assignor is party to that certain Credit Agreement, dated
as of March 12, 1998 (as amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among IMPAC Group, Inc. (the
----------------
"Company"), AGI Incorporated ("AGI"), Klearfold, Inc. ("Klearfold"; and together
- -------- --- ---------
with AGI, each a "L/C Borrower" and collectively, the "L/C Borrowers"), the
------------ -------------
financial institutions party thereto (including the Assignor, the "Lenders"),
-------
and Bank of America National Trust & Savings Association, as Agent for the
Lenders (the "Agent"). Any terms defined in the Credit Agreement and not defined
-----
in this Assignment and Acceptance are used herein as defined in the Credit
Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to making [Revolving Loans to the Company in an aggregate amount not
to exceed $_____________][L/C Loans to the L/C Borrowers in an aggregate amount
not to exceed $_________] (the "Commitment");
----------
WHEREAS, the Assignor wishes to assign to the Assignee [part of the ]
[all] rights and obligations of the Assignor under the Credit Agreement in
respect of its Commitment, together with a corresponding portion of each of its
outstanding [Revolving][L/C] Loans in an amount equal to $____________ (the
"Assigned Amount") on the terms and subject to the conditions set forth herein
---------------
and the Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
-------------------------
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) __% (the "Assignee's Percentage
---------------------
Share") of (A) the Commitment and the [Revolving][L/C] Loans of the Assignor and
- -----
(B) all related rights, benefits, obligations, liabilities and indemnities of
the Assignor under and in connection with the Credit Agreement and the Loan
Documents.
<PAGE>
[IF APPROPRIATE, ADD PARAGRAPH SPECIFYING PAYMENT TO ASSIGNOR BY
ASSIGNEE OF OUTSTANDING PRINCIPAL OF, ACCRUED INTEREST ON, AND FEES WITH RESPECT
TO, LOANS ASSIGNED.]
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Lender under the Credit Agreement (including without limitation under
Article II thereof), including the requirements concerning confidentiality and
the payment of indemnification, with a Commitment in an amount equal to the
Assigned Amount. The Assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Lender. It is the intent of the parties
hereto that the Commitment of the Assignor shall, as of the Effective Date, be
reduced by an amount equal to the Assigned Amount and the Assignor shall
relinquish its rights and be released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee;
provided, however, the Assignor shall not relinquish its rights under Section
- -------- -------
11.05 of the Credit Agreement to the extent such rights relate to the time prior
to the Effective Date.
(c) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignee's Commitment will be $____________.
(d) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignor's Commitment will be $___________.
2. Payments.
--------
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $____________,
representing the Assignee's Pro Rata Share of the principal amount of all
[Revolving][L/C] Loans.
(b) The [Assignor] [Assignee] further agrees to pay to the Agent a
processing fee in the amount specified in Section 11.08(a) of the Credit
Agreement.
3. Reallocation of Payments.
------------------------
Any interest, fees and other payments accrued to the Effective Date with
respect to the Commitment and [Revolving][L/C] Loans shall be for the account of
the Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Amount shall be for the account of
the Assignee. Each of the Assignor and the Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and pay to the other party any such amounts which it may receive promptly upon
receipt.
2
<PAGE>
4. Independent Credit Decision.
---------------------------
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements referred to in Section 7.01 of the Credit
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit and legal analysis and decision to enter into this
Assignment and Acceptance; and (b) agrees that it will, independently and
without reliance upon the Assignor, the Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.
5. Effective Date; Notices.
-----------------------
(a) As between the Assignor and the Assignee, the effective date for
this Assignment and Acceptance shall be ____________, ____ (the "Effective
---------
Date"); provided that the following conditions precedent have been satisfied on
--------
or before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
(ii) the consent of the Issuing Lender, the Agent and each
Credit Party required for an effective assignment of the Assigned Amount by
the Assignor to the Assignee under Section 11.08(a) of the Credit Agreement
shall have been duly obtained and shall be in full force and effect as of
the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due to
the Assignor under this Assignment and Acceptance;
(iv) the Assignee shall have complied with Section 11.08 of the
Credit Agreement (if applicable);
(v) the processing fee referred to in Section 2(b) hereof and
in Section 11.08(a) of the Credit Agreement shall have been paid to the
Agent; and
(vi) the Assignor shall have assigned and the Assignee shall
have assumed a percentage equal to the Assignee's Percentage Share of the
rights and obligations of the Assignor under the Credit Agreement (if such
agreement exists).
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Company and the Agent for
acknowledgment by the Agent, a Notice of Assignment substantially in the form
attached hereto as Schedule 1.
----------
6. Agent.
-----
3
<PAGE>
(a) The Assignee hereby appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the Lenders pursuant to the terms of
the Credit Agreement.
[(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Agent under the Credit Agreement.] [INCLUDE ONLY IF
ASSIGNOR IS AGENT]
7. Withholding Tax.
---------------
The Assignee (a) represents and warrants to the Lender, the Agent and the
Company that under applicable law and treaties no tax will be required to be
withheld by the Lender with respect to any payments to be made to the Assignee
hereunder, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to the Agent and
the Company prior to the time that the Agent or Company is required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein the Assignee claims entitlement to the benefits of a
tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms 4224
or 1001 upon the expiration of any previously delivered form or comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by the Assignee, and (c) agrees to comply
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption.
8. Representations and Warranties.
------------------------------
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any Lien or other adverse claim; (ii) it is duly
organized and existing and it has the full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness,
4
<PAGE>
sufficiency or value of the Credit Agreement or any other instrument or document
furnished pursuant thereto. The Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of the Credit Parties, or the performance or
observance by the Credit Parties, of any of its respective obligations under the
Credit Agreement or any other instrument or document furnished in connection
therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; and (iv) it is an
Eligible Assignee.
9. Further Assurances.
------------------
The Assignor and the Assignee each hereby agree to execute and deliver such
other instruments, and take such other action, as either party may reasonably
request in connection with the transactions contemplated by this Assignment and
Acceptance, including the delivery of any notices or other documents or
instruments to the Company or the Agent, which may be required in connection
with the assignment and assumption contemplated hereby.
10. Miscellaneous.
-------------
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
5
<PAGE>
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF ILLINOIS. The Assignor and the
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in Illinois over any suit, action or proceeding arising
out of or relating to this Assignment and Acceptance and irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such Illinois State or Federal court. Each party to this Assignment and
Acceptance hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER
ORAL OR WRITTEN).
[OTHER PROVISIONS TO BE ADDED AS MAY BE NEGOTIATED BETWEEN THE
ASSIGNOR AND THE ASSIGNEE, PROVIDED THAT SUCH PROVISIONS ARE NOT INCONSISTENT
WITH THE CREDIT AGREEMENT.]
6
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address:______________________________________
______________________________________
______________________________________
[ASSIGNEE]
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address:______________________________________
______________________________________
______________________________________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
BANK OF AMERICA NATIONAL TRUST Payment Instructions:
& SAVINGS ASSOCIATION, Bank:__________________________________
ABA No:________________________________
as Agent Account No:____________________________
Reference:_____________________________
By:___________________________
Name:_________________________
Title:________________________
7
<PAGE>
[BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION,
as Issuing Bank
By:____________________________
Name:__________________________
Title:_________________________]
[IMPAC GROUP, INC.
By:____________________________
Name:__________________________
Title:_________________________]
[AGI INCORPORATED
By:____________________________
Name:__________________________
Title:_________________________]
[KLEARFOLD, INC.
By:____________________________
Name:__________________________
Title:_________________________]
8
<PAGE>
EXHIBIT F-1
PROMISSORY NOTE - REVOLVING LOAN
--------------------------------
$_______________ Dated: March __, 1998
FOR VALUE RECEIVED, IMPAC GROUP, INC. (the "Company") HEREBY PROMISES
TO PAY to the order of __________________________ (the "Lender") the principal
sum of ______________________ United States Dollars ($_________) or, if less,
the aggregate unpaid principal amount of the Revolving Loans made by the Lender
to the Company pursuant to Section 2.01(a) of the Credit Agreement (as
---------------
hereinafter defined), on or before the Termination Date; together, in each case,
with interest on any and all principal amounts remaining unpaid hereunder from
time to time. Interest upon the unpaid principal amount hereof shall accrue at
the rates, shall be calculated in the manner and shall be payable on the dates
set forth in the Credit Agreement. After maturity, whether by acceleration or
otherwise, accrued interest shall be payable upon demand. Both principal and
interest shall be payable in accordance with the Credit Agreement to Bank of
America National Trust & Savings Association, as Agent (the "Agent"), on behalf
of the Lender, at its main office in Chicago, Illinois in immediately available
funds. The Revolving Loans made by the Lender to the Company pursuant to the
Credit Agreement and all payments on account of principal hereof shall be
recorded by the Lender and, prior to any transfer thereof, endorsed on Schedule
--------
A attached hereto which is part of this Note or otherwise in accordance with its
- -
usual practices; provided, however, that the failure to so record shall not
-------- -------
affect the Company's obligations under this Note.
This Note is a Note referred to in, and is entitled to the benefits
of, the Credit Agreement, dated as of March 12, 1998, by and among the Company,
AGI Incorporated, Klearfold, Inc., the financial institutions signatory thereto
(including the Lender) and the Agent (as amended, modified or supplemented from
time to time, the "Credit Agreement") and the other Loan Documents. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. The Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
IMPAC GROUP, INC.
By:_________________________________
Name: ___________________________
Title:___________________________
-2-
<PAGE>
Schedule A
----------
Promissory Note - Revolving Loan
dated March __, 1998
payable to the order of
[Lender]
________________________________________________________________________________
PRINCIPAL PAYMENTS
________________________________________________________________________________
<TABLE>
<CAPTION>
Amount of Unpaid Principal
Principal Amount of Balance Notation
Date Borrowed Principal Repaid ------- Made By
- ------ -------- ---------------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT F-2
PROMISSORY NOTE - L/C LOAN
--------------------------
$_______________ Dated: March __, 1998
FOR VALUE RECEIVED, [AGI INCORPORATED][KLEARFOLD, INC.] (the
"Company") HEREBY PROMISES TO PAY to the order of __________________________
(the "Lender") the principal sum of ______________________ United States Dollars
($_________) or, if less, the aggregate unpaid principal amount of the L/C Loans
made by the Lender to the Company pursuant to Section 2.01[(b)][(c)] of the
----------------------
Credit Agreement (as hereinafter defined), on or before the Termination Date;
together, in each case, with interest on any and all principal amounts remaining
unpaid hereunder from time to time. Interest upon the unpaid principal amount
hereof shall accrue at the rates, shall be calculated in the manner and shall be
payable on the dates set forth in the Credit Agreement. After maturity, whether
by acceleration or otherwise, accrued interest shall be payable upon demand.
Both principal and interest shall be payable in accordance with the Credit
Agreement to Bank of America National Trust & Savings Association, as Agent (the
"Agent"), on behalf of the Lender, at its main office in Chicago, Illinois in
immediately available funds. The L/C Loans made by the Lender to the Company
pursuant to the Credit Agreement and all payments on account of principal hereof
shall be recorded by the Lender and, prior to any transfer thereof, endorsed on
Schedule A attached hereto which is part of this Note or otherwise in accordance
- ----------
with its usual practices; provided, however, that the failure to so record shall
-------- -------
not affect the Company's obligations under this Note.
This Note is a Note referred to in, and is entitled to the benefits
of, the Credit Agreement, dated as of March 12, 1998, by and among the Company,
[AGI Incorporated][Klearfold, Inc.], IMPAC Group, Inc., the financial
institutions signatory thereto (including the Lender) and the Agent (as amended,
modified or supplemented from time to time, the "Credit Agreement") and the
other Loan Documents. Capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
The Credit Agreement, among other things, contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
[AGI INCORPORATED]
[KLEARFOLD, INC.]
By: ___________________________________
Name: _______________________________
Title:_______________________________
-2-
<PAGE>
Schedule A
----------
Promissory Note - L/C Loan
dated March __, 1998
payable to the order of
[Lender]
____________________________________________________________________________
PRINCIPAL PAYMENTS
____________________________________________________________________________
Amount of Unpaid Principal
Principal Amount of Balance Notation
Date Borrowed Principal Repaid ------- Made By
---- -------- ---------------- -------
EXHIBIT.F-2
<PAGE>
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
-----------------------------------
[Date]
Bank of America National Trust
& Savings Association
as Agent for the Lenders party to the
Credit Agreement referred to below
231 South LaSalle Street
Chicago, Illinois 60697
Attn:
IMPAC Group, Inc.
____________________
____________________
Attn:
Ladies and Gentlemen:
We refer to the Credit Agreement, dated as of March 12, 1998 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), among IMPAC Group, Inc. (the "Company"), AGI Incorporated ("AGI"),
- --------- ---
Klearfold, Inc. ("Klearfold"; and together with AGI, each a "L/C Borrower" and
--------- ------------
collectively, the "L/C Borrowers"), the financial institutions party thereto
-------------
(the "Lenders"), and Bank of America National Trust & Savings Association, as
-------
Agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement are
-----
used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by ____________ (the "Assignor") to _________________ (the
--------
"Assignee") of _____% of the right, title and interest of the Assignor in and to
--------
the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the [Revolving][L/C] Commitment of the
Assignor and all outstanding [Revolving][L/C] Loans made by the Assignor
pursuant to the Assignment and Acceptance Agreement attached hereto (the
"Assignment and Acceptance"). Before giving effect to such assignment the
- --------------------------
Assignor's [Revolving][L/C] Commitment is $____________ and the aggregate amount
of its outstanding [Revolving][L/C] Loans is $____________.
2. The Assignee agrees that, upon receiving the consent of the Agent and,
if applicable, the Issuing Bank to such assignment, the Assignee will be bound
by the terms of the Credit Agreement as fully and to the same extent as if the
Assignee were the Lender originally holding such interest in the Credit
Agreement.
9
<PAGE>
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name:_______________________________________
Address:_____________________________________________
_____________________________________________
_____________________________________________
Attention:___________________________________________
Telephone: (______)__________________________________
Fax No.: (______)__________________________________
(B) Payment Instructions:
Account No.:_________________________________________
At:_________________________________________
_________________________________________
_________________________________________
Reference:___________________________________________
Attention:___________________________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance .
-2-
<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice
of Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
[NAME OF ASSIGNEE]
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
-3-
<PAGE>
EXHIBIT 10.20
PROMISSORY NOTE - REVOLVING LOAN
--------------------------------
$40,000,000.00 Dated: March 12, 1998
FOR VALUE RECEIVED, IMPAC GROUP, INC. (the "Company") HEREBY PROMISES
TO PAY to the order of BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION (the
"Lender") the principal sum of FORTY MILLION UNITED STATES DOLLARS
($40,000,000.00) or, if less, the aggregate unpaid principal amount of the
Revolving Loans made by the Lender to the Company pursuant to Section 2.01(a) of
---------------
the Credit Agreement (as hereinafter defined), on or before the Termination
Date; together, in each case, with interest on any and all principal amounts
remaining unpaid hereunder from time to time. Interest upon the unpaid principal
amount hereof shall accrue at the rates, shall be calculated in the manner and
shall be payable on the dates set forth in the Credit Agreement. After maturity,
whether by acceleration or otherwise, accrued interest shall be payable upon
demand. Both principal and interest shall be payable in accordance with the
Credit Agreement to Bank of America National Trust & Savings Association, as
Agent (the "Agent"), on behalf of the Lender, at its main office in Chicago,
Illinois in immediately available funds. The Revolving Loans made by the Lender
to the Company pursuant to the Credit Agreement and all payments on account of
principal hereof shall be recorded by the Lender and, prior to any transfer
thereof, endorsed on Schedule A attached hereto which is part of this Note or
----------
otherwise in accordance with its usual practices; provided, however, that the
-------- -------
failure to so record shall not affect the Company's obligations under this Note.
This Note is a Note referred to in, and is entitled to the benefits
of, the Credit Agreement, dated as of March 12, 1998, by and among the Company,
AGI Incorporated, Klearfold, Inc., the financial institutions signatory thereto
(including the Lender) and the Agent (as amended, modified or supplemented from
time to time, the "Credit Agreement") and the other Loan Documents. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. The Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
IMPAC GROUP, INC.
By: /s/ Richard Block
-------------------------------
Name: Richard Block
-------------------------
Title: President
------------------------
-2-
<PAGE>
Schedule A
----------
Promissory Note - Revolving Loan
dated March 12, 1998
payable to the order of
Bank of America National Trust & Savings Association
- --------------------------------------------------------------------------------
PRINCIPAL PAYMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount of
Principal Amount of Unpaid Principal Notation
Date Borrowed Principal Repaid Balance Made By
---- -------- ---------------- ------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 10.21
________________________________________________________________________________
________________________________________________________________________________
SECURITY AGREEMENT-COMPANY
DATED AS OF MARCH 12, 1998
BETWEEN
IMPAC GROUP, INC.
AND
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION,
AS AGENT
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions and Interpretation of Agreement............................ 2
"Account Debtor"....................................................... 2
"Account Receivable"................................................... 2
"Agent" shall have the meaning given to such term in the Preamble...... 2
"Assignee Deposit Account"............................................. 2
"Collateral"........................................................... 2
"Contract Right"....................................................... 2
"Equipment"............................................................ 2
"General Intangibles".................................................. 2
"Inventory"............................................................ 3
"Non-Goods Collateral"................................................. 3
"Obligor".............................................................. 3
"Permissible Collateral Locations"..................................... 3
2. Grant of Security Interest............................................. 4
3. Representations and Warranties......................................... 5
4. Use of Equipment....................................................... 5
5. Processing, Sale and Collections....................................... 5
6. Certificates, Schedules and Reports.................................... 7
7. Covenants.............................................................. 7
8. Remedies............................................................... 9
(a) Remedies; Obtaining the Collateral Upon an Event of Default..... 9
(b) Disposition of the Collateral................................... 10
9. Application of Proceeds................................................ 11
10. Remedies Cumulative.................................................... 12
11. Discontinuance of Proceedings.......................................... 12
12. Custody and Preservation of Collateral................................. 12
13. Authorization for the Agent to Take Certain Action..................... 12
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
14. Notices............................................................. 13
15. Waiver and Amendments............................................... 13
16. Termination......................................................... 13
18. Severability........................................................ 14
19. Successors and Assigns.............................................. 14
</TABLE>
-ii-
<PAGE>
SCHEDULES
SCHEDULE A - Schedule of Equipment Locations
SCHEDULE B - Schedule of Chief Executive Office Location, Records Locations
and Inventory Locations
SCHEDULE C - Schedule of Trade Names, Styles and Doing Business Forms
-iii-
<PAGE>
SECURITY AGREEMENT-COMPANY
THIS SECURITY AGREEMENT- COMPANY, dated as of March 12, 1998 (as the same
may be restated, amended or modified from time to time, this "Agreement"), by
---------
and between IMPAC GROUP, INC. a Delaware corporation (the "Company"), and BANK
-------
AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, as agent (the "Agent") for the
-----
Secured Creditors (as defined below). Unless otherwise defined in Section 1,
terms defined in the Credit Agreement (as defined below) are used herein as
therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith, among
the Company, AGI Incorporated ("AGI"), Klearfold, Inc. ("Klearfold"; and
--- ---------
together with AGI, each a "L/C Borrower" and collectively, the "L/C Borrowers")
------------ -------------
the financial institutions from time to time party thereto (the "Lenders") and
the Agent (as from time to time restated, amended or modified, the "Credit
Agreement"), the Lenders have agreed to extend certain credit and issue letters
of credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty-Company, dated as of even date herewith (as
from time to time amended or modified, the "Guaranty"), the Company has
--------
guaranteed to the Secured Creditors the payment when due of all obligations and
liabilities of the L/C Borrowers under or with respect to the Secured Debt
Agreements (as defined below) to which such L/C Borrower is a party;
C. The Company may from time to time be an account party to one or more
Swap Contracts relating to the Revolving Loans (each such Swap Contract with a
Swap Creditor (as defined below), a "Secured Swap Contract") with Bank of
America National Trust & Savings Association ("B of A"), in its individual
capacity, any Lender or syndicate of financial institutions organized by B of A,
or an affiliate of B of A, or any Lender (even if B of A or any such Lender
ceases to be a Lender under the Credit Agreement for any reason) and any
institution that participates in, and in each case their subsequent assigns,
such Secured Swap Contract (collectively, the "Swap Creditors"); and
D. The Company may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
---------------------------
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
issued by B of A or a Lender, in each case in its individual capacity (even if B
of A or such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
---
Creditors"); and
- ---------
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Company grant to the
<PAGE>
Agent, for the ratable benefit of itself and the Secured Creditors, a security
interest in the Collateral (as defined below) on the terms and conditions set
forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions and Interpretation of Agreement. The following shall have
-------------------------------------------
(unless otherwise provided elsewhere in this Agreement) the following respective
meanings (such meanings being equally applicable to both the singular and plural
form of the terms defined):
"Account Debtor" shall mean the party who is obligated on or under any
--------------
Account Receivable or Contract Right.
"Account Receivable" shall mean any right of the Company to payment for
------------------
goods sold or leased or for services rendered.
"Agent" shall have the meaning given to such term in the Preamble.
----- --------
"Assignee Deposit Account" has the meaning ascribed to it in Section 5.
------------------------ ---------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Contract Right" shall mean any right of the Company to payment under
--------------
a contract for the sale or lease of goods or the rendering of services, which
right is at the time not yet earned by performance.
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined
----------------
in, the Credit Agreement, or any payment default, after any applicable grace
period, under any other Secured Debt Agreement.
"Equipment" shall mean all equipment owned by the Company of every
---------
description; all accessories, parts, accessions and other property owned by the
Company at any time installed thereon or affixed thereto or used in connection
therewith; and all substitutions for or replacements of any of the foregoing.
"General Intangibles" means all intangible personal property of the
-------------------
Company including, without limitation, all general intangibles, contract rights,
rights to receive payments of money, choses in action, judgments, tax refunds
and tax refund claims, copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, trade names, trade secrets, drawings or plans
with respect to trade secrets, copyrights, licenses, franchises, leasehold
interests
-2-
<PAGE>
in real or personal property, rights to receive rentals of real or personal
property and guarantee claims.
"Inventory" shall mean all goods held by the Company for sale or
---------
lease, or leased by the Company as lessor, or furnished or to be furnished by
the Company under any contract of service, or held by the Company as raw
materials, work in process or materials used or consumed in a business; and all
goods, the sale or lease of which has given rise to an Account Receivable,
Contract Right, instrument or chattel paper, which are returned to the Company,
repossessed by the Company, stopped in transit by the Company or which otherwise
come into the possession of the Company.
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Non-Goods Collateral" shall mean all Collateral other than Inventory,
--------------------
Equipment and other goods.
"Obligor" shall mean the Company and each other party primarily or
-------
secondarily liable on any of the Secured Obligations.
"Permissible Collateral Locations" shall mean the Company's address
--------------------------------
shown above, any locations listed on Schedule B hereto as to which (in the case
----------
of locations not owned by the Company) the Agent has received an executed
landlord waiver in form satisfactory to the Agent (with respect to leased
premises) and any other location to which the Agent, after all actions necessary
in the Agent's absolute discretion to protect the Agent's security interest in
all Collateral to be kept at such location.
"Secured Creditors" means, collectively, the Agent, each Lender, each
-----------------
L/C Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement
-----------------------
and the other Loan Documents, each Secured Letter of Credit and each Secured
Swap Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the
------------------------
Recitals.
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Credit Agreement, (ii) all "Obligations" as defined in the
Guaranty, (iii) the payment when due of all obligations of the Company to Swap
Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by the Company and
(iv) the payment when due of all obligations of the Company to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by the Company.
"Secured Swap Contract" has the meaning ascribed to it in the
---------------------
Recitals.
-3-
<PAGE>
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
A Section or a Schedule is, unless otherwise stated, a reference to a
------- --------
section hereof or a schedule hereto, as the case may be. Section captions used
in this Agreement are for convenience only, and shall not affect the
construction of this Agreement. The words "hereof," "herein," "hereto" and
"hereunder" and words of similar purport when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise defined therein, all terms defined in this Agreement
shall have the defined meanings when used in any certificate or other documents
made or delivered pursuant hereto.
2. Grant of Security Interest. As security for the payment of all
--------------------------
Secured Obligations, the Company hereby assigns to the Agent for the benefit of
the Secured Creditors, and grants to the Agent for the benefit of the Secured
Creditors, a continuing security interest in, all personal property, wherever
located, in which the Company now has or hereafter acquires any right or
interest and all proceeds thereof, including without limitation the following
(collectively, the "Collateral"):
(a) all Inventory, Accounts Receivable, Contract Rights and documents
of title of the Company;
(b) all chattel paper and instruments evidencing any obligation to
the Company for payment for goods sold or leased or for services rendered;
(c) all interest of the Company in any goods, the sale or lease of
which shall have given or shall give rise to, and in all guaranties and other
property securing the payment of or performance under, any Accounts Receivable,
Contract Rights or any such chattel paper or instruments;
(d) all Equipment of the Company.
(e) all General Intangibles of the Company;
(f) to the extent related to the property described in clauses (a)
-----------
through (e) above, all books, correspondence, credit files, records, invoices
---
and other papers and documents, including, without limitation, to the extent so
related, all tapes, cards, computer runs, computer programs (to the extent the
Company may grant a security interest in the same without a breach of the terms
thereof) and other papers and documents in the possession or control of the
Company or any computer bureau from time to time acting for the Company; and, to
the extent so related, all rights in, to and under all policies of insurance,
including claims of rights to payments thereunder and proceeds therefrom,
including any credit insurance; and
(g) all proceeds and products of any of the foregoing.
-4-
<PAGE>
3. Representations and Warranties. The Company represents and warrants
------------------------------
to the Agent and the Secured Creditors that:
(a) none of the Collateral is of a type where a security interest or
lien may be filed under, or notice thereof given under, any federal statute
relating exclusively to Collateral of that type rather than property generally;
provided, however, some of the collateral may be intellectual property falling
- -------- -------
under the purview of the United States Patent and Trademark Office;
(b) all Equipment, except any thereof which the Company shall have
identified on Schedule A as equipment normally used in more than one State, is
----------
located at one of the addresses shown on Schedule A unless another location is
----------
shown with respect to any Equipment in the description thereof on Schedule A, in
----------
which case such Equipment is located at such other location, and all Inventory
is located at the addresses shown on Schedule B;
----------
(c) since January 1, 1993, the Company has not conducted business
under any name except the name or trade name in which it has executed this
Agreement; provided, however, the Company previously conducted business under
--------- -------
the name KFI Holding Corporation;
(d) except with respect to vehicles, none of the Equipment owned by
the Company is covered by any certificate of title; and
(e) the Company has no trade names, styles or doing business forms
except for the divisional names listed on Schedule C and, when using such names,
----------
the Company identifies the applicable division as a division of the Company;
4. Use of Equipment. Until an Event of Default has occurred and is
----------------
continuing, the Company may have possession of all Equipment and use the same in
any lawful manner not inconsistent with this Agreement or with any policy of
insurance on any of the Equipment.
5. Processing, Sale and Collections. Until such time as an Event of
--------------------------------
Default has occurred and is continuing and the Agent shall notify the Company of
the revocation of such power and authority, the Company:
(a) may, in the ordinary course of its business, at its own expense,
sell, lease or furnish under contracts of service any of the Inventory normally
held by the Company for such purpose, and use and consume, in the ordinary
course of its business, any raw materials, work in process or materials normally
held by the Company for such purpose;
(b) will, at its own expense, endeavor to collect, as and when due,
all amounts due with respect to any of the Non-Goods Collateral, including the
taking of such action with respect to such collection as the Agent may
reasonably request or, in the absence of such request, as the Company may deem
advisable;
(c) may grant, in the ordinary course of business, to any party
obligated on or with respect to any of the Non-Goods Collateral, any rebate,
refund or allowance to which such party may
-5-
<PAGE>
be lawfully entitled, and may accept, in connection therewith, the return of
goods, the sale or lease of which shall have given rise to such Non-Goods
Collateral; and
(d) the Company may sell used and obsolete furniture, equipment and
fixtures in the ordinary course of business to the extent not prohibited by the
Credit Agreement. So long as no Event of Default has occurred and is continuing,
the Agent shall, upon the request of the Company, accompanied by a certificate
to the effect such sale is in compliance with this section, without the
requirement of obtaining the consent of any Secured Creditor, release the Lien
of this Agreement upon any property sold pursuant to this section.
The Agent, however, may at any time (but shall not be obligated to), during
the continuation of an Event of Default and after giving written notice of such
action to the Company notify any party obligated on or with respect to any of
the Non-Goods Collateral to make payment directly to the Agent of any amounts
due or to become due thereunder and enforce collection of any of the Non-Goods
Collateral by suit or otherwise and surrender, release or exchange all or any
part thereof, or compromise or extend or renew for any period (whether or not
longer than the original period) any indebtedness thereunder or evidenced
thereby. Upon request of the Agent during the continuation of an Event of
Default, the Company will, at its own expense, notify any parties obligated on
or with respect to any of the Non-Goods Collateral to make payment to the Agent
of any amounts due or to become due thereunder.
The Company will, upon written demand of the Agent made after and during
the continuance of an Event of Default, forthwith, upon receipt, transmit and
deliver to the Agent, in the form received, all cash, checks, drafts, chattel
paper and other instruments or writings for the payment of money (properly
endorsed, where required, so that such items may be collected by the Agent)
which may be received by the Company at any time in full or partial payment or
otherwise as proceeds of any of the Collateral. Except as the Agent may
otherwise consent in writing, any such items which may be received by the
Company following such demand of the Agent will not be commingled with any other
of its funds or property, but will be held separate and apart from its own funds
or property and upon express trust for the Agent, for the benefit of itself and
the Secured Creditors, until delivery is made to the Agent. All items or amounts
which are delivered by the Company to the Agent on account of partial or full
payment by an Account Debtor or otherwise as proceeds of any of the Collateral
shall be deposited to the credit of a special deposit account over which the
Company shall have no control (herein called the "Assignee Deposit Account") of
the Company with the Agent, as security for payment of the Secured Obligations.
The Agent shall invest any and all available funds deposited in such special
deposit account, within 10 business days after the date the relevant funds
become available, in securities issued as fully guaranteed or insured by the
United States Government or any agency thereof backed by the full faith and
credit of the United States having maturities of no greater than 3 months from
the date of acquisition thereof (collectively, "Government Obligations"). The
Company hereby acknowledges and agrees that the Agent shall not have any
liability with respect to, and the Company hereby indemnifies the Agent against,
any loss resulting from the acquisition of the Government Obligation and the
Agent shall not have any obligation to monitor the trading activity of any such
Governmental Obligations on and after the acquisition thereof for the purpose of
obtaining the highest possible return with respect thereto, the Agent's
responsibility being limited to acquiring such Governmental Obligations. The
Agent may,
-6-
<PAGE>
from time to time, in its absolute discretion, apply all or any of the then
balance, representing collected funds, in the Assignee Deposit Account, toward
payment of the Secured Obligations, whether or not then due.
The Agent is authorized to endorse, in the name of the Company, any item,
howsoever received by the Agent, representing any payment on or other proceeds
of any of the Collateral.
6. Certificates, Schedules and Reports. The Company will furnish to the
-----------------------------------
Agent from time to time, as the Agent may reasonably request, such additional
schedules and such certificates and reports respecting all or any of the
Collateral at the time subject to the security interest hereunder and the items
or amounts received by the Company in full or partial payment or otherwise as
proceeds of any of the Collateral, all to such extent as the Agent may
reasonably request. Each of the foregoing schedules, certificates, reports and
notices shall be executed by a duly authorized officer of the Company and shall
be in such form and detail as the Agent may reasonably specify.
7. Covenants. From the date of this Agreement, and thereafter until this
---------
Agreement is terminated, the Company:
(a) will keep all Inventory at the addresses shown on Schedule B, or
----------
at such other address as to which the Company has given the Agent one (1) month
prior written notice and the Agent has taken such steps as it deems necessary to
ensure that its security interest in collateral at such new location shall
remain perfected;
(b) will keep its records concerning its Accounts Receivables at its
address shown on Schedule B, unless the Agent shall otherwise be notified one
----------
(1) month in advance of a new address in writing, which records will be of such
character as will enable the Agent or its designees to determine at any time the
status thereof, and the Company will not, unless the Agent shall otherwise
consent in writing, duplicate any such records at any other address;
(c) will keep all Equipment, except any thereof which the Company
shall have identified on Schedule A as equipment normally used in more than one
----------
State (referred to in this clause (c) as "mobile goods"), at the addresses on
----------
Schedule A, unless the Agent shall otherwise consent in writing; will give
- ----------
written notice to the Agent within thirty (30) days before any use of any mobile
goods in any jurisdiction other than a State in which the Company shall have
previously advised the Agent such mobile goods will be used; and will not use
any mobile goods outside the territorial limits of the United States, unless the
Agent shall otherwise consent in writing;
(d) will not, without giving the Agent one (1) month prior written
notice, change the location of its chief executive office or its chief place of
business from the address shown on Schedule B;
----------
(e) will furnish the Agent not less than 30 days written notice prior
to changing its name or adopting or changing any trade name, style or doing
business form;
-7-
<PAGE>
(f) will furnish the Agent such information concerning the Company,
the Collateral and the Account Debtors as the Agent may from time to time
reasonably request;
(g) upon the occurrence and continuance of an Event of Default, will,
upon request of the Agent, stamp on its records concerning the Collateral a
notation, in form satisfactory to the Agent, of the security interest of the
Agent hereunder;
(h) will reimburse the Agent upon demand for all reasonable costs and
expenses, including reasonable fees of attorneys (who may be employees of the
Agent) and reasonable legal expenses, incurred by the Agent in seeking to
collect or enforce any rights under the Collateral and, in case of an Event of
Default, in seeking to collect any Secured Obligations and to enforce rights
hereunder, including reasonable expenses of any repairs to any realty or other
property to which any of the Equipment may be affixed or be a part;
(i) will pay, when due, all taxes, assessments, governmental charges
and other similar charges levied against any of the Collateral, except and so
long as the Company is contesting such taxes, assessments or charges in good
faith and by appropriate proceedings and the Company has set aside on its books
such reserves or other appropriate provisions therefor as may be required by
generally accepted accounting principles;
(j) will do nothing to impair in any material respect the rights of
the Agent or the Secured Creditors in the Collateral. The Company will at all
times keep the Collateral insured in compliance with the requirements of the
Credit Agreement. The Company assumes all liability and responsibility in
connection with the Collateral acquired by it, and the liability of the Company
to pay its obligations shall in no way be affected or diminished by reason of
the fact that such Collateral may be lost, stolen, damaged or for any reason
whatsoever unavailable to the Company;
(k) will notify the Agent of any Collateral which, to its knowledge,
constitutes a claim against the United States government or any instrumentality
or agency thereof (except for claims against any state government, unless
requested by the Agent), the assignment of which claim is restricted by federal
law. Promptly upon the reasonable request of the Agent, the Company will take
such steps as may be necessary to comply with any applicable federal assignment
of claims laws; and
(l) at any time after and during the continuance of an Event of
Default, upon reasonable request, will give the Agent information as to
ownership of any vehicle or other Equipment covered by a certificate of title.
Promptly upon reasonable request of the Agent at any time after and during the
continuance of an Event of Default, the Company will deliver any such
certificate of title to the Agent and/or will cause the lien of the Agent, on
behalf of itself and the Secured Creditors, to be noted thereupon.
The Agent may from time to time, at its option, perform any agreement of
the Company hereunder which the Company shall fail to perform and take any other
action which the Agent deems necessary for the maintenance or preservation of
any of the Collateral or its interest therein, and the Company agrees to
forthwith reimburse the Agent for all reasonable expenses of the Agent in
-8-
<PAGE>
connection with the foregoing, together with interest thereon from the date
incurred until reimbursed by the Company at a rate per annum equal to the Base
Rate plus the Applicable Margin in effect from time to time. The Company's
obligation to reimburse the Agent pursuant to the preceding sentence shall be a
Secured Obligation payable on demand.
8. Remedies.
--------
(a) Remedies; Obtaining the Collateral Upon an Event of Default. The
-----------------------------------------------------------
Company agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Agent may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from the Company or any
other Person who then has possession of any part thereof with or without
notice or process of law (unless the same shall be required by applicable
law), and for that purpose may enter in an orderly and lawful manner upon
the Company's premises where any of the Collateral is located and remove
the same and use in connection with such removal any and all services,
supplies, aids and other facilities of the Company;
(ii) instruct the obligor or obligors on any contract,
agreement, instrument or other obligation (including, without limitation,
the Receivables) constituting the Collateral to make any payment required
by the terms of such instrument or agreement directly to the Agent, on
behalf of itself and the Secured Creditors;
(iii) sell or otherwise liquidate, or direct the Company to sell
or otherwise liquidate, any or all investments made in whole or in part
with the Collateral or any part thereof, and take possession of the
proceeds of any such sale or liquidation;
(iv) with respect to Secured Obligations not already covered
under the Credit Agreement which are contingent and cannot be accelerated
by their nature, require the Company to deposit cash or other acceptable
collateral in an amount sufficient to cover principal, interest and fees
which will have accrued by the maturity date on said Secured Obligations to
be held as security for said Secured Obligations in the special non-
interest bearing collateral account referred to in Section 7.2 hereof; and
-----------
(v) take possession of the Collateral or any part thereof, by
directing the Company in writing to deliver the same to the Agent, on
behalf of itself and the Secured Creditors, at any reasonable place or
places designated by the Agent, in which event the Company shall at its own
expense:
(A) forthwith cause the same to be moved to the place or
places so designated by the Agent and there delivered to the Agent, on
behalf of itself and the Secured Creditors;
-9-
<PAGE>
(B) store and keep any Collateral so delivered to the
Agent, on behalf of itself and the Secured Creditors, at such place or
places pending further action by the Agent; and
(C) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good condition;
it being understood that the Company's obligation so to deliver the
Collateral is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, the Agent, on behalf
of itself and the Secured Creditors, shall be entitled to a decree
requiring specific performance by the Company of said obligation.
(b) Disposition of the Collateral.
-----------------------------
(i) Any Collateral repossessed by the Agent, on behalf of itself
and the Secured Creditors, under or pursuant to Section 8(a) hereof and any
------------
other Collateral whether or not so repossessed by the Agent, on behalf of
itself and the Secured Creditors, upon the occurrence and continuance of an
Event of Default may be sold, leased or otherwise disposed of under one or
more contracts or as an entirety and without the necessity of gathering at
the place of sale the property to be sold, and in general in such manner,
at such time or times, at such place or places and on such terms and for
such prices as the Agent may, in compliance with any mandatory requirements
of applicable law, determine to be commercially reasonable. Upon the
occurrence and during the continuance of any Event of Default, the Agent,
on behalf of itself and the Secured Creditors, shall have the power to
foreclose the Company's right of redemption in the Collateral by sale,
lease or other disposition of the Collateral in accordance with the Uniform
Commercial Code as enacted in each state where the Collateral is located.
Any of the Collateral may be sold, leased or otherwise disposed of in the
condition in which the same existed when taken by the Agent, on behalf of
itself and the Secured Creditors, or after any overhaul or repair which the
Agent shall determine to be commercially reasonable and the Agent shall be
entitled to reimbursement for the payment of any costs or expenses of such
overhaul or repair. Any such disposition which shall be a private sale or
other private proceeding permitted by the requirements of applicable law
shall be made after 10 days' prior written notice to the Company specifying
the time at which such disposition is to be made and the intended sale
price or other consideration therefor. Any such disposition which shall be
a public sale permitted by such requirements of applicable law shall be
made after written notice to the Company specifying the time and place of
such sale and, in the absence of applicable requirements of law, shall be
by public auction. To the extent permitted by any such requirement of law,
the Agent, on behalf of itself and the Secured Creditors, or any Secured
Creditor may itself bid for and become the purchaser of the Collateral or
any item thereof, offered for sale in accordance with this Section 8(b)
------------
without accountability to the Company. In the payment of the purchase price
of the Collateral the purchaser shall be entitled to have credit on account
of the purchase price thereof of amounts owing to such purchaser on account
of any of the Secured Obligations held by such purchaser and any such
purchaser
-10-
<PAGE>
may deliver notes, claims for interest, or claims for other payment with
respect to such Secured Obligations in lieu of cash up to the amount which
would, upon distribution of the net proceeds of such sale, be payable
thereon. Such notes, if the amount payable hereunder shall be less than the
amount due thereon, shall be returned to the holder thereof after being
appropriately stamped to show partial payment. If, under mandatory
requirements of applicable law, the Agent, on behalf of itself and the
Secured Creditors, shall be required to make disposition of the Collateral
within a period of time which does not permit the giving of notice to the
Company as hereinabove specified, the Agent need give the Company only such
notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law.
(ii) No notification need be given to the Company if it has
signed, after a Default or an Event of Default, a statement renouncing or
modifying any right to notification of sale or other intended disposition.
In addition to the rights and remedies granted to it in this Agreement and
in the Secured Debt Agreements, the Agent, on behalf of itself and the
Secured Creditors, shall have all the rights and remedies of a secured
party under the Uniform Commercial Code of the state in which the
Collateral is located.
9. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in the following
order unless a court of competent jurisdiction shall otherwise direct:
(a) FIRST, to payment of all reasonable costs and expenses of the
Agent incurred in connection with the collection and enforcement of the Secured
Obligations or of the security interest granted to the Agent pursuant to this
Agreement, including all reasonable costs and expenses of any sale pursuant to
this Agreement, and of any judicial or private proceedings in which such sale
may be made, and of all other reasonable expenses, Secured Obligations and
advances made or incurred by the Agent;
(b) SECOND, to payment, pro rata, of that portion of the Secured
--- ----
Obligations constituting accrued and unpaid interest and fees, together with (to
the extent permitted by law) interest owing thereon at the applicable default
rate from the date due, owing or unpaid until paid in full;
(c) THIRD, to payment, pro rata, of the principal of the Secured
--- ----
Obligations, then due, owing or unpaid in respect of any Secured Obligations;
(d) FOURTH, to payment, pro rata, of any other Secured Obligations
--- ----
due, owing or unpaid until paid in full including, without limitation, any
Secured Obligations incurred pursuant to this Agreement; and
(e) FIFTH, the balance, if any, after all of the Secured Obligations
have been satisfied, shall be remitted as required by law.
-11-
<PAGE>
10. Remedies Cumulative. Each and every right, power and remedy hereby
-------------------
specifically given to the Agent, for the benefit of itself and the Secured
Creditors, shall be in addition to every other right, power and remedy
specifically given to the Agent or the Secured Creditors under this Agreement or
any Secured Debt Agreement now or hereafter existing at law or in equity, or by
statute and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time or simultaneously
and as often and in such order as may be deemed expedient by the Agent. All such
rights, powers and remedies shall be cumulative and the exercise or the
beginning of exercise of one shall not be deemed a waiver of the right to
exercise any of the others. No delay or omission of the Agent in the exercise of
any such right, power or remedy and no renewal or extension of any of the
Secured Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. In the event that the Agent or any Secured Creditor shall bring any
suit to enforce any of its rights hereunder and shall be entitled to judgment,
then in such suit the Agent or such Secured Creditor may recover reasonable
expenses, including attorneys' fees, which attorneys may be employees of the
Agent, and the amounts thereof shall be included in such judgment.
11. Discontinuance of Proceedings. In case the Agent or any Secured
-----------------------------
Creditor shall have instituted any proceeding to enforce any right, power or
remedy under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Agent or such Secured Creditor, then and
in every such case the Company and the Agent or such Secured Creditor shall be
restored to their respective former positions and rights hereunder with respect
to the Collateral, and all rights, remedies and powers of the Agent or such
Secured Creditor shall continue as if no such proceeding had been instituted.
12. Custody and Preservation of Collateral. The Agent shall be deemed to
--------------------------------------
have exercised reasonable care in the custody and preservation of any of the
Collateral in its possession if it takes such action for that purpose as the
Company requests in writing, but failure of the Agent to comply with any such
request shall not of itself be deemed a failure to exercise reasonable care, and
no failure of the Agent to preserve or protect any rights with respect to such
Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by the Company, shall be deemed
a failure to exercise reasonable care in the custody or preservation of such
Collateral.
13. Authorization for the Agent to Take Certain Action. The Company
--------------------------------------------------
irrevocably authorizes the Agent, at any time and from time to time, in the sole
discretion of the Agent, and appoints the Agent as its attorney-in-fact to act
on behalf of the Company, (a) to execute on behalf of the Company as debtor and
to file financing statements necessary or desirable in the Agent's sole
discretion to perfect and to maintain the perfection and priority of the Agent's
security interest in the Collateral, on behalf of itself and the Secured
Creditors, (b) to endorse and collect any cash proceeds of the Collateral, (c)
to file a carbon, photographic or other reproduction of this Agreement or any
financing statement with respect to the Collateral as a financing statement in
such offices as the Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral, (d) to enforce payment
of the Receivables in the name of the Agent, any Secured Creditor or the
Company, and
-12-
<PAGE>
(e) to apply the proceeds of any Collateral received by the Agent to the Secured
Obligations as provided in Section 9 hereof. This appointment as attorney-in-
---------
fact is coupled with an interest and shall be irrevocable for so long as any
Secured Obligations are outstanding.
14. Notices. (a) Any notice required or permitted to be given under this
-------
Agreement shall be given (i) in the case of the Company, the Agent, the Agent
and each Lender, in accordance the Credit Agreement, (ii) in the case of a L/C
Creditor, in accordance with the relevant Secured Letter of Credit and (iii) in
the case of a Swap Creditor, in accordance with the relevant Secured Swap
Contract.
(b) The Company, the Agent or any Secured Creditor may
change the address for service of notice upon it by a notice in writing to the
other.
15. Waiver and Amendments. No failure or delay on the part of the Agent
---------------------
or any Secured Creditor in the exercise of any power, right or remedy, and no
course of dealing between the Company and the Agent or any Secured Creditor,
shall operate as a waiver of such power, right or remedy, nor shall any single
or partial exercise of any power, right or remedy preclude other or further
exercise thereof or the exercise of any other power, right or remedy. The
remedies provided for herein are cumulative and not exclusive of any remedies
which may be available to the Agent or any Secured Creditor at law or in equity.
No notice to or demand on the Company not required hereunder shall in any event
entitle the Company to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Agent or any Secured
Creditor to any other or further action in any circumstances without notice or
demand. No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed and delivered by the Agent and the Secured
Creditors affected thereby. Any waiver of any provision of this Agreement, and
any consent to any departure by the Company from the terms of any provision of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which given.
16. Termination. This Agreement shall continue in effect (notwithstanding
-----------
the fact that from time to time there may be no Secured Obligations or
commitments therefor outstanding) until the payment in full of the Secured
Obligations and the termination of the Secured Debt Agreements in accordance
with its terms thereunder, at which time the security interests granted hereby
shall terminate and any and all rights to the Collateral shall revert to the
Company. Upon such termination, the Agent shall promptly return to the Company,
at the Company's expense, such of the Collateral held by the Agent as shall not
have been sold or otherwise applied pursuant to the terms hereof. The Agent will
promptly execute and deliver to the Company such other documents as the Company
shall reasonably request to evidence such termination.
17. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
-13-
<PAGE>
18. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
19. Successors and Assigns. The rights and privileges of the Company, the
----------------------
Agent and the Secured Creditors hereunder shall inure to the benefit of their
successors and permitted assigns.
20. Agent. BofA has been appointed as Agent for the Secured Creditors
-----
hereunder, and the Agent has agreed to act (and any successor Agent shall act)
as such hereunder only on the express conditions contained in Article X of the
Credit Agreement. Any successor Agent appointed pursuant to Article X of the
Credit Agreement shall be entitled to all the rights, interests and benefits of
the Agent hereunder.
21. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Company or any other
party or against or in payment of any or all of the Secured Obligations.
22. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
[Signature Page Follows]
-14-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
IMPAC GROUP, INC.
By /s/ Richard Block
---------------------------------
Name: Richard Block
Title: President
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION,
as Agent
By /s/ David Johanson
---------------------------------
Name: David Johanson
Title: Vice President
S-1
[TO SECURITY AGREEMENT-COMPANY]
<PAGE>
SCHEDULE A
----------
EQUIPMENT LOCATIONS
-------------------
1950 N. Ruby Street
Melrose Park, Cook County, Illinois
<PAGE>
SCHEDULE B
----------
A. Chief Executive Office Location
-------------------------------
1950 N. Ruby Street
Melrose Park, Cook County, Illinois
B. Records Locations
-----------------
1) 1950 N. Ruby Street 2) 110 Gibraltar Road
Melrose Park, Cook County, Illinois Horsham, Montgomery, Pennsylvania
C. Inventory Locations
-------------------
1950 N. Ruby Street
Melrose Park, Cook County, Illinois
<PAGE>
SCHEDULE C
----------
[List trade names, styles
and doing business forms]
None
<PAGE>
EXHIBIT 10.22
________________________________________________________________________________
________________________________________________________________________________
SECURITY AGREEMENT-L/C BORROWERS
DATED AS OF MARCH 12, 1998
BETWEEN
AGI INCORPORATED,
KLEARFOLD, INC.,
AND
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, AGENT
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions and Interpretation of Agreement........................... 2
-------------------------------------------
2. Grant of Security Interest............................................ 4
--------------------------
3. Representations and Warranties........................................ 5
------------------------------
4. Use of Equipment...................................................... 5
----------------
5. Processing, Sale and Collections...................................... 5
--------------------------------
6. Certificates, Schedules and Reports................................... 7
-----------------------------------
7. Covenants............................................................. 7
---------
8. Remedies.............................................................. 9
--------
(a) Remedies; Obtaining the Collateral Upon an Event of Default.... 9
-----------------------------------------------------------
(b) Disposition of the Collateral.................................. 10
-----------------------------
9. Application of Proceeds............................................... 11
-----------------------
10. Remedies Cumulative................................................... 12
-------------------
11. Discontinuance of Proceedings......................................... 12
-----------------------------
12. Custody and Preservation of Collateral................................ 12
--------------------------------------
13. Authorization for the Agent to Take Certain Action.................... 12
--------------------------------------------------
14. Notices............................................................... 13
-------
15. Waiver and Amendments................................................. 13
---------------------
16. Termination........................................................... 13
-----------
17. CHOICE OF LAW......................................................... 14
-------------
18. Severability.......................................................... 14
------------
19. Successors and Assigns................................................ 14
----------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
20. Agent............................................................... 14
-----
21. Marshalling......................................................... 14
-----------
22. WAIVER OF JURY TRIAL................................................ 14
--------------------
</TABLE>
-ii-
<PAGE>
SCHEDULES
SCHEDULE A - Schedule of Equipment Locations
SCHEDULE B - Schedule of Chief Executive Office Location, Records Locations
and Inventory Locations
SCHEDULE C - Schedule of Trade Names, Styles and Doing Business Forms
-iii-
<PAGE>
SECURITY AGREEMENT-L/C BORROWERS
THIS SECURITY AGREEMENT-L/C Borrowers, dated as of March 12, 1998 (as the
same may be restated, amended or modified from time to time, this "Agreement"),
by and between AGI INCORPORATED, an Illinois corporation ("AGI"), KLEARFOLD,
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INC., a Pennsylvania corporation ("Klearfold"; and together with AGI, each an
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"Assignor" and collectively the "Assignors"), and BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors (as
defined below). Unless otherwise defined in Section 1, terms defined in the
Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
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A. Pursuant to the Credit Agreement, dated as of even date herewith, among
the Assignors, IMPAC Group, Inc. (the "Company"), the financial institutions
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from time to time party thereto (the "Lenders") and the Agent (as from time to
time restated, amended or modified, the "Credit Agreement"), the Lenders have
agreed to extend certain credit and issue letters of credit to the Assignors and
the Company;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), each Assignor has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Company under or with respect to the Secured
Debt Agreements (as defined below) to which the Company is a party;
C. An Assignor may from time to time be party to one or more Swap
Contracts relating to the Loans (each such Swap Contract with a Swap Creditor
(as defined below), a "Secured Swap Contract") with Bank of America National
Trust & Savings Association ("BofA"), in its individual capacity, any Lender or
syndicate of financial institutions organized by BofA, or an affiliate of BofA
or any Lender (even if BofA or any such Lender ceases to be a Lender under the
Credit Agreement for any reason) and any institution that participates in, and
in each case their subsequent assigns, such Secured Swap Contract (collectively,
the "Swap Creditors");
D. An Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or any such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors"); and
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignors grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions and Interpretation of Agreement. The following shall
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have (unless otherwise provided elsewhere in this Agreement) the following
respective meanings (such meanings being equally applicable to both the singular
and plural form of the terms defined):
"Account Debtor" shall mean the party who is obligated on or under any
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Account Receivable or Contract Right.
"Account Receivable" shall mean any right of an Assignor to payment
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for goods sold or leased or for services rendered.
"Agent" shall have the meaning ascribed to it in the Preamble.
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"Assignee Deposit Account" has the meaning ascribed to it in Section
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5.
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"Assignor" has the meaning ascribed to it in the Preamble.
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"BofA" has the meaning ascribed to it in the Recitals.
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"Collateral" has the meaning ascribed to it in Section 2.
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"Contract Right" shall mean any right of an Assignor to payment under
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a contract for the sale or lease of goods or the rendering of services, which
right is at the time not yet earned by performance.
"Credit Agreement" has the meaning ascribed to it in the Recitals.
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"Event of Default" means any Event of Default under, and as defined
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in, the Credit Agreement, or any payment default, after any applicable grace
period, under any other Secured Debt Agreement.
"Equipment" shall mean all equipment owned by an Assignor of every
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description; all accessories, parts, accessions and other property owned by such
Assignor at any time installed thereon or affixed thereto or used in connection
therewith; and all substitutions for or replacements of any of the foregoing.
"General Intangibles" means all intangible personal property of an
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Assignor including, without limitation, all general intangibles, contract
rights, rights to receive payments of money, choses in action, judgments, tax
refunds and tax refund claims, copyrights, copyright licenses, patents, patent
licenses, trademarks, trademark licenses, trade names, trade secrets, drawings
or plans with respect to trade secrets, copyrights, licenses, franchises,
leasehold interests in real or personal property, rights to receive rentals of
real or personal property and guarantee claims.
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<PAGE>
"Inventory" shall mean all goods held by an Assignor for sale or
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lease, or leased by such Assignor as lessor, or furnished or to be furnished by
such Assignor under any contract of service, or held by such Assignor as raw
materials, work in process or materials used or consumed in a business; and all
goods, the sale or lease of which has given rise to an Account Receivable,
Contract Right, instrument or chattel paper, which are returned to such
Assignor, repossessed by such Assignor, stopped in transit by such Assignor or
which otherwise come into the possession of such Assignor.
"L/C Creditor" has the meaning ascribed to it in the Recitals.
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"Lenders" has the meaning ascribed to it in the Recitals.
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"Non-Goods Collateral" shall mean all Collateral other than Inventory,
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Equipment and other goods.
"Obligor" shall mean the Company and each other party primarily or
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secondarily liable on any of the Secured Obligations.
"Permissible Collateral Locations" shall mean any location listed on
--------------------------------
Schedule B hereto with respect to an Assignor as to which (in the case of
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locations not owned by such Assignor) the Agent has received an executed
landlord waiver in form satisfactory to the Agent (with respect to leased
premises) and any other location to which the Agent, after all actions necessary
in the Agent's absolute discretion are taken to protect the Agent's security
interest in all Collateral to be kept at such location, has consented in
writing.
"Secured Creditors" means, collectively, the Agent, each Lender, each
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L/C Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement
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and the other Loan Documents, each Secured Letter of Credit and each Secured
Swap Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the
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Recitals.
"Secured Obligations" means, collectively, (i) all "Obligations" as
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defined in the Credit Agreement, (ii) all "Obligations" as defined in the
Guaranty, (iii) the payment when due of all obligations of an Assignor to Swap
Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by an Assignor and
(iv) the payment when due of all obligations of an Assignor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by an Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the
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Recitals.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
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<PAGE>
A Section or a Schedule is, unless otherwise stated, a reference to a
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section hereof or a schedule hereto, as the case may be. Section captions used
in this Agreement are for convenience only, and shall not affect the
construction of this Agreement. The words "hereof," "herein," "hereto" and
"hereunder" and words of similar purport when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise defined therein, all terms defined in this Agreement
shall have the defined meanings when used in any certificate or other documents
made or delivered pursuant hereto.
2. Grant of Security Interest. As security for the payment of all
--------------------------
Secured Obligations, each Assignor hereby assigns to the Agent for the benefit
of the Secured Creditors, and grants to the Agent for the benefit of the Secured
Creditors, a continuing security interest in, all personal property, wherever
located, in which such Assignor now has or hereafter acquires any right or
interest and all proceeds thereof, including without limitation the following
(collectively, the "Collateral"):
(a) all Inventory, Accounts Receivable, Contract Rights and documents
of title of such Assignor;
(b) all chattel paper and instruments evidencing any obligation to
such Assignor for payment for goods sold or leased or for services
rendered;
(c) all interest of such Assignor in any goods, the sale or lease of
which shall have given or shall give rise to, and in all guaranties and
other property securing the payment of or performance under, any Accounts
Receivable, Contract Rights or any such chattel paper or instruments;
(d) all Equipment of such Assignor.
(e) all General Intangibles of such Assignor;
(f) to the extent related to the property described in clauses (a)
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through (e) above, all books, correspondence, credit files, records,
---
invoices and other papers and documents, including, without limitation, to
the extent so related, all tapes, cards, computer runs, computer programs
(to the extent such Assignor may grant a security interest in the same
without a breach of the terms thereof) and other papers and documents in
the possession or control of such Assignor or any computer bureau from time
to time acting for such Assignor; and, to the extent so related, all rights
in, to and under all policies of insurance, including claims of rights to
payments thereunder and proceeds therefrom, including any credit insurance;
and
(g) all proceeds and products of any of the foregoing.
3. Representations and Warranties. Each Assignor represents and warrants
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to the Agent and the Secured Creditors that:
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<PAGE>
(a) none of the Collateral is of a type where a security interest or
lien may be filed under, or notice thereof given under, any federal statute
relating exclusively to Collateral of that type rather than property
generally; provided, however, some of the collateral may be intellectual
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property falling under the purview of the United States Patent and
Trademark Office;
(b) all Equipment, except any thereof which such Assignor shall have
identified on Schedule A as equipment normally used in more than one State,
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is located at one of the addresses shown on Schedule A unless another
location is shown with respect to any Equipment in the description thereof
on Schedule A, in which case such Equipment is located at such other
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location, and all Inventory is located at the addresses shown on Schedule
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B;
-
(c) since January 1, 1993, such Assignor has not conducted business
under any name except the name or trade name in which it has executed this
Agreement;
(d) except with respect to vehicles, none of the Equipment owned by
such Assignor is covered by any certificate of title; and
(e) such Assignor has no trade names, styles or doing business forms
except for the divisional names listed on Schedule C and, when using such
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names, such Assignor identifies the applicable division as a division of
such Assignor;
4. Use of Equipment. Until an Event of Default has occurred and is
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continuing, each Assignor may have possession of all Equipment and use the same
in any lawful manner not inconsistent with this Agreement or with any policy of
insurance on any of the Equipment.
5. Processing, Sale and Collections. Until such time as an Event of
--------------------------------
Default has occurred and is continuing and the Agent shall notify an Assignor of
the revocation of such power and authority, each Assignor:
(a) may, in the ordinary course of its business, at its own expense,
sell, lease or furnish under contracts of service any of the Inventory
normally held by such Assignor for such purpose, and use and consume, in
the ordinary course of its business, any raw materials, work in process or
materials normally held by such Assignor for such purpose;
(b) will, at its own expense, endeavor to collect, as and when due,
all amounts due with respect to any of the Non-Goods Collateral, including
the taking of such action with respect to such collection as the Agent may
reasonably request or, in the absence of such request, as such Assignor may
deem advisable;
(c) may grant, in the ordinary course of business, to any party
obligated on or with respect to any of the Non-Goods Collateral, any
rebate, refund or allowance to which such party may be lawfully entitled,
and may accept, in connection therewith, the return of goods, the sale or
lease of which shall have given rise to such Non-Goods Collateral; and
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<PAGE>
(d) such Assignor may sell used and obsolete furniture, equipment and
fixtures in the ordinary course of business to the extent not prohibited by
the Credit Agreement. So long as no Event of Default has occurred and is
continuing, the Agent shall, upon the request of such Assignor accompanied
by a certificate to the effect such sale is in compliance with this
section, without the requirement of obtaining the consent of any Secured
Creditor, release the Lien of this Agreement upon any property sold
pursuant to this section.
The Agent, however, may at any time (but shall not be obligated to), during
the continuation of an Event of Default and after giving written notice of such
action to the relevant Assignor notify any party obligated on or with respect to
any of the Non-Goods Collateral to make payment directly to the Agent of any
amounts due or to become due thereunder and enforce collection of any of the
Non-Goods Collateral by suit or otherwise and surrender, release or exchange all
or any part thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any indebtedness thereunder or evidenced
thereby. Upon request of the Agent during the continuation of an Event of
Default the relevant Assignor will, at its own expense, notify any parties
obligated on or with respect to any of the Non-Goods Collateral to make payment
to the Agent of any amounts due or to become due thereunder.
Each Assignor will, upon written demand of the Agent made after and during
the continuance of an Event of Default, forthwith, upon receipt, transmit and
deliver to the Agent, in the form received, all cash, checks, drafts, chattel
paper and other instruments or writings for the payment of money (properly
endorsed, where required, so that such items may be collected by the Agent)
which may be received by such Assignor at any time in full or partial payment or
otherwise as proceeds of any of the Collateral. Except as the Agent may
otherwise consent in writing, any such items which may be received by an
Assignor following such demand of the Agent will not be commingled with any
other of its funds or property, but will be held separate and apart from its own
funds or property and upon express trust for the Agent, for the benefit of
itself and the Secured Creditors, until delivery is made to the Agent. All items
or amounts which are delivered by an Assignor to the Agent on account of partial
or full payment by an Account Debtor or otherwise as proceeds of any of the
Collateral shall be deposited to the credit of a special deposit account over
which such Assignor shall have no control (herein called an "Assignee Deposit
Account") of such Assignor with the Agent, as security for payment of the
Secured Obligations. The Agent shall invest any and all available funds
deposited in such special deposit account, within 10 business days after the
date the relevant funds become available, in securities issued as fully
guaranteed or insured by the United States Government or any agency thereof
backed by the full faith and credit of the United States having maturities of no
greater than 3 months from the date of acquisition thereof (collectively,
"Government Obligations"). Each Assignor hereby acknowledges and agrees that the
Agent shall not have any liability with respect to, and each Assignor hereby
jointly and severally indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations. The Agent may, from time to time, in
its absolute discretion, apply all or any of the then balance, representing
collected funds, in the Assignee Deposit Account, toward payment of the Secured
Obligations, whether or not then due.
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<PAGE>
The Agent is authorized to endorse, in the name of the relevant Assignor,
any item, howsoever received by the Agent, representing any payment on or other
proceeds of any of the Collateral.
6. Certificates, Schedules and Reports. Each Assignor will furnish to
-----------------------------------
the Agent from time to time, as the Agent may reasonably request, such
additional schedules and such certificates and reports respecting all or any of
the Collateral at the time subject to the security interest hereunder and the
items or amounts received by such Assignor in full or partial payment or
otherwise as proceeds of any of the Collateral, all to such extent as the Agent
may reasonably request. Each of the foregoing schedules, certificates, reports
and notices shall be executed by a duly authorized officer of the relevant
Assignor and shall be in such form and detail as the Agent may reasonably
specify.
7. Covenants. From the date of this Agreement, and thereafter until this
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Agreement is terminated, each Assignor:
(a) will keep all Inventory at the addresses shown on Schedule B, or
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at such other address as to which each Assignor has given the Agent one (1)
month prior written notice and the Agent has taken such steps as it deems
necessary to ensure that its security interest in collateral at such new
location shall remain perfected;
(b) will keep its records concerning its Accounts Receivables at its
address shown on Schedule B, unless the Agent shall otherwise be notified
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one (1) month in advance of a new address in writing, which records will be
of such character as will enable the Agent or its designees to determine at
any time the status thereof, and such Assignor will not, unless the Agent
shall otherwise consent in writing, duplicate any such records at any other
address;
(c) will keep all Equipment, except any thereof which such Assignor
shall have identified on Schedule A as equipment normally used in more than
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one State (referred to in this clause (c) as "mobile goods"), at the
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addresses on Schedule A, unless the Agent shall otherwise consent in
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writing; will immediately give written notice to the Agent within thirty
(30)days before any use of any mobile goods in any jurisdiction other than
a State in which such Assignor shall have previously advised the Agent such
mobile goods will be used; and will not use any mobile goods outside the
territorial limits of the United States, unless the Agent shall otherwise
consent in writing;
(d) will not, without giving the Agent one (1) month prior written
notice, change the location of its chief executive office or its chief
place of business from the address shown on Schedule B;
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(e) will furnish the Agent not less than 30 days written notice prior
to changing its name or adopting or changing any trade name, style or doing
business form;
(f) will furnish the Agent such information concerning such Assignor,
the Collateral and the Account Debtors as the Agent may from time to time
reasonably request;
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<PAGE>
(g) upon the occurrence and continuance of an Event of Default, will,
upon request of the Agent, stamp on its records concerning the Collateral a
notation, in form satisfactory to the Agent, of the security interest of
the Agent hereunder;
(h) will reimburse the Agent upon demand for all reasonable costs and
expenses, including reasonable fees of attorneys (who may be employees of
the Agent) and reasonable legal expenses, incurred by the Agent in seeking
to collect or enforce any rights under the Collateral and, in case of an
Event of Default, in seeking to collect any Secured Obligations and to
enforce rights hereunder, including reasonable expenses of any repairs to
any realty or other property to which any of the Equipment may be affixed
or be a part;
(i) will pay, when due, all taxes, assessments, governmental charges
and other similar charges levied against any of the Collateral, except and
so long as such Assignor is contesting such taxes, assessments or charges
in good faith and by appropriate proceedings and such Assignor has set
aside on its books such reserves or other appropriate provisions therefor
as may be required by generally accepted accounting principles;
(j) will do nothing to impair in any material respect the rights of
the Agent or the Secured Creditors in the Collateral. Each Assignor will at
all times keep the Collateral insured in compliance with the requirements
of the Credit Agreement. Each Assignor assumes all liability and
responsibility in connection with the Collateral acquired by it, and the
liability of such Assignor to pay its obligations shall in no way be
affected or diminished by reason of the fact that such Collateral may be
lost, stolen, damaged or for any reason whatsoever unavailable to the
Company;
(k) will notify the Agent of any Collateral which, to its knowledge,
constitutes a claim against the United States government or any
instrumentality or agency thereof (except for claims against any state
government, unless requested by the Agent), the assignment of which claim
is restricted by federal law. Promptly upon the reasonable request of the
Agent, the relevant Assignor will take such steps as may be necessary to
comply with any applicable federal assignment of claims laws; and
(l) at any time after and during the continuance of an Event of
Default, upon reasonable request, will give the Agent information as to
ownership of any vehicle or other Equipment covered by a certificate of
title. Promptly upon reasonable request of the Agent at any time after and
during the continuance of an Event of Default, each Assignor will deliver
any such certificate of title to the Agent and/or will cause the lien of
the Agent, on behalf of itself and the Secured Creditors, to be noted
thereupon.
The Agent may from time to time, at its option, perform any agreement of an
Assignor hereunder which such Assignors shall fail to perform and take any other
action which the Agent deems necessary for the maintenance or preservation of
any of the Collateral or its interest therein, and each Assignor agrees to
forthwith reimburse the Agent for all reasonable expenses of the Agent in
connection with the foregoing, together with interest thereon from the date
incurred until reimbursed by an Assignor at a rate per annum equal to the Base
Rate plus the Applicable Margin
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<PAGE>
in effect from time to time. Each Assignor's obligation to reimburse the Agent
pursuant to the preceding sentence shall be a Secured Obligation payable on
demand.
8. Remedies.
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(a) Remedies; Obtaining the Collateral Upon an Event of Default. Each
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Assignor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Agent may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or any
other Person who then has possession of any part thereof with or without
notice or process of law (unless the same shall be required by applicable
law), and for that purpose may enter in an orderly and lawful manner upon
such Assignor's premises where any of the Collateral is located and remove
the same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any contract,
agreement, instrument or other obligation (including, without limitation,
the Receivables) constituting the Collateral to make any payment required
by the terms of such instrument or agreement directly to the Agent, on
behalf of itself and the Secured Creditors;
(iii) sell or otherwise liquidate, or direct such Assignor to
sell or otherwise liquidate, any or all investments made in whole or in
part with the Collateral or any part thereof, and take possession of the
proceeds of any such sale or liquidation;
(iv) with respect to Secured Obligations not already covered
under the Credit Agreement which are contingent and cannot be accelerated
by their nature, require such Assignor to deposit cash or other acceptable
collateral in an amount sufficient to cover principal, interest and fees
which will have accrued by the maturity date on said Secured Obligations to
be held as security for said Secured Obligations in the special non-
interest bearing collateral account referred to in Section 7.2 hereof; and
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(v) take possession of the Collateral or any part thereof, by
directing such Assignor in writing to deliver the same to the Agent, on
behalf of itself and the Secured Creditors, at any reasonable place or
places designated by the Agent, in which event such Assignor shall at its
own expense:
(A) forthwith cause the same to be moved to the place or
places so designated by the Agent and there delivered to the Agent, on
behalf of itself and the Secured Creditors;
(B) store and keep any Collateral so delivered to the
Agent, on behalf of itself and the Secured Creditors, at such place or
places pending further action by the Agent; and
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<PAGE>
(C) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good condition;
it being understood that each Assignor's obligation so to deliver the
Collateral is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, the Agent, on behalf
of itself and the Secured Creditors, shall be entitled to a decree
requiring specific performance by the Assignors of said obligation.
(b) Disposition of the Collateral.
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(i) Any Collateral repossessed by the Agent, on behalf of itself
and the Secured Creditors, under or pursuant to Section 8(a) hereof and any
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other Collateral whether or not so repossessed by the Agent, on behalf of
itself and the Secured Creditors, upon the occurrence and continuance of an
Event of Default may be sold, leased or otherwise disposed of under one or
more contracts or as an entirety and without the necessity of gathering at
the place of sale the property to be sold, and in general in such manner,
at such time or times, at such place or places and on such terms and for
such prices as the Agent may, in compliance with any mandatory requirements
of applicable law, determine to be commercially reasonable. Upon the
occurrence and during the continuance of any Event of Default, the Agent,
on behalf of itself and the Secured Creditors, shall have the power to
foreclose an Assignor's right of redemption in the Collateral by sale,
lease or other disposition of the Collateral in accordance with the Uniform
Commercial Code as enacted in each state where the Collateral is located.
Any of the Collateral may be sold, leased or otherwise disposed of in the
condition in which the same existed when taken by the Agent, on behalf of
itself and the Secured Creditors, or after any overhaul or repair which the
Agent shall determine to be commercially reasonable and the Agent shall be
entitled to reimbursement for the payment of any costs or expenses of such
overhaul or repair. Any such disposition which shall be a private sale or
other private proceeding permitted by the requirements of applicable law
shall be made after 10 days' prior written notice to an Assignor specifying
the time at which such disposition is to be made and the intended sale
price or other consideration therefor. Any such disposition which shall be
a public sale permitted by such requirements of applicable law shall be
made after written notice to an Assignor specifying the time and place of
such sale and, in the absence of applicable requirements of law, shall be
by public auction. To the extent permitted by any such requirement of law,
the Agent, on behalf of itself and the Secured Creditors, or any Secured
Creditor may itself bid for and become the purchaser of the Collateral or
any item thereof, offered for sale in accordance with this Section 8(b)
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without accountability to an Assignor. In the payment of the purchase price
of the Collateral the purchaser shall be entitled to have credit on account
of the purchase price thereof of amounts owing to such purchaser on account
of any of the Secured Obligations held by such purchaser and any such
purchaser may deliver notes, claims for interest, or claims for other
payment with respect to such Secured Obligations in lieu of cash up to the
amount which would, upon distribution of the net proceeds of such sale, be
payable thereon. Such notes, if the amount payable hereunder shall be less
than the amount due thereon, shall be returned to the holder thereof after
being
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<PAGE>
appropriately stamped to show partial payment. If, under mandatory
requirements of applicable law, the Agent, on behalf of itself and the
Secured Creditors, shall be required to make disposition of the Collateral
within a period of time which does not permit the giving of notice to an
Assignor as hereinabove specified, the Agent need give an Assignor only
such notice of disposition as shall be reasonably practicable in view of
such mandatory requirements of applicable law.
(ii) No notification need be given to an Assignor if it has
signed, after a Default or an Event of Default, a statement renouncing or
modifying any right to notification of sale or other intended disposition.
In addition to the rights and remedies granted to it in this Agreement and
in the Secured Debt Agreements, the Agent, on behalf of itself and the
Secured Creditors, shall have all the rights and remedies of a secured
party under the Uniform Commercial Code of the state in which the
Collateral is located.
9. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in the following
order unless a court of competent jurisdiction shall otherwise direct:
(a) FIRST, to payment of all reasonable costs and expenses of the
Agent incurred in connection with the collection and enforcement of the
Secured Obligations or of the security interest granted to the Agent
pursuant to this Agreement, including all reasonable costs and expenses of
any sale pursuant to this Agreement, and of any judicial or private
proceedings in which such sale may be made, and of all other reasonable
expenses, Secured Obligations and advances made or incurred by the Agent;
(b) SECOND, to payment, pro rata, of that portion of the Secured
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Obligations constituting accrued and unpaid interest and fees, together
with (to the extent permitted by law) interest owing thereon at the
applicable default rate from the date due, owing or unpaid until paid in
full;
(c) THIRD, to payment, pro rata, of the principal of the Secured
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Obligations, then due, owing or unpaid in respect of any Secured
Obligations;
(d) FOURTH, to payment, pro rata, of any other Secured Obligations
--- ----
due, owing or unpaid until paid in full including, without limitation, any
Secured Obligations incurred pursuant to this Agreement; and
(e) FIFTH, the balance, if any, after all of the Secured Obligations
have been satisfied, shall be remitted as required by law.
10. Remedies Cumulative. Each and every right, power and remedy hereby
-------------------
specifically given to the Agent, for the benefit of itself and the Secured
Creditors, shall be in addition to every other right, power and remedy
specifically given to the Agent or the Secured Creditors under this Agreement or
any Secured Debt Agreement now or hereafter existing at law or in equity, or by
statute and each and every right, power and remedy whether specifically herein
given or otherwise
-11-
<PAGE>
existing may be exercised from time to time or simultaneously and as often and
in such order as may be deemed expedient by the Agent. All such rights, powers
and remedies shall be cumulative and the exercise or the beginning of exercise
of one shall not be deemed a waiver of the right to exercise any of the others.
No delay or omission of the Agent in the exercise of any such right, power or
remedy and no renewal or extension of any of the Secured Obligations shall
impair any such right, power or remedy or shall be construed to be a waiver of
any Default or Event of Default or an acquiescence therein. In the event that
the Agent or any Secured Creditor shall bring any suit to enforce any of its
rights hereunder and shall be entitled to judgment, then in such suit the Agent
or such Secured Creditor may recover reasonable expenses, including attorneys'
fees, which attorneys may be employees of the Agent, and the amounts thereof
shall be included in such judgment.
11. Discontinuance of Proceedings. In case the Agent or any Secured
-----------------------------
Creditor shall have instituted any proceeding to enforce any right, power or
remedy under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Agent or such Secured Creditor, then and
in every such case the relevant Assignor and the Agent or such Secured Creditor
shall be restored to their respective former positions and rights hereunder with
respect to the Collateral, and all rights, remedies and powers of the Agent or
such Secured Creditor shall continue as if no such proceeding had been
instituted.
12. Custody and Preservation of Collateral. The Agent shall be deemed to
--------------------------------------
have exercised reasonable care in the custody and preservation of any of the
Collateral in its possession if it takes such action for that purpose as the
Company requests in writing, but failure of the Agent to comply with any such
request shall not of itself be deemed a failure to exercise reasonable care, and
no failure of the Agent to preserve or protect any rights with respect to such
Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by an Assignor, shall be deemed
a failure to exercise reasonable care in the custody or preservation of such
Collateral.
13. Authorization for the Agent to Take Certain Action. Each Assignor
--------------------------------------------------
irrevocably authorizes the Agent, at any time and from time to time, in the sole
discretion of the Agent, and appoints the Agent as its attorney-in-fact to act
on behalf of such Assignor, (a) to execute on behalf of such Assignor as debtor
and to file financing statements necessary or desirable in the Agent's sole
discretion to perfect and to maintain the perfection and priority of the Agent's
security interest in the Collateral, on behalf of itself and the Secured
Creditors, (b) to endorse and collect any cash proceeds of the Collateral, (c)
to file a carbon, photographic or other reproduction of this Agreement or any
financing statement with respect to the Collateral as a financing statement in
such offices as the Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral, (d) to enforce payment
of the Receivables in the name of the Agent, any Secured Creditor or such
Assignor, and (e) to apply the proceeds of any Collateral received by the Agent
to the Secured Obligations as provided in Section 9 hereof. This appointment as
---------
attorney-in-fact is coupled with an interest and shall be irrevocable for so
long as any Secured Obligations are outstanding.
-12-
<PAGE>
14. Notices. (a) Any notice required or permitted to be given under this
-------
Agreement shall be given (i) in the case of an Assignor, the Agent, and each
Lender, in accordance with the Credit Agreement, (ii) in the case of a L/C
Creditor, in accordance with the relevant Secured Letter of Credit and (iii) in
the case of a Swap Creditor, in accordance with the relevant Secured Swap
Contract.
(b) Each Assignor or any Secured Creditor may change the
address for service of notice upon it by a notice in writing to the other.
15. Waiver and Amendments. No failure or delay on the part of the Agent
---------------------
or any Secured Creditor in the exercise of any power, right or remedy, and no
course of dealing between the Company and the Agent or any Secured Creditor,
shall operate as a waiver of such power, right or remedy, nor shall any single
or partial exercise of any power, right or remedy preclude other or further
exercise thereof or the exercise of any other power, right or remedy. The
remedies provided for herein are cumulative and not exclusive of any remedies
which may be available to the Agent or any Secured Creditor at law or in equity.
No notice to or demand on an Assignor not required hereunder shall in any event
entitle such Assignor to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the right of the Agent or any
Secured Creditor to any other or further action in any circumstances without
notice or demand. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement shall in any event be effective
unless the same shall be in writing and signed and delivered by the Agent and
the Secured Creditors affected thereby. Any waiver of any provision of this
Agreement, and any consent to any departure by an Assignor from the terms of any
provision of this Agreement, shall be effective only in the specific instance
and for the specific purpose for which given.
16. Termination. This Agreement shall continue in effect (notwithstanding
-----------
the fact that from time to time there may be no Secured Obligations or
commitments therefor outstanding) until the payment in full of the Secured
Obligations and the termination of the Secured Debt Agreements in accordance
with its terms thereunder, at which time the security interests granted hereby
shall terminate and any and all rights to the Collateral shall revert to the
relevant Assignor. Upon such termination, the Agent shall promptly return to an
Assignor, at such Assignor's expense, such of the Collateral held by the Agent
as shall not have been sold or otherwise applied pursuant to the terms hereof.
The Agent will promptly execute and deliver to the relevant Assignor such other
documents as such Assignor shall reasonably request to evidence such
termination.
17. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
18. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
-13-
<PAGE>
19. Successors and Assigns. The rights and privileges of the Assignors,
----------------------
the Agent and the Secured Creditors hereunder shall inure to the benefit of
their successors and permitted assigns.
20. Agent. BofA has been appointed as Agent for the Secured Creditors
-----
hereunder, and the Agent has agreed to act (and any successor Agent shall act)
as such hereunder only on the express conditions contained in Article X of the
Credit Agreement. Any successor Agent appointed pursuant to Article X of the
Credit Agreement shall be entitled to all the rights, interests and benefits of
the Agent hereunder.
21. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Company or any other
party or against or in payment of any or all of the Secured Obligations.
22. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
[SIGNATURE PAGE FOLLOWS]
-14-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
AGI INCORPORATED,
as an Assignor
By /s/ Richard Block
-------------------------------------------
Name: Richard Block
--------------------------------------
Title: President
-------------------------------------
KLEARFOLD, INC.,
as an Assignor
By /s/ Richard Block
--------------------------------------------
Name: Richard Block
---------------------------------------
Title: President
--------------------------------------
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION,
as Agent
By /s/ David A. Johanson
--------------------------------------------
Name: David A. Johanson
---------------------------------------
Title: Vice President
--------------------------------------
S-1
[TO SECURITY AGREEMENT-L/C BORROWER]
<PAGE>
SCHEDULE A - Security Agreement - L/C Borrowers
----------
EQUIPMENT LOCATIONS
-------------------
A. Klearfold, Inc.
---------------
1.) 364 Valley Road
Warrington, Bucks County, Pennsylvania
2.) 110 Gibraltar Road
Horsham, Montgomery County, Pennsylvania
3.) 6033 W. Century Blvd. #400
Los Angeles, Los Angeles County, California
4.) P.O. Box 1430
Louisa Industrial Air Park
Louisa, Louisa County, Virginia
5.) 300 Park Avenue, 17th Floor
New York, New York County, New York
6.) Colgate Juncos
Road 31 No. 100
Juncos, Puerto Rico
B. AGI Incorporated
----------------
1.) 1950 N. Ruby Street
Melrose Park, Cook County, Illinois
2.) Alford Refrigerated Warehouse
318 Cadiz St.
Dallas, Dallas County, Texas
3.) Creative Printing Service
1795 Birchwood Ave,
Des Plains, Cook County, Illinois
4.) Zonne Bookbinders
900 So. Clinton St.
Chicago, Cook County, Illinois
5.) Reindl Bindery
800 Wall St.
Elm Grove, Milwaukee County, Wisconsin
6.) Production Packaging
3750 Ohio Ave.
St. Charles, Kane County, Illinois
7.) Avon Springdale
175 Progress Pl.
Springdale, Hamilton County, Ohio
<PAGE>
SCHEDULE B - Security Agreement - L/C Borrowers
----------
A. Klearfold, Inc.
---------------
1. Chief Executive Office Location
-------------------------------
364 Valley Road
Warrington, Bucks County, Pennsylvania
2. Records Locations
-----------------
110 Gibraltar Road
Horsham, Montgomery County, Pennsylvania
3. Inventory Locations
-------------------
110 Gibraltar Road
Horsham, Montgomery County, Pennsylvania
364 Valley Road
Warrington, Bucks County, Pennsylvania
Colgate Juncos
Road 31 No. 100
Juncos, Puerto Rico
B. AGI Incorporated
----------------
1. Chief Executive Office Location
-------------------------------
1950 N. Ruby Street
Melrose Park, Cook County, Illinois
2. Records Locations
-----------------
1950 N. Ruby Street
Melrose Park, Cook County, Illinois
3. Inventory Locations
-------------------
1950 N. Ruby Street
Melrose Park, Cook County, Illinois
Alford Refrigerated Warehouse
318 Cadiz St.
Dallas, Dallas County, Texas
Creative Printing Service
1795 Birchwood Ave.
Des Plains, Cook County, Illinois
Zonne Bookbinders
900 So. Clinton St.
Chicago, Cook County, Illinois
Reindl Bindery
800 Wall St.
Elm Grove, Milwaukee County, Wisconsin
Production Packaging
3750 Ohio Ave.
St. Charles, Kane County, Illinois
Avon Springdale
175 Progress Pl.
Springdale, Hamilton County, Ohio
<PAGE>
SCHEDULE C
----------
[List trade names, styles
and doing business forms]
A. Klearfold, Inc.
---------------
None
B. AGI Incorporated
----------------
None
<PAGE>
EXHIBIT 10.23
________________________________________________________________________________
________________________________________________________________________________
SECURITY AGREEMENT - SUBSIDIARY GUARANTORS
DATED AS OF MARCH 12, 1998
BETWEEN
KF-DELAWARE, INC.,
KF-INTERNATIONAL, INC.,
AND
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, AGENT
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions and Interpretation of Agreement.......................... 2
-------------------------------------------
2. Grant of Security Interest........................................... 4
--------------------------
3. Representations and Warranties....................................... 5
------------------------------
4. Use of Equipment..................................................... 5
----------------
5. Processing, Sale and Collections..................................... 5
--------------------------------
6. Certificates, Schedules and Reports.................................. 7
-----------------------------------
7. Covenants............................................................ 7
---------
8. Remedies............................................................. 9
--------
(a) Remedies; Obtaining the Collateral Upon an Event of Default.... 9
-----------------------------------------------------------
(b) Disposition of the Collateral.................................. 10
-----------------------------
9. Application of Proceeds.............................................. 11
-----------------------
10. Remedies Cumulative.................................................. 12
-------------------
11. Discontinuance of Proceedings........................................ 12
-----------------------------
12. Custody and Preservation of Collateral............................... 12
--------------------------------------
13. Authorization for the Agent to Take Certain Action................... 12
--------------------------------------------------
14. Notices.............................................................. 13
-------
15. Waiver and Amendments................................................ 13
---------------------
16. Termination.......................................................... 13
-----------
17. CHOICE OF LAW........................................................ 14
-------------
18. Severability......................................................... 14
------------
19. Successors and Assigns............................................... 14
----------------------
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
20. Agent................................................................. 14
-----
21. Marshalling........................................................... 14
-----------
22. WAIVER OF JURY TRIAL.................................................. 14
--------------------
</TABLE>
-ii-
<PAGE>
SCHEDULES
SCHEDULE A - Schedule of Equipment Locations
SCHEDULE B - Schedule of Chief Executive Office Location, Records Locations
and Inventory Locations
SCHEDULE C - Schedule of Trade Names, Styles and Doing Business Forms
-iii-
<PAGE>
SECURITY AGREEMENT- SUBSIDIARY GUARANTORS
THIS SECURITY AGREEMENT- SUBSIDIARY GUARANTORS, dated as of March 12, 1998
(as the same may be restated, amended or modified from time to time, this
"Agreement"), by and among KF-Delaware, Inc., a Delaware corporation ("KFD"),
---
KF-INTERNATIONAL, INC., a United States Virgin Islands corporation ("KFI"; and
---
together with KFD, each an "Assignor" and collectively the "Assignors"), and
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, as agent (the "Agent") for
the Secured Creditors (as defined below). Unless otherwise defined in Section
1, terms defined in the Credit Agreement (as defined below) are used herein as
therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), AGI Incorporated ("AGI"), Klearfold,
------- ---
Inc. ("Klearfold", and together with AGI, each a "L/C Borrower" and
--------- ------------
collectively, the "L/C Borrowers"), the financial institutions from time to time
-------------
party thereto (the "Lenders") and the Agent (as from time to time restated,
amended or modified, the "Credit Agreement"), the Lenders have agreed to extend
certain credit and issue letters of credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), each Assignor has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Company and the L/C Borrowers under or with
respect to the Secured Debt Agreements (as defined below) to which the Company
and the L/C Borrowers is a party;
C. An Assignor may from time to time be party to one or more Swap
Contracts relating to the Loans (each such Swap Contract with a Swap Creditor
(as defined below), a "Secured Swap Contract") with Bank of America National
Trust & Savings Association ("BofA"), in its individual capacity, any Lender or
syndicate of financial institutions organized by BofA, or an affiliate of BofA
or any Lender (even if BofA or any such Lender ceases to be a Lender under the
Credit Agreement for any reason) and any institution that participates in, and
in each case their subsequent assigns, such Secured Swap Contract (collectively,
the "Swap Creditors");
D. An Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05
Obligation with a L/C Creditor (as defined below), a "Secured Letter of
Credit") issued by BofA or a Lender, in each case in its individual capacity
(even if BofA or any such Lender ceases to be a Lender under the Credit
Agreement for any reason) and any institution that participates in, and in each
case their subsequent assigns, such Secured Letter of Credit (collectively, the
"L/C Creditors"); and
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignors grant to the
<PAGE>
Agent, for the ratable benefit of itself and the Secured Creditors, a security
interest in the Collateral (as defined below) on the terms and conditions set
forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions and Interpretation of Agreement. The following shall
-------------------------------------------
have (unless otherwise provided elsewhere in this Agreement) the following
respective meanings (such meanings being equally applicable to both the singular
and plural form of the terms defined):
"Account Debtor" shall mean the party who is obligated on or under any
--------------
Account Receivable or Contract Right.
"Account Receivable" shall mean any right of an Assignor to payment
------------------
for goods sold or leased or for services rendered.
"Agent" shall have the meaning ascribed to it in the Preamble.
-----
"Assignee Deposit Account" has the meaning ascribed to it in Section
------------------------ -------
5.
- -
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ----------
"Contract Right" shall mean any right of an Assignor to payment under
--------------
a contract for the sale or lease of goods or the rendering of services, which
right is at the time not yet earned by performance.
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined
----------------
in, the Credit Agreement, or any payment default, after any applicable grace
period, under any other Secured Debt Agreement.
"Equipment" shall mean all equipment owned by an Assignor of every
---------
description; all accessories, parts, accessions and other property owned by such
Assignor at any time installed thereon or affixed thereto or used in connection
therewith; and all substitutions for or replacements of any of the foregoing.
"General Intangibles" means all intangible personal property of an
-------------------
Assignor including, without limitation, all general intangibles, contract
rights, rights to receive payments of money, choses in action, judgments, tax
refunds and tax refund claims, copyrights, copyright licenses, patents, patent
licenses, trademarks, trademark licenses, trade names, trade secrets,
drawings or plans
-2-
<PAGE>
with respect to trade secrets, copyrights, licenses, franchises, leasehold
interests in real or personal property, rights to receive rentals of real or
personal property and guarantee claims.
"Inventory" shall mean all goods held by an Assignor for sale or
---------
lease, or leased by such Assignor as lessor, or furnished or to be furnished by
such Assignor under any contract of service, or held by such Assignor as raw
materials, work in process or materials used or consumed in a business; and all
goods, the sale or lease of which has given rise to an Account Receivable,
Contract Right, instrument or chattel paper, which are returned to such
Assignor, repossessed by such Assignor, stopped in transit by such Assignor or
which otherwise come into the possession of such Assignor.
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Non-Goods Collateral" shall mean all Collateral other than Inventory,
--------------------
Equipment and other goods.
"Obligor" shall mean the Company and each other party primarily or
-------
secondarily liable on any of the Secured Obligations.
"Permissible Collateral Locations" shall mean any location listed on
--------------------------------
Schedule B hereto with respect to an Assignor as to which (in the case of
- ----------
locations not owned by such Assignor) the Agent has received an executed
landlord waiver in form satisfactory to the Agent (with respect to leased
premises) and any other location to which the Agent, after all actions necessary
in the Agent's absolute discretion are taken to protect the Agent's security
interest in all Collateral to be kept at such location, has consented in
writing.
"Secured Creditors" means, collectively, the Agent, each Lender, each
-----------------
L/C Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement
-----------------------
and the other Loan Documents, each Secured Letter of Credit and each Secured
Swap Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the
------------------------
Recitals.
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Guaranty, (ii) the payment when due of all obligations of an
Assignor to Swap Creditors pursuant to any Secured Swap Contract and the due
performance and compliance with all the terms of the Secured Swap Contracts by
an Assignor and (iii) the payment when due of all obligations of an Assignor to
L/C Creditors pursuant to any Secured Letter of Credit and the due performance
and compliance with all the terms of the Secured Letter of Credit by an
Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the
---------------------
Recitals.
-3-
<PAGE>
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
A Section or a Schedule is, unless otherwise stated, a reference to a
------- --------
section hereof or a schedule hereto, as the case may be. Section captions used
in this Agreement are for convenience only, and shall not affect the
construction of this Agreement. The words "hereof," "herein," "hereto" and
"hereunder" and words of similar purport when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise defined therein, all terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
documents made or delivered pursuant hereto.
2. Grant of Security Interest. As security for the payment of all
--------------------------
Secured Obligations, each Assignor hereby assigns to the Agent for the benefit
of the Secured Creditors, and grants to the Agent for the benefit of the Secured
Creditors, a continuing security interest in, all personal property, wherever
located, in which such Assignor now has or hereafter acquires any right or
interest and all proceeds thereof, including without limitation the following
(collectively, the "Collateral"):
(a) all Inventory, Accounts Receivable, Contract Rights and documents
of title of such Assignor;
(b) all chattel paper and instruments evidencing any obligation to
such Assignor for payment for goods sold or leased or for services
rendered;
(c) all interest of such Assignor in any goods, the sale or lease of
which shall have given or shall give rise to, and in all guaranties and
other property securing the payment of or performance under, any Accounts
Receivable, Contract Rights or any such chattel paper or instruments;
(d) all Equipment of such Assignor.
(e) all General Intangibles of such Assignor;
(f) to the extent related to the property described in clauses (a)
-----------
through (e) above, all books, correspondence, credit files, records,
---
invoices and other papers and documents, including, without limitation, to
the extent so related, all tapes, cards, computer runs, computer programs
(to the extent such Assignor may grant a security interest in the same
without a breach of the terms thereof) and other papers and documents in
the possession or control of such Assignor or any computer bureau from time
to time acting for such Assignor; and, to the extent so related, all rights
in, to and under all policies of insurance, including claims of rights to
payments thereunder and proceeds therefrom, including any credit insurance;
and
(g) all proceeds and products of any of the foregoing.
-4-
<PAGE>
3. Representations and Warranties. Each Assignor represents and warrants
------------------------------
to the Agent and the Secured Creditors that:
(a) none of the Collateral is of a type where a security interest or
lien may be filed under, or notice thereof given under, any federal statute
relating exclusively to Collateral of that type rather than property
generally; provided, however, some of the collateral may be intellectual
-------- -------
property falling under the purview of the United States Patent and
Trademark Office;
(b) all Equipment, except any thereof which such Assignor shall have
identified on Schedule A as equipment normally used in more than one State,
----------
is located at one of the addresses shown on Schedule A unless another
location is shown with respect to any Equipment in the description thereof
on Schedule A, in which case such Equipment is located at such other
----------
location, and all Inventory is located at the addresses shown on Schedule
--------
B;
-
(c) since January 1, 1993, such Assignor has not conducted business
under any name except the name or trade name in which it has executed this
Agreement;
(d) except with respect to vehicles, none of the Equipment owned by
such Assignor is covered by any certificate of title; and
(e) such Assignor has no trade names, styles or doing business forms
except for the divisional names listed on Schedule C and, when using such
----------
names, such Assignor identifies the applicable division as a division of
such Assignor;
4. Use of Equipment. Until an Event of Default has occurred and is
----------------
continuing, each Assignor may have possession of all Equipment and use the same
in any lawful manner not inconsistent with this Agreement or with any policy of
insurance on any of the Equipment.
5. Processing, Sale and Collections. Until such time as an Event of
--------------------------------
Default has occurred and is continuing and the Agent shall notify an Assignor of
the revocation of such power and authority, each Assignor:
(a) may, in the ordinary course of its business, at its own expense,
sell, lease or furnish under contracts of service any of the Inventory
normally held by such Assignor for such purpose, and use and consume, in
the ordinary course of its business, any raw materials, work in process or
materials normally held by such Assignor for such purpose;
(b) will, at its own expense, endeavor to collect, as and when due,
all amounts due with respect to any of the Non-Goods Collateral, including
the taking of such action with respect to such collection as the Agent may
reasonably request or, in the absence of such request, as such Assignor may
deem advisable;
-5-
<PAGE>
(c) may grant, in the ordinary course of business, to any party
obligated on or with respect to any of the Non-Goods Collateral, any
rebate, refund or allowance to which such party may be lawfully entitled,
and may accept, in connection therewith, the return of goods, the sale or
lease of which shall have given rise to such Non-Goods Collateral; and
(d) such Assignor may sell used and obsolete furniture, equipment and
fixtures in the ordinary course of business to the extent not prohibited
by the Credit Agreement. So long as no Event of Default has occurred and
is continuing, the Agent shall, upon the request of such Assignor
accompanied by a certificate to the effect such sale is in compliance with
this section, without the requirement of obtaining the consent of any
Secured Creditor, release the Lien of this Agreement upon any property sold
pursuant to this section.
The Agent, however, may at any time (but shall not be obligated to), during
the continuation of an Event of Default and after giving written notice of such
action to the relevant Assignor, notify any party obligated on or with respect
to any of the Non-Goods Collateral to make payment directly to the Agent of any
amounts due or to become due thereunder and enforce collection of any of the
Non-Goods Collateral by suit or otherwise and surrender, release or exchange all
or any part thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any indebtedness thereunder or evidenced
thereby. Upon request of the Agent during the continuation of an Event of
Default the relevant Assignor will, at its own expense, notify any parties
obligated on or with respect to any of the Non-Goods Collateral to make payment
to the Agent of any amounts due or to become due thereunder.
Each Assignor will, upon written demand of the Agent made after and during
the continuance of an Event of Default, forthwith, upon receipt, transmit and
deliver to the Agent, in the form received, all cash, checks, drafts, chattel
paper and other instruments or writings for the payment of money (properly
endorsed, where required, so that such items may be collected by the Agent)
which may be received by such Assignor at any time in full or partial payment or
otherwise as proceeds of any of the Collateral. Except as the Agent may
otherwise consent in writing, any such items which may be received by an
Assignor following such demand of the Agent will not be commingled with any
other of its funds or property, but will be held separate and apart from its own
funds or property and upon express trust for the Agent, for the benefit of
itself and the Secured Creditors, until delivery is made to the Agent. All items
or amounts which are delivered by an Assignor to the Agent on account of partial
or full payment by an Account Debtor or otherwise as proceeds of any of the
Collateral shall be deposited to the credit of a special deposit account over
which such Assignor shall have no control (herein called an "Assignee Deposit
Account") of such Assignor with the Agent, as security for payment of the
Secured Obligations. The Agent shall invest any and all available funds
deposited in such special deposit account, within 10 business days after the
date the relevant funds become available, in securities issued as fully
guaranteed or insured by the United States Government or any agency thereof
backed by the full faith and credit of the United States having maturities of no
greater than 3 months from the date of acquisition thereof (collectively,
"Government Obligations"). Each Assignor hereby acknowledges and agrees that the
Agent shall not have any liability with respect to, and each Assignor hereby
jointly and severally indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
-6-
<PAGE>
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations. The Agent may, from time to time, in
its absolute discretion, apply all or any of the then balance, representing
collected funds, in the Assignee Deposit Account, toward payment of the Secured
Obligations, whether or not then due.
The Agent is authorized to endorse, in the name of the relevant Assignor,
any item, howsoever received by the Agent, representing any payment on or other
proceeds of any of the Collateral.
6. Certificates, Schedules and Reports. Each Assignor will furnish to
-----------------------------------
the Agent from time to time, as the Agent may reasonably request, such
additional schedules and such certificates and reports respecting all or any of
the Collateral at the time subject to the security interest hereunder and the
items or amounts received by such Assignor in full or partial payment or
otherwise as proceeds of any of the Collateral, all to such extent as the Agent
may reasonably request. Each of the foregoing schedules, certificates, reports
and notices shall be executed by a duly authorized officer of the relevant
Assignor and shall be in such form and detail as the Agent may reasonably
specify.
7. Covenants. From the date of this Agreement, and thereafter until this
---------
Agreement is terminated, each Assignor:
(a) will keep all Inventory at the addresses shown on Schedule B, or
----------
at such other address as to which each Assignor has given the Agent one (1)
month prior written notice and the Agent has taken such steps as it deems
necessary to ensure that its security interest in collateral at such new
location shall remain perfected;
(b) will keep its records concerning its Accounts Receivables at its
address shown on Schedule B, unless the Agent shall otherwise be notified
----------
one (1) month in advance of a new address in writing, which records will be
of such character as will enable the Agent or its designees to determine at
any time the status thereof, and such Assignor will not, unless the Agent
shall otherwise consent in writing, duplicate any such records at any other
address;
(c) will keep all Equipment, except any thereof which such Assignor
shall have identified on Schedule A as equipment normally used in more than
----------
one State (referred to in this clause (c) as "mobile goods"), at the
----------
addresses on Schedule A, unless the Agent shall otherwise consent in
----------
writing; will immediately give written notice to the Agent within thirty
(30) days before any use of any mobile goods in any jurisdiction other than
a State in which such Assignor shall have previously advised the Agent such
mobile goods will be used; and will not use any mobile goods outside the
territorial limits of the United States, unless the Agent shall otherwise
consent in writing;
(d) will not, without giving the Agent one (1) month prior written
notice, change the location of its chief executive office or its chief
place of business from the address shown on Schedule B;
----------
-7-
<PAGE>
(e) will furnish the Agent not less than 30 days written notice prior
to changing its name or adopting or changing any trade name, style or doing
business form;
(f) will furnish the Agent such information concerning such Assignor,
the Collateral and the Account Debtors as the Agent may from time to time
reasonably request;
(g) upon the occurrence and continuance of an Event of Default, will,
upon request of the Agent, stamp on its records concerning the Collateral a
notation, in form satisfactory to the Agent, of the security interest of
the Agent hereunder;
(h) will reimburse the Agent upon demand for all reasonable costs and
expenses, including reasonable fees of attorneys (who may be employees of
the Agent) and reasonable legal expenses, incurred by the Agent in seeking
to collect or enforce any rights under the Collateral and, in case of an
Event of Default, in seeking to collect any Secured Obligations and to
enforce rights hereunder, including reasonable expenses of any repairs to
any realty or other property to which any of the Equipment may be affixed
or be a part;
(i) will pay, when due, all taxes, assessments, governmental charges
and other similar charges levied against any of the Collateral, except and
so long as such Assignor is contesting such taxes, assessments or charges
in good faith and by appropriate proceedings and such Assignor has set
aside on its books such reserves or other appropriate provisions therefor
as may be required by generally accepted accounting principles;
(j) will do nothing to impair in any material respect the rights of
the Agent or the Secured Creditors in the Collateral. Each Assignor will at
all times keep the Collateral insured in compliance with the requirements
of the Credit Agreement. Each Assignor assumes all liability and
responsibility in connection with the Collateral acquired by it, and the
liability of such Assignor to pay its obligations shall in no way be
affected or diminished by reason of the fact that such Collateral may be
lost, stolen, damaged or for any reason whatsoever unavailable to the
Company;
(k) will notify the Agent of any Collateral which, to its knowledge,
constitutes a claim against the United States government or any
instrumentality or agency thereof (except for claims against any state
government, unless requested by the Agent), the assignment of which claim
is restricted by federal law. Promptly upon the reasonable request of the
Agent, the relevant Assignor will take such steps as may be necessary to
comply with any applicable federal assignment of claims laws; and
(l) at any time after and during the continuance of an Event of
Default, upon reasonable request, will give the Agent information as to
ownership of any vehicle or other Equipment covered by a certificate of
title. Promptly upon reasonable request of the Agent at any time after and
during the continuance of an Event of Default, each Assignor will deliver
any such certificate of title to the Agent and/or will cause the lien of
the Agent, on behalf of itself and the Secured Creditors, to be noted
thereupon.
-8-
<PAGE>
The Agent may from time to time, at its option, perform any agreement of an
Assignor hereunder which such Assignors shall fail to perform and take any other
action which the Agent deems necessary for the maintenance or preservation of
any of the Collateral or its interest therein, and each Assignor agrees to
forthwith reimburse the Agent for all reasonable expenses of the Agent in
connection with the foregoing, together with interest thereon from the date
incurred until reimbursed by an Assignor at a rate per annum equal to the Base
Rate plus the Applicable Margin in effect from time to time. Each Assignor's
obligation to reimburse the Agent pursuant to the preceding sentence shall be a
Secured Obligation payable on demand.
8. Remedies.
--------
(a) Remedies; Obtaining the Collateral Upon an Event of Default. Each
-----------------------------------------------------------
Assignor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Agent may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or any
other Person who then has possession of any part thereof with or without
notice or process of law (unless the same shall be required by applicable
law), and for that purpose may enter in an orderly and lawful manner upon
such Assignor's premises where any of the Collateral is located and remove
the same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any contract,
agreement, instrument or other obligation (including, without limitation,
the Receivables) constituting the Collateral to make any payment required
by the terms of such instrument or agreement directly to the Agent, on
behalf of itself and the Secured Creditors;
(iii) sell or otherwise liquidate, or direct such Assignor to
sell or otherwise liquidate, any or all investments made in whole or in
part with the Collateral or any part thereof, and take possession of the
proceeds of any such sale or liquidation;
(iv) with respect to Secured Obligations not already covered
under the Credit Agreement which are contingent and cannot be accelerated
by their nature, require such Assignor to deposit cash or other acceptable
collateral in an amount sufficient to cover principal, interest and fees
which will have accrued by the maturity date on said Secured Obligations to
be held as security for said Secured Obligations in the special non-
interest bearing collateral account referred to in Section 7.2 hereof; and
-----------
(v) take possession of the Collateral or any part thereof, by
directing such Assignor in writing to deliver the same to the Agent, on
behalf of itself and the Secured Creditors, at any reasonable place or
places designated by the Agent, in which event such Assignor shall at its
own expense:
-9-
<PAGE>
(A) forthwith cause the same to be moved to the place or
places so designated by the Agent and there delivered to the Agent, on
behalf of itself and the Secured Creditors;
(B) store and keep any Collateral so delivered to the
Agent, on behalf of itself and the Secured Creditors, at such place or
places pending further action by the Agent; and
(C) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good condition;
it being understood that each Assignor's obligation so to deliver the
Collateral is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, the Agent, on behalf
of itself and the Secured Creditors, shall be entitled to a decree
requiring specific performance by the Assignors of said obligation.
(b) Disposition of the Collateral.
-----------------------------
(i) Any Collateral repossessed by the Agent, on behalf of itself
and the Secured Creditors, under or pursuant to Section 8(a) hereof and any
------------
other Collateral whether or not so repossessed by the Agent, on behalf of
itself and the Secured Creditors, upon the occurrence and continuance of an
Event of Default may be sold, leased or otherwise disposed of under one or
more contracts or as an entirety and without the necessity of gathering at
the place of sale the property to be sold, and in general in such manner,
at such time or times, at such place or places and on such terms and for
such prices as the Agent may, in compliance with any mandatory requirements
of applicable law, determine to be commercially reasonable. Upon the
occurrence and during the continuance of any Event of Default, the Agent,
on behalf of itself and the Secured Creditors, shall have the power to
foreclose an Assignor's right of redemption in the Collateral by sale,
lease or other disposition of the Collateral in accordance with the Uniform
Commercial Code as enacted in each state where the Collateral is located.
Any of the Collateral may be sold, leased or otherwise disposed of in the
condition in which the same existed when taken by the Agent, on behalf of
itself and the Secured Creditors, or after any overhaul or repair which the
Agent shall determine to be commercially reasonable and the Agent shall be
entitled to reimbursement for the payment of any costs or expenses of such
overhaul or repair. Any such disposition which shall be a private sale or
other private proceeding permitted by the requirements of applicable law
shall be made after written notice to an Assignor specifying the time at
which such disposition is to be made and the intended sale price or other
consideration therefor. Any such disposition which shall be a public sale
permitted by such requirements of applicable law shall be made after 10
days' prior written notice to an Assignor specifying the time and place of
such sale and, in the absence of applicable requirements of law, shall be
by public auction. To the extent permitted by any such requirement of law,
the Agent, on behalf of itself and the Secured Creditors, or any Secured
Creditor may itself bid for and become the purchaser of the Collateral or
any item thereof,
-10-
<PAGE>
offered for sale in accordance with this Section 8(b) without
accountability to an Assignor. In the payment of the purchase price of the
Collateral the purchaser shall be entitled to have credit on account of the
purchase price thereof of amounts owing to such purchaser on account of any
of the Secured Obligations held by such purchaser and any such purchaser
may deliver notes, claims for interest, or claims for other payment with
respect to such Secured Obligations in lieu of cash up to the amount which
would, upon distribution of the net proceeds of such sale, be payable
thereon. Such notes, if the amount payable hereunder shall be less than the
amount due thereon, shall be returned to the holder thereof after being
appropriately stamped to show partial payment. If, under mandatory
requirements of applicable law, the Agent, on behalf of itself and the
Secured Creditors, shall be required to make disposition of the Collateral
within a period of time which does not permit the giving of notice to an
Assignor as hereinabove specified, the Agent need give an Assignor only
such notice of disposition as shall be reasonably practicable in view of
such mandatory requirements of applicable law.
(ii) No notification need be given to an Assignor if it has
signed, after a Default or an Event of Default, a statement renouncing or
modifying any right to notification of sale or other intended disposition.
In addition to the rights and remedies granted to it in this Agreement and
in the Secured Debt Agreements, the Agent, on behalf of itself and the
Secured Creditors, shall have all the rights and remedies of a secured
party under the Uniform Commercial Code of the state in which the
Collateral is located.
9. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in the following
order unless a court of competent jurisdiction shall otherwise direct:
(a) FIRST, to payment of all reasonable costs and expenses of the
Agent incurred in connection with the collection and enforcement of the
Secured Obligations or of the security interest granted to the Agent
pursuant to this Agreement, including all reasonable costs and expenses of
any sale pursuant to this Agreement, and of any judicial or private
proceedings in which such sale may be made, and of all other reasonable
expenses, Secured Obligations and advances made or incurred by the Agent;
(b) SECOND, to payment, pro rata, of that portion of the Secured
--- ----
Obligations constituting accrued and unpaid interest and fees, together
with (to the extent permitted by law) interest owing thereon at the
applicable default rate from the date due, owing or unpaid until paid in
full;
(c) THIRD, to payment, pro rata, of the principal of the Secured
--- ----
Obligations, then due, owing or unpaid in respect of any Secured
Obligations;
(d) FOURTH, to payment, pro rata, of any other Secured Obligations
--- ----
due, owing or unpaid until paid in full including, without limitation, any
Secured Obligations incurred pursuant to this Agreement; and
-11-
<PAGE>
(e) FIFTH, the balance, if any, after all of the Secured Obligations
have been satisfied, shall be remitted as required by law.
10. Remedies Cumulative. Each and every right, power and remedy hereby
-------------------
specifically given to the Agent, for the benefit of itself and the Secured
Creditors, shall be in addition to every other right, power and remedy
specifically given to the Agent or the Secured Creditors under this Agreement or
any Secured Debt Agreement now or hereafter existing at law or in equity, or by
statute and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time or simultaneously
and as often and in such order as may be deemed expedient by the Agent. All
such rights, powers and remedies shall be cumulative and the exercise or the
beginning of exercise of one shall not be deemed a waiver of the right to
exercise any of the others. No delay or omission of the Agent in the exercise
of any such right, power or remedy and no renewal or extension of any of the
Secured Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. In the event that the Agent or any Secured Creditor shall bring any
suit to enforce any of its rights hereunder and shall be entitled to judgment,
then in such suit the Agent or such Secured Creditor may recover reasonable
expenses, including attorneys' fees, which attorneys may be employees of the
Agent, and the amounts thereof shall be included in such judgment.
11. Discontinuance of Proceedings. In case the Agent or any Secured
-----------------------------
Creditor shall have instituted any proceeding to enforce any right, power or
remedy under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Agent or such Secured Creditor, then and
in every such case the relevant Assignor and the Agent or such Secured Creditor
shall be restored to their respective former positions and rights hereunder with
respect to the Collateral, and all rights, remedies and powers of the Agent or
such Secured Creditor shall continue as if no such proceeding had been
instituted.
12. Custody and Preservation of Collateral. The Agent shall be deemed to
--------------------------------------
have exercised reasonable care in the custody and preservation of any of the
Collateral in its possession if it takes such action for that purpose as the
Company requests in writing, but failure of the Agent to comply with any such
request shall not of itself be deemed a failure to exercise reasonable care, and
no failure of the Agent to preserve or protect any rights with respect to such
Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by an Assignor, shall be deemed
a failure to exercise reasonable care in the custody or preservation of such
Collateral.
13. Authorization for the Agent to Take Certain Action. Each Assignor
--------------------------------------------------
irrevocably authorizes the Agent, at any time and from time to time, in the sole
discretion of the Agent, and appoints the Agent as its attorney-in-fact to act
on behalf of such Assignor, (a) to execute on behalf of such Assignor as debtor
and to file financing statements necessary or desirable in the Agent's sole
discretion to perfect and to maintain the perfection and priority of the Agent's
security interest in the Collateral, on behalf of itself and the Secured
Creditors, (b) to endorse and collect any cash proceeds of the Collateral, (c)
to file a carbon, photographic or other reproduction of this Agreement or any
financing statement with respect to the Collateral as a financing statement in
such offices as the
-12-
<PAGE>
Agent in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the Agent's and the Secured Creditors'
security interest in the Collateral, (d) to enforce payment of the Receivables
in the name of the Agent, any Secured Creditor or such Assignor, and (e) to
apply the proceeds of any Collateral received by the Agent to the Secured
Obligations as provided in Section 9 hereof. This appointment as attorney-in-
---------
fact is coupled with an interest and shall be irrevocable for so long as any
Secured Obligations are outstanding.
14. Notices. (a) Any notice required or permitted to be given under this
-------
Agreement shall be given (i) in the case of an Assignor, in accordance with the
Guaranty, (ii) in the case of the Agent and each Lender, in accordance with the
Credit Agreement, (iii) in the case of a L/C Creditor, in accordance with the
relevant Secured Letter of Credit and (iv) in the case of a Swap Creditor, in
accordance with the relevant Secured Swap Contract.
(b) Each Assignor or any Secured Creditor may change the address for
service of notice upon it by a notice in writing to the other.
15. Waiver and Amendments. No failure or delay on the part of the Agent
---------------------
or any Secured Creditor in the exercise of any power, right or remedy, and no
course of dealing between the Company and the Agent or any Secured Creditor,
shall operate as a waiver of such power, right or remedy, nor shall any single
or partial exercise of any power, right or remedy preclude other or further
exercise thereof or the exercise of any other power, right or remedy. The
remedies provided for herein are cumulative and not exclusive of any remedies
which may be available to the Agent or any Secured Creditor at law or in equity.
No notice to or demand on an Assignor not required hereunder shall in any event
entitle such Assignor to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the right of the Agent or any
Secured Creditor to any other or further action in any circumstances without
notice or demand. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement shall in any event be effective
unless the same shall be in writing and signed and delivered by the Agent and
the Secured Creditors affected thereby. Any waiver of any provision of this
Agreement, and any consent to any departure by an Assignor from the terms of any
provision of this Agreement, shall be effective only in the specific instance
and for the specific purpose for which given.
16. Termination. This Agreement shall continue in effect (notwithstanding
-----------
the fact that from time to time there may be no Secured Obligations or
commitments therefor outstanding) until the payment in full of the Secured
Obligations and the termination of the Secured Debt Agreements in accordance
with its terms thereunder, at which time the security interests granted hereby
shall terminate and any and all rights to the Collateral shall revert to the
relevant Assignor. Upon such termination, the Agent shall promptly return to an
Assignor, at such Assignor's expense, such of the Collateral held by the Agent
as shall not have been sold or otherwise applied pursuant to the terms hereof.
The Agent will promptly execute and deliver to the relevant Assignor such other
documents as such Assignor shall reasonably request to evidence such
termination.
17. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF
-13-
<PAGE>
LAWS PROVISIONS, OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
18. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
19. Successors and Assigns. The rights and privileges of the Assignors,
----------------------
the Agent and the Secured Creditors hereunder shall inure to the benefit of
their successors and permitted assigns.
20. Agent. BofA has been appointed as Agent for the Secured
-----
Creditors hereunder, and the Agent has agreed to act (and any successor Agent
shall act) as such hereunder only on the express conditions contained in Article
X of the Credit Agreement. Any successor Agent appointed pursuant to Article X
of the Credit Agreement shall be entitled to all the rights, interests and
benefits of the Agent hereunder.
21. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Company or any other
party or against or in payment of any or all of the Secured Obligations.
22. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
[SIGNATURE PAGE FOLLOWS]
-14-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
KF-DELAWARE, INC., as an Assignor
By /s/ Adam J. Murphy
-----------------------------------------
Name: Adam J. Murphy
------------------------------------
Title: Vice President
-----------------------------------
KF-INTERNATIONAL, INC., as an Assignor
By /s/ H. Scott Herrin
----------------------------------------
Name: H. Scott Herrin
-----------------------------------
Title: Treasurer
----------------------------------
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION,
as Agent
By /s/ David A. Johanson
----------------------------------------
Name: David A. Johanson
-----------------------------------
Title: Vice President
----------------------------------
S-1
[TO SECURITY AGREEMENT-SUBSIDIARY GUARANTORS]
<PAGE>
SCHEDULE A
----------
EQUIPMENT LOCATIONS
-------------------
A. KF-Delaware, Inc.
-----------------
364 Valley Road
Warrington, Bucks County, Pennsylvania
B. KF-International, Inc.
----------------------
364 Valley Road
Warrington, Bucks County, Pennsylvania
<PAGE>
SCHEDULE B - Security Agreement - Subsidiary Guarantors
----------
A. KF-Delaware, Inc.
-----------------
1. Chief Executive Office Location
-------------------------------
364 Valley Road
Warrington, Bucks County, Pennsylvania
2. Records Locations
-----------------
364 Valley Road
Warrington, Bucks County, Pennsylvania
KF Delaware
103 Faulk Road
P.O. Box 1958
Wilmington, Wilmington County, Delaware
3. Inventory Locations
-------------------
364 Valley Road
Warrington, Bucks County, Pennsylvania
B. KF-International, Inc.
----------------------
1. Chief Executive Office Location
-------------------------------
364 Valley Road
Warrington, Bucks County, Pennsylvania
2. Records Locations
-----------------
364 Valley Road
Warrington, Bucks County, Pennsylvania
100 Gibraltar Road
Horsham, Montgomery County, Pennsylvania
3. Inventory Locations
-------------------
364 Valley Road
Warrington, Bucks County, Pennsylvania
<PAGE>
SCHEDULE C
----------
[List trade names, styles
and doing business forms]
A. KF-Delaware, Inc.
-----------------
None
B. KF-International, Inc.
----------------------
None
<PAGE>
EXHIBIT 10.24
PLEDGE AGREEMENT - COMPANY
--------------------------
This PLEDGE AGREEMENT - COMPANY, dated as of March 12, 1998 (together
with all amendments, if any, from time to time hereto, this "Agreement"), by and
---------
between IMPAC GROUP, INC., a Delaware corporation (the "Pledgor"), and BANK of
AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, as agent (the "Agent") for the
Secured Creditors (as defined below). Unless otherwise defined in Section 1,
terms defined in the Credit Agreement (as defined below) are used herein as
therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith
among the Pledgor, AGI Incorporated ("AGI"), Klearfold, Inc. ("Klearfold"; and
--- ---------
together with AGI, each a "L/C Borrower" and collectively, the "L/C Borrowers")
------------ -------------
the financial institutions from time to time party thereto (the "Lenders") and
the Agent (as from time to time restated, amended or modified, the "Credit
Agreement"), the Lenders have agreed to extend certain credit to the Pledgor and
the L/C Borrowers;
B. Pursuant to the Guaranty-Company, dated as of even date herewith
(as from time to time amended or modified, the "Guaranty"), the Pledgor has
--------
guaranteed to the Secured Creditors the payment when due of all obligations and
liabilities of the L/C Borrowers under or with respect to the Secured Debt
Agreements (as defined below) to which such L/C Borrower is a party;
C. The Pledgor may from time to time be an account party to one or
more Swap Contracts relating to the Revolving Loans (each such Swap Contract
with a Swap Creditor (as defined below), a "Secured Swap Contract") with Bank of
America National Trust & Savings Association ("B of A"), in its individual
capacity, any Lender or syndicate of financial institutions organized by B of A,
or an affiliate of B of A, or any Lender (even if B of A or any such Lender
ceases to be a Lender under the Credit Agreement for any reason) and any
institution that participates in, and in each case their subsequent assigns,
such Secured Swap Contract (collectively, the "Swap Creditors"); and
D. The Pledgor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
---------------------------
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
issued by B of A or a Lender, in each case in its individual capacity (even if B
of A or such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors"); and
E. As a condition to entering into a Secured Debt Agreement and
extending credit under such Secured Debt Agreement, the Secured Creditors have
required that the Pledgor grant to the Agent, for the ratable benefit of itself
and the Secured Creditors, a security interest in the Pledged Collateral (as
defined below) on the terms and conditions set forth below.
<PAGE>
W I T N E S S E T H:
-------------------
1. Definitions. The following shall have (unless otherwise provided
-----------
elsewhere in this Agreement) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"B of A" has the meaning ascribed to it in the Recitals.
------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined
----------------
in, the Credit Agreement, or any payment default, after any applicable grace
period, under any other Secured Debt Agreement.
"Excluded Shares" has the meaning ascribed to it in the definition
---------------
"Pledged Shares".
--------------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Pledged Collateral" has the meaning ascribed to it in Section 2.
------------------ ---------
"Pledged Debt" means, collectively, (i) those promissory notes and
------------
instruments listed on Schedule I hereto, and (ii) each additional promissory
note and instrument delivered, or to be delivered, to the Agent pursuant to
Section 2 (iv).
"Pledged Entity" means each Subsidiary of the Pledgor the capital
--------------
stock of which is required to be delivered pursuant to this Agreement.
"Pledged Shares" means, collectively, (i) with respect to a Domestic
--------------
Subsidiary, all of the issued and outstanding shares of capital stock at any
time owned by the Pledgor of such Domestic Subsidiary, (ii) with respect to a
first tier Foreign Subsidiary, all of the issued and outstanding shares of
capital stock at any time owned by the Pledgor of such Foreign Subsidiary;
provided that the Pledgor shall not be required to pledge hereunder (and the
- --------
term "Pledged Shares" shall not include) more than 65% of the total combined
voting power of all classes of capital stock of such Foreign Subsidiary entitled
to vote (the "Excluded Shares") until such time as the Pledgor is required to
deliver such Excluded Shares to the Agent pursuant to Section 7.15 of the Credit
Agreement and (iii) each additional share of capital stock delivered, or to be
delivered, to the Agent pursuant to Section 2(ii).
2
<PAGE>
"Pledgor" has the meaning ascribed to it in the Preamble.
-------
"Secured Creditors" means, collectively, the Agent, each Lender, each
-----------------
L/C Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement
-----------------------
and the other Loan Documents, each Secured Letter of Credit and each Secured
Swap Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the
------------------------
Recitals.
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Credit Agreement, (ii) all "Obligations" as defined in the
Guaranty, (iii) the payment when due of all obligations of the Pledgor to Swap
Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by the Pledgor and
(iv) the payment when due of all obligations of the Pledgor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by the Pledgor
"Secured Swap Contract" has the meaning ascribed to it in the
---------------------
Recitals.
"Security Agreement" means the Security Agreement, dated as of even
------------------
date herewith, between the Pledgor and the Agent, as the same may be amended or
modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. Pledge. The Pledgor hereby pledges to the Agent, for the benefit
------
of itself and the Secured Creditors, and grants to the Agent, for the benefit of
itself and the Secured Creditors, a first priority security interest in all of
the following (collectively, the "Pledged Collateral"):
------------------
(i) the Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, distributions, cash, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares of the Pledgor;
(ii) any additional shares of stock (other than Excluded Shares) of a
Pledged Entity from time to time acquired by the Pledgor in any manner
(which shares shall be deemed to be part of the Pledged Shares), and the
certificates representing such additional shares, and all dividends,
distributions, cash, instruments and other property or proceeds from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;
3
<PAGE>
(iii) the Pledged Debt and the promissory notes or instruments
evidencing the Pledged Debt, and all interest, cash, instruments and other
property and assets from time to time received, receivable or otherwise
distributed in respect of the Pledged Debt; and
(iv) all additional Indebtedness for borrowed money arising after the
date hereof and owing to the Pledgor by any Subsidiary of the Pledgor and
evidenced by promissory notes or other instruments, together with such
promissory notes and instruments, and all interest, cash, instruments and
other property and assets from time to time received, receivable or
otherwise distributed in respect of that Pledged Debt.
3. Security for Secured Obligations. This Agreement secures, and
--------------------------------
the Pledged Collateral is security for, the prompt payment in full when due,
whether at stated maturity, by acceleration or otherwise, and performance of all
obligations and liabilities of any kind of the Pledgor under or in the Secured
Debt Agreements.
4. Delivery of Pledged Collateral. All certificates representing or
------------------------------
evidencing the Pledged Shares and all promissory notes and instruments
evidencing Pledged Debt shall be delivered to and held by or on behalf of the
Agent, for the benefit of itself and the Secured Creditors, pursuant hereto and
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent, and all promissory
notes or other instruments evidencing the Pledged Debt shall be endorsed by the
Pledgor.
5. Representations and Warranties. The Pledgor represents and
------------------------------
warrants to the Agent and each Secured Creditor that:
(a) it is, and at the time of delivery of the Pledged Collateral to
the Collateral Agent pursuant to Section 4 hereof will be, the sole holder
---------
of record and the sole beneficial owner of the Pledged Collateral pledged
by it free and clear of any Lien thereon or affecting the title thereto,
except for any Lien created by this Agreement;
(b) all of the Pledged Shares have been duly authorized, validly
issued and are fully paid and non-assessable;
(c) the Pledged Debt has been duly authorized, authenticated or
issued and delivered by, and is the legal, valid and binding obligation of,
the issuer thereof, and no such issuer is in default thereunder;
(d) none of the Pledged Shares, Excluded Shares or Pledged Debt has
been issued or transferred in violation of the securities registration,
securities disclosure or similar laws of any jurisdiction to which such
issuance or transfer may be subject;
(e) all of the Pledged Shares are presently owned by the Pledgor, and
are
4
<PAGE>
presently represented by the stock certificates listed on Schedule I
----------
hereto, and, as of the date hereof, there are no existing options,
warrants, calls or commitments of any character whatsoever relating to the
Pledged Shares;
(f) no consent, approval, authorization or other order of any Person
and no consent, authorization, approval, or other action by, and no notice
to or filing with, any governmental authority is required for the exercise
by the Agent of the voting or other rights provided for in this Agreement
or the remedies in respect of the Pledged Collateral pursuant to this
Agreement, except as may be required in connection with such disposition by
laws affecting the Agent or the offering and sale of securities generally;
and
(g) the Pledged Shares of a Domestic Subsidiary constitute 100% of the
issued and outstanding shares of stock of such Domestic Subsidiary, and the
Pledged Shares of a Foreign Subsidiary constitute 65% (100% in the event
Excluded Shares are delivered to the Agent) of the issued and outstanding
shares of stock of such Foreign Subsidiary.
The representations and warranties set forth in this Section 5 shall
---------
survive the execution and delivery of this Agreement.
6. Covenants. From the date of this Agreement, and thereafter until
---------
this Agreement is terminated, the Pledgor:
(a) will defend the title to the Pledged Collateral and the Liens of
Agent or the Pledged Collateral against the claim of any Person and will
maintain and preserve such Liens; and
(b) will, upon obtaining any additional shares (other than Excluded
Shares) of stock of a Pledged Entity or promissory notes or instruments,
which shares, notes or instruments are not already Pledged Collateral,
promptly (and in any event within five (5) Business Days) deliver to the
Agent a Pledge Amendment, duly executed by the Pledgor, in substantially
the form of Schedule II hereto (a "Pledge Amendment") in respect of any
----------- ----------------
such additional shares, notes or instruments pledging to the Agent, on
behalf of itself and the Secured Creditors, all of such additional shares,
notes and instruments. The Pledgor hereby authorizes the Agent to attach
each Pledge Amendment to this Agreement and agrees that all Pledged Shares
and Pledged Debt listed on any Pledge Amendment delivered to the Agent
shall for all purposes hereunder be considered Pledged Collateral.
7. Pledgor's Rights. Until an Event of Default shall have occurred
----------------
and be continuing and written notice shall be given to the Pledgor in accordance
with Section 8(a) hereof:
------------
(a) the Pledgor shall have the right, from time to time, to vote and
give consents with respect to the Pledged Collateral, or any part thereof
for all purposes not inconsistent with the provisions of this Agreement,
any Secured Debt Agreement and any other document
5
<PAGE>
executed in connection with any such agreement; provided, however, that no
-------- -------
vote shall be cast, and no consent shall be given or action taken, which
would have the effect of impairing the position or interest of the Agent or
any Secured Creditor in respect of the Pledged Collateral or which would
authorize or effect (except as and to the extent expressly permitted by the
Credit Agreement): (i) the dissolution or liquidation, in whole or in part,
of a Pledged Entity; (ii) the consolidation or merger of a Pledged Entity
with any other Person; (iii) the sale, disposition or encumbrance of all or
substantially all of the assets of a Pledged Entity, except for Liens in
favor of the Agent; (iv) any change in the authorized number of shares, the
stated capital or the authorized share capital of a Pledged Entity or the
issuance of any additional shares of its stock; or (v) the alteration of
the voting rights with respect to the stock of a Pledged Entity; and
(b)(i) the Pledgor shall be entitled, from time to time, to collect
and receive for its own use all cash dividends, principal and interest paid
in respect of the Pledged Collateral to the extent not in violation of the
Secured Debt Agreements other than any and all; (A) dividends, principal
and interest paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral; and
(B) dividends and other distributions paid or payable in cash in respect of
any Pledged Collateral in connection with a partial or total liquidation or
dissolution; and (C) cash paid, payable or otherwise distributed, in
respect of principal of, or in redemption of, or in exchange for, any
Pledged Collateral so long as no Default or Event of Default has occurred;
provided, however, that until actually paid all rights to such
-------- -------
distributions shall remain subject to the Lien created by this Agreement;
and
(ii) all dividends and interest (other than such cash dividends and
interest as are permitted to be paid to the Pledgor in accordance with clause
------
(i) above) and all other distributions in respect of any of the Pledged
- ---
Collateral of the Pledgor, whenever paid or made, shall be delivered to the
Agent to hold as Pledged Collateral and shall, if received by the Pledgor, be
received in trust for the benefit of the Agent, for the benefit of itself and
the Secured Creditors, be segregated from the other property or funds of the
Pledgor, and be forthwith delivered to the Agent as Pledged Collateral in the
same form as so received (with any necessary indorsement).
8. Defaults and Remedies. (a) Upon the occurrence and continuance
---------------------
of an Event of Default, then on or at any time after such declaration (provided
that such declaration is not rescinded by the Secured Creditors) and upon
written notice to the Pledgor, the Agent (personally or through an agent) is
hereby authorized and empowered (subject to instructions agreeable to the
Secured Creditors) to transfer and register in its name or in the name of its
nominee the whole or any part of the Pledged Collateral, to exchange
certificates or instruments representing or evidencing Pledged Shares for
certificates or instruments of smaller or larger denominations, to exercise the
voting and all other rights as a stockholder with respect thereto, to collect
and receive all cash dividends, interest and principal and other distributions
made thereon, to sell in one or more sales after ten (10) days' written notice
of the time and place of any public sale or of the time after which a private
sale is to take place (which notice the Pledgor agrees is commercially
reasonable) the whole or any part of the Pledged Collateral and to otherwise act
with respect to the Pledged Collateral as
6
<PAGE>
though the Agent was the outright owner thereof, the Pledgor hereby irrevocably
constituting and appointing the Agent as the proxy and attorney-in-fact of the
Pledgor, with full power of substitution to do so, and which shall remain in
effect until the Obligations are indefeasibly paid in full; provided, however,
-------- -------
the Agent shall not have any duty to exercise any such right or to preserve the
same and shall not be liable for any failure to do so or for any delay in doing
so. Any sale shall be made at a public or private sale at the Agent's place of
business, or at any place to be named in the notice of sale, either for cash or
upon credit or for future delivery at such price as the Agent may deem fair, and
the Agent or any Secured Creditor may be the purchaser of the whole or any part
of the Pledged Collateral so sold and hold the same thereafter in its own right
free from any claim of the Pledgor or any right of redemption. Each sale shall
be made to the highest bidder, but the Agent reserves the right to reject any
and all bids at such sale which, in its discretion, it shall deem inadequate.
Demands of performance, except as otherwise herein specifically provided for,
notices of sale, advertisements and the presence of property at sale are hereby
waived and any sale hereunder may be conducted by an auctioneer or any officer
or agent of the Agent.
(b) If, at the original time or times appointed for the sale of the
whole or any part of the Pledged Collateral, the highest bid, if there be but
one sale, shall be inadequate to discharge in full all the Secured Obligations,
or if the Pledged Collateral be offered for sale in lots, if at any of such
sales, the highest bid for the lot offered for sale would indicate to the Agent,
in its discretion, the unlikelihood of the proceeds of the sales of the whole of
the Pledged Collateral being sufficient to discharge all the Secured
Obligations, the Agent may, on one or more occasions and in its discretion,
postpone any of said sales by public announcement at the time of sale or the
time of previous postponement of sale, and no other notice of such postponement
or postponements of sale need be given, any other notice being hereby waived;
provided, however, that any sale or sales made after such postponement shall be
- -------- -------
after ten (10) days' written notice to the Pledgor.
(c) The proceeds of any sale, disposition or other realization upon
all or any part of the Pledged Collateral shall be distributed by the Agent in
accordance with Section 9 of the Security Agreement.
(d) If, at any time when the Agent in its sole discretion determines,
following the occurrence and during the continuance of an Event of Default,
that, in connection with any actual or contemplated exercise of its rights (when
permitted under this Section 8) to sell the whole or any part of the Pledged
---------
Collateral hereunder, it is necessary or advisable to effect a public
registration of all or part of the Pledged Collateral pursuant to the Securities
Act of 1933, as amended (or any similar statute then in effect) (the "Act"), the
---
Pledgor shall, in an expeditious manner, cause the Pledged Entities to:
(i) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement with respect to the Pledged
----------
Collateral and in good faith use commercially reasonable efforts to cause
such registration statement to become and remain effective;
7
<PAGE>
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Act with
respect to the sale or other disposition of the Pledged Collateral covered
by such registration statement whenever the Agent shall desire to sell or
otherwise dispose of the Pledged Collateral;
(iii) furnish to the Agent such numbers of copies of a prospectus
and a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as the Agent may reasonably request in order
to facilitate the public sale or other disposition of the Pledged
Collateral by the Agent;
(iv) use commercially reasonable efforts to register or qualify
the Pledged Collateral covered by such registration statement under such
other securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as the Agent shall reasonably request, and do such
other reasonable acts and things as may be required of it to enable the
Agent to consummate the public sale or other disposition in such
jurisdictions of the Pledged Collateral by the Agent;
(v) furnish, at the reasonable request of the Agent, on the
date that shares of the Pledged Collateral are delivered to the
underwriters for sale pursuant to such registration or, if the security is
not being sold through underwriters, on the date that the registration
statement with respect to such shares of Pledged Collateral becomes
effective, (A) an opinion, dated such date, of the independent counsel
representing such registrant for the purposes of such registration,
addressed to the underwriters, if any, and in the event the Pledged
Collateral is not being sold through underwriters, then to the Agent, in
customary form and covering matters of the type customarily covered in such
legal opinions; and (B) a comfort letter, dated such date, from the
independent certified public accountants of such registrant, addressed to
the underwriters, if any, and in the event the Pledged Collateral is not
being sold through underwriters, then to the Agent, in a customary form and
covering matters of the type customarily covered by such comfort letters
and as the underwriters or the Agent shall reasonably request. The opinion
of counsel referred to above shall additionally cover such other legal
matters with respect to the registration in respect of which such opinion
is being given as the Agent may reasonably request. The letter referred to
above from the independent certified public accountants shall additionally
cover such other financial matters (including information as to the period
ending not more than five (5) Business Days prior to the date of such
letter) with respect to the registration in respect of which such letter is
being given as the Agent may reasonably request; and
(vi) otherwise use commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable but
not later than 18 months after the effective date of the registration
statement, an earnings statement covering the period of at least 12 months
8
<PAGE>
beginning with the first full month after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Act.
(e) All reasonable expenses incurred in complying with Section 8(d)
------------
hereof, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National Association of
Securities Dealers, Inc.), printing expenses, fees and disbursements of counsel
for the registrant, the reasonable fees and expenses of counsel for the Agent,
reasonable expenses of the independent certified public accountants (including
any special audits incident to or required by any such registration) and
reasonable expenses of complying with the securities or blue sky laws or any
jurisdictions, shall be paid by the Pledgor.
(f) If, at any time when the Agent shall determine to exercise its
right to sell the whole or any part of the Pledged Collateral hereunder, such
Pledged Collateral or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Act, the Agent may, in its
discretion (subject only to applicable requirements of law), sell such Pledged
Collateral or part thereof by private sale in such manner and under such
circumstances as the Agent may deem necessary or advisable, but subject to the
other requirements of this Section 8, and shall not be required to effect such
---------
registration or to cause the same to be effected. Without limiting the
igenerality of the foregoing, in any such event, the Agent in its discretion (x)
may, in accordance with applicable securities laws, proceed to make such private
sale notwithstanding that a registration statement for the purpose of
registering such Pledged Collateral or part thereof could be or shall have been
filed under said Act (or similar statute), (y) may approach and negotiate with a
single possible purchaser to effect such sale, and (z) may restrict such sale to
a purchaser who is an accredited investor under the Act and who will represent
and agree that such purchaser is purchasing for its own account, for investment
and not with a view to the distribution or sale of such Pledged Collateral or
part thereof. In addition to a private sale as provided above in this Section 8,
---------
if any of the Pledged Collateral shall not be freely distributable to the public
without registration under the Act (or similar statute) at the time of any
proposed sale pursuant to this Section 8, then the Agent shall not be required
---------
to effect such registration or cause the same to be effected but, in its
discretion (subject only to applicable requirements of law), may require that
any sale hereunder (including a sale at auction) be conducted subject to
restrictions: (i) as to the financial sophistication and ability of any Person
permitted to bid or purchase at any such sale; (ii) as to the content of legends
to be placed upon any certificates representing the Pledged Collateral sold in
such sale, including restrictions on future transfer thereof; (iii) as to the
representations required to be made by each Person bidding or purchasing at such
sale relating to that Person's access to financial information about the Pledgor
and such Person's intentions as to the holding of the Pledged Collateral so sold
for investment for its own account and not with a view to the distribution
thereof; and (iv) as to such other matters as the Agent may, in its discretion,
deem necessary or appropriate in order that such sale (notwithstanding any
failure so to register) may be effected in compliance with the Bankruptcy Code
and other laws affecting the enforcement of creditors' rights and the Act and
all applicable state securities laws.
(g) The Pledgor recognizes that the Agent may be unable to effect a
public sale of any or all the Pledged Collateral and may be compelled to resort
to one or more private sales thereof in accordance with clause (f) above. The
Pledgor also acknowledges that any such private
9
<PAGE>
sale may result in prices and other terms less favorable to the seller than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Agent shall be under no obligation to delay a sale of any
of the Pledged Collateral for the period of time necessary to permit the
registrant to register such securities for public sale under the Act, or under
applicable state securities laws, even if the Pledgor would agree to do so.
(h) The Pledgor agrees to the maximum extent permitted by applicable
law that following the occurrence and during the continuance of an Event of
Default it will not at any time plead, claim or take the benefit of any
appraisal, valuation, stay, extension, moratorium or redemption law now or
hereafter in force in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder, and
the Pledgor waives the benefit of all such laws to the extent it lawfully may do
so. The Pledgor agrees that it will not interfere with any right, power and
remedy of the Agent provided for in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, or the exercise or beginning of
the exercise by the Agent of any one or more of such rights, powers or remedies.
No failure or delay on the part of the Agent to exercise any such right, power
or remedy and no notice or demand which may be given to or made upon the Pledgor
by the Agent with respect to any such remedies shall operate as a waiver
thereof, or limit or impair the Agent's right to take any action or to exercise
any power or remedy hereunder, without notice or demand, or prejudice its rights
as against the Pledgor in any respect.
(i) The Pledgor further agrees that a breach of any of the covenants
contained in this Section 8 will cause irreparable injury to the Agent and the
---------
Secured Creditors, that the Agent and the Secured Creditors shall have no
adequate remedy at law in respect of such breach and, as a consequence, agrees
that each and every covenant contained in this Section 8 shall be specifically
---------
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such covenants
except for a defense that the Secured Obligations are not then due and payable
in accordance with the agreements and instruments governing and evidencing such
obligations.
9. Waiver. No delay on the Agent's or any Secured Creditors' part
------
in exercising any power of sale, Lien, option or other right hereunder, and no
notice or demand which may be given to or made upon the Pledgor by the Agent or
a Secured Creditor with respect to any power of sale, Lien, option or other
right hereunder, shall constitute a waiver thereof, or limit or impair the
Agent's or any Secured Creditors' right to take any action or to exercise any
power of sale, Lien, option, or any other right hereunder, without notice or
demand, or prejudice the Agent's or any Secured Creditors' rights as against the
Pledgor in any respect.
10. Assignment. The Agent and the Secured Creditors may assign,
----------
indorse or transfer any instrument evidencing all or any part of the Secured
Obligations as provided in, and in accordance with, the applicable Secured Debt
Agreement and the holder of such instrument shall be entitled to the benefits
of this Agreement.
10
<PAGE>
11. Termination. This Agreement shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Pledgor. Upon such termination, the Agent shall promptly return to
the Pledgor, at the Pledgor's expense, such of the Collateral held by the Agent
as shall not have been sold or otherwise applied pursuant to the terms hereof.
The Agent will promptly execute and deliver to the Pledgor such other documents
as the Pledgor shall reasonably request to evidence such termination.
12. Lien Absolute. All rights of the Agent hereunder, and all
-------------
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any Secured Debt
Agreement, any other document executed in connection with either agreement
or any other agreement or instrument governing or evidencing any Secured
Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any part of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any Secured
Debt Agreement, or any other agreement or instrument governing or
evidencing any Secured Obligations;
(c) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations; or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Pledgor.
13. Release. The Pledgor consents and agrees that the Agent and the
-------
Secured Creditors may at any time, or from time to time, in its discretion (a)
renew, extend or change the time of payment, and/or the manner, place or terms
of payment of all or any part of the Secured Obligations and (b) exchange,
release and/or surrender all or any of the Pledged Collateral, or any part
thereof, by whomsoever deposited, which is now or may hereafter be held by the
Agent in connection with all or any of the Secured Obligations; all in such
manner and upon such terms as the Agent and the Secured Creditors may deem
proper, and without notice to or further assent from the Pledgor, it being
hereby agreed that the Pledgor shall be and remain bound upon this Agreement,
irrespective of the value or condition of any of the Pledged Collateral, and
notwithstanding any such change, exchange, settlement, compromise, surrender,
release, renewal or extension, and notwithstanding also that the Secured
Obligations may, at any time, exceed the aggregate principal amount thereof set
forth in the relevant Secured Debt Agreement, or any other agreement governing
any Secured Obligations. The Pledgor hereby waives notice of acceptance of this
Agreement, and also presentment, demand, protest and notice of dishonor of any
and all of the Secured Obligations, and promptness in commencing suit against
any party hereto or liable hereon, and in giving any
11
<PAGE>
notice to or of making any claim or demand hereunder upon the Pledgor. No act or
omission of any kind on the Agent's part shall in any event affect or impair
this Agreement.
14. Reinstatement. This Agreement shall remain in full force and
-------------
effect and continue to be effective should any petition be filed by or against
the Pledgor or any Pledged Entity for liquidation or reorganization, should the
Pledgor or any Pledged Entity become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or any
significant part of the Pledgor's or a Pledged Entity's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Secured Obligations, whether as a
"voidable preference", "fraudulent conveyance", or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
15. Miscellaneous. (a) The Agent may execute any of its duties
-------------
hereunder by or through agents or employees and shall be entitled to advice of
counsel concerning all matters pertaining to its duties hereunder.
(b) The Pledgor agrees to promptly reimburse the Agent for actual out-
of-pocket expenses, including, without limitation, reasonable counsel fees,
incurred by the Agent in connection with the administration and enforcement of
this Agreement. The Pledgor's obligation to reimburse the Agent pursuant to the
preceding sentence shall be a Secured Obligation payable on demand.
(c) None of the Agent, any Secured Creditor nor any of their
respective officers, directors, employees, agents or counsel shall be liable for
any action lawfully taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or willful
misconduct.
(d) The Pledgor hereby irrevocably appoints the Agent as the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time in the Agent's
discretion reasonably exercised, to take any action and to execute any
instrument that the Agent deems reasonably necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, to receive,
endorse and collect all instruments made payable to the Pledgor representing any
dividend, or other proceeds or distribution in respect of the Pledged Collateral
or any part thereof and to give full discharge for the same, when and to the
extent permitted by this Agreement.
(e) The terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the Pledgor, the Agent and the Secured Creditors and
their respective successors and assigns, except that the Pledgor shall not have
the right to assign its rights or obligations under this Agreement or any
interest herein, without the prior written consent of the Agent and the Secured
Creditors.
12
<PAGE>
16. Severability. If for any reason any provision or provisions
------------
hereof are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of or effect those portions of
this Agreement which are valid.
17. Notices. (a) Any notice required or permitted to be given under
-------
this Agreement shall be given (i) in the case of the Pledgor, the Agent, and
each Lender, in accordance the Credit Agreement, (ii) in the case of a L/C
Creditor, in accordance with the relevant Secured Letter of Credit and (iii) in
the case of a Swap Creditor, in accordance with the relevant Secured Swap
Contract.
(b) The Pledgor or any Secured Creditor may change the address for
service of notice upon it by a notice in writing to the other.
18. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
19. Section Titles. The Section titles contained in this Agreement
--------------
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
20. Counterparts. This Agreement may be executed in any number of
------------
counterparts, which shall, collectively and separately, constitute one
agreement.
21. Limitation on Duty of the Agent with Respect to Collateral. BOA
----------------------------------------------------------
has been appointed as Agent for the Secured Creditors hereunder, and the Agent
has agreed to act (and any successor Agent shall act) as such hereunder only on
the express conditions contained in Article X of the Credit Agreement. Any
successor Agent appointed pursuant to Article X of the Credit Agreement shall be
entitled to all the rights, interests and benefits of the Agent hereunder.
Beyond the safe custody thereof, the Agent shall not have any duty with respect
to any Pledged Collateral in its possession or control (or in the possession or
control of any agent or bailee) or with respect to any income thereon or the
preservation of rights against prior parties or any other rights pertaining
thereto. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially equal to that which it
accords its own property. The Agent shall not be liable or responsible for any
loss or damage to any of the Pledged Collateral, or for any diminution in the
value thereof, by reason of the act or omission of any agent or bailee selected
by the Agent in good faith.
22. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY
--------------------
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR
13
<PAGE>
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
[Signature Page Follows]
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
IMPAC GROUP, INC.,
as Pledgor
By /s/ Richard Block
---------------------------------
Name: Richard Block
----------------------------
Title: President
---------------------------
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION,
as Agent
By /s/ David A. Johanson
---------------------------------
Name: David A. Johanson
----------------------------
Title: Vice President
---------------------------
S-1
[TO PLEDGE AGREEMENT-COMPANY]
<PAGE>
SCHEDULE I
PLEDGED SHARES
- ------------------------------------------------------------------------------
Class Stock Certificate Number Percentage of
Stock Issuer of Stock Number(s) of Shares Outstanding Shares
- -------------- -------- -------------------- --------- ------------------
- ------------------------------------------------------------------------------
Klearfold, Inc. Common 100 100%
Stock
AGI Incorporated Common 100%
Stock
PLEDGED DEBT
Initial Principal
Issuer Amount Issue Date Maturity Date Interest Rate
------ ------ ---------- ------------- -------------
<PAGE>
SCHEDULE II
FORM OF PLEDGE AMENDMENT
This Pledge Amendment, dated ________________, ___ is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
------------
undersigned hereby certifies that the representations and warranties in Section
-------
5 of the Pledge Agreement are and continue to be true and correct, both as to
- -
the shares pledged prior to this Pledge Amendment and as to the shares pledged
pursuant to this Pledge Amendment. The undersigned further agrees that this
Pledge Amendment may be attached to that certain Pledge Agreement-Company, dated
March __, 1998, by the undersigned, as the Pledgor, to Bank of America National
Trust & Savings Association, as Agent, and that the Pledged Shares and/or
Pledged Debt listed on this Pledge Amendment shall be and become a part of the
Pledged Collateral referred to in said Pledge Agreement and shall secure all
Secured Obligations referred to in said Pledge Agreement. The undersigned
acknowledges that any shares not included in the Pledged Shares or promissory
notes or instruments not included in the Pledged Debt at the discretion of the
Agent may not otherwise be pledged or otherwise used as security by the Pledgor.
IMPAC GROUP, INC.
By_______________________________________
Name:_____________________________________
Title:____________________________________
Pledged Shares
--------------
- ------------------------------------------------------------------------
Name and Class Certificate Number
Address of the Pledgor Issuer of Stock Number(s) of Shares
- ------------------------ ------ -------- -------------- ---------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Pledged Debt
------------
Initial Principal
<PAGE>
Issuer Amount Issue Date Maturity Date Interest Rate
- ------ ------ ---------- ------------- -------------
<PAGE>
EXHIBIT 10.25
PLEDGE AGREEMENT-L/C BORROWERS
------------------------------
This PLEDGE AGREEMENT-L/C BORROWERS, dated as of March 12, 1998
(together with all amendments, if any, from time to time hereto, this
"Agreement"), by and among AGI INCORPORATED, an Illinois corporation ("AGI"),
--------- ---
KLEARFOLD, INC., a Pennsylvania corporation ("Klearfold"; and together with AGI,
---------
each a "Pledgor" and collectively the "Pledgors"), and BANK of AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors
(as defined below). Unless otherwise defined in Section 1, terms defined in the
Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among the Pledgors, IMPAC Group, Inc. (the "Company"), the financial
-------
institutions from time to time party thereto (the "Lenders") and the Agent (as
from time to time restated, amended or modified, the "Credit Agreement"), the
Lenders have agreed to extend certain credit to the Pledgors and the Company;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), each Pledgor has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Company under or with respect to the Secured
Debt Agreements (as defined below) to which the Company is a party;
C. A Pledgor may from time to time be party to one or more Swap Contracts
relating to the L/C Loans (each such Swap Contract with a Swap Creditor (as
defined below), a "Secured Swap Contract") with Bank of America National Trust &
Savings Association ("BofA"), in its individual capacity, any Lender or
syndicate of financial institutions organized by BofA, or an affiliate of BofA
or any Lender (even if BofA or any such Lender ceases to be a Lender under the
Credit Agreement for any reason) and any institution that participates in, and
in each case their subsequent assigns, such Secured Swap Contract (collectively,
the "Swap Creditors");
D. A Pledgor may from time to time incur Indebtedness pursuant to Section
8.05(i) of the Credit Agreement as an account party to one or more letters of
credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 Obligation with
a L/C Creditor (as defined below), a "Secured Letter of Credit") issued by BofA
or a Lender, in each case in its individual capacity (even if BofA or any such
Lender ceases to be a Lender under the Credit Agreement for any reason) and any
institution that participates in, and in each case their subsequent assigns,
such Secured Letter of Credit (collectively, the "L/C Creditors"); and
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Pledgors grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Pledged Collateral (as defined
below) on the terms and conditions set forth below.
<PAGE>
W I T N E S S E T H:
-------------------
1. Definitions. The following shall have (unless otherwise provided
-----------
elsewhere in this Agreement) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"BofA" has the meaning ascribed to it in the Recitals.
----
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined
----------------
in, the Credit Agreement, or any payment default, after any applicable grace
period, under any other Secured Debt Agreement.
"Excluded Shares" has the meaning ascribed to it in the definition
---------------
"Pledged Shares".
--------------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Pledged Collateral" has the meaning ascribed to it in Section 2.
------------------ ---------
"Pledge Debt" means, collectively, (i) those promissory notes and
-----------
instruments listed on Schedule I hereto, and (ii) each additional promissory
note and instrument delivered, or to be delivered, to the Agent pursuant to
Section 2 (iv).
"Pledged Entity" means each Subsidiary of a Pledgor the capital stock
--------------
of which is required to be delivered pursuant to this Agreement.
"Pledged Shares" means, collectively, (i) with respect to a Domestic
--------------
Subsidiary, all of the issued and outstanding shares of capital stock at any
time owned by a Pledgor of such Domestic Subsidiary, (ii) with respect to a
first-tier Foreign Subsidiary other than _____________, all of the issued and
outstanding shares of capital stock at any time owned by the Pledgor of such
Foreign Subsidiary; provided that such Pledgor shall not be required to pledge
hereunder (and the term "Pledged Shares" shall not include) more than 65% of the
total combined voting power of all classes of capital stock of such Foreign
Subsidiary entitled to vote (the "Excluded Shares") until such time as such
Pledgor is required to deliver such Excluded Shares to the Agent pursuant to
Section 7.15 of the Credit Agreement and (iii) each additional share of capital
stock delivered, or to be delivered, to the Agent pursuant to Section 2(ii).
"Pledgor" has the meaning ascribed to it in the Preamble.
-------
"Secured Creditors" means, collectively, the Agent, each Lender, each
-----------------
L/C Creditor and each Swap Creditor.
2
<PAGE>
"Secured Debt Agreements" means, collectively, the Credit Agreement
-----------------------
and the other Loan Documents, each Secured Letter of Credit and each Secured
Swap Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the
------------------------
Recitals.
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Credit Agreement, (ii) all "Obligations" as defined in the
Guaranty, (iii) the payment when due of all obligations of a Pledgor to Swap
Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by a Pledgor and
(iv) the payment when due of all obligations of a Pledgor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by a Pledgor.
"Secured Swap Contract" has the meaning ascribed to it in the
---------------------
Recitals.
"Security Agreement" means the Security Agreement, dated as of even
------------------
date herewith, among the Pledgors and the Agent, as the same may be amended or
modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. Pledge. Each Pledgor hereby pledges to the Agent, for the
------
benefit of itself and the Secured Creditors, and grants to the Agent, for the
benefit of itself and the Secured Creditors, a first priority security interest
in all of the following (collectively, the "Pledged Collateral"):
------------------
(i) the Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, distributions, cash, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares of such Pledgor;
(ii) any additional shares of stock (other than Excluded Shares) of a
Pledged Entity from time to time acquired by such Pledgor in any manner
(which shares shall be deemed to be part of the Pledged Shares), and the
certificates representing such additional shares, and all dividends,
distributions, cash, instruments and other property or proceeds from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;
(iii) the Pledged Debt and the promissory notes or instruments
evidencing the Pledged Debt, and all interest, cash, instruments and other
property and assets from time to time received, receivable or otherwise
distributed in respect of the Pledged Debt; and
(iv) all additional Indebtedness for borrowed money arising after the
date hereof and owing to a Pledgor by a Subsidiary of a Pledgor and
evidenced by promissory notes or other instruments, together with such
promissory notes and instruments, and all interest, cash, instruments and
other property and assets from time to time received, receivable or
otherwise distributed in respect of that Pledged Debt.
3
<PAGE>
3. Security for Secured Obligations. This Agreement secures, and
--------------------------------
the Pledged Collateral is security for, the prompt payment in full when due,
whether at stated maturity, by acceleration or otherwise, and performance of all
obligations and liabilities of any kind of each Pledgor under or in the Secured
Debt Agreements.
4. Delivery of Pledged Collateral. All certificates representing or
------------------------------
evidencing the Pledged Shares and all promissory notes and instruments
evidencing Pledged Debt shall be delivered to and held by or on behalf of the
Agent, for the benefit of itself and the Secured Creditors, pursuant hereto and
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent, and all promissory
notes or other instruments evidencing the Pledged Debt shall be endorsed by the
appropriate Pledgor.
5. Representations and Warranties. Each Pledgor represents and
------------------------------
warrants to the Agent and each Secured Creditor that:
(a) it is, and at the time of delivery of the Pledged Collateral to
the Agent pursuant to Section 4 hereof will be, the sole holder of record
---------
and the sole beneficial owner of the Pledged Collateral pledged by it free
and clear of any Lien thereon or affecting the title thereto, except for
any Lien created by this Agreement;
(b) all of the Pledged Shares have been duly authorized, validly
issued and are fully paid and non-assessable;
(c) to the Pledgors' knowledge, the Pledged Debt (to the extent not
issued by a Credit Party or a Subsidiary of a Credit Party) has been duly
authorized, authenticated or issued and delivered by, and is the legal,
valid and binding obligation of, the issuer thereof, and no such issuer is
in default thereunder;
(d) none of the Pledged Shares, Excluded Shares or Pledged Debt has
been issued or transferred in violation of the securities registration,
securities disclosure or similar laws of any jurisdiction to which such
issuance or transfer may be subject;
(e) all of the Pledged Shares are presently owned by such Pledgor,
and are presently represented by the stock certificates listed on Schedule
--------
I hereto, and, as of the date hereof, there are no existing options,
-
warrants, calls or commitments of any character whatsoever relating to the
Pledged Shares;
(f) no consent, approval, authorization or other order of any Person
and no consent, authorization, approval, or other action by, and no notice
to or filing with, any governmental authority is required for the exercise
by the Agent of the voting or other rights provided for in this Agreement
or the remedies in respect of the Pledged Collateral pursuant to this
Agreement, except as may be required in connection with such disposition by
laws affecting the Agent or the offering and sale of securities generally;
and
(g) the Pledged Shares of a Domestic Subsidiary constitute 100% of
the issued and outstanding shares of stock of such Domestic Subsidiary, and
the Pledged Shares of a
4
<PAGE>
Foreign Subsidiary constitute 65% (100% in the event Excluded Shares are
delivered to the Agent) of the issued and outstanding shares of stock of
such Foreign Subsidiary.
The representations and warranties set forth in this Section 5 shall
---------
survive the execution and delivery of this Agreement.
6. Covenants. From the date of this Agreement, and thereafter
---------
until this Agreement is terminated, each Pledgor:
(a) will defend the title to the Pledged Collateral and the Liens
of Agent or the Pledged Collateral against the claim of any Person and will
maintain and preserve such Liens; and
(b) will, upon obtaining any additional shares (other than Excluded
Shares) of stock of a Pledged Entity or promissory notes of instruments,
which shares, notes or instruments are not already Pledged Collateral,
promptly (and in any event within five (5) Business Days) deliver to the
Agent a Pledge Amendment, duly executed by such Pledgor, in substantially
the form of Schedule II hereto (a "Pledge Amendment") in respect of any
----------- ----------------
such additional shares, notes or instruments pledging to the Agent, on
behalf of itself and the Secured Creditors, all of such additional shares,
notes or instruments. Each Pledgor hereby authorizes the Agent to attach
each Pledge Amendment to this Agreement and agrees that all Pledged Shares
and Pledged Debt listed on any Pledge Amendment delivered to the Agent
shall for all purposes hereunder be considered Pledged Collateral.
7. Pledgors' Rights. Until an Event of Default shall have
----------------
occurred and be continuing and written notice shall be given to a Pledgor in
accordance with Section 8(a) hereof:
------------
(a) each Pledgor shall have the right, from time to time, to vote
and give consents with respect to the Pledged Collateral, or any part
thereof for all purposes not inconsistent with the provisions of this
Agreement, any Secured Debt Agreement and any other document executed in
connection with any such agreement; provided, however, that no vote shall
-------- -------
be cast, and no consent shall be given or action taken, which would have
the effect of impairing the position or interest of the Agent or any
Secured Creditor in respect of the Pledged Collateral or which would
authorize or effect (except as and to the extent expressly permitted by the
Credit Agreement): (i) the dissolution or liquidation, in whole or in part,
of a Pledged Entity; (ii) the consolidation or merger of a Pledged Entity
with any other Person; (iii) the sale, disposition or encumbrance of all or
substantially all of the assets of a Pledged Entity, except for Liens in
favor of the Agent; (iv) any change in the authorized number of shares, the
stated capital or the authorized share capital of a Pledged Entity or the
issuance of any additional shares of its stock; or (v) the alteration of
the voting rights with respect to the stock of a Pledged Entity; and
(b)(i) each Pledgor shall be entitled, from time to time, to collect
and receive for its own use all cash dividends, principal and interest paid
in respect of the Pledged Collateral to the extent not in violation of the
Secured Debt Agreements other than any and all; (A)
5
<PAGE>
dividends, principal and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral; and (B) dividends and other distributions paid or payable in
cash in respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution so long as no Default or Event of Default
has occurred; and (C) cash paid, payable or otherwise distributed, in
respect of principal of, or in redemption of, or in exchange for, any
Pledged Collateral so long as no Default or Event of Default has occurred;
provided, however, that until actually paid all rights to such
-------- -------
distributions shall remain subject to the Lien created by this Agreement;
and
(ii) all dividends and interest (other than such cash dividends
and interest as are permitted to be paid to a Pledgor in accordance with
clause (i) above) and all other distributions in respect of any of the
------ ---
Pledged Collateral of such Pledgor, whenever paid or made, shall be
delivered to the Agent to hold as Pledged Collateral and shall, if received
by such Pledgor, be received in trust for the benefit of the Agent, for the
benefit of itself and the Secured Creditors, be segregated from the other
property or funds of such Pledgor, and be forthwith delivered to the Agent
as Pledged Collateral in the same form as so received (with any necessary
indorsement).
8. Defaults and Remedies. (a) Upon the occurrence and continuance
---------------------
of an Event of Default, then on or at any time after such declaration (provided
that such declaration is not rescinded by the Secured Creditors) and upon
written notice to a Pledgor, the Agent (personally or through an agent) is
hereby authorized and empowered (subject to instructions agreeable to the
Secured Creditors) to transfer and register in its name or in the name of its
nominee the whole or any part of the Pledged Collateral, to exchange
certificates or instruments representing or evidencing Pledged Shares for
certificates or instruments of smaller or larger denominations, to exercise the
voting and all other rights as a stockholder with respect thereto, to collect
and receive all cash dividends, interest and principal and other distributions
made thereon, to sell in one or more sales after ten (10) days' written notice
of the time and place of any public sale or of the time after which a private
sale is to take place (which notice each Pledgor agrees is commercially
reasonable) the whole or any part of the Pledged Collateral and to otherwise act
with respect to the Pledged Collateral as though the Agent was the outright
owner thereof, each Pledgor hereby irrevocably constituting and appointing the
Agent as the proxy and attorney-in-fact of such Pledgor, with full power of
substitution to do so, and which shall remain in effect until the Obligations
are indefeasibly paid in full; provided, however, the Agent shall not have any
-------- -------
duty to exercise any such right or to preserve the same and shall not be liable
for any failure to do so or for any delay in doing so. Any sale shall be made
at a public or private sale at the Agent's place of business, or at any place to
be named in the notice of sale, either for cash or upon credit or for future
delivery at such price as the Agent may deem fair, and the Agent or any Secured
Creditor may be the purchaser of the whole or any part of the Pledged Collateral
so sold and hold the same thereafter in its own right free from any claim of a
Pledgor or any right of redemption. Each sale shall be made to the highest
bidder, but the Agent reserves the right to reject any and all bids at such sale
which, in its discretion, it shall deem inadequate. Demands of performance,
except as otherwise herein specifically provided for, notices of sale,
advertisements and the presence of property at sale are hereby waived and any
sale hereunder may be conducted by an auctioneer or any officer or agent of the
Agent.
6
<PAGE>
(b) If, at the original time or times appointed for the sale of the
whole or any part of the Pledged Collateral, the highest bid, if there be but
one sale, shall be inadequate to discharge in full all the Secured Obligations,
or if the Pledged Collateral be offered for sale in lots, if at any of such
sales, the highest bid for the lot offered for sale would indicate to the Agent,
in its discretion, the unlikelihood of the proceeds of the sales of the whole of
the Pledged Collateral being sufficient to discharge all the Secured
Obligations, the Agent may, on one or more occasions and in its discretion,
postpone any of said sales by public announcement at the time of sale or the
time of previous postponement of sale, and no other notice of such postponement
or postponements of sale need be given, any other notice being hereby waived;
provided, however, that any sale or sales made after such postponement shall be
- -------- -------
after ten (10) days' written notice to a Pledgor.
(c) The proceeds of any sale, disposition or other realization upon
all or any part of the Pledged Collateral shall be distributed by the Agent in
accordance with Section 9 of the Security Agreement.
(d) If, at any time when the Agent in its sole discretion determines,
following the occurrence and during the continuance of an Event of Default,
that, in connection with any actual or contemplated exercise of its rights (when
permitted under this Section 8) to sell the whole or any part of the Pledged
---------
Collateral hereunder, it is necessary or advisable to effect a public
registration of all or part of the Pledged Collateral pursuant to the Securities
Act of 1933, as amended (or any similar statute then in effect) (the "Act"), the
---
relevant Pledgor shall, in an expeditious manner, cause the Pledged Entities to:
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect to the
----------
Pledged Collateral and in good faith use commercially reasonable efforts to
cause such registration statement to become and remain effective;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Act with
respect to the sale or other disposition of the Pledged Collateral covered
by such registration statement whenever the Agent shall desire to sell or
otherwise dispose of the Pledged Collateral;
(iii) furnish to the Agent such numbers of copies of a prospectus
and a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as the Agent may reasonably request in order
to facilitate the public sale or other disposition of the Pledged
Collateral by the Agent;
(iv) use commercially reasonable efforts to register or qualify
the Pledged Collateral covered by such registration statement under such
other securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as the Agent shall reasonably request, and do such
other reasonable acts and things as may be required of it to enable the
Agent to consummate the public sale or other disposition in such
jurisdictions of the Pledged Collateral by the Agent;
7
<PAGE>
(v) furnish, at the reasonable request of the Agent, on the
date that shares of the Pledged Collateral are delivered to the
underwriters for sale pursuant to such registration or, if the security is
not being sold through underwriters, on the date that the registration
statement with respect to such shares of Pledged Collateral becomes
effective, (A) an opinion, dated such date, of the independent counsel
representing such registrant for the purposes of such registration,
addressed to the underwriters, if any, and in the event the Pledged
Collateral is not being sold through underwriters, then to the Agent, in
customary form and covering matters of the type customarily covered in such
legal opinions; and (B) a comfort letter, dated such date, from the
independent certified public accountants of such registrant, addressed to
the underwriters, if any, and in the event the Pledged Collateral is not
being sold through underwriters, then to the Agent, in a customary form and
covering matters of the type customarily covered by such comfort letters
and as the underwriters or the Agent shall reasonably request. The opinion
of counsel referred to above shall additionally cover such other legal
matters with respect to the registration in respect of which such opinion
is being given as the Agent may reasonably request. The letter referred to
above from the independent certified public accountants shall additionally
cover such other financial matters (including information as to the period
ending not more than five (5) Business Days prior to the date of such
letter) with respect to the registration in respect of which such letter is
being given as the Agent may reasonably request; and
(vi) otherwise use commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable but
not later than 18 months after the effective date of the registration
statement, an earnings statement covering the period of at least 12 months
beginning with the first full month after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Act.
(e) All reasonable expenses incurred in complying with Section 8(d)
------------
hereof, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National Association of
Securities Dealers, Inc.), printing expenses, fees and disbursements of counsel
for the registrant, the reasonable fees and expenses of counsel for the Agent,
reasonable expenses of the independent certified public accountants (including
any special audits incident to or required by any such registration) and
reasonable expenses of complying with the securities or blue sky laws or any
jurisdictions, shall be paid by the Pledgors.
(f) If, at any time when the Agent shall determine to exercise its
right to sell the whole or any part of the Pledged Collateral hereunder, such
Pledged Collateral or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Act, the Agent may, in its
discretion (subject only to applicable requirements of law), sell such Pledged
Collateral or part thereof by private sale in such manner and under such
circumstances as the Agent may deem necessary or advisable, but subject to the
other requirements of this Section 8, and shall not be required to effect such
---------
registration or to cause the same to be effected. Without limiting the
generality of the foregoing, in any such event, the Agent in its discretion (x)
may, in accordance with applicable securities laws, proceed to make such private
sale notwithstanding that a registration statement for the purpose of
registering such Pledged Collateral or part thereof could be or shall have been
filed under said Act (or similar statute), (y) may approach and negotiate with a
single possible
8
<PAGE>
purchaser to effect such sale, and (z) may restrict such sale to a purchaser who
is an accredited investor under the Act and who will represent and agree that
such purchaser is purchasing for its own account, for investment and not with a
view to the distribution or sale of such Pledged Collateral or part thereof. In
addition to a private sale as provided above in this Section 8, if any of the
---------
Pledged Collateral shall not be freely distributable to the public without
registration under the Act (or similar statute) at the time of any proposed sale
pursuant to this Section 8, then the Agent shall not be required to effect such
---------
registration or cause the same to be effected but, in its discretion (subject
only to applicable requirements of law), may require that any sale hereunder
(including a sale at auction) be conducted subject to restrictions: (i) as to
the financial sophistication and ability of any Person permitted to bid or
purchase at any such sale; (ii) as to the content of legends to be placed upon
any certificates representing the Pledged Collateral sold in such sale,
including restrictions on future transfer thereof; (iii) as to the
representations required to be made by each Person bidding or purchasing at such
sale relating to that Person's access to financial information about the
relevant Pledgor and such Person's intentions as to the holding of the Pledged
Collateral so sold for investment for its own account and not with a view to the
distribution thereof; and (iv) as to such other matters as the Agent may, in its
discretion, deem necessary or appropriate in order that such sale
(notwithstanding any failure so to register) may be effected in compliance with
the Bankruptcy Code and other laws affecting the enforcement of creditors'
rights and the Act and all applicable state securities laws.
(g) Each Pledgor recognizes that the Agent may be unable to effect a
public sale of any or all the Pledged Collateral and may be compelled to resort
to one or more private sales thereof in accordance with clause (f) above. Each
Pledgor also acknowledges that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any such private sale shall
be deemed to have been made in a commercially reasonable manner. The Agent
shall be under no obligation to delay a sale of any of the Pledged Collateral
for the period of time necessary to permit the registrant to register such
securities for public sale under the Act, or under applicable state securities
laws, even if the relevant Pledgor would agree to do so.
(h) Each Pledgor agrees to the maximum extent permitted by applicable
law that following the occurrence and during the continuance of an Event of
Default it will not at any time plead, claim or take the benefit of any
appraisal, valuation, stay, extension, moratorium or redemption law now or
hereafter in force in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder, and
each Pledgor waives the benefit of all such laws to the extent it lawfully may
do so. Each Pledgor agrees that it will not interfere with any right, power and
remedy of the Agent provided for in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, or the exercise or beginning of
the exercise by the Agent of any one or more of such rights, powers or remedies.
No failure or delay on the part of the Agent to exercise any such right, power
or remedy and no notice or demand which may be given to or made upon a Pledgor
by the Agent with respect to any such remedies shall operate as a waiver
thereof, or limit or impair the Agent's right to take any action or to exercise
any power or remedy hereunder, without notice or demand, or prejudice its rights
as against the Pledgors in any respect.
9
<PAGE>
(i) Each Pledgor further agrees that a breach of any of the covenants
contained in this Section 8 will cause irreparable injury to the Agent and the
---------
Secured Creditors, that the Agent and the Secured Creditors shall have no
adequate remedy at law in respect of such breach and, as a consequence, agrees
that each and every covenant contained in this Section 8 shall be specifically
---------
enforceable against the Pledgors, and each Pledgor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that the Secured Obligations are not then due and
payable in accordance with the agreements and instruments governing and
evidencing such obligations.
9. Waiver. No delay on the Agent's or any Secured Creditors' part
------
in exercising any power of sale, Lien, option or other right hereunder, and no
notice or demand which may be given to or made upon any Pledgor by the Agent or
a Secured Creditor with respect to any power of sale, Lien, option or other
right hereunder, shall constitute a waiver thereof, or limit or impair the
Agent's or any Secured Creditors' right to take any action or to exercise any
power of sale, Lien, option, or any other right hereunder, without notice or
demand, or prejudice the Agent's or any Secured Creditors' rights as against the
Pledgors in any respect.
10. Assignment. The Agent and the Secured Creditors may assign,
----------
indorse or transfer any instrument evidencing all or any part of the Secured
Obligations as provided in, and in accordance with, the applicable Secured Debt
Agreement and the holder of such instrument shall be entitled to the benefits
of this Agreement.
11. Termination. This Agreement shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Pledged Collateral
shall revert to the relevant Pledgor. Upon such termination, the Agent shall
promptly return to the relevant Pledgor, at such Pledgor's expense, such of the
Pledged Collateral held by the Agent as shall not have been sold or otherwise
applied pursuant to the terms hereof. The Agent will promptly execute and
deliver to the relevant Pledgor such other documents as such Pledgor shall
reasonably request to evidence such termination.
12. Lien Absolute. All rights of the Agent hereunder, and all
-------------
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any Secured Debt
Agreement, any other document executed in connection with either agreement
or any other agreement or instrument governing or evidencing any Secured
Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any part of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any Secured
Debt Agreement, or any other agreement or instrument governing or
evidencing any Secured Obligations;
10
<PAGE>
(c) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations; or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Pledgor.
13. Release. Each Pledgor consents and agrees that the Agent and the
-------
Secured Creditors may at any time, or from time to time, in its discretion (a)
renew, extend or change the time of payment, and/or the manner, place or terms
of payment of all or any part of the Secured Obligations and (b) exchange,
release and/or surrender all or any of the Pledged Collateral, or any part
thereof, by whomsoever deposited, which is now or may hereafter be held by the
Agent in connection with all or any of the Secured Obligations; all in such
manner and upon such terms as the Agent and the Secured Creditors may deem
proper, and without notice to or further assent from any Pledgor, it being
hereby agreed that each Pledgor shall be and remain bound upon this Agreement,
irrespective of the value or condition of any of the Pledged Collateral, and
notwithstanding any such change, exchange, settlement, compromise, surrender,
release, renewal or extension, and notwithstanding also that the Secured
Obligations may, at any time, exceed the aggregate principal amount thereof set
forth in the relevant Secured Debt Agreement, or any other agreement governing
any Secured Obligations. Each Pledgor hereby waives notice of acceptance of this
Agreement, and also presentment, demand, protest and notice of dishonor of any
and all of the Secured Obligations, and promptness in commencing suit against
any party hereto or liable hereon, and in giving any notice to or of making any
claim or demand hereunder upon any Pledgor. No act or omission of any kind on
the Agent's part shall in any event affect or impair this Agreement.
14. Reinstatement. This Agreement shall remain in full force and
-------------
effect and continue to be effective should any petition be filed by or against a
Pledgor or any Pledged Entity for liquidation or reorganization, should a
Pledgor or any Pledged Entity become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or any
significant part of a Pledgor's or a Pledged Entity's assets, and shall continue
to be effective or be reinstated, as the case may be, if at any time payment and
performance of the Secured Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
15. Miscellaneous. (a) The Agent may execute any of its duties
-------------
hereunder by or through agents or employees and shall be entitled to advice of
counsel concerning all matters pertaining to its duties hereunder.
(b) Each Pledgor jointly and severally agrees to promptly reimburse
the Agent for actual out-of-pocket expenses, including, without limitation,
reasonable counsel fees, incurred by the Agent in connection with the
administration and enforcement of this Agreement. Each
11
<PAGE>
Pledgor's obligation to reimburse the Agent pursuant to the preceding sentence
shall be a Secured Obligation payable on demand.
(c) None of the Agent, any Secured Creditor nor any of their
respective officers, directors, employees, agents or counsel shall be liable for
any action lawfully taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or willful
misconduct.
(d) Each Pledgor hereby irrevocably appoints the Agent as such
Pledgor's attorney-in-fact, with full authority in the place and stead of such
Pledgor and in the name of such Pledgor or otherwise, from time to time in the
Agent's discretion reasonably exercised, to take any action and to execute any
instrument that the Agent deems reasonably necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, to receive,
endorse and collect all instruments made payable to such Pledgor representing
any dividend, or other proceeds or distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same, when and
to the extent permitted by this Agreement.
(e) The terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the Pledgors, the Agent and the Secured Creditors
and their respective successors and assigns, except that a Pledgor shall not
have the right to assign its rights or obligations under this Agreement or any
interest herein, without the prior written consent of the Agent and the Secured
Creditors.
16. Severability. If for any reason any provision or provisions
------------
hereof are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of or effect those portions of
this Agreement which are valid.
17. Notices. (a) Any notice required or permitted to be given under
-------
this Agreement shall be given (i) in the case of a Pledgor, the Agent, and each
Lender, in accordance the Credit Agreement, (ii) in the case of a L/C Creditor,
in accordance with the relevant Secured Letter of Credit and (iii) in the case
of a Swap Creditor, in accordance with the relevant Secured Swap Contract.
(b) Any Pledgor or any Secured Creditor may change the address for
service of notice upon it by a notice in writing to the other.
18. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
19. Section Titles. The Section titles contained in this Agreement
--------------
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
12
<PAGE>
20. Counterparts. This Agreement may be executed in any number of
------------
counterparts, which shall, collectively and separately, constitute one
agreement.
21. Limitation on Duty of the Agent with Respect to Pledged
-------------------------------------------------------
Collateral. BOA has been appointed as Agent for the Secured Creditors
- ----------
hereunder, and the Agent has agreed to act (and any successor Agent shall act)
as such hereunder only on the express conditions contained in Article X of the
Credit Agreement. Any successor Agent appointed pursuant to Article X of the
Credit Agreement shall be entitled to all the rights, interests and benefits of
the Agent hereunder. Beyond the safe custody thereof, the Agent shall not have
any duty with respect to any Pledged Collateral in its possession or control (or
in the possession or control of any agent or bailee) or with respect to any
income thereon or the preservation of rights against prior parties or any other
rights pertaining thereto. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which it accords its own property. The Agent shall not be liable or
responsible for any loss or damage to any of the Pledged Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any agent
or bailee selected by the Agent in good faith.
[SIGNATURE PAGE FOLLOWS]
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
KLEARFOLD, INC.,
as a Pledgor
By /s/ Richard Block
------------------------------------------
Name: Richard Block
-------------------------------------
Title: President
------------------------------------
AGI INCORPORATED,
as a Pledgor
By /s/ Richard Block
------------------------------------------
Name: Richard Block
-------------------------------------
Title: President
------------------------------------
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION,
as Agent
By /s/ David Johanson
------------------------------------------
Name: David Johanson
-------------------------------------
Title: Vice President
------------------------------------
S-1
[TO PLEDGE AGREEMENT-L/C BORROWER]
<PAGE>
SCHEDULE I
PLEDGED SHARES
--------------
<TABLE>
<CAPTION>
================================================================================
A. Klearfold, Inc.
--------------
================================================================================
Class Stock Certificate Number Percentage of
Stock Issuer of Stock Number(s) of Shares Outstanding Shares
- -------------- -------- ----------------- --------- ------------------
<S> <C> <C> <C> <C>
KF - Delaware, Inc. Common 100 100%
Stock
================================================================================
================================================================================
KF - International Common 1,000 100%
Inc. Stock
================================================================================
================================================================================
B. AGI Incorporated
----------------
================================================================================
Class Stock Certificate Number Percentage of
Stock Issuer of Stock Number(s) of Shares Outstanding Shares
- -------------- -------- ----------------- --------- ------------------
================================================================================
None
================================================================================
================================================================================
</TABLE>
PLEDGED DEBT
------------
A. Klearfold, Inc.
---------------
Initial Principal
Issuer Amount Issue Date Maturity Date Interest Rate
- ------ ------ ---------- ------------- -------------
B. AGI Incorporated
----------------
Initial Principal
Issuer Amount Issue Date Maturity Date Interest Rate
- ------ ------ ---------- ------------- -------------
<PAGE>
SCHEDULE II
FORM OF PLEDGE AMENDMENT
------------------------
This Pledge Amendment, dated ________________, ___ is delivered
pursuant to Section 6(b) of the Pledge Agreement referred to below. The
------------
undersigned hereby certifies that the representations and warranties in Section
-------
5 of the Pledge Agreement are and continue to be true and correct, both as to
- -
the shares pledged prior to this Pledge Amendment and as to the shares pledged
pursuant to this Pledge Amendment. The undersigned further agrees that this
Pledge Amendment may be attached to that certain Pledge Agreement-L/C Borrowers,
dated March __, 1998, by the undersigned, as a Pledgor, to Bank of America
National Trust & Savings Association, as the Agent, and that the Pledged Shares
and/or Pledged Debt listed on this Pledge Amendment shall be and become a part
of the Pledged Collateral referred to in said Pledge Agreement and shall secure
all Secured Obligations referred to in said Pledge Agreement. The undersigned
acknowledges that any shares not included in the Pledged Shares or promissory
notes or instruments not included in the Pledged Debt at the discretion of the
Agent may not otherwise be pledged or otherwise used as security by the
undersigned.
[NAME OF PLEDGOR]
By______________________________________________
Name:_________________________________________
Title:________________________________________
PLEDGED SHARES
--------------
<TABLE>
<CAPTION>
================================================================================
Name and Class Certificate Number
Address of the Pledgor Issuer of Stock Number(s) of Shares
- ------------------------ ------ -------- -------------- ---------
<S> <C> <C> <C> <C>
================================================================================
================================================================================
================================================================================
</TABLE>
PLEDGED DEBT
------------
Initial Principal
Issuer Amount Issue Date Maturity Date Interest Rate
- ------ ------ ---------- ------------- -------------
<PAGE>
Exhibit 10.26
PLEDGE AGREEMENT - SUBSIDIARY GUARANTORS
----------------------------------------
This PLEDGE AGREEMENT- SUBSIDIARY BORROWERS, dated as of March 12,
1998 (together with all amendments, if any, from time to time hereto, this
"Agreement"), by and among KF-DELAWARE, a Delaware corporation ("KFD"). KF-
--------- ---
INTERNATIONAL, INC., a United States Virgin Island corporation ("KFI"; and
---
together with KFD, each a "Pledgor" and collectively the "Pledgors"), and BANK
of AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, as agent (the "Agent") for the
Secured Creditors (as defined below). Unless otherwise defined in Section 1,
terms defined in the Credit Agreement (as defined below) are used herein as
therein defined.
RECITALS:
--------
A. Pursuant to the Credit Agreement, dated as of even date herewith, IMPAC
Group, Inc. (the "Company"), AGI Incorporated ("AGI"), Klearfold, Inc.
------- ---
("Klearfold", and together with AGI. each a "L/C Borrower" and collectively, the
--------- ------------
"L/C Borrowers"), the financial institutions from time to time party thereto
-------------
(the "Lenders") and the Agent (as from time to time restated, amended or
modified, the "Credit Agreement"), the Lenders have agreed to extend certain
credit to the Company and the L/C Borrowers.
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), each Pledgor has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Company and the L/C Borrowers under or with
respect to the Secured Debt Agreements (as defined below) to which the Company
and the L/C Borrowers are a party,
C. A Pledgor may from time to time be party to one or more Swap Contracts
relating to the L/C Loans (each such Swap Contract with a Swap Creditor (as
defined below), a "Secured Swap Contract") with Bank of America National Trust &
Savings Association ("BofA"), in its individual capacity, any Lender or
syndicate of financial institutions organized by BofA, or an affiliate of BofA
or any Lender (even if BofA or any such Lender ceases to be a Lender under the
Credit Agreement for any reason) and any institution that participates in, and
in each case their subsequent assigns, such Secured Swap Contract (collectively,
the "Swap Creditors");
D. A Pledgor may from time to time incur Indebtedness pursuant to Section
8.05(i) of the Credit Agreement as an account party to one or more letters of
credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 Obligation with
a L/C Creditor (as defined below), a "Secured Letter of Credit") issued by BofA
or a Lender, in each case in its individual capacity (even if BofA or any such
Lender ceases to be a Lender under the Credit Agreement for any reason) and any
institution that participates in, and in each case their subsequent assigns,
such Secured Letter of Credit (collectively, the "L/C Creditors"); and
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Pledgors grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Pledged Collateral (as defined
below) on the terms and conditions set forth below.
<PAGE>
W I T N E S S E T H:
- - - - - - - - - -
1. Definitions. The following shall have (unless otherwise provided
-----------
elsewhere in this Agreement) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined).
"Agent" has the meaning ascribed to it in the Preamble.
-----
"BofA" has the meaning ascribed to it in the Recitals.
----
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined
----------------
in, the Credit Agreement, or any payment default, after any applicable grace
period, under any other Secured Debt Agreement.
"Excluded Shares" has the meaning ascribed to it in the definition
---------------
"Pledged Shares".
---------------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Pledged Collateral" has the meaning ascribed to it in Section 2.
------------------ ---------
"Pledge Debt" means, collectively, (i) those promissory notes and
-----------
instruments listed on Schedule I hereto, and (ii) each additional promissory
note and instrument delivered, or to be delivered, to the Agent pursuant to
Section 2 (iv).
"Pledged Entity" means each Subsidiary of a Pledgor the capital stock
--------------
of which is required to be delivered pursuant to this Agreement.
"Pledged Shares" means, collectively, (i) with respect to a Domestic
--------------
Subsidiary, all of the issued and outstanding shares of capital stock at any
time owned by a Pledgor of such Domestic Subsidiary, (ii) with respect to a
first-tier Foreign Subsidiary, all of the issued and outstanding shares of
capital stock at any time owned by the Pledgor of such Foreign Subsidiary;
provided that such Pledgor shall not be required to pledge hereunder (and the
term "Pledged Shares" shall not include) more than 65% of the total combined
voting power of all classes of capital stock of such Foreign Subsidiary entitled
to vote (the "Excluded Shares") until such time as such Pledgor is required to
deliver such Excluded Shares to the Agent pursuant to Section 7.15 of the Credit
Agreement and (iii) each additional share of capital stock delivered, or to be
delivered, to the Agent pursuant to Section 2(ii).
"Pledgor" has the meaning ascribed to it in the Preamble.
-------
"Secured Creditors" means, collectively, the Agent, each Lender, each
-----------------
L/C Creditor and each Swap Creditor.
2
<PAGE>
"Secured Debt Agreements" means, collectively, the Credit Agreement
-----------------------
and the other Loan Documents, each Secured Letter of Credit and each Secured
Swap Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the
------------------------
Recitals.
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Guaranty, (ii) the payment when due of all obligations of a
Pledgor to Swap Creditors pursuant to any Secured Swap Contract and the due
performance and compliance with all the terms of the Secured Swap Contracts by a
Pledgor and (iii) the payment when due of all obligations of a Pledgor to L/C
Creditors pursuant to any Secured Letter of Credit and the due performance and
compliance with all the terms of the Secured Letter of Credit by a Pledgor.
"Secured Swap Contract" has the meaning ascribed to it in the
---------------------
Recitals.
"Security Agreement" means the Security Agreement, dated as of even
------------------
date herewith, among the Pledgors and the Agent, as the same may be amended or
modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. Pledge. Each Pledgor hereby pledges to the Agent, for the
------
benefit of itself and the Secured Creditors, and grants to the Agent, for the
benefit of itself and the Secured Creditors, a first priority security interest
in all of the following (collectively, the "Pledged Collateral"):
------------------
(i) the Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, distributions, cash, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares of such Pledgor.
(ii) any additional shares of stock (other than Excluded Shares) of a
Pledged Entity from time to time acquired by such Pledgor in any manner
(which shares shall be deemed to be part of the Pledged Shares), and the
certificates representing such additional shares, and all dividends,
distributions, cash, instruments and other property or proceeds from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;
(iii) the Pledged Debt and the promissory notes or instruments
evidencing the Pledged Debt, and all interest, cash, instruments and other
property and assets from time to time received, receivable or otherwise
distributed in respect of the Pledged Debt; and
(iv) all additional Indebtedness for borrowed money arising after
the date hereof and owing to a Pledgor by a Subsidiary of a Pledgor and
evidenced by promissory notes or other instruments, together with such
promissory notes and instruments, and all interest, cash, instruments and
other property and assets from time to time received, receivable or
otherwise distributed in respect of that Pledged Debt.
3
<PAGE>
3. Security for Secured Obligations. This Agreement secures, and
--------------------------------
the Pledged Collateral is security for, the prompt payment in full when due,
whether at stated maturity, by acceleration or otherwise, and performance of all
obligations and liabilities of any kind of each Pledgor under or in the Secured
Debt Agreements.
4. Delivery of Pledged Collateral. All certificates representing or
------------------------------
evidencing the Pledged Shares and all promissory notes and instruments
evidencing Pledged Debt shall be delivered to and held by or on behalf of the
Agent, for the benefit of itself and the Secured Creditors, pursuant hereto and
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent, and all promissory
notes or other instruments evidencing the Pledged Debt shall be endorsed by the
appropriate Pledgor.
5. Representations and Warranties. Each Pledgor represents and
------------------------------
warrants to the Agent and each Secured Creditor that:
(a) it is, and at the time of delivery of the Pledged Collateral to
the Agent pursuant to Section 4 hereof will be, the sole holder of record
---------
and the sole beneficial owner of the Pledged Collateral pledged by it free
and clear of any Lien thereon or affecting the title thereto, except for
any Lien created by this Agreement;
(b) all of the Pledged Shares have been duly authorized, validly
issued and are fully paid and non-assessable.
(c) to the Pledgors' knowledge, the Pledged Debt (to the extent not
issued by a Credit Party or a Subsidiary of a Credit Party) has been duly
authorized, authenticated or issued and delivered by, and is the legal,
valid and binding obligation of, the issuer thereof, and no such issuer is
in default thereunder;
(d) none of the Pledged Shares, Excluded Shares or Pledged Debt has
been issued or transferred in violation of the securities registration,
securities disclosure or similar laws of any jurisdiction to which such
issuance or transfer may be subject.
(e) all of the Pledged Shares are presently owned by such Pledgor,
and are presently represented by the stock certificates listed on Schedule
--------
I hereto, and, as of the date hereof, there are no existing options,
-
warrants, calls or commitments of any character whatsoever relating to the
Pledged Shares;
(f) no consent, approval, authorization or other order of any Person
and no consent, authorization, approval, or other action by, and no notice
to or filing with, any governmental authority is required for the exercise
by the Agent of the voting or other rights provided for in this Agreement
or the remedies in respect of the Pledged Collateral pursuant to this
Agreement, except as may be required in connection with such disposition
by laws affecting the Agent or the offering and sale of securities
generally; and
(g) the Pledged Shares of a Domestic Subsidiary constitute 100% of
the issued and outstanding shares of stock of such Domestic Subsidiary,
and the Pledged Shares of a
4
<PAGE>
Foreign Subsidiary constitute 65% (100% in the event Excluded Shares are
delivered to the Agent) of the issued and outstanding shares of stock of
such Foreign Subsidiary.
The representations and warranties set forth in this Section 5 shall
---------
survive the execution and delivery of this Agreement.
6. Covenants. From the date of this Agreement, and thereafter until
---------
this Agreement is terminated, each Pledgor:
(a) will defend the title to the Pledged Collateral and the Liens of
Agent or the Pledged Collateral against the claim of any Person and will
maintain and preserve such Liens; and
(b) will, upon obtaining any additional shares (other than Excluded
Shares) of stock of a Pledged Entity or promissory notes of instruments,
which shares, notes or instruments are not already Pledged Collateral,
promptly (and in any event within five (5) Business Days) deliver to the
Agent a Pledge Amendment, duly executed by such Pledgor, in substantially
the form of Schedule II hereto (a "Pledge Amendment") in respect of any
----------- -----------------
such additional shares, notes or instruments pledging to the Agent, on
behalf of itself and the Secured Creditors, all of such additional shares,
notes or instruments. Each Pledgor hereby authorizes the Agent to attach
each Pledge Amendment to this Agreement and agrees that all Pledged Shares
and Pledged Debt listed on any Pledge Amendment delivered to the Agent
shall for all purposes hereunder be considered Pledged Collateral.
7. Pledgors' Rights. Until an Event of Default shall have occurred
----------------
and be continuing and written notice shall be given to a Pledgor in accordance
with Section 8(a) hereof:
------------
(a) each Pledgor shall have the right, from time to time, to vote and
give consents with respect to the Pledged Collateral, or any part thereof
for all purposes not inconsistent with the provisions of this Agreement,
any Secured Debt Agreement and any other document executed in connection
with any such agreement; provided, however, that no vote shall be cast, and
--------- -------
no consent shall be given or action taken, which would have the effect of
impairing the position or interest of the Agent or any Secured Creditor in
respect of the Pledged Collateral or which would authorize or effect
(except as and to the extent expressly permitted by the Credit Agreement):
(i) the dissolution or liquidation, in whole or in part, of a Pledged
Entity; (ii) the consolidation or merger of a Pledged Entity with any other
Person; (iii) the sale, disposition or encumbrance of all or substantially
all of the assets of a Pledged Entity, except for Liens in favor of the
Agent; (iv) any change in the authorized number of shares, the stated
capital or the authorized share capital of a Pledged Entity or the issuance
of any additional shares of its stock; or (v) the alteration of the voting
rights with respect to the stock of a Pledged Entity; and
(b)(i) each Pledgor shall be entitled, from time to time, to collect
and receive for its own use all cash dividends, principal and interest paid
in respect of the Pledged Collateral to the extent not in violation of the
Secured Debt Agreements other than any and all; (A) dividends, principal
and interest paid or payable other than in cash in respect of, and
5
<PAGE>
instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral; and
(B) dividends and other distributions paid or payable in cash in respect of
any Pledged Collateral in connection with a partial or total liquidation or
dissolution so long as no Default or Event of Default has occurred; and (C)
cash paid, payable or otherwise distributed, in respect of principal of, or
in redemption of, or in exchange for, any Pledged Collateral so long as no
Default or Event of Default has occurred; provided, however, that until
--------- -------
actually paid all rights to such distributions shall remain subject to the
Lien created by this Agreement; and
(ii) all dividends and interest (other than such cash dividends
and interest as are permitted to be paid to a Pledgor in accordance with
clause (i) above) and all other distributions in respect of any of the
------ ---
Pledged Collateral of such Pledgor, whenever paid or made, shall be
delivered to the Agent to hold as Pledged Collateral and shall, if
received by such Pledgor, be received in trust for the benefit of the
Agent, for the benefit of itself and the Secured Creditors, be segregated
from the other property or funds of such Pledgor, and be forthwith
delivered to the Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement).
8. Defaults and Remedies. (a) Upon the occurrence and continuance
---------------------
of an Event of Default, then on or at any time after such declaration (provided
that such declaration is not rescinded by the Secured Creditors) and upon
written notice to a Pledgor, the Agent (personally or through an agent) is
hereby authorized and empowered (subject to instructions agreeable to the
Secured Creditors) to transfer and register in its name or in the name of its
nominee the whole or any part of the Pledged Collateral, to exchange
certificates or instruments representing or evidencing Pledged Shares for
certificates or instruments of smaller or larger denominations, to exercise the
voting and all other rights as a stockholder with respect thereto, to collect
and receive all cash dividends, interest and principal and other distributions
made thereon, to sell in one or more sales after ten (10) days' written notice
of the time and place of any public sale or of the time after which a private
sale is to take place (which notice each Pledgor agrees is commercially
reasonable) the whole or any part of the Pledged Collateral and to otherwise act
with respect to the Pledged Collateral as though the Agent was the outright
owner thereof, each Pledgor hereby irrevocably constituting and appointing the
Agent as the proxy and attorney-in-fact of such Pledgor, with full power of
substitution to do so, and which shall remain in effect until the Obligations
are indefeasibly paid in full; provided, however, the Agent shall not have any
--------- -------
duty to exercise any such right or to preserve the same and shall not be liable
for any failure to do so or for any delay in doing so. Any sale shall be made at
a public or private sale at the Agent's place of business, or at any place to be
named in the notice of sale, either for cash or upon credit or for future
delivery at such price as the Agent may deem fair, and the Agent or any Secured
Creditor may be the purchaser of the whole or any part of the Pledged Collateral
so sold and hold the same thereafter in its own right free from any claim of a
Pledgor or any right of redemption. Each sale shall be made to the highest
bidder, but the Agent reserves the right to reject any and all bids at such sale
which, in its discretion, it shall deem inadequate. Demands of performance,
except as otherwise herein specifically provided for, notices of sale,
advertisements and the presence of property at sale are hereby waived and any
sale hereunder may be conducted by an auctioneer or any officer or agent of the
Agent.
(b) If, at the original time or times appointed for the sale of the
whole or any part of the Pledged Collateral, the highest bid, if there be but
one sale, shall be inadequate to discharge
6
<PAGE>
in full all the Secured Obligations, or if the Pledged Collateral be offered
for sale in lots, if at any of such sales, the highest bid for the lot offered
for sale would indicate to the Agent, in its discretion, the unlikelihood of the
proceeds of the sales of the whole of the Pledged Collateral being sufficient to
discharge all the Secured Obligations, the Agent may, on one or more occasions
and in its discretion, postpone any of said sales by public announcement at the
time of sale or the time of previous postponement of sale, and no other notice
of such postponement or postponements of sale need be given, any other notice
being hereby waived; provided, however, that any sale or sales made after such
--------- -------
postponement shall be after ten (10) days' written notice to a Pledgor.
(c) The proceeds of any sale, disposition or other realization upon
all or any part of the Pledged Collateral shall be distributed by the Agent in
accordance with Section 9 of the Security Agreement.
(d) If at any time when the Agent in its sole discretion determines,
following the occurrence and during the continuance of an Event of Default,
that, in connection with any actual or contemplated exercise of its rights (when
permitted under this Section 8) to sell the whole or any part of the Pledged
---------
Collateral hereunder, it is necessary or advisable to effect a public
registration of all or part of the Pledged Collateral pursuant to the Securities
Act of 1933, as amended (or any similar statute then in effect) (the "Act") the
---
relevant Pledgor shall, in an expeditious manner, cause the Pledged Entities to:
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect to the
----------
Pledged Collateral and in good faith use commercially reasonable efforts to
cause such registration statement to become and remain effective.
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Act with
respect to the sale or other disposition of the Pledged Collateral covered
by such registration statement whenever the Agent shall desire to sell or
otherwise dispose of the Pledged Collateral;
(iii) furnish to the Agent such numbers of copies of a prospectus
and a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as the Agent may reasonably request in order
to facilitate the public sale or other disposition of the Pledged
Collateral by the Agent;
(iv) use commercially reasonable efforts to register or qualify
the Pledged Collateral covered by such registration statement under such
other securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as the Agent shall reasonably request, and do such
other reasonable acts and things as may be required of it to enable the
Agent to consummate the public sale or other disposition in such
jurisdictions of the Pledged Collateral by the Agent;
(v) furnish, at the reasonable request of the Agent, on the
date that shares of the Pledged Collateral are delivered to the
underwriters for sale pursuant to such registration
7
<PAGE>
or, if the security is not being sold through underwriters, on the date
that the registration statement with respect to such shares of Pledged
Collateral becomes effective, (A) an opinion, dated such date, of the
independent counsel representing such registrant for the purposes of such
registration, addressed to the underwriters, if any, and in the event the
Pledged Collateral is not being sold through underwriters, then to the
Agent, in customary form and covering matters of the type customarily
covered in such legal opinions; and (B) a comfort letter, dated such date,
from the independent certified public accountants of such registrant,
addressed to the underwriters, if any, and in the event the Pledged
Collateral is not being sold through underwriters, then to the Agent, in a
customary form and covering matters of the type customarily covered by such
comfort letters and as the underwriters or the Agent shall reasonably
request. The opinion of counsel referred to above shall additionally cover
such other legal matters with respect to the registration in respect of
which such opinion is being given as the Agent may reasonably request. The
letter referred to above from the independent certified public accountants
shall additionally cover such other financial matters (including
information as to the period ending not more than five (5) Business Days
prior to the date of such letter) with respect to the registration in
respect of which such letter is being given as the Agent may reasonably
request; and
(vi) otherwise use commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable but
not later than 18 months after the effective date of the registration
statement, an earnings statement covering the period of at least 12 months
beginning with the first full month after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Act.
(e) All reasonable expenses incurred in complying with Section 8(d)
------------
hereof, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National Association of
Securities Dealers, Inc.), printing expenses, fees and disbursements of counsel
for the registrant, the reasonable fees and expenses of counsel for the Agent,
reasonable expenses of the independent certified public accountants (including
any special audits incident to or required by any such registration) and
reasonable expenses of complying with the securities or blue sky laws or any
jurisdictions, shall be paid by the Pledgors.
(f) If, at any time when the Agent shall determine to exercise its
right to sell the whole or any part of the Pledged Collateral hereunder, such
Pledged Collateral or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Act, the Agent may, in its
discretion (subject only to applicable requirements of law), sell such Pledged
Collateral or part thereof by private sale in such manner and under such
circumstances as the Agent may deem necessary or advisable, but subject to the
other requirements of this Section 8, and shall not be required to effect such
---------
registration or to cause the same to be effected. Without limiting the
generality of the foregoing, in any such event, the Agent in its discretion (x)
may, in accordance with applicable securities laws, proceed to make such private
sale notwithstanding that a registration statement for the purpose of
registering such Pledged Collateral or part thereof could be or shall have been
filed under said Act (or similar statute), (y) may approach and negotiate with a
single possible purchaser to effect such sale, and (z) may restrict such sale to
a purchaser who is an accredited investor under the Act and who will represent
and agree that such purchaser is purchasing for its own account, for investment
and not with a view to the distribution or sale of such Pledged
8
<PAGE>
Collateral or part thereof. In addition to a private sale as provided above in
this Section 8, if any of the Pledged Collateral shall not be freely
---------
distributable to the public without registration under the Act (or similar
statute) at the time of any proposed sale pursuant to this Section 8, then the
---------
Agent shall not be required to effect such registration or cause the same to be
effected but, in its discretion (subject only to applicable requirements of
law), may require that any sale hereunder (including a sale at auction) be
conducted subject to restrictions: (i) as to the financial sophistication and
ability of any Person permitted to bid or purchase at any such sale; (ii) as to
the content of legends to be placed upon any certificates representing the
Pledged Collateral sold in such sale, including restrictions on future transfer
thereof; (iii) as to the representations required to be made by each Person
bidding or purchasing at such sale relating to that Person's access to financial
information about the relevant Pledgor and such Person's intentions as to the
holding of the Pledged Collateral so sold for investment for its own account and
not with a view to the distribution thereof; and (iv) as to such other matters
as the Agent may, in its discretion, deem necessary or appropriate in order that
such sale (notwithstanding any failure so to register) may be effected in
compliance with the Bankruptcy Code and other laws affecting the enforcement of
creditors' rights and the Act and all applicable state securities laws.
(g) Each Pledgor recognizes that the Agent may be unable to effect a
public sale of any or all the Pledged Collateral and may be compelled to resort
to one or more private sales thereof in accordance with clause (f) above. Each
Pledgor also acknowledges that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any such private sale shall
be deemed to have been made in a commercially reasonable manner. The Agent shall
be under no obligation to delay a sale of any of the Pledged Collateral for the
period of time necessary to permit the registrant to register such securities
for public sale under the Act, or under applicable state securities laws, even
if the relevant Pledgor would agree to do so.
(h) Each Pledgor agrees to the maximum extent permitted by applicable
law that following the occurrence and during the continuance of an Event of
Default it will not at any time plead, claim or take the benefit of any
appraisal, valuation, stay, extension, moratorium or redemption law now or
hereafter in force in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder, and
each Pledgor waives the benefit of all such laws to the extent it lawfully may
do so. Each Pledgor agrees that it will not interfere with any right, power and
remedy of the Agent provided for in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, or the exercise or beginning of
the exercise by the Agent of any one or more of such rights, powers or remedies.
No failure or delay on the part of the Agent to exercise any such right, power
or remedy and no notice or demand which may be given to or made upon a Pledgor
by the Agent with respect to any such remedies shall operate as a waiver
thereof, or limit or impair the Agent's right to take any action or to exercise
any power or remedy hereunder, without notice or demand, or prejudice its rights
as against the Pledgors in any respect.
(i) Each Pledgor further agrees that a breach of any of the covenants
contained in this Section 8 will cause irreparable injury to the Agent and the
---------
Secured Creditors, that the Agent and the Secured Creditors shall have no
adequate remedy at law in respect of such breach and, as a consequence, agrees
that each and every covenant contained in this Section 8 shall be specifically
---------
enforceable against the Pledgors, and each Pledgor hereby waives and agrees not
to assert any
9
<PAGE>
defenses against an action for specific performance of such covenants except for
a defense that the Secured Obligations are not then due and payable in
accordance with the agreements and instruments governing and evidencing such
obligations.
9. Waiver. No delay on the Agent's or any Secured Creditors' part
------
in exercising any power of sale, Lien, option or other right hereunder, and no
notice or demand which may be given to or made upon any Pledgor by the Agent or
a Secured Creditor with respect to any power of sale, Lien, option or other
right hereunder, shall constitute a waiver thereof, or limit or impair the
Agent's or any Secured Creditors' right to take any action or to exercise any
power of sale, Lien, option, or any other right hereunder, without notice or
demand, or prejudice the Agent's or any Secured Creditors' rights as against the
Pledgors in any respect.
10. Assignment. The Agent and the Secured Creditors may assign,
----------
indorse or transfer any instrument evidencing all or any part of the Secured
Obligations as provided in, and in accordance with, the applicable Secured Debt
Agreement and the holder of such instrument shall be entitled to the benefits of
this Agreement.
11. Termination. This Agreement shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Pledged Collateral
shall revert to the relevant Pledgor. Upon such termination, the Agent shall
promptly return to the relevant Pledgor, at such Pledgor's expense, such of the
Pledged Collateral held by the Agent as shall not have been sold or otherwise
applied pursuant to the terms hereof. The Agent will promptly execute and
deliver to the relevant Pledgor such other documents as such Pledgor shall
reasonably request to evidence such termination.
12. Lien Absolute. All rights of the Agent hereunder, and all
-------------
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any Secured Debt
Agreement, any other document executed in connection with either agreement
or any other agreement or instrument governing or evidencing any Secured
Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any part of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any Secured
Debt Agreement, or any other agreement or instrument governing or
evidencing any Secured Obligations;
(c) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations; or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Pledgor.
10
<PAGE>
13. Release. Each Pledgor consents and agrees that the Agent and the
-------
Secured Creditors may at any time, or from time to time, in its discretion (a)
renew, extend or change the time of payment, and/or the manner, place or terms
of payment of all or any part of the Secured Obligations and (b) exchange,
release and/or surrender all or any of the Pledged Collateral, or any part
thereof, by whomsoever deposited, which is now or may hereafter be held by the
Agent in connection with all or any of the Secured Obligations; all in such
manner and upon such terms as the Agent and the Secured Creditors may deem
proper, and without notice to or further assent from any Pledgor, it being
hereby agreed that each Pledgor shall be and remain bound upon this Agreement,
irrespective of the value or condition of any of the Pledged Collateral, and
notwithstanding any such change, exchange, settlement, compromise, surrender,
release, renewal or extension, and notwithstanding also that the Secured
Obligations may, at any time, exceed the aggregate principal amount thereof set
forth in the relevant Secured Debt Agreement, or any other agreement governing
any Secured Obligations. Each Pledgor hereby waives notice of acceptance of this
Agreement, and also presentment, demand, protest and notice of dishonor of any
and all of the Secured Obligations, and promptness in commencing suit against
any party hereto or liable hereon, and in giving any notice to or of making any
claim or demand hereunder upon any Pledgor. No act or omission of any kind on
the Agent's part shall in any event affect or impair this Agreement.
14. Reinstatement. This Agreement shall remain in full force and
-------------
effect and continue to be effective should any petition be filed by or against a
Pledgor or any Pledged Entity for liquidation or reorganization, should a
Pledgor or any Pledged Entity become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or any
significant part of a Pledgor's or a Pledged Entity's assets, and shall continue
to be effective or be reinstated, as the case may be, if at any time payment and
performance of the Secured Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
15. Miscellaneous. (a) The Agent may execute any of its duties
-------------
hereunder by or through agents or employees and shall be entitled to advice of
counsel concerning all matters pertaining to its duties hereunder.
(b) Each Pledgor jointly and severally agrees to promptly reimburse
the Agent for actual out-of-pocket expenses, including, without limitation,
reasonable counsel fees, incurred by the Agent in connection with the
administration and enforcement of this Agreement. Each Pledgor's obligation to
reimburse the Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
(c) None of the Agent, any Secured Creditor nor any of their
respective officers, directors, employees, agents or counsel shall be liable for
any action lawfully taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or willful
misconduct.
11
<PAGE>
(d) Each Pledgor hereby irrevocably appoints the Agent as such
Pledgor's attorney-in-fact, with full authority in the place and stead of such
Pledgor and in the name of such Pledgor or otherwise, from time to time in the
Agent's discretion reasonably exercised, to take any action and to execute any
instrument that the Agent deems reasonably necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, to receive,
endorse and collect all instruments made payable to such Pledgor representing
any dividend, or other proceeds or distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same, when and
to the extent permitted by this Agreement.
(e) The terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the Pledgors, the Agent and the Secured Creditors
and their respective successors and assigns, except that a Pledgor shall not
have the right to assign its rights or obligations under this Agreement or any
interest herein, without the prior written consent of the Agent and the Secured
Creditors.
16. Severability. If for any reason any provision or provisions
------------
hereof are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of or effect those portions of
this Agreement which are valid.
17. Notices. (a) Any notice required or permitted to be given under
-------
this Agreement shall be given (i) in the case of a Pledgor, in accordance with
the Guaranty, (ii) in the case of the Agent, and each Lender, in accordance the
Credit Agreement, (iii) in the case of a L/C Creditor, in accordance with the
relevant Secured Letter of Credit and (iv) in the case of a Swap Creditor, in
accordance with the relevant Secured Swap Contract.
(b) Any Pledgor or any Secured Creditor may change the address for
service of notice upon it by a notice in writing to the other.
18. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
19. Section Titles. The Section titles contained in this Agreement
--------------
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
20. Counterparts. This Agreement may be executed in any number of
------------
counterparts, which shall, collectively and separately, constitute one
agreement.
21. Limitation on Duty of the Agent with Respect to Pledged
-------------------------------------------------------
Collateral. BOA has been appointed as Agent for the Secured Creditors hereunder,
- ----------
and the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article X of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Agent hereunder. Beyond the safe custody thereof, the Agent shall not have any
duty with respect to any Pledged Collateral in its possession or control (or in
the possession or control of any agent or bailee) or with
12
<PAGE>
respect to any income thereon or the preservation of rights against prior
parties or any other rights pertaining thereto. The Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equal to that which it accords its own property. The Agent shall
not be liable or responsible for any loss or damage to any of the Pledged
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any agent or bailee selected by the Agent in good faith.
[SIGNATURE PAGE FOLLOWS]
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
KF-DELAWARE, INC., as a Pledgor
By /s/ Adam J. Murphy
----------------------------------
Name: Adam J. Murphy
-----------------------------
Title: Vice President
----------------------------
KF-INTERNATIONAL, INC., as a Pledgor
By /s/ H. Scott Herrin
----------------------------------
Name: H. Scott Herrin
-----------------------------
Title: Treasurer
----------------------------
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, as Agent
By /s/ David A. Johanson
----------------------------------
Name: David A. Johanson
-----------------------------
Title: Vice President
----------------------------
[TO PLEDGE AGREEMENT - SUBSIDIARY GUARANTORS]
<PAGE>
SCHEDULE I - Pledge Agreement - Subsidiary Guarantors
-----------
PLEDGED SHARES
--------------
A. K-F Delaware, Inc.
-----------------
Stock Percentage of
Class Certificate Number Outstanding
Stock Issuer of Stock Number(s) of Shares Shares
- ------------ -------- --------- --------- ------
None
B. K-F International, Inc.
----------------------
Stock Percentage of
Class Certificate Number Outstanding
Stock Issuer of Stock Number(s) of Shares Shares
- ------------ -------- --------- --------- ------
None
PLEDGED DEBT
------------
A. K-F Delaware, Inc.
-----------------
Initial
Principal
Issuer Amount Issue Date Maturity Date Interest Rate
------ ------ ---------- ------------- -------------
B. K-F International. Inc.
----------------------
Initial
Principal
Issuer Amount Issue Date Maturity Date Interest Rate
------ ------ ---------- ------------- -------------
<PAGE>
SCHEDULE II - Pledge Agreement - Subsidiary Guarantors
FORM OF PLEDGE AMENDMENT
This Pledge Amendment, dated _______ ____ is delivered pursuant to
Section 6(b) of the Pledge Agreement referred to below. The undersigned hereby
- ------------
certifies that the representations and warranties in Section 5 of the Pledge
---------
Agreement are and continue to be true and correct, both as to the shares pledged
prior to this Pledge Amendment and as to the shares pledged pursuant to this
Pledge Amendment. The undersigned further agrees that this Pledge Amendment may
be attached to that certain Pledge Agreement-Company, dated March ___, 1998, by
the undersigned, as the Pledgor, to Bank of America National Trust & Savings
Association, as Agent, and that the Pledged Shares and/or Pledged Debt listed on
this Pledge Agreement and shall secure all Secured Obligations referred to in
said Pledge Agreement. The undersigned acknowledges that any shares not
included in the Pledged Shares or promissory notes or instruments not included
in the Pledged Debt at the discretion of the Agent may not otherwise be pledged
or otherwise used as security by the undersigned.
[NAME OF PLEDGOR]
By
-------------------------------
Name:
--------------------------
Title:
-------------------------
PLEDGED SHARES
--------------
Name and Class of Number of
Address of -------- Certificate ---------
the Pledgor Issuer Stock Number(s) Shares
- ----------- ------ ----- --------- ------
PLEDGED DEBT
------------
Initial
Principal
Issuer Amount Issue Date Maturity Date Interest Rate
------ ------ ---------- ------------- -------------
<PAGE>
EXHIBIT 10.27
GUARANTY - COMPANY
------------------
FOR VALUE RECEIVED and in consideration of any loan or other financial
accommodation heretofore or hereafter at any time made or granted to AGI
INCORPORATED, an Illinois corporation ("AGI"), and/or KLEARFOLD, INC., a
---
Pennsylvania corporation ("Klearfold", and together with AGI, each a "Debtor"
--------- ------
and collectively, the "Debtors"), IMPAC GROUP, INC., a Delaware corporation
-------
(the "Guarantor") hereby absolutely, irrevocably and unconditionally guarantees
---------
(this "Guaranty") the full and prompt payment when due, whether by acceleration
--------
or otherwise, and at all times thereafter, of (a) all obligations of a Debtor
from time to time existing or arising under or pursuant to the Credit Agreement,
dated as of even date herewith among Debtors, Guarantor, the financial
institutions from time to time party thereto (the "Lenders") and Bank of
-------
America National Trust & Savings Association, as agent (the "Agent") (as from
-----
time to time restated, amended or modified, the "Credit Agreement"; any term
----------------
used but not otherwise defined herein shall have the meaning ascribed to such
term in the Credit Agreement), (b) all obligations of a Debtor from time to time
existing or arising under or pursuant to any (i) obligations under a Swap
Contract with Bank of America National Trust & Savings Association ("BofA"), in
----
its individual capacity, any Lender or syndicate of financial institutions
organized by BofA, or an affiliate of BofA, or any Lender (even if BofA or any
such Lender ceases to be a Lender under the Credit Agreement for any reason) and
any institution that participates in, and in each case their subsequent assigns,
such Swap Contract (collectively, the "Swap Creditors"), or (ii) Indebtedness of
--------------
a Debtor evidenced by a letter of credit issued pursuant to Section 8.05(i) of
the Credit Agreement (a "Section 8.05 Letter of Credit", and together with the
-----------------------------
Credit Agreement, the Loan Documents and each Swap Contract, individually a
"Debt Agreement" and collectively, the "Debt Agreements") by BofA or any Lender,
- --------------- ---------------
in each case in its individual capacity (even if BofA or any such Lender ceases
to be a Lender under the Credit Agreement for any reason) and any institution
that participates in, and in each case their subsequent assigns, such Section
8.05 Letter of Credit (collectively, the L/C Creditors", and together with the
-------------
Agent, the Lenders and the Swap Creditors, each a "Creditor" and collectively,
--------
the "Creditors") and (c) all other amounts from time to time owing to the
---------
Creditors by the Debtors under the Debt Agreements, whether direct or indirect,
absolute or contingent, or now or hereafter existing, or due or to become due
(all such obligations being hereinafter collectively called the "Obligations"),
and the Guarantor further agrees to pay all expenses (including attorneys' fees
and legal expenses) paid or incurred by any Creditor, in endeavoring to collect
the Obligations, or any part thereof, and in enforcing this Guaranty.
The Guarantor agrees that, in the event of the dissolution or
insolvency of a Debtor or the inability of a Debtor to pay debts as they
mature, or an assignment by a Debtor for the benefit of creditors, or the
institution of any proceeding by or against a Debtor alleging that such Debtor
is insolvent or unable to pay debts as they mature, and if such event shall
occur at a time when any of the Obligations may not then be due and payable, the
Guarantor will pay to the relevant Creditor
<PAGE>
forthwith the full amount that would be payable hereunder by the Guarantor if
all Obligations were then due and payable.
This Guaranty shall in all respects be a continuing, absolute and
unconditional guaranty, and shall remain in full force and effect
(notwithstanding, without limitation, that at any time or from time to time all
Obligations may have been paid in full).
The Guarantor further agrees that, if at any time all or any part of
any payment theretofore applied by any Creditor to any of the Obligations is or
must be rescinded or returned by such Creditor for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or reorganization of
a Debtor), such Obligations shall, for the purposes of this Guaranty, to the
extent that such payment is or must be rescinded or returned, be deemed to have
continued in existence, notwithstanding such application by such Creditor, and
this guaranty shall continue to be effective or be reinstated, as the case may
be, as to such Obligations, all as though such application by such Creditor had
not been made.
The Agent, on behalf of any Creditor, may, from time to time, whether
before or after any discontinuance of this Guaranty, at its sole discretion and
without notice to the Guarantor retain or obtain a security interest in any
property to secure any of the Obligations or any obligation hereunder.
Any Creditor may, from time to time, whether before or after any
discontinuance of this Guaranty, at its sole discretion and without notice to
the Guarantor take any or all of the following actions: (a) retain or obtain
the primary or secondary obligation of any obligor or obligors, in addition to
the Guarantor, with respect to any of the Obligations; (b) extend or renew for
one or more periods (whether or not longer than the original period), alter,
amend or exchange any of the Obligations or any of the documentation pertaining
thereto, or release or compromise any obligation of the Guarantor hereunder or
any obligation of any nature of any other obligor with respect to any of the
Obligations; (c) release its security interest in, or surrender, release or
permit any substitution or exchange for, all or any part of any property
securing any of the Obligations or any obligation hereunder, or extend or renew
for one or more periods (whether or not longer than the original period) or
release, compromise, alter or exchange any obligations of any nature of any
obligor with respect to any such property; and (d) resort to the Guarantor for
payment of any of the Obligations, whether or not such Creditor (i) shall have
resorted to any property securing any of the Obligations or any obligation
hereunder or (ii) shall have proceeded against any other obligor primarily or
secondarily obligated with respect to any of the Obligations (all of the actions
referred to in preceding clauses (i) and (ii) being hereby expressly waived by
the Guarantor).
Any amounts received by a Creditor from whatsoever source on account
of the Obligations may be applied by it toward the payment of such of the
Obligations, and in such order of application, as such Creditor may from time to
time elect, subject to the terms of other Debt Agreements.
Until such time as the Creditors shall have received payment of the
full amount of all Obligations and of all obligations of the Guarantor
hereunder, no payment made by or for the
-2-
<PAGE>
account of the Guarantor pursuant to this Guaranty shall entitle the Guarantor
by subrogation or otherwise to any payment by a Debtor or from or out of any
property of such Debtor and the Guarantor shall not exercise any right or remedy
against any Debtor or any property of any Debtor by reason of any performance by
the Guarantor of this Guaranty.
The Guarantor hereby expressly waives: (a) notice of the acceptance by
any Creditor of this Guaranty, (b) notice of the existence or creation or
nonpayment of all or any of the Obligations, (c) presentment, demand, notice of
dishonor, protest, and all other notices whatsoever, and (d) all diligence in
collection or protection of or realization upon the Obligations or any thereof,
any obligation hereunder, or any security for or guaranty of any of the
foregoing.
Until the irrevocable payment in full of all of the Obligations (other
than Obligations under the relevant Debt Agreement with a Creditor which
expressly survive the termination of such agreement) and termination of all
Commitments (as defined in the Credit Agreement), (a) the Guarantor waives any
right of subrogation, reimbursement, indemnification and contribution
(contractual, statutory or otherwise), including any claim or right of
subrogation under the Bankruptcy Code or any successor statute, against any
Debtor arising from the existence or performance of this guaranty and (b) the
Guarantor waives any right to enforce any remedy which any Creditor now has or
may hereafter have against any Debtor, and waives any benefit of, and any right
to participate in, any security now or hereafter held by a Creditor securing the
Obligations. Upon such irrevocable payment and termination, each Debtor shall
indemnify the Guarantor for the full amount of any payment made by the Guarantor
under this Guaranty and such Guarantor shall be subrogated to the rights of the
person to whom such payment shall have been made to the extent of such payment.
All rights of subrogation of the Guarantor hereunder shall be fully
subordinated in time and priority of payment to the Obligations and all other
indebtedness of each Debtor to each Creditor.
Any Creditor may, from time to time, whether before or after any
discontinuance of this Guaranty, without notice to the Guarantor, assign or
transfer any or all of the Obligations or any interest therein; and,
notwithstanding any such assignment or transfer or any subsequent assignment or
transfer thereof, such Obligations shall be and remain Obligations for the
purposes of this Guaranty, and each and every immediate and successive assignee
or transferee of any of the Obligations or of any interest therein shall, to the
extent of the interest of such assignee or transferee in the Obligations, be
entitled to the benefits of this Guaranty to the same extent as if such assignee
or transferee were a Creditor.
The Guarantor hereby warrants to each Creditor that it now has and
will continue to have independent means of obtaining information concerning the
affairs, financial condition and business of each Debtor. No Creditor shall
have any duty or responsibility to provide the Guarantor with any credit or
other information concerning the affairs, financial condition or business of
any Debtor that may come into the possession of such Creditor.
-3-
<PAGE>
The Guarantor represents and warrants to each Creditor that all
representations and warranties relating to it contained in Article VI of the
Credit Agreement are true and correct in all material respects.
The Guarantor hereby agrees that until all Obligations have been paid
in full and any and all documents relating thereto have been terminated, it
shall comply with all covenants relating to it contained in Articles VII and
VIII of the Credit Agreement.
No delay on the part of any Creditor in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
any Creditor of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy; nor shall any modification
or waiver of any of the provisions of this Guaranty be binding upon any Creditor
except as expressly set forth in a writing duly signed and delivered (or
consented to) by or on behalf of each Creditor. No action of any Creditor
permitted hereunder shall in any way affect or impair the rights of any Creditor
and the obligations of the Guarantor under this Guaranty. For the purposes of
this Guaranty, Obligations shall include all obligations of each Debtor to each
Creditor arising under or in connection with the agreements relating to the
Obligations, notwithstanding any right or power of a Debtor or anyone else to
assert any claim or defense as to the invalidity or unenforceability of any such
obligation, and no such claim or defense shall affect or impair the obligations
of the Guarantor hereunder. The obligations of the Guarantor under this
Guaranty shall be absolute and unconditional irrespective of any circumstance
whatsoever that might constitute a legal or equitable discharge or defense of
the Guarantor. The Guarantor hereby acknowledges that, except as provided in
the first paragraph of this Guaranty, there are no conditions to the
effectiveness of this Guaranty.
This Guaranty shall be binding upon the Guarantor, and upon the legal
representatives, successors and assigns of the Guarantors; and all references
herein to a Debtor and to the Guarantor, respectively, shall be deemed to
include any successor or successors, whether immediate or remote, to such
entities.
Neither the Agent nor any Secured Creditor shall be under any
obligation to marshall any assets in favor of the Guarantor or any other party
or against or in payment of any or all of the Secured Obligations.
THIS GUARANTY AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. WHEREVER POSSIBLE EACH PROVISION
OF THIS GUARANTY SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND
VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS GUARANTY SHALL BE
PROHIBITED BY OR INVALID UNDER SUCH LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO
THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER
OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS GUARANTY.
-4-
<PAGE>
THE GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
[Signature Page Follows]
-5-
<PAGE>
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty by its
duly authorized officer as of the 12 day of March, 1998.
IMPAC GROUP, INC.
By /s/ Richard Block
-----------------------------------
Name: Richard Block
------------------------------
Title: President
-----------------------------
Acknowledged and Agreed as of
the 12 day of March, 1998:
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
as Agent
By /s/ David A. Johanson
----------------------------
Name: David A. Johanson
----------------------
Title: Vice President
---------------------
S-1
[TO GUARANTY-COMPANY]
<PAGE>
EXHIBIT 10.28
GUARANTY - L/C BORROWERS
------------------------
FOR VALUE RECEIVED and in consideration of any loan or other financial
accommodation heretofore or hereafter at any time made or granted to IMPAC
GROUP, INC., a Delaware corporation (the "Debtor"), the undersigned (each a
"Guarantor" and collectively the "Guarantors") hereby, jointly and severally,
absolutely, irrevocably and unconditionally guarantee the full and prompt
payment when due, whether by acceleration or otherwise, and at all times
thereafter, of (a) all obligations of the Debtor or the other Guarantor from
time to time existing or arising under or pursuant to the Credit Agreement,
dated as even date herewith among the Debtor, the Guarantors, the financial
institutions from time to time party thereto (the "Lenders") and Bank of America
National Trust & Savings Association, as agent (the "Agent") (as from time to
time restated, amended or modified, the "Credit Agreement"; any term used but
not otherwise defined herein shall have the meaning ascribed to such term in the
Credit Agreement), (b) all obligations of the Debtor or the other Guarantor from
time to time existing or arising under or pursuant to any (i) obligations under
a Swap Contract relating to the Revolving Loans with Bank of America National
Trust & Savings Association ("BofA"), in its individual capacity, any Lender or
syndicate of financial institutions organized by BofA, or an affiliate of BofA,
or any Lender (even if BofA or any such Lender ceases to be a Lender under the
Credit Agreement for any reason) and any institution that participates in, and
in each case their subsequent assigns, such Swap Contract (collectively, the
"Swap Creditors"), or (ii) Indebtedness of Debtor or the other Guarantor
evidenced by a letter of credit issued pursuant to Section 8.05(i) of the Credit
Agreement (a "Section 8.05 Letter of Credit", and together with the Credit
Agreement, the Loan Documents, and each Swap Contract, individually a "Debt
Agreement" and Collectively, the "Debt Agreements") by BofA or any Lender, in
each case in its individual capacity (even if BofA or any such Lender ceases to
be a Lender under the Credit Agreement for any reason) and any institution that
participates in, and in each case their subsequent assigns, such Section 8.05
Letter of Credit (collectively, the LC Creditors", and together with the Agent,
the Lenders and the Swap Creditors, each a "Creditor" and collectively, the
"Creditors") and (c) all other amounts from time to time owing to the Creditors
by the Debtor or the other Guarantor under the Debt Agreements, whether direct
or indirect, absolute or contingent, or now or hereafter existing, or due or to
become due (all such obligations being hereinafter collectively called the
"Obligations"), and the Guarantors further agree to pay all expenses (including
attorneys' fees and legal expenses) paid or incurred by any Creditor, in
endeavoring to collect the Obligations, or any part thereof, and in enforcing
this guaranty; provided, however, that each Guarantor shall only be liable under
-------- -------
this guaranty for the greater of (I) the net amount of all loans advanced to
Debtor under the Credit Agreement and reloaned or otherwise transferred to such
Guarantor or (II) the maximum amount of such liability that can be hereby
incurred without rendering this guaranty, as it relates to such Guarantor,
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount. This guaranty constitutes a guaranty
of payment when due and not of collection, and the Guarantors specifically agree
that it shall not be necessary or required that any Creditor exercise any right,
assert any claim or demand, or enforce any remedy whatsoever
<PAGE>
against the Debtor (or any other Person) before or as a condition to the
obligations of the Guarantors hereunder.
The Guarantors agree that, in the event of the dissolution or
insolvency of the Debtor or any of the Guarantors, or the inability of the
Debtor or any of the Guarantors to pay debts as they mature, or an assignment by
the Debtor or any of the Guarantors for the benefit of creditors, or the
institution of any proceeding by or against the Debtor or any of the Guarantors
alleging that the Debtor or such Guarantor is insolvent or unable to pay debts
as they mature, and if such event shall occur at a time when any of the
Obligations may not then be due and payable, the Guarantors will pay to the
relevant Creditor forthwith the full amount that would be payable hereunder by
the Guarantors if all Obligations were then due and payable.
This guaranty shall in all respects be a continuing, absolute and
unconditional guaranty, and shall remain in full force and effect
(notwithstanding, without limitation, the dissolution of any of the Guarantors
or that at any time or from time to time all Obligations may have been paid in
full).
The Guarantors further agree that, if at any time all or any part of
any payment theretofore applied by any Creditor to any of the Obligations is or
must be rescinded or returned by such Creditor for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or reorganization of
the Debtor or any Guarantor), such Obligations shall, for the purposes of this
guaranty, to the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such application by
such Creditor, and this guaranty shall continue to be effective or be
reinstated, as the case may be, as to such Obligations, all as though such
application by such Creditor had not been made.
The Agent, on behalf of any Creditor, may, from time to time, whether
before or after any discontinuance of this guaranty, at its sole discretion and
without notice to the Guarantors, retain or obtain a security interest in any
property to secure any of the Obligations or any obligation hereunder.
Any Creditor may, from time to time, whether before or after any
discontinuance of this guaranty, at its sole discretion without notice to the
Guarantor, take any of the following actions: (a) retain or obtain the primary
or secondary obligation of any obligor or obligors, in addition to the
Guarantors, with respect to any of the Obligations; (b) extend or renew for one
or more periods (whether or not longer than the original period), alter, amend
or exchange any of the Obligations or any of the documentation pertaining
thereto, or release or compromise any obligation of any Guarantor hereunder or
any obligation of any nature of any other obligor with respect to any of the
Obligations; (c) release its security interest in, or surrender, release or
permit any substitution or exchange for, all or any part of any property
securing any of the Obligations or any obligation hereunder, or extend or renew
for one or more periods (whether or not longer than the original period) or
release, compromise, alter or exchange any obligations of any nature of any
obligor with respect to any such property; and (d) resort to any Guarantor for
payment of any of the Obligations, whether or not such Creditor (i) shall have
resorted to any property securing any of the Obligations or any obligation
hereunder or (ii) shall have proceeded against any other obligor primarily or
2
<PAGE>
secondarily obligated with respect to any of the Obligations (all of the actions
referred to in preceding clauses (i) and (ii) being hereby expressly waived by
the Guarantors).
Any amounts received by a Creditor from whatsoever source on account
of the Obligations may be applied by it toward the payment of such of the
Obligations, and in such order of application, as such Creditor may from time to
time elect, subject to the terms of the other Debt Agreement.
Until such time as this guaranty shall have been discontinued as to
all Guarantors and the Creditors shall have received payment of the full amount
of all Obligations and of all obligations of the Guarantor hereunder, no payment
made by or for the account of any Guarantor pursuant to this guaranty shall
entitle such Guarantor by subrogation or otherwise to any payment by the Debtor
or from or out of any property of the Debtor and such Guarantor shall not
exercise any right or remedy against the Debtor or any property of the Debtor by
reason of any performance by such Guarantor of this guaranty.
The Guarantors hereby expressly waive: (a) notice of the acceptance by
any Creditor of this guaranty, (b) notice of the existence or creation or
nonpayment of all or any of the Obligations, (c) presentment, demand, notice of
dishonor, protest, and all other notices whatsoever, and (d) all diligence in
collection or protection of or realization upon the Obligations or any thereof,
any obligation hereunder, or any security for or guaranty of any of the
foregoing.
Until the irrevocable payment in full of all of the Obligations (other
than Obligations under the relevant agreement with a Creditor which expressly
survive the termination of such agreement) and termination of all Commitments,
(a) each Guarantor waives any right of subrogation, reimbursement,
indemnification and contribution (contractual, statutory or otherwise),
including any claim or right of subrogation under the Bankruptcy Code or any
successor statute, against the Debtor arising from the existence or performance
of this guaranty and (b) each Guarantor waives any right to enforce any remedy
which any Creditor now has or may hereafter have against the Debtor, and waives
any benefit of, and any right to participate in, any security now or hereafter
held by a Creditor securing the Obligations. Upon such irrevocable payment and
termination, the Debtor shall indemnify such Guarantor for the full amount of
any payment made by such Guarantor under this Guaranty and such Guarantor shall
be subrogated to the rights of the person to whom such payment shall have been
made to the extent of such payment.
Each Guarantor (a "Contributing Guarantor") agrees that, in the event
a payment shall be made by any other Guarantor under this guaranty and such
other Guarantor (the "Claiming Guarantor") shall not have been fully indemnified
by the Company as provided above, the Contributing Guarantor shall indemnify the
Claiming Guarantor in an amount equal to the amount of such payment multiplied
by a fraction of which the numerator shall be the net worth of the Contributing
Guarantor as of date hereof and the denominator shall be the aggregate net worth
of all the Guarantors on such date. Any Contributing Guarantor making any
payment to a Claiming Guarantor pursuant to this section shall be subrogated to
the rights of such Claiming Guarantor to the extent of such payment. All rights
of contribution and subrogation of any Guarantor hereunder
3
<PAGE>
shall be fully subordinated in time and priority of payment to the Obligations
and all other indebtedness of the Debtor to each Creditor.
Any Creditor may, from time to time, whether before or after any
discontinuance of this guaranty, without notice to the Guarantors, assign or
transfer any or all of the Obligations or any interest therein; and,
notwithstanding any such assignment or transfer or any subsequent assignment or
transfer thereof, such Obligations shall be and remain Obligations for the
purposes of this guaranty, and each and every immediate and successive assignee
or transferee of any of the Obligations or of any interest therein shall, to the
extent of the interest of such assignee or transferee in the Obligations, be
entitled to the benefits of this guaranty to the same extent as if such assignee
or transferee were a Creditor.
Each Guarantor hereby warrants to each Creditor that such Guarantor
now has and will continue to have independent means of obtaining information
concerning the affairs, financial condition and business of the Debtor. No
Creditor shall have any duty or responsibility to provide the Guarantors with
any credit or other information concerning the affairs, financial condition or
business of the Debtor that may come into the possession of such Creditor.
Each Guarantor represents and warrants to each Creditor that all
representations and warranties relating to such Guarantor contained in Article
VI of the Credit Agreement are true and correct in all material respects.
Each Guarantor hereby agrees that until all Obligations have been paid
in full and any and all documents relating thereto have been terminated, it
shall comply with all covenants relating to it contained in Articles VII and
VIII of the Credit Agreement.
No delay on the part of any Creditor in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
any Creditor of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy; nor shall any modification
or waiver of any of the provisions of this guaranty be binding upon any Creditor
except as expressly set forth in a writing duly signed and delivered (or
consented to) by or on behalf of each Creditor. No action of any Creditor
permitted hereunder shall in any way affect or impair the rights of any Creditor
and the obligations of the Guarantors under this guaranty. For the purposes of
this guaranty, Obligations shall include all obligations of the Debtor to each
Creditor arising under or in connection with the agreements relating to the
Obligations, notwithstanding any right or power of the Debtor or anyone else to
assert any claim or defense as to the invalidity or unenforceability of any such
obligation, and no such claim or defense shall affect or impair the obligations
of the Guarantors hereunder. The obligations of the Guarantors under this
guaranty shall be absolute and unconditional irrespective of any circumstance
whatsoever that might constitute a legal or equitable discharge or defense of
the Guarantors. The Guarantors hereby acknowledge that there are no conditions
to the effectiveness of this guaranty.
4
<PAGE>
This guaranty shall be binding upon the Guarantors, and upon the legal
representatives, successors and assigns of the Guarantors; and all references
herein to the Debtor and to the Guarantors, respectively, shall be deemed to
include any successor or successors, whether immediate or remote, to such
entities. All obligations of the Guarantors hereunder shall be joint and
several.
Neither the Agent nor any Secured Creditor shall be under any
obligation to marshall any assets in favor of the Guarantor or any other party
or against or in payment of any or all of the Secured Obligations.
THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF ILLINOIS. WHEREVER POSSIBLE EACH PROVISION OF
THIS GUARANTY SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID
UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS GUARANTY SHALL BE PROHIBITED
BY OR INVALID UNDER SUCH LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT
OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH
PROVISION OR THE REMAINING PROVISIONS OF THIS GUARANTY.
THE GUARANTORS HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
[Signature Page Follows]
5
<PAGE>
IN WITNESS WHEREOF, the Guarantors have executed this Guaranty by
their duly authorized officers as of the 12 day of March, 1998.
AGI INCORPORATED
By /s/ Richard Block
-------------------------------
Name: Richard Block
--------------------------
Title: President
-------------------------
KLEARFOLD, INC.
By /s/ Richard Block
-------------------------------
Name: Richard Block
--------------------------
Title: President
-------------------------
Acknowledged and Agreed as of
the 12 day of March, 1998:
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
as Agent
By /s/ David A. Johanson
-------------------------------------
Name: David A. Johanson
--------------------------------
Title: Vice President
-------------------------------
S-1
[TO GUARANTY L.C. BORROWERS]
<PAGE>
EXHIBIT 10.29
GUARANTY - SUBSIDIARY GUARANTORS
--------------------------------
FOR VALUE RECEIVED and in consideration of any loan or other financial
accommodation heretofore or hereafter at any time made or granted to IMPAC
GROUP, INC., a Delaware corporation (the "Company"), AGI Incorporated ("AGI"),
---
Klearfold, Inc. ("Klearfold", and together with the Company and AGI, each a
---------
"Debtor" and collectively, the "Debtors"), the undersigned (each a "Guarantor"
------ -------
and collectively the "Guarantors") hereby, jointly and severally, absolutely,
irrevocably and unconditionally guarantee the full and prompt payment when due,
whether by acceleration or otherwise, and at all times thereafter, of (a) all
obligations of the Debtors or the other Guarantor from time to time existing or
arising under or pursuant to the Credit Agreement, dated as of even date
herewith, among the Debtors, the financial institutions from time to time party
thereto (the "Lenders") and Bank of America National Trust & Savings
Association, as agent (the "Agent") (as from time to time restated, amended or
modified, the "Credit Agreement"; any term used but not otherwise defined
herein shall have the meaning ascribed to such term in the Credit Agreement),
(b) all obligations of a Debtor from time to time existing or arising under or
pursuant to any (i) obligations under a Swap Contract relating to the Loans with
Bank of America National Trust & Savings Association ("BofA"), in its individual
capacity, any Lender or syndicate of financial institutions organized by BofA,
or an affiliate of BofA, or any Lender (even if BofA or any such Lender ceases
to be a Lender under the Credit Agreement for any reason) and any institution
that participates in, and in each case their subsequent assigns, such Swap
Contract (collectively, the "Swap Creditors"), or (ii) Indebtedness of a Debtor
or the other Guarantor evidenced by a letter of credit issued pursuant to
Section 8.05(i) of the Credit Agreement (a "Section 8.05 Letter of Credit", and
together with the Credit Agreement, the Loan Documents, and each Swap Contract,
individually a "Debt Agreement" and Collectively, the "Debt Agreements") by BofA
or any Lender, in each case in its individual capacity (even if BofA or any such
Lender ceases to be a Lender under the Credit Agreement for any reason) and any
institution that participates in, and in each case their subsequent assigns,
such Section 8.05 Letter of Credit (collectively, the LC Creditors", and
together with the Agent, the Lenders and the Swap Creditors, each a "Creditor"
and collectively, the "Creditors") and (c) all other amounts from time to time
owing to the Creditors by the Debtors or the other Guarantor under the Debt
Agreements, whether direct or indirect, absolute or contingent, or now or
hereafter existing, or due or to become due (all such obligations being
hereinafter collectively called the "Obligations"), and the Guarantors further
agree to pay all expenses (including attorneys' fees and legal expenses) paid or
incurred by any Creditor, in endeavoring to collect the Obligations, or any part
thereof, and in enforcing this guaranty; provided, however, that each Guarantor
-------- -------
shall only be liable under this guaranty for the greater of (I) the net amount
of all loans advanced to Debtor under the Credit Agreement and reloaned or
otherwise transferred to such Guarantor or (II) maximum amount of such liability
that can be hereby incurred without rendering this guaranty, as it relates to
such Guarantor, voidable under applicable law relating to fraudulent conveyance
or fraudulent transfer, and not for any greater amount. This guaranty
constitutes a guaranty of payment when due and not of collection, and the
Guarantors specifically agree that it shall not be necessary or required that
any Creditor exercise any right, assert any claim or demand, or enforce any
remedy whatsoever against any Debtor (or any other Person) before or as a
condition to the obligations of the Guarantors hereunder.
<PAGE>
The Guarantors agree that, in the event of the dissolution or insolvency of
a Debtor or any of the Guarantors, or the inability of a Debtor or any of the
Guarantors to pay debts as they mature, or an assignment by a Debtor or any of
the Guarantors for the benefit of creditors, or the institution of any
proceeding by or against a Debtor or any of the Guarantors alleging that a
Debtor or such Guarantor is insolvent or unable to pay debts as they mature, and
if such event shall occur at a time when any of the Obligations may not then be
due and payable, the Guarantors will pay to the relevant Creditor forthwith the
full amount that would be payable hereunder by the Guarantors if all Obligations
were then due and payable.
This guaranty shall in all respects be a continuing, absolute and
unconditional guaranty, and shall remain in full force and effect
(notwithstanding, without limitation, the dissolution of any of the Guarantors
or that at any time or from time to time all Obligations may have been paid in
full).
The Guarantors further agree that, if at any time all or any part of any
payment theretofore applied by any Creditor to any of the Obligations is or must
be rescinded or returned by such Creditor for any reason whatsoever (including,
without limitation, the insolvency, bankruptcy or reorganization of a Debtor or
any Guarantor), such Obligations shall, for the purposes of this guaranty, to
the extent that such payment is or must be rescinded or returned, be deemed to
have continued in existence, notwithstanding such application by such Creditor,
and this guaranty shall continue to be effective or be reinstated, as the case
may be, as to such Obligations, all as though such application by such Creditor
had not been made.
The Agent, on behalf of any Creditor, may, from time to time, whether
before or after any discontinuance of this guaranty, at its sole discretion and
without notice to the Guarantors, retain or obtain a security interest in any
property to secure any of the Obligations or any obligation hereunder.
Any Creditor may, from time to time, whether before or after any
discontinuance of this guaranty, at its sole discretion without notice to the
Guarantors, take any or all of the following actions: (a) retain or obtain the
primary or secondary obligation of any obligor or obligors, in addition to the
Guarantors, with respect to any of the Obligations; (b) extend or renew for one
or more periods (whether or not longer than the original period), alter, amend
or exchange any of the Obligations or any of the documentation pertaining
thereto, or release or compromise any obligation of any Guarantor hereunder or
any obligation of any nature of any other obligor with respect to any of the
Obligations; (c) release its security interest in, or surrender, release or
permit any substitution or exchange for, all or any part of any property
securing any of the Obligations or any obligation hereunder, or extend or renew
for one or more periods (whether or not longer than the original period) or
release, compromise, alter or exchange any obligations of any nature of any
obligor with respect to any such property; and (d) resort to any Guarantor for
payment of any of the Obligations, whether or not such Creditor (i) shall have
resorted to any property securing any of the Obligations or any obligation
hereunder or (ii) shall have proceeded against any other obligor primarily or
secondarily obligated with respect to any of the Obligations (all of the actions
referred to in preceding clauses (i) and (ii) being hereby expressly waived by
the Guarantors).
2
<PAGE>
Any amounts received by a Creditor from whatsoever source on account of the
Obligations may be applied by it toward the payment of such of the Obligations,
and in such order of application, as such Creditor may from time to time elect,
subject to the terms of the other Debt Agreement.
Until such time as this guaranty shall have been discontinued as to all
Guarantors and the Creditors shall have received payment of the full amount of
all Obligations and of all obligations of the Guarantor hereunder, no payment
made by or for the account of any Guarantor pursuant to this guaranty shall
entitle such Guarantor by subrogation or otherwise to any payment by a Debtor or
from or out of any property of a Debtor and such Guarantor shall not exercise
any right or remedy against a Debtor or any property of a Debtor by reason of
any performance by such Guarantor of this guaranty.
The Guarantors hereby expressly waive: (a) notice of the acceptance by any
Creditor of this guaranty, (b) notice of the existence or creation or nonpayment
of all or any of the Obligations, (c) presentment, demand, notice of dishonor,
protest, and all other notices whatsoever, and (d) all diligence in collection
or protection of or realization upon the Obligations or any thereof, any
obligation hereunder, or any security for or guaranty of any of the foregoing.
Until the irrevocable payment in full of all of the Obligations (other than
Obligations under the relevant agreement with a Creditor which expressly survive
the termination of such agreement) and termination of all Commitments, (a) each
Guarantor waives any right of subrogation, reimbursement, indemnification and
contribution (contractual, statutory or otherwise), including any claim or right
of subrogation under the Bankruptcy Code or any successor statute, against a
Debtor arising from the existence or performance of this guaranty and (b) each
Guarantor waives any right to enforce any remedy which any Creditor now has or
may hereafter have against a Debtor, and waives any benefit of, and any right to
participate in, any security now or hereafter held by a Creditor securing the
Obligations. Upon such irrevocable payment and termination, the relevant Debtor
shall indemnify such Guarantor for the full amount of any payment made by such
Guarantor under this Guaranty and such Guarantor shall be subrogated to the
rights of the person to whom such payment shall have been made to the extent of
such payment.
Each Guarantor (a "Contributing Guarantor") agrees that, in the event a
payment shall be made by any other Guarantor under this guaranty and such other
Guarantor (the "Claiming Guarantor") shall not have been fully indemnified by
the Company as provided above, the Contributing Guarantor shall indemnify the
Claiming Guarantor in an amount equal to the amount of such payment multiplied
by a fraction of which the numerator shall be the net worth of the Contributing
Guarantor as of date hereof and the denominator shall be the aggregate net worth
of all the Guarantors on such date. Any Contributing Guarantor making any
payment to a Claiming Guarantor pursuant to this section shall be subrogated to
the rights of such Claiming Guarantor to the extent of such payment. All rights
of contribution and subrogation of any Guarantor hereunder shall be fully
subordinated in time and priority of payment to the Obligations and all other
indebtedness of the Debtors to each Creditor.
3
<PAGE>
Any Creditor may, from time to time, whether before or after any
discontinuance of this guaranty, without notice to the Guarantors, assign or
transfer any or all of the Obligations or any interest therein; and,
notwithstanding any such assignment or transfer or any subsequent assignment or
transfer thereof, such Obligations shall be and remain Obligations for the
purposes of this guaranty, and each and every immediate and successive assignee
or transferee of any of the Obligations or of any interest therein shall, to the
extent of the interest of such assignee or transferee in the Obligations, be
entitled to the benefits of this guaranty to the same extent as if such assignee
or transferee were a Creditor.
Each Guarantor hereby warrants to each Creditor that such Guarantor now has
and will continue to have independent means of obtaining information concerning
the affairs, financial condition and business of the Debtors. No Creditor shall
have any duty or responsibility to provide the Guarantors with any credit or
other information concerning the affairs, financial condition or business of the
Debtors that may come into the possession of such Creditor.
Each Guarantor represents and warrants to each Creditor that all
representations and warranties relating to such Guarantor contained in Article
VI of the Credit Agreement are true and correct in all material respects.
Each Guarantor hereby agrees that until all Obligations have been paid in
full and any and all documents relating thereto have been terminated, it shall
comply with all covenants relating to such Guarantor contained in Articles VII
and VIII of the Credit Agreement.
No delay on the part of any Creditor in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by any
Creditor of any right or remedy shall preclude other or further exercise thereof
or the exercise of any other right or remedy; nor shall any modification or
waiver of any of the provisions of this guaranty be binding upon any Creditor
except as expressly set forth in a writing duly signed and delivered (or
consented to) by or on behalf of each Creditor. No action of any Creditor
permitted hereunder shall in any way affect or impair the rights of any Creditor
and the obligations of the Guarantors under this guaranty. For the purposes of
this guaranty, Obligations shall include all obligations of the Debtors to each
Creditor arising under or in connection with the agreements relating to the
Obligations, notwithstanding any right or power of a Debtor or anyone else to
assert any claim or defense as to the invalidity or unenforceability of any such
obligation, and no such claim or defense shall affect or impair the obligations
of the Guarantors hereunder. The obligations of the Guarantors under this
guaranty shall be absolute and unconditional irrespective of any circumstance
whatsoever that might constitute a legal or equitable discharge or defense of
the Guarantors. The Guarantors hereby acknowledge that there are no conditions
to the effectiveness of this guaranty.
This guaranty shall be binding upon the Guarantors, and upon the legal
representatives, successors and assigns of the Guarantors; and all references
herein to the Debtors and to the Guarantors, respectively, shall be deemed to
include any successor or successors, whether immediate or remote, to such
entities. All obligations of the Guarantors hereunder shall be joint and
several.
4
<PAGE>
Any notice required or permitted to be given under this Guaranty shall be
given (i) in the case of a Guarantor, at the address specified on Schedule A
hereto, (ii) in the case of the Agent and each Lender, in accordance with the
Credit Agreement, (iii) in the case of a L/C Creditor, in accordance with the
relevant Section 8.05 Letter of Credit and (iv) in the case of a Swap Creditor,
in accordance with the relevant Swap Contract. Any Guarantor, the Agent or any
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
Neither the Agent nor any Secured Creditor shall be under any obligation to
marshall any assets in favor of the Guarantor or any other party or against or
in payment of any or all of the Secured Obligations.
THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS. WHEREVER POSSIBLE EACH PROVISION OF
THIS GUARANTY SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID
UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS GUARANTY SHALL BE PROHIBITED
BY OR INVALID UNDER SUCH LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT
OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH
PROVISION OR THE REMAINING PROVISIONS OF THIS GUARANTY.
EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS AGI
WITH OFFICES ON THE DATE HEREOF AT 1950 RUBY ROAD, MELROSE PARK, ILLINOIS 60160,
AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND
ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION
OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE
TO BE AVAILABLE TO ACT AS SUCH, EACH GUARANTOR AGREES TO DESIGNATE A NEW
DESIGNEE, APPOINTEE AND AGENT IN ILLINOIS ON THE TERMS AND FOR THE PURPOSES OF
THIS PROVISION SATISFACTORY TO THE AGENT UNDER THIS AGREEMENT. EACH GUARANTOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE RELEVANT
GUARANTOR AT ITS ADDRESS SET FORTH ON SCHEDULE A, SUCH SERVICE TO BECOME
EFFECTIVE 10 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE AGENT OR ANY SECURED CREDITOR TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST A GUARANTOR
IN ANY OTHER JURISDICTION.
AGI hereby irrevocably accepts its appointment as agent for service of
process for each Guarantor set forth in the above paragraph and agrees that it
(i) shall inform the Agent promptly in writing of any change of its address in
the State of Illinois, (ii) shall terminate any of the agency
5
<PAGE>
relationships created by the above paragraph only upon 60 days prior written
notice to the Agent, and (iii) shall perform its obligations as such agent in
accordance with the provisions of the above paragraph. AGI, as process agent,
and its successor or successors agrees to discharge the above-mentioned
obligations and will not refuse fulfillment of such obligations under the above
paragraph or the Loan Documents, as the case may be. AGI agrees that it will
maintain an office in Melrose Park, Illinois until such time as the Guarantors
shall have entered into a letter agreement in form and substance satisfactory to
the Agent appointing another agent for service of process in the State of
Illinois, which agent shall be acceptable to the Agent.
THE GUARANTORS HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
[Signature Page Follows]
6
<PAGE>
IN WITNESS WHEREOF, the Guarantors have executed this Guaranty by their
duly authorized officers as of the 12th day of March, 1998.
KF-DELAWARE, INC.
By /s/ Adam J. Murphy
-----------------------------------
Name: Adam J. Murphy
------------------------------
Title: Vice President
-----------------------------
KF-INTERNATIONAL, INC.
By /s/ H. Scott Herrin
-----------------------------------
Name: H. Scott Herrin
------------------------------
Title: Treasurer
-----------------------------
Acknowledged and Agreed as of
the 12th day of March, 1998:
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
as Agent
By /s/ David Johanson
-------------------------------
Name: David Johanson
--------------------------
Title: Vice President
-------------------------
S-1
[TO GUARANTY-SUBSIDIARY GUARANTORS]
<PAGE>
SCHEDULE A
----------
NOTICE INFORMATION
------------------
KF-Delaware, Inc.
364 Valley Road
- --------------------------------------
Warrington, Bucks County, Pennsylvania
- --------------------------------------
Fax: 215-443-7012
----------------------------------
Telephone: 215-443-5065
----------------------------
Attn:[Daniel Santry]
---------------------------------
KF-International, Inc.
364 Valley Road
- --------------------------------------
Warrington, Bucks County, Pennsylvania
- --------------------------------------
Fax: 215-443-7012
----------------------------------
Telephone: 215-443-5065
----------------------------
Attn:[Daniel Santry]
---------------------------------
<PAGE>
EXHIBIT 10.30
PATENT ASSIGNMENT - COMPANY
---------------------------
This Patent Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
----------
between IMPAC GROUP, INC. (the "Assignor") and BANK OF AMERICA NATIONAL TRUST &
--------
SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors (as
-----
defined below). Unless otherwise defined in Section 1, terms defined in the
Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among the Assignor, Klearfold, Inc. ("Klearfold"), AGI Incorporated ("AGI", and
--------- ---
together with Klearfold, each a "L/C Borrower" and collectively, the "L/C
------------ ---
Borrowers"), the financial institutions from time to time party thereto (the
- ---------
"Lenders") and the Agent (as from time to time restated, amended or modified,
- --------
the "Credit Agreement"), the Lenders have agreed to extend certain credit to the
----------------
Assignor and the L/C Borrowers;
B. Pursuant to the Guaranty-Company, dated as of even date herewith (as
from time to time amended or modified, the "Guaranty"), the Assignor has
--------
guaranteed to the Secured Creditors the payment when due of all obligations and
liabilities of the L/C Borrowers under or with respect to the Secured Debt
Agreements (as defined below) to which such L/C Borrower is a party;
C. The Assignor may from time to time be an account party to one or more
Swap Contracts relating to the Revolving Loans (each such Swap Contract with a
Swap Creditor (as defined below), a "Secured Swap Contract") with Bank of
---------------------
America National Trust & Savings Association ("BofA"), in its individual
----
capacity, any Lender or syndicate of financial institutions organized by BofA,
or an affiliate of BofA, or any Lender (even if BofA or any such Lender ceases
to be a Lender under the Credit Agreement for any reason) and any institution
that participates in, and in each case their subsequent assigns, such Secured
Swap Contract (collectively, the "Swap Creditors");
--------------
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
---------------------------
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
------------------------
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
---
Creditors"); and
- ---------
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignor grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1 General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Patents" has the meaning ascribed to it in Section 2.
------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee or subcontractor thereof, of products or
services sold by or under the authority of the Assignor in connection with the
Patents or Licenses.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
-2-
<PAGE>
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means , collectively, (i) all "Obligations" as
-------------------
defined in the Credit Agreement, (ii) all "Obligations" as defined in the
Guaranty, (iii) the payment when due of all obligations of the Assignor to Swap
Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by the Assignor and
(iv) the payment when due of all obligations of the Assignor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, between the Assignor and the Agent, as the same may be restated,
amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign patents and patent applications,
whether in the United States or any foreign jurisdiction, and the
inventions and improvements described and claimed therein and trade secrets
and know-how related thereto, including, without limitation, the patents
and patent applications listed on Exhibit A hereto, and the re-issues,
---------
divisions, renewals, extensions and continuations-in-part thereof and all
income, royalties, damages and payments now and hereafter due and/or
payable thereunder and with respect thereto, including, without limitation,
damages and payments for past and future infringements thereof, the right
to sue for past, present and future infringements thereof and all rights
corresponding thereto throughout the world (all of the foregoing being
sometimes hereinafter individually and/or collectively referred to as the
"Patents");
--------
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any patent license
-3-
<PAGE>
agreements with any other party, whether the Assignor is a licensee or
licensor under any such license agreement, including, without limitation,
those patent license agreements listed on Exhibit B attached hereto and
---------
made a part hereof, and the right to prepare for sale and sell any and all
inventory now or hereafter owned by the Assignor and now or hereafter
covered by such licenses (all of the foregoing are hereinafter referred to
collectively as the "Licenses");
(c) the Related Documents; and
(d) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1 Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2 No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3 Registrations. The Assignor has duly and properly applied for
-------------
registration of the Patents listed in Exhibit A hereto as indicated thereon in
---------
the United States Patent and Trademark Office.
3.4 Complete Listing. The Patents and Licenses set forth on the Schedules
----------------
hereto constitute, as of the date hereof, all Patents and Licenses of the
Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
4.1 Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Patents and Licenses and, to that end,
shall maintain the quality of any and all of its products or services bearing
the trademarks or service marks included in such Patents or Licenses consistent
with the quality of such products and services of such marks as of the date of
this Assignment, in each case to the extent necessary for the operation of its
business.
4.2 Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Patents and Licenses as described
above shall be worldwide, to the extent possessed by the Assignor,
-4-
<PAGE>
and without any liability for royalties or other related charges from the Agent
or any Secured Creditor to the Assignor. The term of the assignments and grants
of security interests granted herein shall extend until the expiration of each
of the respective Patents and Licenses assigned or pledged hereunder, or until
the Secured Obligations have been indefeasibly paid in full, no commitment by
the Agent or any Secured Creditor exists that could give rise to any Secured
Obligations and the Secured Debt Agreements and this Assignment have been
terminated.
4.3 Duties of Assignor. The Assignor shall have the duty (a) to prosecute
------------------
diligently any application to register the Patents pending as of the date hereof
or thereafter until all Secured Obligations have been indefeasibly paid in full,
(b) to make application on unpatented but patentable inventions, as appropriate
or as requested by the Agent, except where failure to do so would have a
Material Adverse Effect, and (c) to preserve and maintain all rights in all
applications to register Patents, except where failure to do so would have a
Material Adverse Effect. Any expenses incurred in connection with such
applications shall be borne by the Assignor. The Assignor shall not abandon any
right to file an application to register material Patents without the prior
written consent of the Agent.
4.4 Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Patents.
4.5 Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Patent and Trademark Office or any agency of any state or any
court regarding the Assignor's right, title and interest in any material Patent
or the Assignor's right to register any material Patent.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1 Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any exchange, broker's board or at any of the Agent's offices
or elsewhere upon such terms and conditions as the Agent may deem advisable and
at such prices as the Agent may deem best, for any combination of cash or on
credit or for future delivery without assumption of any credit risk, with the
right to the Agent or any Secured Creditor upon any such sale or sales or
dispositions, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in the Assignor,
which right or equity is hereby expressly waived and released.
5.2 Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or
-5-
<PAGE>
remedy or be construed to be a waiver of any Default or Event of Default or an
acquiescence therein, and any single or partial exercise of any such right or
remedy shall not preclude other or further exercise thereof or the exercise of
any other right or remedy, and no waiver, amendment or other variation of the
terms, conditions or provisions of this Assignment whatsoever shall be valid
unless in writing signed by the Agent and consented to by the Secured Creditors,
and then only to the extent specifically set forth in such writing.
6. PROCEEDS.
--------
6.1 Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within ten (10)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months or less from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2 Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
- ---------
7. GENERAL PROVISIONS.
------------------
7.1 Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
7.2 Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default, the Agent may perform or pay
any obligation which the Assignor has agreed to perform or pay in this
Assignment and the Assignor shall reimburse the Agent for any amounts paid by
the Agent pursuant to this Section 7.2. The Assignor's obligation to reimburse
-----------
the Agent pursuant to the preceding sentence shall be a Secured Obligation
payable on demand.
7.3 Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to
-6-
<PAGE>
execute on behalf of the Assignor as debtor and to file financing statements and
other documents with the United States Patent and Trademark Office or otherwise
which are necessary or desirable in the Agent's sole discretion to perfect and
to maintain the perfection and priority of the Agent's and Secured Creditors'
security interest in the Collateral; (ii) so long as an Event of Default shall
have occurred and is continuing, to endorse and collect any cash proceeds of the
Collateral; or (iii) to file a carbon, photographic or other reproduction of
this Assignment or any financing statement with respect to the Collateral as a
financing statement in such offices as the Agent in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and priority of
the Agent's and the Secured Creditors' security interest in the Collateral. At
any time and from time to time after the Secured Obligations have been declared
or become due and payable in accordance with the Secured Debt Agreements, the
Assignor authorizes the Agent to collect, endorse and apply the proceeds of any
Collateral received by the Agent to the Secured Obligations as provided in
Section 6 hereof.
- ---------
7.4 Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Creditors
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of the Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5 Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6 Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
7.7 Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights or obligations under
this Assignment or any interest herein, without the prior written consent of the
Agent and the Secured Creditors.
7.8 Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9 Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any
-7-
<PAGE>
federal or other taxes imposed upon the Agent or any Secured Creditor, with
respect to its gross or net income or profits arising out of this Assignment)
payable or ruled payable by any Federal or State authority in respect of this
Assignment shall be paid by the Assignor, together with interest and penalties,
if any. The Assignor shall reimburse (a) the Agent for any and all reasonable
out-of-pocket expenses and internal charges (including reasonable attorneys',
auditors' and accountants' fees and reasonable time charges of attorneys,
paralegals, auditors and accountants who may be employees of the Agent) paid or
incurred by the Agent in connection with the preparation, execution, delivery,
administration, collection and enforcement of this Assignment and in the
administration, collection, preservation or sale of the Collateral (including
the reasonable expenses and charges associated with any periodic or special
audit of the Collateral), and (b) the Agent and each Secured Creditor for any
and all reasonable out-of-pocket expenses and internal charges (including
reasonable attorneys', auditors' and accountants' fees and reasonable time
charges of attorneys, paralegals, auditors and accountants who may be employees
of the Agent or such Secured Creditor) paid or incurred by the Agent or such
Secured Creditor in connection with the collection and enforcement of this
Assignment.
7.10 Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11 Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12 Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
7.13 Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature, imposed on, incurred by or asserted against the Agent or any Secured
Creditor, or its successors, assigns, agents and employees, in any way relating
to or arising out of this Assignment, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (other than liability
resulting from the gross negligence or wilful misconduct of the Agent or any
such Secured Creditor).
-8-
<PAGE>
7.14 Releases. Upon termination of this Assignment in accordance with the
--------
provisions of Section 7.11 hereof, the Agent and the Secured Creditors shall, at
------------
the Assignor's request and expense, execute such releases as the Assignor may
reasonably request, in form and upon terms acceptable to the Agent and the
Secured Creditors in all respects.
7.15 Waivers. Except to the extent expressly otherwise provided herein or
-------
in any Secured Debt Agreement, the Assignor waives, to the extent permitted by
applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16 Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17 CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS AND
PATENTS.
7.18 WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19 Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article X of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Agent hereunder.
9. NOTICES.
-------
9.1 Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given, (i) in the case of the Assignor, Agent and each
Lender, in accordance the Credit Agreement, (ii) in the case of a L/C Creditor,
in accordance with the relevant Secured Letter of
-9-
<PAGE>
Credit and (iii) in the case of a Swap Creditor, in accordance with the relevant
Secured Swap Contract.
9.2 Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set
forth above.
IMPAC GROUP, INC.
as Assignor
By /s/ David C. Underwood
-----------------------------------------
Name: David C. Underwood
Title: Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST
& SAVINGS BANK, as Agent
By /s/ David A. Johanson
-----------------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Patent Assignment was executed and acknowledged before me
this 12 day of March, 1998 by David Underwood, personally known to me to be the
Treasurer & Secretary of IMPAC GROUP, INC., a Delaware corporation, on behalf of
such corporation.
/s/ Janet Foley
--------------------------------------------
NOTARY PUBLIC
April 30, 2000
--------------------------------------------
My Commission Expires:
(SEAL)
<PAGE>
EXHIBIT A
---------
PATENTS
Patent or Filing Date/ Name of
Application No. Issue Date Invention Investor Expiry Date
--------------- ---------- --------- -------- -----------
None
<PAGE>
EXHIBIT B
---------
LICENSES
Date Parties Subject of License Term
---- ------- ------------------ ----
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
IMPAC Group, Inc.
1950 N. Ruby Street
Melrose Park, Cook County, Illinois
<PAGE>
EXHIBIT 10.31
PATENT ASSIGNMENT - AGI
-----------------------
This Patent Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
between AGI INCORPORATED (the "Assignor") and BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors (as
defined below). Unless otherwise defined in Section 1, terms defined in the
Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), the Assignor, Klearfold, Inc.
(("Klearfold"), and together with Assignor, each a "L/C Borrower" and
collectively, the "L/C Borrowers"), the financial institutions from time to time
party thereto (the "Lenders") and the Agent (as from time to time restated,
amended or modified, the "Credit Agreement"), the Lenders have agreed to extend
certain credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), each L/C Borrower, including the
Assignor, has jointly and severally guaranteed to the Secured Creditors the
payment when due of all obligations and liabilities of the Company under or
with respect to the Secured Debt Agreements (as defined below) to which the
Company is a party;
C. The Assignor may from time to time be party to one or more Swap
Contracts relating to the Revolving Loans (each such Swap Contract with a Swap
Creditor (as defined below), a "Secured Swap Contract") with Bank of America
National Trust & Savings Association ("BofA"), in its individual capacity, any
Lender or syndicate of financial institutions organized by BofA, or an affiliate
of BofA, or any Lender (even if BofA or any such Lender ceases to be a Lender
under the Credit Agreement for any reason) and any institution that participates
in, and in each case their subsequent assigns, such Secured Swap Contract
(collectively, the "Swap Creditors");
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05
L/C Obligation with a L/C Creditor (as defined below), a "Secured Letter of
Credit") issued by BofA or a Lender, in each case in its individual capacity
(even if BofA or such Lender ceases to be a Lender under the Credit Agreement
for any reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors");
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and
extending credit under such Secured Debt Agreement, the Secured Creditors have
required that the Assignors grant to the Agent, for the ratable benefit of
itself and the Secured Creditors, a security interest in the Collateral (as
defined below) on the terms and conditions set forth below; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1. General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it in the Recitals.
-------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Patents" has the meaning ascribed to it in Section 2.
------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee
-2-
<PAGE>
or subcontractor thereof, of products or services sold by or under the authority
of the Assignor in connection with the Patents or Licenses.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as defined
-------------------
in the Credit Agreement, (ii) all "Obligations" as defined in the Guaranty,
(iii) the payment when due of all obligations of the Assignor to Swap Creditors
pursuant to any Secured Swap Contract and the due performance and compliance
with all the terms of the Secured Swap Contracts by the Assignor and (iv) the
payment when due of all obligations of the Assignor to L/C Creditors pursuant
to any Secured Letter of Credit and the due performance and compliance with all
the terms of the Secured Letter of Credit by the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the L/C Borrowers, including the Assignor, and the Agent, as the
same may be restated, amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign patents and patent applications,
whether in the United States or any foreign jurisdiction, and the
inventions and improvements described and claimed therein and trade secrets
and know-how related thereto, including, without limitation, the patents
and patent applications listed on Exhibit A hereto, and the re-issues,
---------
divisions, renewals, extensions and continuations-in-part thereof and all
income, royalties, damages and payments now and hereafter due and/or
payable thereunder and with respect thereto, including, without limitation,
damages and payments for past and future
-3-
<PAGE>
infringements thereof, the right to sue for past, present and future
infringements thereof and all rights corresponding thereto throughout the
world (all of the foregoing being sometimes hereinafter individually and/or
collectively referred to as the "Patents");
--------
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any patent license agreements with any other party, whether the
Assignor is a licensee or licensor under any such license agreement,
including, without limitation, those patent license agreements listed on
Exhibit B attached hereto and made a part hereof, and the right to prepare
---------
for sale and sell any and all inventory now or hereafter owned by the
Assignor and now or hereafter covered by such licenses (all of the
foregoing are hereinafter referred to collectively as the "Licenses");
(c) the Related Documents; and
(d) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1. Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2. No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3. Registrations. The Assignor has duly and properly applied for
-------------
registration of the Patents listed in Exhibit A hereto as indicated thereon in
---------
the United States Patent and Trademark Office.
3.4. Complete Listing. The Patents and Licenses set forth on the Schedules
----------------
hereto constitute, as of the date hereof, all Patents and Licenses of the
Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
4.1. Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Patents and Licenses and, to that end,
shall maintain the quality of any and all of its products or services bearing
the trademarks or service marks included in such Patents or
-4-
<PAGE>
Licenses consistent with the quality of such products and services of such marks
as of the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2. Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Patents and Licenses as described
above shall be worldwide, to the extent possessed by the Assignor, and without
any liability for royalties or other related charges from the Agent or any
Secured Creditor to the Assignor. The term of the assignments and grants of
security interests granted herein shall extend until the expiration of each of
the respective Patents and Licenses assigned or pledged hereunder, or until the
Secured Obligations have been indefeasibly paid in full, no commitment by the
Agent or any Secured Creditor exists that could give rise to any Secured
Obligations and the Secured Debt Agreements and this Assignment have been
terminated.
4.3. Duties of Assignor. The Assignor shall have the duty (a) to prosecute
------------------
diligently any application to register the Patents pending as of the date hereof
or thereafter until all Secured Obligations have been indefeasibly paid in full,
(b) to make application on unpatented but patentable inventions, as appropriate
or as requested by the Agent, except where failure to do so would have a
Material Adverse Effect, and (c) to preserve and maintain all rights in all
applications to register Patents, except where failure to do so would have a
Material Adverse Effect. Any expenses incurred in connection with such
applications shall be borne by each Assignor. The Assignor shall not abandon
any right to file an application to register material Patents without the prior
written consent of the Agent.
4.4. Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Patents.
4.5. Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Patent and Trademark Office or any agency of any state or any
court regarding the Assignor's right, title and interest in any material Patent
or the Assignor's right to register any material Patent.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1. Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any exchange, broker's board or at any of the Agent's offices
or elsewhere upon such terms and conditions as the Agent may deem advisable and
at such prices as the Agent may deem best, for any combination of cash or on
credit or for future delivery without assumption of any credit risk, with
-5-
<PAGE>
the right to the Agent or any Secured Creditor upon any such sale or sales or
dispositions, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in such Assignor,
which right or equity is hereby expressly waived and released.
5.2. Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or provisions of this
Assignment whatsoever shall be valid unless in writing signed by the Agent and
consented to by the Secured Creditors, and then only to the extent specifically
set forth in such writing.
6. PROCEEDS.
--------
6.1. Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1. Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
7.2. Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which an Assignor has agreed to
-6-
<PAGE>
perform or pay in this Assignment and such Assignor shall reimburse the Agent
for any amounts paid by the Agent pursuant to this Section 7.2. The Assignor's
-----------
obligation to reimburse the Agent pursuant to the preceding sentence shall be a
Secured Obligation payable on demand.
7.3. Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the United States Patent and Trademark Office or otherwise which are necessary
or desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the Agent's and Secured Creditors' security interest
in the Collateral; (ii) so long as an Event of Default shall have occurred and
is continuing, to endorse and collect any cash proceeds of the Collateral; or
(iii) to file a carbon, photographic or other reproduction of this Assignment or
any financing statement with respect to the Collateral as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4. Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Creditors
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of such Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5. Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6. Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
7.7. Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall have not the right to assign its rights
-7-
<PAGE>
or obligations under this Assignment or any interest herein, without the prior
written consent of the Agent and the Secured Creditors.
7.8. Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9. Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State authority in respect of this Assignment shall be paid by the respective
Assignor, together with interest and penalties, if any. The Assignor shall
reimburse (a) the Agent for any and all reasonable out-of-pocket expenses and
internal charges (including reasonable attorneys', auditors' and accountants'
fees and reasonable time charges of attorneys, paralegals, auditors and
accountants who may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, execution, delivery, administration, collection
and enforcement of this Assignment and in the administration, collection,
preservation or sale of the Collateral (including the reasonable expenses and
charges associated with any periodic or special audit of the Collateral), and
(b) the Agent and each Secured Creditor for any and all reasonable out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of the Agent or such Secured Creditor) paid
or incurred by the Agent or such Secured Creditor in connection with the
collection and enforcement of this Assignment.
7.10. Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11. Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12. Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
7.13. Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents
-8-
<PAGE>
and employees, from and against any and all liabilities, damages, penalties,
suits, costs, and expenses of any kind and nature, imposed on, incurred by or
asserted against the Agent or any Secured Creditor, or its successors, assigns,
agents and employees, in any way relating to or arising out of this Assignment,
or the manufacture, purchase, acceptance, rejection, ownership, delivery, lease,
possession, use, operation, condition, sale, return or other disposition of any
Collateral (other than liability resulting from the gross negligence or wilful
misconduct of the Agent or any such Secured Creditor).
7.14. Releases. Upon termination of this Assignment in accordance with the
--------
provisions of Section 7.11 hereof, the Agent and the Secured Creditors shall, at
------------
the Assignor's request and expense, execute such releases as the Assignor may
reasonably request, in form and upon terms acceptable to the Agent and the
Secured Creditors in all respects.
7.15. Waivers. Except to the extent expressly otherwise provided herein or
-------
in any Secured Debt Agreement, the Assignor waives, to the extent permitted by
applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by the
Assignor and the Agent.
7.17. CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS AND
PATENTS.
7.18. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUDNING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of either Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article
-9-
<PAGE>
X of the Credit Agreement shall be entitled to all the rights, interests and
benefits of the Agent hereunder.
9. NOTICES.
-------
9.1. Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor, the Agent and
each Lender, in accordance the Credit Agreement, (ii) in the case of a L/C
Creditor, in accordance with the relevant Secured Letter of Credit and (iii) in
the case of a Swap Creditor, in accordance with the relevant Secured Swap
Contract.
9.2. Change in Address for Notices. The Assignor, the Agent or any Secured
-----------------------------
Creditor may change the address for service of notice upon it by a notice in
writing to the other.
[signature page follows]
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set
forth above.
AGI INCORPORATED,
as Assignor
By /s/ David C. Underwood
--------------------------------
Name: David C. Underwood
Title: Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
--------------------------------
Name: David A. Johanson
Title: Vice President
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Patent Assignment was executed and acknowledged before me
this 12th day of March, 1998 by David Underwood, personally known to me to be
the CFO of AGI INCORPORATED, an Illinois corporation, on behalf of
such corporation.
/s/ Janet Foley
-----------------------------------
NOTARY PUBLIC
My Commission Expires: April 30, 2000
(SEAL)
<PAGE>
EXHIBIT A
---------
PATENTS
<TABLE>
<CAPTION>
Patent or Filing Date/ Name of
Application No. Issue Date Invention Inventor Expiry Date
- --------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT B
---------
LICENSES
<TABLE>
<CAPTION>
Date Parties Subject of License Term
---- ------- ------------------ ----
<S> <C> <C> <C>
</TABLE>
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
AGI Incorporated
1950 N. Ruby Street
Melrose Park, Cook County, Illinois
<PAGE>
EXHIBIT 10.32
PATENT ASSIGNMENT - KLEARFOLD
-----------------------------
This Patent Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
between KLEARFOLD, INC. (the "Assignor") and BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors (as
defined below). Unless otherwise defined in Section 1, terms defined in the
Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), the Assignor, AGI Incorporated
(("AGI"), and together with Assignor, each a "L/C Borrower" and collectively,
the "L/C Borrowers"), the financial institutions from time to time party thereto
(the "Lenders") and the Agent (as from time to time restated, amended or
modified, the "Credit Agreement"), the Lenders have agreed to extend certain
credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), each L/C Borrower, including the
Assignor, has jointly and severally guaranteed to the Secured Creditors the
payment when due of all obligations and liabilities of the Company under or with
respect to the Secured Debt Agreements (as defined below) to which the Company
is a party;
C. The Assignor may from time to time be party to one or more Swap
Contracts relating to the Revolving Loans (each such Swap Contract with a Swap
Creditor (as defined below), a "Secured Swap Contract") with Bank of America
National Trust & Savings Association ("BofA"), in its individual capacity, any
Lender or syndicate of financial institutions organized by BofA, or an affiliate
of BofA, or any Lender (even if BofA or any such Lender ceases to be a Lender
under the Credit Agreement for any reason) and any institution that participates
in, and in each case their subsequent assigns, such Secured Swap Contract
(collectively, the "Swap Creditors");
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors");
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignors grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1. General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it in the Recitals.
-------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Patents" has the meaning ascribed to it in Section 2.
------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee
-2-
<PAGE>
or subcontractor thereof, of products or services sold by or under the authority
of the Assignor in connection with the Patents or Licenses.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as defined
-------------------
in the Credit Agreement, (ii) all "Obligations" as defined in the Guaranty,
(iii) the payment when due of all obligations of the Assignor to Swap Creditors
pursuant to any Secured Swap Contract and the due performance and compliance
with all the terms of the Secured Swap Contracts by the Assignor and (iv) the
payment when due of all obligations of the Assignor to L/C Creditors pursuant to
any Secured Letter of Credit and the due performance and compliance with all the
terms of the Secured Letter of Credit by the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the L/C Borrowers, including the Assignor, and the Agent, as the
same may be restated, amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign patents and patent applications,
whether in the United States or any foreign jurisdiction, and the
inventions and improvements described and claimed therein and trade secrets
and know-how related thereto, including, without limitation, the patents
and patent applications listed on Exhibit A hereto, and the re-issues,
---------
divisions, renewals, extensions and continuations-in-part thereof and all
income, royalties, damages and payments now and hereafter due and/or
payable thereunder and with respect thereto, including, without limitation,
damages and payments for past and future
-3-
<PAGE>
infringements thereof, the right to sue for past, present and future
infringements thereof and all rights corresponding thereto throughout the
world (all of the foregoing being sometimes hereinafter individually and/or
collectively referred to as the "Patents");
--------
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any patent license agreements with any other party, whether the
Assignor is a licensee or licensor under any such license agreement,
including, without limitation, those patent license agreements listed on
Exhibit B attached hereto and made a part hereof, and the right to prepare
---------
for sale and sell any and all inventory now or hereafter owned by the
Assignor and now or hereafter covered by such licenses (all of the
foregoing are hereinafter referred to collectively as the "Licenses");
(c) the Related Documents; and
(d) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1. Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2. No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3. Registrations. The Assignor has duly and properly applied for
-------------
registration of the Patents listed in Exhibit A hereto as indicated thereon in
---------
the United States Patent and Trademark Office.
3.4. Complete Listing. The Patents and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Patents and Licenses of
the Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
4.1. Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Patents and Licenses and, to that end,
shall maintain the quality of any and all of its products or services bearing
the trademarks or service marks included in such Patents or
-4-
<PAGE>
Licenses consistent with the quality of such products and services of such marks
as of the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2. Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Patents and Licenses as described
above shall be worldwide, to the extent possessed by the Assignor, and without
any liability for royalties or other related charges from the Agent or any
Secured Creditor to the Assignor. The term of the assignments and grants of
security interests granted herein shall extend until the expiration of each of
the respective Patents and Licenses assigned or pledged hereunder, or until the
Secured Obligations have been indefeasibly paid in full, no commitment by the
Agent or any Secured Creditor exists that could give rise to any Secured
Obligations and the Secured Debt Agreements and this Assignment have been
terminated.
4.3. Duties of Assignor. The Assignor shall have the duty (a) to prosecute
------------------
diligently any application to register the Patents pending as of the date hereof
or thereafter until all Secured Obligations have been indefeasibly paid in full,
(b) to make application on unpatented but patentable inventions, as appropriate
or as requested by the Agent, except where failure to do so would have a
Material Adverse Effect, and (c) to preserve and maintain all rights in all
applications to register Patents, except where failure to do so would have a
Material Adverse Effect. Any expenses incurred in connection with such
applications shall be borne by each Assignor. The Assignor shall not abandon any
right to file an application to register material Patents without the prior
written consent of the Agent.
4.4. Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Patents.
4.5. Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Patent and Trademark Office or any agency of any state or any
court regarding the Assignor's right, title and interest in any material Patent
or the Assignor's right to register any material Patent.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1. Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any exchange, broker's board or at any of the Agent's offices
or elsewhere upon such terms and conditions as the Agent may deem advisable and
at such prices as the Agent may deem best, for any combination of cash or on
credit or for future delivery without assumption of any credit risk, with
-5-
<PAGE>
the right to the Agent or any Secured Creditor upon any such sale or sales or
dispositions, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in such Assignor,
which right or equity is hereby expressly waived and released.
5.2. Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or provisions of this
Assignment whatsoever shall be valid unless in writing signed by the Agent and
consented to by the Secured Creditors, and then only to the extent specifically
set forth in such writing.
6. PROCEEDS.
--------
6.1. Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1. Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
7.2. Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which an Assignor has agreed to
-6-
<PAGE>
perform or pay in this Assignment and such Assignor shall reimburse the Agent
for any amounts paid by the Agent pursuant to this Section 7.2. The Assignor's
-----------
obligation to reimburse the Agent pursuant to the preceding sentence shall be a
Secured Obligation payable on demand.
7.3. Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the United States Patent and Trademark Office or otherwise which are necessary
or desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the Agent's and Secured Creditors' security interest
in the Collateral; (ii) so long as an Event of Default shall have occurred and
is continuing, to endorse and collect any cash proceeds of the Collateral; or
(iii) to file a carbon, photographic or other reproduction of this Assignment or
any financing statement with respect to the Collateral as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4. Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Creditors
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of such Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5. Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6. Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
7.7. Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall have not the right to assign its rights
-7-
<PAGE>
or obligations under this Assignment or any interest herein, without the prior
written consent of the Agent and the Secured Creditors.
7.8. Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9. Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State authority in respect of this Assignment shall be paid by the respective
Assignor, together with interest and penalties, if any. The Assignor shall
reimburse (a) the Agent for any and all reasonable out-of-pocket expenses and
internal charges (including reasonable attorneys', auditors' and accountants'
fees and reasonable time charges of attorneys, paralegals, auditors and
accountants who may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, execution, delivery, administration, collection
and enforcement of this Assignment and in the administration, collection,
preservation or sale of the Collateral (including the reasonable expenses and
charges associated with any periodic or special audit of the Collateral), and
(b) the Agent and each Secured Creditor for any and all reasonable out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of the Agent or such Secured Creditor) paid
or incurred by the Agent or such Secured Creditor in connection with the
collection and enforcement of this Assignment.
7.10. Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11. Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12. Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
7.13. Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents
-8-
<PAGE>
and employees, from and against any and all liabilities, damages, penalties,
suits, costs, and expenses of any kind and nature, imposed on, incurred by or
asserted against the Agent or any Secured Creditor, or its successors, assigns,
agents and employees, in any way relating to or arising out of this Assignment,
or the manufacture, purchase, acceptance, rejection, ownership, delivery, lease,
possession, use, operation, condition, sale, return or other disposition of any
Collateral (other than liability resulting from the gross negligence or wilful
misconduct of the Agent or any such Secured Creditor).
7.14. Releases. Upon termination of this Assignment in accordance with
--------
the provisions of Section 7.11 hereof, the Agent and the Secured Creditors
------------
shall, at the Assignor's request and expense, execute such releases as the
Assignor may reasonably request, in form and upon terms acceptable to the Agent
and the Secured Creditors in all respects.
7.15. Waivers. Except to the extent expressly otherwise provided herein
-------
or in any Secured Debt Agreement, the Assignor waives, to the extent permitted
by applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17. CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS AND PATENTS.
7.18. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUDNING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19 Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of either Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article
-9-
<PAGE>
X of the Credit Agreement shall be entitled to all the rights, interests and
benefits of the Agent hereunder.
9. NOTICES.
-------
9.1. Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor, the Agent and
each Lender, in accordance the Credit Agreement, (ii) in the case of a L/C
Creditor, in accordance with the relevant Secured Letter of Credit and (iii) in
the case of a Swap Creditor, in accordance with the relevant Secured Swap
Contract.
9.2. Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
[signature page follows]
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set
forth above.
KLEARFOLD, INC.,
as Assignor
By /s/ David C. Underwood
---------------------------------
Name: David C. Underwood
Title: Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
---------------------------------
Name: David A. Johanson
Title: Vice President
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Patent Assignment was executed and acknowledged before me
this 12 day of March, 1998 by David Underwood, personally known to me to be the
CFO, Treasurer + Secretary of KLEARFOLD, INC., a Pennsylvania corporation, on
behalf of such corporation.
/s/ Anna Ferroro
--------------------------------------
NOTARY PUBLIC
My Commission Expires: August 31, 1998
(SEAL)
<PAGE>
EXHIBIT A
---------
PATENTS
<TABLE>
<CAPTION>
Patent or Filing Date/ Name of
Application No. Issue Date Invention Inventor Expiry Date
- --------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
None
</TABLE>
<PAGE>
EXHIBIT B
---------
LICENSES
<TABLE>
<CAPTION>
Date Parties Subject of License Term
- ---- ------- ------------------ ----
<S> <C> <C> <C>
None
</TABLE>
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
Klearfold, Inc.
364 Valley Road
Warrington, Bucks County, Pennsylvania
<PAGE>
EXHIBIT 10.33
PATENT ASSIGNMENT - KF-INTERNATIONAL
------------------------------------
This Patent Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
between KF-INTERNATIONAL, INC., (the "Assignor") and BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors
(as hereinafter defined). Unless otherwise defined in Section 1, terms defined
in the Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), AGI Incorporated ("AGI"), Klearfold,
Inc. ("Klearfold", and together with AGI, each a "L/C Borrower" and
collectively, the "L/C Borrowers"), the financial institutions from time to time
party thereto (the "Lenders") and the Agent (as from time to time restated,
amended or modified, the "Credit Agreement"), the Lenders have agreed to extend
certain credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), the Assignor has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Company and the L/C Borrowers under or with
respect to the Secured Debt Agreements (as defined below) to which the Company
and the L/C Borrowers is a party;
C. The Assignor may from time to time be party to one or more Swap
Contracts relating to the Revolving Loans (each such Swap Contract with a Swap
Creditor (as defined below), a "Secured Swap Contract") with Bank of America
National Trust & Savings Association ("BofA"), in its individual capacity, any
Lender or syndicate of financial institutions organized by BofA, or an affiliate
of BofA, or any Lender (even if BofA or any such Lender ceases to be a Lender
under the Credit Agreement for any reason) and any institution that participates
in, and in each case their subsequent assigns, such Secured Swap Contract
(collectively, the "Swap Creditors");
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors"); and
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that each Assignor grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1. General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it in the Recitals.
-------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Patents" has the meaning ascribed to it in Section 2.
------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee
-2-
<PAGE>
or subcontractor thereof, of products or services sold by or under the authority
of the Assignor in connection with the Patents or Licenses.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as defined
-------------------
in the Guaranty, (ii) the payment when due of all obligations of the Assignor to
Swap Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by the Assignor and
(iii) the payment when due of all obligations of the Assignor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the Subsidiary Guarantors, including the Assignor, and the
Agent, as the same may be restated, amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign patents and patent applications,
whether in the United States or any foreign jurisdiction, and the
inventions and improvements described and claimed therein and trade secrets
and know-how related thereto, including, without limitation, the patents
and patent applications listed on Exhibit A hereto, and the re-issues,
---------
divisions, renewals, extensions and continuations-in-part thereof and all
income, royalties, damages and payments now and hereafter due and/or
payable thereunder and with respect thereto, including, without limitation,
damages and payments for past and future infringements thereof, the right
to sue for past, present and future infringements thereof and
-3-
<PAGE>
all rights corresponding thereto throughout the world (all of the foregoing
being sometimes hereinafter individually and/or collectively referred to as
the "Patents");
-------
(b) to the extent permitted by the relevant agreement but suject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any patent license agreements with any other party, whether the
Assignor is a licensee or licensor under any such license agreement,
including, without limitation, those patent license agreements listed on
Exhibit B attached hereto and made a part hereof, and the right to prepare
---------
for sale and sell any and all inventory now or hereafter owned by the
Assignor and now or hereafter covered by such licenses (all of the
foregoing are hereinafter referred to collectively as the "Licenses");
(c) the Related Documents; and
(d) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1. Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2. No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3. Registrations. The Assignor has duly and properly applied for
-------------
registration of the Patents listed in Exhibit A hereto as indicated thereon in
---------
the United States Patent and Trademark Office.
3.4. Complete Listing. The Patents and Licenses set forth on the Schedules
----------------
hereto constitute, as of the date hereof, all Patents and Licenses of the
Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
4.1. Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Patents and Licenses and, to that end,
shall maintain the quality of any and all of its products or services bearing
the trademarks or service marks included in such Patents or
-4-
<PAGE>
Licenses consistent with the quality of such products and services of such marks
as of the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2. Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Patents and Licenses as described
above shall be worldwide, to the extent possessed by the Assignor, and without
any liability for royalties or other related charges from the Agent or any
Secured Creditor to the Assignor. The term of the assignments and grants of
security interests granted herein shall extend until the expiration of each of
the respective Patents and Licenses assigned or pledged hereunder, or until the
Secured Obligations have been indefeasibly paid in full, no commitment by the
Agent or any Secured Creditor exists that could give rise to any Secured
Obligations and the Secured Debt Agreements and this Assignment have been
terminated.
4.3. Duties of Assignors. The Assignor shall have the duty (a) to
-------------------
prosecute diligently any application to register the Patents pending as of the
date hereof or thereafter until all Secured Obligations have been indefeasibly
paid in full, (b) to make application on unpatented but patentable inventions,
as appropriate or as requested by the Agent, except where failure to do so would
have a Material Adverse Effect, and (c) to preserve and maintain all rights in
all applications to register Patents, except where failure to do so would have a
Material Adverse Effect. Any expenses incurred in connection with such
applications shall be borne by the Assignor. The Assignor shall not abandon any
right to file an application to register material Patents without the prior
written consent of the Agent.
4.4. Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Patents.
4.5. Notice of Proceedings. Each Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Patent and Trademark Office or any agency of any state or any
court regarding the Assignor's right, title and interest in any material Patent
or the Assignor's right to register any material Patent.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1. Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any exchange, broker's board or at any of the Agent's offices
or elsewhere upon such terms and conditions as the Agent may deem advisable and
at such prices as the Agent may deem best, for any combination of cash or on
credit or for future delivery without assumption of any credit risk, with
-5-
<PAGE>
the right to the Agent or any Secured Creditor upon any such sale or sales or
dispositions, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in such Assignor,
which right or equity is hereby expressly waived and released.
5.2. Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or provisions of this
Assignment whatsoever shall be valid unless in writing signed by the Agent and
consented to by the Secured Creditors, and then only to the extent specifically
set forth in such writing.
6. PROCEEDS.
--------
6.1. Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months or less from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1. Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
7.2. Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to
-6-
<PAGE>
perform or pay in this Assignment and the Assignor shall reimburse the Agent for
any amounts paid by the Agent pursuant to this Section 7.2. The Assignor's
-----------
obligation to reimburse the Agent pursuant to the preceding sentence shall be a
Secured Obligation payable on demand.
7.3. Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the United States Patent and Trademark Office or otherwise which are necessary
or desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the Agent's and Secured Creditors' security interest
in the Collateral; (ii) so long as an Event of Default shall have occurred and
is continuing, to endorse and collect any cash proceeds of the Collateral; or
(iii) to file a carbon, photographic or other reproduction of this Assignment or
any financing statement with respect to the Collateral as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4. Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Creditors
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of the Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5. Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6. Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
7.7. Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights
-7-
<PAGE>
or obligations under this Assignment or any interest herein, without the prior
written consent of the Agent and the Secured Creditors.
7.8. Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9. Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State authority in respect of this Assignment shall be paid by the respective
Assignor, together with interest and penalties, if any. The Assignor shall
reimburse (a) the Agent for any and all reasonable out-of-pocket expenses and
internal charges (including reasonable attorneys', auditors' and accountants'
fees and reasonable time charges of attorneys, paralegals, auditors and
accountants who may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, execution, delivery, administration, collection
and enforcement of this Assignment and in the administration, collection,
preservation or sale of the Collateral (including the reasonable expenses and
charges associated with any periodic or special audit of the Collateral), and
(b) the Agent and each Secured Creditor for any and all reasonable out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of the Agent or such Secured Creditor) paid
or incurred by the Agent or such Secured Creditor in connection with the
collection and enforcement of this Assignment.
7.10. Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11. Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12. Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
7.13. Indemnity.The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents
-8-
<PAGE>
and employees, from and against any and all liabilities, damages, penalties,
suits, costs, and expenses of any kind and nature, imposed on, incurred by or
asserted against the Agent or any Secured Creditor, or its successors, assigns,
agents and employees, in any way relating to or arising out of this Assignment,
or the manufacture, purchase, acceptance, rejection, ownership, delivery, lease,
possession, use, operation, condition, sale, return or other disposition of any
Collateral (other than liability resulting from the gross negligence or wilful
misconduct of the Agent or any such Secured Creditor).
7.14. Releases. Upon termination of this Assignment in accordance with the
--------
provisions of Section 7.11 hereof, the Agent and the Secured Creditors shall, at
------------
the Assignor's request and expense, execute such releases as the Assignor may
reasonably request, in form and upon terms acceptable to the Agent and the
Secured Creditors in all respects.
7.15. Waivers. Except to the extent expressly otherwise provided herein or
-------
in any Secured Debt Agreement, the Assignor waives, to the extent permitted by
applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17. CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS AND
PATENTS.
7.18. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUDNING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article
-9-
<PAGE>
X of the Credit Agreement shall be entitled to all the rights, interests and
benefits of the Agent hereunder.
9. NOTICES.
-------
9.1. Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor, in accordance
with the Guaranty, (ii) in the case of the Agent and each Lender, in accordance
the Credit Agreement, (iii) in the case of a L/C Creditor, in accordance with
the relevant Secured Letter of Credit and (iv) in the case of a Swap Creditor,
in accordance with the relevant Secured Swap Contract.
9.2. Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
[signature page follows]
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set
forth above.
KF-INTERNATIONAL, INC.,
as Assignor
By /s/ H. Scott Herrin
--------------------------------
Name: H. Scott Herrin
Title: Treasurer
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
--------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Patent Assignment was executed and acknowledged before me
this 12th day of March, 1998 by H. Scott Herrin, personally known to me to be
the Treasurer of KF-INTERNATIONAL, INC., a U.S. Virgin Islands corporation, on
behalf of such corporation.
/s/ Janet Foley
-------------------------------------
NOTARY PUBLIC
My Commission Expires: April 30, 2000
(SEAL)
<PAGE>
EXHIBIT A
---------
PATENTS
<TABLE>
<CAPTION>
Patent or Filing Date/ Name of
Application No. Issue Date Invention Inventor Expiry Date
- --------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
</TABLE>
None
<PAGE>
EXHIBIT B
---------
LICENSES
<TABLE>
<CAPTION>
Date Parties Subject of License Term
---- ------- ------------------ ----
<S> <C> <C> <C>
</TABLE>
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
KF-INTERNATIONAL, INC.
364 Valley Road
- -------------------------
Warrington, Bucks County
- -------------------------
Pennsylvania
- -------------------------
<PAGE>
EXHIBIT 10.34
PATENT ASSIGNMENT - KF-DELAWARE
-------------------------------
This Patent Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
between KF-DELAWARE, INC., (the "Assignor") and BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors (as
hereinafter defined). Unless otherwise defined in Section 1, terms defined in
the Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), AGI Incorporated ("AGI"), Klearfold,
Inc. ("Klearfold", and together with AGI, each a "L/C Borrower" and
collectively, the "L/C Borrowers"), the financial institutions from time to time
party thereto (the "Lenders") and the Agent (as from time to time restated,
amended or modified, the "Credit Agreement"), the Lenders have agreed to extend
certain credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), the Assignor has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Company and the L/C Borrowers under or with
respect to the Secured Debt Agreements (as defined below) to which the Company
and the L/C Borrowers is a party;
C. The Assignor may from time to time be party to one or more Swap
Contracts relating to the Revolving Loans (each such Swap Contract with a Swap
Creditor (as defined below), a "Secured Swap Contract") with Bank of America
National Trust & Savings Association ("BofA"), in its individual capacity, any
Lender or syndicate of financial institutions organized by BofA, or an affiliate
of BofA, or any Lender (even if BofA or any such Lender ceases to be a Lender
under the Credit Agreement for any reason) and any institution that participates
in, and in each case their subsequent assigns, such Secured Swap Contract
(collectively, the "Swap Creditors");
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors"); and
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that each Assignor grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1. General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it in the Recitals.
-------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Patents" has the meaning ascribed to it in Section 2.
------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee
-2-
<PAGE>
or subcontractor thereof, of products or services sold by or under the authority
of the Assignor in connection with the Patents or Licenses.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as defined
-------------------
in the Guaranty, (ii) the payment when due of all obligations of the Assignor to
Swap Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by the Assignor and
(iii) the payment when due of all obligations of the Assignor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the Subsidiary Guarantors, including the Assignor, and the
Agent, as the same may be restated, amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign patents and patent applications,
whether in the United States or any foreign jurisdiction, and the
inventions and improvements described and claimed therein and trade secrets
and know-how related thereto, including, without limitation, the patents
and patent applications listed on Exhibit A hereto, and the re-issues,
---------
divisions, renewals, extensions and continuations-in-part thereof and all
income, royalties, damages and payments now and hereafter due and/or
payable thereunder and with respect thereto, including, without limitation,
damages and payments for past and future infringements thereof, the right
to sue for past, present and future infringements thereof and
-3-
<PAGE>
all rights corresponding thereto throughout the world (all of the foregoing
being sometimes hereinafter individually and/or collectively referred to as
the "Patents");
-------
(b) to the extent permitted by the relevant agreement but suject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any patent license agreements with any other party, whether the
Assignor is a licensee or licensor under any such license agreement,
including, without limitation, those patent license agreements listed on
Exhibit B attached hereto and made a part hereof, and the right to prepare
---------
for sale and sell any and all inventory now or hereafter owned by the
Assignor and now or hereafter covered by such licenses (all of the
foregoing are hereinafter referred to collectively as the "Licenses");
(c) the Related Documents; and
(d) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1. Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2. No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3. Registrations. The Assignor has duly and properly applied for
-------------
registration of the Patents listed in Exhibit A hereto as indicated thereon in
---------
the United States Patent and Trademark Office.
3.4. Complete Listing. The Patents and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Patents and Licenses of
the Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
4.1. Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Patents and Licenses and, to that end,
shall maintain the quality of any and all of its products or services bearing
the trademarks or service marks included in such Patents or
-4-
<PAGE>
Licenses consistent with the quality of such products and services of such marks
as of the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2. Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Patents and Licenses as described
above shall be worldwide, to the extent possessed by the Assignor, and without
any liability for royalties or other related charges from the Agent or any
Secured Creditor to the Assignor. The term of the assignments and grants of
security interests granted herein shall extend until the expiration of each of
the respective Patents and Licenses assigned or pledged hereunder, or until the
Secured Obligations have been indefeasibly paid in full, no commitment by the
Agent or any Secured Creditor exists that could give rise to any Secured
Obligations and the Secured Debt Agreements and this Assignment have been
terminated.
4.3. Duties of Assignors. The Assignor shall have the duty (a) to
-------------------
prosecute diligently any application to register the Patents pending as of the
date hereof or thereafter until all Secured Obligations have been indefeasibly
paid in full, (b) to make application on unpatented but patentable inventions,
as appropriate or as requested by the Agent, except where failure to do so would
have a Material Adverse Effect, and (c) to preserve and maintain all rights in
all applications to register Patents, except where failure to do so would have a
Material Adverse Effect. Any expenses incurred in connection with such
applications shall be borne by the Assignor. The Assignor shall not abandon any
right to file an application to register material Patents without the prior
written consent of the Agent.
4.4. Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Patents.
4.5. Notice of Proceedings. Each Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Patent and Trademark Office or any agency of any state or any
court regarding the Assignor's right, title and interest in any material Patent
or the Assignor's right to register any material Patent.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1. Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any exchange, broker's board or at any of the Agent's offices
or elsewhere upon such terms and conditions as the Agent may deem advisable and
at such prices as the Agent may deem best, for any combination of cash or on
credit or for future delivery without assumption of any credit risk, with
-5-
<PAGE>
the right to the Agent or any Secured Creditor upon any such sale or sales or
dispositions, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in such Assignor,
which right or equity is hereby expressly waived and released.
5.2. Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or provisions of this
Assignment whatsoever shall be valid unless in writing signed by the Agent and
consented to by the Secured Creditors, and then only to the extent specifically
set forth in such writing.
6. PROCEEDS.
--------
6.1. Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months or less from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1. Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
7.2. Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to
-6-
<PAGE>
perform or pay in this Assignment and the Assignor shall reimburse the Agent for
any amounts paid by the Agent pursuant to this Section 7.2. The Assignor's
-----------
obligation to reimburse the Agent pursuant to the preceding sentence shall be a
Secured Obligation payable on demand.
7.3. Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the United States Patent and Trademark Office or otherwise which are necessary
or desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the Agent's and Secured Creditors' security interest
in the Collateral; (ii) so long as an Event of Default shall have occurred and
is continuing, to endorse and collect any cash proceeds of the Collateral; or
(iii) to file a carbon, photographic or other reproduction of this Assignment or
any financing statement with respect to the Collateral as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4. Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Creditors
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of the Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5. Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6. Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
7.7. Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights
-7-
<PAGE>
or obligations under this Assignment or any interest herein, without the prior
written consent of the Agent and the Secured Creditors.
7.8. Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9. Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State authority in respect of this Assignment shall be paid by the respective
Assignor, together with interest and penalties, if any. The Assignor shall
reimburse (a) the Agent for any and all reasonable out-of-pocket expenses and
internal charges (including reasonable attorneys', auditors' and accountants'
fees and reasonable time charges of attorneys, paralegals, auditors and
accountants who may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, execution, delivery, administration, collection
and enforcement of this Assignment and in the administration, collection,
preservation or sale of the Collateral (including the reasonable expenses and
charges associated with any periodic or special audit of the Collateral), and
(b) the Agent and each Secured Creditor for any and all reasonable out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of the Agent or such Secured Creditor) paid
or incurred by the Agent or such Secured Creditor in connection with the
collection and enforcement of this Assignment.
7.10. Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11. Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12. Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
7.13. Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents
-8-
<PAGE>
and employees, from and against any and all liabilities, damages, penalties,
suits, costs, and expenses of any kind and nature, imposed on, incurred by or
asserted against the Agent or any Secured Creditor, or its successors, assigns,
agents and employees, in any way relating to or arising out of this Assignment,
or the manufacture, purchase, acceptance, rejection, ownership, delivery, lease,
possession, use, operation, condition, sale, return or other disposition of any
Collateral (other than liability resulting from the gross negligence or wilful
misconduct of the Agent or any such Secured Creditor).
7.14. Releases. Upon termination of this Assignment in accordance with
--------
the provisions of Section 7.11 hereof, the Agent and the Secured Creditors
------------
shall, at the Assignor's request and expense, execute such releases as the
Assignor may reasonably request, in form and upon terms acceptable to the Agent
and the Secured Creditors in all respects.
7.15. Waivers. Except to the extent expressly otherwise provided herein
-------
or in any Secured Debt Agreement, the Assignor waives, to the extent permitted
by applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17. CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS AND PATENTS.
7.18. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUDNING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article
-9-
<PAGE>
X of the Credit Agreement shall be entitled to all the rights, interests and
benefits of the Agent hereunder.
9. NOTICES.
-------
9.1. Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor, in accordance
with the Guaranty, (ii) in the case of the Agent and each Lender, in accordance
the Credit Agreement, (iii) in the case of a L/C Creditor, in accordance with
the relevant Secured Letter of Credit and (iv) in the case of a Swap Creditor,
in accordance with the relevant Secured Swap Contract.
9.2. Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
[signature page follows]
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set forth
above.
KF-DELAWARE, INC.,
as Assignor
By /s/ Adam J. Murphy
-------------------------------
Name: Adam J. Murphy
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
-------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Patent Assignment was executed and acknowledged before me
this 12th day of March, 1998 by Adam Murphy, personally known to me to be the
Vice President of KF-DELAWARE, INC., a Delaware corporation, on behalf of such
corporation.
/s/ Janet Foley
----------------------------------
NOTARY PUBLIC
My Commission Expires: April 30, 2000
(SEAL)
<PAGE>
EXHIBIT A
---------
PATENTS
<TABLE>
<CAPTION>
Patent or Filing Date/ Name of
Application No. Issue Date Invention Inventor Expiry Date
- --------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT B
---------
LICENSES
<TABLE>
<CAPTION>
Date Parties Subject of License Term
---- ------- ------------------ ----
<S> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
KF-DELAWARE, INC.
364 Valley Road
- ------------------------
Warrington, Bucks County
- ------------------------
Pennsylvania
- ------------------------
<PAGE>
EXHIBIT 10.35
TRADEMARK ASSIGNMENT - COMPANY
------------------------------
This Trademark Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
----------
between IMPAC GROUP, INC., a Delaware corporation (the "Assignor"), and BANK of
--------
AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, as agent (the "Agent") for the
-----
Secured Creditors (as hereinafter defined). Unless otherwise defined in Section
-------
1, terms defined in the Credit Agreement (as defined below) are used herein as
- -
therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith among
the Assignor, AGI Incorporated ("AGI"), Klearfold, Inc. ("Klearfold"; and
--- ---------
together with AGI, each a "L/C Borrower" and collectively, the "L/C Borrowers")
------------ -------------
the financial institutions from time to time party thereto (the "Lenders") and
-------
the Agent (as from time to time restated, amended or modified, the "Credit
------
Agreement"), the Lenders have agreed to extend certain credit to the Assignor
- ---------
and the L/C Borrowers;
B. Pursuant to the Guaranty-Company, dated as of even date herewith (as
from time to time amended or modified, the "Guaranty"), the Assignor has
--------
guaranteed to the Secured Creditors the payment when due of all obligations and
liabilities of the L/C Borrowers under or with respect to the Secured Debt
Agreements (as defined below) to which such L/C Borrower is a party;
C. The Assignor may from time to time be an account party to one or more
Swap Contracts relating to the Revolving Loans (each such Swap Contract with a
Swap Creditor (as defined below), a "Secured Swap Contract") with Bank of
---------------------
America National Trust & Savings Association ("BofA"), in its individual
----
capacity, any Lender or syndicate of financial institutions organized by BofA,
or an affiliate of BofA, or any Lender (even if BofA or any such Lender ceases
to be a Lender under the Credit Agreement for any reason) and any institution
that participates in, and in each case their subsequent assigns, such Secured
Swap Contract (collectively, the "Swap Creditors"); and
--------------
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
---------------------------
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
------------------------
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
---
Creditors"); and
- ---------
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignor grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1 General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it in the Recitals.
-------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee or subcontractor thereof, of products or
services sold by or under the authority of the Assignor in connection with the
Trademarks or Licenses including, without limitation, all product and service
-2-
<PAGE>
specification documents and production and quality control manuals used in the
manufacture of products or provision of services sold under or in connection
with the Trademarks.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as
------------------- -----------
defined in the Credit Agreement, (ii) all "Obligations" as defined in the
-----------
Guaranty, (iii) the payment when due of all obligations of the Assignor to Swap
Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by the Assignor and
(iv) the payment when due of all obligations of the Assignor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the Assignor and the Agent, as the same may be restated, amended
or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
"Trademarks" has the meaning ascribed to it in Section 2.
---------- ---------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign trademarks, tradenames, service
marks, trademark and service mark registrations and renewals, and trademark
and service mark applications, including, without limitation, the
trademarks, service marks and tradenames listed on Exhibit A hereto, and
---------
registrations and renewals thereof, and all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect to all
trademarks, tradenames and service marks including, without limitation,
damages and
-3-
<PAGE>
payments for past and future infringements and dilutions thereof against
third parties (all of the foregoing are sometimes hereinafter individually
and/or collectively referred to as the "Trademarks");
----------
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any trademark license agreements or service mark license
agreements with any other party, whether the Assignor is a licensee or
licensor under any such license agreement, including, without limitation,
those trademark license agreements and service mark license agreements
listed on Exhibit B attached hereto and made a part hereof, together with
---------
any goodwill connected with and symbolized by any such trademark license
agreements or service mark license agreements, and the right to prepare for
sale and sell any and all inventory now or hereafter owned by the Assignor
and now or hereafter covered by such licenses (all of the foregoing are
hereinafter referred to collectively as the "Licenses");
--------
(c) the goodwill of the Assignor's business connected with the use of
and symbolized by the Trademarks;
(d) the Related Documents; and
(e) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1 Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2 No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3 Registrations. The Assignor has duly and properly applied for
-------------
registration of the Trademarks listed in Exhibit A hereto as indicated thereon
---------
in the United States Patent and Trademark Office.
3.4 Complete Listing. The Trademarks and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Trademarks and Licenses
of the Assignor.
-4-
<PAGE>
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
4.1 Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Trademarks and Licenses and, to that
end, shall maintain the quality of any and all of its products or services
bearing the trademarks or service marks included in such Trademarks or Licenses
consistent with the quality of such products and services of such marks as of
the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2 Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Trademarks and Licenses as described
above shall be worldwide, to the extent possessed by the Assignor, and without
any liability for royalties or other related charges from the Agent or any
Secured Creditor to the Assignor. The term of the assignments and grants of
security interests granted herein shall extend until the expiration of each of
the respective Trademarks and Licenses assigned or pledged hereunder, or until
the Secured Obligations have been indefeasibly paid in full, no commitment by
the Agent or any Secured Creditor exists that could give rise to any Secured
Obligations and the Secured Debt Agreements and this Assignment have been
terminated.
4.3 Duties of Assignor. The Assignor shall have the duty (a) to prosecute
------------------
diligently any application to register the Trademarks pending as of the date
hereof or thereafter until all Secured Obligations have been indefeasibly paid
in full, (b) to make application on Trademarks, as appropriate or as requested
by the Agent, except where failure to do so would have a Material Adverse
Effect, and (c) to preserve and maintain all rights in all applications to
register Trademarks. Any expenses incurred in connection with such applications
shall be borne by the Assignor, except where failure to do so would have a
Material Adverse Effect. The Assignor shall not abandon any right to file an
application to register material Trademarks without the prior written consent of
the Agent.
4.4 Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Trademarks.
4.5 Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Patent and Trademark Office or any agency of any state or any
court regarding the Assignor's right, title and interest in any material
Trademark or the Assignor's right to register any material Trademark.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1 Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly
-5-
<PAGE>
waived), may, and upon the direction of the Secured Creditors shall, forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any exchange, broker's board or at any of the Agent's offices
or elsewhere upon such terms and conditions as the Agent may deem advisable and
at such prices as the Agent may deem best, for any combination of cash or on
credit or for future delivery without assumption of any credit risk, with the
right to the Agent or any Secured Creditor upon any such sale or sales or
dispositions, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in the Assignor,
which right or equity is hereby expressly waived and released.
5.2 Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or provisions of this
Assignment whatsoever shall be valid unless in writing signed by the Agent and
consented to by the Secured Creditors, and then only to the extent specifically
set forth in such writing.
6. PROCEEDS.
--------
6.1 Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within ten (10)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
----------------------
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2 Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
- ---------
7. GENERAL PROVISIONS.
------------------
7.1 Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable
-6-
<PAGE>
if made to the Assignor, addressed as set forth in Section 9 hereof, at least
---------
ten (10) days prior to any such public sale or the time after which any such
private sale or other disposition may be made.
7.2 Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to perform or pay in
this Assignment and the Assignor shall reimburse the Agent for any amounts paid
by the Agent pursuant to this Section 7.2. The Assignor's obligation to
-----------
reimburse the Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
7.3 Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the United States Patent and Trademark Office or otherwise which are necessary
or desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the Agent's and Secured Creditors' security interest
in the Collateral; (ii) so long as an Event of Default shall have occurred and
is continuing, to endorse and collect any cash proceeds of the Collateral; or
(iii) to file a carbon, photographic or other reproduction of this Assignment or
any financing statement with respect to the Collateral as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4 Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Lenders
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of the Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5 Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
-7-
<PAGE>
7.6 Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
7.7 Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights or obligations under
this Assignment or any interest herein, without the prior written consent of the
Agent and the Secured Creditors.
7.8 Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9 Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State authority in respect of this Assignment shall be paid by the Assignor,
together with interest and penalties, if any. The Assignor shall reimburse (a)
the Agent for any and all reasonable out-of-pocket expenses and internal charges
(including reasonable attorneys', auditors' and accountants' fees and reasonable
time charges of attorneys, paralegals, auditors and accountants who may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Assignment and in the administration, collection, preservation or sale of
the Collateral (including the reasonable expenses and charges associated with
any periodic or special audit of the Collateral), and (b) the Agent and each
Secured Creditor for any and all reasonable out-of-pocket expenses and internal
charges (including reasonable attorneys', auditors' and accountants' fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who
may be employees of the Agent or such Secured Creditor) paid or incurred by the
Agent or such Secured Creditor in connection with the collection and enforcement
of this Assignment.
7.10 Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11 Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
-8-
<PAGE>
7.12 Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
7.13 Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature, imposed on, incurred by or asserted against the Agent or any Secured
Creditor, or its successors, assigns, agents and employees, in any way relating
to or arising out of this Assignment, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (other than liability
resulting from the gross negligence or wilful misconduct of the Agent or any
such Secured Creditor).
7.14 Releases. Upon termination of this Assignment in accordance with the
--------
provisions of Section 7.11 hereof, the Agent and the Secured Creditors shall, at
------------
the Assignor's request and expense, execute such releases as the Assignor may
reasonably request, in form and upon terms acceptable to the Agent and the
Secured Creditors in all respects.
7.15 Waivers. Except to the extent expressly otherwise provided herein or
-------
in any Secured Debt Agreement, the Assignor waives, to the extent permitted by
applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16 Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17 CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS AND
TRADEMARKS.
7.18 WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
-9-
<PAGE>
7.19 Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article X of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Agent hereunder.
9. NOTICES.
-------
9.1 Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor, Agent, and each
Lender, in accordance the Credit Agreement, (ii) in the case of a L/C Creditor
in accordance with the relevant Secured Letter of Credit and (iii) in the case
of a Swap Creditor, in accordance with the relevant Secured Swap Contract.
9.2 Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set
forth above.
IMPAC GROUP, INC., as Assignor
By /s/ David C. Underwood
-------------------------------------
Name: David C. Underwood
Title: Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
-------------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Trademark Assignment was executed and acknowledged before me
this 12th day of March, 1998 by David Underwood, personally known to me to be
the Treasurer & Secretary of IMPAC GROUP, INC., a Delaware corporation, on
behalf of such corporation.
/s/ Janet Foley
------------------------------------
NOTARY PUBLIC
My Commission Expires: April 30, 2000
(SEAL)
<PAGE>
EXHIBIT A
---------
TRADEMARKS
<TABLE>
<CAPTION>
U.S. Application
Registration or Registered Date of Date (if not yet
Serial No. Mark Issuance Expiry Date issued)
--------- ---- -------- ----------- ------
<S> <C> <C> <C> <C>
</TABLE>
None
<PAGE>
EXHIBIT B
---------
LICENSES
<TABLE>
<CAPTION>
Date Parties Subject of License Term
- ---- ------- ------------------ ----
<S> <C> <C> <C>
</TABLE>
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
IMPAC Group, Inc.
1950 N. Ruby Street
Melrose Park, Cook County, Illinois
<PAGE>
EXHIBIT 10.36
TRADEMARK ASSIGNMENT - AGI
--------------------------
This Trademark Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
between AGI INCORPORATED (the "Assignor") and BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors (as
hereinafter defined). Unless otherwise defined in Section 1, terms defined in
the Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), the Assignor, Klearfold, Inc.
(("Klearfold", and together with the Assignor, each a "L/C Borrower" and
collectively, the "L/C Borrowers"), the financial institutions from time to time
party thereto (the "Lenders") and the Agent (as from time to time restated,
amended or modified, the "Credit Agreement"), the Lenders have agreed to extend
certain credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), each L/C Borrower, including the
Assignor, has jointly and severally guaranteed to the Secured Creditors the
payment when due of all obligations and liabilities of the Company under or
with respect to the Secured Debt Agreements (as defined below) to which the
Company is a party;
C. The Assignor may from time to time be party to one or more Swap
Contracts relating to the Revolving Loans (each such Swap Contract with a Swap
Creditor (as defined below), a "Secured Swap Contract") with Bank of America
National Trust & Savings Association ("BofA"), in its individual capacity, any
Lender or syndicate of financial institutions organized by BofA, or an affiliate
of BofA, or any Lender (even if BofA or any such Lender ceases to be a Lender
under the Credit Agreement for any reason) and any institution that participates
in, and in each case their subsequent assigns, such Secured Swap Contract
(collectively, the "Swap Creditors");
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or any Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors");
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignor grant to the
<PAGE>
Agent, for the ratable benefit of itself and the Secured Creditors, a security
interest in the Collateral (as defined below) on the terms and conditions set
forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1. General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it int he Recitals.
-------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee or subcontractor thereof, of products or
services sold by or under the authority of the Assignor in connection with the
Trademarks or Licenses including, without limitation, all product and service
specification documents and production and quality control manuals used in the
manufacture of products or provision of services sold under or in connection
with the Trademarks.
-2-
<PAGE>
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Credit Agreement, (ii) all "Obligations" as defined in the
Guaranty, (iii) the payment when due of all obligations of the Assignor to Swap
Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by the Assignor and
(iv) the payment when due of all obligations of the Assignor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the L/C Borrowers, including the Assignor, and the Agent, as the
same may be restated, amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
"Trademarks" has the meaning ascribed to it in Section 2.
---------- ---------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign trademarks, tradenames, service
marks, trademark and service mark registrations and renewals, and trademark
and service mark applications, including, without limitation, the
trademarks, service marks and tradenames listed on Exhibit A hereto, and
---------
registrations and renewals thereof, and all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect to all
trademarks, tradenames and service marks including, without limitation,
damages and payments for past and future infringements and dilutions
thereof against third parties (all of
-3-
<PAGE>
the foregoing are sometimes hereinafter individually and/or collectively
referred to as the "Trademarks");
----------
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any trademark license agreements or service mark license
agreements with any other party, whether the Assignor is a licensee or
licensor under any such license agreement, including, without limitation,
those trademark license agreements and service mark license agreements
listed on Exhibit B attached hereto and made a part hereof, together with
---------
any goodwill connected with and symbolized by any such trademark license
agreements or service mark license agreements, and the right to prepare for
sale and sell any and all inventory now or hereafter owned by the Assignor
and now or hereafter covered by such licenses (all of the foregoing are
hereinafter referred to collectively as the "Licenses");
(c) the goodwill of the Assignor's business connected with the use of
and symbolized by the Trademarks;
(d) the Related Documents; and
(e) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1. Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2. No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3. Registrations. The Assignor has duly and properly applied for
-------------
registration of the Trademarks listed in Exhibit A hereto as indicated thereon
---------
in the United States Patent and Trademark Office.
3.4. Complete Listing. The Trademarks and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Trademarks and Licenses
of the Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
-4-
<PAGE>
4.1. Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Trademarks and Licenses and, to that
end, shall maintain the quality of any and all of its products or services
bearing the trademarks or service marks included in such Trademarks or Licenses
consistent with the quality of such products and services of such marks as of
the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2. Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Trademarks and Licenses as described
above shall be worldwide, to the extent possessed by the Assignor, and without
any liability for royalties or other related charges from the Agent or any
Secured Creditor to the Assignor. The term of the assignments and grants of
security interests granted herein shall extend until the expiration of each of
the respective Trademarks and Licenses assigned or pledged hereunder, or until
the Secured Obligations have been indefeasibly paid in full, no commitment by
the Agent or any Secured Creditor exists that could give rise to any Secured
Obligations and the Secured Debt Agreements and this Assignment have been
terminated.
4.3. Duties of Assignor. The Assignor shall have the duty (a) to prosecute
------------------
diligently any application to register the Trademarks pending as of the date
hereof or thereafter until all Secured Obligations have been indefeasibly paid
in full, (b) to make application on Trademarks, as appropriate or as requested
by the Agent,except where failure to do so would have a Material Adverse Effect,
and (c) to preserve and maintain all rights in all applications to register
Trademarks, except where failure to do so would have a Material Adverse Effect.
Any expenses incurred in connection with such applications shall be borne by the
Assignor. The Assignor shall not abandon any right to file an application to
register material Trademarks without the prior written consent of the Agent.
4.4. Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Trademarks.
4.5. Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Patent and Trademark Office or any agency of any state or any
court regarding the Assignor's right, title and interest in any material
Trademark or the Assignor's right to register any material Trademark.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1. Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any
-5-
<PAGE>
exchange, broker's board or at any of the Agent's offices or elsewhere upon such
terms and conditions as the Agent may deem advisable and at such prices as the
Agent may deem best, for any combination of cash or on credit or for future
delivery without assumption of any credit risk, with the right to the Agent or
any Secured Creditor upon any such sale or sales or dispositions, public or
private, to purchase the whole or any part of said Collateral so sold, free of
any right or equity of redemption in the Assignor, which right or equity is
hereby expressly waived and released.
5.2. Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or provisions of this
Assignment whatsoever shall be valid unless in writing signed by the Agent and
consented to by the Secured Creditors, and then only to the extent specifically
set forth in such writing.
6. PROCEEDS.
--------
6.1. Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1. Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
-6-
<PAGE>
7.2. Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to perform or pay in
this Assignment and the Assignor shall reimburse the Agent for any amounts paid
by the Agent pursuant to this Section 7.2. The Assignor's obligation to
-----------
reimburse the Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
7.3. Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the United States Patent and Trademark Office or otherwise which are necessary
or desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the Agent's and Secured Creditors' security interest
in the Collateral; (ii) so long as an Event of Default shall have occurred and
is continuing, to endorse and collect any cash proceeds of the Collateral; or
(iii) to file a carbon, photographic or other reproduction of this Assignment or
any financing statement with respect to the Collateral as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4. Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Lenders
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of the Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5. Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6. Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
-7-
<PAGE>
7.7. Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights or obligations under
this Assignment or any interest herein, without the prior written consent of the
Agent and the Secured Creditors.
7.8. Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9. Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State authority in respect of this Assignment shall be paid by the Assignor,
together with interest and penalties, if any. The Assignor shall reimburse (a)
the Agent for any and all reasonable out-of-pocket expenses and internal charges
(including reasonable attorneys', auditors' and accountants' fees and reasonable
time charges of attorneys, paralegals, auditors and accountants who may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Assignment and in the administration, collection, preservation or sale of
the Collateral (including the reasonable expenses and charges associated with
any periodic or special audit of the Collateral), and (b) the Agent and each
Secured Creditor for any and all reasonable out-of-pocket expenses and internal
charges (including reasonable attorneys', auditors' and accountants' fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who
may be employees of the Agent or such Secured Creditor) paid or incurred by the
Agent or such Secured Creditor in connection with the collection and enforcement
of this Assignment.
7.10. Headings. The title of and section headings in this Assignment
--------
are for convenience of reference only, and shall not govern the interpretation
of any of the terms and provisions of this Assignment.
7.11. Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12. Entire Agreement. This Assignment and the Secured Debt
----------------
Agreements embody the entire agreement and understanding between the Assignor
and the Agent relating to the Collateral and supersede all prior agreements and
understandings between the Assignor and the Agent relating to the Collateral.
-8-
<PAGE>
7.13. Indemnity. The Assignor hereby agrees to assume liability for,
---------
and does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature, imposed on, incurred by or asserted against the Agent or any Secured
Creditor, or its successors, assigns, agents and employees, in any way relating
to or arising out of this Assignment, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (other than liability
resulting from the gross negligence or wilful misconduct of the Agent or any
such Secured Creditor).
7.14. Releases. Upon termination of this Assignment in accordance with
--------
the provisions of Section 7.11 hereof, the Agent and the Secured Creditors
------------
shall, at the Assignor's request and expense, execute such releases as the
Assignor may reasonably request, in form and upon terms acceptable to the Agent
and the Secured Creditors in all respects.
7.15. Waivers. Except to the extent expressly otherwise provided
-------
herein or in any Secured Debt Agreement, the Assignor waives, to the extent
permitted by applicable law, (a) any right to require either the Agent or any
Secured Creditor to proceed against any other person, to exhaust its rights in
any other collateral, or to pursue any other right which either the Agent or any
Secured Creditor may have, and (b) with respect to the Secured Obligations,
presentment and demand for payment, protest, notice of protest and non-payment,
and notice of the intention to accelerate.
7.16. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17. CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS AND TRADEMARKS.
7.18. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY
--------------------
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUDNING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
-9-
<PAGE>
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article X of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Agent hereunder.
9. NOTICES.
-------
9.1. Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor, Agent, and each
Lender, in accordance the Credit Agreement, (ii) in the case of a L/C Creditor
in accordance with the relevant Secured Letter of Credit and (iii) in the case
of a Swap Creditor, in accordance with the relevant Secured Swap Contract.
9.2. Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set
forth above.
AGI INCORPORATED, as Assignor
By /s/ David C. Underwood
-------------------------------
Name: David C. Underwood
Title: CFO
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
-------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Trademark Assignment was executed and acknowledged before me
this 12th day of March, 1998 by David Underwood, personally known to me to be
the CFO of AGI INCORPORATED, an Illinois corporation, on behalf of such
corporation.
/s/ Anna Ferraro
--------------------------------------
NOTARY PUBLIC
My Commission Expires: August 31, 1998
----------------
(SEAL)
<PAGE>
EXHIBIT A
---------
TRADEMARKS
<TABLE>
<CAPTION>
U.S. Application
Registration or Registered Date of Date (if not yet
Serial No. Mark Issuance Expiry Date issued)
---------- ---- -------- ----------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT B
---------
LICENSES
<TABLE>
<CAPTION>
Date Parties Subject of License Term
---- ------- ------------------ ----
<S> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
AGI Incorporated
1950 N. Ruby Street
Melrose Park, Cook County, Illinois
<PAGE>
EXHIBIT 10.37
TRADEMARK ASSIGNMENT - KLEARFOLD
--------------------------------
This Trademark Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
between KLEARFOLD, INC. (the "Assignor") and BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors (as
hereinafter defined). Unless otherwise defined in Section 1, terms defined in
the Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), the Assignor, AGI Incorporated (("AGI",
and together with the Assignor, each a "L/C Borrower" and collectively, the "L/C
Borrowers"), the financial institutions from time to time party thereto (the
"Lenders") and the Agent (as from time to time restated, amended or modified,
the "Credit Agreement"), the Lenders have agreed to extend certain credit to the
Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), each L/C Borrower, including the
Assignor, has jointly and severally guaranteed to the Secured Creditors the
payment when due of all obligations and liabilities of the Company under or with
respect to the Secured Debt Agreements (as defined below) to which the Company
is a party;
C. The Assignor may from time to time be party to one or more Swap
Contracts relating to the Revolving Loans (each such Swap Contract with a Swap
Creditor (as defined below), a "Secured Swap Contract") with Bank of America
National Trust & Savings Association ("BofA"), in its individual capacity, any
Lender or syndicate of financial institutions organized by BofA, or an affiliate
of BofA, or any Lender (even if BofA or any such Lender ceases to be a Lender
under the Credit Agreement for any reason) and any institution that participates
in, and in each case their subsequent assigns, such Secured Swap Contract
(collectively, the "Swap Creditors");
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or any Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors");
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignor grant to the
<PAGE>
Agent, for the ratable benefit of itself and the Secured Creditors, a security
interest in the Collateral (as defined below) on the terms and conditions set
forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1. General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it in the Recitals.
-------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee or subcontractor thereof, of products or
services sold by or under the authority of the Assignor in connection with the
Trademarks or Licenses including, without limitation, all product and service
specification documents and production and quality control manuals used in the
manufacture of products or provision of services sold under or in connection
with the Trademarks.
-2-
<PAGE>
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Credit Agreement, (ii) all "Obligations" as defined in the
Guaranty, (iii) the payment when due of all obligations of the Assignor to Swap
Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by the Assignor and
(iv) the payment when due of all obligations of the Assignor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the L/C Borrowers, including the Assignor, and the Agent, as the
same may be restated, amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
"Trademarks" has the meaning ascribed to it in Section 2.
---------- ---------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign trademarks, tradenames, service
marks, trademark and service mark registrations and renewals, and trademark
and service mark applications, including, without limitation, the
trademarks, service marks and tradenames listed on Exhibit A hereto, and
---------
registrations and renewals thereof, and all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect to all
trademarks, tradenames and service marks including, without limitation,
damages and payments for past and future infringements and dilutions
thereof against third parties (all of
-3-
<PAGE>
the foregoing are sometimes hereinafter individually and/or collectively
referred to as the "Trademarks");
----------
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any trademark license agreements or service mark license
agreements with any other party, whether the Assignor is a licensee or
licensor under any such license agreement, including, without limitation,
those trademark license agreements and service mark license agreements
listed on Exhibit B attached hereto and made a part hereof, together with
---------
any goodwill connected with and symbolized by any such trademark license
agreements or service mark license agreements, and the right to prepare for
sale and sell any and all inventory now or hereafter owned by the Assignor
and now or hereafter covered by such licenses (all of the foregoing are
hereinafter referred to collectively as the "Licenses");
(c) the goodwill of the Assignor's business connected with the use of
and symbolized by the Trademarks;
(d) the Related Documents; and
(e) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1. Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2. No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3. Registrations. The Assignor has duly and properly applied for
-------------
registration of the Trademarks listed in Exhibit A hereto as indicated thereon
---------
in the United States Patent and Trademark Office.
3.4. Complete Listing. The Trademarks and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Trademarks and Licenses
of the Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
-4-
<PAGE>
4.1. Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Trademarks and Licenses and, to that
end, shall maintain the quality of any and all of its products or services
bearing the trademarks or service marks included in such Trademarks or Licenses
consistent with the quality of such products and services of such marks as of
the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2. Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Trademarks and Licenses as described
above shall be worldwide, to the extent possessed by the Assignor, and without
any liability for royalties or other related charges from the Agent or any
Secured Creditor to the Assignor. The term of the assignments and grants of
security interests granted herein shall extend until the expiration of each of
the respective Trademarks and Licenses assigned or pledged hereunder, or until
the Secured Obligations have been indefeasibly paid in full, no commitment by
the Agent or any Secured Creditor exists that could give rise to any Secured
Obligations and the Secured Debt Agreements and this Assignment have been
terminated.
4.3. Duties of Assignor. The Assignor shall have the duty (a) to prosecute
------------------
diligently any application to register the Trademarks pending as of the date
hereof or thereafter until all Secured Obligations have been indefeasibly paid
in full, (b) to make application on Trademarks, as appropriate or as requested
by the Agent,except where failure to do so would have a Material Adverse Effect,
and (c) to preserve and maintain all rights in all applications to register
Trademarks, except where failure to do so would have a Material Adverse Effect.
Any expenses incurred in connection with such applications shall be borne by the
Assignor. The Assignor shall not abandon any right to file an application to
register material Trademarks without the prior written consent of the Agent.
4.4. Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Trademarks.
4.5. Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Patent and Trademark Office or any agency of any state or any
court regarding the Assignor's right, title and interest in any material
Trademark or the Assignor's right to register any material Trademark.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1. Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any
-5-
<PAGE>
exchange, broker's board or at any of the Agent's offices or elsewhere upon such
terms and conditions as the Agent may deem advisable and at such prices as the
Agent may deem best, for any combination of cash or on credit or for future
delivery without assumption of any credit risk, with the right to the Agent or
any Secured Creditor upon any such sale or sales or dispositions, public or
private, to purchase the whole or any part of said Collateral so sold, free of
any right or equity of redemption in the Assignor, which right or equity is
hereby expressly waived and released.
5.2. Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or provisions of this
Assignment whatsoever shall be valid unless in writing signed by the Agent and
consented to by the Secured Creditors, and then only to the extent specifically
set forth in such writing.
6. PROCEEDS.
--------
6.1. Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1. Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
-6-
<PAGE>
7.2. Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to perform or pay in
this Assignment and the Assignor shall reimburse the Agent for any amounts paid
by the Agent pursuant to this Section 7.2. The Assignor's obligation to
-----------
reimburse the Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
7.3. Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the United States Patent and Trademark Office or otherwise which are necessary
or desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the Agent's and Secured Creditors' security interest
in the Collateral; (ii) so long as an Event of Default shall have occurred and
is continuing, to endorse and collect any cash proceeds of the Collateral; or
(iii) to file a carbon, photographic or other reproduction of this Assignment or
any financing statement with respect to the Collateral as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4. Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Lenders
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of the Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5. Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6. Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
-7-
<PAGE>
7.7. Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights or obligations under
this Assignment or any interest herein, without the prior written consent of the
Agent and the Secured Creditors.
7.8. Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9. Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State authority in respect of this Assignment shall be paid by the Assignor,
together with interest and penalties, if any. The Assignor shall reimburse (a)
the Agent for any and all reasonable out-of-pocket expenses and internal charges
(including reasonable attorneys', auditors' and accountants' fees and reasonable
time charges of attorneys, paralegals, auditors and accountants who may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Assignment and in the administration, collection, preservation or sale of
the Collateral (including the reasonable expenses and charges associated with
any periodic or special audit of the Collateral), and (b) the Agent and each
Secured Creditor for any and all reasonable out-of-pocket expenses and internal
charges (including reasonable attorneys', auditors' and accountants' fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who
may be employees of the Agent or such Secured Creditor) paid or incurred by the
Agent or such Secured Creditor in connection with the collection and enforcement
of this Assignment.
7.10. Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11. Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12. Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
-8-
<PAGE>
7.13. Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature, imposed on, incurred by or asserted against the Agent or any Secured
Creditor, or its successors, assigns, agents and employees, in any way relating
to or arising out of this Assignment, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (other than liability
resulting from the gross negligence or wilful misconduct of the Agent or any
such Secured Creditor).
7.14. Releases. Upon termination of this Assignment in accordance with the
--------
provisions of Section 7.11 hereof, the Agent and the Secured Creditors shall, at
------------
the Assignor's request and expense, execute such releases as the Assignor may
reasonably request, in form and upon terms acceptable to the Agent and the
Secured Creditors in all respects.
7.15. Waivers. Except to the extent expressly otherwise provided herein or
-------
in any Secured Debt Agreement, the Assignor waives, to the extent permitted by
applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17. CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS AND
TRADEMARKS.
7.18. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUDNING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
-9-
<PAGE>
BofA has been appointed as Agent for the Secured Creditors hereunder, and the
Agent has agreed to act (and any successor Agent shall act) as such hereunder
only on the express conditions contained in Article X of the Credit Agreement.
Any successor Agent appointed pursuant to Article X of the Credit Agreement
shall be entitled to all the rights, interests and benefits of the Agent
hereunder.
9. NOTICES.
-------
9.1. Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor, Agent, and each
Lender, in accordance the Credit Agreement, (ii) in the case of a L/C Creditor
in accordance with the relevant Secured Letter of Credit and (iii) in the case
of a Swap Creditor, in accordance with the relevant Secured Swap Contract.
9.2. Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set forth
above.
KLEARFOLD, INC., as Assignor
By /s/ David C. Underwood
-------------------------------
Name: David C. Underwood
Title: CFO
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
-------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Trademark Assignment was executed and acknowledged before me
this 12 day of March, 1998 by David Underwood, personally known to me to be
the CFO, Treasurer and Secretary of AGI INCORPORATED, an Illinois corporation,
on behalf of such corporation.
/s/ Anna Ferraro
---------------------------------
NOTARY PUBLIC
My Commission Expires: August 31, 1998
(SEAL)
<PAGE>
EXHIBIT A
---------
TRADEMARKS
U.S. Application
Registration or Registered Date of Date (if not yet
Serial No. Mark Issuance Expiry Date issued)
---------- ---- -------- ----------- ------
None
<PAGE>
EXHIBIT B
---------
LICENSES
Date Parties Subject of License Term
---- ------- ------------------ ----
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
Klearfold, Inc.
1950 N. Ruby Street
Melrose Park, Cook County, Illinois
<PAGE>
Exhibit 10.38
TRADEMARK ASSIGNMENT - KF-INTERNATIONAL
---------------------------------------
This Trademark Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
between KF-INTERNATIONAL, INC. (the "Assignor") and BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors
(as hereinafter defined). Unless otherwise defined in Section 1, terms defined
in the Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), AGI Incorporated ("AGI"), Klearfold,
Inc. ("Klearfold", and together with AGI, each a "L/C Borrower" and
collectively, the "L/C Borrowers"), the financial institutions from time to time
party thereto (the "Lenders") and the Agent (as from time to time restated,
amended or modified, the "Credit Agreement"), the Lenders have agreed to extend
certain credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith(as from time
to time amended or modified, the "Guaranty"), the Assignor has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Company and the L/C Borrowers under or with
respect to the Secured Debt Agreements (as defined below) to which the Company
and the L/C Borrowers is a party;
C. The Assignor may from time to time be party to one or more Swap
Contracts relating to the Revolving Loans (each such Swap Contract with a Swap
Creditor (as defined below), a "Secured Swap Contract") with Bank of America
National Trust & Savings Association ("BofA"), in its individual capacity, any
Lender or syndicate of financial institutions organized by BofA, or an affiliate
of BofA, or any Lender (even if BofA or any such Lender ceases to be a Lender
under the Credit Agreement for any reason) and any institution that participates
in, and in each case their subsequent assigns, such Secured Swap Contract
(collectively, the "Swap Creditors");
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors"); and
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignor grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1 General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it int he Recitals.
-------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee or subcontractor thereof, of products or
services sold by or under the authority of the Assignor in connection with the
Trademarks or Licenses including, without limitation, all product and service
-2-
<PAGE>
specification documents and production and quality control manuals used in the
manufacture of products or provision of services sold under or in connection
with the Trademarks.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Guaranty, (ii) the payment when due of all obligations of the
Assignor to Swap Creditors pursuant to any Secured Swap Contract and the due
performance and compliance with all the terms of the Secured Swap Contracts by
the Assignor and (iii) the payment when due of all obligations of the Assignor
to L/C Creditors pursuant to any Secured Letter of Credit and the due
performance and compliance with all the terms of the Secured Letter of Credit by
the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the Subsidiary Guarantors, including the Assignor, and the
Agent, as the same may be restated, amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
"Trademarks" has the meaning ascribed to it in Section 2.
---------- ---------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign trademarks, tradenames, service
marks, trademark and service mark registrations and renewals, and trademark
and service mark applications, including, without limitation, the
trademarks, service marks and tradenames listed on Exhibit A hereto, and
---------
registrations and renewals thereof, and all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect to all
trademarks, tradenames and service marks including, without limitation,
damages and
-3-
<PAGE>
payments for past and future infringements and dilutions thereof against
third parties (all of the foregoing are sometimes hereinafter individually
and/or collectively referred to as the "Trademarks");
----------
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any trademark license agreements or service mark license
agreements with any other party, whether the Assignor is a licensee or
licensor under any such license agreement, including, without limitation,
those trademark license agreements and service mark license agreements
listed on Exhibit B attached hereto and made a part hereof, together with
---------
any goodwill connected with and symbolized by any such trademark license
agreements or service mark license agreements, and the right to prepare for
sale and sell any and all inventory now or hereafter owned by the Assignor
and now or hereafter covered by such licenses (all of the foregoing are
hereinafter referred to collectively as the "Licenses");
(c) the goodwill of the Assignor's business connected with the use of
and symbolized by the Trademarks;
(d) the Related Documents; and
(e) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1 Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2 No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3 Registrations. The Assignor has duly and properly applied for
-------------
registration of the Trademarks listed in Exhibit A hereto as indicated thereon
---------
in the United States Patent and Trademark Office.
3.4 Complete Listing. The Trademarks and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Trademarks and Licenses
of the Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
-4-
<PAGE>
4.1 Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Trademarks and Licenses and, to that
end, shall maintain the quality of any and all of its products or services
bearing the trademarks or service marks included in such Trademarks or Licenses
consistent with the quality of such products and services of such marks as of
the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2 Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Trademarks and Licenses as described
above shall be worldwide, to the extent possessed by the Assignor, and without
any liability for royalties or other related charges from the Agent or any
Secured Creditor to the Assignor. The term of the assignments and grants of
security interests granted herein shall extend until the expiration of each of
the respective Trademarks and Licenses assigned or pledged hereunder, or until
the Secured Obligations have been indefeasibly paid in full, no commitment by
the Agent or any Secured Creditor exists that could give rise to any Secured
Obligations and the Secured Debt Agreements and this Assignment have been
terminated.
4.3 Duties of Assignor. The Assignor shall have the duty (a) to prosecute
------------------
diligently any application to register the Trademarks pending as of the date
hereof or thereafter until all Secured Obligations have been indefeasibly paid
in full, (b) to make application on Trademarks, as appropriate or as requested
by the Agent, except where failure to do so would have a Material Adverse
Effect, and (c) to preserve and maintain all rights in all applications to
register Trademarks, except where failure to do so would have a Material Adverse
Effect. Any expenses incurred in connection with such applications shall be
borne by the Assignor. The Assignor shall not abandon any right to file an
application to register material Trademarks without the prior written consent of
the Agent.
4.4 Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Trademarks.
4.5 Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Patent and Trademark Office or any agency of any state or any
court regarding the Assignor's right, title and interest in any material
Trademark or the Assignor's right to register any material Trademark.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1 Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any
-5-
<PAGE>
exchange, broker's board or at any of the Agent's offices or elsewhere upon such
terms and conditions as the Agent may deem advisable and at such prices as the
Agent may deem best, for any combination of cash or on credit or for future
delivery without assumption of any credit risk, with the right to the Agent or
any Secured Creditor upon any such sale or sales or dispositions, public or
private, to purchase the whole or any part of said Collateral so sold, free of
any right or equity of redemption in the Assignor, which right or equity is
hereby expressly waived and released.
5.2 Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or provisions of this
Assignment whatsoever shall be valid unless in writing signed by the Agent and
consented to by the Secured Creditors, and then only to the extent specifically
set forth in such writing.
6. PROCEEDS.
--------
6.1 Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2 Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1 Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made to
the Assignor, addressed as set forth in Section 9 hereof, at least ten (10) days
---------
prior to any such public sale or the time after which any such private sale or
other disposition may be made.
-6-
<PAGE>
7.2 Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to perform or pay in
this Assignment and the Assignor shall reimburse the Agent for any amounts paid
by the Agent pursuant to this Section 7.2. The Assignor's obligation to
-----------
reimburse the Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
7.3 Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the United States Patent and Trademark Office or otherwise which are necessary
or desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the Agent's and Secured Creditors' security interest
in the Collateral; (ii) so long as an Event of Default shall have occurred and
is continuing, to endorse and collect any cash proceeds of the Collateral; or
(iii) to file a carbon, photographic or other reproduction of this Assignment or
any financing statement with respect to the Collateral as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4 Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Lenders
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of the Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5 Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6 Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
-7-
<PAGE>
7.7 Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights or obligations under
this Assignment or any interest herein, without the prior written consent of the
Agent and the Secured Creditors.
7.8 Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9 Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State authority in respect of this Assignment shall be paid by the Assignor,
together with interest and penalties, if any. The Assignor shall reimburse (a)
the Agent for any and all reasonable out-of-pocket expenses and internal charges
(including reasonable attorneys', auditors' and accountants' fees and reasonable
time charges of attorneys, paralegals, auditors and accountants who may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Assignment and in the administration, collection, preservation or sale of
the Collateral (including the reasonable expenses and charges associated with
any periodic or special audit of the Collateral), and (b) the Agent and each
Secured Creditor for any and all reasonable out-of-pocket expenses and internal
charges (including reasonable attorneys', auditors' and accountants' fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who
may be employees of the Agent or such Secured Creditor) paid or incurred by the
Agent or such Secured Creditor in connection with the collection and enforcement
of this Assignment.
7.10 Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11 Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12 Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
-8-
<PAGE>
7.13 Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature, imposed on, incurred by or asserted against the Agent or any Secured
Creditor, or its successors, assigns, agents and employees, in any way relating
to or arising out of this Assignment, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (other than liability
resulting from the gross negligence or wilful misconduct of the Agent or any
such Secured Creditor).
7.14 Releases. Upon termination of this Assignment in accordance with the
--------
provisions of Section 7.11 hereof, the Agent and the Secured Creditors shall, at
------------
the Assignor's request and expense, execute such releases as the Assignor may
reasonably request, in form and upon terms acceptable to the Agent and the
Secured Creditors in all respects.
7.15 Waivers. Except to the extent expressly otherwise provided herein or
-------
in any Secured Debt Agreement, the Assignor waives, to the extent permitted by
applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16 Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17 CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS AND
TRADEMARKS.
7.18 WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUDNING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19 Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
-9-
<PAGE>
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article X of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Agent hereunder.
9. NOTICES.
-------
9.1 Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor in accordance
with the Guaranty, (ii) in the case of the Agent, and each Lender, in accordance
the Credit Agreement, (iii) in the case of a L/C Creditor in accordance with the
relevant Secured Letter of Credit and (iv) in the case of a Swap Creditor, in
accordance with the relevant Secured Swap Contract.
9.2 Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set
forth above.
KF-INTERNATIONAL, INC., as Assignor
By /s/ H. Scott Herrin
-----------------------------------------
Name: H. Scott Herrin
Title: Treasurer
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
-----------------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Trademark Assignment was executed and acknowledged before me
this 12th day of March, 1998 by H. Scott Herrin, personally known to me to be
the Treasurer of KF-International, Inc., a U.S. Virgin Islands corporation, on
behalf of such corporation.
/s/ Janet Foley
--------------------------------------------
NOTARY PUBLIC
April 30, 2000
--------------------------------------------
My Commission Expires:
(SEAL)
<PAGE>
EXHIBIT A
---------
TRADEMARKS
U.S. Application
Registration or Registered Date of Date (if not yet
Serial No. Mark Issuance Expiry Date issued)
---------- ---- -------- ----------- ------
None
<PAGE>
EXHIBIT B
---------
LICENSES
Date Parties Subject of License Term
---- ------- ------------------ ----
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
KF-INTERNATIONAL, INC.
364 Valley Road
Warrington, Bucks County
Pennsylvania
<PAGE>
Exhibit 10.39
TRADEMARK ASSIGNMENT - KF-DELAWARE
----------------------------------
This Trademark Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
between KF-DELAWARE, INC. (the "Assignor") and BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors (as
hereinafter defined). Unless otherwise defined in Section 1, terms defined in
the Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), AGI Incorporated ("AGI"), Klearfold,
Inc. ("Klearfold", and together with AGI, each a "L/C Borrower" and
collectively, the "L/C Borrowers"), the financial institutions from time to time
party thereto (the "Lenders") and the Agent (as from time to time restated,
amended or modified, the "Credit Agreement"), the Lenders have agreed to extend
certain credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith(as from time
to time amended or modified, the "Guaranty"), the Assignor has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Company and the L/C Borrowers under or with
respect to the Secured Debt Agreements (as defined below) to which the Company
and the L/C Borrowers is a party;
C. The Assignor may from time to time be party to one or more Swap
Contracts relating to the Revolving Loans (each such Swap Contract with a Swap
Creditor (as defined below), a "Secured Swap Contract") with Bank of America
National Trust & Savings Association ("BofA"), in its individual capacity, any
Lender or syndicate of financial institutions organized by BofA, or an affiliate
of BofA, or any Lender (even if BofA or any such Lender ceases to be a Lender
under the Credit Agreement for any reason) and any institution that participates
in, and in each case their subsequent assigns, such Secured Swap Contract
(collectively, the "Swap Creditors");
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors"); and
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignor grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1 General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it int he Recitals.
-------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee or subcontractor thereof, of products or
services sold by or under the authority of the Assignor in connection with the
Trademarks or Licenses including, without limitation, all product and service
-2-
<PAGE>
specification documents and production and quality control manuals used in the
manufacture of products or provision of services sold under or in connection
with the Trademarks.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means , collectively, (i) all "Obligations" as
-------------------
defined in the Guaranty, (ii) the payment when due of all obligations of the
Assignor to Swap Creditors pursuant to any Secured Swap Contract and the due
performance and compliance with all the terms of the Secured Swap Contracts by
the Assignor and (iii) the payment when due of all obligations of the Assignor
to L/C Creditors pursuant to any Secured Letter of Credit and the due
performance and compliance with all the terms of the Secured Letter of Credit by
the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the Subsidiary Guarantors, including the Assignor, and the
Agent, as the same may be restated, amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
"Trademarks" has the meaning ascribed to it in Section 2.
---------- ---------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign trademarks, tradenames, service
marks, trademark and service mark registrations and renewals, and trademark
and service mark applications, including, without limitation, the
trademarks, service marks and tradenames listed on Exhibit A hereto, and
---------
registrations and renewals thereof, and all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect to all
trademarks, tradenames and service marks including, without limitation,
damages and
-3-
<PAGE>
payments for past and future infringements and dilutions thereof against
third parties (all of the foregoing are sometimes hereinafter individually
and/or collectively referred to as the "Trademarks");
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any trademark license agreements or service mark license
agreements with any other party, whether the Assignor is a licensee or
licensor under any such license agreement, including, without limitation,
those trademark license agreements and service mark license agreements
listed on Exhibit B attached hereto and made a part hereof, together with
---------
any goodwill connected with and symbolized by any such trademark license
agreements or service mark license agreements, and the right to prepare for
sale and sell any and all inventory now or hereafter owned by the Assignor
and now or hereafter covered by such licenses (all of the foregoing are
hereinafter referred to collectively as the "Licenses");
(c) the goodwill of the Assignor's business connected with the use of
and symbolized by the Trademarks;
(d) the Related Documents; and
(e) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1. Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2. No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3. Registrations. The Assignor has duly and properly applied for
-------------
registration of the Trademarks listed in Exhibit A hereto as indicated thereon
---------
in the United States Patent and Trademark Office.
3.4. Complete Listing. The Trademarks and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Trademarks and Licenses
of the Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
-4-
<PAGE>
4.1. Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Trademarks and Licenses and, to that
end, shall maintain the quality of any and all of its products or services
bearing the trademarks or service marks included in such Trademarks or Licenses
consistent with the quality of such products and services of such marks as of
the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2. Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Trademarks and Licenses as described
above shall be worldwide, to the extent possessed by the Assignor, and without
any liability for royalties or other related charges from the Agent or any
Secured Creditor to the Assignor. The term of the assignments and grants of
security interests granted herein shall extend until the expiration of each of
the respective Trademarks and Licenses assigned or pledged hereunder, or until
the Secured Obligations have been indefeasibly paid in full, no commitment by
the Agent or any Secured Creditor exists that could give rise to any Secured
Obligations and the Secured Debt Agreements and this Assignment have been
terminated.
4.3. Duties of Assignor. The Assignor shall have the duty (a) to prosecute
------------------
diligently any application to register the Trademarks pending as of the date
hereof or thereafter until all Secured Obligations have been indefeasibly paid
in full, (b) to make application on Trademarks, as appropriate or as requested
by the Agent, except where failure to do so would have a Material Adverse
Effect, and (c) to preserve and maintain all rights in all applications to
register Trademarks, except where failure to do so would have a Material Adverse
Effect. Any expenses incurred in connection with such applications shall be
borne by the Assignor. The Assignor shall not abandon any right to file an
application to register material Trademarks without the prior written consent of
the Agent.
4.4. Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Trademarks.
4.5. Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Patent and Trademark Office or any agency of any state or any
court regarding the Assignor's right, title and interest in any material
Trademark or the Assignor's right to register any material Trademark.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1. Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any
-5-
<PAGE>
exchange, broker's board or at any of the Agent's offices or elsewhere upon such
terms and conditions as the Agent may deem advisable and at such prices as the
Agent may deem best, for any combination of cash or on credit or for future
delivery without assumption of any credit risk, with the right to the Agent or
any Secured Creditor upon any such sale or sales or dispositions, public or
private, to purchase the whole or any part of said Collateral so sold, free of
any right or equity of redemption in the Assignor, which right or equity is
hereby expressly waived and released.
5.2. Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or provisions of this
Assignment whatsoever shall be valid unless in writing signed by the Agent and
consented to by the Secured Creditors, and then only to the extent specifically
set forth in such writing.
6. PROCEEDS.
--------
6.1. Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1. Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made to
the Assignor, addressed as set forth in Section 9 hereof, at least ten (10) days
---------
prior to any such public sale or the time after which any such private sale or
other disposition may be made.
-6-
<PAGE>
7.2. Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to perform or pay in
this Assignment and the Assignor shall reimburse the Agent for any amounts paid
by the Agent pursuant to this Section 7.2. The Assignor's obligation to
-----------
reimburse the Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
7.3. Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the United States Patent and Trademark Office or otherwise which are necessary
or desirable in the Agent's sole discretion to perfect and to maintain the
perfection and priority of the Agent's and Secured Creditors' security interest
in the Collateral; (ii) so long as an Event of Default shall have occurred and
is continuing, to endorse and collect any cash proceeds of the Collateral; or
(iii) to file a carbon, photographic or other reproduction of this Assignment or
any financing statement with respect to the Collateral as a financing statement
in such offices as the Agent in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4. Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Lenders
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of the Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5. Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6. Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
-7-
<PAGE>
7.7. Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights or obligations under
this Assignment or any interest herein, without the prior written consent of the
Agent and the Secured Creditors.
7.8. Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9. Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State authority in respect of this Assignment shall be paid by the Assignor,
together with interest and penalties, if any. The Assignor shall reimburse (a)
the Agent for any and all reasonable out-of-pocket expenses and internal charges
(including reasonable attorneys', auditors' and accountants' fees and reasonable
time charges of attorneys, paralegals, auditors and accountants who may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Assignment and in the administration, collection, preservation or sale of
the Collateral (including the reasonable expenses and charges associated with
any periodic or special audit of the Collateral), and (b) the Agent and each
Secured Creditor for any and all reasonable out-of-pocket expenses and internal
charges (including reasonable attorneys', auditors' and accountants' fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who
may be employees of the Agent or such Secured Creditor) paid or incurred by the
Agent or such Secured Creditor in connection with the collection and enforcement
of this Assignment.
7.10. Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11. Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12. Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
-8-
<PAGE>
7.13. Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature, imposed on, incurred by or asserted against the Agent or any Secured
Creditor, or its successors, assigns, agents and employees, in any way relating
to or arising out of this Assignment, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (other than liability
resulting from the gross negligence or wilful misconduct of the Agent or any
such Secured Creditor).
7.14. Releases. Upon termination of this Assignment in accordance with the
--------
provisions of Section 7.11 hereof, the Agent and the Secured Creditors shall, at
------------
the Assignor's request and expense, execute such releases as the Assignor may
reasonably request, in form and upon terms acceptable to the Agent and the
Secured Creditors in all respects.
7.15. Waivers. Except to the extent expressly otherwise provided herein or
-------
in any Secured Debt Agreement, the Assignor waives, to the extent permitted by
applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17. CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS AND
TRADEMARKS.
7.18. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUDNING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
-9-
<PAGE>
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article X of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Agent hereunder.
9. NOTICES.
-------
9.1. Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor in accordance
with the Guaranty, (ii) in the case of the Agent, and each Lender, in accordance
the Credit Agreement, (iii) in the case of a L/C Creditor in accordance with the
relevant Secured Letter of Credit and (iv) in the case of a Swap Creditor, in
accordance with the relevant Secured Swap Contract.
9.2. Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set forth
above.
KF-DELAWARE, INC., as Assignor
By /s/ Adam J. Murphy
---------------------------
Name: Adam J. Murphy
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
---------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Trademark Assignment was executed and acknowledged before me
this 12 day of March, 1998 by Adam Murphy, personally known to me to be the Vice
President of KF-Delaware, Inc., a Delaware corporation, on behalf of such
corporation.
/s/ Janet Foley
-------------------------------------
NOTARY PUBLIC
My Commission Expires: April 30, 2000
---------------
(SEAL)
<PAGE>
EXHIBIT A
---------
TRADEMARKS
U.S. Application
Registration or Registered Date of Date (if not yet
Serial No. Mark Issuance Expiry Date issued)
---------- ---- -------- ----------- ------
None
<PAGE>
EXHIBIT B
---------
LICENSES
Date Parties Subject of License Term
---- ------- ------------------ ----
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
KF-DELAWARE, INC.
364 Valley Road
Warrington, Bucks County, Pennsylvania
<PAGE>
Exhibit 10.40
COPYRIGHT ASSIGNMENT - COMPANY
------------------------------
This Copyright Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
----------
between IMPAC GROUP, INC., a Delaware corporation (the "Assignor"), and BANK OF
--------
AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, as agent (the "Agent") for the
-----
Secured Creditors (as hereinafter defined). Unless otherwise defined in Section
1, terms defined in the Credit Agreement (as defined below) are used herein as
therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among the Assignor, AGI Incorporated ("AGI"), Klearfold, Inc. ("Klearfold"; and
--- ---------
together with AGI, each a "L/C Borrower" and collectively, the "L/C Borrowers")
------------ -------------
the financial institutions from time to time party thereto (the "Lenders") and
-------
the Agent (as from time to time restated, amended or modified, the "Credit
------
Agreement"), the Lenders have agreed to extend certain credit to the Assignor
- ---------
and the L/C Borrowers;
B. Pursuant to the Guaranty-Company, dated as of even date herewith (as
from time to time amended or modified, the "Guaranty"), the Assignor has
--------
guaranteed to the Secured Creditors the payment when due of all obligations and
liabilities of the L/C Borrowers under or with respect to the Secured Debt
Agreements (as defined below) to which such L/C Borrower is a party;
C. The Assignor may from time to time be an account party to one or more
Swap Contracts relating to the Revolving Loans (each such Swap Contract with a
Swap Creditor (as defined below), a "Secured Swap Contract") with Bank of
---------------------
America National Trust & Savings Association ("BofA"), in its individual
----
capacity, any Lender or syndicate of financial institutions organized by BofA,
or an affiliate of BofA, or any Lender (even if BofA or any such Lender ceases
to be a Lender under the Credit Agreement for any reason) and any institution
that participates in, and in each case their subsequent assigns, such Secured
Swap Contract (collectively, the "Swap Creditors"); and
--------------
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
---------------------------
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
------------------------
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
---
Creditors"); and
- ---------
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignor grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1. General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it in the Recitals.
-------
"Copyrights" has the meaning ascribed to it in Section 2.
---------- ---------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee
-2-
<PAGE>
or subcontractor thereof, of products or services sold by or under the authority
of the Assignor in connection with the Copyrights or Licenses.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as
------------------- -----------
defined in the Credit Agreement, (ii) all "Obligations" as defined in the
-----------
Guaranty, (iii) the payment when due of all obligations of the Assignor to Swap
Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by the Assignor and
(iv) the payment when due of all obligations of the Assignor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the Assignor and the Agent, as the same may be restated, amended
or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign copyrights, including, without
limitation, copyrights listed on Exhibit A hereto, and applications
---------
therefor and renewals thereof and all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect to all
United States and foreign copyrights including, without limitation, damages
and payments for past and future infringements thereof (all of the
foregoing are sometimes hereinafter individually and/or collectively
referred to as the "Copyrights");
----------
-3-
<PAGE>
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any copyright license agreements with any other party, whether
the Assignor is a licensee or licensor under any such license agreement,
including, without limitation, those copyright license agreements listed on
Exhibit B attached hereto and made a part hereof, and the right to prepare
---------
for sale and sell any and all inventory now or hereafter owned by the
Assignor and now or hereafter covered by such licenses (all of the
foregoing are hereinafter referred to collectively as the "Licenses");
--------
(c) the Related Documents; and
(d) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1. Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2. No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3. Registrations. The Assignor has duly and properly applied for
-------------
registration of the Copyrights listed in Exhibit A hereto as indicated thereon
---------
in the United States Copyright Office.
3.4. Complete Listing. The Copyrights and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Copyrights and Licenses
of the Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
4.1. Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Copyrights and Licenses and, to that
end, shall maintain the quality of any and all of its products or services
bearing the trademarks or service marks included in such Copyrights or Licenses
consistent with the quality of such products and services of such Copyrights as
of the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2. Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any
-4-
<PAGE>
Copyrights and Licenses as described above shall be worldwide, to the extent
possessed by the Assignor, and without any liability for royalties or other
related charges from the Agent or any Secured Creditor to the Assignor. The term
of the assignments and grants of security interests granted herein shall extend
until the expiration of each of the respective Copyrights and Licenses assigned
or pledged hereunder, or until the Secured Obligations have been indefeasibly
paid in full, no commitment by the Agent or any Secured Creditor exists that
could give rise to any Secured Obligations and the Secured Debt Agreements and
this Assignment have been terminated.
4.3. Duties of Assignor. The Assignor shall have the duty (a) to
------------------
prosecute diligently any application to register the Copyrights pending as of
the date hereof or thereafter until all Secured Obligations have been
indefeasibly paid in full, (b) to make application on material Copyrights, as
appropriate or as requested by the Agent, except where failure to do so would
have a Material Adverse Effect and (c) to preserve and maintain all rights in
all applications to register material Copyrights, except where failure to do so
would have a Material Adverse Effect. Any expenses incurred in connection with
such applications shall be borne by the Assignor. The Assignor shall not abandon
any right to file an application to register material Copyrights without the
prior written consent of the Agent.
4.4. Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Copyrights.
4.5. Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Copyright Office or any agency of any state or any court regarding
the Assignor's right, title and interest in any material Copyright or the
Assignor's right to register any material Copyright.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1. Remedies. In the event that an Event of Default has occurred and
--------
is continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any exchange, broker's board or at any of the Agent's offices
or elsewhere upon such terms and conditions as the Agent may deem advisable and
at such prices as the Agent may deem best, for any combination of cash or on
credit or for future delivery without assumption of any credit risk, with the
right to the Agent or any Secured Creditor upon any such sale or sales or
dispositions, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in the Assignor,
which right or equity is hereby expressly waived and released.
-5-
<PAGE>
5.2. Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude other or further
exercise thereof or the exercise of any other right or remedy, and no waiver,
amendment or other variation of the terms, conditions or provisions of this
Assignment whatsoever shall be valid unless in writing signed by the Agent and
consented to by the Secured Creditors, and then only to the extent specifically
set forth in such writing.
6. PROCEEDS.
--------
6.1. Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within ten (10)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
----------------------
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1. Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
7.2. Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to perform or pay in
this Assignment and the Assignor shall reimburse the Agent for any amounts paid
by the Agent pursuant to this Section 7.2. The Assignor's obligation to
-----------
reimburse the Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
-6-
<PAGE>
7.3. Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the United States Copyright Office or otherwise which are necessary or desirable
in the Agent's sole discretion to perfect and to maintain the perfection and
priority of the Agent's and Secured Creditors' security interest in the
Collateral; (ii) so long as an Event of Default shall have occurred and is
continuing, to endorse and collect any cash proceeds of the Collateral; or (iii)
to file a carbon, photographic or other reproduction of this Assignment or any
financing statement with respect to the Collateral as a financing statement in
such offices as the Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4. Specific Performance of Certain Covenants. The Assignor
-----------------------------------------
acknowledges and agrees that a breach of any of the covenants contained in
Sections 4.4 and 7.5 hereof will cause irreparable injury to the Agent and the
- ------------ ---
Secured Lenders and that the Agent and the Secured Creditors have no adequate
remedy at law in respect of such breaches and therefore agree, without limiting
the right of the Agent or the Secured Creditors to seek and obtain specific
performance of other obligations of the Assignor contained in this Assignment,
that the covenants of the Assignor contained in the Sections referred to in this
Section 7.4 shall be specifically enforceable against the Assignor.
- -----------
7.5. Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6. Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
7.7. Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights or obligations under
this Assignment or any interest herein, without the prior written consent of the
Agent and the Secured Creditors.
7.8. Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
-7-
<PAGE>
7.9. Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State authority in respect of this Assignment shall be paid by the Assignor,
together with interest and penalties, if any. The Assignor shall reimburse (a)
the Agent for any and all reasonable out-of-pocket expenses and internal charges
(including reasonable attorneys', auditors' and accountants' fees and reasonable
time charges of attorneys, paralegals, auditors and accountants who may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Assignment and in the administration, collection, preservation or sale of
the Collateral (including the reasonable expenses and charges associated with
any periodic or special audit of the Collateral), and (b) the Agent and each
Secured Creditor for any and all reasonable out-of-pocket expenses and internal
charges (including reasonable attorneys', auditors' and accountants' fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who
may be employees of the Agent or such Secured Creditor) paid or incurred by the
Agent or such Secured Creditor in connection with the collection and enforcement
of this Assignment.
7.10. Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11. Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12. Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
7.13. Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature, imposed on, incurred by or asserted against the Agent or any Secured
Creditor, or its successors, assigns, agents and employees, in any way relating
to or arising out of this Assignment, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (other than
-8-
<PAGE>
liability resulting from the gross negligence or wilful misconduct of the Agent
or any such Secured Creditor).
7.14. Releases. Upon termination of this Assignment in accordance with
--------
the provisions of Section 7.11 hereof, the Agent and the Secured Creditors
------------
shall, at the Assignor's request and expense, execute such releases as the
Assignor may reasonably request, in form and upon terms acceptable to the Agent
and the Secured Creditors in all respects.
7.15. Waivers. Except to the extent expressly otherwise provided herein
-------
or in any Secured Debt Agreement, the Assignor waives, to the extent permitted
by applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17. CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS AND COPYRIGHTS.
7.18. WAIVER OF JURY TRIAL ALL PARTIES HERETO HEREBY WAIVE TRIAL BY
--------------------
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article X of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Agent hereunder.
-9-
<PAGE>
9. NOTICES.
-------
9.1. Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor and each Lender,
in accordance with the Credit Agreement, (ii) in the case of a L/C Creditor, in
accordance with the relevant Secured Letter of Credit and (iii) in the case of a
Swap Creditor, in accordance with the relevant Secured Swap Contract.
9.2. Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set forth
above.
IMPAC GROUP, INC., as Assignor
By /s/ David C. Underwood
------------------------------
Name: David C. Underwood
Title: CFO
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Copyright Assignment was executed and acknowledged before me
this 12th day of March 1998 by David Underwood, personally known to me to be
the Treasurer & Secretary of IMPAC GROUP, INC., a Delaware corporation, on
behalf of such corporation.
/s/ Janet Foley
-------------------------------------
NOTARY PUBLIC
My Commission Expires: April 30, 2000
(SEAL)
<PAGE>
EXHIBIT A
---------
COPYRIGHTS
Registration Date of
No. Issuance Title
--- -------- -----
None
<PAGE>
EXHIBIT B
---------
LICENSES
Date Parties Subject of License Term
- ---- ------- ------------------ ----
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
IMPAC Group, Inc.
1950 N. Ruby Street
Melrose Park, Illinois 60160
<PAGE>
Exhibit 10.41
COPYRIGHT ASSIGNMENT - AGI
--------------------------
This Copyright Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
between AGI INCORPORATED (the "Assignor") and BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors (as
hereinafter defined). Unless otherwise defined in Section 1, terms defined in
the Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), the Assignor, Klearfold, Inc.
-------
(("Klearfold"), and together with the Assignor, each a "L/C Borrower" and
collectively, the "L/C Borrowers"), the financial institutions from time to time
party thereto (the "Lenders") and the Agent (as from time to time restated,
amended or modified, the "Credit Agreement"), the Lenders have agreed to extend
certain credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), each L/C Borrower, including the
Assignor, has jointly and severally guaranteed to the Secured Creditors the
payment when due of all obligations and liabilities of the Company under or with
respect to the Secured Debt Agreements (as defined below) to which the Company
is a party;
C. The Assignor may from time to time be an account party to one or more
Swap Contracts relating to the Revolving Loans (each such Swap Contract with a
Swap Creditor (as defined below), a "Secured Swap Contract") with Bank of
America National Trust & Savings Association ("BofA"), in its individual
capacity, any Lender or syndicate of financial institutions organized by BofA,
or an affiliate of BofA, or any Lender (even if BofA or any such Lender ceases
to be a Lender under the Credit Agreement for any reason) and any institution
that participates in, and in each case their subsequent assigns, such Secured
Swap Contract (collectively, the "Swap Creditors"); and
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05 L/C
Obligation with a L/C Creditor (as defined below), a "Secured Letter of Credit")
issued by BofA or a Lender, in each case in its individual capacity (even if
BofA or such Lender ceases to be a Lender under the Credit Agreement for any
reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors"); and
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignor grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1 General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it int he Recitals.
-------
"Copyrights" has the meaning ascribed to it in Section 2.
---------- ---------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee
-2-
<PAGE>
or subcontractor thereof, of products or services sold by or under the authority
of the Assignor in connection with the Copyrights or Licenses.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Credit Agreement, (ii) all "Obligations" as defined in the
Guaranty, (iii) the payment when due of all obligations of the Assignor to Swap
Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by the Assignor and
(iv) the payment when due of all obligations of the Assignor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the L/C Borrowers, including the Assignor, and the Agent, as the
same may be restated, amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign copyrights, including, without
limitation, copyrights listed on Exhibit A hereto, and applications
---------
therefor and renewals thereof and all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect to all
United States and foreign copyrights including, without limitation, damages
and payments for past and future infringements thereof (all of the
foregoing are sometimes hereinafter individually and/or collectively
referred to as the "Copyrights");
----------
-3-
<PAGE>
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any copyright license agreements with any other party, whether
the Assignor is a licensee or licensor under any such license agreement,
including, without limitation, those copyright license agreements listed on
Exhibit B attached hereto and made a part hereof, and the right to prepare
---------
for sale and sell any and all inventory now or hereafter owned by the
Assignor and now or hereafter covered by such licenses (all of the
foregoing are hereinafter referred to collectively as the "Licenses");
(c) the Related Documents; and
(d) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1 Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2 No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3 Registrations. The Assignor has duly and properly applied for
-------------
registration of the Copyrights listed in Exhibit A hereto as indicated thereon
---------
in the United States Copyright Office.
3.4 Complete Listing. The Copyrights and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Copyrights and Licenses
of the Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
4.1 Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Copyrights and Licenses and, to that
end, shall maintain the quality of any and all of its products or services
bearing the trademarks or service marks included in such Copyrights or Licenses
consistent with the quality of such products and services of such marks as of
the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2 Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Copyrights and Licenses as described
above shall be worldwide, to the extent possessed by the
-4-
<PAGE>
Assignor, and without any liability for royalties or other related charges from
the Agent or any Secured Creditor to the Assignor. The term of the assignments
and grants of security interests granted herein shall extend until the
expiration of each of the respective Copyrights and Licenses assigned or pledged
hereunder, or until the Secured Obligations have been indefeasibly paid in full,
no commitment by the Agent or any Secured Creditor exists that could give rise
to any Secured Obligations and the Secured Debt Agreements and this Assignment
have been terminated.
4.3 Duties of Assignor. The Assignor shall have the duty (a) to prosecute
------------------
diligently any application to register the Copyrights pending as of the date
hereof or thereafter until all Secured Obligations have been indefeasibly paid
in full, (b) to make application on material Copyrights, as appropriate or as
requested by the Agent, except where failure to do so would have a Material
Adverse Effect, and (c) to preserve and maintain all rights in all applications
to register material Copyrights except where failure to do so would have a
Material Adverse Effect. Any expenses incurred in connection with such
applications shall be borne by the Assignor. The Assignor shall not abandon any
right to file an application to register material Copyrights without the prior
written consent of the Agent.
4.4 Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Copyrights.
4.5 Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Copyright Office or any agency of any state or any court regarding
the Assignor's right, title and interest in any material Copyright or the
Assignor's right to register any material Copyright.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1 Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any exchange, broker's board or at any of the Agent's offices
or elsewhere upon such terms and conditions as the Agent may deem advisable and
at such prices as the Agent may deem best, for any combination of cash or on
credit or for future delivery without assumption of any credit risk, with the
right to the Agent or any Secured Creditor upon any such sale or sales or
dispositions, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in the Assignor,
which right or equity is hereby expressly waived and released.
5.2 Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or
-5-
<PAGE>
remedy or be construed to be a waiver of any Default or Event of Default or an
acquiescence therein, and any single or partial exercise of any such right or
remedy shall not preclude other or further exercise thereof or the exercise of
any other right or remedy, and no waiver, amendment or other variation of the
terms, conditions or provisions of this Assignment whatsoever shall be valid
unless in writing signed by the Agent and consented to by the Secured Creditors,
and then only to the extent specifically set forth in such writing.
6. PROCEEDS.
--------
6.1 Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2 Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1 Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
7.2 Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to perform or pay in
this Assignment and the Assignor shall reimburse the Agent for any amounts paid
by the Agent pursuant to this Section 7.2. The Assignor's obligation to
-----------
reimburse the Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
7.3 Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute
-6-
<PAGE>
on behalf of the Assignor as debtor and to file financing statements and other
documents with the United States Copyright Office or otherwise which are
necessary or desirable in the Agent's sole discretion to perfect and to maintain
the perfection and priority of the Agent's and Secured Creditors' security
interest in the Collateral; (ii) so long as an Event of Default shall have
occurred and is continuing, to endorse and collect any cash proceeds of the
Collateral; or (iii) to file a carbon, photographic or other reproduction of
this Assignment or any financing statement with respect to the Collateral as a
financing statement in such offices as the Agent in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and priority of
the Agent's and the Secured Creditors' security interest in the Collateral. At
any time and from time to time after the Secured Obligations have been declared
or become due and payable in accordance with the Secured Debt Agreements, the
Assignor authorizes the Agent to collect, endorse and apply the proceeds of any
Collateral received by the Agent to the Secured Obligations as provided in
Section 6 hereof.
- ---------
7.4 Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Lenders
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of the Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5 Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6 Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
7.7 Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights or obligations under
this Assignment or any interest herein, without the prior written consent of the
Agent and the Secured Creditors.
7.8 Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9 Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or
-7-
<PAGE>
net income or profits arising out of this Assignment) payable or ruled payable
by any Federal or State authority in respect of this Assignment shall be paid by
the Assignor, together with interest and penalties, if any. The Assignor shall
reimburse (a) the Agent for any and all reasonable out-of-pocket expenses and
internal charges (including reasonable attorneys', auditors' and accountants'
fees and reasonable time charges of attorneys, paralegals, auditors and
accountants who may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, execution, delivery, administration, collection
and enforcement of this Assignment and in the administration, collection,
preservation or sale of the Collateral (including the reasonable expenses and
charges associated with any periodic or special audit of the Collateral), and
(b) the Agent and each Secured Creditor for any and all reasonable out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of the Agent or such Secured Creditor) paid
or incurred by the Agent or such Secured Creditor in connection with the
collection and enforcement of this Assignment.
7.10 Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11 Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12 Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
7.13 Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature, imposed on, incurred by or asserted against the Agent or any Secured
Creditor, or its successors, assigns, agents and employees, in any way relating
to or arising out of this Assignment, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (other than liability
resulting from the gross negligence or wilful misconduct of the Agent or any
such Secured Creditor).
-8-
<PAGE>
7.14 Releases. Upon termination of this Assignment in accordance with the
--------
provisions of Section 7.11 hereof, the Agent and the Secured Creditors shall, at
------------
the Assignor's request and expense, execute such releases as the Assignor may
reasonably request, in form and upon terms acceptable to the Agent and the
Secured Creditors in all respects.
7.15 Waivers. Except to the extent expressly otherwise provided herein or
-------
in any Secured Debt Agreement, the Assignor waives, to the extent permitted by
applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16 Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17 CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS AND
COPYRIGHTS.
7.18 WAIVER OF JURY TRIAL ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN
--------------------
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
7.19 Marshaling. Neither the Agent nor any Secured Creditor shall be
----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article X of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Agent hereunder.
9. NOTICES.
-------
9.1 Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor and each Lender,
in accordance with the Credit Agreement, (ii) in the case of a L/C Creditor, in
accordance with the relevant Secured Letter of
-9-
<PAGE>
Credit and (iii) in the case of a Swap Creditor, in accordance with the relevant
Secured Swap Contract.
9.2 Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set
forth above.
AGI INCORPORATED, as Assignor
By /s/ David C. Underwood
-----------------------------------------
Name: David C. Underwood
Title: CFO
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
-----------------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Copyright Assignment was executed and acknowledged before me
this 12th day of March, 1998 by David Underwood, personally known to me to be
the CFO of AGI INCORPORATED, an Illinois corporation, on behalf of such
corporation.
/s/ Anna Ferraro
---------------------------------------
NOTARY PUBLIC
My Commission Expires: August 31, 1998
(SEAL)
<PAGE>
EXHIBIT A
---------
COPYRIGHTS
Registration Date of
No. Issuance Title
--- -------- -----
None
<PAGE>
EXHIBIT B
---------
LICENSES
Date Parties Subject of License Term
---- ------- ------------------ ----
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
364 Valley Road
Warrington, Bucks County
Pennsylvania
<PAGE>
Exhibit 10.42
COPYRIGHT ASSIGNMENT - KLEARFOLD
--------------------------------
This Copyright Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
between KLEARFOLD, INC. (the "Assignor") and BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors (as
hereinafter defined). Unless otherwise defined in Section 1, terms defined in
the Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), the Assignor, AGI Incorporated
-------
(("AGI"), and together with the Assignor, each a "L/C Borrower" and
collectively, the "L/C Borrowers"), the financial institutions from time to time
party thereto (the "Lenders") and the Agent (as from time to time restated,
amended or modified, the "Credit Agreement"), the Lenders have agreed to extend
certain credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), each L/C Borrower, including the
Assignor, has jointly and severally guaranteed to the Secured Creditors the
payment when due of all obligations and liabilities of the Company under or
with respect to the Secured Debt Agreements (as defined below) to which the
Company is a party;
C. The Assignor may from time to time be an account party to one or more
Swap Contracts relating to the Revolving Loans (each such Swap Contract with a
Swap Creditor (as defined below), a "Secured Swap Contract") with Bank of
America National Trust & Savings Association ("BofA"), in its individual
capacity, any Lender or syndicate of financial institutions organized by BofA,
or an affiliate of BofA, or any Lender (even if BofA or any such Lender ceases
to be a Lender under the Credit Agreement for any reason) and any institution
that participates in, and in each case their subsequent assigns, such Secured
Swap Contract (collectively, the "Swap Creditors"); and
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05
L/C Obligation with a L/C Creditor (as defined below), a "Secured Letter of
Credit") issued by BofA or a Lender, in each case in its individual capacity
(even if BofA or such Lender ceases to be a Lender under the Credit Agreement
for any reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors"); and
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignor grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1. General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it int he Recitals.
-------
"Copyrights" has the meaning ascribed to it in Section 2.
---------- ---------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Lenders" has the meaning ascribed to it in the Recitals.
-------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee
-2-
<PAGE>
or subcontractor thereof, of products or services sold by or under the authority
of the Assignor in connection with the Copyrights or Licenses.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Credit Agreement, (ii) all "Obligations" as defined in the
Guaranty, (iii) the payment when due of all obligations of the Assignor to Swap
Creditors pursuant to any Secured Swap Contract and the due performance and
compliance with all the terms of the Secured Swap Contracts by the Assignor and
(iv) the payment when due of all obligations of the Assignor to L/C Creditors
pursuant to any Secured Letter of Credit and the due performance and compliance
with all the terms of the Secured Letter of Credit by the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the L/C Borrowers, including the Assignor, and the Agent, as the
same may be restated, amended or modified from time to time .
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign copyrights, including, without
limitation, copyrights listed on Exhibit A hereto, and applications
---------
therefor and renewals thereof and all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect to all
United States and foreign copyrights including, without limitation, damages
and payments for past and future infringements thereof (all of the
foregoing are sometimes hereinafter individually and/or collectively
referred to as the "Copyrights");
----------
-3-
<PAGE>
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any copyright license agreements with any other party, whether
the Assignor is a licensee or licensor under any such license agreement,
including, without limitation, those copyright license agreements listed on
Exhibit B attached hereto and made a part hereof, and the right to prepare
---------
for sale and sell any and all inventory now or hereafter owned by the
Assignor and now or hereafter covered by such licenses (all of the
foregoing are hereinafter referred to collectively as the "Licenses");
(c) the Related Documents; and
(d) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1. Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2. No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3. Registrations. The Assignor has duly and properly applied for
-------------
registration of the Copyrights listed in Exhibit A hereto as indicated thereon
---------
in the United States Copyright Office.
3.4. Complete Listing. The Copyrights and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Copyrights and Licenses
of the Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
4.1. Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Copyrights and Licenses and, to that
end, shall maintain the quality of any and all of its products or services
bearing the trademarks or service marks included in such Copyrights or Licenses
consistent with the quality of such products and services of such marks as of
the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2. Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Copyrights and Licenses as described
above shall be worldwide, to the extent possessed by the
-4-
<PAGE>
Assignor, and without any liability for royalties or other related charges from
the Agent or any Secured Creditor to the Assignor. The term of the assignments
and grants of security interests granted herein shall extend until the
expiration of each of the respective Copyrights and Licenses assigned or pledged
hereunder, or until the Secured Obligations have been indefeasibly paid in full,
no commitment by the Agent or any Secured Creditor exists that could give rise
to any Secured Obligations and the Secured Debt Agreements and this Assignment
have been terminated.
4.3. Duties of Assignor. The Assignor shall have the duty (a) to prosecute
------------------
diligently any application to register the Copyrights pending as of the date
hereof or thereafter until all Secured Obligations have been indefeasibly paid
in full, (b) to make application on material Copyrights, as appropriate or as
requested by the Agent, except where failure to do so would have a Material
Adverse Effect, and (c) to preserve and maintain all rights in all applications
to register material Copyrights except where failure to do so would have a
Material Adverse Effect. Any expenses incurred in connection with such
applications shall be borne by the Assignor. The Assignor shall not abandon any
right to file an application to register material Copyrights without the prior
written consent of the Agent.
4.4. Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Copyrights.
4.5. Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Copyright Office or any agency of any state or any court regarding
the Assignor's right, title and interest in any material Copyright or the
Assignor's right to register any material Copyright.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1. Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any exchange, broker's board or at any of the Agent's offices
or elsewhere upon such terms and conditions as the Agent may deem advisable and
at such prices as the Agent may deem best, for any combination of cash or on
credit or for future delivery without assumption of any credit risk, with the
right to the Agent or any Secured Creditor upon any such sale or sales or
dispositions, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in the Assignor,
which right or equity is hereby expressly waived and released.
5.2. Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or
-5-
<PAGE>
remedy or be construed to be a waiver of any Default or Event of Default or an
acquiescence therein, and any single or partial exercise of any such right or
remedy shall not preclude other or further exercise thereof or the exercise of
any other right or remedy, and no waiver, amendment or other variation of the
terms, conditions or provisions of this Assignment whatsoever shall be valid
unless in writing signed by the Agent and consented to by the Secured Creditors,
and then only to the extent specifically set forth in such writing.
6. PROCEEDS.
--------
6.1. Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1. Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
7.2. Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to perform or pay in
this Assignment and the Assignor shall reimburse the Agent for any amounts paid
by the Agent pursuant to this Section 7.2. The Assignor's obligation to
-----------
reimburse the Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
7.3. Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute
-6-
<PAGE>
on behalf of the Assignor as debtor and to file financing statements and other
documents with the United States Copyright Office or otherwise which are
necessary or desirable in the Agent's sole discretion to perfect and to maintain
the perfection and priority of the Agent's and Secured Creditors' security
interest in the Collateral; (ii) so long as an Event of Default shall have
occurred and is continuing, to endorse and collect any cash proceeds of the
Collateral; or (iii) to file a carbon, photographic or other reproduction of
this Assignment or any financing statement with respect to the Collateral as a
financing statement in such offices as the Agent in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and priority of
the Agent's and the Secured Creditors' security interest in the Collateral. At
any time and from time to time after the Secured Obligations have been declared
or become due and payable in accordance with the Secured Debt Agreements, the
Assignor authorizes the Agent to collect, endorse and apply the proceeds of any
Collateral received by the Agent to the Secured Obligations as provided in
Section 6 hereof.
- ---------
7.4. Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Lenders
- ---
and that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of the Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5. Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6. Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
7.7. Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights or obligations under
this Assignment or any interest herein, without the prior written consent of the
Agent and the Secured Creditors.
7.8. Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9. Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or
-7-
<PAGE>
net income or profits arising out of this Assignment) payable or ruled payable
by any Federal or State authority in respect of this Assignment shall be paid by
the Assignor, together with interest and penalties, if any. The Assignor shall
reimburse (a) the Agent for any and all reasonable out-of-pocket expenses and
internal charges (including reasonable attorneys', auditors' and accountants'
fees and reasonable time charges of attorneys, paralegals, auditors and
accountants who may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, execution, delivery, administration, collection
and enforcement of this Assignment and in the administration, collection,
preservation or sale of the Collateral (including the reasonable expenses and
charges associated with any periodic or special audit of the Collateral), and
(b) the Agent and each Secured Creditor for any and all reasonable out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of the Agent or such Secured Creditor) paid
or incurred by the Agent or such Secured Creditor in connection with the
collection and enforcement of this Assignment.
7.10. Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11. Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12. Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
7.13. Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature, imposed on, incurred by or asserted against the Agent or any Secured
Creditor, or its successors, assigns, agents and employees, in any way relating
to or arising out of this Assignment, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (other than liability
resulting from the gross negligence or wilful misconduct of the Agent or any
such Secured Creditor).
-8-
<PAGE>
7.14. Releases. Upon termination of this Assignment in accordance with the
--------
provisions of Section 7.11 hereof, the Agent and the Secured Creditors shall, at
------------
the Assignor's request and expense, execute such releases as the Assignor may
reasonably request, in form and upon terms acceptable to the Agent and the
Secured Creditors in all respects.
7.15. Waivers. Except to the extent expressly otherwise provided herein or
-------
in any Secured Debt Agreement, the Assignor waives, to the extent permitted by
applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17 CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS AND
COPYRIGHTS.
7.18 WAIVER OF JURY TRIAL ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN
--------------------
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
7.19. Marshaling. Neither the Agent nor any Secured Creditor shall be under
----------
any obligation to marshall any assets in favor of the Assignor or any other
party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article X of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Agent hereunder.
9. NOTICES.
-------
9.1. Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor and each Lender,
in accordance with the Credit Agreement, (ii) in the case of a L/C Creditor, in
accordance with the relevant Secured Letter of
-9-
<PAGE>
Credit and (iii) in the case of a Swap Creditor, in accordance with the relevant
Secured Swap Contract.
9.2. Change in Address for Notices. The Assignor, the Agent or any Secured
-----------------------------
Creditor may change the address for service of notice upon it by a notice in
writing to the other.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be executed
by their duly authorized representatives as of the date first set forth above.
KLEARFOLD, INC., as Assignor
By /s/ David C. Underwood
--------------------------------------
Name: David C. Underwood
Title: CFO
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
--------------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Copyright Assignment was executed and acknowledged before me
this 12 day of March, 1998 by David Underwood, personally known to me to be
the CFO, Treasurer & Secretary of KLEARFOLD, INC., a Pennsylvania corporation,
on behalf of such corporation.
/s/ Anna Ferraro
--------------------------------------------
NOTARY PUBLIC
My Commission Expires: August 31, 1998
-------------------
(SEAL)
<PAGE>
EXHIBIT A
---------
COPYRIGHTS
Registration Date of
No. Issuance Title
----- -------- ------
None
<PAGE>
EXHIBIT B
---------
LICENSES
Date Parties Subject of License Term
- ---- ------- ------------------ ----
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
Klearfold, Inc.
364 Valley Road
Warrington, Bucks County, Pennsylvania
<PAGE>
Exhibit 10.43
COPYRIGHT ASSIGNMENT - KF-INTERNATIONAL
---------------------------------------
This Copyright Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
between KF-INTERNATIONAL, INC. (the "Assignor"), and BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors
(as hereinafter defined). Unless otherwise defined in Section 1, terms defined
in the Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), AGI Incorporated ("AGI"), Klearfold,
------- ---
Inc. ("Klearfold", and together with AGI, each a "L/C Borrower" and
--------- ------------
collectively, the "L/C Borrowers"), the financial institutions from time to time
-------------
party thereto (the "Lender") and the Agent (as from time to time restated,
amended or modified, the "Credit Agreement"), the Lender have agreed to extend
certain credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), the Assignor has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Company and the L/C Borrowers under or with
respect to the Secured Debt Agreements (as defined below) to which the Company
and the L/C Borrowers is a party;
C. The Assignor may from time to time be party to one or more Swap
Contracts relating to the Revolving Loans (each such Swap Contract with a Swap
Creditor (as defined below), a "Secured Swap Contract") with Bank of America
National Trust & Savings Association ("BofA"), in its individual capacity, any
Lender or syndicate of financial institutions organized by BofA, or an affiliate
of BofA or any Lender (even if BofA, or any such Lender ceases to be a Lender
under the Credit Agreement for any reason) and any institution that participates
in, and in each case their subsequent assigns, such Secured Swap Contract
(collectively, the "Swap Creditors"); and
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05
obligation with a L/C Creditor (as defined below), a "Secured Letter of
Credit") issued by BofA or a Lender, in each case in its individual capacity
(even if BofA or such Lender ceases to be a Lender under the Credit Agreement
for any reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
Creditors"); and
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignor grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1. General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it int he Recitals.
-------
"Copyrights" has the meaning ascribed to it in Section 2.
---------- ---------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lender" has the meaning ascribed to it in the Recitals.
------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee
-2-
<PAGE>
or subcontractor thereof, of products or services sold by or under the authority
of the Assignor in connection with the Copyrights or Licenses.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Guaranty, (ii) the payment when due of all obligations of the
Assignor to Swap Creditors pursuant to any Secured Swap Contract and the due
performance and compliance with all the terms of the Secured Swap Contracts by
the Assignor and (iii) the payment when due of all obligations of the Assignor
to L/C Creditors pursuant to any Secured Letter of Credit and the due
performance and compliance with all the terms of the Secured Letter of Credit by
the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the Subsidiary Guarantors, including the Assignor, and the
Agent, as the same may be restated, amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign copyrights, including, without
limitation, copyrights listed on Exhibit A hereto, and applications
---------
therefor and renewals thereof and all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect to all
United States and foreign copyrights including, without limitation, damages
and payments for past and future infringements thereof (all of the
foregoing are sometimes hereinafter individually and/or collectively
referred to as the "Copyrights");
----------
-3-
<PAGE>
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any copyright license agreements with any other party, whether
the Assignor is a licensee or licensor under any such license agreement,
including, without limitation, those copyright license agreements listed on
Exhibit B attached hereto and made a part hereof, and the right to prepare
---------
for sale and sell any and all inventory now or hereafter owned by the
Assignor and now or hereafter covered by such licenses (all of the
foregoing are hereinafter referred to collectively as the "Licenses");
(c) the Related Documents; and
(d) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1. Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2. No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3. Registrations. The Assignor has duly and properly applied for
-------------
registration of the Copyrights listed in Exhibit A hereto as indicated thereon
---------
in the United States Copyright Office.
3.4. Complete Listing. The Copyrights and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Copyrights and Licenses
of the Assignor and Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
4.1. Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Trademarks and Licenses and, to that
end, shall maintain the quality of any and all of its products or services
bearing the trademarks or service marks included in such Trademarks or Licenses
consistent with the quality of such products and services of such marks as of
the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2. Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Copyrights and Licenses as described
above shall be worldwide, to the extent possessed by the
-4-
<PAGE>
Assignor, and without any liability for royalties or other related charges from
the Agent or any Secured Creditor to the Assignor. The term of the assignments
and grants of security interests granted herein shall extend until the
expiration of each of the respective Copyrights and Licenses assigned or pledged
hereunder, or until the Secured Obligations have been indefeasibly paid in full,
no commitment by the Agent or any Secured Creditor exists that could give rise
to any Secured Obligations and the Secured Debt Agreements and this Assignment
have been terminated.
4.3. Duties of Assignor. The Assignor shall have the duty (a) to prosecute
------------------
diligently any application to register the Copyrights pending as of the date
hereof or thereafter until all Secured Obligations have been indefeasibly paid
in full, (b) to make application on Copyrights, as appropriate or as requested
by the Agent, except where failure to do so would have a Material Adverse
Effect, and (c) to preserve and maintain all rights in all applications to
register Copyrights, except where failure to do so would have a Material Advise
Effect. Any expenses incurred in connection with such applications shall be
borne by the Assignor. The Assignor shall not abandon any right to file an
application to register material Copyrights without the prior written consent of
the Agent.
4.4. Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Copyrights.
4.5. Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Copyright Office or any agency of any state or any court regarding
the Assignor's right, title and interest in any material Copyright or the
Assignor's right to register any material Copyright.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1. Remedies. In the event that an Event of Default has occurred and is
--------
continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any exchange, broker's board or at any of the Agent's offices
or elsewhere upon such terms and conditions as the Agent may deem advisable and
at such prices as the Agent may deem best, for any combination of cash or on
credit or for future delivery without assumption of any credit risk, with the
right to the Agent or any Secured Creditor upon any such sale or sales or
dispositions, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in the Assignor,
which right or equity is hereby expressly waived and released.
5.2. Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein,
-5-
<PAGE>
and any single or partial exercise of any such right or remedy shall not
preclude other or further exercise thereof or the exercise of any other right or
remedy, and no waiver, amendment or other variation of the terms, conditions or
provisions of this Assignment whatsoever shall be valid unless in writing signed
by the Agent and consented to by the Secured Creditors, and then only to the
extent specifically set forth in such writing.
6. PROCEEDS.
--------
6.1. Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1. Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
7.2. Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to perform or pay in
this Assignment and the Assignor shall reimburse the Agent for any amounts paid
by the Agent pursuant to this Section 7.2. The Assignor's obligation to
-----------
reimburse the Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
7.3. Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the
-6-
<PAGE>
United States Copyright Office or otherwise which are necessary or desirable in
the Agent's sole discretion to perfect and to maintain the perfection and
priority of the Agent's and Secured Creditors' security interest in the
Collateral; (ii) so long as an Event of Default shall have occurred and is
continuing to endorse and collect any cash proceeds of the Collateral; or (iii)
to file a carbon, photographic or other reproduction of this Assignment or any
financing statement with respect to the Collateral as a financing statement in
such offices as the Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4. Specific Performance of Certain Covenants. The Assignor acknowledges
-----------------------------------------
and agrees that a breach of any of the covenants contained in Sections 4.4 and
------------
7.5 hereof will cause irreparable injury to the Agent and the Secured Lender and
- ---
that the Agent and the Secured Creditors have no adequate remedy at law in
respect of such breaches and therefore agree, without limiting the right of the
Agent or the Secured Creditors to seek and obtain specific performance of other
obligations of the Assignor contained in this Assignment, that the covenants of
the Assignor contained in the Sections referred to in this Section 7.4 shall be
-----------
specifically enforceable against the Assignor.
7.5. Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6. Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
7.7. Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights or obligations under
this Assignment or any interest herein, without the prior written consent of the
Agent and the Secured Creditors.
7.8. Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9. Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State
-7-
<PAGE>
authority in respect of this Assignment shall be paid by the Assignor, together
with interest and penalties, if any. The Assignor shall reimburse (a) the Agent
for any and all reasonable out-of-pocket expenses and internal charges
(including reasonable attorneys', auditors' and accountants' fees and reasonable
time charges of attorneys, paralegals, auditors and accountants who may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Assignment and in the administration, collection, preservation or sale of
the Collateral (including the reasonable expenses and charges associated with
any periodic or special audit of the Collateral), and (b) the Agent and each
Secured Creditor for any and all reasonable out-of-pocket expenses and internal
charges (including reasonable attorneys', auditors' and accountants' fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who
may be employees of the Agent or such Secured Creditor) paid or incurred by the
Agent or such Secured Creditor in connection with the collection and enforcement
of this Assignment.
7.10. Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11. Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12. Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
7.13. Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature, imposed on, incurred by or asserted against the Agent or any Secured
Creditor, or its successors, assigns, agents and employees, in any way relating
to or arising out of this Assignment, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (other than liability
resulting from the gross negligence or wilful misconduct of the Agent or any
such Secured Creditor).
7.14. Releases. Upon termination of this Assignment in accordance with the
--------
provisions of Section 7.11 hereof, the Agent and the Secured Creditors shall, at
------------
the Assignor's request and
-8-
<PAGE>
expense, execute such releases as the Assignor may reasonably request, in form
and upon terms acceptable to the Agent and the Secured Creditors in all
respects.
7.15. Waivers. Except to the extent expressly otherwise provided herein or
-------
in any Secured Debt Agreement, the Assignor waives, to the extent permitted by
applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17. CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS AND
COPYRIGHTS.
7.18. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY JURY
--------------------
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article X of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Agent hereunder.
9. NOTICES.
-------
9.1. Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor in accordance
with the Guaranty, (ii) in the case of the Agent and each Lender, in accordance
with the Credit Agreement, (iii) in the case of a L/C Creditor, in accordance
with the relevant Secured Letter of Credit and (iv) in the case of a Swap
Creditor, in accordance with the relevant Secured Swap Contract.
-9-
<PAGE>
9.2. Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set
forth above.
KF-INTERNATIONAL, INC., as Assignor
By /s/ H. Scott Herrin
-----------------------------------------
Name: H. Scott Herrin
Title: Treasurer
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
-----------------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Copyright Assignment was executed and acknowledged before me
this 12th day of March, 1998 by H. Scott Herrin, personally known to me to be
the Treasurer of KF-INTERNATIONAL, INC., a U.S. Virgin Islands corporation, on
behalf of such corporation.
/s/ Janet Foley
-------------------------------------
NOTARY PUBLIC
My Commission Expires: April 30, 2000
(SEAL)
<PAGE>
EXHIBIT A
---------
COPYRIGHTS
Registration Date of
No. Issuance Title
----- --------- -------
None
<PAGE>
EXHIBIT B
---------
LICENSES
Date Parties Subject of License Term
---- ------- ------------------ ----
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
KF-INTERNATIONAL, INC.
364 Valley Road
Warrington, Bucks County
Pennsylvania
<PAGE>
Exhibit 10.44
COPYRIGHT ASSIGNMENT - KF-DELAWARE
----------------------------------
This Copyright Assignment (as the same may be restated, amended or modified
from time to time, this "Assignment") is dated as of March 12, 1998 by and
----------
between KF-DELAWARE, INC. (the "Assignor"), and BANK OF AMERICA NATIONAL TRUST &
--------
SAVINGS ASSOCIATION, as agent (the "Agent") for the Secured Creditors (as
-----
hereinafter defined). Unless otherwise defined in Section 1, terms defined in
the Credit Agreement (as defined below) are used herein as therein defined.
R E C I T A L S:
---------------
A. Pursuant to the Credit Agreement, dated as of even date herewith,
among IMPAC Group, Inc. (the "Company"), AGI Incorporated ("AGI"), Klearfold,
------- ---
Inc. ("Klearfold", and together with AGI, each a "L/C Borrower" and
--------- ------------
collectively, the "L/C Borrowers"), the financial institutions from time to time
-------------
party thereto (the "Lender") and the Agent (as from time to time restated,
------
amended or modified, the "Credit Agreement"), the Lender have agreed to extend
----------------
certain credit to the Company and the L/C Borrowers;
B. Pursuant to the Guaranty, dated as of even date herewith (as from time
to time amended or modified, the "Guaranty"), the Assignor has jointly and
--------
severally guaranteed to the Secured Creditors the payment when due of all
obligations and liabilities of the Company and the L/C Borrowers under or with
respect to the Secured Debt Agreements (as defined below) to which the Company
and the L/C Borrowers is a party;
C. The Assignor may from time to time be party to one or more Swap
Contracts relating to the Revolving Loans (each such Swap Contract with a Swap
Creditor (as defined below), a "Secured Swap Contract") with Bank of America
---------------------
National Trust & Savings Association ("BofA"), in its individual capacity, any
----
Lender or syndicate of financial institutions organized by BofA, or an affiliate
of BofA or any Lender (even if BofA, or any such Lender ceases to be a Lender
under the Credit Agreement for any reason) and any institution that participates
in, and in each case their subsequent assigns, such Secured Swap Contract
(collectively, the "Swap Creditors"); and
--------------
D. The Assignor may from time to time incur Indebtedness pursuant to
Section 8.05(i) of the Credit Agreement as an account party to one or more
letters of credit (a "Section 8.05 L/C Obligation") (each such Section 8.05
---------------------------
obligation with a L/C Creditor (as defined below), a "Secured Letter of
-----------------
Credit") issued by BofA or a Lender, in each case in its individual capacity
(even if BofA or such Lender ceases to be a Lender under the Credit Agreement
for any reason) and any institution that participates in, and in each case their
subsequent assigns, such Secured Letter of Credit (collectively, the "L/C
---
Creditors"); and
- ---------
<PAGE>
E. As a condition to entering into a Secured Debt Agreement and extending
credit under such Secured Debt Agreement, the Secured Creditors have required
that the Assignor grant to the Agent, for the ratable benefit of itself and the
Secured Creditors, a security interest in the Collateral (as defined below) on
the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS AND EFFECT.
----------------------
1.1. General Terms. The following shall have (unless otherwise provided
-------------
elsewhere in this Assignment) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of the terms
defined):
"Agent" has the meaning ascribed to it in the Preamble.
-----
"Assignment" has the meaning ascribed to it in the Preamble.
----------
"Assignor" has the meaning ascribed to it in the Preamble.
--------
"BofA" has the meaning ascribed to it in the Recitals.
----
"Collateral" has the meaning ascribed to it in Section 2.
---------- ---------
"Company" has the meaning ascribed to it in the Recitals.
-------
"Copyrights" has the meaning ascribed to it in Section 2.
---------- ---------
"Credit Agreement" has the meaning ascribed to it in the Recitals.
----------------
"Event of Default" means any Event of Default under, and as defined in, the
----------------
Credit Agreement, or any payment default, after any applicable grace period,
under any Secured Debt Agreement.
"Guaranty" has the meaning ascribed to it in the Recitals.
--------
"L/C Creditor" has the meaning ascribed to it in the Recitals.
------------
"Lender" has the meaning ascribed to it in the Recitals.
------
"Licenses" has the meaning ascribed to it in Section 2.
-------- ---------
"Related Documents" means, collectively, all documents and things in the
-----------------
Assignor's possession related to the production and sale by the Assignor, or any
Affiliate, Subsidiary, licensee
-2-
<PAGE>
or subcontractor thereof, of products or services sold by or under the authority
of the Assignor in connection with the Copyrights or Licenses.
"Section" means a numbered section of this Assignment, unless another
-------
document is specifically referenced.
"Secured Creditors" means, collectively, the Agent, each Lender, each L/C
-----------------
Creditor and each Swap Creditor.
"Secured Debt Agreements" means, collectively, the Credit Agreement and the
-----------------------
other Loan Documents, each Secured Letter of Credit and each Secured Swap
Contract.
"Secured Letter of Credit" has the meaning ascribed to it in the Recitals.
------------------------
"Secured Obligations" means, collectively, (i) all "Obligations" as
-------------------
defined in the Guaranty, (ii) the payment when due of all obligations of the
Assignor to Swap Creditors pursuant to any Secured Swap Contract and the due
performance and compliance with all the terms of the Secured Swap Contracts by
the Assignor and (iii) the payment when due of all obligations of the Assignor
to L/C Creditors pursuant to any Secured Letter of Credit and the due
performance and compliance with all the terms of the Secured Letter of Credit by
the Assignor.
"Secured Swap Contract" has the meaning ascribed to it in the Recitals.
---------------------
"Security Agreement" means the Security Agreement, dated as of even date
------------------
herewith, among the Subsidiary Guarantors, including the Assignor, and the
Agent, as the same may be restated, amended or modified from time to time.
"Swap Creditor" has the meaning ascribed to it in the Recitals.
-------------
2. GRANT OF SECURITY INTEREST.
--------------------------
The Assignor hereby grants to the Agent, for the benefit of itself and the
Secured Creditors, a security interest in all of the Assignor's right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising property described as follows (collectively, the "Collateral") to secure
----------
the complete and timely payment, performance and satisfaction of the Secured
Obligations:
(a) all United States and foreign copyrights, including, without
limitation, copyrights listed on Exhibit A hereto, and applications
---------
therefor and renewals thereof and all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect to all
United States and foreign copyrights including, without limitation, damages
and payments for past and future infringements thereof (all of the
foregoing are sometimes hereinafter individually and/or collectively
referred to as the "Copyrights");
----------
-3-
<PAGE>
(b) to the extent permitted by the relevant agreement but subject to
Section 9-318 of the Illinois Uniform Commercial Code, all rights under or
interest in any copyright license agreements with any other party, whether
the Assignor is a licensee or licensor under any such license agreement,
including, without limitation, those copyright license agreements listed on
Exhibit B attached hereto and made a part hereof, and the right to prepare
---------
for sale and sell any and all inventory now or hereafter owned by the
Assignor and now or hereafter covered by such licenses (all of the
foregoing are hereinafter referred to collectively as the "Licenses");
(c) the Related Documents; and
(d) all proceeds, including, without limitation, insurance proceeds,
of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Assignor represents and warrants to the Agent and the Secured Creditors
that:
3.1. Principal Location. As of the date hereof, the Assignor's mailing
------------------
address, and the location of its chief executive office and the books and
records relating to the Collateral are disclosed in Exhibit C hereto.
---------
3.2. No Other Names. The Assignor has not conducted business under any
--------------
name except the names in which it has executed this Assignment or as otherwise
disclosed pursuant to the Loan Documents.
3.3. Registrations. The Assignor has duly and properly applied for
-------------
registration of the Copyrights listed in Exhibit A hereto as indicated thereon
---------
in the United States Copyright Office.
3.4. Complete Listing. The Copyrights and Licenses set forth on the
----------------
Schedules hereto constitute, as of the date hereof, all Copyrights and Licenses
of the Assignor and Assignor.
4. COVENANTS.
---------
From the date of this Assignment, and thereafter until this Assignment is
terminated:
4.1. Preservation of Value. The Assignor agrees to protect and preserve
---------------------
the value and integrity of all material Trademarks and Licenses and, to that
end, shall maintain the quality of any and all of its products or services
bearing the trademarks or service marks included in such Trademarks or Licenses
consistent with the quality of such products and services of such marks as of
the date of this Assignment, in each case to the extent necessary for the
operation of its business.
4.2. Collateral Royalties; Term. The Assignor hereby agrees that any use
--------------------------
by the Agent, on behalf of itself and the Secured Creditors, during the
continuance of an Event of Default of any Copyrights and Licenses as described
above shall be worldwide, to the extent possessed by the
-4-
<PAGE>
Assignor, and without any liability for royalties or other related charges from
the Agent or any Secured Creditor to the Assignor. The term of the assignments
and grants of security interests granted herein shall extend until the
expiration of each of the respective Copyrights and Licenses assigned or pledged
hereunder, or until the Secured Obligations have been indefeasibly paid in full,
no commitment by the Agent or any Secured Creditor exists that could give rise
to any Secured Obligations and the Secured Debt Agreements and this Assignment
have been terminated.
4.3. Duties of Assignor. The Assignor shall have the duty (a) to
------------------
prosecute diligently any application to register the Copyrights pending as of
the date hereof or thereafter until all Secured Obligations have been
indefeasibly paid in full, (b) to make application on Copyrights, as appropriate
or as requested by the Agent, except where failure to do so would have a
Material Adverse Effect, and (c) to preserve and maintain all rights in all
applications to register Copyrights, except where failure to do so would have a
Material Advise Effect. Any expenses incurred in connection with such
applications shall be borne by the Assignor. The Assignor shall not abandon any
right to file an application to register material Copyrights without the prior
written consent of the Agent.
4.4. Delivery of Certificates. The Assignor shall deliver to the Agent
------------------------
copies of all existing and future official Certificates of Registration for the
Copyrights.
4.5. Notice of Proceedings. The Assignor shall promptly notify the Agent
---------------------
of the institution of, and any adverse determination in, any proceeding in the
United States Copyright Office or any agency of any state or any court regarding
the Assignor's right, title and interest in any material Copyright or the
Assignor's right to register any material Copyright.
5. WAIVERS, AMENDMENTS AND REMEDIES.
--------------------------------
5.1. Remedies. In the event that an Event of Default has occurred and
--------
is continuing, the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Assignor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, and upon the direction of the Secured Creditors shall,
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or forthwith sell, assign, give option or options to purchase,
contract to sell or otherwise dispose of and deliver said Collateral, or any
part thereof, in one or more portions at public or private sale or sales or
dispositions, at any exchange, broker's board or at any of the Agent's offices
or elsewhere upon such terms and conditions as the Agent may deem advisable and
at such prices as the Agent may deem best, for any combination of cash or on
credit or for future delivery without assumption of any credit risk, with the
right to the Agent or any Secured Creditor upon any such sale or sales or
dispositions, public or private, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in the Assignor,
which right or equity is hereby expressly waived and released.
5.2. Waivers and Amendments. No delay or omission of the Agent or any
----------------------
Secured Creditor to exercise any right or remedy granted under this Assignment
shall impair such right or remedy or be construed to be a waiver of any Default
or Event of Default or an acquiescence therein,
-5-
<PAGE>
and any single or partial exercise of any such right or remedy shall not
preclude other or further exercise thereof or the exercise of any other right or
remedy, and no waiver, amendment or other variation of the terms, conditions or
provisions of this Assignment whatsoever shall be valid unless in writing signed
by the Agent and consented to by the Secured Creditors, and then only to the
extent specifically set forth in such writing.
6. PROCEEDS.
--------
6.1. Special Collateral Account. After an Event of Default has occurred
--------------------------
and is continuing, all cash proceeds of the Collateral received by the Agent
shall be deposited in a special deposit account with the Agent and held there as
security for the Secured Obligations. The Agent shall invest any and all
available funds deposited in such special deposit account, within five (5)
business days after the date the relevant funds become available, in securities
issued as fully guaranteed or insured by the United States Government or any
agency thereof backed by the full faith and credit of the United States having
maturities of three (3) months from the date of acquisition thereof
(collectively, "Government Obligations"). The Assignor hereby acknowledges and
agrees that the Agent shall not have any liability with respect to, and the
Assignor hereby indemnifies the Agent against, any loss resulting from the
acquisition of the Government Obligation and the Agent shall not have any
obligation to monitor the trading activity of any such Governmental Obligations
on and after the acquisition thereof for the purpose of obtaining the highest
possible return with respect thereto, the Agent's responsibility being limited
to acquiring such Governmental Obligations.
6.2. Application of Proceeds. The proceeds of the Collateral shall be
-----------------------
applied by the Agent to payment of the Secured Obligations in accordance with
Section 9 of the Security Agreement.
7. GENERAL PROVISIONS.
------------------
7.1. Notice of Disposition of Collateral. Written notice of the time and
-----------------------------------
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral shall be made ten (10) days
prior to such disposition. Any notice made shall be deemed reasonable if made
to the Assignor, addressed as set forth in Section 9 hereof, at least ten (10)
---------
days prior to any such public sale or the time after which any such private sale
or other disposition may be made.
7.2. Agent Performance of Assignor Obligations. Without having any
-----------------------------------------
obligation to do so, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of a Default or an Event of Default, the Agent may
perform or pay any obligation which the Assignor has agreed to perform or pay in
this Assignment and the Assignor shall reimburse the Agent for any amounts paid
by the Agent pursuant to this Section 7.2. The Assignor's obligation to
-----------
reimburse the Agent pursuant to the preceding sentence shall be a Secured
Obligation payable on demand.
7.3. Authorization for Agent to Take Certain Action. The Assignor
----------------------------------------------
irrevocably authorizes the Agent at any time and from time to time, in the sole
discretion of the Agent, upon either (a) notice to the Assignor or (b) the
occurrence and continuation of an Event of Default: (i) to execute on behalf of
the Assignor as debtor and to file financing statements and other documents with
the
-6-
<PAGE>
United States Copyright Office or otherwise which are necessary or desirable in
the Agent's sole discretion to perfect and to maintain the perfection and
priority of the Agent's and Secured Creditors' security interest in the
Collateral; (ii) so long as an Event of Default shall have occurred and is
continuing to endorse and collect any cash proceeds of the Collateral; or (iii)
to file a carbon, photographic or other reproduction of this Assignment or any
financing statement with respect to the Collateral as a financing statement in
such offices as the Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the Agent's and the
Secured Creditors' security interest in the Collateral. At any time and from
time to time after the Secured Obligations have been declared or become due and
payable in accordance with the Secured Debt Agreements, the Assignor authorizes
the Agent to collect, endorse and apply the proceeds of any Collateral received
by the Agent to the Secured Obligations as provided in Section 6 hereof.
---------
7.4. Specific Performance of Certain Covenants. The Assignor
-----------------------------------------
acknowledges and agrees that a breach of any of the covenants contained in
Sections 4.4 and 7.5 hereof will cause irreparable injury to the Agent and the
- ------------ ---
Secured Lender and that the Agent and the Secured Creditors have no adequate
remedy at law in respect of such breaches and therefore agree, without limiting
the right of the Agent or the Secured Creditors to seek and obtain specific
performance of other obligations of the Assignor contained in this Assignment,
that the covenants of the Assignor contained in the Sections referred to in this
Section 7.4 shall be specifically enforceable against the Assignor.
- -----------
7.5. Dispositions Not Authorized. Except as provided for by the Credit
---------------------------
Agreement, the Assignor is not authorized to sell or otherwise dispose of the
Collateral and notwithstanding any course of dealing between the Assignor and
the Agent or other conduct of the Agent, no authorization to sell or otherwise
dispose of the Collateral in a manner prohibited by the Credit Agreement shall
be binding upon the Agent or the Secured Creditors unless such authorization is
in writing signed by the Agent with the consent of the Secured Creditors, as
required by the Secured Debt Agreements.
7.6. Definition of Certain Terms. Terms defined in the Illinois Uniform
---------------------------
Commercial Code which are not otherwise defined in this Assignment are used in
this Assignment as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.
7.7. Benefit of Agreement. The terms and provisions of this Assignment
--------------------
shall be binding upon and inure to the benefit of the Assignor, the Agent and
the Secured Creditors and their respective successors and assigns, except that
the Assignor shall not have the right to assign its rights or obligations under
this Assignment or any interest herein, without the prior written consent of the
Agent and the Secured Creditors.
7.8. Survival of Representations. All representations and warranties of
---------------------------
the Assignor contained in this Assignment shall survive the execution and
delivery of this Assignment.
7.9. Taxes and Expenses. Any taxes (including, without limitation, any
------------------
sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including any federal or other taxes imposed upon the
Agent or any Secured Creditor, with respect to its gross or net income or
profits arising out of this Assignment) payable or ruled payable by any Federal
or State
-7-
<PAGE>
authority in respect of this Assignment shall be paid by the Assignor, together
with interest and penalties, if any. The Assignor shall reimburse (a) the Agent
for any and all reasonable out-of-pocket expenses and internal charges
(including reasonable attorneys', auditors' and accountants' fees and reasonable
time charges of attorneys, paralegals, auditors and accountants who may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Assignment and in the administration, collection, preservation or sale of
the Collateral (including the reasonable expenses and charges associated with
any periodic or special audit of the Collateral), and (b) the Agent and each
Secured Creditor for any and all reasonable out-of-pocket expenses and internal
charges (including reasonable attorneys', auditors' and accountants' fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who
may be employees of the Agent or such Secured Creditor) paid or incurred by the
Agent or such Secured Creditor in connection with the collection and enforcement
of this Assignment.
7.10. Headings. The title of and section headings in this Assignment are
--------
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Assignment.
7.11. Termination. This Assignment shall continue in effect
-----------
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Secured Debt Agreements in
accordance with its terms thereunder, at which time the security interests
granted hereby shall terminate and any and all rights to the Collateral shall
revert to the Assignor. Upon such termination, the Agent shall promptly return
to the Assignor, at the Assignor's expense, such of the Collateral held by the
Agent as shall not have been sold or otherwise applied pursuant to the terms
hereof. The Agent will promptly execute and deliver to the Assignor such other
documents as the Assignor shall reasonably request to evidence such termination.
7.12. Entire Agreement. This Assignment and the Secured Debt Agreements
----------------
embody the entire agreement and understanding between the Assignor and the Agent
relating to the Collateral and supersede all prior agreements and understandings
between the Assignor and the Agent relating to the Collateral.
7.13. Indemnity. The Assignor hereby agrees to assume liability for, and
---------
does hereby agree to indemnify and keep harmless the Agent and each Secured
Creditor, its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature, imposed on, incurred by or asserted against the Agent or any Secured
Creditor, or its successors, assigns, agents and employees, in any way relating
to or arising out of this Assignment, or the manufacture, purchase, acceptance,
rejection, ownership, delivery, lease, possession, use, operation, condition,
sale, return or other disposition of any Collateral (other than liability
resulting from the gross negligence or wilful misconduct of the Agent or any
such Secured Creditor).
7.14. Releases. Upon termination of this Assignment in accordance with
--------
the provisions of Section 7.11 hereof, the Agent and the Secured Creditors
------------
shall, at the Assignor's request and
-8-
<PAGE>
expense, execute such releases as the Assignor may reasonably request, in form
and upon terms acceptable to the Agent and the Secured Creditors in all
respects.
7.15. Waivers. Except to the extent expressly otherwise provided herein
-------
or in any Secured Debt Agreement, the Assignor waives, to the extent permitted
by applicable law, (a) any right to require either the Agent or any Secured
Creditor to proceed against any other person, to exhaust its rights in any other
collateral, or to pursue any other right which either the Agent or any Secured
Creditor may have, and (b) with respect to the Secured Obligations, presentment
and demand for payment, protest, notice of protest and non-payment, and notice
of the intention to accelerate.
7.16. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Assignment by signing any such
counterpart. This Assignment shall be effective when it has been executed by
the Assignor and the Agent.
7.17. CHOICE OF LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS AND COPYRIGHTS.
7.18. WAIVER OF JURY TRIAL. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY
--------------------
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUDNING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
7.19. Marshalling. Neither the Agent nor any Secured Creditor shall be
-----------
under any obligation to marshall any assets in favor of the Assignor or any
other party or against or in payment of any or all of the Secured Obligations.
8. THE AGENT.
---------
BofA has been appointed as Agent for the Secured Creditors hereunder, and
the Agent has agreed to act (and any successor Agent shall act) as such
hereunder only on the express conditions contained in Article X of the Credit
Agreement. Any successor Agent appointed pursuant to Article X of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Agent hereunder.
9. NOTICES.
-------
9.1. Sending Notices. Any notice required or permitted to be given under
---------------
this Assignment shall be given (i) in the case of the Assignor in accordance
with the Guaranty, (ii) in the case of the Agent and each Lender, in accordance
with the Credit Agreement, (iii) in the case of a L/C Creditor, in accordance
with the relevant Secured Letter of Credit and (iv) in the case of a Swap
Creditor, in accordance with the relevant Secured Swap Contract.
-9-
<PAGE>
9.2. Change in Address for Notices. The Assignor, the Agent or any
-----------------------------
Secured Creditor may change the address for service of notice upon it by a
notice in writing to the other.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
executed by their duly authorized representatives as of the date first set
forth above.
KF-DELAWARE, INC., as Assignor
By /s/ Adam Murphy
----------------------------------
Name: Adam Murphy
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By /s/ David A. Johanson
----------------------------------
Name: David A. Johanson
Title: Vice President
-11-
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
The foregoing Copyright Assignment was executed and acknowledged before me
this 12th day of March, 1998 by Adam Murphy, personally known to me to be the
Vice President of KF-DELAWARE, INC., a Delaware corporation, on behalf of such
corporation.
/s/ Janet Foley
---------------------------------------
NOTARY PUBLIC
My Commission Expires: April 30, 2000
-----------------
(SEAL)
<PAGE>
EXHIBIT A
---------
COPYRIGHTS
Registration Date of
No. Issuance Title
--- -------- -----
None
<PAGE>
EXHIBIT B
---------
LICENSES
Date Parties Subject of License Term
- ---- ------- ------------------ ----
None
<PAGE>
EXHIBIT C
---------
Principal Place of Business and Mailing Address:
KF-DELAWARE, INC.
364 Valley Road
Warrington, Bucks County
Pennsylvania
<PAGE>
Exhibit 10.45
PROMISSORY NOTE - L/C LOAN
--------------------------
$4,428,440.00 Dated: March 12, 1998
FOR VALUE RECEIVED, KLEARFOLD, INC. (the "Company") HEREBY PROMISES TO
PAY to the order of BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION (the
"Lender") the principal sum of FOUR MILLION FOUR HUNDRED TWENTY EIGHT THOUSAND,
FOUR HUNDRED FORTY UNITED STATES DOLLARS ($4,428,440.00) or, if less, the
aggregate unpaid principal amount of the L/C Loans made by the Lender to the
Company pursuant to Section 2.01(b) of the Credit Agreement (as hereinafter
---------------
defined), on or before the Termination Date; together, in each case, with
interest on any and all principal amounts remaining unpaid hereunder from time
to time. Interest upon the unpaid principal amount hereof shall accrue at the
rates, shall be calculated in the manner and shall be payable on the dates set
forth in the Credit Agreement. After maturity, whether by acceleration or
otherwise, accrued interest shall be payable upon demand. Both principal and
interest shall be payable in accordance with the Credit Agreement to Bank of
America National Trust & Savings Association, as Agent (the "Agent"), on behalf
of the Lender, at its main office in Chicago, Illinois in immediately available
funds. The L/C Loans made by the Lender to the Company pursuant to the Credit
Agreement and all payments on account of principal hereof shall be recorded by
the Lender and, prior to any transfer thereof, endorsed on Schedule A attached
----------
hereto which is part of this Note or otherwise in accordance with its usual
practices; provided, however, that the failure to so record shall not affect the
-------- -------
Company's obligations under this Note.
This Note is a Note referred to in, and is entitled to the benefits
of, the Credit Agreement, dated as of March 12, 1998, by and among the Company,
AGI Incorporated, IMPAC Group, Inc., the financial institutions signatory
thereto (including the Lender) and the Agent (as amended, modified or
supplemented from time to time, the "Credit Agreement") and the other Loan
Documents. Capitalized terms used but not otherwise defined herein shall have
the respective meanings ascribed thereto in the Credit Agreement. The Credit
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
KLEARFOLD, INC.
By: /s/ Richard Block
--------------------------------
Name: Richard Block
--------------------------
Title: President
--------------------------
-2-
<PAGE>
Schedule A
----------
Promissory Note - L/C Loan
dated March 12, 1998
payable to the order of
Bank of America National Trust & Savings Association
________________________________________________________________________________
PRINCIPAL PAYMENTS
________________________________________________________________________________
<TABLE>
<CAPTION>
Unpaid
Amount of Principal
Principal Amount of Balance Notation
-------
Date Borrowed Principal Repaid Made By
- ---- -------- ---------------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
Exhibit 10.46
PROMISSORY NOTE - L/C LOAN
--------------------------
$8,921,019.00 Dated: March 12, 1998
FOR VALUE RECEIVED, AGI INCORPORATED (the "Company") HEREBY PROMISES
TO PAY to the order of BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION (the
"Lender") the principal sum of EIGHT MILLION NINE HUNDRED TWENTY ONE THOUSAND
AND NINETEEN UNITED STATES DOLLARS ($8,921,019.00) or, if less, the aggregate
unpaid principal amount of the L/C Loans made by the Lender to the Company
pursuant to Section 2.01(b) of the Credit Agreement (as hereinafter defined), on
---------------
or before the Termination Date; together, in each case, with interest on any and
all principal amounts remaining unpaid hereunder from time to time. Interest
upon the unpaid principal amount hereof shall accrue at the rates, shall be
calculated in the manner and shall be payable on the dates set forth in the
Credit Agreement. After maturity, whether by acceleration or otherwise, accrued
interest shall be payable upon demand. Both principal and interest shall be
payable in accordance with the Credit Agreement to Bank of America National
Trust & Savings Association, as Agent (the "Agent"), on behalf of the Lender, at
its main office in Chicago, Illinois in immediately available funds. The L/C
Loans made by the Lender to the Company pursuant to the Credit Agreement and all
payments on account of principal hereof shall be recorded by the Lender and,
prior to any transfer thereof, endorsed on Schedule A attached hereto which is
----------
part of this Note or otherwise in accordance with its usual practices; provided,
--------
however, that the failure to so record shall not affect the Company's
- -------
obligations under this Note.
This Note is a Note referred to in, and is entitled to the benefits
of, the Credit Agreement, dated as of March 12, 1998, by and among the Company,
Klearfold, Inc., IMPAC Group, Inc., the financial institutions signatory thereto
(including the Lender) and the Agent (as amended, modified or supplemented from
time to time, the "Credit Agreement") and the other Loan Documents. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. The Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
AGI INCORPORATED
By: /s/ Richard Block
----------------------------------
Name: Richard Block
----------------------------
Title: President
----------------------------
-2-
<PAGE>
Schedule A
----------
Promissory Note - L/C Loan
dated March 12, 1998
payable to the order of
Bank of America National Trust & Savings Association
________________________________________________________________________________
PRINCIPAL PAYMENTS
________________________________________________________________________________
<TABLE>
<CAPTION>
Amount of
Principal Amount of Unpaid Principal Notation
Date Borrowed Principal Repaid Balance Made By
---- -------- ---------------- ------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
COMPLIANCE CERTIFICATE
----------------------
Bank of America National Trust
& Savings Association,
as Agent for the Lenders party to the
Credit Agreement referred to below
231 South LaSalle Street
Chicago, Illinois 60697
Attn:
Ladies and Gentlemen:
This certificate is furnished to you by IMPAC Group, Inc. (the "Company"),
pursuant to Section 7.02(b) of that certain Credit Agreement, dated as of March
___, 1998, among the Company, AGI Incorporated, Klearfold, Inc., the financial
institutions party thereto (the "Lenders"), and Bank of America National Trust &
Savings Association, as agent for such Lenders (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), concurrently with the delivery of the financial statements required
pursuant to Section 7.01 of the Credit Agreement. Terms not otherwise defined
herein are used herein as defined in the Credit Agreement.
The undersigned, on behalf of the Company, hereby certifies that:
(A) no Default or Event of Default has occurred and is continuing, except
as described in Attachment 1 hereto;
(B) the financial data and computations set forth in Schedule I below,
evidencing compliance with the covenants set forth in Sections 8.01(g), (i) and
(j), 8.04(h), (i) and (k), 8.05(i), 8.10 (b) and (c), 8.15, 8.16, 8.17, 8.18,
8.19 and 8.21 of the Credit Agreement, are true and correct as of December 31,
1997 (the "Computation Date"); and
(C) if the financial statements of the Company being concurrently
delivered were not prepared in accordance with GAAP, Attachment 2 hereto sets
forth any derivations required to conform the relevant data in such financial
statements to the computations set forth below.
<PAGE>
The foregoing certifications, together with the computations set forth in
Schedule 1 hereto and the financial statements delivered with this Compliance
Certificate in support hereof, are made and delivered as of this 12th day of
March, 1998.
IMPAC GROUP, INC.
By:__________________________________
Name:________________________________
Its:_________________________________
2
<PAGE>
SCHEDULE 1
----------
Computations
------------
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------
I. Section 8.01 Liens
------------------
- ------------------------------------------------------------------------------------------
A. Clause (q)
----------
- ------------------------------------------------------------------------------------------
1. Aggregate amount of obligations permitted to be $ 375,000
secured:
- ------------------------------------------------------------------------------------------
2. Actual amount of obligations secured as of the date of $ 0
determination:
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
B. Clause (i)
----------
- ------------------------------------------------------------------------------------------
1. Aggregate amount of obligations permitted to be $ 750,000
secured:
- ------------------------------------------------------------------------------------------
2. Actual amount of obligations secured as of the date of $ N/A
determination:
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
C. Clause (j)
----------
- ------------------------------------------------------------------------------------------
1. Aggregate amount of obligations permitted to be $ 750,000
secured:
- ------------------------------------------------------------------------------------------
2. Actual amount of obligations secured as of the date of $ 451,000
determination:
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
II. Section 8.04 Loans and Investments
----------------------------------
- ------------------------------------------------------------------------------------------
A. Clause (h)
----------
- ------------------------------------------------------------------------------------------
1. Aggregate amount of advances permitted: $ 1,750,000
- ------------------------------------------------------------------------------------------
2. Actual amount of advances outstanding as of the date of $ 44,000
determination:
- ------------------------------------------------------------------------------------------
B. Clause (i)
---------
- ------------------------------------------------------------------------------------------
1. Aggregate amount of advances permitted: $ 75,000
- ------------------------------------------------------------------------------------------
2. Actual amount of advances outstanding as of the date of $ 0
determination:
- ------------------------------------------------------------------------------------------
C. Clause (k)
----------
- ------------------------------------------------------------------------------------------
1. Aggregate amount of Investments permitted: $ 1,000,000
- ------------------------------------------------------------------------------------------
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------
2. Aggregate amount of Investments outstanding as of the $ N/A
date of determination:
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
III. Section 8.05 Indebtedness
-------------------------
- ------------------------------------------------------------------------------------------
A. Clause (i)
----------
- ------------------------------------------------------------------------------------------
1. Aggregate principal amount of Indebtedness permitted: $ 3,500,000
- ------------------------------------------------------------------------------------------
2. Aggregate principal amount of Indebtedness outstanding $ 0
as of the date of determination:
- ------------------------------------------------------------------------------------------
IV. Section 8.10 Lease Obligations
------------------------------
- ------------------------------------------------------------------------------------------
A. Clause (b)
----------
- ------------------------------------------------------------------------------------------
1. Aggregate amount of rental payments permitted in any $ 750,000
fiscal year:
- ------------------------------------------------------------------------------------------
2. Aggregate amount of rental payments to be made during $ N/A
the current fiscal year:
- ------------------------------------------------------------------------------------------
B. Clause (c)
---------
- ------------------------------------------------------------------------------------------
1. Aggregate amount of Capital Lease Obligations $ 750,000
permitted:
- ------------------------------------------------------------------------------------------
2. Aggregate amount of Capital Lease Obligations as of the $ N/A
date of determination:
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
V. Section 8.15 Leverage Ratio
---------------------------
- ------------------------------------------------------------------------------------------
Period: Twelve months ended December 31, 1997.
- ------------------------------------------------------------------------------------------
1. Required: 6.00: 1.0
- ------------------------------------------------------------------------------------------
2. Actual:
- ------------------------------------------------------------------------------------------
(a) Indebtedness for borrowed money as of the end of the $111,640,000
period referred to above:
- ------------------------------------------------------------------------------------------
(b) EBITDA for the period referred to above: $ 24,536,000
- ------------------------------------------------------------------------------------------
(c) Ratio of (a) to (b): 4.55: 1.0
--
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
VI. Section 8.16 Senior Leverage Ratio
----------------------------------
- ------------------------------------------------------------------------------------------
Period: Twelve months ended December 31, 1997.
- ------------------------------------------------------------------------------------------
1. Required: 3.50: 1.0.
- ------------------------------------------------------------------------------------------
</TABLE>
I-2
<PAGE>
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------
2. Actual:
- -------------------------------------------------------------------------------------------
(a) Senior Debt as of the end of the period referred to above: $ 12,611,000
- -------------------------------------------------------------------------------------------
(b) EBITDA for the period referred to above: $ 24,536,000
- -------------------------------------------------------------------------------------------
(c) Ratio of (a) to (b): .51: 1.0.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
VII. Section 8.17 Interest Coverage Ratio
------------------------------------
- -------------------------------------------------------------------------------------------
Period: Twelve months ended December 31, 1997.
- -------------------------------------------------------------------------------------------
1. Required: 1.75: 1.0.
- -------------------------------------------------------------------------------------------
2. Actual:
- -------------------------------------------------------------------------------------------
(a) EBITDA for the period referred to above: $ 24,536,000
- -------------------------------------------------------------------------------------------
(b) Consolidated Interest Expense for the period referred to $ 11,476,000
above:
- -------------------------------------------------------------------------------------------
(c) Ratio of (a) to (b): 2.14: 1.0.
- -------------------------------------------------------------------------------------------
VIII. Section 8.18 Net Asset Ratio
----------------------------
- -------------------------------------------------------------------------------------------
Period: Twelve months ended December 31, 1997.
- -------------------------------------------------------------------------------------------
1. Required: 1.75: 1.0.
- -------------------------------------------------------------------------------------------
2. Actual:
- -------------------------------------------------------------------------------------------
(a) sum of accounts receivable, inventory and the net $ 83,435,000
property, plant and equipment as of the date of
determination:
- -------------------------------------------------------------------------------------------
(b) Senior Debt as of the date of determination: $ 12,611,000
- -------------------------------------------------------------------------------------------
(c) Ratio of (a) to (b): 6.62: 1.0.
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
IX. Section 8.19 Minimum Net Worth
------------------------------
- -------------------------------------------------------------------------------------------
1. Required Net Worth: as of December 31, 1997
- -------------------------------------------------------------------------------------------
(a) Base Amount: $ 3,500,000
- -------------------------------------------------------------------------------------------
(b) 50% of the sum of the positive Net Income of the $ N/A
Company for each fiscal quarter ending on and after
March 31, 1998:
- -------------------------------------------------------------------------------------------
(c) 75% of the amount of the cash and non-cash proceeds of $ N/A
any equity securities issued by the Company after the
Closing Date:
- -------------------------------------------------------------------------------------------
</TABLE>
I-3
<PAGE>
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------
(d) The sum of (a) plus (b) plus (c) $ 3,500,000
- -------------------------------------------------------------------------------------------
2. Actual Net Worth: $ 4,456,000
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
X. Section 8.21 Intercompany Loans
- -------------------------------------------------------------------------------------------
A. Owing by (or to) Subsidiaries other than Credit Parties
- -------------------------------------------------------------------------------------------
1. Aggregate amount permitted: $ 1,000,000
- -------------------------------------------------------------------------------------------
2. Aggregate amount outstanding as of the date of $ N/A
determination:
- -------------------------------------------------------------------------------------------
</TABLE>
I-4
<PAGE>
ATTACHMENT 1
------------
DESCRIPTION OF ANY DEFAULTS OR EVENTS OF DEFAULT
-------------------------------------------------
A-1
<PAGE>
ATTACHMENT 2
------------
DERIVATIONS REQUIRED TO CONFORM RELEVANT DATA IF FINANCIAL
STATEMENTS WERE NOT PREPARED IN ACCORDANCE WITH GAAP
----------------------------------------------------
A-2
<PAGE>
Exhibit 10.47
AGI PLEDGE AND SECURITY AGREEMENT
---------------------------------
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of March
12, 1998, is made among AGI INCORPORATED, an Illinois corporation (the
"Pledgor"), BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, as agent on
behalf of certain lenders as set forth below (the "Agent"), BANK ONE, ILLINOIS,
NA (formerly known as Bank One, Springfield and intending to be known as Bank
One Trust Company, NA), as trustee (the "Trustee") and as Tender Agent (the
"Tender Agent") under a Trust Indenture dated as of January 1, 1995 (the
"Indenture") between The City of Jacksonville, Illinois (the "Issuer") and the
Trustee and WILLIAM BLAIR & COMPANY, as remarketing agent (the "Remarketing
Agent") under the Remarketing Agreement dated as of January 1, 1995 (the
"Remarketing Agreement") between the Pledgor and the Remarketing Agent.
WHEREAS, pursuant to the Indenture, the Issuer issued and sold its Multi-
Mode Industrial Project Revenue Bonds, Series 1995 (AGI Incorporated Project) in
the aggregate principal amount of $7,640,000 (collectively, the "Bonds" and
individually a "Bond");
WHEREAS, the Pledgor and Bank of America Illinois (currently known as Bank
of America National Trust & Savings Association ("BofA")) entered into a
Reimbursement Agreement dated as of January 1, 1995 (the "Reimbursement
Agreement") pursuant to which BofA issued its irrevocable letter of credit (the
"Letter of Credit") to the Trustee for the benefit of the holders of the Bonds;
WHEREAS, BofA is assigning without recourse, liability or representation or
warranty of any kind, all of its right title and interest in and to the
Reimbursement Agreement and the Mortgage to the Agent, and the Agent (on behalf
of the Lenders) will assume, as of the date hereof, the obligations of BofA
under the Reimbursement Agreement and the Mortgage arising after the date
hereof, under a Credit Agreement dated as of even date herewith (as amended from
time to time, the "Credit Agreement") by and among the Pledgor, IMPAC Group,
Inc., a Delaware corporation, Klearfold, Inc., a Pennsylvania corporation, the
Agent, BofA, as letter of credit issuing bank and the other financial
institutions party thereto from time to time (the "Lenders"), that provides for
a revolving credit facility and a letter of credit facility by which the Letter
of Credit will become an obligation under the Credit Agreement;
WHEREAS, the Credit Agreement shall, after the date hereof, amend and
restate in their entirety, the obligations of BofA and the Pledgor under the
Reimbursement Agreement (which obligations shall be deemed to be continuing) and
shall supercede the Reimbursement Agreement which shall be of no further force
or effect after the date hereof;
WHEREAS, the Indenture requires that under certain circumstances Bonds
delivered by the holders thereof to the Trustee or the Tender Agent be purchased
with the proceeds of drawings under
<PAGE>
the Letter of Credit issued by BofA under the Reimbursement Agreement (Bonds
purchased with proceeds of drawings under the Letter of Credit being the
"Pledged Bonds");
WHEREAS, currently any Pledged Bonds are to be pledged under a Pledge and
Security Agreement dated as of January 1, 1995 (the "Pledge Agreement") which
will be terminated in connection with the execution and delivery of this
Agreement;
WHEREAS, it is the intention of the parties hereto that all Pledged Bonds
shall now be pledged to and held by the Agent (on behalf of the Lenders) to
secure the Pledgor's obligation to reimburse BofA, the Agent and the Lenders in
accordance with the terms of the Credit Agreement for drawings under the Letter
of Credit;
WHEREAS, the parties hereto desire to secure any and all of the Pledgor's
obligations to reimburse BofA, the Agent and the other Lenders for draws under
the Letter of Credit and for other obligations under the Credit Agreement with
the pledge and grant by the Pledgor to the Agent, for the benefit of itself,
BofA and the other Lenders, of a security interest in its right, title and
interest in and to the Pledged Bonds;
NOW THEREFORE, in consideration of the premises and in order to induce the
Agent and the Lenders to permit the Letter of Credit to become an obligation
under and issued under the Credit Agreement, the Pledgor, the Trustee, the
Tender Agent and the Remarketing Agent hereby agree with the Agent (on behalf of
the Lenders) as follows:
SECTION 1. Pledge. The Pledgor hereby (i) pledges to the Agent (on behalf
of the Lenders), and grants to the Agent (on behalf of the Lenders) a security
interest in, all of the Pledgor's right, title and interest in and to the
Pledged Bonds, and all amounts received, receivable or otherwise distributed in
respect of the Pledged Bonds and (ii) agrees to pledge and deliver to the Agent,
and hereby assigns and transfers to the Agent all of the Pledgor's right, title
and interest in and to, any Pledged Bonds received from time to time by the
Pledgor (collectively, the "Pledged Collateral").
SECTION 2. Security for Obligations. This Agreement secures the payment
of all obligations of the Pledgor now or hereafter existing under the Credit
Agreement and the other documents, promissory notes and agreements contemplated
thereby, whether for principal, interest, fees, expenses or otherwise, and all
obligations of the Pledgor now or hereafter existing under this Agreement (all
such obligations of the Pledgor being the "Obligations").
SECTION 3. Delivery of Pledged Bonds; Agent's Rights With Respect to
Pledged Bonds.
(a) All certificates or instruments representing or evidencing the Pledged
Bonds shall, promptly after receipt by the Pledgor, the Remarketing Agent, the
Tender Agent or the Trustee, be delivered to the Agent, or any agent or nominee
of the Agent as the Agent shall direct.
2
<PAGE>
(b) At all times that the Book-Entry System (as defined in the Indenture)
is in effect, Pledged Bonds will be held on the records of the Book-Entry System
registered in the name of the Agent, or such agent or nominee of the Agent as
the Agent shall direct, as collateral security in favor of the Agent. The
Trustee, the Pledgor, the Remarketing Agent and the Tender Agent agree to comply
with any "instructions" (as defined in Section 8-102(a)(12) of the Uniform
Commercial Code as in effect in the State of Illinois) originated by the Agent
without further consent of the Pledgor, including, without limitation,
instructions on transfer, redemption, disposition or distribution of the Pledged
Bonds or the proceeds thereof.
(c) The Pledgor shall promptly execute and deliver, or cause to be
executed and delivered, to the Agent such bond powers and other instruments of
transfer and assignment relating to the Pledged Bonds as the Agent may request
at any time or from time to time for the purpose of causing the Pledged Bonds to
be registered in the name of the Agent, or any agent or nominee of the Agent as
the Agent shall direct and shall not register the Pledged Bonds in the name of
any other person or entity without the prior written consent of the Agent.
(d) The Agent shall be entitled to receive any and all interest paid with
respect to the Pledged Bonds.
(e) All Pledged Bonds shall be regarded as Outstanding (as defined in the
Indenture) for all purposes of the Indenture, and the Agent shall be deemed to
be, and shall have and be entitled to exercise all of the benefits and rights
of, the holder of each Pledged Bond with respect to any action or instrument
permitted or required by the terms of the Indenture to be taken by or for the
benefit of or given by or to the holder of such Pledged Bond.
SECTION 4. Release of Pledged Bonds. If the Pledgor makes a reimbursement
in accordance with Section 3.03(b)(iii) of the Credit Agreement, the Agent
agrees, upon the receipt of such reimbursement in immediately available funds,
to release from the lien of this Agreement and to deliver to the Pledgor (or to
the Remarketing Agent, the Tender Agent or the Trustee, if directed by the
Pledgor), Pledged Bonds in accordance with Section 3.03(b)(iii) of the Credit
Agreement; provided that the Agent shall not, and shall not be required to,
--------
release its lien with respect to any Pledged Bonds so long as there has occurred
and is continuing a Default or an Event of Default; provided further, that
-------- -------
notwithstanding the foregoing, each of the Trustee, the Tender Agent and the
Agent agree to not, and the Agent shall cause any other nominee appointed by it
to hold the Pledged Bonds, to not release an Pledged Bonds until the Agent has
been reimbursed in accordance with Section 3.03(b)(iii) of the Credit Agreement.
SECTION 5. Proceeds from Remarketing of Pledged Bonds. All amounts
received by the Tender Agent or the Remarketing Agent in connection with the
remarketing of the Pledged Bonds shall be promptly paid to the Agent (on behalf
of the Lenders) at its address specified on the signature page hereof in
immediately available funds.
3
<PAGE>
SECTION 6. Subrogation. The Pledgor will not exercise any rights which it
may acquire by way of subrogation under this Agreement, as a result of any
payment made hereunder or otherwise, until all the Obligations shall have been
paid in full. If any amount shall be paid to the Pledgor on account of such
subrogation rights at any time when all the Obligations shall not have been paid
in full, such amount shall be held in trust for the benefit of the Agent (on
behalf of the Lenders) and shall forthwith be paid to the Agent (on behalf of
the Lenders) to be credited and applied to the Obligations, whether matured or
unmatured, in accordance with the terms of the Credit Agreement.
SECTION 7. Representations, Warranties and Covenants.
(a) The Pledgor represents and warrants as follows:
i. On the date of delivery to the Agent of any Pledged Bonds
described herein, neither the Issuer nor the Trustee will have any
right, title or interest in and to the Pledged Bonds;
ii. The Pledgor is the legal and beneficial owner of the Pledged
Collateral free and clear of any lien, security interest, option or
other charge or encumbrance except for the security interest created
by this Agreement;
iii. The delivery to the Agent of the Pledged Bonds will create a
valid and perfected first priority security interest in the Pledged
Collateral, securing the payment of the Obligations;
iv. No authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body is
required either (i) for the pledge by the Pledgor of the Pledged
Collateral pursuant to this Agreement or for the execution, delivery
or performance of the Agreement by the Pledgor or (ii) for the
exercise by the Agent of the rights provided for in this Agreement or
the remedies in respect of the Pledged Collateral pursuant to this
Agreement (except as may be required in connection with such
disposition by laws affecting the offering and sale of securities
generally).
(b) The Pledgor covenants and agrees that it will defend the Agent's
right, title and security interest in and to the Pledged Bonds and the proceeds
thereof against the claims and demands of all Persons whomsoever; and covenants
and agrees that it will have like title to and the right to pledge any other
property at any time hereafter pledged to the Agent as Collateral hereunder and
will likewise defend the Agent's right thereto and security interest therein.
SECTION 8. Further Assurances. The Pledgor agrees that at any time and
from time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that
4
<PAGE>
the Agent may request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Agent to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral.
SECTION 9. Transfers and Other Liens. The Pledgor agrees that it will not
(i) sell or otherwise dispose of, or grant any option with respect to, any of
the Pledged Collateral, or (ii) create or permit to exist any lien, security
interest, or other charge or encumbrance upon or with respect to any of the
Pledged Collateral, except for the security interest under this Agreement.
SECTION 10. Voting Rights; Interests; Etc. (a) So long as no Default or
Event of Default shall have occurred and be continuing, the Pledgor shall be
entitled to exercise, or refrain from exercising, any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Credit
Agreement; provided that the Pledgor shall not exercise and shall refrain from
--------
exercising any such right if, the Agent notifies the Pledgor that, in the
Agent's judgment, such action would have a material adverse effect on the value
of the Pledged Collateral or any part thereof, and provided further, that the
-------- -------
Pledgor shall give the Agent at least two days' written notice of the manner in
which it intends to exercise, or the reasons for refraining from exercising, any
such right.
(b) Upon the occurrence and during the continuance of an Event of
Default or a Default, all rights of the Pledgor to exercise the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to
Section 10(a) hereof shall cease, and all such rights shall thereupon become
- -------------
vested in the Agent which shall thereupon have the sole right to exercise such
voting and other consensual rights.
(c) If the Pledgor shall become entitled to receive or shall receive
any principal or interest payment in respect of the Pledged Bonds, the Pledgor
agrees to accept the same as the Agent's agent and to hold the same in trust on
behalf of the Agent and to deliver the same forthwith to the Agent. All sums of
money so paid in respect of the Pledged Bonds that are received by the Pledgor
and paid to the Agent shall be credited against the obligations of the Pledgor
to the Agent under the Credit Agreement.
SECTION 11. Agent Appointed Attorney-in-Fact. The Pledgor hereby appoints
the Agent as the Pledgor's attorney-in-fact, with full authority in the place
and stead of the Pledgor and in the name of the Pledgor or otherwise, from time
to time in the Agent's discretion to take any action and to execute any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, to receive, endorse
and collect all instruments made payable to the Pledgor representing any
interest payment or other distribution in respect of the Pledged Bonds or any
part thereof and to give full discharge for the same.
SECTION 12. Agent May Perform. If the Pledgor fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by the Pledgor under Section 16 hereof.
----------
5
<PAGE>
SECTION 13. Reasonable Care. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which the Agent accords its own property, it being understood that the
Agent shall not have any responsibility for taking any necessary steps to
preserve rights against any parties with respect to any Pledged Collateral.
SECTION 14. Sale of Collateral.
(a) The Pledgor recognizes that the Agent may be unable to effect a public
sale of any or all of the Pledged Bonds by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agrees that such private sale
shall be deemed to have been made in a commercially reasonable manner. The Agent
shall be under no obligation to delay a sale of any of the Pledged Bonds for the
period of time necessary to permit the Issuer to register such securities for
public sale under the Securities Act, or under applicable state securities laws,
even if the Issuer would agree to do so.
(b) The Pledgor further agrees to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any portion or
all of the Pledged Bonds valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at the Pledgor's
expense. The Pledgor further agrees that a breach of any of the covenants
contained in this Section 14 will cause irreparable injury to the Agent, that
----------
the Agent has no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this paragraph
shall be specifically enforceable against the Pledgor and the Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred under the Credit Agreement. The Pledgor further acknowledges the
impossibility of ascertaining the amount of damages which would be suffered by
the Agent and the Lenders by reason of a breach of any of such covenants and,
consequently, agrees that, if the Agent (on behalf of the Lenders) shall sue for
damages for breach, it shall pay, as liquidated damages and not as a penalty, an
amount equal to the principal amount of the Pledged Bonds plus accrued interest
on all Loans and other amounts then outstanding with respect to the Pledged
Bonds on the date the Agent shall demand compliance with this Section 14(b).
-------------
SECTION 15. Remedies upon Default. If any Event of Default shall have
occurred and be continuing:
6
<PAGE>
(a) The Agent may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code (the "Code") in effect in the State of Illinois at that
time, and the Agent may also, without notice except as specified below, sell the
Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the Agent's offices
or elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Agent may deem commercially reasonable. The Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten days' notice to
the Pledgor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The Agent
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. The Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned.
(b) Any cash held by the Agent as Pledged Collateral and all cash proceeds
received by the Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral may, in the
discretion of the Agent, be held by the Agent as collateral for, and/or then or
at any time thereafter applied (after payment of any amounts payable to the
Agent pursuant to Section 16 hereof) in whole or in part by the Agent against,
----------
all or any part of the Obligations in such order as the Agent shall elect. Any
surplus of such cash or cash proceeds held by the Agent and remaining after
payment in full of all the Obligations shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus.
SECTION 16. Expenses. The Pledgor will upon demand pay to the Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Agent may incur
in connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Bonds, (iii) the exercise or enforcement of any of the rights of
the Agent hereunder or (iv) the failure by the Pledgor to perform or observe any
of the provisions hereof.
SECTION 17. Amendments, Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Pledgor herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided that the duties
--------
of the Remarketing Agent, the Tender Agent and the Trustee shall not be modified
or amended without their respective prior written consent.
SECTION 18. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including tested telex) and, if to
the Pledgor, telexed or delivered to it, return receipt requested, addressed to
it at the address of the Pledgor specified on the signature page hereto; if to
the Agent, telexed or delivered to it, return receipt requested, addressed to it
at the address of the Agent specified on the signature page hereto; if to the
Trustee, telexed or delivered to it, return receipt requested addressed to it at
the address of the Trustee specified on the signature
7
<PAGE>
page hereto; if to the Remarketing Agent telexed or delivered to it, return
receipt requested, addressed to it at the address of the Remarketing Agent
specified on the signature page hereto, or as to any party at such other address
as shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section 18. All such notices and
----------
other communications shall, when telexed or delivered, as the case may be, be
effective upon receipt.
SECTION 19. Amendments, Modifications and Waivers with Respect to
Obligations. The Pledgor hereby consents that, without the necessity of any
reservation of rights against the Pledgor, and without notice to or further
assent by the Pledgor, any demand for payment of any of the Obligations made by
the Agent may be rescinded by the Agent and any of the Obligations continued,
and the Obligations, or the liability of the Pledgor or any other party upon or
for any part thereof, or any collateral security or guarantee therefor or right
of offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered, or released by the Agent, and the Credit Agreement, the Letter of
Credit or any collateral security documents or guarantees or documents in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Agent may deem advisable from time to time, and any
collateral security at any time held by the Agent for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released, all without
the necessity of any reservation of rights against the Pledgor and without
notice to or further assent by the Pledgor, which will remain bound hereunder,
notwithstanding, any such renewal, extension, modification, acceleration,
compromise, amendment, supplement, termination, sale, exchange, waiver,
surrender or release. Subject to Section 13 hereof, the Agent shall have no
obligation to protect, secure, perfect or insure any other collateral security
document or property subject thereto at any time held as security for the
Obligations. The Pledgor waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations and notice of or proof of
reliance by the Agent upon this Agreement, and the Obligations, and any of them
shall conclusively be deemed to have been created, contracted or incurred in
reliance upon this Agreement, and all dealings between the Pledgor and the Agent
shall likewise be conclusively presumed to have been had or consummated in
reliance upon this Agreement. The Pledgor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Pledgor with respect to the Obligations.
SECTION 20. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Pledged Collateral and shall (i) remain in
full force and effect until payment in full of the Obligations and such time as
no further obligations under the Credit Agreement and the Letter of Credit could
be incurred by the Pledgor or the Agent, respectively, (ii) be binding upon the
parties hereto and their respective successors and assigns, and (iii) inure to
the benefit of the Pledgor and the Agent and their respective permitted
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), the Agent may assign or otherwise transfer the Credit
------------
Agreement and this Agreement to any other person or entity, and such other
person or entity shall thereupon become vested with all the benefits in respect
thereof granted to the Agent herein or otherwise. Upon the payment in full
(after the Termination Date) of the Obligations, the Pledgor shall be entitled
to the return, upon its request and at its expense, of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
8
<PAGE>
SECTION 21. Effectiveness. Effective upon execution of the Credit
Agreement, the Pledge Agreement shall be deemed to have terminated and no longer
be of any effect. If the Credit Agreement is not executed by all parties
thereto by March 31, 1998, this Agreement shall be of no effect.
SECTION 22. Governing Law; Terms; Interpretation. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS. Unless otherwise defined herein or in the Credit Agreement, terms
defined in Article 9 of the Uniform Commercial Code in the State of Illinois are
used herein as therein defined. Capitalized terms used herein but not otherwise
defined herein shall have the respective meanings ascribed thereto in the Credit
Agreement. This Agreement is deemed to be one of the Loan Documents under the
Credit Agreement.
SECTION 23. Waiver of Jury Trial. ALL PARTIES HERETO HEREBY WAIVE TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER.
[signature page follows]
9
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
NOTICE ADDRESSES: AGI INCORPORATED
AGI Incorporated By /s/ Richard Block
1950 North Ruby Street -----------------------
Melrose Park, Illinois 60160 Name: Richard Block
------------------
Title: President
-----------------
Bank of America National Trust BANK OF AMERICA NATIONAL TRUST
& Savings Association & SAVINGS ASSOCIATION, as Agent
231 South LaSalle Street
Chicago, Illinois 60697 By /s/ David A. Johanson
-----------------------
Name: David A. Johanson
------------------
Title: Vice President
-----------------
Bank One, Illinois, NA BANK ONE, ILLINOIS, NA (formerly known
Attn: Corporate Trust Dept. as Bank One,Springfield and intending
1 East Old State Capitol Plaza to be known as Bank One Trust Company
Springfield, Illinois 62701 as Trustee and as Tender Agent
By /s/ George J. Laubner
-----------------------
Name: George J. Laubner
------------------
Title: Vice President
-----------------
William Blair & Company WILLIAM BLAIR & COMPANY,
222 West Adams Street as Remarketing Agent
Chicago, Illinois 60606
By /s/ Kenton Brown
-----------------------
Name: Kenton Brown
------------------
Title: Principal
-----------------
10
<PAGE>
Exhibit 10.48
SUBROGATION AGREEMENT
---------------------
THIS SUBROGATION AGREEMENT (this "Agreement") is made effective as of
---------
the __ day of March, 1998, by and between Mellon Bank, N.A. ("Mellon") and Bank
------
of America National Trust & Savings Association, individually ("Bank of
-------
America") and as agent ("Agent"), on behalf of all the lenders from time to time
- ------- -----
(the "Lenders") under that certain Credit Agreement dated as of the date hereof
-------
(as such agreement may be amended, supplemented or otherwise modified from time
to time, the "Credit Agreement") by and among Agent, the Lenders, KFI Holding
----------------
Corporation, a Delaware corporation (the "Borrower"), Klearfold, Inc., a
--------
Pennsylvania corporation (the "Company") and AGI Incorporated, an Illinois
-------
corporation. Each term used but not otherwise defined herein shall have the
meaning ascribed to it by the Credit Agreement.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Mellon has established that certain Irrevocable Letter of
Credit No. S854302 dated as of August 21, 1997 in the amount of $4,078,440.00
(the "Mellon L/C"), for the account of Klearfold, Inc. (the "Company"), in favor
---------- -------
of Mellon, as trustee (the "Trustee") under the Indenture of Trust dated as of
-------
August 1, 1997 between the Trustee and the Bucks County Industrial Development
Authority pursuant to which certain bonds (the "Bonds") were issued;
-----
WHEREAS, in connection with the issuance of the Mellon L/C, Mellon in
its capacity as letter of credit issuer and the Company entered into that
certain Letter of Credit and Reimbursement Agreement dated as of August 1, 1997
(the "Reimbursement Agreement");
-----------------------
WHEREAS, in connection with the transactions contemplated under the
Credit Agreement, Bank of America has established a letter of credit dated of
even date herewith in substantially the form of Exhibit A hereto in the amount
---------
of $4,064,440.00 for the account of the Company and in favor of Mellon (the
"Backup L/C") in its capacity as letter of credit issuer which may be drawn upon
----------
by Mellon in the event that the Mellon L/C is drawn upon;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Mellon and the
Agent (on behalf of the Lenders) hereby agree as follows.
1. Subrogation. Upon satisfaction and payment to Mellon of all of
-----------
the Company's obligations under the Reimbursement Agreement (the "Payment
-------
Date"), the Agent (on behalf of the Lenders) shall, with respect to any amounts
drawn upon by Mellon pursuant to the Backup L/C, be subrogated to all of
Mellon's right, title and interest in, to and under (i) the Reimbursement
Agreement, (ii) any pledge agreement pledging the Bonds to Mellon and any Bonds
pledged thereunder, and (iii) any other mortgages, deeds of trust, guarantees or
other security documents in favor of Mellon or funds or trust accounts of any
kind executed or created in connection with the Mellon L/C in favor of Mellon,
and the Reimbursement Agreement and the other agreements with respect to the
Bonds, including, but not limited to, any rights and remedies,
<PAGE>
if any, Mellon may have in regard to any collateral security granted by the
Borrower, the Company or any other person or entity in connection with any of
the foregoing.
In furtherance of such subrogation rights, promptly following payment
by Bank of America to Mellon of the full amount drawn under the Backup L/C,
Mellon shall if requested by the Agent (a) assign to the Agent (on behalf of the
Lenders) with respect to any payment made by Mellon and pursuant to
documentation in form and substance reasonably acceptable to Agent and Mellon,
all of its right, title and interest in, to and under any pledge agreement, any
Bonds, any mortgages and all other ancillary loan and/or security agreements and
instruments executed by or in favor of Mellon in connection with the Mellon L/C,
including, without limitation, of all the agreements set forth on Exhibit B
---------
hereto (the "Mellon Security Agreements") and (b) shall not thereafter release
--------------------------
any Bonds pledged to Mellon unless it receives the prior written consent of the
Agent. Any such Assignment shall be without any representation or warranty by
Mellon and without recourse to Mellon.
2. Back-up Letter of Credit. Agent agrees that as of the date
------------------------
hereof it shall deliver to Mellon a fully executed and effective Backup L/C
which was issued by Bank of America National Trust & Savings Association on the
date hereof.
3. Mellon Letter of Credit. Mellon hereby agrees that unless it has
-----------------------
received the prior written consent of Agent or has attempted to draw against the
Backup L/C pursuant to conforming drawing certificates under such Backup L/C
(and Bank of America has failed to honor such draw) it shall not take any action
of any kind against any collateral or other property pledged or mortgaged to it
by the Borrower, the Company or in which it has been granted a security
interest, pursuant to any of the Mellon Security Agreements. Mellon further
agrees that if it draws against the Backup L/C due to the fact that the Backup
L/C will expire and no substitute L/C has been provided (all as more fully
described as one of the drawing conditions in the Backup L/C), then Mellon
agrees to hold all funds received under the Backup L/C solely as cash collateral
for its obligations under the Mellon L/C and to promptly after making such
drawing send written notice to the Trustee of the holders of the Bonds notifying
the Trustee that a default has occurred under the Reimbursement Agreement and
requesting the Trustee to make a drawing under the Mellon L/C.
4. Reinstatement of L/C Amounts; Amendment of Mellon Documents. (a)
-----------------------------------------------------------
Mellon will not agree to reinstate any amounts drawn on the Mellon L/C without
the prior written consent of Agent, except for interest draws to the extent the
amount so drawn has been repaid to Mellon in cash by the Company or, the Agent
or the Lenders, and will take all steps necessary to ensure that no such
reinstatement shall occur thereunder including without limitation, providing
appropriate notices to the Trustee or otherwise in accordance with the Mellon
L/C.
(b) Mellon and the Company have entered into an amendment to the
Reimbursement Agreement (and the other documents in connection therewith) in
substantially the form of Exhibit C hereto, and agree that they will not further
---------
amend the Reimbursement Agreement, or the other documents in connection
therewith in any material respect without the prior written consent of Agent.
-2-
<PAGE>
(c) Notwithstanding anything herein to the contrary, Mellon will not
be required to take any action in contravention of its obligations under the
Bond Documents (as such term is defined in the Reimbursement Agreement).
5. Default Waiver. Mellon hereby waives any defaults or breaches
--------------
existing as of the date hereof under the Reimbursement Agreement (and the other
documents in connection therewith), and acknowledges that the fact that the
Borrower and the Company have entered into the Credit Agreement and the other
documents in connection therewith or granted to Agent, on behalf of the Lenders,
a security interest in and lien upon substantially all their properties and
assets shall not constitute a default or breach under the Reimbursement
Agreement, the Mellon Security Agreements (or the other documents in connection
therewith).
6. Indemnity. Agent hereby agrees to indemnify Mellon for any
---------
liability, claims or expenses incurred by Mellon as a direct result of (i)
Mellon following the written instructions of Agent or (ii) any actions taken by
Agent in its capacity as a subrogee of Mellon under this Agreement; provided,
however, no indemnity will exist under this Section 6 for liabilities, claims or
---------
expenses caused by the gross negligence or willful misconduct of Mellon, or any
agent, employee or representative of Mellon.
7. Successors and Assigns. This Agreement shall be binding upon the
----------------------
parties hereto and their successors and assigns, but cannot be assigned without
the prior written consent of all parties hereto.
8. Severability. The illegality or unenforceability of any provision
------------
of this Agreement shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement.
9. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS
-------------
AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS) OF THE COMMONWEALTH OF
PENNSYLVANIA.
10. Counterparts; Headings. This Agreement may be executed in any
----------------------
number of counterparts, and by the Agent, the Company, the Borrower, and Mellon
in separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement. The headings and section
titles to the various paragraphs of this Agreement are only for the convenience
of the reader, and shall have no substantive effect or meaning of any kind in
interpreting the terms of this Agreement.
11. Release. The Company, the Borrower and the Agent and IMPAC
-------
Group, Inc. hereby agree that Mellon is released from and shall not be liable to
either of them in connection with Mellon's performance of its obligations under
this Agreement or from following the written instructions of Agent given
pursuant hereto.
-3-
<PAGE>
12. Capacity. Mellon is executing this Agreement solely in its
--------
capacity as issuer of the Mellon L/C and not as Trustee. This Agreement shall
not affect the rights or obligations of Mellon as Trustee.
(Signature Page Follows)
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers on the date first
written above.
MELLON BANK, N.A.,
in its capacity as issuer of the Mellon L/C
By: Signature Illegible
--------------------------------------
Name:
-------------------------------------
Its: Vice President
--------------------------------------
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, as Agent on behalf of the
Lenders
By: /s/ David A. Johanson
--------------------------------------
Name: David A. Johanson
-------------------------------------
Its: Vice President
--------------------------------------
ACKNOWLEDGED AND AGREED TO:
KLEARFOLD, INC.
By: /s/ Richard Block
------------------------------
Name: Richard Block
----------------------------
Its: President
----------------------------
IMPAC GROUP, INC.
By: /s/ Richard Block
------------------------------
Name: Richard Block
----------------------------
Its: President
----------------------------
<PAGE>
EXHIBIT A
---------
Form of BofA Letter of Credit
<PAGE>
EXHIBIT B
---------
Security Documents
[Mellon to complete]
<PAGE>
EXHIBIT C
---------
Form of Amendment to Reimbursement Agreement
<PAGE>
Exhibit 10.50
FIRST AMENDMENT TO
REIMBURSEMENT AGREEMENT
-----------------------
This First Amendment to Reimbursement Agreement (the "Amendment") is
made as of the 11th day of March, 1998 by and between Mellon Bank, N.A.
("Lender"), and Klearfold, Inc., a Pennsylvania corporation ("Borrower").
WHEREAS, on August 1, 1997 Borrower and Lender entered into a Letter
of Credit Reimbursement Agreement (the "Reimbursement Agreement") relating to
the issuance of a letter of credit by Lender in the amount of $4,078,440.00 (the
"Letter of Credit") for the account of Borrower for the benefit of the Trustee
for holders of $4,000,000.00 in industrial bonds used to finance a manufacturing
facility operated by the Borrower (the "Facility");
WHEREAS, pursuant to a certain Subrogation Agreement of even date
herewith, Bank of America National Trust & Savings Association, as agent
("Agent") on behalf of certain banks from time to time under that certain credit
agreement ("Credit Agreement") of even date herewith, as amended, shall be
subrogated to Lender's rights arising out of the Reimbursement Agreement and to
Lender's rights with respect to certain collateral;
NOW THEREFORE, in consideration of the mutual agreements contained in
this Amendment, Lender and Borrower agree as follows:
1. Lender agrees to waive any default arising under the
Reimbursement Agreement occurring on or before the effective date
of this Amendment; provided, however, that Lender does not hereby
waive future violations of the Reimbursement Agreement or this
Amendment.
2. Recital "A" of the Reimbursement Agreement is hereby deleted in
its entirety and shall be of no further force or effect as of the
date of this Amendment.
3. Recital "E" of the Reimbursement Agreement is amended in its
entirety to read as follows:
"E. The Letter of Credit shall be issued for the account of
the Company by Mellon."
4. Each reference to the "Revolving Credit Loan Agreement" in the
Reimbursement Agreement shall be deleted in its entirety and
shall be of no further force and effect as of the date of this
Amendment.
5. Each reference to "Boston" and "NatWest" in the Reimbursement
Agreement shall be deleted in its entirety.
6. Subsection 2.2 (a) of the Reimbursement Agreement is amended in
its entirety to read as follows:
<PAGE>
"(A) REIMBURSEMENT PAYMENTS. The Company hereby agrees to
----------------------
pay to Mellon a sum equal to each amount drawn under the
Letter of Credit on the same Business Day that such drawing
is honored, and directs Mellon to seek repayment by making a
claim to Bank of America National Trust & Savings
Association ("BOA") for payment pursuant to that certain BOA
Irrevocable Standby Letter of Credit C ____________("Back-up
L/C") if Mellon does not receive payment from the Company."
6. Subsection 2.2(d) of the Reimbursement Agreement is amended in
its entirety to read as follows:
"(D) COMMITMENT FEES. So long as any credit remains
---------------
available to the Trustee under the Letter of Credit, the
Company shall pay to Mellon a Letter of Credit commitment
fee computed at 3.00% per annum (as described below) on the
average daily Letter of Credit Amount during the preceding
quarterly period (or portion thereof in the case of the
first such payment and in the case of a termination of the
Letter of Credit on a day other than a date on which a
quarterly payment is scheduled); provided that, for purposes
of computing such average daily Letter of Credit Amount,
there shall be added to the Letter of Credit Amount for each
day the aggregate amount of any Interest Drafts theretofore
honored by Mellon in respect of which Mellon may thereafter
be required to reinstate the Letter of Credit pursuant to
the terms thereof. Computations of Letter of Credit
commitment fees under this Section shall be for the actual
number of days in the applicable period based on a 365-day
year. As of March ___, 1998, the estimated amount of such
fee to be paid through August 21, 1998 is $ ______________,
which shall be paid in full on March ___, 1998. If the
Letter of Credit is replaced prior to August 21, 1998,
Mellon will refund the applicable portion of such fee on a
pro rata basis for the days for which the Letter of Credit
is not outstanding."
7. Subsection 2.3(c) of the Reimbursement Agreement is amended by
adding a new paragraph as follows:
"Notwithstanding anything herein to the contrary, Mellon
will not agree to reinstate any amounts drawn under the
Letter of Credit without the prior written consent of BOA,
except for interest draws to the extent repaid by the
Company."
8. Section 3.2 of the Reimbursement Agreement is hereby amended by
deleting the phrase "and all Obligations under the Revolving
Credit Loan Agreement"
-2-
<PAGE>
where it appears in the second and third lines of such section
and by deleting the parenthetical "(for itself as collateral
agent for the Banks)."
9. Subsection 3.4(a) of the Reimbursement Agreement is hereby
amended by deleting the phrase "(for itself and as collateral
agent for the Banks)."
10. Subsection 3.4(c) of the Reimbursement Agreement is amended by
adding a new sentence as follows to the end of such subsection:
"Notwithstanding anything herein to the contrary, Mellon
shall not release the Pledged Bonds without the prior
written consent of Agent."
11. Section 3.6 of the Reimbursement Agreement is hereby deleted in
its entirety and shall be of no further force or effect as of the
date of this Amendment.
12. Subsection 4.1(b)(2) of the Reimbursement Agreement is hereby
deleted.
13. The covenants set forth in Subsections 5.2(a) and (d) of the
Reimbursement Agreement are hereby deleted in their entirety and
shall be of no further force or effect as of the date of this
Amendment.
14. Subsections 6.1(g) and (h) and 6.2(d) and (e) of the
Reimbursement Agreement are hereby deleted in their entirety and
shall be of no further force or effect as of the date of this
Amendment and a new subsection 6.1(g) is hereby added to the
Reimbursement Agreement reading as follows:
"(g) If Mellon draws against the Back-up L/C because such L/C is
set to expire at any time during the 30 days following such
drawing."
15. Section 7.10 of the Reimbursement Agreement is hereby deleted in
its entirety and shall be of no further force or effect as of the
date of this Amendment.
16. Bank of America National Trust and Savings Association,
individually and as agent on behalf of the lenders from time to
time under that certain Credit Agreement of even date herewith,
as amended, among Agent, borrowers and the other parties thereto
is hereby made a third party beneficiary of the Reimbursement
Agreement and the other documents and agreements contemplated
thereby, and no such document or agreement shall be further
amended without the prior written consent of the Agent.
17. Except as expressly amended hereby, the Reimbursement Agreement
is not further amended or modified and remains in full force and
effect.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Amendment as
of the date forth above written.
MELLON BANK, N.A.,
a National Banking Association
By: [SIGNATURE ILLEGIBLE]
------------------------------------
Title: Vice President
---------------------------------
KLEARFOLD, INC.
By: /s/ Richard Block
------------------------------------
Title: President
---------------------------------
<PAGE>
Exhibit 10.51
[LETTERHEAD OF BANK OF AMERICA APPEARS HERE]
Page: 1
DATE: DECEMBER 15, 1997
AMENDMENT TO IRREVOCABLE STANDBY CREDIT NUMBER: C7266237
AMENDMENT NUMBER 1
BENEFICIARY APPLICANT
BANK ONE, SPRINGFIELD AGI INC
ONE EAST OLD STATE CAPITOL PLAZA 1950 NORTH RUBY STREET
P.O. BOX 19266 MELROSE PARK, IL 60160
SPRINGFIELD, IL 62794-9266
THIS AMENDMENT IS TO BE CONSIDERED AN INTEGRAL PART OF THE ABOVE CREDIT AND MUST
BE ATTACHED THERETO.
THE ABOVE MENTIONED CREDIT IS AMENDED AS FOLLOWS:
THE EXPIRATION DATE IS AMENDED TO: JANUARY 19, 1999.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
IF YOU REQUIRE ANY ASSISTANCE OR HAVE ANY QUESTIONS REGARDING THIS AMENDMENT,
PLEASE CALL 312-923-5885.
BANK OF AMERICA
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
- ------------------------ ------------------------
FOR CASHIER FOR CASHIER
THIS DOCUMENT CONSISTS OF 1 PAGE(S).
<PAGE>
[LOGO OF BANK OF AMERICA APPEARS HERE]
Date January 19, 1995
Irrevocable Letter of Credit
No. C7266237
Bank One. Springfield
as Trustee (the "Trustee")
under a Trust Indenture
(the "Indenture") dated as
of January 1, 1995
between The City of
Jacksonville, Illinois
(the "Issuer") and the Trustee
securing $7,640,000
in aggregate principal amount
of the Issuer's Multi-Mode
Industrial Project Revenue Bonds,
Series 1995 (AGI Incorporated
Project)
One East Old State Capitol Plaza
P.O. Box 19266
Springfield, Illinois 62794-9266
Attention: Corporate Trust Officer
At the request and for the account of our customer, AGI Incorporated (our
"Customer"), we establish our irrevocable letter of credit in your favor by our
signature below and your receipt of this letter of credit. We irrevocably agree
to honor your demands for payment, reduction, and transfer which comply with
terms of this letter of credit. The amount available under this letter of credit
is $8,571,019 subject to reduction as provided herein (the "Stated Amount"). You
and our Customer have advised us that the Stated Amount is comprised of: (x)
$7,640,000 corresponding to the principal amount (or the purchase price
corresponding to the principal amount) of the Bonds referred to above, plus (y)
$549,019 corresponding to interest (or the purchase price corresponding to
interest) on the Bonds referred to above, at an assumed rate of 13% per annum
for Bonds bearing interest at a variable rate for a period of 199 days on the
basis of a year of 360 days, plus (z) $382,000 corresponding to up to a 5.00%
premium on the Bonds which may be payable on redemption of the Bonds (or in
connection with the purchase of the Bonds on an LOC Termination Tender Date (as
defined in the Indenture)) while the Bonds are in an Adjustable Long Period as
defined in the Indenture) or the Fixed Rate Period (as defined in the
Indenture).
<PAGE>
[LOGO OF BANK OF AMERICA APPEARS HERE]
Each demand for payment under this letter of credit must be made by
presentation of a document in the form of Exhibit A-1 (Next Day Purchase),
Exhibit A-2 (Same Day Purchase),Exhibit B (Principal), Exhibit C (Interest),
Exhibit D (Premium) or Exhibit E (Acceleration) to this letter of credit. Each
such demand for payment must be completed, purportedly signed by an Authorized
Officer, and presented (such presentment may be in the form of a facsimile
transmission if made to the following number (312) 987-6828 or at such other
number that we provide to you for facsimile transmissions relating to this
letter of credit) and if an original of such transmission is presented to us by
the immediately succeeding business day) to us at our office on a business day
on or before January 19, 1998 (the "Expiration Date"). (For purposes hereof
"business day" means any day, other than a Saturday or Sunday, on which we are
open in Chicago, Illinois for commercial banking business;"our office" means our
office at the above address or such other address as we may specify in a writing
that references this letter of credit and is signed by us and received by you;
and "Authorized Officer" means any of your Vice Presidents, Assistant Vice
Presidents, Trust Officers or Assistant Trust Officers.)
If a complying demand for immediate payment is presented to us as described
in the preceding paragraph, then we shall waive the usual three day period for
examination of documents and honor such demand by initiating a wire transfer to
you of our own immediately available funds and advise you of the wire transfer
information (by telephone confirmed in writing) (x) in case of the presentation
of a document in the form of Exhibit A-1 (Next Day Purchase),(i) on or before
1:00 p.m., Chicago time, on the business day immediately following the business
day on which we receive such demand, if received by us at or before 4:00 p.m.,
Chicago time on a business day; or (ii) on or before 10:00 a.m. Chicago time,
on the second succeeding business day if received by us after 4:00 p.m. Chicago
time, on a business day; (y) in the case of the presentation of a document in
the form of Exhibit A-2 (Same Day Purchase), (i) on or before 1:00 p.m., Chicago
time, on the same business day on which we receive such demand, if received by
us at or before 11:00 a.m., Chicago time or (ii) on or before 10:00 a.m. Chicago
time, on the next succeeding business day if received by us after 11:00 a.m.,
Chicago time, on a business day; or (z) in the case of presentation of a
document in the form of Exhibit B (Principal), Exhibit C (Interest), Exhibit D
(Premium) or Exhibit E (Acceleration), (i) on or before 1:00 p.m., Chicago time,
on the business day immediately following the business day on which we receive
such demand, if received by us at or before 1:00 p.m., Chicago time, on a
business day, or (ii) on or before 10:00 a.m., Chicago time, on the second
succeeding business day if received by us after 1:00 p.m., Chicago time, on a
business day; or we shall notify you(by telephone, confirmed in writing) of our
dishonor of such demand on or before such time(s).
After our honor of a complying demand for payment in the form of Exhibit C
(Interest) that does not relate to a redemption or purchase and cancellation of
the Bonds, the Stated Amount available under this Letter of Credit shall be
automatically reduced by the amount of such honor but shall be automatically
reinstated on the opening of business on the 4th business day after such honor,
unless on or prior thereto you receive a notice signed by us that refers to this
letter of credit, and states that we have elected not to effect such
reinstatement. After our honor of a complying demand for payment in the form of
Exhibit C (Interest) that provides, as set forth in Exhibit C (Interest), that
the drawing of interest relates to a redemption or purchase and cancellation of
the Bonds, the Stated
-2-
<PAGE>
[LOGO OF BANK OF AMERICA APPEARS HERE]
Amount available under this letter of credit shall be automatically reduced by
the amount of such honor, or, if such honor of a complying demand for payment in
the form of Exhibit C (Interest) is made in conjunction with our honor of a
complying demand for payment in the form of Exhibit B (Principal), the Stated
Amount available under this letter of credit shall be automatically reduced as
set forth in the next following paragraph.
After our honor of a complying demand for payment in the form of Exhibit B
(Principal), the amount available under this letter of credit shall be
automatically reduced by an amount equal to the total potential Tender Price of
the Bonds purchased and cancelled or redeemed through such honor of such demand
therefor (such amount to be equal to the principal amount of the Bonds purchased
and cancelled or redeemed through such honor of such demand plus interest
thereon at 13% for 199 days).
After our honor of a complying demand for payment in the form of Exhibit D
(Premium), the amount available under this letter of credit shall be
automatically and permanently reduced by the amount of such honor.
After our honor of a complying demand for payment in the form of Exhibit
A-1 (Next Day Purchase) or Exhibit A-2 (Same Day Purchase) the amount available
under this letter of credit shall be automatically reduced by an amount equal to
the total potential Tender Price of the Bonds purchased through such honor of
such demand therefor (such amount to be equal to the principal amount of the
Bonds purchased through such honor of such demand plus interest thereon at 13%
for 199 days, but we may in our discretion reinstate all or a portion of such
amount if you receive a notice signed by us that refers to this letter of
credit, and sets forth the amount of such reinstatement, such reinstatement to
be effective upon your receipt of such notice).
Upon our recept of a certificate signed by an Authorized Officer in the
form of Exhibit H, the Stated Amount available under this letter of credit
automatically shall be reduced by the amount so specified as of 5:00 p.m.,
Chicago time, on the date of our receipt (or such later date as may be specified
therein). We may in our discretion reinstate all or a portion of the amount
available under this letter of credit as so reduced if you receive a notice
signed by us that refers to this letter of credit and sets forth the amount of
such reinstatement, such reinstatement to be effective upon your receipt of such
notice.
After our honor of a complying demand for payment in the form of Exhibit E
(Acceleration), this letter of credit shall automatically terminate and shall be
delivered promptly to us for cancellation. In addition, upon the earliest of (i)
our receipt of a certificate purportedly signed by an Authorized Officer
referring to this letter of credit stating that: "(a) the conditions precedent
to the acceptance and effectiveness of an Alternate Letter of Credit (as defined
in the Indenture) have been satisfied and (b) the Trustee has accepted an
Alternate Letter of Credit", (ii) our receipt of a certificate purportedly
signed by an Authorized Officer referring to this letter of credit stating that:
"no Bonds remain Outstanding (as defined in the Indenture)", (iii) the date that
is 30 calendar days following delivery of a notice from us to our Customer and
you in the form attached hereto as Exhibit G at the addresses set forth on such
Exhibit G (or at such other address as you may advise us in
-3-
<PAGE>
[LETTERHEAD OF BANK OF AMERICA APPEARS HERE]
Bank of America
writing to use in lieu thereof), (iv) if we shall receive written notice from
our Customer and the holders of all the Bonds that are "Outstanding" within the
meaning of the Indenture that they are exercising their option to terminate this
Letter of Credit pursuant to the terms of the Indenture, on the earlier of the
date specified in such notice and the date that is 30 calendar days after we
receive such written notice, and (v) the Expiration Date, this letter of credit
shall terminate, and shall be delivered promptly to us for cancellation.
Your rights to demand further payment, reduction and transfer under this
letter of credit may be successively transferred by presentation to us at our
office on a business day of a demand in the form of Exhibit F (Transfer) to this
letter of credit, completed and signed by you. Your transferee shall be deemed
the addressee of this letter of credit and the sole permitted signer of any
further demands under this letter of credit for payment, reduction and transfer.
This letter of credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein or in any
Exhibit hereto and any such reference shall not be deemed to incorporate herein
by reference any document, instrument or agreement.
Only you as beneficiary of this letter of credit may complete the
certificate(s) required hereby on your behalf and may make a drawing under this
letter of credit. Upon this payment of our funds to you, to your order or to
your account of the amount demanded hereunder, we shall be fully discharged to
the extent of such payment on our obligation under this letter of credit with
respect to such demand for payment. By paying an amount demanded in accordance
herewith, we make no representation as to the correctness of the amount
demanded.
This letter of credit shall be goverened by the Uniform Commercial
Code--Letters of Credit, as enacted in the State of Illinois (the "UCC"). This
letter of credit is issued subject to the Uniform Customs and Practices for
Documentary Credits, 1993 revision, ICC Publication No. 500(1994), excluding
Articles 45 and 54 (regarding installment drawings and transfer) thereof and
except to the extent that other articles or provisions thereof may be
inconsistent with the UCC or the terms of this letter of credit.
BANK OF AMERICA ILLINOIS
By: /s/ Jesus Aranas 0.843
-------------------------------
Name: JESUS ARANAS
------------------------------
Title: FOR CASHIER
By: /s/ [SIGNATURE APPEARS HERE]
-------------------------------
Name: [NAME APPEARS HERE]
------------------------------
Title: FOR CASHIER
-----------------------------
-4-
<PAGE>
Exhibit A-1 (Next Day Purchase)
Date:_________________________________
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Letter of Credit Department
We demand payment to our order of ___________ Dollars ($________),
consisting of __________ Dollars ($_________) corresponding to principal and
_______ Dollars ($______) corresponding to up to ____ days accrued and unpaid
interest on such Bonds, under your Letter of Credit No. C7266237 (the "Letter of
Credit"),
We certify as follows:
1. We are the Trustee under the Indenture mentioned below and the
beneficiary of the Letter of Credit.
2. The amount demanded equals the aggregate amount of the purchase price
of Bonds mentioned below as described in and which is due and payable, other
than on an LOC Termination Tender Date (as defined in the Indenture referred to
below), under Section 202 or Section 503 of such Indenture, such Bonds are
supported by the Letter of Credit, and the amount demanded does not exceed the
Stated Amount (as defined in the Letter of Credit) of the Letter of Credit.
3. The proceeds from your honor of this demand will be used solely to pay
such purchase price of such Bonds and will not be used to pay the purchase price
of any Bonds owned by or registered in the name of the Customer referred to in
the Letter of Credit (whether owned by it or pledged in your favor). Such Bonds
immediately upon your payment to our order of the amount demanded hereby will be
registered in the name of such Customer subject to a pledge in your favor
pursuant to the Pledge and Security Agreement dated as of January 1, 1995
between you and the Customer referred to in the Letter of Credit, and will be
held by us for your benefit pending your further instruction by your singed
writing to us.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon your honoring of this demand, the amount of the Letter of Credit
and the amounts available to be drawn by the Trustee thereunder by any
subsequent drawings under the Letter of Credit are automatically decreased by an
amount equal to the purchase price of the Bonds corresponding to principal that
are subject to this drawing plus 199 days interest thereon at an assumed rate of
13% per annum, subject to reinstatement as provided in the Letter of Credit.
Please wire transfer the amount demanded hereby to:
______________________________________________________________________________.
<PAGE>
We make our demand and certification as of _____________________ [Fill in
the next Business Day after the date hereof].
Bank One, Springfield
as Trustee (the "Trustee")
under a Trust Indenture
dated as of January 1, 1995
between The City of
Jacksonville, Illinois
(the "Issuer") and the Trustee
securing $7,640,000
in aggregate principal amount
of the Issuer's Multi-Mode
Industrial Project Revenue Bonds,
Series 1995 (AGI Incorporated
Project)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-2-
<PAGE>
Exhibit A-2(Same Day Purchase)*
Date:
------------------
Bank of America Illinois
231 South LaSalle
Chicago, Illinois 60697
Attention: Letter of Credit Department
We demand payment to our order of ______________Dollars($__________),
consisting of __________Dollars($______) corresponding to principal and ________
Dollars($________) corresponding to up to ____ days accrued and unpaid interest
on such Bonds, under your Letter of Credit No. C7266237 (the "Letter of
Credit").
We certify as follows:
1. We are the Trustee under the Indenture mentioned below and the
beneficiary of the Letter of Credit.
2. The amount demanded equals the aggregate amount of the purchase price of
Bonds mentioned below, as described in and which is due and payable, other than
on an LOC Termination Tender Date (as defined in the Indenture), under Section
202 or 503 of such Indenture, such Bonds are supported by the Letter of Credit,
and the amount demanded does not exceed the Stated Amount (as defined in the
Letter of Credit) of the Letter of Credit.
3. This demand for payment arises due to a failure of a third-party
purchaser to make timely payment for remarketed Bonds which have been
delivered or tendered for purchase and which are required to be purchased
today.
[4. This demand supplements and is in addition to our demand in the form of
Exhibit A-1 (Next Day Purchase) requiring payment on this date under the Letter
of Credit and does not supersede such demand.]**
[4./5.]*** The proceeds from your honor of this demand will be used solely
to pay such purchase price of such Bonds, and will not be used to pay the
purchase price of any Bonds owned by or registered in the name of the Customer
referred to in the Letter of Credit (whether
- ----------------------------
* This notice must be received by the Bank not later than 11:00 a.m., Chicago
time, to assure the same day purchase.
** Omit bracketed language if not applicable.
*** Use appropriate number.
<PAGE>
owned by it or pledged in your favor). Such Bonds immediately upon your payment
to our order of the amount demanded hereby will be registered in the name of
such Customer subject to a pledge in your favor pursuant to the Pledge and
Security Agreement dated as of January 1, 1995 between you and the Customer
referred to in the Letter of Credit, and will be held by us for your benefit
pending your further instruction by your signed writing to us.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon your honoring of this demand, the amount of the Letter of Credit
and the amount is available to be drawn by the Trustee thereunder by any
subsequent drawings under the Letter of Credit are automatically decreased by an
amount equal to the purchase price of the Bonds corresponding to principal that
are subject to this drawing plus 199 days interest thereon at an assumed rate of
13% per annum, subject to reinstatement as provided in the Letter of Credit.
Please wire transfer the amount demanded hereby to:
_______________________________________________________________________.
We make our demand and certification as of the date hereof.
Bank One, Springfield
as Trustee (the "Trustee")
under a Trustee Indenture
dated as of January 1, 1995
between The City of
Jacksonville, Illinois
(the "Issuer") and the Trustee
securing $7,600,000
in aggregate principal amount
of the Issuer's Multi-Mode
Industrial Project Revenue Bonds,
Series 1995 (AGI Incorporated
Project)
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
-2-
<PAGE>
Exhibit B (Principal)
Date:_____________________
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Letter of Credit Department
We demand payment to our order of _____________Dollars($_______) under your
Letter of Credit No. C7266237 (the "Letter of Credit").
We certify as follows:
1. We are the Trustee under the Indenture mentioned below and the
beneficiary of the Letter of Credit.
2. The amount demanded equals the aggregate amount of principal of Bonds
mentioned below, as described in and which is due and payable under Section 202
or Article V of such Indenture, such Bonds are supported by the Letter of
Credit, and the amount demanded does not exceed the Stated Amount (as defined
in the Letter of Credit) of the Letter of Credit.
3. The proceeds from your honor of this demand will be used solely to pay
such principal on such Bonds and will not be used to pay the principal amount of
any Bonds owned by or registered in the name of the Customer referred to in the
Letter of Credit (whether owned by it or pledged in your favor).
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon your honoring of this demand, the amount of the Letter of Credit
and the amounts available to be drawn by the Trustee thereunder by any
subsequent drawings under the Letter of Credit are automatically and permanently
decreased by an amount equal to the principal amount of Bonds that are subject
to this drawing plus 199 days interest thereon at an assumed rate of 13% per
annum.
<PAGE>
Please wire transfer the amount demanded hereby to:
_____________________________________________________________.
We make our demand and certification as of ________________. [Fill in the
date hereof or applicable future date not more than one week from the date
hereof.]
Bank One, Springfield
as Trustee (the "Trustee")
under a Trust Indenture
dated as of January 1, 1995
between The City of
Jacksonville, Illinois
(the "Issuer") and the Trustee
securing $7,640,000
in aggregate principal amount
of the Issuer's Multi-Mode
Industrial Project Revenue Bonds,
Series 1995 (AGI Incorporated
Project)
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
-2-
<PAGE>
Exhibit C (Interest)
Date:__________________
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Letter of Credit Department
We demand payment to our order of _____________ Dollars ($_______) under
your Letter of Credit No. C7266237 (the "Letter of Credit").
We certify as follows:
1. We are the Trustee under the Indenture mentioned below and the
beneficiary of the Letter of Credit.
2. The amount demanded equals the aggregate amount of accrued and unpaid
interest which is due and payable under the Bonds mentioned below under Section
202 of the Indenture mentioned below for the period from and including the last
preceding interest payment date under the Indenture to but not including
_________*, such Bonds are supported by the Letter of Credit, and the amount
demanded does not exceed the Stated Amount (as defined in the Letter of Credit)
of the Letter of Credit.
3. The proceeds from your honor of this demand will be used solely to pay
such unpaid interest on such Bonds to the extent such interest has accrued
during the preceding _____** days. None of the Bonds in respect of which this
drawing will be used to pay interest thereon are owned by or registered in the
name of the Customer referred to in the Letter of Credit (whether owned by it or
pledged in your favor).
[4. This drawing of interest relates to a redemption or purchase and
cancellation of Bonds.]***
- ---------------------------------
* Specify Payment Due Date.
** Not to exceed 199 days.
*** Omit if inapplicable.
<PAGE>
[4/5.] ****[This drawing of interest is the first such drawing presented by
the Trustee under the Letter of Credit.] [The drawing for interest last
presented by the Trustee under the Letter of Credit was honored and paid by you
on ________, 19__, and the Trustee has not received a notice from you that you
have not been reimbursed for such drawing.]*****
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon your honoring of this demand, the amount of the Letter of Credit
and the amounts available to be drawn by the Trustee thereunder by any
subsequent drawings under the Letter of Credit are automatically decreased by an
amount as provided in the Letter of Credit, subject to reinstatement (if such
drawing of interest does not relate to a redemption or purchase and cancellation
of the Bonds) as provided in the Letter of Credit.
Please wire transfer the amount demanded hereby to:
- --------------------------------------------------------------------.
We make our demand and certification as of ______________ [Fill in the date
hereof or applicable future date not more than one week from the date hereof.]
Bank One, Springfield
as Trustee (the "Trustee")
under a Trust Indenture
dated as of January 1, 1995
between The City of
Jacksonville, Illinois
(the "Issuer") and the Trustee
securing $7,640,000
in aggregate principal amount
of the Issuer's Multi-Mode
Industrial Project Revenue Bonds,
Series 1995 (AGI Incorporated
Project)
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
- ---------------------------------
**** Use appropriate number.
***** Select appropriate bracketed language.
-2-
<PAGE>
Exhibit D (Premium)
Date:
---------------
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Letter of Credit Department
We demand payment to our order of ___________________Dollars ($_______)
under your Letter of Credit No. C7266237 (the "Letter of Credit").
We certify as follows:
1. We are the Trustee under the Indenture mentioned below and the
beneficiary of the Letter of Credit.
2. The amount demanded equals the aggregate amount of premium due on the
Bonds mentioned below, as described in and which is due and payable under
Article V of such Indenture, such Bonds are in an Adjustable Long Period (as
defined in the Indenture) or the Fixed Rate Period (as defined in the
Indenture), such Bonds are supported by the Letter of Credit, and the amount
demanded does not exceed the Stated Amount (as defined in the Letter of Credit)
of the Letter of Credit.
3. The proceeds from your honor of this demand will be used solely to pay
premium due on such Bonds and will not be used to pay the premium due on any
Bonds owned by or registered in the name of the Customer referred to in the
Letter of Credit (whether owned by it or pledged in your favor).
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon your honoring of this demand, the amount of the Letter of Credit
and the amounts available to be drawn by the Trustee thereunder by any
subsequent drawings under the Letter of Credit are automatically and permanently
decreased by an amount equal to the amount demanded hereby.
Please wire transfer the amount demanded hereby to:
- -------------------------------------------------------------------------.
-1-
<PAGE>
We make our demand and certification as of ____________________ [Fill in
the date hereof or applicable future date not more than one week from the date
hereof.]
Bank One, Springfield
as Trustee (the "Trustee")
under a Trust Indenture
dated as of January 1, 1995
between The City of
Jacksonville, Illinois
(the "Issuer") and the Trustee
securing $7,640,000
in aggregate principal amount
of the Issuer's Multi-Mode
Industrial Project Revenue Bonds,
Series 1995 (AGI Incorporated
Project)
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-2-
<PAGE>
Exhibit E (Acceleration)
Date:
-------------------------
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Letter of Credit Department
We demand payment of our order of _________________. Dollars ($__________),
consisting of ____________ Dollars ($_____________) corresponding to principal,
______________ Dollars ($______________) corresponding to up to _________ days
accrued and unpaid interest on such Bonds, and ___________ Dollars ($__________)
corresponding to premium, if any, on the Bonds under your Letter of Credit No.
C7266237 (the "Letter of Credit").
We certify as follows:
1. We are the Trustee under the Indenture mentioned below and the
beneficiary of the Letter of Credit.
2. The amount demanded equals (x) the aggregate amount of principal of and
interest on the Bonds mentioned below which has become due and payable pursuant
to acceleration of maturity of the Bonds mentioned below as provided in Section
702 of such Indenture or (y) the aggregate amount of the purchase price of Bonds
(consisting of, premium, if any, as described below, and interest on such Bonds)
mentioned below as described in and which is due and payable on an LOC
Termination Tender Date (as defined in the Indenture) (such amount to include a
premium if such Bonds are in an Adjustable Long Period (as defined in the
Indenture) or the Fixed Rate Period (as defined in the Indenture)), and the
amount demanded does not exceed the Stated Amount (as defined in the Letter of
Credit) on the Letter of Credit.
3. The proceeds from your honor of this demand will be used solely to pay
the principal amount (or the purchase price corresponding to principal),
premium, if any, as described above, and interest (or the purchase price
corresponding to interest), to the extent such interest has accrued during the
preceding _______* days, owing on account of such Bonds which are Outstanding
(as defined in such Indenture) and not owned by or registered in the name of the
Customer referred to in the Letter of Credit (whether owned by it or pledged in
your favor). Such Bonds immediately upon your payment to our order of the amount
demanded hereby will be registered in the name of such Customer subject to a
pledge in your favor pursuant to the Pledge and Security Agreement dated as of
January 1, 1995 between you and the Customer referred to in the Letter of
Credit, and will be held by us for your benefit pending your further instruction
by your signed writing to us.
- --------------------------
* Not to exceed 199 days.
<PAGE>
Please wire transfer the amount demanded hereby to:
___________________________________________________________________________.
We make our demand and certification as of ____________________ [Fill in
the date hereof or applicable future date not more than one week from the date
hereof.]
Upon payment by you of this drawing, we acknowledge that the Letter of
Credit will terminate.
Bank One, Springfield
as Trustee (the "Trustee")
under a Trust Indenture
dated as of January 1, 1995
between The City of
Jacksonville, Illinois
(the "Issuer") and the Trustee
securing $7,640,000
in aggregate principal amount
of the Issuer's Multi-Mode
Industrial Project Revenue Bonds,
Series 1995 (AGI Incorporated
Project)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-2-
<PAGE>
Exhibit F (Transfer)
Date:
------------------
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Letter of Credit Department
We demand transfer of our rights to demand further payment, reduction, and
transfer under your Letter of Credit No. C7266237 to the following trustee bank:
[Name of Transferee]
---------------------------
[Address]
------------------------
----------------------
We certify that the above identified bank has been appointed and qualified
(or will be upon your honor of our transfer demand) as our successor trustee
under the Indenture (as defined in such Letter of Credit).
We make our demand and certification as of ______________, 19__ [Fill in
the date hereof or applicable future date not more than one week from the date
hereof].
[Name of Transferor]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[Name of Transferee]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE>
Exhibit G
NOTICE OF INTENT TO TERMINATE
-----------------------------
LETTER OF CREDIT
----------------
Bank One, Springfield
AGI Incorporated as Trustee (the "Trustee")
1950 Ruby Street under a Trust Indenture
Melrose Park, Illinois 60160 dated as of January 1, 1995 between
Attention: Chief Financial The City of Jacksonville, Illinois (the)
Officer "Issuer") and the Trustee securing
$7,640,000 in aggregate principal
amount of the Issuer's Multi-Mode
Industrial Project Revenue Bonds,
Series 1998 (AGI Incorporated Project)
(the "Bonds")
One East Old State Capitol Plaza
P.O. Box 19266
Springfield, Illinois 62794-9266
Re: Letter of Credit No. C7266237
-----------------------------
The undersigned hereby notifies you that its Letter of Credit No.
C7266237, dated January 19, 1995 (the "Letter of Credit") shall expire 30
calendar days from the date hereof on _____________ 19___ due to the occurrence
and continuance of the event of default described in Section 6 of the
Reimbursement Agreement dated as of January 1, 1995, between AGI Incorporated
and the undersigned. Please deliver to the undersigned for cancellation the
original of the Letter of Credit immediately following such expiration date.
BANK OF AMERICA ILLINOIS
By:______________________
Name:____________________
Title:___________________
<PAGE>
Exhibit H
Date:
-----------------
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Letter of Credit Department
We hereby request that the stated amount available under your Letter of
Credit No. C7266237 (the "Letter of Credit") be reduced by ___________ Dollars
($___________), consisting of ___________ Dollars ($__________) in respect of
principal of Bonds, __________ Dollars ($__________) in respect of interest on
Bonds at 13% per annum for 199 days and __________ Dollars ($__________) in
respect of premium on the Bonds.
We certify as follows:
1. We are the Trustee under the Indenture mentioned below and the
beneficiary of the Letter of Credit.
2. The amount of reduction equals the aggregate amount of principal
thereon, premium thereon, and interest thereon at 13% per annum for 199 days
which may be due and payable under the Bonds mentioned below which are no longer
required to be supported by the Letter of Credit and which the Customer referred
to in the Letter of Credit with your consent has requested not be supported by
the Letter of Credit by notice to us.
We make our demand and certification as of __________. (Fill in the date
hereof or applicable future date not more than one week from the date hereof.)
Bank One, Springfield
as Trustee (the "Trustee"),
under a Trust Indenture dated
as of January 1, 1995 between
The City of Jacksonville,
Illinois (the "Issuer") and the
Trustee securing $7,640,000 in
aggregate principal amount of
the Issuer's Multi-Mode
Industrial Project Revenue
Bonds, Series 1995 (AGI
Incorporated Project)
By:
-------------------------
Name:
-----------------------
Title:
----------------------
<PAGE>
Exhibit 10.52
[LETTERHEAD OF MELLON BANK APPEARS HERE]
DUPLICATE ORIGINAL. IF THE ORIGINAL IS FOUND, PLEASE RETURN THIS
DUPLICATE ORIGINAL TO US AT THE ADDRESS LISTED ABOVE.
IRREVOCABLE LETTER OF CREDIT
MELLON BANK,N.A.
Trade Banking Operations
Three Mellon Bank Center, Room 2329
Pittsburgh, Pennsylvania 15259-0001
Dated as of August 21,1997
CREDIT NO. S854302
Mellon Bank, N.A.
Mellon Independence Center
701 Market Street
Philadelphia, PA 19106
Attention: Corporate Trust Group
Gentleman/Ladies:
At the request and on the instructions of our customer, Klearfold, Inc.,
a Pennsylvania corporation (the "Borrower"), with its principal place of
business located at 110 Gibralter Road, Suite 102, Horsham, Pennsylvania 19044,
we hereby establish in you favor, as Trustee under the Trust Indenture dated as
of August 1, 1997 (as amended and in effect from time to time, the "Indenture")
between the Bucks County Industrial Development Authority (the "Issuer"), and
Mellon Bank, N.A., as Trustee (the "Trustee"), pursuant to which $4,000,000 in
aggregate principal amount of the Issuer's Variable Rate Demand Revenue Bonds,
Series 1997 (Klearfold, Inc. Project) (the "Bonds"), are being issued, this
Irrevocable Letter of Credit in the amount of Four Million Sixty Four Thousand
Four Hundred Forty Dollars ($4,064,440.00) (herinafter, as reduced from time to
time in accordance with the provisions hereof, the "Stated Amount") of which an
amount not exceeding $4,000,000.00 (as reduced and reinstated from time to time
in accordance with the terms hereof) is referred to herein as the "Principal
Component", and an amount not exceeding $64,440.00 (as reduced and reinstated
from time to time in accordance with the terms hereof) is referred to as the
"Interest Component". This Irrevocable Letter of Credit No. S854302 (this
"Letter of Credit") is effective immediately and expires on August 21, 1998,
unless terminated earlier in accordance with the provisions hereof or unless
otherwise extended. This Letter of Credit is issued by us pursuant to the
provisions of the Letter of Credit and Reimbursement dated as of August 1, 1997
between the Borrower and Mellon Bank, N.A., in its capacity as issuer of this
Letter of Credit (as amended and in effect from time to time, the
1
<PAGE>
[LETTERHEAD OF MELLON BANK APPEARS HERE]
"Reimbursement Agreement"). All drawings under this Letter of Credit will
be paid with our own funds in United States dollars.
Funds under this Letter of Credit will be made available to you in an
aggregate amount not exceeding the Stated Amount in accordance with the terms
and conditions and subject to the reductions, all as hereinafter provided,
against receipt by us of sight draft(s) of yours drawn on Mellon Bank, N.A.,
stating on its face: "Drawn under Mellon Bank, N.A., Pittsburgh, Pennsylvania,
Irrevocable Letter of Credit No. S854302, dated August 21, 1997" and accompanied
by one or more of the following items at the time required below:
(A) a written statement in the form of Exhibit A hereto
---------
appropriately completed and purportedly signed by an Authorized Officer (as
hereinafter defined);
(B) a written statement in the form of Exhibit B hereto
---------
appropriately completed and purportedly signed by an Authorized Officer; or
(C) a written statement in the form of Exhibit C hereto
---------
appropriately completed and purportedly signed by an Authorized Officer.
Presentation of such draft(s) and statement(s) shall be made at Mellon Bank,
N.A., Three Mellon Bank Center, Room 2329, Pittsburgh, Pennsylvania 15259-001
or at any other location which may be designated by us by written notice
delivered to you.
Demand for payment may also be made in the form of a telecopy by your duly
Authorized Officer to us at Telecopier No. (412) 234-2733 to be confirmed by
telephonic notice to Manager - Standby Letter of Credit Unit by telephone at
(412) 234-6408; provided that such telecopy sets out word for word the text of
the sight draft and the appropriate drawing statement and that you undertake to
send us the appropriate documents referred to above within three (3) Business
Days (hereinafter defined) of the sending of such telecopy. Demand for payment
may not be made by any telecommunication facility other than telecopy.
We hereby agree that each draft drawn under and in compliance with the
terms of this Letter of Credit will be duly honored by us with our own funds
upon due delivery of the statement, or statements, as specified above, if
presented as specified below on or before the Expiration Date hereof:
(1) If a presentation in respect of payment in connection with an A
Drawing or a related C Drawing is made by you hereunder and
received by us at or prior to 10:30 a.m., Pittsburgh, PA, time,
on a Business Day, and provided that such drawing and the
documents so presented in connection therewith conform to the
terms and conditions hereof, we shall initiate payment to you
of the amount specified, in immediately available funds by wire
transfer to Mellon Bank, N.A.,
2
<PAGE>
[LETTERHEAD OF MELLON BANK APPEARS HERE]
ABA No. 043000261 for credit to the Letter of Credit Account of the
Bond Purchase Fund under the Indenture, or such other account
designated in writing by you, in sufficient time so that you receive
the proceeds of such drawing at or before 2:00 p.m., Pittsburgh, PA,
time, on the same Business Day, or on such later Business Day as you
may specify.
(2) If a presentation in respect of payment in connection with an A
Drawing or a related C Drawing is made by you hereunder and received
by us after 10:30 a.m. but on or prior to 3:00 p.m., Pittsburgh, PA,
time, on a Business Day, and provided that such drawing and the
documents so presented in connection therewith conform to the terms
and conditions hereof, we shall initiate payment to you of the amount
specified, in immediately available funds by wire transfer to Mellon
Bank, N.A., ABA No. 043000261 for credit to the Letter of Credit
Account of the Bond Purchase Fund under the Indenture, or such other
account designated in writing by you, on or before 10:30 a.m.,
Pittsburgh, PA, time, on the next succeeding Business Day, or on such
later Business Day as you may specify.
(3) If a presentation in respect of payment in connection with an A
Drawing or a related C Drawing is made by you hereunder and received
by us after 3:00 p.m., Pittsburgh, PA, time, on a Business Day, and
provided that such drawing and the documents so presented in
connection therewith conform to the terms and conditions hereof, we
shall initiate payment to you of the amount specified, in immediately
available funds by wire transfer to Mellon Bank, N.A., ABA No.
043000261 for credit to the Letter of Credit Account of the Bond
Purchase Fund under the Indenture, or such other account designated
in writing by you, on or before 2:00 p.m., Pittsburgh, PA, time, on
the next succeeding Business Day, or on such later Business Day as
you may specify.
(4) If a presentation in respect of payment in connection with a B
Drawing or a C Drawing (not related to an A Drawing) is made by you
hereunder and received by us at or prior to 10:30 a.m., Pittsburgh,
PA, time, on a Business Day, and provided that such drawing and the
documents so presented in connection therewith conform to the terms
and conditions hereof, we shall initiate payment to you of the amount
specified, in immediately available funds by wire transfer to Mellon
Bank, N.A., ABA No. 043000261 for credit to the Letter of Credit
Account of the Bond Fund under the Indenture, or such other account
designated in writing by you, in sufficient time so that you receive
the proceeds of such drawing at or before 2:00 p.m., Pittsburgh, PA,
time, on the same Business Day, or on such later Business Day as you
may specify.
3
<PAGE>
[LETTERHEAD OF MELLON BANK APPEARS HERE]
(5) If a presentation in respect of payment in connection with a B
Drawing or a C Drawing (not related to an A Drawing) is made by you
hereunder and received by us after 10:30 a.m., Pittsburgh, PA, time,
on a Business Day, and provided that such drawing and the documents
so presented in connection therewith conform to the terms and
conditions hereof, we shall initiate payment to you of the amounts
specified, in immediately available funds by wire transfer to Mellon
Bank, N.A., ABA No. 043000261 for credit to the Letter of Credit
Account of the Bond Fund under the Indenture, or such other account
designated in writing by you, on or before 2:00 p.m., Pittsburgh, PA,
time, on the next succeeding Business Day or on such later Business
Day as you may specify.
Payment under this Letter of Credit will be made by deposit of immediately
available funds in an account designated by you.
No Drawing may be made hereunder to pay principal of, interest on or the
purchase price of, Pledged Bonds or Corporation Bonds (as defined in the
Indenture) or any Bonds registered in the name of the Borrower or any affiliate
of the Borrower.
Subject to the operation of the provisions contained in the immediately
following paragraph, the Principal Component shall be reduced immediately upon,
and by the amount of each drawing accomplished by, your presentation to us of a
written statement in the form of either (i) Exhibit A hereto (such statement
---------
entitled a "Drawing for Principal Portion of Purchase Price of Bonds" shall be
referred to hereafter as an "A Drawing") or (ii) Exhibit B hereto (such
---------
statement entitled a "Drawing for Principal Amount Due by Optional or Mandatory
Redemption, Acceleration or Maturity" shall be referred to hereafter as a "B
Drawing"). Subject to the operation of the provisions contained in the
immediately following paragraph, the Interest Component shall be reduced
immediately upon, and by the amount of each drawing accomplished by, your
presentation to us of a written statement in the form of Exhibit C hereto (such
---------
statement entitled a "Drawing for Interest Due Upon an Interest Payment Date,
Optional or Mandatory Redemption, Mandatory Tender for Purchase, Acceleration,
Purchase or Maturity" shall be referred to hereafter as a "C Drawing").
Immediately upon your presentation to us of a statement in the form of Exhibit D
---------
hereto (a "Reduction of Principal Request"), (i) the Principal Component shall
be reduced, without possibility of reinstatement by the amount of the reduction
in the principal amount of Bonds stated in the Reduction of Principal Request
and (ii) the Interest Component shall be reduced, without possibility of
reinstatement, by an amount equal to 49 days' accrued interest computed at the
rate of twelve percent (12%) (the "Maximum Rate of Interest") per annum on the
--- -----
basis of a 365/366 day year on the reduction in the principal amount of Bonds
stated in the Reduction of Principal Request. Any such reduction shall result in
a corresponding reduction in the Stated Amount.
After any A Drawing and any related C Drawing and provided that no Event of
Default exists under the Reimbursement Agreement, the Principal Component and
Interest Component,
4
<PAGE>
[LETTERHEAD OF MELLON BANK APPEARS HERE]
respectively shall be reinstated only (A) upon receipt of and to the extent of
any reimbursement by or on behalf of the Borrower of all or a portion of such A
Drawing and any related C Drawing or (B) upon receipt of and to the extent
specified in paragraph 4 of your statement in the form of Exhibit E hereto. With
---------
respect to a C Drawing not related to a A Drawing, if you shall not have
received, within ten (10) calendar days after any payment in respect of such C
Drawing, notice from us to the effect that (1) an Event of Default has occurred
under the Reimbursement Agreement and (2) the Letter of Credit will not be
reinstated as of the date hereof, then the Interest Component will be
automatically reinstated, as of the close of business on such tenth calendar day
to an amount equal to 49 days' accrued interest (computed at the Maximum Rate of
Interest per annum on the basis of a 365/366 day year notwithstanding the actual
---------
rate of interest borne from time to time by the Bonds) on the then applicable
Principal Component.
This Letter of Credit applies only to the payment of principal (whether by
maturity, redemption or acceleration) or the purchase of Bonds (or portions
thereof) tendered for purchase at the option of a Bondholder or as the result of
any mandatory tender for purchase under the terms of the Trust Indenture, and up
to 49 days' interest (completed as aforesaid) accruing on the Bonds, on or prior
to the expiration of this Letter of Credit and does not apply to any interest
that may accrue thereon or any principal or premium which may be payable with
respect thereto after such date.
Upon the earliest to occur (the "Expiration Date") of (i) the date on which
all available amounts hereunder have been drawn; (ii) the close of business on
the day of our receipt of a statement purportedly signed by your Authorized
Officer stating that: "(a) the Trustee has accepted an Alternate Letter of
Credit (as defined in the Trust Indenture) pursuant to Section 403 of the Trust
Indenture, (b) such Alternate Letter of Credit becomes effective on the date of
receipt of such statement by Mellon Bank, N.A., and (c) Mellon Bank, N.A.,
Irrevocable Letter of Credit No. S854302 is being surrendered herewith for
immediate cancellation"; (iii) the close of business on the twentieth (20th) day
after your receipt of notice from us that an Event of Default (as defined in the
Reimbursement Agreement) has occurred and is continuing and that the Letter of
Credit will terminate on such twentieth (20th) day, (iv) 5:00 p.m. (Pittsburgh,
PA, time) on August 21, 1998 or, if that date is not a Business Day, on the
first Business Day thereafter, or such later date to which the expiration date
of this Letter of Credit shall have been extended, as the same may be renewed
pursuant to the following paragraph (the "Scheduled Expiration Date"); (v) the
close of business on the day of our receipt of a statement purportedly signed by
your Authorized Officer stating that: "(a) there are no Bonds outstanding under
the Trust Indenture and (b) Mellon Bank, N.A., Irrevocable Letter of Credit No.
S854302 is being surrendered herewith for immediate cancellation"; and (vi) the
close of business on the day of our receipt of a statement purportedly signed by
your Authorized Officer stating that: "(a) the Fixed Rate (as defined in the
Trust Indenture) has become effective and (b) Mellon Bank, N.A., Irrevocable
Letter of Credit No. S854302 is being surrendered herewith for immediate
cancellation", this Letter of Credit shall terminate and be delivered to us for
cancellation.
5
<PAGE>
[LETTERHEAD OF MELLON BANK APPEARS HERE]
This Letter of Credit shall expire on August 21, 1998, unless prior to the
Scheduled Expiration Date, we notify you and the Borrower that we elect to renew
this Letter of Credit. We shall have no obligation to renew this Letter of
Credit and may renew this Letter of Credit on such terms and conditions as we
shall, in our sole discretion, determine. In the event of such renewal of the
Letter of Credit then in effect in respect to the Bonds, we shall, prior to the
expiration of the Letter of Credit then in effect, deliver to you a new Letter
of Credit or an amendment to this Letter of Credit having a new Scheduled
Expiration Date. In such case, the Letter of Credit shall not have expired on
the Scheduled Expiration Date.
Communications with respect to this Letter of Credit shall be in writing
and shall be addressed to Mellon Bank, N.A., Trade Banking Operations, Three
Mellon Bank Center, Room 2329, Pittsburgh, Pennsylvania 15259-0001, Attention:
Letter of Credit Department, specifically referring thereon to Mellon Bank, N.A.
Irrevocable Letter of Credit No. S854302.
This Letter of Credit is transferable in its entirety (but not in part)
to any transferee who has succeeded you as Trustee under the Indenture, and may
be successively transferred. Transfer of this Letter of Credit to such
transferee shall be effected by the presentation to us of this Letter of Credit
accompanied by the instrument of transfer in the form of Exhibit F attached
---------
hereto.
As used herein, the term "Authorized Officer" shall mean any Vice
President, Assistant Vice President, Officer or Assistant Officer in the
Corporate Trust Group (or similar group) of the Trustee. As used herein, the
term "Business Day" shall mean any day other than a Saturday, Sunday or other
day on which banks are authorized or required to be closed in Pittsburgh,
Pennsylvania, or Philadelphia, Pennsylvania, or municipalities in which the
principal offices of the Trustee, the Tender Agent (as defined in the Indenture)
or the Remarketing Agent (as defined in the Indenture) are located or a day on
which the New York Stock Exchange is closed.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds), except the statement(s) referred to
herein; and any such reference shall not be deemed to incorporate herein by
reference any document, instrument or agreement except for such statement(s).
Except as otherwise expressly stated, this Letter of Credit is subject to
the laws of the Commonwealth of Pennsylvania, including the Uniform Commercial
Code in effect in the Commonwealth of Pennsylvania as of the date of issuance of
this Letter of Credit. This Letter of Credit is subject to the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce, Publication No. 500 (the "Uniform Customs") with the exception of
Article 48(f) thereof. This Letter of Credit shall, as to matters not governed
by the Uniform Customs, be governed by and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without regard to principles of conflicts
of laws.
6
<PAGE>
[LETTERHEAD OF MELLON BANK APPEARS HERE]
Very truly yours,
MELLON BANK, N.A.
By: [ILLEGIBLE SIGNATURE APPEARS HERE]
---------------------------------------
Authorized Signature
7
<PAGE>
EXHIBIT 10.53
[BANK OF AMERICA LETTERHEAD APPEARS HERE]
PAGE: 1
DATE: MARCH 11, 1998
IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER: C7348825
BENEFICIARY APPLICANT
MELLON BANK, N.A. KLEARFOLD, INC.
610 WEST GERMANTOWN PIKE 364 VALLEY ROAD
PLYMOUTH, PA 19462 WARRINGTON, PA 18976
AMOUNT
USD 4,078,440.00
FOUR MILLION SEVENTY EIGHT THOUSAND
FOUR HUNDRED FORTY AND 00/100'S US
DOLLARS
EXPIRATION
SEPTEMBER 22, 1998 AT OUR COUNTERS
WE HEREBY ISSUE IN YOUR FAVOR OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO.
C7348825 IN AN AMOUNT NOT TO EXCEED IN THE AGGREGATE U.S. DOLLARS 4,078,440.00
(FOUR MILLION SEVENTY EIGHT THOUSAND FOUR HUNDRED FORTY AND NO/100 UNITED STATES
DOLLARS) EFFECTIVE IMMEDIATELY AND EXPIRING AT OUR OFFICE ON SEPTEMBER 22, 1998.
WE ARE INFORMED THAT THIS LETTER OF CREDIT IS BEING ISSUED TO SECURE THE
REIMBURSEMENT OBLIGATIONS TO YOU IN RELATION TO THAT CERTAIN LETTER OF CREDIT
NO. S854302 WHICH HAS BEEN ISSUED BY YOU ON BEHALF OF AND FOR THE ACCOUNT OF
KLEARFOLD, INC.
FUNDS UNDER THIS LETTER OF CREDIT ARE AVAILABLE TO YOU FROM TIME TO TIME UPON
OUR RECEIPT OF YOUR TESTED TELEX OR SWIFT ADVICE STATING ONE OF THE FOLLOWING.
1. "MELLON BANK, N.A. HAS BEEN REQUESTED TO PAY BY PRESENTATION OF A DRAFT FOR
PAYMENT AND HAS PAID THE AMOUNT STATED THEREIN AS A SO CALLED "(A, B OR C)
DRAWING" PURSUANT TO THE TERMS AND CONDITIONS OF THAT CERTAIN IRREVOCABLE LETTER
OF CREDIT NO. S854302 ISSUED ON AUGUST 21, 1997 (THE "MELLON L/C") AND HAS PAID
U.S.D. ______________________ THEREUNDER AND MELLON BANK, N.A. HEREBY REQUESTS
PAYMENT OF ______________ DOLLARS (________) UNDER THE BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION LETTER OF CREDIT NO. C7348825 ISSUED FOR THE
ACCOUNT OF KLEARFOLD, INC. IN FAVOR OF MELLON BANK, N.A., AND REPRESENTS THAT
SUCH AMOUNT WAS PAID BY MELLON BANK, N.A. UNDER THE MELLON L/C."
2. "THE BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION LETTER OF CREDIT
NO. C7348825 ISSUED FOR THE ACCOUNT OF KLEARFOLD, INC. IN FAVOR OF MELLON BANK,
N.A. IS SET TO EXPIRE WITHIN THE NEXT THIRTY (30) DAYS AND NO SUBSTITUTE OR
REPLACEMENT LETTER OF CREDIT IN FORM AND SUBSTANCE (AND FROM AN ISSUER)
ACCEPTABLE TO MELLON BANK, N.A. HAS BEEN PROVIDED BY KLEARFOLD, INC. AND MELLON
HEREBY REQUESTS PAYMENT OF __________________ DOLLARS (___________) UNDER THE
BANK OF AMERICA LETTER OF CREDIT REFERENCED ABOVE AND REPRESENTS THAT SUCH FUNDS
WILL BE HELD AS CASH COLLATERAL SOLELY TO SECURE ITS OBLIGATIONS UNDER THE
MELLON L/C."
IN RESPECT OF CLAIMS DRAWN UNDER THIS LETTER OF CREDIT:
1. IF A PRESENTATION IN RESPECT OF PAYMENT IS MADE BY YOU HEREUNDER AT OR PRIOR
TO 9:00 A.M., CHICAGO TIME, IN A BUSINESS DAY (AS DEFINED
<PAGE>
[LETTERHEAD OF BANK OF AMERICA APPEARS HERE]
PAGE: 2
THIS IS AN INTEGRAL PART OF LETTER OF CREDIT NUMBER: C7348825
BELOW) PAYMENT SHALL BE MADE TO YOU OR YOUR DESIGNEE OF THE AMOUNT SPECIFIED, IN
IMMEDIATELY AVAILABLE FUNDS, NOT LATER THAN 3:00 P.M., CHICAGO TIME, ON THE SAME
BUSINESS DAY, AND
2. IF A PRESENTATION IN RESPECT OF PAYMENT IS MADE BY YOU HEREUNDER AFTER 9:00
A.M., BUT BEFORE 1 P.M., CHICAGO TIME, ON A BUSINESS DAY, PAYMENT SHALL BE MADE
TO YOU, OR TO YOUR DESIGNEE, OF THE AMOUNT SPECIFIED IN IMMEDIATELY AVAILABLE
FUNDS, NOT LATER THAN 9:00 A.M., CHICAGO TIME, ON THE NEXT BUSINESS DAY, AND
3. IF A PRESENTATION IN RESPECT OF PAYMENT IS MADE BY YOU HEREUNDER AFTER 1:00
P.M., CHICAGO TIME, ON A BUSINESS DAY, PAYMENT SHALL BE MADE TO YOU, OR TO YOUR
DESIGNEE, OF THE AMOUNT SPECIFIED IN IMMEDIATELY AVAILABLE FUNDS, NOT LATER THAN
2:00 P.M., CHICAGO TIME, ON THE NEXT BUSINESS DAY. AS USED HEREIN, "BUSINESS
DAY" MEANS ANY DAY OTHER THAN A SATURDAY, A SUNDAY OR A DAY ON WHICH BANKS IN
CHICAGO ARE AUTHORIZED OR REQUIRED BY LAW OR BY EXECUTIVE ORDER TO CLOSE.
IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE REDUCED
AUTOMATICALLY AND WITHOUT AMENDMENT, FROM TIME TO TIME IN THE FOLLOWING MANNER:
A) BY ANY AMOUNT CLAIMED BY YOU AND PAID BY BANK OF AMERICA UNDER THIS LETTER OF
CREDIT; OR
B) UPON RECEIPT OF YOUR WRITTEN ADVICE THAT OUR LETTER OF CREDIT CAN BE REDUCED
BY A STATED AMOUNT AS A RESULT OF A CANCELLATIONS OF OR A REDUCTION OF THE
AMOUNT OF YOUR LETTER OF CREDIT NO. S854302.
WE HEREBY AGREE WITH YOU THAT YOUR CLAIM PRESENTED HEREUNDER IN ACCORDANCE WITH
THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT WILL BE DULY HONORED UPON
RECEIPT ON OR BEFORE THE ABOVE STATED EXPIRATION DATE.
THIS LETTER OF CREDIT IS TRANSFERABLE IN ITS ENTIRETY (BUT NOT IN PART) TO ANY
HOLDER WHO HAS UNDERTAKED ALL OF THE OBLIGATIONS OF MELLON, N.A. UNDER THAT
CERTAIN LETTER OF CREDIT NO. S854302 ISSUED BY MELLON, N.A. AND REIMBURSEMENT
AGREEMENT DATED AS OF AUGUST 1, 1997 (AS AMENDED) BETWEEN KLEARFOLD, INC. AND
MELLON, N.A., PROVIDED THAT ANY SUCH TRANSFER MUST BE ACCOMPANIED BY AN
INSTRUMENT OF TRANSFER IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION.
EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED, THIS LETTER OF CREDIT IS SUBJECT TO
THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION)
INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500 AND SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER AND AS TO MATTERS NOT GOVERNED BY THE UCP SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
IF YOU REQUIRE ANY ASSISTANCE OR HAVE ANY QUESTIONS REGARDING THIS TRANSACTION,
PLEASE CALL 312-923-5885.
BANK OF AMERICA
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
- ------------------------------------- -----------------------------------
FOR CASHIER FOR CASHIER
<PAGE>
Exhibit 10.54
================================================================================
LOAN AGREEMENT
AGI INCORPORATED
AND
CITY OF JACKSONVILLE, ILLINOIS
DATED AS OF JANUARY 1, 1995
The rights of the City of Jacksonville, Illinois, under this Agreement
(except the right to receive payment for its expenses, the right to receive
indemnities, and rights relating to the amendment of this Agreement) have been
assigned to Bank One, Springfield, Springfield, Illinois, as Trustee under a
Trust Indenture dated as of the date of this Agreement, between the City and the
Trustee.
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
Recitals......................................................................... 1
Agreement........................................................................ 1
ARTICLE I DEFINITIONS AND EXHIBITS........................................ 2
Section 1.1. Terms Defined................................................. 2
Section 1.2. Rules of Interpretation....................................... 3
Section 1.3. Exhibits...................................................... 4
ARTICLE II THE LOAN AND THE PROJECT........................................ 4
Section 2.1. Issuer's Representations, Warranties and Covenants............ 4
Section 2.2. Company's Representations, Warranties and Covenants........... 4
Section 2.3. The Project................................................... 7
ARTICLE III THE BONDS, USE OF PROCEEDS, THE NOTE............................ 7
Section 3.1. Agreement to Issue Bonds...................................... 7
Section 3.2. Disbursements from Project Fund............................... 8
Section 3.3. Company Is Required to Pay in the Event Project Fund Is
Insufficient.................................................. 8
Section 3.4. Investment of Project Fund and Debt Service Fund
Moneys........................................................ 8
Section 3.5. Covenants with Respect to Arbitrage........................... 9
Section 3.6. Loan Payments and Other Amounts Payable....................... 9
Section 3.7. Obligation of Company Unconditional........................... 11
Section 3.8. Letter of Credit and Alternate Letter of Credit; Obligation
to Maintain Letter of Credit.................................. 11
ARTICLE IV PARTICULAR COVENANTS OF THE COMPANY............................. 12
Section 4.1. Consent to Assignment to Trustee.............................. 12
Section 4.2. Payment of Expenses of Issuance of Bonds...................... 12
Section 4.3. Company to Maintain Its Existence; Conditions under
Which Exceptions Permitted.................................... 12
Section 4.4. Further Assurances and Corrective Instruments................. 13
Section 4.5. Covenants of Company with Respect to Use of Bond
Proceeds...................................................... 13
Section 4.6. Indemnification of Issuer and Trustee......................... 13
Section 4.7. Reports, Certificates and Other Information................... 13
Section 4.8. Insurance..................................................... 14
Section 4.9. Taxes and Liabilities......................................... 14
</TABLE>
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<TABLE>
<S> <C> <C>
Section 4.10. Company to Furnish Notice of Fixed Interest Rate and
Mandatory Redemption Dates.................................... 14
Section 4.11. Notice of Adjustment Dates, Rate Determination Dates,
Rate Change Dates, Interest Payment Dates and LOC
Termination Tender Dates...................................... 14
Section 4.12. Continuing Market Disclosure.................................. 15
ARTICLE V MAINTENANCE, TAXES AND INSURANCE................................ 15
Section 5.1. Maintenance and Modifications of Project by Company............ 15
Section 5.2. Taxes, Other Governmental Charges and Utility Charges......... 15
Section 5.3. Insurance Required............................................ 16
Section 5.4. Application of Net Proceeds of Insurance...................... 16
Section 5.5. Additional Provision Respecting Insurance..................... 16
ARTICLE VI DAMAGE DESTRUCTION AND CONDEMNATION........................... 16
Section 6.1. Damage and Destruction........................................ 16
Section 6.2. Condemnation.................................................. 17
ARTICLE VII PREPAYMENT OF NOTE.............................................. 17
Section 7.1. Optional Prepayment of Note................................... 17
Section 7.2. Mandatory Prepayment of Note in the Event of a
Determination of Taxability................................... 18
Section 7.3. Purchase of Bonds............................................. 18
Section 7.4. Extraordinary Event Prepayment of the Note.................... 18
Section 7.5. Notice of Prepayment.......................................... 18
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES.................................. 18
Section 8.1. Events of Default............................................. 18
Section 8.2. Remedies on Default........................................... 20
Section 8.3. Application of Moneys......................................... 20
Section 8.4. Remedies Cumulative........................................... 21
Section 8.5. Delay or Omission Not a Waiver................................ 21
Section 8.6. Remedies Subject to Provisions of Law......................... 21
ARTICLE IX SUPPLEMENTS AND AMENDMENTS TO THIS AGREEMENT.................... 21
Section 9.1. Supplements and Amendments to This Agreement.................. 21
ARTICLE X MISCELLANEOUS................................................... 21
Section 10.1. Binding Effect................................................ 21
Section 10.2. Severability.................................................. 21
Section 10.3. Amounts Remaining in Debt Service Fund........................ 21
Section 10.4. Amendments, Changes and Modifications......................... 21
Section 10.5. Execution in Counterparts..................................... 22
</TABLE>
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<TABLE>
<S> <C> <C>
Section 10.6. Notices....................................................... 22
Section 10.7. References to Bonds Ineffective after Bonds Are Paid.......... 22
Section 10.8. Agreement for Benefit of Parties Hereto....................... 22
Section 10.9. Waiver........................................................ 22
Section 10.10. Captions and Table of Contents................................ 22
Section 10.11. Survival of Covenants, Representations and Warranties......... 22
Section 10.12. Applicable Law................................................ 22
Section 10.13. Holidays...................................................... 23
</TABLE>
EXHIBIT A: Description of the Project
EXHIBIT B: Form of Note
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<PAGE>
LOAN AGREEMENT
This LOAN AGREEMENT has been executed as of January 1, 1995, by and between
AGI INCORPORATED, an Illinois corporation (the "Company" and the CITY OF
JACKSONVILLE, Illinois (the "Issuer").
RECITALS
1. Definitions of certain of the terms used in these Recitals are set out
in Article I hereof and Article I of the Indenture.
2. The Company is pursuing the acquisition, installation and equipping of
the Project which is to be located on the Project Site.
3. To finance a portion of the costs of the Project, the Company is
borrowing from the Issuer funds derived from the sale of the Bonds, and the
Company, as evidence of its obligation to repay the funds, is issuing to the
Issuer its Note.
4. Pursuant to 65 ILCS 5/11-74-1, et seq., the Issuer is obtaining funds
of City of Jacksonville, Illinois Multi-Mode Industrial Project Revenue Bonus,
Series 1995 (AGI Incorporated Project).
5. Pursuant to a Trust Indenture dated as of the date of this Agreement,
between the Issuer and Bank One, Springfield, Springfield, Illinois, as Trustee,
the Issuer will issue the Bonds and, as security for the payment of the Bonds
and the performance of the obligations of the Issuer and the Company under the
Indenture and the Note, the Issuer will assign the Note and its rights under
this Agreement (except the right to receive payment for its expenses, the right
to receive indemnities and rights relating to any amendments to this Agreement)
to the Trustee and the Company will cause to be issued to the Trustee an
irrevocable direct pay letter of credit of Bank of America Illinois, dated
January 19, 1995. The Bonds will be payable solely out of the revenues and other
amounts derived from the Note and under this Agreement and from the Letter of
Credit and shall not, in any respect, be a general obligation of, an
indebtedness of, or constitute a charge against the general credit of the
Issuer, the State of Illinois, or any political subdivision thereof.
AGREEMENT
In consideration of the premises and the mutual covenants contained herein,
the Company and the Issuer agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS AND EXHIBITS
Section 1.1. Terms Defined. As used in this Agreement, the following terms
shall have the following meanings unless the context otherwise requires:
"Act" means 65 ILCS 5/11-74-1 et seq., as from time to time amended.
"Agreement" means this Loan Agreement and any amendment and supplement
thereto.
"Agreement Term" means the period commencing on the date of this Agreement
and, subject to the provisions of this Agreement, ending on such date as the
Bonds have been fully paid and retired or provision for such payment made as
provided in the Indenture.
"Authorized Company Representative" means any officer designated to act on
behalf of the Company by written certificate furnished to the Issuer and the
Trustee containing the specimen signature of the person and signed on behalf of
the Company by its President, any of its Vice Presidents, its Secretary or any
of its Assistant Secretaries. The certificate may designate an alternate or
alternates. The Authorized Company Representative may be an employee of the
Company.
"Bankruptcy Code" means Title 11 of the United States Code, as amended.
"Bonds" means the $7,640,000 aggregate principal amount of the City of
Jacksonville, Illinois Multi-Mode Industrial Project Revenue Bonds, Series 1995
(AGI Incorporated Project).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means AGI Incorporated, an Illinois corporation, and its
successors and signs.
"Counsel" means an attorney-at-law (who may be counsel to the Trustee, the
Issuer or the Company).
"Debt Service Fund" means the fund created in Section 402 of the Indenture.
"Indenture" means the Trust Indenture, dated as of the date of this
Agreement, between the Issuer and Bank One, Springfield, Springfield, Illinois,
as Trustee, relating to the Bonds, and any indenture supplemental thereto.
"Issuer" means the City of Jacksonville, Illinois, and any successor.
"Letter of Credit" means the irrevocable direct pay letter of credit of Bank
of America Illinois dated January 19, 1995 issued to the Trustee for the benefit
of the
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<PAGE>
bondholders under a Reimbursement Agreement among said Bank and the Company
dated as of January 1, 1995.
"Loan" means the $7,640,000 loan in principal amount by the Issuer to the
Company of the proceeds from the sale of the Bonds.
"Net Proceeds" means, when used with respect to any insurance proceeds or
any condemnation award, the amount remaining after deducting all expenses
(including attorneys' fees) incurred in the collection of such proceeds or award
from the gross proceeds thereof.
"Note" or "Promissory Note" means the Note of the Company in substantially
the form of Exhibit B hereto and any Note issued in exchange therefor.
"Project" means the acquisition of land, and construction and equipping of a
manufacturing facility for the Company as more fully described in Exhibit A to
this Loan Agreement.
"Project Cost" means and includes all those costs related to the Project
which are permitted to be financed under the Code, the Act, this Agreement and
the Indenture and which do not result in a loss of the exclusion from gross
income for federal income tax purposes of the interest on the Bonds under the
Code.
"Project Fund" means the fund created in Section 302 of the Indenture.
"Qualified Investments" shall have the meaning ascribed thereto in Section
3.4.
"Reimbursement Agreement" means the Reimbursement Agreement between the
Company and Bank of America Illinois dated as of January 1, 1995, under which
the Letter of Credit will be issued.
"Trust" means the trustee at the time serving under the Indenture.
Section 1.2. Rules of Interpretation. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) "This Agreement" means this instrument as originally executed
and as it may from time to time be supplemented or amended.
(b) The words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
(c) The terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular.
-3-
<PAGE>
(d) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles.
(e) Any terms not defined herein but defined in the Indenture
shall have the same meaning herein.
(f) The terms defined elsewhere in this Agreement shall have the
meanings therein prescribed for them.
Section 1.3. Exhibits. The following Exhibits are a part of this Agreement:
Exhibit A: Description of the Project.
Exhibit B: Form of Note, form of Note Registrar's Certificate of
Validation and form of Assignment.
ARTICLE II
THE LOAN AND THE PROJECT
Section 2.1. Issuer's Representations, Warranties and Covenants. (a) The
Issuer represents and warrants that:
(i) The Issuer is a duly organized and existing municipal
corporation and political subdivision of the State of Illinois, with full
power and authority under the Act to enter into the transactions
contemplated by this Agreement and to carry out its obligations hereunder.
(ii) The Issuer has duly authorized the issuance, execution and
delivery of the Bonds and the execution and delivery of this Agreement.
(b) The Issuer covenants that:
(i) The Issuer shall not take any action to interfere with any
obligation it may have with respect to the Bonds, the proceedings
authorizing the Bonds or this Agreement.
(ii) The Issuer shall provide funds from the proceeds from the sale
of the Bonds for the financing of a portion of the costs of the Project and
shall secure the payment of the Bonds by assigning this Agreement (except
the right to receive payment for its expenses, the right to receive
indemnities and rights relating to any amendment of this Agreement) and the
Note to the Trustee pursuant to the Indenture.
Section 2.2. Company's Representations, Warranties and Covenants. The
Company makes the following representations and warranties (all as of the date
on which this Agreement has been executed) and in addition, makes the following
covenants:
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<PAGE>
(a) It is a duly organized and validly existing corporation in good
standing under the laws or the State of Illinois and is duly qualified to
transact business in Illinois, has the power and authority to own its
properties and assets and to carry on its business as now being conducted
and as now contemplated, and has full power and authority to issue the
Note and to execute and deliver this Agreement, the Reimbursement
Agreement and all other agreements contemplated by this Agreement to which
the Company is a party; all actions necessary for the execution and
delivery of the Note, this Agreement and the Indenture have been taken; and
the Note will be a valid and binding obligation of the Company.
(b) The execution, delivery and performance of this Agreement, the
Note and the Reimbursement Agreement will not conflict with or result in a
breach of, or a default under, the Company's Articles of Incorporation, By-
Laws, or any material agreement or instrument to which the Company is a
party or by which it is bound (excepting, however such agreements or
instruments with respect to which the Company has been required to and has
obtained waivers or consents) or result in the creation or imposition of
any lien, charge or encumbrance upon any of the property or assets of the
Company, except for the lien of the Indenture and liens, charges or
encumbrances in favor of Bank of America Illinois.
(c) At least 95% of the proceeds from the Bonds (including any
income earned on the investment of such proceeds) will be used for the
acquisition of land, construction of a building and installation of
machinery and equipment for the Project. No more than 2% of the proceeds of
the Bonds will be used for the costs of issuance of the Bonds, including
any broker's, underwriter's or placement agent's discount or other
compensation. Costs of issuance paid from the Bond proceeds together with
any other expenditures which are not described in the first sentence of
this subsection will be not more than 5% of the proceeds of the Bonds. No
part of the proceeds are to be used by the Company, directly or indirectly,
as working capital or to finance inventory.
(d) The Project and all components thereof will consist of property
of a character subject to the allowance for depreciation under the Code.
(e) The indication of interest by the Issuer on the date of
adoption of the inducement resolution to issue its Bonds and lend the
proceeds to the Company for the purposes set forth herein has encouraged
the Company to acquire and construct the Project, and will promote economic
development and create new or preserve existing job opportunities in the
area. The Project, or any components thereof which are to be paid for out
of the proceeds of the Bonds, had not been acquired, constructed, equipped,
furnished or rehabilitated by the Company prior to the adoption of the
inducement resolution of the City Council of the Issuer with respect to the
Project.
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(f) The sum of the following does not exceed $10,000,000:
(i) the aggregate face amount of any outstanding issues of
obligations (other than the Bonds) exempt from taxation under
Sections 103 and 144 of the Code, the proceeds from which were or
will be used primarily with respect to the Project or other
facilities (a) located within the County of Morgan (but not in any
incorporated municipality) or within the Issuer and (b) the principal
user of which is or will be the Company or any other principal user
of the Project or related person or persons within the meaning of
Section 144 of the Code;
(ii) the aggregate principal amount of the Bonds; and
(iii) the sum of all capital expenditures (within the meaning
of Section 144(a) of the Code (and, pursuant to said section,
specifically excluding capital expenditures made from the proceeds of
bonds described in paragraph (i) and (ii) above)) relating to the
facilities described in subsection (i) and made during the period
beginning three years prior to the date on which the Bonds are issued
and ending on the date on which the Bonds are issued.
(g) The "average maturity" of the Bonds (taking into account their
issue prices) does not exceed 120% of the "average reasonably expected
economic life" of the facilities to be financed with the proceeds of the
Bonds (taking into account the respective cost of such facilities), all as
determined in accordance with the provisions of Section 147(b) of the Code.
(h) No portion of the proceeds of the Bonds will be used to provide
any facility the primary purpose of which is retail food and beverage
service, automobile sales or services, or the provision of recreation or
entertainment, any private or commercial golf course, country club, massage
parlor, tennis club, skating facility (including roller skating, skateboard
and ice skating), racquet sports facility (including any handball or
racquetball court), hot tub facility, suntan facility, racetrack, airplane,
sky box, or other private luxury box, health club facility, facility used
for gambling, or facility used for the sale of alcoholic beverages.
(i) The Bonds are not and shall not be "federally guaranteed" as
defined in Section 149(b) of the Code.
(j) No portion of the proceeds of the Bonds will be used to acquire
land (or an interest therein) or to acquire any property (or an interest
therein) where the first use of such property is not pursuant to such
acquisition. The portion of the Bonds to be used to acquire land will not
exceed $60,000.
(k) The aggregate authorized face amount of the Bonds allocated to
any "test period beneficiary," as such term is defined in Section 144 of
the Code, when increased by the outstanding tax-exempt industrial
development bonds of such beneficiary, does not and shall not exceed
$40,000,000.
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(l) The execution, delivery and performance by the Company of this
Loan Agreement and the Note do not require the consent or approval of, the
giving of notice of, the registration with, or the taking of any other
action in respect of, any federal, state or other governmental authority or
agency, not previously obtained or performed.
(m) No litigation, arbitration proceedings or governmental
proceedings are pending or threatened against the Company which would, if
adversely determined, materially and adversely affect the right and power
of the Company to execute and deliver this Loan Agreement and all documents
and instruments related hereto or contemplated hereby to which the Company
is a party or signatory.
(n) Except with respect to future capital expenditures, the Company
will take no action which would (and will omit no action reasonably within
its power, the omission of which would) cause the interest on the Bonds to
become includable for Federal income tax purposes in the gross income of
any Bondholder, other than a Bondholder who is a "substantial user" of the
Project or a "related person" within the meaning and for the purpose of
Section 147 of the Code. While this Agreement does not restrict the Company
as to future capital expenditures (and such expenditures, if sufficiently
large, could cause the interest on the Bonds to become includable in gross
income for Federal income tax purposes), the Company presently believes and
expects that it will comply with the applicable Code limitations on future
capital expenditures.
Section 2.3. The Project. The Company shall cause the Project to be
acquired, constructed, installed and equipped with all reasonable dispatch in
accordance with the Company's specifications and directions. It is the Company's
present intention to use the Project, or to cause it to be used, throughout the
term of this Agreement as an "economic development facility" within the meaning
of the Act. The failure or inability of the Company to use the Project, or to
cause it to be used, for the intended purposes shall not affect in any way the
Company's obligations under this Agreement or the Note and shall not be deemed a
breach or default under this Agreement as long as the use does not affect the
validity of the Bonds or result in the interest on the Bonds becoming includable
for Federal income tax purposes in the gross income of a Bondholder.
ARTICLE III
THE BONDS, USE OF PROCEEDS, THE NOTE
Section 3.1. Agreement to Issue Bonds. In order to provide funds to make
the Loan, the Issuer shall issue the Bonds and sell them to the purchaser or
purchasers thereof and deposit the proceeds with the Trustee as follows:
(a) Into the Debt Service Fund, the accrued interest, if any, paid
by the purchasers of the bonds; and
(b) Into the Project Fund, the balance of the proceeds.
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Section 3.2. Disbursements from Project Fund. The Indenture authorizes the
Trustee to make payments from the Project Fund to pay Project Costs and to
reimburse the Company for Project Costs paid by it. Payments shall be made upon
receipt of requisitions signed by an Authorized Company Representative stating:
(a) the requisition number, (b) the name and address of the person, firm or
corporation to whom payment is due or to whom the Company has made payment for
which reimbursement is to be made, (c) the amount to be paid, and (d) that each
obligation has been properly incurred, is a Project Cost that is a proper charge
against the Project Fund, and has not been the basis of any previous withdrawal.
The requisition shall be accompanied by copies of such invoices, canceled checks
(or other evidence of payment) and similar documentation as the Trustee may
reasonably request.
After the Trustee has paid all amounts requisitioned from the Project Fund
and has received a certificate from the Company stating that the Project has
been completed, or that the Project cannot or will not be completed for the
reasons specified therein, any balance in the Project Fund shall, subject to
compliance with the Act, be transferred to the Purchase Fund and disbursed in
accordance with the provisions of the Indenture relating thereto; provided, that
at least 95% of the amount actually expended has been expended on property of a
character subject to the allowance for depreciation under the Code ("qualified
facilities"). If such balance, plus any amounts actually expended other than on
qualified facilities, exceeds the permissible 5% insubstantial amount of the
Bond proceeds, the Company shall so notify the Trustee in writing, which written
notification shall include detailed instructions as to the disposition of such
balance, including instructions that the Trustee shall deposit such excess into
a special escrow account within the Purchase Fund and detailed instructions
pursuant to which the Trustee shall invest and use any amount so deposited to
redeem or retire the Bonds, or portions thereof, in accordance with Internal
Revenue Service Rev. Proc. 79-5 and Rev. Proc. 81-22 and any subsequent
amendments, modifications or replacements thereof at the earliest redemption
date occurring after such deposit.
Section 3.3. Company Is Required to Pay in the Event Project: Fund Is
Insufficient. In the event the moneys in the Project Fund available for payment
of the Project Costs should not be sufficient to pay the costs of acquiring,
constructing, installing and equipping the Project in full, the Company shall
complete the Project and pay that portion of the costs of the Project in excess
of the moneys available in the Project Fund.
Section 3.4. Investment of Project Fund and Debt Service Fund Moneys.
Moneys held as part of the Debt Service Fund shall be invested by the Trustee at
the direction of the Company only in Government Securities. Subject to the
provisions of Section 405 of the Indenture, any moneys held as part of the
Project Fund shall be invested by the Trustee at the direction of the Company in
(a) direct obligations of the United States of America, or (b) obligations the
principal and interest of which are guaranteed as to full and timely payment by
the United States of America, or (c) obligations of any agency of the United
States of America, or (d) certificates of deposit or bankers acceptances issued
by, or interest bearing time or demand deposits with, any bank, trust company or
national banking association (including the Trustee, any affiliate of the
Trustee and any paying agent) having a combined
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capital and surplus of at least $10,000,000 and which obligations of the "bank
are rated "Baa-3" or "Prime-3" by Moody's Investors Service, Inc., or (e)
repurchase agreements with any entity rated "AAA" by Moody's and meeting the
requirements specified in (d) above for the purchase and sale of obligations of
the type specified in (a) or (b) above including contracts with the Trustee, any
affiliate of the Trustee and any paying agent), or f) commercial paper which has
been classified for rating purposes by Moody's Investors Service, Inc., as
Prime-2 and by Standard and Poor's Corporation as A-2 (other than commercial
paper of the Company or any "related person"), or (g) obligations the interest
on which is excludable from gross income for Federal income tax purposes and
that are rated at least "A" "MIG-2" or Prime-2 by Moody's Investor's Service,
Inc., and "A" or "A-2" by Standard and Poor's Corporation and an equivalent
rating by any other national rating agency, or (h) funds, mutual funds, common
trust funds or any similar entity which is both (i) rated investment grade by
Moody's Investors Service, Inc. and Standard and Poor's Corporation, and (ii)
whose investments consist of the foregoing. Each of the investments described
in Subsections (a) through (h) above is a "Qualified Investment."
Section 3.5. Covenants with Respect to Arbitrage. The Company and the Issuer
covenant to each other and to and for the benefit of the holders of the Bonds
that no use will be made of the proceeds from the issue and sale of the Bonds
which, if such use could have been reasonably expected on the date of issue of
the Bonds, would have caused the Bonds to be classified as arbitrage bonds
within the meaning of Section 103(b)(2) of the Code. As long as any Bonds are
outstanding, the Issuer and the Company shall not violate the requirements of
the Code relating to arbitrage bonds, and any regulations thereunder including
the requirement of Section 148 of the Code relating to the rebate of certain
amounts to the United States government. The Company will provide to the Trustee
instructions relating to the permissible investment of Bond proceeds and
instructions and computations (using investment information provided by the
Trustee) relating to the amount required to be rebated to the United States, all
in conformity with Section 148 of the Code. The Company reserves the right,
however, to make any investment of proceeds permitted under the laws of the
State of Illinois, if the sections of the Code relating to arbitrage bonds or
the regulations thereunder are repealed or relaxed or are held void by final
judgment of a court of competent jurisdiction, so long as the investment would
not result in making the interest on the Bonds includable in the gross income of
the holders thereof for purposes of Federal income taxation. In making
investments, the Company may rely on an opinion of counsel of recognized
competence in such matters. The Trustee may make any and all such investments
through its own bond department.
Section 3.6. Loan Payments and Other Amounts Payable. (a) Concurrently with
the sale of the Bonds, the Company shall execute and deliver the Note to the
Issuer, pursuant to which the Company shall make payments sufficient to pay when
due (whether at maturity, upon call for redemption, by acceleration or
otherwise) the principal of and premium, if any, and interest on the Bonds. The
Note shall be issued as a fully registered note substantially in the form
attached hereto as Exhibit B. The obligation of the Company to make any payment
in respect of the loan made hereunder shall be reduced by the amount of any
reduction under the Indenture of the corresponding payment to be made by the
Issuer thereunder, including any reduction due to payments made by the Bank to
the Trustee in
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respect of the principal of premium, if any, or interest on the Bonds when due
pursuant to the Letter of Credit.
(b) The Company shall pay or cause to be paid to the Tender Agent as agent
for the Trustee amounts equal to the amounts to be paid to Owners of Bonds
pursuant to Section 403 of the Indenture, on the dates the purchase price of
Bonds delivered to the Tender Agent is to be paid from the sources described in
Section 403 of the Indenture. The obligation of the Company to make the payments
required to be made under this Section 3.6 shall be reduced by the amount of any
moneys otherwise available for such payment, including particularly, any payment
made by the Bank to the Trustee in respect of the purchase price of Bonds
pursuant to the Letter of Credit.
(c) The Company shall also pay when due (i) the reasonable and necessary
fees and expenses of the Trustee (including any reasonable and necessary fees
and expenses in its capacity as Note Registrar) the Tender Agent and any paying
agent for services in connection with the Bonds as specified in Section 802 of
the Indenture and (ii) the reasonable and necessary fees and expenses of the
Issuer, including reasonable attorneys' fees, in connection with any default of
the Company under this Agreement or the Note.
(d) If the Company fails to make any of the payments required in this
Section 3.6 or in the Note, all unpaid items or installments shall continue as
an obligation of the Company until fully paid, and the Company shall pay the
same with interest thereon (to the extent permitted by law) until paid at a per
annum rate of interest equal to the per annum rate then in effect on the Bonds.
(e) All payments under this Section 3.6 other than with respect to (b) above
shall be made by the Company directly to the Trustee or as directed by the
Trustee in immediately available funds and the Trustee shall deposit all such
payments into the Debt Service Fund, provided that payments under Section 3.6(c)
shall be made by the Company directly to the person entitled thereto. The amount
of any money in the Debt Service Fund which is either proceeds from the sale of
any Bonds or earnings on investments made pursuant to the provisions of the
Indenture which has been set aside by the Trustee, at the request of the
Company, for payments of principal, whether at maturity or upon redemption, of
the Bonds shall be credited against the obligation of the Company to pay the
principal of the Note. The amount of any money in the Debt Service Fund which is
either proceeds from the sale of any Bonds or earnings on investments made
pursuant to the provisions of the Indenture which has been set aside by the
Trustee for payments of interest on the Bonds shall be credited against the
obligation of the Company to pay interest on the Note. The principal amount of
any Bonds purchased by the Company and delivered to the Trustee, or purchased by
the Trustee and canceled, shall be credited against the obligation of the
Company to pay the principal of the Note.
(f) If on any principal or interest payment date the balance in the Debt
Service Fund is insufficient to make the required payments of principal of and
premium, if any, and interest on the Bonds on that date, the Company upon notice
shall pay forthwith any deficiency to the Trustee.
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(g) The Company shall not be obligated to make any further payments under
this Section 3.6. and the Company's liability to make payments under this
Section 3.6 shall cease, at any time that the entire principal of and premium,
if any, and interest on the Bonds shall have been fully paid in accordance with
their terms and the provisions of Section 1101 of the Indenture (including,
without limitation, principal, interest to maturity or earliest redemption
date, as the case may be, expenses of redemption, redemption premiums, and fees
and expenses of the Issuer, the Trustee, the Tender Agent and any paying agent
and any other costs and fees required to be paid by the Company pursuant to this
Agreement), or at any time that there shall be in the Debt Service Fund an
amount sufficient to pay or redeem the Bonds in accordance with the provisions
of Section 1101 of the Indenture (including, without limitation, principal,
interest to maturity or earliest redemption date, as the case may be, expenses
of redemption and redemption premiums, and fees and expenses of the Issuer, the
Trustee and any paying agent and any other costs and fees required to be paid by
the Company pursuant to this Agreement) and all other requirements of Section
1101 of the Indenture have been satisfied in full.
Section 3.7. Obligation of Company Unconditional. Subject to Sections
3.6(g) and 4.6. the obligation of the Company to make the payments and to
perform and observe its other agreements pursuant to this Agreement and the Note
shall be absolute and unconditional and shall not be subject to reduction or
delay by set-off, counterclaim, abatement or otherwise. Until such time as the
principal of and premium, if any, and interest on the Bonds shall have been
fully paid or provision for the payment thereof shall have been made in
accordance with Section 1101 of the Indenture (including, without limitation,
principal, interest to maturity or earliest redemption date, as the case may be,
expenses of redemption, redemption premiums, and fees and expenses of the
Issuer, the Trustee, the Tender Agent, and any paying agent and any other costs
and fees required to be paid by the Company pursuant to this Agreement), and all
other requirements of Section 1101 of the Indenture have been satisfied in full,
the Company (a) shall not suspend or discontinue any payments pursuant to this
Agreement or the Note, (b) shall perform and observe all its other agreements
contained in this Agreement and the Note, and (c) except as provided in Article
VII hereof, shall not terminate this Agreement or the Note for any cause.
Nothing contained in this Agreement shall be construed to release the Issuer
from the performance of any of its obligations: and in the event the Issuer
shall fail to perform any such agreement on its part, the Company may institute
such action against the Issuer as the Company may deem necessary to compel
performance, provided that no such action shall (i) violate the agreements on
the part of the Company contained in the first sentence of this Section 3.7 or
(ii) diminish the amounts required to be paid by the Company pursuant to Section
3.6 hereof.
Section 3.8. Letter of Credit and Alternate Letter of Credit: Obligation to
Maintain Letter of Credit, (a) From the date of issuance of the Bonds, while the
Bonds are in an Adjustable Long Period or Short Period, the Company shall
maintain the Letter of Credit or Alternate Letter of Credit.
(b) From the date of issuance of the Bonds, the Company shall provide
security for payment of the principal of and interest on, and applicable
redemption premiums with
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respect to, all Bonds in the Adjustable Long Period or Short Period and for
payment of the purchase price of such Bonds delivered to the Tender Agent
pursuant to Section 202(d) or Section 503 of the Indenture by causing the Letter
of Credit or an Alternate Letter of Credit to be delivered to the Trustee. The
Company hereby authorizes and directs the Trustee to draw moneys under the
Letter of Credit, in accordance with its terms and the terms of the Indenture,
to the extent necessary to pay the principal of, premium, if any, and interest
on the Bonds when due and to pay the purchase price of Bonds as provided in the
indenture.
(c) The Company may, at its election and with the consent of the Bank,
provide for one or more extensions of the Letter of Credit beyond its then
stated date of expiration. At any time prior to the Trustee's giving of notice
of redemption of Bonds pursuant to Section 202(e) of the Indenture, the Company
may provide for the delivery of an Alternate Letter of Credit which must have a
term of at least one year from its date of delivery, provided that the Company
must furnish to the Trustee written evidence from Moody's, if the Bonds are
rated by Moody's, and S&P, if the Bonds are rated by S&P, to the effect that it
has reviewed such Alternate Letter of Credit and that its substitution for the
Letter of Credit then in effect will not, of itself, result in a reduction or
withdrawal of its ratings of the Bonds from those which then prevail,
accompanied by an opinion of Bond Counsel that the delivery of such Alternate
Letter of Credit is permitted under the Indenture and this Agreement and will
not adversely affect the exemption from federal income taxation of interest on
the Bonds.
ARTICLE IV
PARTICULAR COVENANTS OF THE COMPANY
Section 4.1. Consent to Assignment to Trustee. The Company acknowledges and
consents to the assignment of the Note and of the Issuer's rights hereunder
(except the right to receive payment for its expenses, the right to receive
indemnities and rights relating to any amendments to this Agreement) to the
Trustee pursuant to the Indenture. Except as otherwise provided herein, the
Company shall pay to the Trustee all amounts payable under this Agreement and
the Note, and the Company acknowledges that the Trustee may enforce the rights,
remedies and privileges granted to the Issuer hereunder.
Section 4.2. Payment of Expenses of Issuance of Bonds. In addition to its
payment obligations under Section 3.6 of this Agreement, the Company shall pay
for all the reasonable costs and shall be liable and pay for any recording
expenses, legal fees, printing expenses and other fees and expenses reasonably
incurred or to be incurred by or on behalf of the Issuer and the Trustee in
connection with or as an incident to the issuance and sale of the Bonds or any
amendment or supplement to this Agreement or the Indenture.
Section 4.3. Company to Maintain Its Existence: Conditions under Which
Exceptions Permitted. The Company shall during the term of this Agreement
maintain its corporate existence and will be duly qualified to transact business
in the State of Illinois and shall not voluntarily take, or omit to take, any
action that would cause the Company to be dissolved, nor shall the Company sell,
lease, transfer or otherwise dispose of all or substantially all of its assets
or consolidate with or merge into another corporation or permit one or more
other
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corporations to consolidate with or merge into it; except that the company may
consolidate with or merge into another corporation incorporated and existing
under the laws of the United States of America or one of the states of the
United States of America or permit one or more other corporations to consolidate
with or merge into it or sell or otherwise transfer to another such other
corporation all or substantially all of its assets as an entirety and may
thereafter dissolve, provided that immediately after such action there is no
default under the Note, this Agreement or the Indenture, and further provided
that if the Company is not the surviving, resulting or transferee corporation
("the Survivor"), the Survivor is (a) qualified to do business in the State of
Illinois and (b) shall expressly assume and agree to perform all of the
Company's obligations under this Agreement, the Note and the Indenture.
Section 4.4. Further Assurances and Corrective Instruments. The Issuer and
the Company shall execute and deliver, or cause to be executed and delivered,
such supplements hereto and further instruments as may reasonably be required
for carrying out the intention of or facilitating the performance of this
Agreement.
Section 4.5. Covenants of Company with Respect to Use of Bond Proceeds. The
Issuer is issuing the Bonds pursuant to an exemption contained in the Code. It
is the intention of the parties that the interest on the Bonds remain excludable
from gross income for purposes of federal income taxation and to that end the
Company covenants with the Issuer and with the Trustee for the benefit of the
future holders of the Bonds, that it will never, insofar as it is able, permit
Bond proceeds to be expended or utilized in such a manner as to cause the loss
of the exclusion claimed other than as a result of previously unanticipated
capital expenditures.
Section 4.6. Indemnification of Issuer and Trustee. The Company shall
indemnify and hold the Issuer and the Trustee harmless against any claim, loss,
liability or expense incurred without negligence or bad faith or willful
misconduct on the part of the Issuer or the Trustee arising out of or in
connection with this Agreement, the Note or the Indenture, including reasonable
attorneys' fees and the costs and expense of defense against any such claim or
liability.
Section 4.7. Reports, Certificates and Other Information. The Company shall
furnish to the Trustee:
(a) Annual Statements. As soon as available and in any event within one
hundred twenty days after the close of each fiscal year of the Company ending
after the date of this Agreement, copies of the balance sheet of the Company,
and statements of income and retained earnings and statements of cash flows of
the Company for such fiscal year, each of which shall be audited by the
Company's independent public accountants and shall set forth in comparative
form the figures for the preceding fiscal year, all in reasonable detail.
(b) Quarterly Statements. As soon as available, and in any event within
sixty days after the close of each calendar quarter ending after the date of
this Agreement (except the last quarter of each fiscal year), copies of the
balance sheet of the
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Company as of the end of such quarter, and statements of income and
statements of cash flows of the Company for the portion of the fiscal year
ended as of the end of such quarter. All such statements may be prepared
internally and shall be accompanied by a certificate of an appropriate
officer of the Company that such financial statements have been prepared in
material conformity with generally accepted accounting principles
consistently applied (except for changes in which the independent
accountants for the Company concur), and present fairly the financial
position of the Company as of the dates of such statements.
(c) No Default Certificate. Concurrently with providing such financial
statements, a certificate of the President, a Vice President or the Chief
Financial Officer of the Company that after reasonable investigation he has
no knowledge of the occurrence of any event of default under this Agreement
or the Indenture (or of any event that with the lapse of time or the giving
of notice would constitute an event of default), or if such officer shall
have obtained knowledge of any such event of default, he shall disclose the
same in such certificate and the nature thereof.
From and after such time as the Company creates any subsidiaries or acquires
subsidiaries the information required above will be reported on a consolidated
basis.
Section 4.8. Insurance. Subject to Article V of this Agreement, the Company
shall maintain such insurance as may be required by law and such other
insurance, to such extent and against such hazards and liabilities, as is
customarily maintained by companies similarly situated.
Section 4.9. Taxes and Liabilities. Subject to Article V of this Agreement,
the Company shall pay when due all taxes, assessments and other liabilities
including trade accounts, except such as are being contested in good faith and
by appropriate proceedings and for which appropriate reserves have been
established and, as to trade accounts, subject to industry practices.
Section 4.10. Company to Furnish Notice of Fixed Interest Rate and Mandatory
Redemption Dates. The Company agrees that, upon the determination of a Fixed
Interest Rate for the Series 1995 Bonds pursuant to the Indenture, the Company
shall cause notice of (i) the specific mandatory redemption dates or serial
maturities of such Series 1995 Bonds and (ii) the Fixed Interest Rate applicable
to such Series 1995 Bonds, to be given to the Issuer, the Trustee, the Bank, the
Paying Agent, if any, and the Remarketing Agent in accordance with the
Indenture.
Section 4.11. Notice of Adjustment Dates, Rate Determination Dates, Rate
Change Dates, Interest Payment Dates and LOC Termination Tender Dates. The
Company shall, or shall cause the Remarketing Agent to, make the designations
and give the written notices to the Persons to whom the Company or the
Remarketing Agent are therein required to give notice, as provided in Sections
202 and 209 of the Indenture. In addition, the Company shall, if required,
deliver to the Trustee the opinions of Bond Counsel referred to in Sections 202
and 209 of the Indenture.
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Section 4.12. Continuing Market Disclosure. Upon conversion of the Bonds to
an interest rate determination method that would subject the related Remarketing
of the Bonds to the requirements of Rule 15c2-12 under the Securities Exchange
Act of 1934, as Amended, or any successor Provision, the Company shall comply
with the applicable reporting requirements for obligated persons contained in
Rule 5c2-12(b)(5), or any successor provision.
Because the payments of principal or purchase price of premium, if any, and
interest on the Bonds only shall be derived from draws under the Letter of
Credit or any Alternate Letter of Credit then in effect, and from payments made
by the Company under the Loan Agreement, the Issuer has determined that the
financial condition of the Issuer is not material to any investment decision
with respect to the Bonds. The Issuer is not required to furnish any continuing
information with respect to it or the Bonds.
ARTICLE V
MAINTENANCE, TAXES AND INSURANCE
Section 5.1. Maintenance and Modifications of Project by Company. The
Company shall, during the Agreement Term and at its own expense, (a) keep the
Project and the Project Site in as reasonably safe condition as its operations
shall permit, and (b) keep the Project in good repair and in good operating
condition, making from time to time all necessary repairs thereto (including
external and structural repairs) and renewals and replacements thereof. Subject
to the provisions of this Agreement and the Indenture, the Company may, also at
its own expense, make from time to time any additions, modifications or
improvements to the Project, including specifically additions and expansions to
the Project, as it may deem desirable for its business purposes that do not
materially adversely affect the structural integrity of the Project or
substantially reduce its value.
Section 5.2. Taxes, Other Governmental Charges and Utility Charges. The
Company shall promptly pay, as the same become due, all taxes and governmental
charges of any kind whatsoever that may at any time be lawfully assessed or
levied against or with respect to the Project or the Project Site, or any
interest therein or any machinery, equipment or other property installed or
bought by the Company therein or thereon (including, without limiting the
generality of the foregoing, any taxes levied upon or with respect to the
revenues, income or profits of the Company from the Project which, if not paid,
will become a lien on the Project or the Project Site prior to or on a parity
with the lien of the Indenture and including all ad valorem taxes lawfully
assessed upon the Project or the Project Site), all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the Project
or the Project Site and all assessments and charges lawfully made by any
governmental body for public improvements that may be secured by lien on the
Project or the Project Site.
The Company may, at its expense and in its own name and behalf, in good
faith contest by appropriate proceedings any such taxes, assessments and other
charges and, in the event of any such contest, may permit the taxes, assessments
or other charges so contested to
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remain unpaid during the period of such contest and any appeal therefrom,
provided during such period enforcement of any such contested item shall be
effectively stayed and appropriate reserves shall be established.
Section 5.3 Insurance Required. The Company shall insure or cause to be
insured during the Agreement Term the Project and the Project Site, against such
risks as are customarily insured against by businesses of like size and type,
paying as the same become due all premiums in respect thereto, including but not
necessarily limited to comprehensive general public liability insurance to the
extent of $2,000,000 per occurrence against liability for bodily injury,
including death resulting therefrom, and damage to property including loss of
use thereof occurring on or in any way related to the Project or the Project
Site or any part thereof and worker's compensation and occupational disease
coverage as required by the laws of the State of Illinois. All policies of
insurance related to the Project or the Project Site shall name the Bank and the
Trustee as additional insureds.
Section 5.4. Application of Net Proceeds of Insurance. The Net Proceeds of
the insurance carried pursuant to the provisions of Section 5.3 hereof shall be
paid and applied as provided in Section 6.1 hereof.
Section 5.5. Additional Provision Respecting Insurance. All insurance
required in Section 5.3 hereof shall be taken out and maintained in generally
recognized responsible insurance companies selected by the Company and qualified
to do business in the State of Illinois. All policies evidencing such insurance
shall provide for payment to the Bank or if no Bank, to Trustee.
A certificate, or certificates, of the insurers that such insurance is in
force and effect, together with copies of the insurance policies, shall be
deposited promptly with the Trustee upon request and, prior to the expiration of
any such policy, the Company shall furnish the Trustee upon request with
evidence satisfactory to the Trustee that the policy has been renewed or
replaced, or is no longer required by this Agreement. The insurance herein
required may be contained in blanket policies now or hereafter maintained by the
Company.
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 6.1. Damage and Destruction. Unless the Company shall have
exercised its option to prepay the Note in full pursuant to the provisions of
Section 7.4 hereof, if prior to full payment of the Bonds (or provision for
payment thereof having been made in accordance with the provisions of the
Indenture) the Project is destroyed (in whole or in part) or is damaged by fire
or other casualty, unless otherwise provided in the Reimbursement Agreement or
the Mortgage executed in connection therewith or the Amended and Restated
Security Agreement dated as of November 22, 1993 between the Company and Bank of
America Illinois, the Company (a) shall promptly repair, rebuild or restore the
property damaged or destroyed to substantially the same condition as it existed
prior to the event causing such damage or destruction, with such changes,
alterations and
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modifications (including the substitution and addition of other property as may
be desired by the Company and as will not impair operating unity or productive
capacity or the character of the Project, and (b) shall apply for such purpose
so much as may be necessary of any Net Proceeds of insurance resulting from such
claims for losses, as well as any additional moneys of the Company necessary
therefor.
Section 6.2. Condemnation. Unless the Company shall have exercised its
option to prepay the Note in full pursuant to the provisions of Section 7.4
hereof. in the event that title to, or the temporary use of, the Project or the
Project Site or any part hereof shall be taken under the exercise of the power
of eminent domain by any governmental body or by any person, firm or corporation
acting under governmental authority, the Company shall be obligated to continue
to make payments on the Note and all other payments specified herein. Unless
otherwise provided in the Reimbursement Agreement or the Mortgage executed in
connection therewith or the Amended and Restated Security Agreement, dated as of
November 22, 1993 between the Company and Bank of America Illinois, the Company
and the Trustee shall cause the Net Proceeds received by them or either of them
from any award made in such eminent domain proceedings to be paid to and held by
the Trustee in a separate trust account, and to be applied, at the option of the
Company, in one or more of the following ways as shall be directed in writing by
the Company:
(a) The prompt repair, restoration, relocation, modification or
improvement of the Project and the Project Site, to substantially the
same condition as existed prior to the exercise of said power of
eminent domain, or
(b) Redemption of the Bonds pursuant to Section 7.4 hereof.
Unless the Company shall have exercised its option to prepay the Note
in full pursuant to the provisions of Section 7.4 hereof within the time period
set forth therein, the condemnation award should be applied as provided in (a)
above.
ARTICLE VII
PREPAYMENT OF NOTE
Section 7.1. Optional Prepayment of Note. Prior to the Conversion Date
and so long as the Bonds are in a Short Period (as defined in the Indenture),
the Company may, at its option, prepay the Note in whole or in part (but only in
multiples of $100,000) at any time by paying to the Trustee a sum sufficient,
together with other funds in the Debt Service Fund and available for that
purpose, to pay (a) the principal of, and interest on that portion of the Bonds
then outstanding to be redeemed, and (b) all reasonable and necessary fees and
expenses of the Trustee, the Tender Agent, the Remarketing Agent, and any paying
agent accrued and to accrue through the redemption date. After the Conversion
Date or during an Adjustable Long Period, the Company may prepay the loan made
hereunder, in whole or in part, (in multiples of $5,000) on any Business Day,
upon 45 days' written notice to the Trustee (and if a Letter of Credit is then
in effect, with the written consent of the Bank), in a principal amount equal to
100% of the principal amount of Bond to be redeemed on such
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<PAGE>
Business Day, plus a premium on such principal amount equal to the premium to be
paid in connection with the redemption of the Bonds as provided in Section
501(A)(2) of the Indenture plus accrued interest to the redemption date.
Section 7.2. Mandatory Prepayment of Note in the Event of a
Determination of Taxability. The Company shall prepay the amounts due under this
Agreement and the Note in whole prior to the expiration of this Agreement and
prior to the full payment (or provision for full payment) of the Bonds on the
earliest practicable date (selected by the Trustee) within one hundred eighty
(180) days following a Determination of Taxability (as defined in the
Indenture).
In the event of an obligation to prepay under this Section 7.2, the
Company shall pay to the Trustee a sum sufficient, together with other funds
deposited into the Debt Service Fund and available for the purpose, to pay the
principal, premium and interest on the principal of all the Bonds then
outstanding and all reasonable and necessary fees and expenses of the Trustee
and any paying agent accrued and to accrue through final payment of the Bonds.
Section 7.3. Purchase of Bonds. The Company may at any time, and from
time to time, furnish moneys to the Trustee accompanied by a notice directing
such moneys to be provided to the Tender Agent to be applied (and if a Letter of
Credit is then in effect, with the written consent of the Bank), at such time as
they constitute Eligible Moneys, to the purchase of Bonds delivered pursuant to
Section 202(d) or 503 of the Indenture, which Bonds shall, at the direction of
the Company, be delivered to the Trustee for cancellation or, if proceeds of the
Letter of Credit are used for such purchase, to the Bank as Pledged Bonds.
Section 7.4. Extraordinary Event Prepayment of the Note. The Company
may, at its option, prepay the Note in whole or in part, without redemption
premium, within one year following the occurrence of any of the events specified
in Article VI of this Agreement by paying the Trustee a sum sufficient, together
with other funds in the Debt Service Fund and available for that purpose, to pay
(a) the principal of and interest upon all of the Bonds then outstanding, and
(b) all reasonable and necessary fees and expenses of the Trustee and the paying
agent accrued and to accrue through the redemption date.
Section 7.5. Notice of Prepayment. To exercise prepayment under this
Article VII, the Company shall give written notice to the Trustee at the time
specified in the Indenture.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.1. Events of Default. The occurrence and continuance of any of
the following events shall constitute an "event of default" hereunder:
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(a) Default in the due and punctual payment of any installment of principal
of (whether at stated maturity, upon required prepayment, acceleration or
otherwise) or any payment of interest or redemption premium on the Note;
(b) Failure by the Company to pay the Tender Price with respect to the
purchase price of the Bonds on the date such purchase price is to be paid;
(c) The dissolution or liquidation of the Company unless such dissolution or
liquidation is permitted by this Agreement;
(d) Failure by the Company to observe and perform any covenant, condition or
agreement in this Agreement on its part to be observed or performed (excluding,
however, any covenant, condition or agreement that, if not observed, would
result in an event of default as described in Section 8.1(a), (b) or (c)) for a
period of thirty days after written notice, specifying the failure and
requesting that it be remedied, given to the Company by the Trustee, unless the
Trustee agrees in writing to an extension of the time prior to its expiration;
provided, however, that with respect to this clause (d), if such failure of
performance shall be such that it cannot be corrected within such period, it
shall not constitute an event of default during the 90 day period beginning 31
days after the delivery of the above described notice (but shall, if not
corrected, constitute an Event of Default, thereafter) if: (i) such failure of
performance, in the reasonable opinion of the Trustee, is correctable without
material adverse effect on the Bonds; (ii) corrective action is instituted by or
on behalf of the Company within such period; and (iii) such corrective action is
diligently pursued until such failure of performance is corrected. The Trustee
may request (and may rely upon) from the Company or the Issuer a certificate to
the effect that the Company or the Issuer has instituted corrective action and
will diligently pursue such action and believes that its failure of performance
can be corrected through such action;
(e) A decree or order shall have been entered by a court of competent
jurisdiction constituting an order for relief under the Bankruptcy Code or
adjudging the Company insolvent or approving as properly filed a petition
seeking reorganization of the Company under the Bankruptcy Code or any other
federal or state law relating to bankruptcy or insolvency or appointing a
receiver or decreeing or ordering the winding up or liquidation of the affairs
of the Company or the sequestration of a substantial part of the property of the
Company, and any such decree or order shall remain in force undischarged and
unstayed for a period of ninety days;
(f) The Company shall file a petition seeking relief under the Bankruptcy
Code or shall suffer the imposition of an order thereunder or shall institute or
consent to the institution of bankruptcy or insolvency proceedings against it or
shall file a petition or answer or consent seeking reorganization or relief
(other than as a creditor) under the Bankruptcy Code or any other federal or
state law relating to bankruptcy or insolvency or shall consent to the filing of
any such petition or shall consent to the appointment of a receiver or shall
make an assignment for the benefit of
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creditors or shall admit in writing its inability to pay its debts generally
as they become due or shall fail to pay its debts generally as they become
due, or action shall be taken by the Company in furtherance of any of the
aforesaid purposes:
(g) If the Trustee receives notice from the Bank on or before the date
or dates specified in the Letter of Credit or Alternate Letter of Credit
following a drawing on the Letter of Credit or Alternate Letter of Credit
for interest that it will not reinstate to the stated amount of its Letter
of Credit or Alternate Letter of Credit an amount to cover such Interest; or
(h) Receipt of Written Notice from the Bank that an event of default as
defined in the Reimbursement Agreement has occurred and that the Letter of
Credit or Alternate Letter of Credit, as the case may be, will expire not
less than 30 days after such notice.
Section 8.2. Remedies on Default. Whenever any Event of Default referred to
in Section 8.1 shall have happened and be continuing, the Trustee:
(a) Shall to the extent that the Indenture so requires or permits,
declare the Note and all amounts payable thereunder, whether by acceleration
of maturity or otherwise, to be immediately due and payable.
(b) The Trustee may take whatever action may appear necessary or
desirable to collect the amounts due and to become due under this Agreement
and the Note, or to enforce performance and observance of any obligation,
agreement or covenant of the Company under this Agreement and the Note.
Section 8.3. Application of Moneys. All moneys collected by the Trustee
under Section 8.2 shall be applied as follows:
FIRST: To pay any sums required to be paid by the Company pursuant to
this Agreement, the Note, the Indenture or the Bonds other than
principal, premium and interest on the Note or the Bonds, including
specifically any amounts required to be paid to the United States of America
pursuant to Section 148(f) of the Code.
SECOND: To pay the whole amount then due, owing and unpaid upon the
Note for principal, premium, if any, and interest on the Bonds in accordance
with Section 705 of the Indenture. Payment shall be made upon presentation
of the Note and the notation on the Note of the payment, if partially paid,
or the surrender and cancellation of the Note, if fully paid.
THIRD: To the Bank as payment on behalf of the Company of all of its
obligations under the Reimbursement Agreement, as shall be certified in
writing by the Bank to the Trustee.
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<PAGE>
FOURTH: To pay the Company, its successors or assigns, upon the written
request of the Company or to whosoever may be lawfully entitled to receive
the same upon its written request or as any court of competent jurisdiction
may direct.
Section 8.4. Remedies Cumulative. No remedy granted by this Agreement is
intended to be exclusive of any other remedy. All available remedies shall be
cumulative.
Section 8.5. Delay or Omission Not a Waiver. No delay or omission of the
Trustee to exercise any right or power accruing upon any Event of Default shall
impair the right or power, or shall be construed to be a waiver of the Event of
Default or an acquiescence therein. Every power and remedy may be exercised as
often as the Trustee deems expedient.
Section 8.6. Remedies Subject to Provisions of Law. All rights, remedies
and powers provided by this Article may be exercised only to the extent that
their exercise does not violate any applicable provision of law. All the
provisions of this Article are intended to be subject to all applicable
mandatory provisions of law which may be controlling and to be limited to the
extent necessary so that they will not render this Agreement invalid or
unenforceable under the provisions of any applicable law.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS AGREEMENT
Section 9.1. Supplements and Amendments to This Agreement. Reference is made
to Article X of the Indenture.
ARTICLE X
MISCELLANEOUS
Section 10.1. Binding Effect. This Agreement shall inure to the benefit of
and shall be binding upon the Issuer, the Company and their respective
successors and assigns.
Section 10.2. Severability. In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
that holding shall not invalidate or render unenforceable any other provisions
hereof.
Section 10.3. Amounts Remaining in Debt Service Fund. Any amounts remaining
in the Debt Service Fund upon expiration or termination of this Agreement in
accordance with the Indenture shall belong to and be paid to the Company by the
Trustee.
Section 10.4. Amendments, Changes and Modifications. After the Bonds are
issued and before they are paid in full (or provision for payment in full is
made), this Agreement may not be amended, assigned or terminated without the
written consent of the Trustee.
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<PAGE>
Section 10.5. Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original.
Section 10.6. Notices. All notices, certificates, payments or other
communications hereunder shall be sufficiently given and shall be deemed given
when delivered or mailed by registered or certified mail, postage prepaid, or
overnight express mail addressed as follows: if to the Issuer, at the
Jacksonville Municipal Building, 200 West Douglas Avenue, Jacksonville, Illinois
62650, Attention of its City Clerk; if to the Bank, at 231 South LaSalle Street,
Chicago, Illinois 60697, Attention: George C. Lyman; if to the Company, at 1950
North Ruby Street, Melrose Park, Illinois 60160, Attention of its Vice
President/Finance with a copy to the attention of its President; or to such
other address as may hereafter be furnished by notice.
Section 10.7. References to Bonds Ineffective after Bonds Are Paid. Upon
payment in full of the Bonds (or provision for payment thereof having been made
in accordance with the provisions of the Indenture) and payment of all fees and
charges of the Issuer, Trustee, Tender Agent, and any paying agent, all
references in this Agreement to the Bonds and the Trustee shall be ineffective
and neither the Trustee nor the holders of the Bonds shall thereafter have any
rights hereunder, except those that shall have theretofore vested.
Section 10.8. Agreement for Benefit of Parties Hereto. Nothing in this
Agreement, express or implied, is intended to give to any person other than the
parties hereto and the holder of the Note, any right, remedy or claim under or
by reason of this Agreement other than the Bank (and this Agreement shall inure
to the benefit of the Bank).
Section 10.9. Waiver. No waiver of any of the provisions of this Agreement
shall be effective and binding unless set forth in a written notice and no
waiver of one provision shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such waiver constitute
a continuing waiver or a waiver of such provision in any other instance.
Section 10.10. Captions and Table of Contents. The captions herein and the
Table of Contents are inserted only as a matter of convenience and do not in any
way define, limit, construe or describe the scope or intent of this Agreement or
any section thereof or in any other way affect this Agreement.
Section 10.11. Survival of Covenants, Representations and Warranties. All
covenants, representations and warranties made by the Company and the Issuer
contained herein or in any other document, certificate or instrument delivered
in connection with the sale of any of the Bonds shall be continuing and shall
survive delivery of the Bonds and the other transactions contemplated by this
Agreement and the Indenture.
Section 10.12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.
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<PAGE>
Section 10.13. Holidays. Where a date of payment on the Note is not a
Business day then payment may be made on the first Business Day thereafter.
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<PAGE>
IN WITNESS WHEREOF, the Issuer and the Company have caused this Agreement to
be executed all as of the date first above written.
CITY OF JACKSONVILLE, ILLINOIS
By: [SIGNATURE APPEARS HERE]
------------------------------------
Mayor
[SEAL]
ATTEST:
[SIGNATURE APPEARS HERE]
- ----------------------------------
Clerk
AGI INCORPORATED
By:
------------------------------------
President
ATTEST:
- ----------------------------------
Secretary
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<PAGE>
IN WITNESS WHEREOF, the Issuer and the Company have caused this Agreement to
be executed all as of the date first above written.
CITY OF JACKSONVILLE, ILLINOIS
By:
------------------------------------
Mayor
[SEAL]
ATTEST:
- ----------------------------------
Clerk
AGI INCORPORATED
By: /s/ Richard Block
------------------------------------
President
ATTEST:
/s/ David C. Underwood
- ----------------------------------
Secretary
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<PAGE>
EXHIBIT A
(Description of the Project)
The Project consists of the acquisition of land, construction of an
industrial building and installation of the following equipment for use as a
manufacturing facility, all located within the boundaries of the Issuer:
DESCRIPTION ESTIMATED COST
Land $ 60,000
Building 3,452,189
Equipment 3,741,870
Other (Capitalized Interest) 86,003
$7,340,062
=========
The Project Site is described as follows:
The Company is acquiring, constructing and equipping a new 76,000 square
foot facility in Jacksonville, Illinois. The plant will be dedicated to the
production of booklets, folders and inserts for CD and cassette packaging to
service the Company's music and multimedia customers. The Company will focus its
production of these products in Jacksonville. The facility will be equipped
primarily with new machinery which will facilitate improved cycle times and
lower order quantities. It will also better position the Company for additional
growth in these markets. The plant is expected to begin operations at the end of
the first quarter of 1995. The Company estimates that it will hire 100
additional workers to operate the Jacksonville facility.
<PAGE>
EXHIBIT B
(Form of NOTE)
AGI INCORPORATED
PROMISSORY NOTE
FOR VALUE RECEIVED, AGI Incorporated (the "Company"), an Illinois
Corporation, promises to pay to the City of Jacksonville, Illinois, or
registered assigns, on or before 2:00 p.m. (Jacksonville time) (a) on February
1, 2026, a sum which, together with other moneys available therefor in the Debt
Service Fund under the Trust Indenture (the "Indenture") dated as of January 1,
1995, between the City of Jacksonville, Illinois (the "Issuer"), and Bank One,
Springfield, Springfield, Illinois, as trustee (the "Trustee"), will equal the
Principal Amount of the Bonds (defined below) which becomes due on that date;
(b) on the first business day of each month commencing February 1, 1995, or
otherwise when due a sum which, together with other moneys available therefor in
the Debt Service Fund under the Indenture, will equal the interest which becomes
due on the Bonds outstanding on that date; (c) on the dates fixed for redemption
or tender of the Bonds in whole or in part, the principal of and premium, if
any, in a maximum amount of five percent of the Principal Amount, and interest
on the Bonds to be redeemed to the date fixed for redemption; and (d)
immediately upon a declaration of acceleration of the maturity of the Bonds by
the Trustee, the principal, interest and premium, if any, in a maximum amount of
five percent of the Principal Amount, to the date of declaration of
acceleration.
All payments of principal, premium, if any, and interest are to be made
directly to the Trustee (or subsequent registered owner) for the account of the
Issuer in immediately available funds. This Note is security for the payment of
the Issuer's Multi-Mode Industrial Project Revenue Bonds, Series 1995 (AGI
Incorporated, Project), issued in the principal amount of $7,640,000 (the
"Principal Amount") pursuant to the Indenture (the "Bonds"). All of the terms,
conditions and provisions of the Indenture are incorporated into this Note by
reference.
This Note is issued pursuant to the Loan Agreement (the "Loan Agreement")
dated as of January 1, 1995, between the Issuer and the Company and is entitled
to the benefits, and is subject to the conditions, thereof. The obligation of
the Company to make the payments required under this Note is absolute and
unconditional without any defense or right of setoff, counterclaim or recoupment
by reason of any default by the Issuer under the Loan Agreement or under any
other agreement between the Company and the Issuer or out of any indebtedness or
liability at any time owing to the Company by the Issuer or for any other
reason.
This Note is subject to prepayment under the terms and conditions, and in
the amounts, provided in Article VII of the Loan Agreement.
<PAGE>
This Note is transferable only upon the books of the Trustee kept for that
purpose at its principal office, upon surrender for transfer of this Note at the
principal office of the Trustee, endorsed for transfer by the registered owner
or accompanied by an assignment executed by the registered owner or his
authorized attorney. Upon such surrender for transfer, the Trustee shall
validate and deliver in the name of the transferee a new Note which shall have
been executed by the Company.
If the Company fails to make any of the payments under this Note, the amount
unpaid shall continue as an obligation of the Company until fully paid and shall
bear interest (to the extent permitted by law) until paid at a per annum rate of
interest equal to the per annum rate then in effect on the Bonds.
If an "Event of Default" occurs under Section 8.1 of the Loan Agreement, the
principal of this Note may be declared due and payable as provided in Article
VIII of the Loan Agreement.
Where a date of payment is not a business day in the City of Chicago,
Illinois, or New York, New York, then payment may be made on the first business
day thereafter.
All amounts payable under the terms of this Note are payable without relief
from valuation and appraisement laws and with attorneys' fees. The maker and any
endorsers waive demand, presentment for payment, protest, notice of protest and
notice of non-payment or dishonor and consent to any and all extensions of time
for payment without notice.
All terms used in this Note which are defined in the Loan Agreement and not
in this Note shall have the meanings assigned to them in the Loan Agreement.
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered this _______ day of January, 1995.
AGI INCORPORATED
By:
----------------------------------
President
ATTEST:
- ---------------------------------
Secretary
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<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby assigns and transfers, unto Bank
One, Springfield, Springfield, Illinois, as Trustee (the "Trustee") under that
certain Trust Indenture between the City of Jacksonville, Illinois and the
Trustee dated as of January 1, 1995, the within Note, together with interest
accruing thereon and all right, title and interest thereto.
Dated:
--------------------------
CITY OF JACKSONVILLE, ILLINOIS
------------------------------------------
Mayor
In the presence of:
- -----------------------
Clerk
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<PAGE>
Exhibit 10.55
================================================================================
LOAN AGREEMENT
between
BUCKS COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
KLEARFOLD, INC.
Dated as of August 1, 1997
Relating to the
BUCKS COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
Variable Rate Demand Revenue Bonds, Series 1997
(Klearfold, Inc. Project)
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS - ACCEPTANCE OF INDENTURE.......................... 3
Section 1.01. Definitions.............................................. 3
Section 1.02. Acceptance of Indenture.................................. 4
Section 1.03. Assignment to Trustee.................................... 4
Section 1.04. Accounting Principles.................................... 4
ARTICLE II THE PROJECT................................................... 5
Section 2.01. The Project.............................................. 5
Section 2.02. Costs of Project......................................... 5
ARTICLE III LOAN OF BOND PROCEEDS........................................ 6
Section 3.01. Sale and Delivery of Bonds............................... 6
Section 3.02. Loan of Bond Proceeds.................................... 6
Section 3.03. Use of Bond Proceeds..................................... 6
Section 3.04. Corporation Contribution................................. 6
Section 3.05. Security................................................. 6
Section 3.06. Conditions Precedent..................................... 6
ARTICLE IV INSTALLMENT PAYMENTS.......................................... 7
Section 4.01. Repayment of Loan........................................ 7
Section 4.02. Time and Manner of Repayment............................. 7
Section 4.03. Payment Credits.......................................... 9
Section 4.04. Additional Amounts Payable by the Corporation............ 9
Section 4.05. Payments to Trustee...................................... 10
Section 4.06. Payments Unconditional; No Defense or Set-Off............ 10
Section 4.07. Optional Prepayments By Corporation...................... 10
ARTICLE V WARRANTIES, REPRESENTATIONS AND COVENANTS OF CORPORATION....... 12
Section 5.01. General Representations, Warranties and Covenants........ 12
Section 5.02. Indemnification of Issuer and Trustee.................... 13
Section 5.03. Reports and Audits....................................... 13
Section 5.04. Taxes and Claims......................................... 13
Section 5.05. Compliance with Laws..................................... 14
Section 5.06. Tax-Exempt Bond Covenants................................ 14
Section 5.07. Insurance................................................ 15
Section 5.08. Observance of Terms of Documents......................... 15
Section 5.09. Covenant With Bondholders................................ 15
Section 5.13. Investments.............................................. 15
Section 5.14. Filings to Protect Security Interest in Trust Estate..... 15
Section 5.12. Renewal Letter of Credit; Alternate Letter of Credit..... 16
Section 5.13. Remarketing Agent........................................ 16
Section 5.14. Purchase of Bonds........................................ 16
ARTICLE VI DEFAULTS AND REMEDIES......................................... 17
Section 6.01. Events of Default by Corporation......................... 17
Section 6.02. Remedies Upon Event of Default........................... 17
Section 6.03. Remedies of Authority and Control of Remedies by Bank.... 18
Section 6.04. Waiver of Errors and Exemptions.......................... 18
Section 6.05. No Remedy Exclusive...................................... 18
Section 6.06. No Waiver Implied........................................ 18
Section 6.07. Agreement to Pay Attorney's Fees and Expenses............ 18
ARTICLE VII MISCELLANEOUS................................................ 20
Section 7.01. Representations and Special Covenants of Issuer.......... 20
Section 7.02. Assignment............................................... 20
Section 7.03. Term of Agreement........................................ 20
Section 7.04. Notices.................................................. 21
Section 7.05. Parties in Interest...................................... 21
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Loan Agreement, Series 1997 Bonds
Klearfold, Inc.
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Section 7.06. Survival of Covenants, Conditions and Representations.... 22
Section 7.07. Amendments............................................... 22
Section 7.08. Severability............................................. 22
Section 7.09. Counterparts............................................. 23
Section 7.10. Applicable Law........................................... 23
EXHIBIT A DESCRIPTION OF PREMISES
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Loan Agreement, Series 1997 Bonds Page ii
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of August 1, 1997 (the "Agreement") between
the BUCKS COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY (the "Authority"), a body
corporate and politic duly organized, existing and in good standing under the
laws of the Commonwealth of Pennsylvania (the "Commonwealth") and KLEARFOLD,
INC., a for-profit corporation organized under the laws of the Commonwealth (the
"Corporation").
WITNESSETH:
WHEREAS, the Authority is a body corporate and politic existing under the
laws of the Commonwealth of Pennsylvania pursuant to the Economic Development
Financing Law, amended December 17, 1993, P.L. 490, No. 74, as amended
(hereinafter called the "Act"), having been duly organized by the County of
Bucks, Pennsylvania (hereinafter called the "County"); and
WHEREAS, the Corporation has, by duly authorized resolution, undertaken a
project consisting of financing, through the issuance by the Authority of bonds,
all or a portion of: (a) the acquisition and installation of an offset printing
press and related equipment and (b) paying all or part of the costs relating
thereto (collectively, the "Project'); and
WHEREAS, the Authority is authorized under the Act to issue its bonds for
the purposes aforesaid and the Authority has determined that the public interest
will be best served and that the purposes of the Act can be more advantageously
obtained by the Authority's issuance of bonds in order to obtain funds to loan
to the Corporation for the foregoing purposes; and
WHEREAS, it has been determined that in order to accomplish such purposes
the Authority will issue its revenue bonds pursuant to a Trust Indenture dated
as of August 1, 1997 (the "Indenture") between the Authority and Mellon Bank,
N.A., as trustee (the "Trustee"), in an aggregate principal amount not to exceed
$4,000,000, which shall be designated Bucks County Industrial Development
Authority Variable Rate Demand Revenue Bonds, Series 1997 (Klearfold, Inc.
Project) (the "Bonds"); and
WHEREAS, the Authority and the Corporation hereby agree to enter into this
Agreement, under the terms of which the Authority will lend the proceeds from
the sale of the Bonds to the Corporation to finance a portion of the costs of
the Project and the Corporation will repay the Loan by making installment
payments to the Authority in an aggregate amount sufficient to pay the principal
or purchase price of, premium, if any, and interest on the Bonds as the same
become due and payable; and
WHEREAS, the Bonds shall be secured by, among other things, the installment
payments to be paid pursuant to this Agreement (except for the Unassigned
Rights) to the Authority by the Corporation, which payments are to be assigned
to the Trustee; and
WHEREAS, the Corporation has obtained an Initial Letter of Credit (as
hereinafter defined) from Mellon Bank, N.A. (the "Initial Bank") which can be
drawn upon prior to the expiration thereof in an amount up to (a) an amount
equal to the outstanding principal amount of the Bonds to be used (i) to pay the
principal of the Bonds, (ii) to enable the Trustee's Agent (as hereinafter
defined) to pay the portion of the purchase price equal to the principal amount
of Bonds delivered or deemed delivered for purchase and not remarketed or (iii)
to enable the Corporation to purchase Bonds in lieu of redemption under certain
circumstances, plus (b) an initial amount equal to 49 days' accrued interest on
the Bonds (calculated at a rate of 12% per annum) to be used (i) to pay interest
on the Bonds or (ii) to pay the portion of the
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purchase price equal to the accrued interest, if any, of the Bonds properly
delivered or deemed delivered for purchase and not remarketed; and
WHEREAS, the issuance, sale and delivery of the Bonds and the execution and
delivery of this Agreement have been in all respects duly and validly authorized
in accordance with the Act by the resolutions of the Authority and as approved
by the County; and
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, covenants and agreements herein set forth, the Authority and
the Corporation, each intending to legally bind themselves and their respective
successors and assigns, do mutually promise, covenant and agree as follows:
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ARTICLE I
DEFINITIONS - ACCEPTANCE OF INDENTURE
Section 1.01. Definitions. All terms which are defined in the recitals
hereto shall have the meaning assigned to them therein, unless otherwise defined
herein or unless the context clearly requires otherwise. Capitalized terms used
in this Agreement and not otherwise defined herein, unless the context clearly
requires otherwise, shall have the same meanings as set forth in the Indenture.
In addition, the following terms shall have the meanings specified below:
"Code" means the Internal Revenue Code of 1986, as amended from time to
time. Each reference to a section of the Code herein shall be deemed to include
the United States Treasury Regulations, including temporary and proposed
regulations, relating to such section which are applicable to the Bonds or the
use of the proceeds thereof.
"Cost" or "Costs" in connection with the Project or any other project
financed under the Indenture, means all expenses which are properly chargeable
thereto under GAAP which are permitted costs under the Act.
"Documents" means this Agreement, the Indenture, the Bonds, the Letter of
Credit Agreement and all other documents executed by the Corporation or the
Authority in connection therewith.
"GAAP" shall mean generally accepted accounting principles as defined more
specifically in Section 1.04 hereof.
"Loan" means the loan to the Corporation by the Authority, concurrently
with the issuance of the Bonds, of the gross proceeds from the sale of the Bonds
for the purpose of financing the Project.
"Officer's Certificate" means a certificate signed, in the case of a
certificate delivered by the Corporation, by the Chief Executive Officer, Chief
Financial Officer, any Vice President, Secretary or Assistant Secretary of the
Corporation or, in the case of a certificate delivered by any other Person, the
chief executive or chief financial officer of such other Person, in either case
whose authority to execute such Certificate shall be evidenced to the
satisfaction of the Trustee.
"Person" means any natural person, firm, joint venture, association,
partnership, business trust, corporation, public body, agency or political
subdivision thereof or any other similar entity.
"Premises" means the facilities more particularly described in Exhibit A
hereto.
"Unassigned Rights" means the fees and expenses payable to the Authority,
the Authority's right to indemnification under Section 5.02 of this Agreement
and the Authority's right to execute and deliver supplements and amendments to
this Agreement.
All definitions of documents herein shall include any and all amendments
and supplements thereto and all definitions of persons or entities shall include
their respective successors and assigns.
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All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP in effect from time to time, as
modified by Section 1.04 hereof.
Section 1.02. Acceptance of Indenture. The Corporation acknowledges that it
has received an executed copy of the indenture and that it is familiar with the
terms and conditions of the Indenture. The Corporation further covenants that it
will comply with all the conditions and covenants contained in the Indenture
relating to the Corporation and the Premises, and that it will not take any
action which would cause a default thereunder or jeopardize the rights of the
Trustee, the Authority or the Bondholders.
Section 1.03. Assignment to Trustee. The Authority hereby notifies the
Corporation, and the Corporation hereby acknowledges, that all of the
Authority's right, title and interest in this Agreement (except Unassigned
Rights) are being assigned and pledged to the Trustee as security for the Bonds.
The Corporation consents to such assignment and acknowledges that the Bonds are
being issued in reliance by the Trustee upon the assignment of the Authority's
rights under this Agreement. The Corporation agrees that it shall perform all
obligations and pay all amounts due from the Authority under the Bonds and the
Indenture so that at all times there shall be no default thereunder.
Section 1.04. Accounting Principles. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation, combination or other accounting computation is required to be
made for the purposes of this Agreement or any agreement, document or
certificate executed and delivered in connection with or pursuant to this
Agreement, such determination or computation shall be done in accordance with
GAAP.
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ARTICLE II
THE PROJECT
Section 2.01. The Project. The Project consists of financing, through the
issuance by the Authority of the Bonds, the costs of:
(a) the acquisition and installation of an offset printing press and
related equipment, and
(b) paying all or part of the costs relating thereto
Section 2.02. Costs of Project. The Corporation agrees and acknowledges
that there is no implied or express warranty that the proceeds of the Bonds will
be sufficient to pay the Costs of the Project.
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ARTICLE III
LOAN OF BOND PROCEEDS
Section 3.01. Sale and Delivery of Bonds. In order to provide the funds
necessary to finance the Project as provided for in this Agreement, the
Authority agrees that it will use its best efforts to cause the Bonds to be
issued, sold and delivered. All proceeds received from the sale of the Bonds
shall be deposited by the Authority in trust with the Trustee in accordance with
the requirements of the Indenture, for the benefit, however, of the Corporation,
and in consideration of such issuance, sale and delivery of the Bonds, and such
deposit, the Corporation shall apply such funds as provided herein and in the
Indenture and shall make the payments specified in Article IV hereof and observe
all other conditions and provisions hereof.
Section 3.02. Loan of Bond Proceeds. Subject to the conditions hereof, the
Authority will concurrently with the issuance of the Bonds lend the proceeds
from the sale of the Bonds to the Corporation for the purpose of financing the
Project.
Section 3.03. Use of Bond Proceeds. The Authority shall deposit the
proceeds from the sale of the Bonds with the Trustee to be expended and
deposited all in accordance with the provisions of the Indenture.
Section 3.04. Corporation Contribution. In the event the Loan should not be
sufficient to pay the costs of the Project, the Corporation shall pay those
costs in excess of the amount of the Loan.
Section 3.05. Security. This Agreement is a general obligation of the
Corporation and the full faith and credit of the Corporation is pledged to the
payment of all sums due hereunder.
Section 3.06. Conditions Precedent. The obligation of the Authority to
provide the Loan is subject to the satisfaction of the following conditions:
(a) The representations and warranties set forth herein shall be
true and correct on and as of the date of the issuance of the Bonds and on such
date no Event of Default as hereinafter defined and no condition or act which
with the giving of notice or the lapse of time or both, would constitute such an
Event of Default, shall have occurred and be continuing or shall exist;
(b) The Corporation shall furnish to the Authority an Opinion of
Counsel for the Corporation in form and substance satisfactory to the Authority
as to matters which the Authority shall reasonably request:
(c) All legal details and proceedings in connection with the
issuance of the Bonds and the making of the Loan shall be in form and substance
satisfactory to the Authority and the Authority shall have received all
originals or certified or other copies of such documents and proceedings in
connection therewith in form and substance satisfactory to it as it may
reasonably request.
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ARTICLE IV
INSTALLMENT PAYMENTS
Section 4.01. Repayment of Loan. The Corporation hereby covenants and
agrees that it shall repay the Loan to the Authority by making installment
payments, in the manner and at the times hereinafter set forth, in sums
sufficient to pay the principal of, premium, if any, and interst payable on the
Bonds, and to pay all other amounts payable under the terms of this Agreement.
Section 4.02. Time and Manner of Repayment. The Corporation agrees to make
the following payments on the following dates:
(a) Interest:
--------
(i) At all times while the Bonds are secured by a Letter of
-------------------------------------------------------
Credit: On each Interest Payment Date for the Bonds while the Bonds are
------
secured by a Letter of Credit, an amount which, after taking into
consideration any amount on deposit in the Bond Fund (other than in the LOC
Debt Service Account), is equal to the amount of the interest to become due
on the Bonds on such Interest Payment Date; provided, however, that the
Corporation may be entitled to certain credits on or reductions of such
payments as permitted under Section 4.03 hereof and Section 408 of the
Indenture.
(ii) At all times while the Bonds are NOT secured by a Letter of
-----------------------------------------------------------
Credit following the Conversion Date: In the event that the Letter of
------------------------------------
Credit is terminated on and after the Conversion Date in accordance with
Section 403 of the Indenture, the Corporation agrees to make the following
payments on the following dates:
(A) On the 20th day of each month, beginning with the
first month following the month in which the Conversion Date for the
Bonds occurs, an amount which, together with an equal amount to be
paid on the 20th day of each month, if any, occurring before the next
succeeding Semiannual Date, will not be less than the interest to
become due on the Bonds on the next succeeding Semiannual Date; and
(B) on the 20th day of each month thereafter, an amount
equal to one-sixth (1/6) of the interest to become due on the Bonds
on the next succeeding Semiannual Date; provided, however, that the
Corporation may be entitled to certain credits on the payments in
this Section 4.02(a)(ii) as permitted under Section 4.03 hereof.
(b) Principal:
---------
(i) At all times while the Bonds are secured by a Letter of
-------------------------------------------------------
Credit: On each August 1, an amount equal to the principal to become due on
------
the Bonds secured by a Letter of Credit on such date by Maturity; provided,
however, that the Corporation may be entitled to certain credits on or
reductions of such payments as permitted under Section 4.03 hereof and
Section 408 of the Indenture.
(ii) At all times while the Bonds are NOT secured by a
-------------------------------------------------
Letter of Credit following the Conversion Date: On the 20th day of each
----------------------------------------------
month beginning with the first month following the month in which the
Conversion Date for the Bonds occurs, an amount which, together with an
equal amount to be paid on the 20th day of each
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month, if any, occurring before the next succeeding August 1, will not be
less than the principal to become due on the Bonds on the next succeeding
August 1 by Maturity or mandatory redemption, and thereafter on the 20th
day of each month an amount equal to one-twelfth (1/12) of the next
installment of the principal becoming due on the Bonds on the next
succeeding August 1 by Maturity or mandatory redemption; provided, however,
that the Corporation may be entitled to certain credits on such payments as
permitted under Section 4.03 hereof.
(c) The Corporation shall provide for the payment of the
principal of, interest and premium, if any, on the Bonds other than Pledged
Bonds, Corporation Bonds and Bonds bearing interest at a Fixed Rate (subject to
the provisions of Section 403(i) of the Indenture permitting the termination of
the Letter of Credit in the Fixed Mode in certain situations) by delivery of a
Letter of Credit to the Trustee which complies with the requirements of the
Indenture. Simultaneously with the original issuance and delivery of the Bonds,
the Corporation shall deliver the Initial Letter of Credit to the Trustee. The
Corporation hereby authorizes and directs the Trustee to draw moneys under the
Letter of Credit in accordance with the provisions of the Indenture and the
Letter of Credit to the extent necessary to pay the principal of, premium, if
any, and interest on the Bonds other than Pledged Bonds and Corporation Bonds if
and when due.
(d) The Corporation shall pay to the Trustee amounts equal to the
amounts to be paid by the Trustee and the Trustee's Agent pursuant to Section
506 of the Indenture to purchase outstanding Bonds, such amounts to be paid by
the Corporation to the Trustee and the Trustee's Agent, as the case may be, on
the dates such payments pursuant to Section 506 of the Indenture are to be made;
provided, however, that the obligation of the Corporation to make any such
payment hereunder shall be reduced by the amount of any moneys available for
such payment under clauses (i) or (ii) of Section 506(a) of the Indenture.
(e) The Corporation shall provide for the payment of amounts to be
paid by the Trustee or the Trustee's Agent pursuant to Section 506(a)(ii) of
the Indenture by the delivery of the Letter of Credit to the Trustee.
Simultaneously with the original issuance and delivery of the Bonds, the
Corporation shall deliver the Initial Letter of Credit to the Trustee. The
Corporation hereby authorizes and directs the Trustee to draw moneys under the
Letter of Credit in accordance with the provisions of the Indenture and the
Letter of Credit to the extent necessary to provide moneys payable under Section
506 of the Indenture if and when due.
(f) Payments Required to Effect Optional Redemption. On or before
-----------------------------------------------
the Business Day next preceding the date of redemption of any Bonds to be
optionally redeemed pursuant to Section 511(a) of the Indenture, an amount not
less than the full amount required to pay the principal of and premium, if any,
on such Bonds to be optionally redeemed; provided, however, that the Corporation
may be entitled to certain credits on or reductions of such payments as
permitted under Section 408 of the Indenture.
(g) Trustee's and the Trustee's Agent Fee. While the Bonds remain
-------------------------------------
Outstanding, the reasonable compensation and expenses of the Trustee and the
Trustee's Agent under the Indenture shall be paid directly to such Trustee and
the Trustee's Agent by the Corporation upon the receipt by the Corporation of a
bill for such services and expenses from the Trustee and/or the Trustee's Agent,
as applicable.
(h) Authority's Administrative Fee. At closing the Corporation
------------------------------
shall pay the Authority a closing fee of $8,000. There will be no annual
administrative fee.
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(i) Rebate to the United States. If there is any amount required
---------------------------
to be paid to the United States pursuant to Section 148(f) of the Code and
Section 5.06(d) hereof, the Corporation shall pay such amount to the United
States.
Section 4.03. Payment Credits. Notwithstanding any provision contained in
---------------
this Loan Agreement or in the Indenture to the contrary, the Corporation shall
be entitled to receive a credit against the payments required by Section 4.02 in
the following situations:
(a) Principal and Interest: Any moneys on deposit in the Bond Fund,
----------------------
other than the LOC Debt Service Account, shall be credited against the
obligation of the Corporation under Section 4.02(a) and/or (b) hereof for the
payment of principal of and interest on the Bonds.
(b) Purchase of Bonds: The principal amount of Bonds purchased by
-----------------
the Corporation and delivered to the Trustee, or purchased by the Trustee and
canceled, shall be credited against the obligation of the Corporation to pay
amounts equal to the principal due on the Bonds in such order as the Corporation
shall elect in writing to the Trustee prior to such purchase or if no such
ejection is made prior to such purchase, in the inverse order thereof; provided,
however, that deposit of a Bond of one Maturity may not be credited against an
obligation which would be used, in the normal course, to retire a Bond of
another Maturity; and provided further, however, that so long as a Letter of
Credit is in effect with respect to all or a portion of the Bonds, the
Corporation shall be entitled to the credit provided in this Section 4.03(b)
only to the extent that Bonds the payment of which is secured by such Letter of
Credit which are purchased by the Corporation and delivered to the Trustee, or
purchased by the Trustee and canceled, are (in each instance) purchased with
Eligible Moneys drawn under the Letter of Credit.
(c) In addition, the Corporation shall be entitled to a credit
during the year immediately preceding the final maturity date of the Bonds to
the extent that any payment required to be made pursuant to Section 4.02 of this
Agreement would, together with the amount held by the Trustee in all Funds under
the Indenture, other than the LOC Debt Service Account, exceed the principal
amount of the Bonds Outstanding and the amount of the interest due both at the
final maturity date and the interest payment date immediately preceding the
final maturity date.
(d) The Corporation shall also be entitled to a credit against
payments required to be made pursuant to Section 4.02 hereof to the extent that
the required payment due on the Bonds has been paid from moneys advanced under
the Letter of Credit and the Corporation has directly reimbursed the Bank for
such draw.
Section 4.04. Additional Amounts Payable by the Corporation. It is the
intention of the Authority and the Corporation that, notwithstanding any other
provision of this Agreement, the Trustee, on the Authority's behalf, shall
receive funds from the Corporation at such times and in such amounts as will
enable the Authority to meet all of its obligations under the Bonds, including
obligations surviving payment of the Bonds pursuant to the terms thereof.
Accordingly, the Corporation agrees (but such agreement shall not limit the
generality of the preceding sentence) that if any additional amounts become
payable by the Authority pursuant to the terms of the Bonds to any holder of the
Bonds, then additional amounts shall be due and payable by the Corporation to
the Authority hereunder equal to any additional amounts that may be payable by
the Authority under the Bonds, before or after payment of principal on the
Bonds, all of which amounts shall be paid by the Corporation on the date that
the comparable amounts are due by the Authority to such owner of the Bonds. The
Corporation further agrees to pay any other amounts which the Authority is
obligated under the Indenture to pay to the Trustee.
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Section 4.05. Payments to Trustee. All installment payments and other
amounts payable by the Corporation hereunder shall be paid directly to the
Trustee, except that indemnification payments due to the Authority pursuant to
Section 5.02 hereof shall be paid to the Authority and Administrative Fee of the
Authority shall be paid directly to the Authority.
Section 4.06. Payments Unconditional; No Defense or Set-Off.
(a) The obligations of the Corporation to pay the installments and
other amounts payable hereunder shall be absolute and unconditional without
defense or set-off by reason of any default by the Authority under this
Agreement or under any other agreement between the Corporation and the Authority
or for any other reason, including, without limitation, any acts or
circumstances that may constitute failure of consideration, destruction of or
damage to the Premises, commercial frustration of purpose or failure of the
Authority to perform and observe any agreement, whether express or implied, or
any duty, liability or obligation arising out of or in connection with this
Agreement, it being the intention of the parties that such installment payments
and other amounts will be paid in full when due without any delay and will be
received by the Authority and the Trustee as a net sum without deductions,
abatements, diminution or set-off of any kind whatsoever.
(b) Damage to or destruction of all or any portion of the
Premises by fire or any other cause or taking of all or a portion of the
Premises of the Corporation by condemnation shall not terminate this Agreement
or cause any abatement of or reduction in the payments to be made by the
Corporation hereunder, or otherwise alter the respective obligations of the
Authority or the Corporation as set forth herein.
Section 4.07. Optional Prepayments By Corporation.
(a) The Corporation may prepay all or any portion of the Loan to
the same extent and upon the same conditions that the Authority has the right to
prepay the indebtedness evidenced by the Bonds. Any such amounts prepaid by the
Corporation to the Trustee shall be credited against the outstanding balance of
the Loan hereunder. Partial prepayments of the Loan made by the Corporation
hereunder shall be credited against the obligation of the Corporation to pay
amounts equal to the principal due on the Bonds in such order as the Corporation
shall eject prior to such purchase or if no such election is made prior to such
purchase, in the inverse order thereof. Payments of principal installments and
interest falling due shall continue to be made in accordance with Sections 4.01
and 4.02 hereof until the entire outstanding balance of the Loan and all accrued
interest have been paid or provision satisfactory to the Trustee has been made
for the defeasance of the Bonds in accordance with Section 1201 of the
Indenture.
(b) If there are sufficient moneys available with the Trustee to
meet the payment of principal of, premium, if any, and interest on all the
Outstanding Bonds and sufficient funds available with the Trustee to meet all
remaining obligations of the Corporation to the Authority and the Trustee, the
Trustee shall so notify the Corporation in writing, and the Corporation shall
then be relieved of making any further payments hereunder, and this Agreement
shall terminate.
(c) With respect to Bonds bearing interest at a Weekly Rate, the
Corporation shall give the Authority and the Trustee not less than 35 days'
prior written notice of any optional prepayment, which notice shall designate
the date of prepayment and the amount thereof and direct the redemption of Bonds
in the amount corresponding to the prepayment. No such notice from the
Corporation shall be required in the case of prepayments required to be made in
order to provide for the payment of the redemption of Bonds required to be
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<PAGE>
redeemed. The Corporation shall provide to the Bank a copy of any notice given
pursuant to this Section 4.07(c).
(d) In the case of a prepayment to be applied to the redemption of
Bonds bearing interest at a Fixed Rate, the Corporation shall give the Authority
and the Trustee not less than 45 days' prior written notice, which notice shall
designate the date of prepayment and the amount thereof and direct the
redemption of Bonds in the amount corresponding to the prepayment. No such
notice from the Corporation shall be required in the case of prepayments
required to be made in order to provide for the payment of the redemption of
Bonds required to be redeemed. The Corporation shall provide to the Bank a copy
of any notice given pursuant to this Section 4.07(d).
(e) Notwithstanding subsections (c) and (d) above, in the case of a
prepayment to be applied to the special optional redemption of Pledged Bonds
pursuant to Section 511(b) of the Indenture, the Corporation shall give the
Authority and the Trustee not less than two Business Days' prior written notice,
which notice shall designate the date of prepayment and the amount thereof and
direct the redemption of Pledged Bonds in the amount corresponding to the
prepayment. The Corporation shall provide to the Bank a copy of any notice given
pursuant to this Section 4.07(e). The Corporation shall also prepare and deliver
with the notice (i) a form of the Written Request of the Authority which the
Authority will deliver to the Trustee pursuant to Section 511(d)(iii) of the
Indenture, and (ii) a form of the notice of redemption which the Trustee will
deliver to the Bank pursuant to Section 512(b) of the Indenture.
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ARTICLE V
WARRANTIES, REPRESENTATIONS AND COVENANTS OF CORPORATION
Section 5.01. General Representations, Warranties and Covenants. The
Corporation represents, warrants and agrees that:
(a) All information, representations and warranties set forth in
the certificates, executed and delivered by the Corporation in connection with
the issuance of the Bonds by the Authority is true, correct and complete as of
the date of execution of this Agreement.
(b) The Corporation shall not take any action that would cause the
occurrence of an Event of Default hereunder and under the terms of the
Indenture.
(c) The Corporation has full power and authority to execute and
deliver the Documents executed and delivered by the Corporation, and to incur
and perform the obligations provided for therein, all of which have been duly
authorized by all proper and necessary action and all material governmental
licenses, authorizations, consents and approvals required. No consent or
approval of any other person or public authority or regulatory body (other than
the Authority) is required as a condition to the validity or enforceability of
any of the Documents executed and delivered by the Corporation, or if required
the same has been duly obtained.
(d) Each of the Documents executed and delivered by the Corporation
has been properly executed by the Corporation, constitutes the valid and legally
binding obligation of the Corporation, and is fully enforceable against the
Corporation in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights and by general principles of equity.
(e) There is no litigation or proceeding pending or, so far as the
Corporation knows, threatened, before any court or administrative agency which,
in the opinion of the Corporation, will materially adversely affect the
financial condition or operations of the Corporation or the authority of the
Corporation to enter into, or the validity or enforceability of, any of the
Documents executed and delivered by the Corporation.
(f) There is (i) no provision of any existing mortgage, indenture,
contract or agreement binding on the Corporation or affecting its property, and
(ii) no law binding upon the Corporation or affecting any of its property, which
would conflict with or in any way prevent the execution, delivery or performance
of any of the Documents executed and delivered by the Corporation or which would
be in default or violated as a result of such execution, delivery or
performance.
(g) The Corporation has filed all federal, state and local tax
returns which are required to be filed by the Corporation or has received
extensions for filing the same and has paid all taxes as shown on such returns
as they have become due. No claims have been assessed and are unpaid with
respect to such taxes.
(h) There is no default by the Corporation under this Agreement or
any other Documents and, no event has occurred and is continuing, and no
condition exists which with notice or the passage of time or both would
constitute a default under any thereof.
Section 5.02. Indemnification of Issuer and Trustee. The Corporation agrees
that the Authority and the members, officers and employees thereof shall not be
liable for and the
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<PAGE>
Corporation covenants and agrees to protect, exonerate, defend, indemnify and
save the Authority and the members, officers, employees and agents thereof and
the Trustee, its officers, directors, employees and agents, harmless from and
against any and all costs, damages or liabilities which may arise out of the
issuance of the Bonds or the Authority's and the Trustee's execution of the
Documents or any of them, the Authority's and the Trustee's performance
thereunder or arising from any breach or default on the part of the Corporation
in the performance of any covenant or agreement on the part of the Corporation
to be performed pursuant to the terms of this Agreement or any of the other
Documents; and from and against all reasonable costs, counsel fees, including
the allocated costs and expenses of in-house counsel and legal staff, expenses
and liabilities incurred in or about the defense of any such claims or action or
proceedings brought thereon. The Corporation may, at its cost and in its name or
in the name of the Authority and/or the Trustee, prosecute or take any other
action involving third persons which the Corporation deems necessary in order to
insure or protect the Corporation's rights under this Agreement; in such event,
the Authority and the Trustee will reasonably cooperate with the Corporation,
but at the sole expense of the Corporation.
The Authority or Trustee, as the case may be, shall give prompt written
notice to the Corporation of any claim asserted against the Authority, its
members, officers, employees or agents or the Trustee, its officers, directors,
employees or agents, when such claim becomes known and which, if sustained, may
result in liability of the Corporation hereunder; provided, however, that the
failure by the Authority or the Trustee to give such notice shall not relieve
the Corporation from its obligations to protect, exonerate, defend, indemnify
and save the Authority and its members, officers or employees or the Trustee,
its officers, directors, employees, and agents harmless as aforesaid, except to
the extent that the failure to give such notice results in actual loss or damage
to the Corporation; and in case any action or proceeding be brought against the
Authority, its members, officers, employees or agents or the Trustee, its
officers, directors, employees or agents, by reason of any such claim, the
Corporation, upon notice as aforesaid, covenants and agrees diligently to resist
or defend such action or proceedings; provided, however, that the indemnified
party or parties will cooperate and assist, at the expense of the Corporation,
in the defense of such action or proceeding if reasonably requested to do so by
the Corporation.
Notwithstanding anything contained herein to the contrary, the Corporation
shall not be obligated to indemnify or hold harmless the Authority or its
members, officers, employees or agents for its or their gross negligence or
willful misconduct or the Trustee, it's officers, directors and employees for
its or their gross negligence or willful misconduct.
Section 5.03. Reports and Audits. The Corporation shall provide to the
Authority such financial information relating to the Bonds as shall be required
by the Authority to complete its annual financial statements.
Section 5.04. Taxes and Claims. The Corporation shall pay and discharge all
taxes, assessments and governmental charges or levies imposed upon it or on its
income or properties prior to the date on which penalties attach thereto, and
all lawful claims which, if unpaid, might become a lien or charge upon any of
its properties, provided that the Corporation shall not be required to pay any
such tax, assessment, charge, levy or claim, the payment of which is being
contested in good faith and by proper proceedings, so long as the security for
the Bonds is not, in the opinion of the Trustee, materially impaired during the
period of contest.
Section 5.05. Compliance with Laws. The Corporation shall comply with all
applicable federal, state and local laws, rules, regulations and orders of any
governmental authority, the noncompliance with which could have a material
adverse affect on the financial condition of the Company or its ability to
perform its obligations under this Agreement, subject to its right to contest
the same in good faith.
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Klearfold, Inc.
<PAGE>
Section 5.06. Tax-Exempt Bond Covenants.
(a) The Corporation hereby covenants and agrees that:
(i) it shall at all times do and perform all acts and things
necessary or desirable in order to assure that interest paid on the Bonds
shall, for purposes of federal income taxation, be and remain excludable
from the gross income of the recipients thereof and that it will refrain
from doing or performing any act or thing that will cause such interest
not to be so excludable.
(ii) it will not make any investment, or direct the Trustee to
make any investment, or other use of the proceeds (as that term is defined
in Section 148 of the Code and all applicable regulations promulgated
thereunder) of the Bonds which would cause the Bonds to be "arbitrage
bonds" (as that term is defined in Section 148 of the Code and all
applicable regulations promulgated thereunder), and that it will comply
with the requirements of such Code section and regulations throughout the
term of the Bonds.
(iii) it will not take or omit to take any action or permit
another person to take action after the date hereof that causes the
$10,000,000 limitation set forth in Section 144(a)(4) of the Code or the
$40,000,000 limit set forth in Section 144(a)(10) of the Code to be
exceeded or otherwise cause the Bonds to lose their status as "qualified
small issue bonds" in accordance with the requirements of Section 144(a) of
the Code."
(b) The Corporation hereby covenants that the average maturity of
the Bonds does not exceed 120% of the average reasonably expected economic life
of the facilities financed with the net proceeds of the Bonds.
(c) Interest with respect to the Bonds is not guaranteed (in whole
or in part) by the United States or any agency or instrumentality thereof; no
portion of the proceeds of the Bonds are to be (a) used in making loans the
payment of principal or interest with respect to which is to be guaranteed (in
whole or in part) by the United States (or any agency or instrumentality
thereof), or (b) invested (directly or indirectly) in federally insured deposits
or accounts except to the extent permitted under Section 149(b)(3) of the Code
which provides exceptions which include (i) investments during any initial
temporary period permitted under Section 148 of the Code, such as for certain
construction periods, until such proceeds are needed for the purpose for which
the Bonds were issued; (ii) investments in a bona fide debt service fund, within
the meaning of Section 149(b)(3) of the Code, (iii) investments in a reasonably
required reserve or replacement fund, within the meaning of Section 148(d) of
the Code or (iv) investments in obligations issued by the United States
Treasury; and the payment of principal of or interest on the Bonds is not
otherwise indirectly guaranteed (in whole or in part) by the United States or
any agency or instrumentality thereof.
(d) The Corporation hereby covenants that it will perform all
undertakings of and pay all amounts due to the Internal Revenue Service pursuant
to the requirements of Section 148(f) of the Internal Revenue Code and will, in
accordance with the Tax Regulatory Certificate:
(i) deliver to the Trustee and the Authority, a written
statement, with appropriate supporting schedules, of the amount, if any,
determined as of any computation date specified in such Tax Regulatory
Certificate to be payable to the United States government with respect to
the Bonds pursuant to Section 148(f) of the Code (which written statement
and supporting schedules may be prepared by the
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Loan Agreement, Series 1997 Bonds Page 14
Klearfold, Inc.
<PAGE>
Corporation or by an accounting, consulting or financial advisory firm
retained by it for such purpose), and
(ii) submit to the Internal Revenue Service sufficient funds
to make any payment required to be made under Section 148(f) of the Code,
as disclosed in the written statement delivered pursuant to (i) above,
accompanied by such related documentation as may be required to be filed
with such payment; and
will retain records of all determinations made pursuant to the foregoing with
regard to the Bonds until six years after the retirement of the last Bond. The
Trustee may conclusively rely upon any information provided to it by the
Corporation under this Section 5.06 without any independent verification.
Section 5.07. Insurance. The Corporation will maintain, or cause to be
maintained, insurance covering such risks and in such amounts as is customary
for other comparable institutions and is adequate to protect it and its
properties and operations.
Section 5.08. Observance of Terms of Documents. The Corporation shall
comply with all of the terms and conditions and covenants applicable to the
Corporation contained in this Agreement, the Indenture and the Documents.
Section 5.09. Covenant With Bondholders. The Authority and the Corporation
agree that this Agreement is executed in part to induce the purchase by others
of the Bonds, and accordingly, all representations, warranties, covenants and
agreements on the part of the Corporation and the Authority as set forth herein
are declared to be for the benefit of the Trustee and the registered owners from
time to time of the Bonds and their respective successors and assigns.
Section 5.10. Investments. The Authority and the Corporation agree that all
moneys in any fund established under the Indenture may be invested in such
Qualified Investments as the Corporation may direct in writing; provided,
however, that any such directions shall conform to the requirements of the
Indenture. The Trustee is hereby authorized to trade with itself in the purchase
and sale of securities as provided in Section 407 of the Indenture.
Section 5.11. Filings to Protect Security Interest in Trust Estate. The
Corporation hereby agrees to file and refile such instruments as shall be
necessary to preserve the lien of the Indenture upon the Trust Estate or any
part thereof granted in the Indenture until the principal of and interest on the
Bonds secured by the Indenture shall have been paid and to furnish satisfactory
evidence to the Trustee of recording, registering, filing and refiling of such
instruments and of every additional instrument which shall be necessary to
preserve the lien of the Indenture upon the Trust Estate or any part thereof
until the principal of and interest on the Bonds secured by the Indenture shall
have been paid. The Trustee shall have no liability for a lapse of any security
interest by reason of the Corporation's failure to file or preserve the lien of
the Indenture upon the Trust Estate or any part thereof granted in the
Indenture.
Section 5.12. Renewal Letter of Credit; Alternate Letter of Credit.
(a) The Corporation covenants and agrees not to permit any of the
Bonds prior to the Conversion Date to be remarketed unless a Letter of Credit
satisfying the requirements of the Indenture is in full force and effect.
Similarly, prior to the Conversion Date, the Corporation may not cancel the
Letter of Credit then in effect unless it provides a Renewal Letter of Credit or
an Alternate Letter of Credit satisfying the requirements of the Indenture.
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Loan Agreement, Series 1997 Bonds Page 15
Klearfold, Inc.
<PAGE>
(b) At any time, the Corporation may, at its option, subject to
the provisions of the Letter of Credit Agreement, provide for the delivery to
the Trustee of a Renewal Letter of Credit or an Alternate Letter of Credit in
lieu of the Letter of Credit then in effect, which Letter of Credit shall meet
the requirements of Section 403 of the Indenture.
Section 5.13. Remarketing Agent. The Corporation covenants and agrees
that it will comply with the provisions of Section 918 of the Indenture with
respect to the removal and replacement of the Remarketing Agent.
Section 5.14. Purchase of Bonds. So long as a Letter of Credit is in
effect, the Corporation shall not acquire, and shall not permit any other
Affiliate or Insider to acquire, any Bonds (other than Pledged Bonds or Bonds
which bear interest at a Fixed Rate) except with Eligible Moneys or as otherwise
required by Section 4.02(d) of this Loan Agreement.
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Loan Agreement, Series 1997 Bonds Page 16
Klearfold, Inc.
<PAGE>
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default by Corporation. The occurrence of any of
the following shall constitute an Event of Default hereunder:
(a) Failure by the Corporation to make any payments under Sections
4.01 and 4.02 of this Agreement when due and such default shall not be cured
within five days after such payment becomes due hereunder; or
(b) Failure by the Corporation to make any payment hereunder or in
the performance of or compliance with any of the provisions, warranties,
covenants, agreements, terms or conditions contained in this Agreement, other
than those specified in (a) above, which continues for thirty (30) days
following written notice thereof to the Corporation from the Authority or the
Trustee except in the case of a default which cannot be cured within such
thirty (30) days, in which case the period shall be extended for such period as
is reasonable to cure the same with due diligence, provided the Corporation
commences such performance or compliance within thirty (30) days and proceeds
diligently to cure the same; or
(c) If the Corporation shall make an assignment of substantially
all of its assets for the benefit of creditors or is adjudicated a bankrupt or
shall file a bill in equity or otherwise initiate proceedings for the
appointment of a receiver of its assets, or shall file a case under the Federal
Bankruptcy Code to be declared a bankrupt or for reorganization or otherwise
initiate any proceedings in any court for a composition with its creditors or
for relief in any manner from the payment of its debts when due under any state
or federal laws; or if any proceedings in bankruptcy or for the appointment of
a receiver shall be instituted against the Corporation under any state or
federal law and shall not be dismissed within sixty (60) days; or
(d) the occurrence of an Event of Default under the Indenture
resulting in an acceleration of the Bonds.
Unless and until the Authority or the Trustee shall have exercised any remedies
upon an Event of Default, and subject to the rights of the Bank to control all
remedies, including any waiver of an Event of Default pursuant to the Indenture,
the Corporation (or any other person on behalf of the Corporation) may at any
time (a) pay all accrued unpaid payments then due and owing on the outstanding
balance of the Loan and all other sums which the Corporation is obligated to pay
hereunder; and (b) cure all other existing defaults hereunder, and in every such
case, such payment and cure shall be deemed to constitute a waiver of the
default and its consequences as though the default had not occurred.
Section 6.02. Remedies Upon Event of Default. Upon the occurrence of an
Event of Default:
(a) Subject to Section 6.03 hereof. the entire outstanding balance
of the Loan and any other sums which the Corporation is obligated to pay to the
Authority or to the Trustee hereunder shall immediately be due and payable;
provided, however, that the Trustee shall have declared the acceleration of the
Bonds in accordance with the Indenture.
(b) The Trustee. after ten (10) days notice to the Corporation. may
but shall not be obligated to perform for the account of the Corporation any
covenant of the Corporation hereunder in the performance of which the
Corporation is in default or make any payment for which the Corporation is in
default. The Corporation shall pay to the Trustee upon demand any amount paid by
it in the performance of such covenant and any amounts which
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Klearfold, Inc.
<PAGE>
the Trustee shall have paid by reason of failure of the Corporation to comply
with any covenant or provision of this Agreement, including reasonable counsel
fees incurred in connection with prosecution or defense of any proceedings
instituted by reason of default of the Corporation, together with interest at a
rate equal to the lesser of the highest rate permitted by applicable law and the
cost of the money to the Trustee, from the date of payment until repayment by
the Corporation.
(c) The Authority and the Trustee, as assignee, may pursue any
other right/remedy available at law or in equity.
Section 6.03. Remedies of Authority and Control of Remedies by Bank.
(a) In addition to the rights of the Trustee under Section 6.02
hereof, the Authority shall have the right to proceed against the Corporation
for payment of Administrative Fees pursuant to Section 4.02(h) hereof and for
indemnification pursuant to Section 5.02 hereof.
(b) Control of Remedies by Bank. Anything herein to the contrary
---------------------------
notwithstanding, if the Bank has not failed to make any payment required under
the Letter of Credit, the Bank shall have the exclusive right to exercise or
direct the exercise of remedies with respect to the Bonds and the Loan Agreement
in accordance with the terms hereof following an Event of Default.
Section 6.04. Waiver of Errors and Exemptions. The Corporation hereby
waives and releases all technical errors, defects and imperfections whatsoever
of a procedural nature in the entering of any judgment or any process or
proceedings arising out of this Agreement. The Corporation also waives the
benefit of any law which now or hereafter might authorize the stay of any
execution to be issued or any judgment recovered hereunder or the exemption of
any property from levy or sale thereunder.
Section 6.05. No Remedy Exclusive. No right or remedy herein conferred
upon or reserved to the Authority or the Trustee is intended to be exclusive of
any other right or remedy herein or by law provided, but each shall be
cumulative and in addition to every other right or remedy given herein or now or
hereafter existing at law or in equity or by statute.
Section 6.06. No Waiver Implied. No waiver by the Authority, the Bank or
the Trustee of any breach by the Corporation of any of its obligations,
agreements or covenants hereunder shall be a waiver of any subsequent breach or
of any obligation, agreement or covenant, nor shall any forbearance by the
Authority, the Bank or the Trustee to seek a remedy for any breach by the
Corporation be a waiver by the Authority, the Bank or the Trustee of its rights
and remedies with respect to any subsequent breach.
Section 6.07. Agreement to Pay Attorney's Fees and Expenses. In the event
the Corporation should default under any of the provisions of this Agreement and
the Authority, the Bank or the Trustee (in its own name or in the name and on
behalf of the Authority) should employ attorneys or incur other expenses for the
collection of the payments required hereunder or the enforcement of performance
or observance of any obligation or agreement on the part of the Corporation
herein contained, the Corporation will, on demand therefor, pay to the Authority
or the Trustee (as the case may be) the reasonable fee of such attorneys, and
such other reasonable expenses so incurred.
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Loan Agreement, Series 1997 Bonds Page 18
Klearfold, Inc.
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.01. Representations and Special Covenants of Issuer. The
Authority represents, warrants and agrees that:
(a) It is a public body corporate and politic constituting an
instrumentality of the Commonwealth and is authorized under the Act to enter
into the transactions contemplated by this Agreement and to carry out its
obligations hereunder. The Authority has duly authorized the execution and
delivery of this Agreement and will do or cause to be done all things necessary
to preserve and keep it in full force and effect.
(b) The execution and delivery by the Authority of the Bonds, this
Agreement and the Indenture and compliance with the provisions of such
instruments will not conflict with or constitute a breach of, or default under,
any indenture, commitment, agreement or other instrument to which the Authority
is a party or by which it is bound, or, as presently construed, any
constitutional or statutory provision, or rule, regulation, ordinance, judgment,
order or decree to which the Authority or any of its property, is subject.
(c) There is no action, suit, proceeding, inquiry or investigation
at law or in equity, before or by any court, public board or body, pending or,
to the best of its knowledge, threatened against the Authority (nor is there
any basis therefor) (i) which in any way questions the powers of the Authority
to enter into this transaction, or the validity of the proceedings taken by the
Authority in connection with the issuance of the Bonds, (ii) wherein an
unfavorable decision, ruling or finding would materially adversely affect the
transactions contemplated by this Agreement, the Indenture or the Bonds or
(iii) which in any way would adversely affect the validity or enforceability of
the Bonds, this Agreement or the Indenture (or of any other instrument required
or contemplated for use in consummating the transactions contemplated thereby
or hereby).
Section 7.02. Assignment. The Corporation will not assign all or any part
of its obligations under this Agreement to another Person or Persons; provided
that the Corporation may assign all or a part of the Corporation's obligations
under this Agreement to another Person or Persons subject to the requirement
that (a) the assignee assumes in writing all of the obligations of the
Corporation, or in the case of an assignment of a part of the Corporation's
obligations under this Agreement, that portion of the obligations assigned,
under this Agreement; (b) there is delivered to the Trustee, the Authority and
the Bank prior to the consummation of such assignment an Opinion of Counsel to
the effect that such assignment is permitted hereunder and does not subject the
interest payable on the Bonds to United States income taxes or cause the Bonds
to be deemed "arbitrage bonds" within the meaning of Section 148 of the Code and
the regulations thereunder, and (c) there is delivered to the Trustee prior to
the consummation of such assignment written evidence from the Bank that it
consents to such assignment. Every assignee shall be bound by all of the
covenants and agreements of the Corporation herein. Upon satisfaction with the
preconditions to assignment contained in this Section 7.02 and the execution and
delivery of such documents as are reasonably necessary to effect such
assignment, the Corporation shall no longer be liable for such portion of its
obligations under this Agreement properly assigned to another Person or Persons.
Section 7.03. Term of Agreement. This Agreement shall remain in full force
and effect for a term commencing on the date of the issuance of the Bonds and
terminating at such time as there are no Bonds Outstanding under the provisions
of the Indenture; provided, however, that this Agreement and the obligation of
the Corporation to make payments pursuant to the
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Klearfold, Inc.
<PAGE>
provisions of Article IV hereof shall continue following the discharge of the
Bonds until such time as any amounts due to the Internal Revenue Service for
rebate required by the Indenture and the Tax Regulatory Certificate and any
other amounts due under this Agreement have been satisfied. The provisions of
Section 5.02 hereof shall survive the termination of this Agreement and the
payment or defeasance of the Bonds.
Section 7.04. Notices. Except as otherwise provided in this Agreement, all
notices, directions, certificates, requests, requisitions and other
communications hereunder shall be in writing and shall be sufficiently given and
shall be deemed given when received following mailing, addressed as follows or
hand delivered to the following addresses:
If to the Authority:
Bucks County Industrial Development Authority
Two East Court Street
Doylestown, Pennsylvania 18901
Attention: Executive Director
If to the Corporation:
Klearfold, Inc.
110 Gibraltar Road
Suite 102
Horsham, PA 19044
Attention: Chief Financial Officer
If to the Trustee:
Mellon Bank, N.A.
Mellon Independence Center -5th Floor
701 Market Street
P.O. Box 7899
Philadelphia, PA 19101-7899
Attention: Corporate Trust Group
If to the Initial Bank:
Mellon Bank, N.A.
Plymouth Meeting Executive Campus
610 West Germantown Pike, Suite 200
Plymouth Meeting, Pennsylvania 19462
Attn: Middle Market Banking Group
A copy of each notice, direction, certificate, request or other communication
given hereunder to the Authority, the Corporation or the Trustee shall also be
given to the others. Any of the foregoing may, by notice given hereunder,
designate any further or different addresses to which subsequent notices,
directions, certificates, requests or other communications shall be sent.
Section 7.05. Parties in Interest. This Agreement shall inure to the
benefit of the Authority, the Corporation, the Trustee and their respective
successors and assigns, and shall be binding upon the Authority, the Corporation
and their respective successors and assigns, and no other Person, other than the
Trustee, the Authority, the Bondholders and the Bank (including for this purpose
any participating bank granted rights with respect to the Corporation and the
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Klearfold, Inc.
<PAGE>
Bonds pursuant to the Letter of Credit Agreement) and their respective
successors and assigns shall have any right, remedy or claim under or by reason
of this Agreement; provided, however, that, except as provided in the Act,
neither the Authority, the County, the Commonwealth nor any political
subdivision thereof shall be liable for the payment of the principal or purchase
price of or interest on the Bonds or for the performance of any pledge,
mortgage, obligation or agreement created by or arising out of this Agreement or
the issuance of the Bonds, and, further, that neither the Bonds nor any such
obligation or agreement of the Authority shall be construed to constitute an
indebtedness of the Authority, the County, the Commonwealth or any political
subdivision thereof or a charge against their general credit or taxing powers
within the meaning of any constitutional or statutory provisions whatsoever, but
shall be limited obligations of the Authority payable solely out of the Trust
Estate, including the revenues derived from this Agreement, or from the sale of
the Bonds or income earned on invested funds, as provided herein and in the
Indenture. It is further understood and agreed by the Corporation, that the
Authority shall incur no pecuniary liability hereunder, and shall not be liable
for any expenses related hereto, including administrative expenses and fees and
disbursements of Bond Counsel retained in connection therewith, all of which
expenses the Corporation has agreed to pay. The Authority has no taxing power.
Section 7.06. Survival of Covenants, Conditions and Representations. All
covenants, conditions and representations of the Corporation contained herein
which, by nature, impliedly or expressly involve performance in any particular
manner after the settlement pursuant to Article III or which cannot be
ascertained to have been performed until after the said settlement shall survive
said settlement.
Section 7.07. Amendments.
(a) Except for the amendments provided for by Section 7.07(b) here-
of, this Agreement may not be amended except in accordance with Article XI of
the Indenture as evidenced by an instrument in writing signed by the parties.
(b) Section 5.06(d) hereof concerning the Corporation's obligation
to comply with the rebate requirements of Section 148(f) of the Code, may be
amended by an instrument in writing signed by the parties hereto in the event
that the Corporation delivers to the Trustee an Officer's Certificate
accompanied by an Opinion of Bond Counsel addressed to the Trustee to the
effect that amendments to such section are necessary or desirable to comply
with the provisions of Section 148(f) of the Code.
(c) The Corporation shall reimburse the Authority and the Trustee
for all reasonable costs and expenses, including, without limitation,
reasonable attorney's fees and expenses, paid or incurred by the Authority or
the Trustee in connection with any amendments or modifications of this
Agreement or to the Indenture and any document, instrument or agreement related
hereto or thereto, and the discussion, negotiation, preparation, approval,
execution and delivery of any and all documents necessary or desirable to
effect such amendments or modifications. A copy of any amendments shall be sent
by the Corporation to the Rating Agency.
Section 7.08. Severability. If any clause, provision or section of this
Agreement shall be ruled invalid, illegal or unenforceable for any reason, the
invalidity of such clause, provision or section shall not affect any of the
remaining clauses, provisions or sections hereof, and this Agreement shall be
construed as if such clause, provision or section had not been contained herein.
Section 7.09. Counterparts. This Agreement may be executed in several
counterparts, any or all of which shall constitute one and the same instrument.
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Klearfold, Inc.
<PAGE>
Section 7.10. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth.
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Klearfold, Inc.
<PAGE>
IN WITNESS WHEREOF, the BUCKS COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY and
the KLEARFOLD, INC., have caused this Loan Agreement to be duly executed as of
the day and year first above written.
ATTEST: BUCKS COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY
By: [SIGNATURE APPEARS HERE] By: [SIGNATURE APPEARS HERE]
------------------------- ---------------------------------
(Asst.) Secretary Vice Chairman
ATTEST: KLEARFOLD, INC.
By: By:
------------------------- ---------------------------------
Authorized Officer Authorized Officer
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Loan Agreement, Series 1997 Bonds
Klearfold, Inc.
<PAGE>
IN WITNESS WHEREOF, the BUCKS COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY and
the KLEARFOLD, INC., have caused this Loan Agreement to be duly executed as of
the day and year first above written.
ATTEST: BUCKS COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY
By: By:
------------------------- ---------------------------------
(Asst.) Secretary Vice Chairman
ATTEST: KLEARFOLD, INC.
By: [SIGNATURE APPEARS HERE] By: [SIGNATURE APPEARS HERE]
------------------------- ---------------------------------
Authorized Officer Authorized Officer
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Loan Agreement, Series 1997 Bonds
Klearfold, Inc.
<PAGE>
EXHIBIT A
DESCRIPTION OF PREMISES
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Loan Agreement, Series 1997 Bonds
Klearfold, Inc.
<PAGE>
Exhibit 10.56
The CORPORATE plan for Retirement
THE PROFIT SHARING/401 (K) PLAN
FIDELITY BASIC PLAN DOCUMENT NO. 07
-----------------------------------
<PAGE>
8/1/93
THE CORPORATE PLAN FOR RETIREMENT
PROFIT SHARING/401(K) PLAN
ARTICLE 1
ADOPTION AGREEMENT
ARTICLE 2
DEFINITIONS
2.01 - Definitions
ARTICLE 3
PARTICIPATION
3.01 - Date of Participation
3.02 - Resumption of Participation Following Reemployment
3.03 - Cessation or Resumption of Participation Following a Change in Status
3.04 - Participation by Owner-Employee; Controlled Businesses
3.05 - Omission of Eligible Employee
ARTICLE 4
CONTRIBUTIONS
4.01 - Deferral Contributions
4.02 - Additional Limit on Deferral Contributions
4.03 - Matching Contributions
4.04 - Limit on Matching Contributions and Employee Contributions
4.05 - Special Rules
4.06 - Fixed/Discretionary Employer Contributions
4.07 - Time of Making Employer Contributions
4.06 - Return of Employer Contributions
4.09 - Employee Contributions
4.10 - Rollover Contributions
4.11 - Deductible Voluntary Employee Contributions
4.12 - Additional Rules for Paired Plans
ARTICLE 5
PARTICIPANTS' ACCOUNTS
5.01 - Individual Accounts
5.02 - Valuation of Accounts
5.03 - Code Section 415 Limitations
ARTICLE 6
INVESTMENT OF CONTRIBUTIONS
6.01 - Manner of Investment
6.02 - Investment Decisions
6.03 - Participant Directions to Trustee
ARTICLE 7
RIGHT TO BENEFITS
7.01 - Normal or Early Retirement
7.02 - Late Retirement
7.03 - Disability Retirement
7.04 - Death
7.05 - Other Termination of Employment
7.06 - Separate Account
7.07 - Forfeitures
7.08 - Adjustment for Investment Experience
7.09 - Participant Loans
7.10 - In-Service Withdrawals
7.11 - Prior Plan In-Service Distribution Rules
<PAGE>
8/1/93
ARTICLE 8
DISTRIBUTION OF BENEFITS PAYABLE AFTER TERMINATION OF SERVICE
8.01 - Distribution of Benefits to Participants and Beneficiaries
8.02 - Annuity Distributions
8.03 - Joint and Survivor Annuities/Preretirement Survivor Annuities
8.04 - Installment Distributions
8.05 - Immediate Distributions
8.06 - Determination of Method of Distribution
8.07 - Notice to Trustee
8.08 - Time of Distribution
8.09 - Whereabouts of Participants and Beneficiaries
ARTICLE 9
TOP-HEAVY PROVISIONS
9.01 - Application
9.02 - Definitions
9.03 - Minimum Contribution
9.04 - Adjustment to the Limitation on Contributions and Benefits
9.05 - Minimum Vesting
ARTICLE 10
AMENDMENT AND TERMINATION
10.01 - Amendment by Employer
10.02 - Amendment by Prototype Sponsor
10.03 - Amendments Affecting Vested and/or Accrued Benefits
10.04 - Retroactive Amendments
10.05 - Termination
10.06 - Distribution Upon Termination of the Plan
10.07 - Merger or Consolidation of Plan; Transfer of Plan Assets
ARTICLE 11
AMENDMENT AND CONTINUATION OF PREDECESSOR PLAN; TRANSFER OF FUNDS TO OR FROM
OTHER QUALIFIED PLANS
11.01 - Amendment and Continuation of Predecessor Plan
11.02 - Transfer of Funds from an Existing Plan
11.03 - Acceptance of Assets by Trustee
11.04 - Transfer of Assets from Trust
ARTICLE 12
MISCELLANEOUS
12.01 - Communication to Participants
12.02 - Limitation of Rights
12.03 - Nonalienability of Benefits and Qualified Domestic Relations Orders
12.04 - Facility of Payment
12.05 - Information Between Employer and Trustee
12.06 - Effect of Failure to Qualify Under Code
12.07 - Notices
12.06 - Governing Law
ARTICLE 13
PLAN ADMINISTRATION
13.01 - Powers and Responsibilities of the Administrator
13.02 - Nondiscriminatory Exercise of Authority
13.03 - Claims and Review Procedures
13.04 - Named Fiduciary
13.05 - Costs of Administration
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ARTICLE 14
TRUST AGREEMENT
14.01 - Acceptance of Trust Responsibilities
14.02 - Establishment of Trust Fund
14.03 - Exclusive Benefit
14.04 - Powers of Trustee
14.05 - Accounts
14.06 - Approving of Accounts
14.07 - Distribution from Trust Fund
14.06 - Transfer of Amounts from Qualified Plan
14.09 - Transfer of Assets from Trust
14.10 - Separate Trust or Fund for Existing Plan Assets
14.11 - Voting; Delivery of Information
14.12 - Compensation and Expenses of Trustee
14.13 - Reliance by Trustee on other Persons
14.14 - Indemnification by Employer
14.15 - Consultation by Trustee with Counsel
14.16 - Persons Dealing with the Trustee
14.17 - Resignation or Removal of Trustee
14.18 - Fiscal Year of the Trust
14.19 - Discharge of Duties by Fiduciaries
14.20 - Amendment
14.21 - Plan Termination
14.22 - Permitted Reversion of Funds to Employer
14.23 - Governing Law
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Article 1. Adoption Agreement.
------------------
Article 2. Definitions.
-----------
2.01. Definitions.
-----------
(a) Wherever used herein, the following terms have the meanings set forth
below, unless a different meaning is clearly required by the context:
(1) "Account" means an account established on the books of the Trust for
the purpose of recording contributions made on behalf of a Participant
and any income, expenses, gains or losses incurred thereon.
(2) "Administrator" means the Employer adopting this Plan, or other
person designated by the Employer in Section 1.01(c).
(3) "Adoption Agreement" means Article 1 under which the Employer
establishes and adopts, or amends, the Plan and Trust and designates the
optional provisions selected by the Employer, and the Trustee accepts its
responsibilities under Article 14. The provisions of the Adoption
Agreement shall be an integral part of the Plan.
(4) "Annuity Starting Date" means the first day of the first period for
which an amount is payable as an annuity or in any other form.
(5) "Beneficiary" means the person or persons entitled under Section 7.04
to receive benefits under the Plan upon the death of a Participant,
provided that for purposes of Section 7.04 such term shall be applied in
accordance with Section 401(a)(9) of the Code and the regulations
thereunder.
(6) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(7) "Compensation" shall mean:
(A) for purposes of Article 4 (Contributions), compensation as
defined in Section 5.03(e)(2) excluding any items elected by the
Employer in Section 1.04(a), reimbursements or other expense
allowances, fringe benefits (cash and non-cash), moving expenses,
deferred compensation and welfare benefits, but including amounts that
are not includable in the gross income of the Participant under a
salary reduction agreement by reason of the application of Sections
125, 402(a)(8), 402(h), or 403(b) of the Code; and
(B) for purposes of Section 2.01(a)(16) (Highly Compensated
Employees), Section 5.03 (Code Section 415 Limitations), and Section
9.03 (Top Heavy Plan Minimum Contributions), compensation as defined in
Section 5.03(e)(2).
Compensation shall generally be based on the amount actually paid to
the Participant during the Plan Year or, for purposes of Article 4 if so
elected by the Employer in Section 1.04(b), during that portion of the
Plan Year during which the Employee is eligible to participate.
Notwithstanding the preceding sentence, compensation for purposes of
Section 5.03 (Code Section 415 Limitations) shall be based on the amount
actually paid or made available to the Participant during the Limitation
Year. Compensation for the initial Plan Year for a new plan
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shall be based upon eligible Participant Compensation, subject to Section 1.04
(b), from the Effective Date listed in Section 1.01(g)(1) through the end of
the first Plan Year.
In the case of any Self-Employed Individual, Compensation shall mean the
Individual's Earned Income.
For years beginning after December 31, 1968, the annual Compensation of each
Participant taken into account for determining all benefits provided under the
plan for any determination period shall not exceed $200,000. This limitation
shall be adjusted by the Secretary at the same time and in the same manner as
under Section 415(d) of the Code, except that the dollar increase in effect on
January 1 of any calendar year is effective for years beginning in such calendar
year and the first adjustment to the $200,000 limitation is effected on January
1, 1990. If a plan determines Compensation on a period of time that contains
fewer than 12 calendar months, then annual Compensation limit is amount equal to
the annual Compensation limit for the calendar year in which the Compensation
period begins multiplied by the ratio obtained by dividing the number of full
months in the period by 12.
If Compensation for any prior determination period is taken into account in
determining an Employee's allocations or benefits for the current determination
period, the Compensation for such prior year is subject to the applicable annual
compensation limit in effect for that prior year. For this purpose, for years
beginning before January 1, 1990, the applicable annual compensation limit is
$200,000.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply, except that
in applying such rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the year. If the $200,000 limitation is exceeded as
a result of the application of these rules, then the limitation shall be
prorated among the affected individuals in proportion to each such individual's
Compensation as determined under this Section prior to the application of this
limitation.
(8) "Earned Income" means the net earnings of a Self-Employed Individual
derived from the trade or business with respect to which the Plan is established
and for which the personal services of such individual are a material income-
providing factor, excluding any items not included in gross income and the
deductions allocated to such items, except that for taxable years beginning
after December 31, 1989 net earnings shall be determined with regard to the
deduction allowed under Section 164(f) of the Code, to the extent applicable to
the Employer. Net earnings shall be reduced by contributions of the Employer to
any qualified plan, to the extent a deduction is allowed to the Employer for
such contributions under Section 404 of the Code.
(9) "Eligibility Computation Period" means each 12-consecutive month period
beginning with the Employment Commencement Date and each anniversary thereof or,
in the case of an Employee who before completing the eligibility requirements
set forth in Section 1.03 (a)(1) incurs a break in service for participation
purposes and thereafter returns to the employ of the Employer or
2
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Related Employer, each 12-consecutive month period beginning with the first day
of reemployment and each anniversary thereof.
A "break in service for participation purposes" shall mean an Eligibility
Computation Period during which the participant does not complete more than 500
Hours of Service with the Employer.
(10) "Employee" means any employee of the Employer, any Self-Employed
Individual or Owner-Employee. The Employer must specify in Section 1.03 (a)(3)
any Employee, or class of Employees, not eligible to participate in the Plan.
If the Employer elects to exclude collective bargaining employees, the exclusion
applies to any employee of the Employer included in a unit of employees covered
by an agreement which the Secretary of Labor finds to be a collective bargaining
agreement between employee representatives and one or more employers unless the
collective bargaining agreement requires the employee to be included within the
Plan. The term "employee representatives" does not include any organization
more than half the members of which are owners, officers, or executives of the
Employer.
For purposes of the Plan, an individual shall be considered to become an
Employee on the date on which he first completes an Hour of Service and he shall
be considered to have ceased to be an Employee on the date on which he last
completes an Hour of Service. The term also includes a Leased Employee, such
that contributions or benefits provided by the leasing organization which are
attributable to services performed for the Employer shall be treated as provided
by the Employer. Notwithstanding the above, a Leased Employee shall not be
considered an Employee if Leased Employees do not constitute more than 20
percent of the Employer's non-highly compensated work force (taking into account
all Related Employers) and the Leased Employee is covered by a money purchase
pension plan maintained by the leasing organization which plan provides (i) a
nonintegrated employer contribution rate of at least 10 percent of compensation,
as defined for purposes of Section 415(c)(3) of the Code, but including amounts
contributed pursuant to a salary reduction agreement which are excludable from
gross income under Section 125, Section 402(a)(8), Section 402(h) or Section
403(b) of the Code, (ii) full and immediate vesting, and (iii) immediate
participation by each employee of the leasing organization.
(11) "Employer" means the employer named in Section 1.02(a) and any Related
Employers required by this Section 2.01(a)(11). If Article 1 of the Employer's
Plan is the Standardized Adoption Agreement, the term "Employer" includes all
Related Employers. If Article 1 of the Employer's Plan is the Non-standardized
Adoption Agreement, the term "Employer" includes those Related Employers
designated in Section 1.02(b).
(12) "Employment Commencement Date" means the date on which the Employee first
performs an Hour of Service.
(13) "ERISA" means the Employee Retirement Income Security Act of 1974, as from
time to time amended.
(14) "Fidelity Fund" means any Registered Investment Company or Managed Income
Portfolio of the Fidelity Group Trust for Employee Benefit Plans which is made
available to plans utilizing the CORPORATE plan for Retirement.
3
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(15) "Fund Share" means the share, unit, or other evidence of ownership in a
Fidelity Fund.
(16) "Highly Compensated Employee" means both highly compensated active
Employees and highly compensated former Employees.
A highly compensated active Employee includes any Employee who performs
service for the Employer during the determination year and who, during the look-
back year: (i) received compensation from the Employer in excess of $75,000 (as
adjusted pursuant to Section 415(d) of the Code); (ii) received compensation
from the Employer in excess of $50,000 (as adjusted pursuant to Section 415(d)
of the Code) and was a member of the top-paid group for such year; or (iii) was
an officer of the Employer and received compensation during such year that is
greater than 50 percent of the dollar limitation in effect under Section 415(b)
(1)(A) of the Code. The term highly compensated Employee also includes: (i)
Employees who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back year" and the
Employee is one of the 100 Employees who received the most compensation from the
Employer during the determination year; and (ii) Employees who are 5 percent
owners at any time during the look-back year or determination year.
If no officer has satisfied the compensation requirement of (iii) above
during either a determination year or look-back year, the highest paid officer
for such year shall be treated as a highly compensated Employee.
For this purpose, the determination year shall be the Plan Year. The look-
back year shall be the twelve-month period immediately preceding the
determination year. The Employer may elect to make the look-back year
calculation for a determination on the basis of the calendar year ending with or
within the applicable determination year, as prescribed by Section 414(q) of the
Code and the regulations issued thereunder.
A highly compensated former Employee includes any Employee who separated from
service (or was deemed to have separated) prior to the determination year,
performs no service for the Employer during the determination year, and was a
highly compensated active Employee for either the separation year or any
determination year ending on or after the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year, a family
member of either a 5 percent owner who is an active or former Employee or a
highly compensated Employee who is one of the 10 most highly compensated
Employees ranked on the basis of compensation paid by the Employer during such
year, then the family member and the 5 percent owner or top-ten highly
compensated Employee shall be aggregated. In such case, the family member and 5
percent owner or top-ten highly compensated Employee shall be treated as a
single Employee receiving compensation and plan contributions or benefits equal
to the sum of such compensation and contributions or benefits of the family
member and 5 percent owner or top-ten highly compensated Employee. For purposes
of this Section, family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of such lineal
ascendants and descendants.
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The determination of who is a highly compensated Employee, including the
determinations of the number and identity of Employees in the top-paid group,
the top 100 Employees, the number of Employees treated as officers and the
compensation that is considered, will be made in accordance with Section 414(q)
of the Code and the regulations thereunder.
(17) "Hour of Service" means, with respect to any Employee,
(A) Each hour for which the Employee is directly or indirectly paid, or
entitled to payment, for the performance of duties for the Employer or a
Related Employer, each such hour to be credited to the Employee for the
Eligibility Computation Period in which the duties were performed;
(B) Each hour for which the Employee is directly or indirectly paid, or
entitled to payment, by the Employer or Related Employer (including payments
made or due from a trust fund or insurer to which the Employer contributes or
pays premiums) on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity, disability,
layoff, jury duty, military duty, or leave of absence, each such hour to be
credited to the Employee for the Eligibility Computation Period in which such
period of time occurs, subject to the following rules:
(i) No more than 501 Hours of Service shall be credited under this
paragraph (B) on account of any single continuous period during which
the Employee performs no duties;
(ii) Hours of Service shall not be credited under this paragraph (B) for
a payment which solely reimburses the Employee for medically-related
expenses, or which is made or due under a plan maintained solely for the
purpose of complying with applicable workmen's compensation,
unemployment compensation or disability insurance laws; and
(iii) If the period during which the Employee performs no duties falls
within two or more Eligibility Computation Periods and if the payment
made on account of such period is not calculated on the basis of units
of time, the Hours of Service credited with respect to such period shall
be allocated between not more than the first two such Eligibility
Computation Periods on any reasonable basis consistently applied with
respect to similarly situated Employees; and
(C) Each hour not counted under paragraph (A) or (B) for which back pay,
irrespective of mitigation of damages, has been either awarded or agreed to
be paid by the Employer or a Related Employer, each such hour to be credited
to the Employee for the Eligibility Computation Period to which the award or
agreement pertains rather than the Eligibility Computation Period in which
the award agreement or payment is made.
For purposes of determining Hours of Service, Employees of the Employer
and of all Related Employers will be treated as employed by a single
employer. For purposes of paragraphs (B) and (C) above, Hours of Service
will be calculated in accordance with the provisions of Section 2530.200b-
2(b) of the Department of Labor regulations which are incorporated herein by
reference.
5
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Solely for purposes of determining whether a break in service for
participation purposes has occurred in a computation period, an individual
who is absent from work for maternity or paternity reasons shall receive
credit for the hours of service which would otherwise been credited to
such individual but for such absence, or in any case in which such hours
cannot be determined, 8 hours of service per day of such absence. For
purposes of this paragraph, an absence from work for maternity reasons
means an absence (1) by reason of the pregnancy of the individual, (2) by
reason of a birth of a child of the individual, (3) by reason of the
placement of a child with the individual in connection with the adoption
of such child by such individual, or (4) for purposes of caring for such
child for a period beginning immediately following such birth or
placement. The hours of service credited under this paragraph shall be
credited (1) in the computation period in which the absence begins if the
crediting is necessary to prevent a break in service in that period, or
(2) in all other cases, in the following computation period.
(18) "Leased Employee" means any individual who provides services to the
Employer or a Related Employer (the "recipient") but is not otherwise an
employee of the recipient if (i) such services are provided pursuant to an
agreement between the recipient and any other person (the "leasing
organization"), (ii) such individual has performed services for the recipient
(or for the recipient and any related persons within the meaning of Section
414(n)(6) of the Code) on a substantially, full-time basis for at least one
year, and (iii) such services are of a type historically performed by employees
in the business field of the recipient.
(19) "Normal Retirement Age" means the normal retirement age specified in
Section 1.06(a) of the Adoption Agreement. If the Employer enforces a mandatory
retirement age, the Normal Retirement Age is the lesser of that mandatory age or
the age specified in Section 1.06 (a).
(20) "Owner-Employee" means, if the Employer is a sole proprietorship, the
individual who is the sole proprietor, or if the Employer is a partnership, a
partner who owns more than 10 percent of either the capital interest or the
profits interest of the partnership.
(21) "Participant" means any Employee who participates in the Plan in
accordance with Article 3 hereof.
(22) "Plan" means the plan established by the Employer in the form of the
prototype plan as set forth herein as a new plan or as an amendment to an
existing plan, by executing the Adoption Agreement, together with any and all
amendments hereto.
(23) "Plan Year" means the 12-consecutive month period designated by the
Employer in Section 1.01(f).
(24) "Prototype Sponsor" means Fidelity Management and Research Company, or its
successor.
(25) "Registered Investment Company" means any one or more corporations,
partnerships or trusts registered under the Investment Company Act of 1940 for
which Fidelity Management and Research Company serves as investment advisor.
6
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8/1/93
(26) "Related Employer" means any employer other than the Employer named in
Section 1.02 (a), if the Employer and such other employer are members of a
controlled group of corporations (as defined in Section 414(b) of the Code) or
an affiliated service group (as defined in Section 414 (m)), or are trades or
businesses (whether or not incorporated) which are under common control (as
defined in Section 414(c)), or such other employer is required to be aggregated
with the Employer pursuant to regulations issued under Section 414(o).
(27) "Self-Employed Individual" means an individual who has Earned Income for
the taxable year from the Employer or who would have had Earned Income but for
the fact that the trade or business had no net profits for the taxable year.
(28) "Trust" means the trust created by the Employer in accordance with the
provisions of Section 14.01.
(29) "Trust Agreement" means the agreement between the Employer and the
Trustee, as set forth in Article 14, under which the assets of the Plan are
held, administered, and managed.
(30) "Trust Fund" means the property held in Trust by the Trustee for the
Accounts of the Participants and their Beneficiaries.
(31) "Trustee" means the Fidelity Management Trust Company, or its successor.
(32) "Year of Service for Participation" means, with respect to any Employee,
an Eligibility Computation Period during which the Employee has been credited
with at least 1,000 Hours of Service. If the Plan maintained by the Employer is
the plan of a predecessor employer, an Employee's Years of Service for
Participation shall include years of service with such predecessor employer. In
any case in which the Plan maintained by the Employer is not the plan maintained
by a predecessor employer, service for such predecessor shall be treated as
service for the Employer, to the extent provided in Section 1.06.
(33) "Years of Service for Vesting" means, with respect to any Employee, the
number of whole years of his periods of service with the Employer or a Related
Employer (the elapsed time method to compute vesting service), subject to any
exclusions elected by the Employer in Section 1.07(b). An Employee will receive
credit for the aggregate of all time period(s) commencing with the Employee's
Employment Commencement Date and ending on the date a break in service begins,
unless any such years are excluded by Section 1.07(b). An Employee will also
receive credit for any period of severance of less than 12 consecutive months.
Fractional periods of a year will be expressed in terms of days.
In the case of a Participant who has 5 consecutive 1-year breaks in
service, all years of service after such breaks in service will be disregarded
for the purpose of vesting the Employer-derived account balance that accrued
before such breaks, but both pre-break and post-break service will count for the
purposes of vesting the Employer-derived account balance that accrues after such
breaks. Both accounts will share in the earnings and losses of the fund.
In the case of a Participant who does not have 5 consecutive 1-year breaks
in service, both the pre-break and post-break service will count in vesting both
the pre-break and post-break employer-derived account balance.
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A break in service is a period of severance of at least 12 consecutive
months. Period of severance is a continuous period of time during which the
Employee is not employed by the Employer. Such period begins on the date the
Employee retires, quits or is discharged, or if earlier, the 12 month
anniversary of the date on which the Employee was otherwise first absent
from service.
In the case of an individual who is absent from work for maternity or
paternity reasons, the 12-consecutive month period beginning on the first
anniversary of the first date of such absence shall not constitute a break
in service. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence (1) by reason of the
pregnancy of the individual, (2) by reason of the birth of a child of the
individual, (3) by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or (4) for
purposes of caring for such child for a period beginning immediately
following such birth or placement.
If the Plan maintained by the Employer is the plan of a predecessor
employer, an Employee's Years of Service for Vesting shall include years of
service with such predecessor employer. In any case in which the Plan
maintained by the Employer is not the plan maintained by a predecessor
employer, service for such predecessor shall be treated as service for the
Employer to the extent provided in Section 1.08.
(b) Pronouns used in the Plan are in the masculine gender but include the
feminine gender unless the context clearly indicates otherwise.
Article 3. Participation.
-------------
3.01. Date of Participation. All Employees in the eligible class (as defined
---------------------
in Section 1.03 (a)(3)) who are in the service of the Employer on the
Effective Date will become Participants on the date elected by the Employer in
Section 1.03(c). Any other Employee will become a Participant in the Plan as of
the first Entry Date on which he first satisfies the eligibility requirements
set forth in Section 1.03(a). In the event that an Employee who is not a member
of an eligible class (as defined in Section 1.03 (a)(3)) becomes a member of an
eligible class, the individual shall participate immediately if such individual
had already satisfied the eligibility requirements and would have otherwise
previously become a Participant.
If an eligibility requirement other than one Year of Service is elected in 1.03
(a)(1), an Employee may not be required to complete a minimum number of Hours
of Service before becoming a Participant. An otherwise eligible Employee
subject to a minimum months of service requirement shall become a Participant on
the first Entry Date following his completion of the required number of
consecutive months of employment measured from his Employment Commencement Date
to the coinciding date in the applicable following month. For purposes of
determining consecutive months of service, the Related Employer and predecessor
employer rules contained in Sections 2.01(a)(17) and 2.01(a)(32) shall apply.
3.02. Resumption of Participation following Reemployment. If a Participant
--------------------------------------------------
ceases to be an Employee and thereafter returns to the employ of the Employer he
will be treated as follows:
(a) he will again become a Participant on the first date on which he
completes an Hour of Service for the Employer following his reemployment and
is in the eligible class of Employees as defined in Section 1.03(a)(3), and
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(b) any distribution which he is receiving under the Plan will cease
except as otherwise required under Section 8.08.
3.03. Cessation or Resumption of Participation Following a Change in Status.
---------------------------------------------------------------------
If any Participant continues in the employ of the Employer or Related Employer
but ceases to be a member of an eligible class as defined in Section 1.03(a)(3),
the individual shall continue to be a Participant for most purposes until the
entire amount of his benefit is distributed; however, the individual shall not
be entitled to receive an allocation of contributions or forfeitures during the
period that he is not a member of the eligible class. Such Participant shall
continue to receive credit for service completed during the period for purposes
of determining his vested interest in his Accounts. In the event that the
individual subsequently again becomes a member of an eligible class of
Employees, the individual shall resume full participation immediately upon the
date of such change in status.
3.04. Participation by Owner-Employee; Controlled Businesses. If the
------------------------------------------------------
Plan provides contributions or benefits for one or more Owner-Employees who
control both the trade or business with respect to which the Plan is established
and one or more other trades or businesses, the Plan and any plan established
with respect to such other trades or businesses must, when looked at as a single
plan, satisfy Sections 401(a) and 401(d) of the Code with respect to the
employees of this and all such other trades or businesses. If the Plan provides
contributions or benefits for one or more Owner-Employees who control one or
more other trades or businesses, the Employees of each such other trade or
business must be included in a plan which satisfies Sections 401(a) and 401(d)
of the Code and which provides contributions and benefits not less favorable
than provided for Owner-Employees under the Plan.
If an individual is covered as an Owner-Employee under the plans of two or
more trades or businesses which are not controlled and the individual controls a
trade or business, then the contributions or benefits of the Employees under the
plan of the trades or businesses which are controlled must be as favorable as
those provided for him under the most favorable plan of the trade or business
which is not controlled.
For purposes of this Section, an Owner-Employee, or two or more Owner-
Employees, shall be considered to control a trade or business if such Owner-
Employee, or such Owner-Employees together, (i) own the entire interest in an
unincorporated trade or business, or (ii) in the case of a partnership, own more
than 50 percent of either the capital interest or the profits interest in such
partnership. For this purpose, an Owner-Employee, or two or more Owner-
Employees, shall be treated as owning any interest in a partnership which is
owned, directly or indirectly, by a partnership controlled by such Owner-
Employee or such Owner-Employees.
3.05. Omission of Eligible Employee. If any Employee who should be included as
-----------------------------
a Participant in the Plan is erroneously omitted and discovery of such omission
is not made until after a contribution by his Employer for the year has been
made, the Employer shall make a subsequent contribution, if necessary, so that
the omitted Employee receives the total amount which the said Employee would
have received had he not been omitted. For purposes of this Section 3.05, the
term "contribution" shall not include Deferral Contributions and Matching
Contributions made pursuant to Sections 4.01 and 4.03, respectively.
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Article 4. Contributions.
-------------
4.01. Deferral Contributions.
----------------------
(a) 4.01. Deferral Contributions. If so provided by the Employer in
----------------------
Section 1.05(b), each Participant may elect to execute a salary reduction
agreement with the Employer to reduce his Compensation by a specified
percentage not exceeding 15% per payroll period, subject to any exceptions
elected by the Employer in Section 1.05(b)(2) and 1.05(b)(3) and equal to a
whole number multiple of one (1) percent. Such agreement shall become
effective on the first day of the first payroll period for which the
Employer can reasonably process the request. The Employer shall make a
Deferral Contribution on behalf of the Participant corresponding to the
amount of said reduction, subject to the restrictions set forth below.
Under no circumstances may a salary reduction agreement be adopted
retroactively.
(b) A Participant may elect to change or discontinue the percentage by
which his Compensation is reduced by notice to the Employer as provided in
Section 1.05(b)(1).
(c) No Participant shall be permitted to have Deferral Contributions made
under the Plan, or any other qualified plan maintained by the Employer,
during the taxable year, in excess of the dollar limitation contained in
Section 402(g) of the Code in effect at the beginning of such taxable year.
A Participant may assign to the Plan any Excess Deferrals made during the
taxable year of the Participant by notifying the Plan Administrator on or
before March 15 following the taxable year of the amount of the Excess
Deferrals to be assigned to the Plan. A Participant is deemed to notify the
Administrator of any Excess Deferrals that arise by taking into account only
those Deferral Contributions made to the Plan and any other plan of the
Employer. Notwithstanding any other provision of the Plan, Excess Deferrals,
plus any income and minus any loss allocable thereto, shall be distributed
no later than April 15 to any Participant to whose account Excess Deferrals
were so assigned for the preceding year and who claims Excess Deferrals for
such taxable year.
"Excess Deferrals" shall mean those Deferral Contributions that are
includable in a participant's gross income under Section 402(g) of the Code
to the extent such Participant's Deferral Contributions for a taxable year
exceed the dollar limitation under such Code section. For purposes of
determining Excess Deferrals, the term "Deferral Contributions" shall
include the sum of all Employer Contributions made on behalf of such
Participant pursuant to an election to defer under any qualified CODA as
described in Section 401(k) of the Code, any simplified employee pension
cash or deferred arrangement as described in Section 402(h)(1)(B) of the
Code, any eligible deferred compensation plan under Section 457, any plan as
described under Section 501(c)(18) of the Code, and any Employer
Contributions made on the behalf of a Participant for the purchase of an
annuity contract under Section 403(b) of the Code pursuant to a salary
reduction agreement. Deferral Contributions shall not include any deferrals
properly distributed as excess annual additions. Excess Deferrals shall be
treated as annual additions under the Plan, unless such amounts are
distributed no later than the first April 15 following the close of the
Participant's taxable year.
Excess Deferrals shall be adjusted for any income or loss up to the date
of distribution. The income or loss allocable to Excess
10
<PAGE>
Deferrals is (1) income or loss allocable to the Participant's Deferral
Contributions account for the taxable year multiplied by a fraction, the
numerator of which is such Participant's Excess Deferrals for the year and
the denominator is the Participant's account balance attributable to
Deferral Contributions without regard to any income or loss occurring
during such taxable year, or (2) such other amount determined under any
reasonable method, provided that such method is used consistently for all
Participants in calculating the distributions required under this Section
4.01(c) and Sections 4.02(d) and 4.04(d) for the Plan Year, and is used by
the Plan in allocating income or loss to Participants' accounts. Income or
loss allocable to the period between the end of the Plan Year and the date
of distribution shall be disregarded in determining income or loss.
(d) In order for the Plan to comply with the requirements of Sections
401(k), 402(g) and 415 of the Code and the regulations promulgated
thereunder, at any time in a Plan Year the Administrator may reduce the
rate of Deferral Contributions to be made on behalf of any Participant, or
class of Participants, for the remainder of that Plan Year, or the
Administrator may require that all Deferral Contributions to be made on
behalf of a Participant be discontinued for the remainder of that Plan
Year. Upon the close of the Plan Year or such earlier date as the
Administrator may determine, any reduction or discontinuance in Deferral
Contributions shall automatically cease until the Administrator again
determines that such a reduction or discontinuance of Deferral
Contributions is required.
4.02. Additional Limit on Deferral Contributions.
------------------------------------------
(a) The Actual Deferral Percentage (hereinafter "ADP") for Participants
who are Highly Compensated Employees for each Plan Year and the ADP for
participants who are Non-highly Compensated Employees for the same Plan
Year must satisfy one of the following tests:
(1) The ADP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ADP for Participants who are Non-
highly Compensated Employees for the same Plan Year multiplied by 1.25;
or
(2) The ADP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ADP for Participants who are Non-
highly Compensated Employees for the same Plan Year multiplied by 2.0,
provided that the ADP for participants who are Highly Compensated
Employees does not exceed the ADP for Participants who are Non-highly
Compensated Employees by more than two (2) percentage points.
(b) The following special rules apply for the purposes of this Section:
(1) The ADP for any Participant who is a Highly Compensated Employee
for the Plan Year and who is eligible to have Deferral Contributions
(and Qualified Discretionary Contributions if treated as Deferral
Contributions for purposes of the ADP test) allocated to his or her
accounts under two or more arrangements described in Section 401(k) of
the Code, that are maintained by the Employer, shall be determined as if
such Deferral Contributions (and, if applicable, such Qualified
Discretionary Contributions) were made under a single arrangement. If a
Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash
11
<PAGE>
or deferred arrangements ending with or within the same calendar year
shall be treated as a single arrangement. Notwithstanding the foregoing,
certain plans shall be treated as separate if mandatorily disaggregated
under regulations under Section 401(k) of the Code.
(2) In the event that this Plan satisfies the requirements of Sections
401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements
of such Sections of the Code only if aggregated with this plan, then
this Section shall be applied by determining the ADP of Employees as if
all such plans were a single plan. For Plan Years beginning after
December 31, 1989, plans may be aggregated in order to satisfy section
401(k) of the Code only if they have the same Plan Year.
(3) For purposes of determining the ADP of a Participant who is a
5-percent owner or one of the ten most highly-paid Highly Compensated
Employees, the Deferral Contributions (and Qualified Discretionary
Contributions if treated as Deferral Contributions for purposes of the
ADP test) and Compensation of such Participant shall include the
Deferral Contributions (and, if applicable, Qualified Discretionary
Contributions) and Compensation for the Plan Year of Family Members (as
defined in Section 414(q) (6) of the Code). Family Members, with respect
to such Highly Compensated Employees, shall be disregarded as separate
employees in determining the ADP both for Participants who are Non-
highly Compensated Employees and for Participants who are Highly
Compensated Employees.
(4) For purposes of determining the ADP test, Deferral Contributions
and Qualified Discretionary Contributions must be made before the last
day of the twelve-month period immediately following the Plan Year to
which contributions relate.
(5) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Discretionary
Contributions used in such test.
(6) The determination and treatment of the ADP amounts of any
Participant shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
(c) The following definitions shall apply for purposes of this Section:
(1) "Actual Deferral Percentage" shall mean, for a specified group of
Participants for a Plan Year, the average of the ratios (calculated
separately for each Participant in such group) of (1) the amount of
Employer contributions actually paid over to the trust on behalf of such
Participant for the Plan Year to (2) the Participant's Compensation for
such Plan Year. Employer contributions on behalf of any Participant
shall include: (1) any Deferral Contributions made pursuant to the
Participant's deferral election, including Excess Deferrals of Highly
Compensated Employees, but excluding (a) Excess Deferrals of Non-Highly
Compensated Employees that arise solely from Deferral Contributions made
under the Plan or plans of the Employer and (b) Deferral Contributions
that are taken into account in the Contribution Percentage test
(provided the ADP test is satisfied both with and without exclusion of
these Deferral Contributions); and (2) at the election of the Employer,
Qualified Discretionary Contributions. Matching Contributions, whether
or not non-forfeitable when made, shall not be
12
<PAGE>
considered as Employer Contributions for purposes of this paragraph. For
purposes of computing Actual Deferral Percentages, an Employee who would
be a Participant but for the failure to make Deferral Contributions
shall be treated as a Participant on whose behalf no Deferral
Contributions are made.
(2) "Excess Contributions" shall mean, with respect to any Plan Year,
the excess of:
(a) The aggregate amount of Employer contributions actually taken
into account in computing the ADP of Highly Compensated Employees for
such Plan Year, over
(b) The maximum amount of such contributions permitted by the ADP
test (determined by reducing contributions made on behalf of Highly
Compensated Employees in order of the ADPs, beginning with the
highest of such percentages).
(3) "Qualified Discretionary Contributions" shall mean contributions
made by the Employer as elected in Section 1.05(g) and allocated to
Participant accounts of Non-highly Compensated Employees that such
Participants may not elect to receive in cash until distributed from the
plan; that are nonforfeitable when made; and that are distributable only
in accordance with the distribution provisions that are applicable to
Deferral Contributions. Participants shall not be required to satisfy
any hours of service or employment requirement in order to receive an
allocation of such contributions.
(d) Notwithstanding any other provision of this plan, Excess
Contributions, plus any income and minus any loss allocable thereto, shall
be distributed no later than the last day of each Plan Year to participants
to whose accounts such Excess Contributions were allocated for the
preceding Plan Year. If such excess amounts are distributed more than 2-1/2
months after the last day of the Plan Year in which such excess amounts
arose, a ten (10) percent excise tax will be imposed on the employer
maintaining the plan with respect to such amounts. Such distributions shall
be made to Highly Compensated Employees on the basis of the respective
portions of the Excess Contributions attributable to each of such
employees. Excess Contributions of Participants who are subject to the
family member aggregation rules of Section 414(q)(6) of the Code shall be
allocated among the family members in proportion to the Deferral
Contributions (and amounts treated as Deferral Contributions) of each
family member that is combined to determine the combined ADP.
Excess Contributions shall be treated as annual additions under the
plan.
Excess Contributions shall be adjusted for any income or loss up to the
date of distribution. The income or loss allocable to Excess Contributions
is (1) income or loss allocable to the Participant's Deferral Contribution
account (and if applicable, the Qualified Discretionary Contribution
account) for the Plan Year multiplied by a fraction, the numerator of which
is such Participant's Excess Contributions for the year and the denominator
is the Participant's account balance attributable to Deferral Contributions
without regard to any income or loss occurring during such Plan Year, or
(2) an amount determined under any reasonable method, provided that such
method is used consistently for all Participants in calculating any
distributions required under Section 4.02(d) and Sections 4.01(c) and
4.04(d) for the Plan Year, and is used by the Plan in allocating income or
loss to the
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8/1/93
Participants' accounts. Income or loss allocable to the period between the
end of the Plan Year and the date of distribution shall be disregarded in
determining income or loss.
Excess Contributions shall be distributed from the Participant's
Qualified Discretionary Contribution account only to the extent that such
Excess Contributions exceed the balance in the Participant's Deferral
Contributions account.
4.03. Matching Contributions. If so provided by the Employer in Section
----------------------
1.05(c), the Employer shall make a Matching Contribution on behalf of each
Participant who had Deferral Contributions made on his behalf during the year
and who meets the requirement, if any, of Section l.05(c)(4). The amount of the
Matching Contribution shall be determined in accordance with Section 1.05(c),
subject to the limitations set forth in Section 4.04 and Section 404 of the
Code. Matching Contributions will not be allowed to be made by the Employer on
any voluntary nondeductible Employee Contributions.
4.04. Limit on Matching Contributions and Employee Contributions.
----------------------------------------------------------
(a) The Average Contribution Percentage (hereinafter "ACP") for
Participants who are Highly Compensated Employees for each Plan Year and
the ACP for Participants who are Non-highly Compensated Employees for the
same Plan Year must satisfy one of the following tests:
(1) The ACP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ACP for participants who are Non-
highly Compensated Employees for the same Plan Year multiplied by 1.25;
or
(2) The ACP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ACP for Participants who are Non-
highly Compensated Employees for the same Plan Year multiplied by two
(2), provided that the ACP for Participants who are Highly Compensated
Employees does not exceed the ACP for Participants who are Non-highly
Compensated Employees by more than two (2) percentage points.
(b) The following special rules apply for purposes of this section:
(1) If one or more Highly Compensated Employees participate in both a
qualified cash or deferred arrangement described in Section 401(k) of
the Code (hereafter "CODA") and a plan subject to the ACP test
maintained by the Employer and the sum of the ADP and ACP of those
Highly Compensated Employees subject to either or both tests exceeds the
Aggregate Limit, then the ACP of those Highly Compensated Employees who
also participate in a CODA will be reduced (beginning with such Highly
Compensated Employee whose ACP is the highest) so that the limit is not
exceeded. The amount by which each Highly Compensated Employee's
Contribution Percentage Amounts is reduced shall be treated as an Excess
Aggregate Contribution. The ADP and ACP of the Highly Compensated
Employees are determined after any corrections required to meet the ADP
and ACP tests. Multiple use does not occur if either the ADP or ACP of
the Highly Compensated Employees does not exceed 1.25 multiplied by the
ADP and ACP of the Non-highly Compensated Employees.
(2) For purposes of this section, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is eligible to
have Contribution Percentage Amounts allocated to
14
<PAGE>
his or her account under two or more plans described in section 401(a) of
the Code, or arrangements described in section 401(k) of the Code that are
maintained by the Employer, shall be determined as if the total of such
Contribution Percentage Amounts was made under each plan. If a Highly
Compensated Employee participates in two or more cash or deferred
arrangements that have different plan years, all cash or deferred
arrangements ending with or within the same calendar year shall be treated
as a single arrangement. Notwithstanding the foregoing, certain plans shall
be treated as separate if mandatorily disaggregated under regulations under
Section 401(m) of the Code.
(3) In the event that this plan satisfies the requirements of Sections
401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements of
such sections of the Code only if aggregated with this plan, then this
section shall be applied by determining the Contribution Percentage of
Employees as if all such plans were a single plan. For plan years beginning
after December 31, 1989, plans may be aggregated in order to satisfy
Section 401(m) of the Code only if they have the same Plan Year.
(4) For purposes of determining the Contribution percentage of a
Participant who is a five-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Contribution Percentage Amounts and
Compensation of such Participant shall include the Contribution Percentage
Amounts and Compensation for the Plan Year of Family Members (as defined in
Section 414(q)(6) of the Code). Family Members, with respect to Highly
Compensated Employees, shall be disregarded as separate Employees in
determining the Contribution Percentage both for Participants who are Non-
highly Compensated Employees and for Participants who are Highly
Compensated Employees.
(5) For purposes of determining the Contribution Percentage test, Employee
Contributions made pursuant to Section 1.05(d)(1) are considered to have
been made in the Plan Year in which contributed to the Trust. Matching
Contributions and Qualified Discretionary Contributions will be considered
made for a Plan Year if made no later than the end of the twelve-month
period beginning on the day after the close of the Plan Year.
(6) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Discretionary
Contributions used in such test.
(7) The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed by
the Secretary of Treasury.
(c) The following definitions shall apply for purposes of this Section:
(1) "Aggregate Limit" shall mean the greater of (A) or (B) where (A) is
the sum of (i) 125 percent of the greater of the ADP of the Non-highly
Compensated Employees for the Plan Year or the ACP of Non-highly
Compensated Employees under the plan subject to Section 401(m) of the Code
for the Plan Year beginning with or within the Plan Year of the CODA and
(ii) the lesser of 200% or two plus the lesser of such ADP or ACP and where
(B) is the sum of (i) 125 percent of the lesser of the ADP of the Non-
highly Compensated Employees for the Plan Year or the
15
<PAGE>
ACP of Non-highly Compensated Employees under the Plan subject to
Section 401(m) of the Code for the Plan Year beginning with or within
the Plan Year of the CODA and (ii) the lesser of 200% or two plus the
greater of such ADP or ACP.
(2) "Average Contribution Percentage" or "ACP" shall mean the average
of the Contribution Percentages of the Eligible Participants in a group.
(3) "Contribution Percentage" shall mean the ratio (expressed as a
percentage) of the Participant's Contribution Percentage Amounts to the
Participant's Compensation for the Plan Year.
(4) "Contribution Percentage Amounts" shall mean the sum of the
Employee Contributions and Matching Contributions made under the plan on
behalf of the Participant for the Plan Year. Such Contribution
Percentage Amounts shall not include Matching Contributions that are
forfeited either to correct Excess Aggregate Contributions or because
the contributions to which they relate are Excess Deferrals, Excess
Contributions or Excess Aggregate Contributions. If so elected by the
Employer in Section l.05(b)(4), the Employer may include Qualified
Discretionary Contributions in the Contribution Percentage Amounts. The
Employer also may elect to use Deferral Contributions in the
Contribution Percentage Amounts so long as the ADP test is met before
the Deferral Contributions are used in the ACP test and continues to be
met following the exclusion of those Deferral Contributions that are
used to meet the ACP test.
(5) "Deferral Contribution" shall mean any contribution made at the
election of the Participant pursuant to a salary reduction agreement in
accordance with Section 4.01(a).
(6) "Eligible Participant" shall mean any Employee who is eligible to
make an Employee Contribution, or a Deferral Contribution (if the
employer takes such contributions into account in the calculation of the
Contribution Percentage), or to receive a Matching Contribution.
(7) "Employee Contribution" shall mean any voluntary non-deductible
contribution made to the plan by or on behalf of a Participant that is
included in the Participant's gross income in the year in which made and
that is maintained in a separate account to which earnings and losses
are allocated.
(8) "Matching Contribution" shall mean an Employer Contribution made to
this or any other defined contribution plan on behalf of a Participant
on account of a Participant's Deferral Contribution.
(9) "Excess Aggregate Contributions" shall mean, with respect to any
Plan Year, the excess of:
(A) The aggregate Contribution Percentage Amounts taken into account
in computing the numerator of the Contribution Percentage actually
made on behalf of Highly Compensated Employees for such Plan Year,
over
(B) The maximum Contribution Percentage Amounts permitted by the ACP
test (determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution Percentages
beginning with the highest of such percentages).
16
<PAGE>
Such determination shall be made after first determining Excess
Deferrals pursuant to Section 4.C1 and then determining Excess
Contributions pursuant to Section 4.02.
(d) Notwithstanding any other provision of the Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall
be forfeited, if forfeitable, or if not forfeitable, distributed no later
than the last day of each Plan Year to Participants to whose accounts such
Excess Aggregate Contributions were allocated for the preceding Plan Year.
Excess Aggregate Contributions of Participants who are subject to the
family member aggregation rules of Section 414(q)(6) of the Code shall be
allocated among the family members in proportion to the Employee and
Matching Contributions of each family member that is combined to determine
the combined ACP. If such Excess Aggregate Contributions are distributed
more than 2 1/2 months after the last day of the Plan Year in which such
excess amounts arose, a ten (10) percent excise tax will be imposed on the
employer maintaining the plan with respect to those amounts. Excess
Aggregate Contributions shall be treated as annual additions under the
Plan.
Excess Aggregate Contributions shall be adjusted for any income or
loss up to the date of distribution. The income or loss allocable to Excess
Aggregate Contributions is (1) income or loss allocable to the
Participant's Employee Contribution account, Matching Contribution account
(if any, and if all amounts therein are not used in the ADP test) and if
applicable, Qualified Non-elective Contribution account for the Plan Year
multiplied by a fraction, the numerator of which is such Participant's
Excess Aggregate Contributions for the year and the denominator is the
Participant's account balance(s) attributable to Contribution Percentage
Amounts without regard to income or loss occurring during such Plan Year,
or (2) such other amount determined under any reasonable method, provided
that such method is used consistently for all Participants in calculating
any distributions required under Section 4.04(d) and Sections 4.01(c) and
4.02(d) for the Plan Year, and is used by the Plan in allocating income or
loss to the Participants' accounts. Income or loss allocable to the period
between the end of the Plan Year and the date of distribution shall be
disregarded in determining income or loss.
Forfeitures of Excess Aggregate Contributions shall be applied to
reduce Employer contributions; the forfeitures shall be held in the money
market fund, if any, listed in Section 1.14(b) pending such application.
Excess Aggregate Contributions shall be forfeited, if forfeitable, or
distributed on a prorata basis from the Participant's Employee Contribution
Account, Matching Contribution Account and if applicable, the Participant's
Deferral Contributions Account or Qualified Discretionary Contribution
Account or both.
4.05. Special Rules. Deferral Contributions and Qualified Discretionary
-------------
Contributions and income allocable to each are not distributable to a
Participant or his or her beneficiary or beneficiaries, in accordance with such
Participant's or beneficiary or beneficiaries election, earlier than upon
separation from service, death, or disability, except as otherwise provided in
Section 7.10, 7.11 or 10.06. Such amounts may also be distributed, but after
March 31, 1988 in the form of a lump sum only, upon:
(a) Termination of the Plan without establishment of another defined
contribution plan, other than an employee stock
17
<PAGE>
ownership plan (as defined in Section 4975(e) or Section 409 of the Code)
or a simplified employee pension plan as defined in Section 408(k) of the
Code.
(b) The disposition by a corporation to an unrelated corporation of
substantially all of the assets (within the meaning of Section 409(d)(2)
of the Code) used in a trade or business of such corporation if such
corporation continues to maintain this Plan after the disposition, but only
with respect to employees who continue employment with the corporation
acquiring such assets.
(c) The disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary (within the meaning of Section
409(d)(2) of the Code) if such corporation continues to maintain this Plan,
but only with respect to employees who continue employment with such
subsidiary.
The Participant's accrued benefit derived from Deferral Contributions,
Qualified Discretionary Contributions and Employee Contributions (as defined in
Section 4.09) is nonforfeitable. Separate accounts for Deferral Contributions,
Qualified Discretionary Contributions, Employee Contributions and Matching
Contributions will be maintained for each Participant. Each account will be
credited with the applicable contributions and earnings thereon.
4.06. Fixed/Discretionary Employer Contributions. If so provided by the
------------------------------------------
Employer in Sections 1.05(a)(1) or 1.05(a)(2), for the Plan Year in which the
Plan is adopted and for each Plan Year thereafter, the Employer will make Fixed
or Discretionary Employer Contributions to the Trust in accordance with Section
1.05 to be allocated as follows:
(a) Fixed Employer Contributions shall be allocated among eligible
Participants (as determined in accordance with Section 1.05(a)(3)) in the
manner specified in Section 1.05(a).
(b) Discretionary Employer Contributions shall be allocated among
eligible Participants, as determined in accordance with Section 1.05(a)(3),
as follows:
(1) If the Non-Integrated Formula is elected in Section
1.05(a)(2)(A), such contributions shall be allocated to eligible
Participants in the ratio that each Participant's Compensation
bears to the total Compensation paid to all eligible Participants
for the Plan Year; and
(2) If the Integrated Formula is elected in Section
1.05(a)(2)(B), such contributions shall be allocated in the
following steps:
(A) First, to each eligible Participant in the same ratio
that the sum of the Participant's Compensation plus Excess
Compensation for the plan Year bears to the sum of the
Compensation plus Excess Compensation of all Participants
for the Plan Year. This allocation as a percentage of the
sum of each Participant's Compensation plus Excess
Compensation shall not exceed 5.7%.
(B) Any remaining Discretionary Employer Contribution shall
be allocated to each eligible Participant in the same ratio
that each Participant's Compensation for the Plan Year bears
18
<PAGE>
to the total Compensation of all Participants for the Plan
Year.
For purposes of this Section, "Excess Compensation" means
Compensation in excess of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the
first day of the Plan Year. Further, this Section 4.06(b)(2)
shall be modified as provided in Section 9.03 for years in which
the Plan is top heavy under Article 9.
4.07. Time of Making Employer Contributions. The Employer will pay its
-------------------------------------
contribution for each Plan Year not later than the time prescribed by law for
filing the Employer's Federal income tax return for the fiscal (or taxable) year
with or within which such Plan Year ends (including extensions thereof). The
Trustee will have no authority to inquire into the correctness of the amounts
contributed and paid over to the Trustee, to determine whether any contribution
is payable under this Article 4, or to enforce, by suit or otherwise, the
Employer's obligation, if any, to make a contribution to the Trustee.
4.08. Return of Employer Contributions. The Trustee shall, upon request by the
--------------------------------
Employer, return to the Employer the amount (if any) determined under Section
14.22. Such amount shall be reduced by amounts attributable thereto which have
been credited to the Accounts of Participants who have since received
distributions from the Trust, except to the extent such amounts continue to be
credited to such Participants' Accounts at the time the amount is returned to
the Employer. Such amount shall also be reduced by the losses of the Trust
attributable thereto, if and to the extent such losses exceed the gains and
income attributable thereto, but will not be increased by the gains and income
of the Trust attributable thereto, if and to the extent such gains and income
exceed the losses attributable thereto. In no event will the return of a
contribution hereunder cause the balance of the individual Account of any
Participant to be reduced to less than the balance which would have been
credited to the Account had the mistaken amount not been contributed.
4.09. Employee Contributions. If the Employer elected to permit Deferral
----------------------
Contributions in Section 1.05(b) and if so provided by the Employer in Section
1.05(d), each Participant may elect to make Employee Contributions to the Plan
in accordance with the rules and procedures established by the Employer and in
an amount not less than one percent (1%) and not greater than ten percent (10%)
of such Participant's Compensation for the Plan Year. Such contributions and all
Employee Contributions for Plan Years beginning after December 31, 1986 shall be
subject to the nondiscrimination requirements of Section 401(m) of the Code as
set forth in Section 4.04.
For purposes of this Plan, "Employee Contributions" shall mean any
voluntary non-deductible contribution made to a plan by or on behalf of a
Participant that is or was included in the Participant's gross income in the
year in which made and that is maintained under a separate account to which
applicable earnings and losses are allocated. Excess Contributions may not be
recharacterized as Employee Contributions.
Employee Contributions shall be paid over to the Trustee not later than
thirty (30) days following the end of the month in which the Participant makes
the contribution. A Participant shall have a fully vested 100% nonforfeitable
right to his Employee Contributions and the earnings or losses allocated
thereon. Distributions of Employee Contributions shall be made in accordance
with Section 7.10.
19
<PAGE>
4.10. Rollover Contributions.
----------------------
(a) Rollover of Eligible Rollover Distributions
-------------------------------------------
(1) An Employee who is or was a distributee of an "eligible rollover
distribution" (as defined in Section 402(c)(4) of the Code and the
regulations issued thereunder) from a qualified plan or Section 403(b)
annuity may directly transfer all or any portion of such distribution to
the Trust or transfer all or any portion of such distribution to the
Trust within sixty (60) days of payment. The transfer shall be made in
the form of cash or allowable Fund Shares only.
(2) The Employer may refuse to accept rollover contributions or instruct
the Trustee not to accept rollover contributions under the Plan.
(b) Treatment of Rollover Amount.
----------------------------
(1) An account will be established for the transferring Employee under
Article 5, the rollover amount will be credited to the account and such
amount will be subject to the terms of the Plan, including Section 8.01,
except as otherwise provided in this Section 4.10.
(2) The rollover account will at all times be fully vested in and
nonforfeitable by the Employee.
(c) Entry into Plan by Transferring Employee. Although an amount may be
----------------------------------------
transferred to the Trust Fund under this Section 4.10 by an Employee who
has not yet become a Participant in accordance with Article 4, and such
amount is subject to the terms of the Plan as described in paragraph (b)
above, the Employee will not become a Participant entitled to share in
Employer contribution until he has satisfied such requirements.
(d) Monitoring of Rollovers.
-----------------------
(1) The Administrator shall develop such procedures and require such
information from transferring Employees as it deems necessary to insure
that amounts transferred under this Section 4.10 meet the requirements
for tax-free rollovers established by such Section and by Section 402(c)
of the Code. No such amount may be transferred until approved by the
Administrator.
(2) If a transfer made under this Section 4.10 is later determined by
the Administrator not to have met the requirements of this Section or of
the Code or Treasury regulations, the Trustee shall, within a reasonable
time after such determination is made, and on instructions from the
Administrator, distribute to the Employee the amounts then held in the
Trust attributable to the transferred amount.
4.11. Deductible Voluntary Employee Contributions. The Administrator will not
-------------------------------------------
accept deductible employee contributions which are made for a taxable year
beginning after December 31, 1986. Contributions made prior to that date will
be maintained in a separate account which will be nonforfeitable at all times
and which will share in the gains and losses of the trust in the same manner as
described in Section 5.02. No part of the deductible voluntary contribution
account will be used to purchase life insurance. Subject to Article VIII, the
Participant may
20
<PAGE>
withdraw any part of the deductible voluntary contribution account upon request.
4.12. Additional Rules for Paired Plans. If the Employer has adopted a
---------------------------------
qualified plan under Fidelity Basic Plan Document No. 09 which is to be
considered as a paired plan with this Plan, the elections in Section 1.03 must
be identical to the Employer's corresponding elections for the other plan. When
the paired plans are top-heavy or are deemed to be top-heavy as provided in
Section 9.01, the Plan paired with this Plan will provide a minimum contribution
to each non-key Employee which is equal to 3 percent (or such other percent
elected by the Employer in Section 1.12(c)) of such Employee's Compensation.
Notwithstanding the preceding sentence, the minimum contribution shall be
provided by this Plan if contributions under the other Plan paired with this
Plan are frozen.
Article 5. Participants' Accounts.
----------------------
5.01. Individual Accounts. The Administrator will establish and maintain an
-------------------
Account for each Participant which will reflect Employer and Employee
Contributions made on behalf of the Participant and earnings, expenses, gains
and losses attributable thereto, and investments made with amounts in the
Participant's Account. The Administrator will establish and maintain such other
accounts and records as it decides in its discretion to be reasonably required
or appropriate in order to discharge its duties under the Plan.
5.02. Valuation of Accounts. Participant Accounts will be valued at their fair
---------------------
market value at least annually as of a date specified by the Administrator in
accordance with a method consistently followed and uniformly applied, and on
such date earnings, expenses, gains and losses on investments made with amounts
in each Participant's Account will be allocated to such Account. Participants
will be furnished statements of their Account values at least once each Plan
Year.
5.03. Code Section 415 Limitations. Notwithstanding any other provisions of the
----------------------------
Plan:
Subsections (a)(1) through (a)(4) -- (These subsections apply to Employers
------------------------------------
who do not maintain any qualified plan including a Welfare Benefit Fund, an
- ---------------------------------------------------------------------------
Individual Medical Account, or a simplified employee pension in addition to this
- --------------------------------------------------------------------------------
Plan.)
- -----
(a)(1) If the Participant does not participate in, and has never
participated in any other qualified plan, Welfare Benefit Fund, Individual
Medical Account, or a simplified employee pension, as defined in section
408(k) of the Code, maintained by the Employer, which provides an annual
addition as defined in Section 5.03(e)(1), the amount of Annual Additions
to a Participant's Account for a Limitation Year shall not exceed the
lesser of the Maximum Permissible Amount or any other limitation contained
in this Plan. If the Employer contribution that would otherwise be
contributed or allocated to the Participant's account would cause the
annual additions for the limitation year to exceed the maximum permissible
amount, the amount contributed or allocated will be reduced so that the
annual additions for the limitation year will equal the maximum permissible
amount.
(a)(2) Prior to the determination of the Participant's actual Compensation
for a Limitation Year, the Maximum Permissible Amount may be determined on
the basis of a reasonable estimation of the
21
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8/1/93
Participant's compensation for such Limitation Year, uniformly determined
for all Participants similarly situated. Any Employer contributions based
on estimated annual compensation shall be reduced by any Excess Amounts
carried over from prior years.
(a)(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such Limitation Year
shall be determined on the basis of the Participant's actual Compensation
for such Limitation Year.
(a)(4) If, pursuant to subsection (a)(3) or as a result of the
allocation of forfeitures, or a reasonable error in determining the total
Elective Deferrals there is an Excess Amount with respect to a Participant
for a Limitation Year, such Excess Amount shall be disposed of as follows:
(A) Any nondeductible voluntary employee contributions ("employee
contributions") or Elective Deferrals, to the extent they would reduce the
Excess Amount, will be returned to the Participant. Any gains attributable
to returned employee contributions will also be returned or will be treated
as additional employee contributions for the Limitation Year in which the
employee contributions were made.
(B) If after the application of paragraph (A) an Excess amount
still exists and the Participant is in the service of the Employer which is
covered by the Plan at the end of the Limitation Year, then such Excess
Amount shall be reapplied to reduce future Employer contributions under
this Plan for the next Limitation Year (and for each succeeding year, as
necessary) for such Participant, so that in each such Year the sum of
actual Employer contributions plus the reapplied amount shall equal the
amount of Employer contributions which would otherwise be made to such
Participant's Account.
(C) If after the application of paragraph (A) an Excess Amount
still exists and the Participant is not in the service of the Employer
which is covered by the Plan at the end of a Limitation Year, then such
Excess Amount will be held unallocated in a suspense account. The suspense
account will be applied to reduce future Employer contributions for all
remaining Participants in the next Limitation Year and each succeeding
Limitation Year if necessary.
(D) If a suspense account is in existence at any time during the
Limitation Year pursuant to this subsection, it will not participate in the
allocation of the Trust Fund's investment gains and losses. All amounts in
the suspense account must be allocated to the Accounts of Participants
before any Employer contribution may be made for the Limitation Year.
Except as provided in paragraph (A), Excess Amounts may not be distributed
to Participants or former Participants.
Subsections (b)(1) through (b)(6) - - (These subsections apply to
--------------------------
Employers who, in addition to this Plan, maintain one or more plans, all of
- ---------------------------------------------------------------------------
which are qualified Master or Prototype defined contribution Plans, any Welfare
- -------------------------------------------------------------------------------
Benefit Fund, any Individual Medical Account, or any simplified employee
- ------------------------------------------------------------------------
pension.)
- --------
(b)(1) If, in addition to this Plan, the Participant is covered under
any other qualified defined contribution plans (all of which are qualified
Master or Prototype Plans), Welfare Benefit Funds, Individual Medical
Accounts, or simplified employee pension Plans, maintained by the
Employer, that provide an annual addition as
22
<PAGE>
defined in Section 5.03(e)(1), the amount of Annual Additions to a
Participant's Account for a Limitation Year, shall not exceed the lesser of:
(A) the Maximum Permissible Amount, reduced by the sum of any
Annual Additions to the Participant's accounts for the same
Limitation Year under such other qualified Master or Prototype
defined contribution plans, and Welfare Benefit Funds, Individual
Medical Accounts, and simplified employee pensions, or
(B) any other limitation contained in this Plan.
If the annual additions with respect to the Participant under other qualified
Master or Prototype defined contribution plans Welfare Benefit Funds, Individual
Medical Accounts and simplified employee pensions maintained by the Employer are
less than the maximum permissible amount and the Employer contribution that
would otherwise be contributed or allocated to the Participant's Account under
this plan would cause the annual additions for the limitation year to exceed
this limitation, the amount contributed or allocated will be reduced so that the
annual additions under all such plans and funds for the limitation year will
equal the maximum permissible amount. If the annual additions with respect to
the Participant under such other qualified Master or Prototype defined
contribution plans, Welfare Benefit Funds, Individual Medical Accounts and
simplified employee pensions in the aggregate are equal to or greater than the
maximum permissible amount, no amount will be contributed or allocated to the
Participant's Account under this plan for the limitation year.
(b)(2) Prior to the determination of the Participant's actual Compensation
for the Limitation Year, the amounts referred to in (b)(1)(A) above may be
determined on the basis of a reasonable estimation of the Participant's
Compensation for such Limitation Year, uniformly determined for all Participants
similarly situated. Any Employer contribution based on estimated annual
Compensation shall be reduced by any Excess Amounts carried over from prior
years .
(b)(3) As soon as is administratively feasible after the end of the
Limitation Year, the amounts referred to in (b)(1)(A) shall be determined on
the basis of the Participant's actual Compensation for such Limitation Year.
(b)(4) If a Participant's Annual Additions under this Plan and all such other
plans result in an Excess Amount, such Excess Amount shall be deemed to consist
of the Annual Additions last allocated, except that Annual Additions
attributable to a simplified employee pension will be deemed to have been
allocated first, followed by Annual Additions to a Welfare Benefit Fund or
Individual Medical Account regardless of the actual allocation date.
(b)(5) If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another plan, the
Excess Amount attributed to this Plan will be the product of:
(A) the total Excess Amount allocated as of such date (including any amount
which would have been allocated but for the limitations of Section 415 of the
Code), times
(B) the ratio of (i) the Annual Additions allocated to the Participant as of
such date under this Plan, divided by (ii) the Annual Additions allocated as
of such date under all
23
<PAGE>
qualified defined contribution plans (determined without regard to the
limitations of Section 415 of the Code).
(b)(6) Any Excess Amounts attributed to this Plan shall be disposed of as
provided in subsection (a)(4).
Subsection (c)-- (This subsection applies only to Employers who, in addition
----------------------------------------------------------
to this Plan, maintain one or more qualified plans which are qualified defined
- ------- ----------------------------------------------------------------------
contribution plans other than Master or Prototype Plans.)
- ------------------ -------------------------------------
(c) If the Employer also maintains another plan which is a qualified defined
contribution plan other than a Master or Prototype Plan, Annual Additions
allocated under this Plan on behalf of any Participant shall be limited in
accordance with the provisions of (b)(1) through (b)(6), as though the
other plan were a Master or Prototype Plan, unless the Employer provides
other limitations in the Adoption Agreement.
Subsection (d)-- (This subsection applies only to Employers who, in addition
----------------------------------------------------------
to this Plan, maintain or at any time maintained a qualified defined benefit
- ------- --------------------------------------------------------------------
plan.)
- -----
(d) If the Employer maintains, or at any time maintained, a qualified
defined benefit plan, the sum of any Participant's Defined Benefit Fraction
and Defined Contribution Fraction shall not exceed the combined plan
limitation of 1.0 in any Limitation Year. The combined plan limitation will
be met as provided by the Employer in the Adoption Agreement.
Subsections (e)(1) through (e)(9) -- (Definitions.)
---------------------------------------------------
(e)(1) "Annual Additions" means the sum of the following amounts credited
to a Participant for a Limitation Year:
(A) all Employer contributions,
(B) all Employee contributions,
(C) all forfeitures,
(D) Amounts allocated, after March 31, 1964, to an Individual Medical
Account which is part of a pension or annuity plan maintained by the
Employer are treated as Annual Additions to a defined contribution
plan. Also, amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the
separate account of a key employee, as defined in Section 419A(d)(3)
of the Code, under a Welfare Benefit Fund maintained by the Employer
are treated as Annual Additions to a defined contribution plan, and
(E) Allocations under a simplified employee pension.
For purposes of this Section 5.03, amounts reapplied to reduce Employer
contributions under subsection (a)(4) shall also be included as Annual
Additions.
(e)(2) "Compensation" means wages as defined in Section 3401 (a) of the
Code and all other payments of compensation to an employee by the employer
(in the course of the employer's trade or business) for which the employer
is required to furnish the employee a written statement under Sections
6041(d) and 6051(a)(3) of the
24
<PAGE>
8/1/93
Code. Compensation must be determined without regard to any rules under Section
3401(a) of the Code that limit the remuneration included in wages based on the
nature or location of the employment or the services performed (such as the
exception for agricultural labor in Section 3401(a)(2) of the Code.)
For any Self-Employed Individual compensation will mean Earned Income.
For limitation years beginning after December 31, 1991, for purposes of applying
the limitations of this article, compensation for a limitation year is the
compensation actually paid or made available during such limitation year.
(e)(3) "Defined Benefit Fraction" means a fraction, the numerator of which is
the sum of the Participant's annual benefits (adjusted to an actuarially
equivalent straight life annuity if such benefit is expressed in a form other
than a straight life annuity or qualified joint and survivor annuity) under all
the defined benefit plans (whether or not terminated) maintained by the
Employer, each such annual benefit computed on the assumptions that the
Participant will remain in employment until the normal retirement age under each
such plan (or the Participant's current age, if later) and that all other
factors used to determine benefits under such plan will remain constant for all
future Limitation Years, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the Limitation Year under
Sections 415(b)(1)(A) and 415(d) of the Code or 140 percent of the
Participant's average Compensation for the 3 highest consecutive calendar years
of service during which the Participant was active in each such plan, including
any adjustments under Section 415(b) of the Code. However, if the Participant
was a participant as of the first day of the first Limitation Year beginning
after December 31, 1966 in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986 then the denominator of the
Defined Benefit Fraction shall not be less than 125 percent of the Participant's
total accrued benefit as of the close of the last Limitation Year beginning
before January 1, 1987, disregarding any changes in the terms and conditions of
the plan after May 5, 1986, under all such defined benefit plans as met,
individually and in the aggregate, the requirements of Section 415 of the Code
for all Limitation Years beginning before January 1, 1987.
(e)(4) "Defined Contribution Fraction" means a fraction, the numerator of which
is the sum for the current and all prior Limitation Years of (A) all Annual
Additions (if any) to the Participant's accounts under each defined contribution
plan (whether or not terminated) maintained by the Employer, and (B) all Annual
Additions attributable to the Participant's nondeductible employee contributions
to all defined benefit plans (whether or not terminated) maintained by the
Employer, and the Participant's Annual Additions attributable to all Welfare
Benefit Funds, Individual Medical Accounts, and simplified employee pensions,
maintained by the Employer, and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior Limitation Years during
which the Participant was an Employee (regardless of whether the Employer
maintained a defined contribution plan in any such year).
The maximum aggregate amount in any Limitation Year is the lesser of 125
percent of the dollar limitation in effect under
25
<PAGE>
8/1/93
Section 415(c)(1)(A) of the Code for each such year or 35 percent of the
Participant's Compensation for each such year.
If the Participant was a participant as of the first day of the first
Limitation Year beginning after December 31, 1986 in one or more defined
contribution plans maintained by the Employer which were in existence on May 6,
1986 then the numerator of the Defined Contribution Fraction shall be adjusted
if the sum of this fraction and the Defined Benefit Fraction would otherwise
exceed 1.0 under the terms of this Plan. Under the adjustment an amount equal
to the product of (i) the excess of the sum of the fractions over 1.0 times (ii)
the denominator of this fraction will be permanently subtracted from the
numerator of this fraction. The adjustment is calculated using the fractions as
they would be computed as of the end of the last Limitation Year beginning
before January 1, 1987, and disregarding any changes in the terms and conditions
of the plan made after May 6, 1986, but using the Section 415 limitation
applicable to the first Limitation Year beginning on or after January 1, 1987.
The annual addition for any limitation year beginning before January 1, 1987
shall not be recomputed to treat all employee contributions as annual additions.
(e)(5) "Employer" means the Employer and any Related Employer that adopts this
Plan. In the case of a group of employers which constitutes a controlled group
of corporations (as defined in Section 414(b) of the Code as modified by Section
415(h)) or which constitutes trades or businesses (whether or not incorporated)
which are under common control (as defined in Section 414(c) of the Code as
modified by Section 415(h) of the Code) or which constitutes an affiliated
service group (as defined in Section 414(m) of the Code) and any other entity
required to be aggregated with the Employer pursuant to regulations issued under
Section 414(o) of the Code, all such employers shall be considered a single
employer for purposes of applying the limitations of this Section 5.03.
(e)(6) "Excess Amount" means the excess of the Participant's Annual Additions
for the Limitation Year over the Maximum Permissible Amount.
(e)(7) "Individual Medical Account" means an individual medical account as
defined in Section 415(1)(2) of the Code.
(e)(8) "Limitation Year" means the Plan Year. All qualified plans of the
Employer must use the same Limitation Year. If the Limitation Year is amended to
a different 12-consecutive month period, the new Limitation Year must begin on a
date within the Limitation Year in which the amendment is made.
(e)(9) "Master or Prototype Plan" means a plan the form of which is the
subject of a favorable opinion letter from the Internal Revenue Service.
(e)(10) "Maximum Permissible Amount" means for a Limitation Year with respect
to any Participant the lesser of (i) $30,000 or, if greater, 25 percent of the
dollar limitation set forth in Section 415(b)(1) of the Code, as in effect for
the Limitation Year, or (ii) 25 percent of the Participant's Compensation for
the Limitation Year. If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different 12-consecutive month
period, the Maximum Permissible Amount will not exceed the limitation in
(e)(10)(i) multiplied by a fraction whose
26
<PAGE>
8/1/93
numerator is the number of months in the short Limitation Year and whose
denominator is 12.
The compensation limitation referred to in subsection (e)(10)(ii)
shall not apply to any contribution for medical benefits within the meaning
of Section 401(h) or Section 419A(f)(2) of the Code after separation from
service which is otherwise treated as an Annual Addition under Section
419A(d)(2) or Section 415(1)(1) of the Code.
(e) (11) "Welfare Benefit Fund" means a welfare benefit fund as defined in
Section 419(e) of the Code.
Article 6. Investment of Contributions.
---------------------------
6.01. Manner of Investment. All contributions made to the Accounts of
--------------------
Participants shall be held for investment by the Trustee. The Accounts of
Participants shall be invested and reinvested only in eligible investments
selected by the Employer in Section 1.14(b), subject to Section 14.10.
6.02. Investment Decisions. Investments shall be directed by the
--------------------
Employer or by each Participant or both, in accordance with the
Employer's election in Section 1.14(a). Pursuant to Section 14.04, the
Trustee shall have no discretion or authority with respect to the
investment of the Trust Fund.
(a) With respect to those Participant Accounts for which Employer investment
direction is elected, the Employer has the right to direct the Trustee in
writing with respect to the investment and reinvestment of assets comprising
the Trust Fund in the Fidelity Fund(s) designated in Section 1.14(b) and as
allowed by the Trustee.
(b) If Participant investment direction is elected, each Participant shall
direct the investment of his Account among the Fidelity Funds listed in
Section 1.14(b). The Participant shall file initial investment instructions
with the Administrator, on such form as the Administrator may provide,
selecting the Funds in which amounts credited to his Account will be
invested.
(1) Except as provided in this Section 6.02, only authorized Plan contacts
and the Participant shall have access to a Participant's account. While
any balance remains in the Account of a Participant after his death, the
Beneficiary of the Participant shall make decisions as to the investment
of the Account as though the Beneficiary were the Participant. To the
extent required by a qualified domestic relations order as defined in
Section 414(p) of the Code, an alternate payee shall make investment
decisions with respect to a Participant's Account as though such alternate
payee were the Participant.
(2) If the Trustee receives any contribution under the Plan as to which
investment instructions have not been provided, the Trustee shall promptly
notify the Administrator and the Administrator shall take steps to elicit
instructions from the Participant. The Trustee shall credit any such
contribution to the Participant's Account and such amount shall be
invested in the Fidelity Fund selected by the Employer for such purposes
or, absent Employer selection, in the most conservative Fidelity Fund
listed in Section 1.14(b), until investment instructions have been
received by the Trustee.
27
<PAGE>
8/1/93
(c) All dividends, interest, gains and distributions of any nature
received in respect of Fund Shares shall be reinvested in additional shares
or that Fidelity Fund.
(d) Expenses attributable to the acquisition of investments shall be
charged to the Account of the Participant for which such investment is made.
6.03. Participant Directions to Trustee. All Participant initial investment
---------------------------------
instructions filed with the Administrator pursuant to the provisions of Section
6.02 shall be promptly transmitted by the Administrator to the Trustee. A
Participant shall transmit subsequent investment instructions directly to the
Trustee by means of the telephone exchange system maintained by the Trustee for
such purposes. The method and frequency for change of investments will be
determined under the (1) rules applicable to the investments selected by the
Employer in Section 1.14(b) and (2) the additional rules of the Employer, if
any, limiting the frequency of investment changes, which are included in a
separate written administrative procedure adopted by the Employer and accepted
by the Trustee. The Trustee shall have no duty to inquire into the investment
decisions of a Participant or to advise him regarding the purchase, retention or
sale of assets credited to his Account.
Article 7. Right to Benefits.
-----------------
7.01. Normal or Early Retirement. Each Participant who attains his Normal
--------------------------
Retirement Age or, if so provided by the Employer in Section 1.06(b). Early
Retirement Age will have a 100 percent nonforfeitable interest in his Account
regardless of any vesting schedule elected in Section 1.07. If a Participant
retires upon the attainment of Normal or Early Retirement Age, such retirement
is referred to as a normal retirement. Upon his normal retirement the balance
of the Participant's Account, plus any amounts thereafter credited to his
Account, subject to the provisions of Section 7.08, will be distributed to him
in accordance with Article 8.
If a Participant separates from service before satisfying the age
requirements for early retirement, but has satisfied the service requirement,
the Participant will be entitled to elect an early retirement distribution upon
satisfaction of such age requirement.
7.02. Late Retirement. If a Participant continues in the service of the
---------------
Employer after attainment of Normal Retirement Age, he will continue to have a
100 percent nonforfeitable interest in his Account and will continue to
participate in the Plan until the date he establishes with the Employer for his
late retirement. Until he retires, he has a continuing election to receive all
or any portion of his Account. Upon the earlier of his late retirement or the
distribution date required under Section 8.08, the balance of his Account, plus
any amounts thereafter credited to his Account, subject to the provisions of
Section 7.08, will be distributed to him in accordance with Article 8 below.
7.03. Disability Retirement. If so provided by the Employer in Section
---------------------
1.06(c), a Participant who becomes disabled will have a 100 percent
nonforfeitable interest in his Account, the balance of which Account, plus any
amounts thereafter credited to his Account, subject to the provisions of Section
7.08, will be distributed to him in accordance with Article 8 below. A
Participant is considered disabled if he cannot
28
<PAGE>
8/1/93
engage in any substantial, gainful activity because of a medically determinable
physical or mental impairment likely to result in death or to be of a continuous
period of not less than 12 months, and terminates his employment with the
employer. Such termination of employment is referred to as a disability
retirement. Determinations with respect to disability shall be made by the
Administrator who may rely on the criteria set forth in Section 1.06(c) as
evidence that the Participant is disabled.
7.04. Death. Subject, if applicable, to Section 8.04, if a Participant dies
-----
before the distribution of his Account has commenced, or before such
distribution has been completed, his Account shall become 100 percent vested and
his designated Beneficiary or Beneficiaries will be entitled to receive the
balance or remaining balance of his Account, plus any amounts thereafter
credited to his Account, subject to the provisions of Section 7.08.
Distribution to the Beneficiary or Beneficiaries will be made in accordance with
Article 8.
A Participant may designate a Beneficiary or Beneficiaries, or change any
prior designation of Beneficiary or Beneficiaries by giving notice to the
Administrator on a form designated by the Administrator. If more than one person
is designated as the Beneficiary, their respective interests shall be as
indicated on the designation form. In the case of a married Participant the
Participant's spouse shall be deemed to be the designated Beneficiary unless the
Participant's spouse has consented to another designation in the manner
described in Section 8.03 (d).
A copy of the death notice or other sufficient documentation must be filed
with and approved by the Administrator. If upon the death of the Participant
there is, in the opinion of the Administrator, no designated Beneficiary for
part or all of the Participant's Account, such amount will be paid to his
surviving spouse or, if none, to his estate (such spouse or estate shall be
deemed to be the Beneficiary for purposes of the Plan). If a Beneficiary dies
after benefits to such Beneficiary have commenced, but before they have been
completed, and, in the opinion of the Administrator, no person has been
designated to receive such remaining benefits, then such benefits shall be paid
in a lump sum to the deceased Beneficiary's estate.
7.05. Other Termination of Employment. If a Participant terminates his
-------------------------------
employment for any reason other than death or normal, late, or disability
retirement, he will be entitled to a termination benefit equal to (i) the vested
percentage(s) of the value of the Matching and/or Fixed/Discretionary
Contributions to his Account, as adjusted for income, expense, gain, or loss,
such percentage(s) determined in accordance with the vesting schedule(s)
selected by the Employer in Section 1.07, and (ii) the value of the Deferral,
Employee, Qualified Discretionary and Rollover Contributions to his Account as
adjusted for income, expense, gain or loss. The amount payable under this
Section 7.05 will be subject to the provisions of Section 7.08 and will be
distributed in accordance with Article 8 below.
7.06. Separate Account. If a distribution from a Participant's Account has
----------------
been made to him at a time when he has a nonforfeitable right to less than 100
percent of his Account, the vesting schedule in Section 1.07 will thereafter
apply only to amounts in his Account attributable to Employer Contributions
allocated after such distribution. The balance of his Account immediately after
such distribution will be transferred to a separate account which will be
maintained for the purpose of determining his interest therein according to the
following provisions.
29
<PAGE>
8/1/93
At any relevant time prior to a forfeiture of any portion thereof under
Section 7.07 a Participant's nonforfeitable interest in his Account held in a
separate account described in the preceding paragraph will be equal to P(AB +
(RxD)) - (RxD), where P is the nonforfeitable percentage at the relevant time
determined under Section 7.05; AB is the account balance of the separate account
at the relevant time; D is the amount of the distribution; and R is the ratio of
the account balance at the relevant time to the account balance after
distribution. Following a forfeiture of any portion of such separate account
under Section 7.07 below, any balance in the Participant's separate account will
remain fully vested and nonforfeitable.
7.07. Forfeitures. If a Participant terminates his employment, any portion
-----------
of his Account (including any amounts credited after his termination of
employment) not payable to him under Section 7.05 will be forfeited by him upon
the complete distribution to him of the vested portion of his Account, if any,
subject to the possibility of reinstatement as described in the following
paragraph. For purposes of this paragraph, if the value of an Employee's vested
account balance is zero, the Employee shall be deemed to have received a
distribution of his vested interest immediately following termination of
employment. Such forfeitures will be applied to reduce the contributions of the
Employer next payable under the Plan (or administrative expenses of the Plan);
the forfeitures shall be held in a money market fund pending such application.
If a Participant forfeits any portion of his Account under the preceding
paragraph but does again become an Employee after such date, then the amount so
forfeited, without any adjustment for the earnings, expenses, or losses or gains
of the assets credited to his Account since the date forfeited, will be
recredited to his Account (or to a separate account as described in Section
7.06, if applicable) but only if he repays to the Plan before the earlier of
five years after the date of his reemployment or the date he incurs 5
consecutive 1-year breaks in service following the date of the distribution the
amount previously distributed to him, without interest, under Section 7.05. If
an Employee is deemed to receive a distribution pursuant to this Section 7.07,
and the Employee resumes employment before 5 consecutive 1-year breaks in
service, the Employee shall be deemed to have repaid such distribution on the
date of his reemployment. Upon such an actual or deemed repayment, the
provisions of the Plan (including Section 7.06) will thereafter apply as if no
forfeiture had occurred. The amount to be recredited pursuant to this paragraph
will be derived first from the forfeitures, if any, which as of the date of
recrediting have yet to be applied as provided in the preceding paragraph and,
to the extent such forfeitures are insufficient, from a special Employer
contribution to be made by the Employer.
If a Participant elects not to receive the nonforfeitable portion of his
Account following his termination of employment, the non-vested portion of his
Account shall be forfeited after the Participant has incurred five consecutive
1-year breaks in service as defined in Section 2.01(a)(33).
No forfeitures will occur solely as a result of a Participant's withdrawal
of Employee contributions.
7.08. Adjustment for Investment Experience. If any distribution under this
------------------------------------
Article 7 is not made in a single payment, the amount retained by the Trustee
after the distribution will be subject to adjustment until distributed to
reflect the income and gain or loss on the investments in which such amount is
invested and any expenses properly charged under the Plan and Trust to such
amounts.
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7.09. Participant Loans. If permitted under Section 1.09, the Administrator
-----------------
shall allow Participants to apply for a loan from the Plan, subject to the
following:
(a) Loan Application. All Plan loans shall be administered by the
Administrator. Applications for loans shall be made to the Administrator on
forms available from the Administrator. Loans shall be made available to all
Participants on a reasonably equivalent basis. For this purpose, the term
"Participant" means any Participant or Beneficiary, including an alternate
payee under a qualified domestic relations order, as defined in Section 414
(p) of the Code, who is a party-in-interest (as determined under ERISA
Section 3(14)) with respect to the Plan except no loans will be made to: (i)
an Employee who makes a rollover contribution in accordance with Section 4.10
who has not satisfied the requirements of Section 3.01, or (ii) a
shareholder-employee or Owner-Employee. For purposes of this requirement, a
shareholder-employee means an employee or officer of an electing small
business (Subchapter S) corporation who owns (or is considered as owning
within the meaning of Section 318(a)(1) of the Code), on any day during the
taxable year of such corporation, more than 5% of the outstanding stock of
the corporation.
A Participant with an existing loan may not apply for another loan
until the existing loan is paid in full and may not refinance an existing
loan or attain a second loan for the purpose of paying off the existing
loan. A Participant may not apply for more than one loan during each Plan
Year.
(b) Limitation of Loan Amount/Purpose of Loan. Loans shall not be made
available to Highly Compensated Employees in an amount greater than the
amount made available to other Employees. No loan to any Participant or
Beneficiary can be made to the extent that such loan when added to the
outstanding balance of all other loans to the Participant or Beneficiary
would exceed the lesser of (a) $50,000 reduced by the excess (if any) of the
highest outstanding balance of loans during the one year period ending on
the day before the loan is made over the outstanding balance of loans from
the plan on the date the loan is made, or (b) one-half the present value of
the nonforfeitable Account of the Participant. For the purpose of the above
limitation, all loans from all plans of the Employer and Related Employers
are aggregated. A Participant may not request a loan for less than $1,000.
The Employer may provide that loans only be made from certain contribution
sources within Participant Account(s) by notifying the Trustee in writing of
the restricted source.
Loans may be made for any purpose or if elected by the Employer in
Section 1.09(a), on account of hardship only. A loan will be considered to
be made on account of hardship only if made on account of an immediate and
heavy financial need described in Section 7.10(b)(1).
(c) Terms of Loan. All loans shall bear a reasonable rate of interest as
determined by the Administrator based on the prevailing interest rates
charged by persons in the business of lending money for loans which would be
made under similar circumstances. The determination of a reasonable rate of
interest must be based on appropriate regional factors unless the Plan is
administered on a national basis in which case the Administrator may
establish a uniform reasonable rate of interest applicable to all regions.
All loans shall by their terms require that repayment (principal and
interest) be amortized in level payments, not less
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than quarterly, over a period not extending beyond five years from the date
of the loan unless such loan is for the purchase of a Participant's primary
residence, in which case the repayment period may not extend beyond ten
years from the date of the loan. A Participant may prepay the outstanding
loan balance prior to maturity without penalty.
(d) Security. Loans must be secured by the Participant's Accounts not to
exceed 50 percent of the Participant's vested Account. A Participant must
obtain the consent of his or her spouse, if any, to use a Participant
Account as security for the loan, if the provisions of Section 8.03 apply to
the Participant. Spousal consent shall be obtained no earlier than the
beginning of the 90-day period that ends on the date on which the loan is to
be so secured. The consent must be in writing, must acknowledge the effect
of the loan, and must be witnessed by a Plan representative or notary
public. Such consent shall thereafter be binding with respect to the
consenting spouse or any subsequent spouse with respect to that loan.
(e) Default. The Administrator shall treat a loan in default if:
(1) any scheduled repayment remains unpaid more than 90 days;
(2) there is an outstanding principal balance existing on a loan after
the last scheduled repayment date.
Upon default or termination of employment, the entire outstanding
principal and accrued interest shall be immediately due and payable. If a
distributable event (as defined by the Code) has occurred, the Administrator
shall direct the Trustee to foreclose on the promissory note and offset the
Participant's vested Account by the outstanding balance of the loan. If a
distributable event has not occurred, the Administrator shall direct the
Trustee to foreclose on the promissory note and offset the Participant's
vested Account as soon as a distributable event occurs.
(f) Pre-existing loans. The provision in paragraph (a) of this Section 7.09
limiting a Participant to one outstanding loan shall not apply to loans made
before the Employer adopted this prototype plan document. A Participant may
not apply for a new loan until all outstanding loans made before the
Employer adopted this prototype plan have been paid in full. The Trustee may
accept any loan made before the Employer adopted this prototype plan
document except such loans which require the Trustee to hold as security for
the loan property other than the Participant's vested Account.
As of the effective date of amendment of this Plan in Section 1.01(g)(2),
the Trustee shall have the right to reamortize the outstanding principal
balance of any Participant loan that is delinquent. Such reamortization
shall be based upon the remaining life of the loan and the original maturity
date may not be extended.
Notwithstanding any other provision of this Plan, the portion of the
Participant's vested Account used as a security interest held by the plan by
reason of a loan outstanding to the Participant shall be taken into account
for purposes of determining the amount of the Account payable at the time of
death or distribution, but only if the reduction is used as repayment of the
loan. If less than 100% of the Participant's vested Account (determined
without regard to the preceding sentence) is payable to the surviving
spouse, then the Account shall be adjusted by first reducing the vested
Account by the amount of the security used as repayment of
32
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the loan, and then determining the benefit payable to the surviving spouse.
No loan to any Participant or Beneficiary can be made to the extent that
such loan when added to the outstanding balance of all other loans to the
Participant or Beneficiary would exceed the lesser of (a) $50,000 reduced by
the excess (if any) of the highest outstanding balance of loans during the
one year period ending on the day before the loan is made over the
outstanding balance of loans from the plan on the date the loan is made, or
(b) one-half the present value of the nonforfeitable Account of the
Participant. For the purpose of the above limitation, all loans from all
plans of the Employer and Related Employers are aggregated.
7.10. In-Service/Hardship Withdrawals. Subject to the provisions of Article 8,
-------------------------------
a Participant shall not be permitted to withdraw any Employer or Employee
Contributions (and earnings thereon) prior to retirement or termination of
employment, except as follows:
(a) Age 59 1/2. If permitted under Section 1.11(b), a Participant who has
attained the age of 59 1/2 is permitted to withdraw upon request all or any
portion the Accounts specified by the Employer in 1.11(b).
(b) Hardship. If permitted under Section 1.10, a Participant may apply
to the Administrator to withdraw some or all of his Deferral Contributions (and
earnings thereon accrued as of December 31, 1988) and, if applicable, Rollover
Contributions and such other amounts allowed by a predecessor plan, if such
withdrawal is made on account of a hardship. For purposes of this Section, a
distribution is made on account of hardship if made on account of an immediate
and heavy financial need of the Employee where such Employee lacks other
available resources. Determinations with respect to hardship shall be made by
the Administrator and shall be conclusive for purposes of the Plan, and shall be
based on the following special rules:
(1) The following are the only financial needs considered immediate and
heavy: expenses incurred or necessary for medical care (within the meaning
of Section 213(d) of the Code) of the Employee, the Employee's spouse,
children, or dependents; the purchase (excluding mortgage payments) of a
principal residence for the Employee; payment of tuition and related
educational fees for the next twelve (12) months of post-secondary
education for the Employee, the Employee's spouse, children or dependents;
or the need to prevent the eviction of the Employee from, or a foreclosure
on the mortgage of, the Employee's principal residence.
(2) A distribution will be considered as necessary to satisfy an immediate
and heavy financial need of the Employee only if:
(i) The Employee has obtained all distributions, other than the
hardship distributions, and all nontaxable (at the time of the loan)
loans currently available under all plans maintained by the Employer;
(ii) The Employee suspends Deferral Contributions and Employee
Contributions to the Plan for the 12-month period following the date of
his hardship distribution. The suspension must also apply to all
elective contributions and employee contributions to all other
qualified plans and non-qualified plans maintained by the Employer,
other than any mandatory employer contribution portion of a defined
benefit plan, including stock option, stock purchase and other
33
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8/1/93
similar plans, but not including health and welfare benefit plans
(other than the cash or deferred arrangement portion of a cafeteria
plan);
(iii) The distribution is not in excess of the amount of an immediate
and heavy financial need (including amounts necessary to pay any Federal,
state or local income taxes or penalties reasonably anticipated to result
from the distribution); and
(iv) The Employee agrees to limit Deferral Contributions (elective
contributions) to the Plan and any other qualified plan maintained by the
Employer for the Employee's taxable year immediately following the
taxable year of the hardship distribution to the applicable limit under
Section 402(g) of the Code for such taxable year less the amount of such
Employee's Deferral Contributions for the taxable year of the hardship
distribution.
(3) A Participant must obtain the consent of his or her spouse, if any, to
obtain a hardship withdrawal, if the provisions of Section 8.03 apply to
the Participant.
(c) Employee Contributions. A Participant may elect to withdraw, in cash, up
to one hundred percent of the amount then credited to his Employee
Contribution Account. Such withdrawals shall be limited to one (1) per Plan
Year unless this prototype plan document is an amendment of a prior plan
document, in which case the rules and restrictions governing employee
contribution withdrawals, if any, are incorporated herein by reference.
7.11. Prior Plan In-Service Distribution Rules. If designated by the Employer in
----------------------------------------
Section 1.11(b), a Participant shall be entitled to withdraw at anytime prior to
his termination of employment, subject to the provisions of Article 8 and the
prior plan, any vested Employer Contributions maintained in a Participant's
Account for the specified period of time.
Article 8. Distribution of Benefits Payable after Termination of Service.
-------------------------------------------------------------
8.01. Distribution of Benefits to Participants and Beneficiaries.
----------------------------------------------------------
(a) Distributions from the Trust to a Participant or to the Beneficiary of
the Participant shall be made in a lump sum in cash or, if elected by the
Employer in Section 1.11, under a systematic withdrawal plan (installment(s))
upon retirement, death, disability, or other termination of employment,
unless another form of distribution is required or permitted in accordance
with paragraph (d) of this Section 8.01 or Sections 1.11(c), 8.02, 8.03, 8.04
or 11.02. A distribution may be made in Fund Shares, at the election of the
Participant, pursuant to the qualifying rollover of such distribution to a
Fidelity Investments individual retirement account.
(b) Distributions under a systematic withdrawal plan must be made in
substantially equal annual, or more frequent, installments, in cash, over a
period certain which does not extend beyond the life expectancy of the
Participant or the joint life expectancies of the Participant and his
Beneficiary, or, if the Participant dies prior
34
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8/1/93
to the commencement of his benefits the life expectancy of the Participant's
Beneficiary, as further described in Section 8.04.
(c) Notwithstanding the provisions of Section 8.01(b) above, if a
Participant's Account is, and at the time of any prior distribution(s) was,
$3,500 or less, the balance of such Account shall be distributed in a lump
sum as soon as practicable following retirement, disability, death or other
termination of employment.
(d) This paragraph (d) applies to distributions made on or after January 1,
l993. Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Article 8, a distributee
may elect, at the time and in the manner prescribed by the Administrator, to
have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
The following definitions shall apply for purposes of this paragraph (d):
(1) Eligible rollover distribution: An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit of
the distributee, except that an eligible rollover distribution does not
include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Section
401(a)(9) of the Code; and the portion of any distribution that is not
includable in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities).
(2) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible
rollover distribution to a surviving spouse, an eligible retirement plan
is an individual retirement account or individual retirement annuity.
(3) Distributee: A distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(4) Direct rollover: A direct rollover is a payment by the plan to
the eligible retirement plan specified by the distributee.
8.02. Annuity Distributions. If so provided in Section 1.11(C), a Participant
---------------------
may elect distributions made in whole or in part in the form of an annuity
contract subject to the provisions of Section 8.03.
(a) An annuity contract distributed under the Plan must be purchased from an
insurance company and must be nontransferable. The terms of an annuity
contract shall comply with the requirements
35
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8/1/93
of the Plan and distributions under such contract shall be made in accordance
with Section 401 (a) (9) of the Code and the regulations thereunder.
(b) The payment period of an annuity contract distributed to the Participant
pursuant to this Section may be as long as the Participant lives. If the
annuity is payable to the Participant and his spouse or designated
Beneficiary, the payment period of an annuity contract may be for as long as
either the Participant or his spouse or designated Beneficiary lives. Such an
annuity may provide for an annuity certain feature for a period not exceeding
the life expectancy of the Participant. If the annuity is payable to the
Participant and his spouse such period may not exceed the joint life and last
survivor expectancy of the Participant and his spouse, or, if the annuity is
payable to the Participant and a designated Beneficiary, the joint life and
last survivor expectancy of the Participant and such Beneficiary. If the
Participant dies prior to the commencement of his benefits, the payment period
of an annuity contract distributed to the Beneficiary of the Participant may
be as long as the Participant's Beneficiary lives, and may provide for an
annuity certain feature for a period not exceeding the life expectancy of
the Beneficiary. Any annuity contract distributed under the Plan must provide
for nonincreasing payments.
8.03. Joint and Survivor Annuities/Preretirement Survivor Annuities.
-------------------------------------------------------------
(a) Application. The provisions of this Section supersede any conflicting
-----------
provisions of the Plan; provided, however, that paragraph (b) of this Section
shall not apply if the Participant's Account does not exceed or at the time of
any prior distribution did not exceed $3,500. A Participant is described in
this Section only if (i) the Participant has elected distribution of his
Account in the form of an Annuity Contract in accordance with Section 8.02,
or (ii) the Trustee has directly or indirectly received a transfer of assets
from another plan (including a predecessor plan) to which Section 401 (a) (11)
of the Code applies with respect to such Participant .
(b) Retirement Annuity. Unless the Participant elects to waive the
------------------
application of this subsection in a manner satisfying the requirements of
subsection (d) below, to the extent applicable to the Participant, within the
90-day period preceding his Annuity Starting Date (which election may be
revoked, and if revoked, remade, at any time in such period), the vested
Account due any Participant to whom this subsection (b) applies will be paid
to him by the purchase and delivery to him of an annuity contract described
in Section 8.02 providing a life annuity only form of benefit or, if the
Participant is married as of his Annuity Starting Date, providing an immediate
annuity for the life of the Participant with a survivor annuity for the life
of the Participant's spouse (determined as of the date of distribution of the
contract) which is 50 percent of the amount of the annuity which is payable
during the joint lives of the Participant and such spouse. The Participant may
elect to receive distribution of his benefits in the form of such annuity as
of the earliest date on which he could elect to receive retirement benefits
under the Plan. Within the period beginning 90 days prior to the Participant's
Annuity Starting Date and ending 30 days prior to such Date, the Administrator
will provide such Participant with a written explanation of (i) the terms and
conditions of the annuity contract described herein, (ii) the Participant's
right to make and the effect of an election to waive application of this
subsection, (iii) the rights of the Participant's spouse under subsection (d),
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and (iv) the right to revoke and the period of time effect of a revocation of
the election to waive application of this subsection.
(c) Annuity Death Benefit. Unless the Participant elects to waive the
---------------------
application of this subsection in a manner satisfying the requirements of
subsection (d) below at any time within the applicable election period (which
election may be revoked, and if revoked, remade, at any time in such period),
if a married Participant to whom this Section applies dies before his Annuity
Starting Date, then notwithstanding any designation of a Beneficiary to the
contrary, 50 percent of his vested Account will be applied to purchase an
annuity contract described in Section 8.02 providing an annuity for the life
of the Participant's surviving spouse, which contract will then be promptly
distributed to such spouse. In lieu of the purchase of such an annuity
contract, the spouse may elect in writing to receive distributions under the
Plan as if he or she had been designated by the Participant as his Beneficiary
with respect to 50 percent of his Account. For purposes of this subsection,
the applicable election period will commence on the first day of the Plan Year
in which the Participant attains age 35 and will end on the date of the
Participant's death, provided that in the case of a Participant who
terminates his employment the applicable election period with respect to
benefits accrued prior to the date of such termination will in no event
commence later than the date of his termination of employment. A Participant
may elect to waive the application of this subsection prior to the Plan Year
in which he attains age 35, provided that any such waiver will cease to be
effective as of the first day of the Plan Year in which the Participant
attains age 35.
The Administrator will provide a Participant to whom this subsection applies
with a written explanation with respect to the annuity death benefit described
in this subsection (c) comparable to that required under subsection (b) above.
Such explanation shall be furnished within whichever of the following periods
ends last: (i) the period beginning with the first day of the Plan Year in
which the Participant reaches age 32 and ending with the end of the Plan Year
preceding the Plan Year in which he reaches age 35, (ii) a reasonable period
ending after the Employee becomes a Participant, (iii) a reasonable period
ending after this Section 8.04 first becomes applicable to the Participant in
accordance with Section 8.04(a), (iv) in the case of a Participant who
separates from service before age 35, a reasonable period of time ending after
separation from service. For purposes of the preceding sentence, the two-year
period beginning one year prior to the date of the event described in clause
(ii), (iii) or (iv), whichever is applicable, and ending one year after such
date shall be considered reasonable, provided, that in the case of a
Participant who separates from service under (iv) above and subsequently
recommences employment with the Employer, the applicable period for such
Participant shall be predetermined in accordance with this subsection.
(d) Requirements of Elections. This subsection will be satisfied with
-------------------------
respect to a waiver or designation which is required to satisfy this
subsection if such waiver or designation is in writing and either
(1) the Participant's spouse consents thereto in writing, which consent
must acknowledge the effect of such waiver or designation and be witnessed by
a notary public or Plan representative, or
37
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(2) the Participant establishes to the satisfaction of the Administrator
that the consent of the Participant's spouse cannot be obtained because
there is no spouse, because the spouse cannot be located or because of
such other circumstances as the Secretary of Treasury may prescribe.
Any consent by a spouse, or establishment that the consent of a spouse
may not be obtained, will be effective only with respect to a specific
Beneficiary (including any class of beneficiaries or any contingent
beneficiaries) or form of benefits identified in the Participant's
waiver or designation, unless the consent of the spouse expressly
permits designations by the Participant without any requirement of
further consent by the spouse. A consent which permits such
designations by the Participant shall acknowledge that the spouse has
the right to limit consent to a specific Beneficiary and form of
benefits and that the spouse voluntarily elects to relinquish both such
rights. A consent by a spouse shall be irrevocable once made. Any such
consent, or establishment that such consent may not be obtained, will
be effective only with respect to such spouse. For purposes of
subsections (b) and (c) above, no consent of a spouse shall be valid
unless the notice required by such subsection, whichever is applicable,
has been provided to the Participant.
(e) Former Spouse. For purposes of this Section 8.03, a former spouse
-------------
of a Participant will be treated as the spouse or surviving spouse of the
Participant, and a current spouse will not be so treated, to the extent
required under a qualified domestic relations order, as defined in Section
414 (p) of the Code.
(f) Vested Account Balance. For purposes of this Section, vested
----------------------
Account shall the aggregate value of the Participant's vested Account
derived from Employer and Employee contributions (including rollovers),
whether vested before or upon death. The provisions of this Section shall
apply to a Participant who is vested in amounts attributable to Employer
contributions, Employee contributions, or both, upon death or at the time
of distribution.
8.04 Installment Distributions. This Section shall be interpreted and applied
-------------------------
in accordance with the regulations under Section 401(a)(9) of the Code,
including the minimum distribution incidental benefit requirement of section
1.401(a)(9)-2 of the regulations.
(a) In General. If a Participant's benefit may be distributed in
----------
accordance with Section 8.01(b), the amount to be distributed for each
calendar year for which a minimum distribution is required shall be at
least an amount equal to the quotient obtained by dividing the
Participant's interest in his Account by the life expectancy of the
Participant or Beneficiary or the joint life and last survivor expectancy
of the Participant and his Beneficiary, whichever is applicable. For
calendar years beginning before January 1, 1989, if a Participant's
Beneficiary is not his spouse, the method of distribution selected must
insure that at least 50 percent of the present value of the amount
available for distribution is paid within the life expectancy of the
Participant. For calendar years beginning after December 31, 1988 the
amount to be distributed for each calendar year shall not be less than an
amount equal to the quotient obtained by dividing the Participant's
interest in his Account by the lesser of (i) the applicable life
expectancy under Section 8.01(b), or (ii) if a Participant's Beneficiary
is not his spouse, the applicable divisor determined under Section
1.401(a)(9)-2, Q&A 4 of the Proposed Treasury Regulations, or any
successor regulations of similar import.
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8/1/93
Distributions after the death of the Participant shall be made using the
applicable life expectancy under (i) above, without regard to Section
1.401(a)(9)-2 of such regulations.
The minimum distribution required under this subsection (a) for the
calendar year immediately preceding the calendar year in which the
Participant's required beginning date, as determined under Section
8.08(b), occurs shall be made on or before the Participant's required
beginning date, as so determined. Minimum distributions for other calendar
years shall be made on or before the close of such calendar year.
(b) Additional Requirements for Distributions After Death of Participant.
--------------------------------------------------------------------
(1) Distribution beginning before Death. If the Participant dies before
-----------------------------------
distribution of his benefits has begun, distributions shall be made in
accordance with the provisions of this paragraph. Distributions under
Section 8.01(a) shall be completed by the close of the calendar year in
which the fifth anniversary of the death of the Participant occurs.
Distributions under Section 8.01(b) shall commence, if the Beneficiary
is not the Participant's spouse, not later than the close of the
calendar year immediately following the calendar year in which the death
of the Participant occurs. Distributions under Section 6.01(b) to a
Beneficiary who is the Participant's surviving spouse shall commence not
later than the close of the calendar year in which the Participant would
have attained age 70 1/2 or, if later, the close of the calendar year
immediately following the calendar year in which the death of the
Participant occurs. In the event such spouse dies prior to the date
distribution to him or her commences, he or she will be treated for
purposes of this subsection (other than the preceding sentence) as if he
or she were the Participant. If the Participant has not designated a
Beneficiary, or the Participant or Beneficiary has not effectively
selected a method of distribution, distribution of the Participant's
benefit shall be completed by the close of the calendar year in which
the fifth anniversary of the death of the Participant occurs.
Any amount paid to a child of the Participant will be treated as if it
had been paid to the surviving spouse if the amount becomes payable to
the surviving spouse when the child reaches the age of majority.
For purposes of this subsection (b)(1), the life expectancy of a
Beneficiary who is the Participant's surviving spouse shall be
recalculated annually unless the Participant's spouse irrevocably elects
otherwise prior to the time distributions are required to begin. Life
expectancy shall be computed in accordance with the provisions of
subsection (a) above.
(2) Distribution beginning after Death. If the Participant dies after
----------------------------------
distribution of his benefits has begun, distributions to the
Participant's Beneficiary will be made at least as rapidly as under the
method of distribution being used as of the date of the Participant's
death.
For purposes of this Section 8.04(b), distribution of a Participant's
interest in his Account will be considered to begin as of the
Participant's required beginning date, as determined under Section
8.08(b). If distribution in the form of an annuity irrevocably commences
prior to such date, distribution will be considered to begin as of the
actual date distribution commences.
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(c) Life Expectancy. For purposes of this Section, life expectancy
---------------
shall be recalculated annually in the case of the Participant or a
Beneficiary who is the Participant's spouse unless the Participant or
Beneficiary irrevocably elects otherwise prior to the time distributions
are required to begin. If not recalculated in accordance with the
foregoing, life expectancy shall be calculated using the attained age of
the Participant or Beneficiary, whichever is applicable, as of such
individual's birth date in the first year for which a minimum distribution
is required reduced by one for each elapsed calendar year since the date
life expectancy was first calculated. For purposes of this Section, life
expectancy and joint life and last survivor expectancy shall be computed
by use of the expected return multiples in Table V and VI of section 1.72-
9 of the income tax Regulations.
A Participant's interest in his Account for purposes of this
Section 8.04 shall be determined as of the last valuation date in the
calendar year immediately preceding the calendar year for which a minimum
distribution is required, increased by the amount of any contributions
allocated to, and decreased by any distributions from, such Account after
the valuation date. Any distribution for the first year for which a
minimum distribution is required made after the close of such year shall
be treated as if made prior to the close of such year.
8.05. Immediate Distributions. If the Account distributable to a Participant
-----------------------
exceeds, or at the time of any prior distribution exceeded, $3,500, no
distribution will be made to the Participant before he reaches his Normal
Retirement Age (or age 62, if later), unless the written consent of the
Participant has been obtained. Such consent shall be made in writing within the
90-day period ending on the Participant's Annuity Starting Date. Within the
period beginning 90 days before the Participant's Annuity Starting Date and
ending 30 days before such Date, the Administrator will provide such Participant
with written notice comparable to the notice described in Section 8.03(b)
containing a general description of the material features and an explanation of
the relative values of the optional forms of benefit available under the Plan
and informing the Participant of his right to defer receipt of the distribution
until his Normal Retirement Age (or age 62, if later).
The consent of the Participant's spouse must also be obtained if the
Participant is subject to the provisions of Section 8.03(a), unless the
distribution will be made in the form of the applicable retirement annuity
contract described in Section 8.03(b). A spouse's consent to early
distribution, if required, must satisfy the requirements of Section 8.03(d).
Neither the consent of the Participant nor the Participant's spouse shall be
required to the extent that a distribution is required to satisfy Section 401
(a)(9) or Section 415 of the Code. In addition, upon termination of the Plan if
it does not offer an annuity option (purchased from a commercial provider) and
if the Employer or any Related Employer does not maintain another defined
contribution plan (other than an employee stock ownership plan as defined in
Code Section 4975(e)(7)) the Participant's Account will, without the
Participant's consent, be distributed to the Participant. However, if any
Related Employer maintains another defined contribution plan (other than an
employee stock ownership plan as defined in Section 4975(e)(7) of the Code)
then the Participant's Account will be transferred, without the Participant's
consent, to the other plan if the Participant does not consent to an immediate
distribution.
40
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8.06. Determination of Method of Distribution. The Participant will
---------------------------------------
determine the method of distribution of benefits to himself and may determine
the method of distribution to his Beneficiary. Such determination will be made
prior to the time benefits become payable under the Plan. If the Participant
does not determine the method of distribution to his Beneficiary or if the
Participant permits his Beneficiary to override his determination, the
Beneficiary, in the event of the Participant's death, will determine the method
of distribution of benefits to himself as if he were the Participant. A
determination by the Beneficiary must be made no later than the close of the
calendar year in which distribution would be required to begin under Section
8.04(b) or, if earlier, the close of the calendar year in which the fifth
anniversary of the death of the Participant occurs.
8.07. Notice to Trustee. The Administrator will notify the Trustee in writing
-----------------
whenever any Participant or Beneficiary is entitled to receive benefits under
the Plan. The Administrator's notice shall indicate the form of benefits that
such Participant or Beneficiary shall receive and (in the case of distributions
to a Participant) the name of any designated Beneficiary or Beneficiaries.
8.08. Time of Distribution. In no event will distribution to a Participant
--------------------
be made later than the earlier of the dates described in (a) and (b) below:
(a) Absent the consent of the Participant (and his spouse, if appropriate),
the 60th day after the close of the Plan Year in which occurs the later of
the date on which the Participant attains age 65, the date on which the
Participant ceases to be employed by the Employer; or the 10th anniversary
of the year in which the Participant commenced participation in the Plan;
and
(b) April 1 of the calendar year first following the calendar year in which
the Participant attains age 70 1/2 or, in the case of a Participant who had
attained age 70 1/2 before January 1, 1988, the required beginning date
determined in accordance with (1) or (2) below:
(1) The required beginning date of a Participant who is not a 5-percent
owner is the first day of April of the calendar year following the
calendar year in which the later of retirement or attainment of age 70-
1/2 occurs.
(2) The required beginning date of a Participant who is a 5-percent
owner during any year beginning after December 31, 1979, is the first
day of April following the later of:
(i) the calendar year in which the participant attains age
70-1/2, or
(ii) the earlier of the calendar year with or within which ends the
plan year in which the participant becomes a 5-percent owner, or the
calendar year in which the participant retires.
Notwithstanding the foregoing, in the case of a Participant who attained age
70 1/2 during 1988 and who had not retired prior to January 1, 1989, the
required beginning date described in this paragraph shall be April 1, 1990.
Notwithstanding (a) above, the failure of a Participant (and spouse) to
consent to a distribution while a benefit is immediately distributable, within
the meaning of Section 8.05, shall be deemed to be
41
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an election to defer commencement of payment of any benefit sufficient to
satisfy (a) above.
Once distributions have begun to a 5-percent owner under (b) above, they
must continue to be distributed, even if the Participant ceases to be a 5-
percent owner in a subsequent year.
For purposes of (b) above, a Participant is treated as a 5-percent owner
if such participant is a 5-percent owner as defined in Section 416(i) of the
Code (determined in accordance with Section 416 but without regard to whether
the plan is top-heavy) at any time during the plan year ending with or within
the calendar year in which such owner attains age 66-1/2 or any subsequent plan
year.
The Administrator shall notify the Trustee in writing whenever a
distribution is necessary in order to comply with the minimum distribution rules
set forth in this Section.
8.09. Whereabouts of Participants and Beneficiaries. The Administrator
---------------------------------------------
will at all times be responsible for determining the whereabouts of each
Participant or Beneficiary who may be entitled to benefits under the Plan and
will at all times be responsible for instructing the Trustee in writing as to
the current address of each such Participant or Beneficiary. The Trustee will be
entitled to rely on the latest written statement received from the Administrator
as to such addresses. The Trustee will be under no duty to make any
distributions under the Plan unless and until it has received written
instructions from the Administrator satisfactory to the Trustee containing the
name and address of the distributee, the time when the distribution is to occur,
and the form which the distribution will take. Notwithstanding the foregoing, if
the Trustee attempts to make a distribution in accordance with the
Administrator's instructions but is unable to make such distribution because the
whereabouts of the distributee is unknown, the Trustee will notify the
Administrator of such situation and thereafter the Trustee will be under no duty
to make any further distributions to such distributee until it receives further
written instructions from the Administrator. If a benefit is forfeited because
the Administrator determines that the Participant or beneficiary cannot be
found, such benefit will be reinstated by the Sponsor if a claim is filed by the
Participant or Beneficiary with the Administrator and the Administrator confirms
the claim to the Sponsor.
Article 9. Top-Heavy Provisions.
--------------------
9.01 Application. If the Plan is or becomes a Top-Heavy Plan in any Plan Year
-----------
or is automatically deemed to be Top-Heavy in accordance with the Employer's
election in Section 1.12(a)(1) of the Adoption Agreement, the provisions of
this Article 9 shall supersede any conflicting provision in the Plan.
9.02 Definitions. For purposes of this Article 9, the following terms have
-----------
the meanings set forth below:
(a) Key Employee. Any Employee or former Employee (and the Beneficiary of
------------
any such Employee) who at any time during the determination period was (i)
an officer of the Employer whose annual compensation exceeds 50 percent of
the dollar limitation under Section 415(b)(1)(A) of the Code, (ii) an
owner (or considered an owner under Section 318 of the Code) of one of the
ten largest interests in the Employer if such individual's annual
compensation exceeds the dollar limitation under Section 415(c)(1)(A) of
the Code, (iii) a 5-percent owner of the Employer, or (iv) a 1-percent
owner of the Employer who has annual compensation of more than $150,000.
For purposes of this
42
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paragraph, the determination period is the Plan Year containing the
Determination Date and the four preceding Plan Years. The determination of
who is a Key Employee shall be made in accordance with Section 416(i)(1)
of the Code and the regulations thereunder. Annual compensation means
compensation as defined in Section 5.03(e)(2), but including amounts
contributed by the Employer pursuant to a salary reduction agreement which
are excludable from the employee's gross income under Section 125, Section
402(a)(8), and Section 403(b) of the Code.
(b) Top-Heavy Plan. The Plan is a Top-Heavy Plan if any of the following
--------------
conditions exists:
(1) the Top-Heavy Ratio for the Plan exceeds 60 percent and the Plan
is not part of any Required Aggregation Group or Permissive
Aggregation Group;
(2) the Plan is a part of a Required Aggregation Group but not part
of a Permissive Aggregation Group and the Top-Heavy Ratio for the
Required Aggregation Group exceeds 60 percent; or
(3) the Plan is a part of a Required Aggregation Group and a
Permissive Aggregation Group and the Top-Heavy Ratio for both Groups
exceeds 60 percent.
(c) Top-Heavy Ratio.
---------------
(1) With respect to this Plan, or with respect to any Required
Aggregation Group or Permissive Aggregation Group that consists solely
of defined contribution plans (including any simplified employee
pension plans) and the Employer has not maintained any defined benefit
plan which during the 5-year period ending on the determination date(s)
has or has had accrued benefits; the Top-Heavy Ratio is a fraction, the
numerator of which is the sum of the account balances of all Key
Employees under the plans as of the Determination Date (including any
part of any account balance distributed in the 5-year period ending on
the Determination Date), and the denominator of which is the sum of
all account balances (including any part of any account balance
distributed in the 5-year period ending on the Determination Date) of
all participants under the plans as of the Determination Date. Both the
numerator and denominator of the Top-Heavy Ratio shall be increased, to
the extent required by Section 416 of the Code, to reflect any
contribution which is due but unpaid as of the Determination Date.
(2) With respect to any Required Aggregation Group or Permissive
Aggregation Group that includes one or more defined benefit plans
which, during the 5-year period ending on the Determination Date, has
covered or could cover a Participant in this Plan, the Top-Heavy Ratio
is a fraction, the numerator of which is the sum of the account
balances under the defined contribution plans for all Key Employees and
the present value of accrued benefits under the defined benefit plans
for all Key Employees, and the denominator of which is the sum of the
account balances under the defined contribution plans for all
participants and the present value of accrued benefits under the
defined benefit plans for all participants. Both the numerator and
denominator of the Top-Heavy Ratio shall be increased for any
distribution of an account balance or an accrued benefit made in the 5-
year period ending on the Determination Date and any contribution due
but unpaid as of the Determination Date.
43
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(3) For purposes of (1) and (2) above, the value of Accounts and the
present value of accrued benefits will be determined as of the most
recent Valuation Date that falls within or ends with the 12-month
period ending on the Determination Date, except as provided in Section
416 of the Code and the regulations thereunder for the first and second
plan years of a defined benefit plan. The Account and accrued benefits
of a Participant (i) who is not a Key Employee but who was a Key
Employee in a prior year, or (ii) who has not been credited with at
least one Hour of Service with the Employer at any time during the 5-
year period ending on the Determination Date, will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent to which
distributions, rollovers, and transfers are taken into account, shall
be made in accordance with Section 416 of the Code and the regulations
thereunder. Deductible employee contributions shall not be taken into
account for purposes of computing the Top-Heavy Ratio. When aggregating
plans, the value of Accounts and accrued benefits shall be calculated
with reference to the Determination Dates that fall within the same
calendar year.
For purposes of determining if the Plan, or any other plan included
in a Required Aggregation Group of which this Plan is a part, is a Top-
Heavy Plan, the accrued benefit in a defined benefit plan of an
Employee other than a Key Employee shall be determined under (a) the
method, if any, that uniformly applies for accrual purposes under all
plans maintained by the Employer, or (b) if there is no such method, as
if such benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional accrual rate of Section 411(b)(1)(C)
of the Code.
(d) Permissive Aggregation Group. The Required Aggregation Group plus any
----------------------------
other qualified plans of the Employer or a Related Employer which, when
considered as a group with the Required Aggregation Group, would continue to
satisfy the requirements of Sections 401(a)(4) and 410 of the Code.
(e) Required Aggregation Group.
--------------------------
(1) Each qualified plan of the Employer or Related Employer in which at
least one Key Employee participates, or has participated at any time
during the determination period (regardless of whether the plan has
terminated), and
(2) any other qualified plan of the Employer or Related Employer which
enables a plan described in (1) above to meet the requirements of Sections
401(a)(4) or 410 of the Code.
(f) Determination Date. For any Plan Year of the Plan subsequent to the
------------------
first Plan Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that Plan Year.
(g) Valuation Date. The Determination Date.
--------------
(h) Present Value. Present value shall be based only on the interest
-------------
rate and mortality table specified in the Adoption Agreement.
9.03. Minimum Contribution.
--------------------
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(a) Except as otherwise provided in (b) and (c) below, the
Fixed/Discretionary Contributions made on behalf of any Participant who is
not a Key Employee shall not be less than the lesser of 3 percent (or such
other percent elected by the Employer in Section 1.12(c)) of such
Participant's Compensation or, in the case where the Employer has no defined
benefit plan which designates this Plan to satisfy Section 401 of the Code,
the largest percentage of Employer contributions, as a percentage of the
first $200,000 of the Key Employee's Compensation, made on behalf of any Key
Employee for that year. If the Employer selected the Integrated Formula in
Section 1.05(a) (2), the minimum contribution shall be determined under
paragraph (e) of this Section 9.03. Further, the minimum contribution under
this Section 9.03 shall be made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive a contribution, or
would have received a lesser contribution for the year, because (i) the
Participant failed to complete 1,000 Hours of Service or any equivalent
service requirement provided in the Adoption Agreement; or (ii) the
Participant's Compensation was less than a stated amount.
(b) The provisions of (a) above shall not apply to any Participant who was
not employed by the Employer on the last day of the Plan Year.
(c) The Employer contributions for the Plan Year made on behalf of each
Participant who is not a Key Employee and who is a participant in a defined
benefit plan maintained by the Employer shall not be less than 5 percent of
such Participant's Compensation, unless the Employer has provided in Section
1.12(c) that the minimum contribution requirement will be met in the other
plan or plans of the Employer.
(d) The minimum contribution required under (a) above (to the extent
required to be nonforfeitable under Section 416(b) of the Code) may not be
forfeited under Section 411(a) (3) (B) or 411(a) (3) (D) of the Code.
(e) If the Employer elected an Integrated Formula in Section 1.05(a) (2),
the allocation steps in Section 4.06(b) (2) shall be preceded by the
following steps:
(1) The Discretionary Employer Contributions will be allocated to each
eligible Participant (as determined under this Section 9.03) in the ratio
that the Participant's Compensation bears to all Participants'
Compensation, but not in excess of 3% (or such other percent elected by
the Employer in Section 1.12(c).
(2) Any Discretionary Employer Contributions remaining after (e) (1)
above will be allocated to each eligible Participant in the ratio that the
Participant's Excess Compensation for the Plan Year bears to the Excess
Compensation of all eligible Participants, but not in excess of 3% (or
such other percent elected by the Employer in Section 1.12(c)).
9.04. Adjustment to the Limitation on Contributions and Benefits. If this Plan
----------------------------------------------------------
is in Top-Heavy status, the number 100 shall be substituted for the number 125
in subsections (e) (3) and (e) (4) of Section 5.03. However, this substitution
shall not take effect with respect to this Plan in any Plan Year in which the
following requirements are satisfied:
(a) The Employer contributions for such Plan Year made on behalf of each
Participant who is not a Key Employee and who is a
45
<PAGE>
8/1/93
participant in a defined benefit plan maintained by the Employer is not
less than 7 1/2 percent of such Participant's Compensation.
(b) The sum of the present value as of the Determination Date of (i) the
aggregate accounts of all Key Employees under all defined contribution plans
of the Employer and (ii) the cumulative accrued benefits of all Key Employees
under all defined benefit plans of the Employer does not exceed 90 percent of
the same amounts determined for all Participants under all plans of the
Employer that are Top-Heavy Plans, excluding Accounts and accrued benefits
for Employees who formerly were but are no longer Key Employees.
The substitutions of the number 100 for 125 shall not take effect in any
limitation Year with respect to any Participant for whom no benefits are
accrued or contributions made for such Year.
9.05. Minimum Vesting. For any Plan Year in which the Plan is a Top-Heavy
---------------
Plan and all Plan Years thereafter, the Top-Heavy vesting schedule elected in
Section 1.12(d) will automatically apply to the Plan. The Top-Heavy vesting
schedule applies to all benefits within the meaning of Section 411 (a) (7) of
the Code except those attributable to Employee Contributions or those already
subject to a vesting schedule which vests at least as rapidly in all cases as
the schedule elected in Section 1.12(d), including benefits accrued before the
Plan becomes a Top-Heavy Plan. Further, no decrease in a Participant's
nonforfeitable percentage may occur in the event the Plan's status as a Top-
Heavy Plan changes for any Plan Year. However, this Section 9.05 does not apply
to the Account of any Employee who does not have an Hour of Service after the
Plan has initially become a Top-Heavy Plan and such Employee's Account
attributable to Employer Contributions will be determined without regard to this
Section 9.05.
Article 10. Amendment and Termination.
-------------------------
10.01 Amendment by Employer. The Employer reserves the authority, subject to
---------------------
the provisions of Article 1 and Section 10.03, to amend the Plan:
(a) Changing Elections Contained in the Adoption Agreement. By filing with
------------------------------------------------------
the Trustee an amended Adoption Agreement, executed by the Employer only, on
which said Employer has indicated a change or changes in provisions
previously elected by it. Such changes are to be effective on the effective
date of such amended Adoption Agreement except that retroactive changes to a
previous election or elections pursuant to the regulations issued under
Section 401 (a) (4) of the Code shall be permitted. Any such change
notwithstanding, no Participant's Account shall be reduced by such change
below the amount to which the Participant would have been entitled if he had
voluntarily left the employ of the Employer immediately prior to the date of
the change. The Employer may from time to time make any amendment to the Plan
that may be necessary to satisfy Sections 415 or 416 of the Code because of
the required aggregation of multiple plans by completing overriding Plan
language in the Adoption Agreement. The Employer may also add certain model
amendments published by the Internal Revenue Service which specifically
provide that their adoption will not cause the Plan to be treated as an
individually designed plan; or
(b) Other Changes. By amending any provision of the Plan for any reason other
-------------
than those specified in (a) above. However, upon making such amendment,
including a waiver of the minimum funding requirement under Section 412(d)
of the Code, the Employer may no longer participate in this prototype plan
arrangement and will be
46
<PAGE>
8/1/93
deemed to have an individually designed plan. Following such amendment, the
Trustee may transfer the assets of the Trust to the trust forming part of
such newly adopted plan upon receipt of sufficient evidence (such as a
determination letter or opinion letter from the Internal Revenue Service or
an opinion of counsel satisfactory to the Trustee) that such trust will be a
qualified trust under the Code.
10.02. Amendment by Prototype Sponsor. The Prototype Sponsor may in its
------------------------------
discretion amend the Plan or the Adoption Agreement at any time, subject to the
provisions of Article 1 and Section 10.03, and provided that the Prototype
Sponsor mails a copy of such amendment to the Employer at its last known address
as shown on the books of the Prototype Sponsor.
10.03. Amendments Affecting Vested and/or Accrued Benefits.
---------------------------------------------------
(a) Except as permitted by Section 10.04, no amendment to the Plan shall be
effective to the extent that it has the effect of decreasing a Participant's
Account or eliminating an optional form of benefit with respect to benefits
attributable to service before the amendment. Furthermore, if the vesting
schedule of the Plan is amended, the nonforfeitable interest of a Participant
in his Account, determined as of the later of the date the amendment is
adopted or the date it becomes effective, will not be less than the
Participant's nonforfeitable interest in his Account determined without
regard to such amendment.
(b) If the Plan's vesting schedule is amended, including any amendment
resulting from a change to or from Top-Heavy Plan status, or the Plan is
amended in any way that directly or indirectly affects the computation of a
Participant's nonforfeitable interest in his Account, each Participant with
at least three (3) Years of Service for Vesting with the Employer may elect,
within a reasonable period after the adoption of the amendment, to have the
nonforfeitable percentage of his Account computed under the Plan without
regard to such amendment. The Participant's election may be made within 60
days from the latest of (i) the date the amendment is adopted; (ii) the date
the amendment becomes effective; or (iii) the date the Participant is issued
written notice of the amendment by the Employer or the Administrator.
10.04. Retroactive Amendments. An amendment made by the sponsor in
----------------------
accordance with Section 10.02 may be made effective on a date prior to the first
day of the Plan Year in which it is adopted if such amendment is necessary or
appropriate to enable the Plan and Trust to satisfy the applicable requirements
of the Code or to conform the Plan to any change in federal law, or to any
regulations or ruling thereunder. Any retroactive amendment by the Employer
shall be subject to the provisions of Section 10.01.
10.05. Termination. The Employer has adopted the Plan with the intention and
-----------
expectation that contributions will be continued indefinitely. However, said
Employer has no obligation or liability whatsoever to maintain the Plan for any
length of time and may discontinue contributions under the Plan or terminate the
Plan at any time by written notice delivered to the Trustee without any
liability hereunder for any such discontinuance or termination.
10.06. Distribution upon Termination of the Plan. Upon termination or partial
-----------------------------------------
termination of the Plan or complete discontinuance of contributions thereunder,
each Participant (including a terminated Participant with respect to amounts not
previously forfeited by him) who is affected by such termination or partial
termination or discontinuance
47
<PAGE>
8/1/93
will have a fully vested interest in his Account, and, subject to Section 4.05
and Article 8, the Trustee will distribute to each Participant or other person
entitled to distribution the balance of the Participant's Account in a single
lump sum payment. In the absence of such instructions, the Trustee will notify
the Administrator of such situation and the Trustee will be under no duty to
make any distributions under the Plan until it receives written instructions
from the Administrator. Upon the completion of such distributions, the Trust
will terminate, the Trustee will be relieved from all liability under the Trust,
and no Participant or other person will have any claims thereunder, except as
required by applicable law.
10.07. Merger or Consolidation of Plan; Transfer of Plan Assets. In case of
--------------------------------------------------------
any merger or consolidation of the Plan with, or transfer of assets and
liabilities of the Plan to, any other plan, provision must be made so that each
Participant would, if the Plan then terminated, receive a benefit immediately
after the merger, consolidation or transfer which is equal to or greater than
the benefit he would have been entitled to receive immediately before the
merger, consolidation or transfer if the Plan had then terminated.
Article 11. Amendment and Continuation of Predecessor Plan; Transfer of Funds
-----------------------------------------------------------------
to or from Other Qualified Plans.
- ---------- ---------------------
11.01. Amendment and Continuation of Predecessor Plan. In the event
----------------------------------------------
the Employer has previously established a plan (the "predecessor plan") which is
a defined contribution plan under the Code and which on the date of adoption of
the Plan meets the applicable requirements of section 401(a) of the Code, the
Employer may, in accordance with the provisions of the predecessor plan, amend
and continue the predecessor plan in the form of the Plan and become the
Employer hereunder, subject to the following:
(a) Subject to the provisions of the Plan, each individual who was a
Participant or former Participant in the predecessor plan immediately prior
to the effective date of such amendment and continuation will become a
Participant or former Participant in the Plan;
(b) No election may be made under the vesting provisions of the Adoption
Agreement if such election would reduce the benefits of a Participant under
the Plan to less than the benefits to which he would have been entitled if
he voluntarily separated from the service of the Employer immediately prior
to such amendment and continuation;
(c) No amendment to the Plan shall decrease a Participant's accrued benefit
or eliminate an optional form of benefit and if the amendment of the
predecessor plan in the form of the Plan results in a change in the method
of crediting service for vesting purposes between the general method set
forth in Section 2530.200b-2 of the Department of Labor Regulations and the
elapsed time method in Section 2.01(a)(33) of the Plan, each Participant
with respect to whom the method of crediting vesting service is changed
shall be treated in the manner set forth by the provisions of Section
1.410(a)-7(f)(1) of the Treasury Regulations which are incorporated herein
by reference.
(d) The amounts standing to the credit of a Participant's Account
immediately prior to such amendment and continuation which represent the
amounts properly attributable to (i) contributions by the Participant and
(ii) contributions by the Employer and
48
<PAGE>
8/1/93
forfeitures will constitute the opening balance of his Account or Accounts
under the Plan;
(e) Amounts being paid to a former Participant or to a Beneficiary in
accordance with the provisions of the predecessor plan will continue to be
paid in accordance with such provisions;
(f) Any election and waiver of the qualified pre-retirement annuity in
effect after August 23, 1984, under the predecessor plan immediately before
such amendment and continuation will be deemed a valid election and waiver
of Beneficiary under Section 8.04 if such designation satisfies the
requirements of Section 8.04(d), unless and until the Participant revokes
such election and waiver under the Plan; and
(g) Unless the Employer and the Trustee agree otherwise, all assets of the
predecessor trust will be deemed to be assets of the Trust as of the
effective date of such amendment. Such assets will be invested by the
Trustee as soon as reasonably practicable pursuant to Article 6. The
Employer agrees to assist the Trustee in any way requested by the Trustee in
order to facilitate the transfer of assets from the predecessor trust to the
Trust Fund.
11.02. Transfer of Funds from an Existing Plan. The Employer may from time to
---------------------------------------
time direct the Trustee, in accordance with such rules as the Trustee may
establish, to accept cash, allowable Fund Shares or participant loan promissory
notes transferred for the benefit of Participants from a trust forming part of
another qualified plan under the Code, provided such plan is a defined
contribution plan. Such transferred assets will become assets of the Trust as
of the date they are received by the Trustee. Such transferred assets will be
credited to Participants' Account in accordance with their respective interests
immediately upon receipt by the Trustee. A Participant's interest under the
Plan in transferred assets which were fully vested and nonforfeitable under the
transferring plan will be fully vested and nonforfeitable at all times. Such
transferred assets will be invested by the Trustee in accordance with the
provisions of paragraph (g) of Section 11.01 as if such assets were transferred
from a predecessor plan. No transfer of assets in accordance with this Section
may cause a loss of an accrued or optional form of benefit protected by Section
411(d)(6) of the Code.
11.03. Acceptance of Assets by Trustee. The Trustee will not accept assets
-------------------------------
which are not either in a medium proper for investment under the Plan, as set
forth in Section 1.14(b), or in cash. Such assets shall be accompanied by
written instructions showing separately the respective contributions by the
prior employer and by the Employee, and identifying the assets attributable to
such contributions. The Trustee shall establish such accounts as may be
necessary or appropriate to reflect such contributions under the Plan. The
Trustee shall hold such assets for investment in accordance with the provisions
of Article 6, and shall in accordance with the written instructions of the
Employer make appropriate credits to the Accounts of the Participants for whose
benefit assets have been transferred.
11.04. Transfer of Assets from Trust. The Employer may direct the
-----------------------------
Trustee to transfer all or a specified portion of the Trust assets to any other
plan or plans maintained by the Employer or the employer or employers of a
former Participant or Participants, provided that the Trustee has received
evidence satisfactory to it that such other plan meets all applicable
requirements of the Code. The assets so transferred shall be accompanied by
written instructions from the Employer naming the persons for whose benefit such
assets have been
49
<PAGE>
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transferred, showing separately the respective contributions by the Employer and
by each Participant, if any, and identifying the assets attributable to the
various contributions. The Trustee shall have no further liabilities with
respect to assets so transferred.
Article 12. Miscellaneous.
-------------
12.01. Communication to Participants. The Plan will be communicated to all
-----------------------------
Participants by the Employer promptly after the Plan is adopted.
12.02. Limitation of Rights. Neither the establishment of the Plan and the
--------------------
Trust, nor any amendment thereof, nor the creation of any fund or account, nor
the payment of any benefits, will be construed as giving to any Participant or
other person any legal or equitable right against the Employer, Administrator or
Trustee, except as provided herein; and in no event will the terms of employment
or service of any Participant be modified or in any way affected hereby. It is a
condition of the Plan, and each Participant expressly agrees by his
participation herein, that each Participant will look solely to the assets held
in the Trust for the payment of any benefit to which he is entitled under the
Plan.
12.03. Nonalienability of Benefits and Qualified Domestic Relations Orders.
-------------------------------------------------------------------
The benefits provided hereunder will not be subject to alienation, assignment,
garnishment, attachment, execution or levy of any kind, either voluntarily or
involuntarily, and any attempt to cause such benefits to be so subjected will
not be recognized, except to such extent as may be required by law. The
preceding sentence shall also apply to the creation, assignment, or recognition
of a right to any benefit payable with respect to a Participant pursuant to a
domestic relations order, unless such order is determined by the Plan
Administrator to be a qualified domestic relations order, as defined in Section
414(p) of the Code, or any domestic relations order entered before January 1,
1985. The Administrator must establish reasonable procedures to determine the
qualified status of a domestic relations order. Upon receiving a domestic
relations order, the Administrator will promptly notify the Participant and any
alternate payee named in the order, in writing, of the receipt of the order and
the Plan's procedures for determining the qualified status of the order. Within
a reasonable period of time after receiving the domestic relations order, the
Administrator must determine the qualified status of the order and must notify
the Participant and each alternate payee, in writing, of its determination. The
Administrator must provide notice under this paragraph by mailing to the
individual's address specified in the domestic relations order, or in a manner
consistent with the Department of Labor regulations.
If any portion of the Participant's Account is payable during the period the
Administrator is making its determination of the qualified status of the
domestic relations order, the Administrator must make a separate accounting of
the amounts payable. If the Administrator determines the order is a qualified
domestic relations order within 18 months of the date amounts first are payable
following receipt of the order, the Administrator will direct the Trustee to
distribute the payable amounts in accordance with the order. If the
Administrator does not make his determination of the qualified status of the
order within the 18 month determination period, the Administrator will direct
the Trustee to distribute the payable amounts in the manner the Plan would
distribute if the order did not exist and will apply the order prospectively if
the Administrator later determines the order is a qualified domestic relations
order.
A domestic relations order will not fail to be deemed a qualified domestic
relations order merely because it requires the distribution or segregation of
all or part of a Participant's Account with respect to an
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<PAGE>
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alternate payee prior to the Participant's earliest retirement age (as defined
in Section 414(p) of the Code) under the Plan. A distribution to an alternate
payee prior to the Participant's attainment of the earliest retirement age is
available only if: (1) the other specifies distribution at that time; and (2)
if the present value of the alternate payee's benefits under the Plan exceeds
$3,500, and the order requires, the alternate payee consents to any
distribution occurring prior to the Participant's attainment of earliest
retirement age.
12.04. Facility of Payment. In the event the Administrator determines, on the
-------------------
basis of medical reports or other evidence satisfactory to the Administrator,
that the recipient of any benefit payments under the Plan is incapable of
handling his affairs by reason of minority, illness, infirmity or other
incapacity, the Administrator may direct the Trustee to disburse such payments
to a person or institution designated by a court which has jurisdiction over
such recipient or a person or institution otherwise having the legal authority
under State law for the care and control of such recipient. The receipt by such
person or institution of any such payments shall be complete acquittance
therefore, and any such payment to the extent thereof, shall discharge the
liability of the Trust for the payment of benefits hereunder to such recipient.
12.05. Information between Employer and Trustee. The Employer agrees
----------------------------------------
to furnish the Trustee , and the Trustee agrees to furnish the Employer with
such information relating to the Plan and Trust as may be required by the other
in order to carry out their respective duties hereunder, including without
limitation information required under the Code and any regulations issued or
forms adopted by the Treasury Department thereunder or under the provisions of
ERISA and any regulations issued or forms adopted by the Labor Department
thereunder.
12.06. Effect of Failure to Qualify under Code. Notwithstanding any other
---------------------------------------
provision contained herein, if the Employer fails to obtain or retain approval
of the Plan by the Internal Revenue Service as a qualified Plan under the Code,
the Employer may no longer participate in this prototype Plan arrangement and
will be deemed to have an individually designed plan.
12.07. Notices. Any notice or other communication in connection with this Plan
-------
shall be deemed delivered in writing if addressed as provided below and if
either actually delivered at said address or, in the case of a letter, three
business days shall have elapsed after the same shall have been deposited in the
United States mails, first-class postage prepaid and registered or certified:
(a) If to the Employer or Administrator, to it at the address set forth in the
Adoption Agreement, to the attention of the person specified to receive notice
in the Adoption Agreement;
(b) If to the Trustee, to it at the address set forth in the Adoption
Agreement;
or, in each case at such other address as the addressee shall have specified by
written notice delivered in accordance with the foregoing to the addressor's
then effective notice address.
12.08. Governing Law. The Plan and the accompanying Adoption Agreement
-------------
will be construed, administered and enforced according to ERISA, and to the
extent not preempted thereby, the laws of the Commonwealth of Massachusetts.
51
<PAGE>
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Article 13. Plan Administration.
-------------------
13.01. Powers and responsibilities of the Administrator. The Administrator has
------------------------------------------------
the full power and the full responsibility to administer the Plan in all of its
details, subject, however, to the requirements of ERISA. The Administrator's
powers and responsibilities include, but are not limited to, the following:
(a) To make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan;
(b) To interpret the Plan, its interpretation thereof in good faith to be
final and conclusive on all persons claiming benefits under the Plan;
(c) To decide all questions concerning the Plan and the eligibility of
any person to participate in the Plan;
(d) To administer the claims and review procedures specified in Section
13.03;
(e) To compute the amount of benefits which will be payable to any
Participant, former Participant or Beneficiary in accordance with the
provisions of the Plan;
(f) To determine the person or persons to whom such benefits will be
paid;
(g) To authorize the payment of benefits and provide for the distribution
of Code Section 402(f) notices;
(h) To comply with the reporting and disclosure requirements of Part 1 of
Subtitle B of Title I of ERISA;
(i) To appoint such agents, counsel, accountants, and consultants as
may be required to assist in administering the Plan;
(j) By written instrument, to allocate and delegate its fiduciary
responsibilities in accordance with Section 405 of ERISA including the
formation of an Administrative Committee to administer the Plan;
(k) To provide bonding coverage as required under Section 412 of ERISA.
13.02. Nondiscriminatory Exercise of Authority. Whenever, in the
---------------------------------------
administration of the Plan, any discretionary action by the Administrator is
required, the Administrator shall exercise its authority in a nondiscriminatory
manner so that all persons similarly situated will receive substantially the
same treatment.
13.03. Claims and Review Procedures.
----------------------------
(a) Claims Procedure. If any person believes he is being denied any
----------------
rights or benefits under the Plan, such person may file a claim in writing
with the Administrator. If any such claim is wholly or partially denied,
the Administrator will notify such person of its decision in writing. Such
notification will contain (i) specific reasons for the denial, (ii)
specific reference to pertinent Plan provisions, (iii) a description of any
additional material or information necessary for such person to perfect
such claim and an explanation of why such material or information is
necessary, and (iv) information as to the steps to be taken if the person
wishes to submit a request for review. Such notification will be given
52
<PAGE>
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within 90 days after the claim is received by the Administrator (or within
180 days, if special circumstances require an extension of time for
processing the claim, and if written notice of such extension and
circumstances is given to such person within the initial 90-day period). If
such notification is not given within such period, the claim will be
considered denied as of the last day of such period and such person may
request a review of his claim.
(b) Review Procedure. Within 60 days after the date on which a person
----------------
receives a written notice of a denied claim (or, if applicable, within 60
days after the date on which such denial is considered to have occurred),
such person (or his duly authorized representative) may (i) file a written
request with the Administrator for a review of his denied claim and of
pertinent documents and (ii) submit written issues and comments to the
Administrator. The Administrator will notify such person of its decision in
writing. Such notification will be written in a manner calculated to be
understood by such person and will contain specific reasons for the
decision as well as specific references to pertinent Plan provisions. The
decision on review will be made within 60 days after the request for review
is received by the Administrator (or within 120 days, if special
circumstances require an extension of time for processing the request, such
as an election by the Administrator to hold a hearing, and if written
notice of such extension and circumstances is given to such person within
the initial 60-day period). If the decision on review is not made within
such period, the claim will be considered denied.
13.04. Named Fiduciary. The Administrator is a "named fiduciary" for purposes
---------------
of Section 402(a)(1) of ERISA and has the powers and responsibilities with
respect to the management and operation of the Plan described herein.
13.05. Costs of Administration. Unless some or all are paid by the Employer,
-----------------------
all reasonable costs and expenses (including legal, accounting, and employee
communication fees) incurred by the Administrator and the Trustee in
administering the Plan and Trust will be paid first from the forfeitures (if
any) resulting under Section 7.07, then from the remaining Trust Fund. All such
costs and expenses paid from the Trust Fund will, unless allocable to the
Accounts of particular Participants, be charged against the Accounts of all
Participants on a prorata basis or in such other reasonable manner as may be
directed by the Employer.
ARTICLE 14. Trust Agreement.
---------------
14.01. Acceptance of Trust Responsibilities. By executing the Adoption
------------------------------------
Agreement, the Employer establishes a trust to hold the assets of the plan. By
executing the Adoption Agreement, the Trustee agrees to accept the rights,
duties and responsibilities set forth in this Article 14.
14.02. Establishment of Trust Fund. A trust is hereby established under the
---------------------------
Plan and the Trustee will open and maintain a Trust account for the Plan and, as
part thereof, Participants' Accounts for such individuals as the Employer shall
from time to time give written notice to the Trustee are Participants in the
Plan. The Trustee will accept and hold in the Trust Fund such contributions on
behalf of Participants as it may receive from time to time from the Employer.
The Trust Fund shall be fully invested and reinvested in accordance with the
applicable provisions of the Plan in Fund Shares or as otherwise provided in
Section 14.10.
14.03. Exclusive Benefit. The Trustee shall hold the assets of the Trust Fund
-----------------
for the exclusive purpose of providing benefits to
53
<PAGE>
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Participants and Beneficiaries and defraying the reasonable expenses of
administering the Plan. No assets of the Plan shall revert to the Employer
except as specifically permitted by the terms of the Plan.
14.04. Powers of Trustee. The Trustee shall have no discretion or authority
-----------------
with respect to the investment of the Trust Fund but shall act solely as a
directed trustee of the funds contributed to it. In addition to and not in
limitation of such powers as the Trustee has by law or under any other
provisions of the Plan, the Trustee will have the following powers, each of
which the Trustee exercises solely as directed Trustee in accordance with the
written direction of the Employer except to the extent a Plan asset is subject
to Participant direction of investment and provided that no such power shall be
exercised in any manner inconsistent with the provisions of ERISA:
(a) to deal with all or any part of the Trust Fund and to invest all or a
part of the Trust Fund in investments available under the Plan, without regard
to the law of any state regarding proper investment;
(b) to retain uninvested such cash as it may deem necessary or advisable,
without liability for interest thereon, for the administration of the Trust;
(c) to sell, convert, redeem, exchange, or otherwise dispose of all or
any part of the assets constituting the Trust Fund;
(d) to enforce by suit or otherwise, or to waive, its rights on behalf of
the Trust, and to defend claims asserted against it or the Trust, provided that
the Trustee is indemnified to its satisfaction against liability and expenses;
(e) to employ such agents and counsel as may be reasonably necessary in
collecting managing, administering, investing, distributing and protecting the
Trust Fund or the assets thereof and to pay them reasonable compensation;
(f) to compromise, adjust and settle any and all claims against or in
favor of it or the Trust;
(g) to oppose, or participate in and consent to the reorganization,
merger, consolidation, or readjustment of the finances of any enterprise, to pay
assessments and expenses in connection therewith, and to deposit securities
under deposit agreements;
(h) to apply for or purchase annuity contracts in accordance with Section
8.02;
(i) to hold securities unregistered, or to register them in its own name
or in the name of nominees;
(j) to appoint custodians to hold investments within the jurisdiction of
the district courts of the United States and to deposit securities with stock
clearing corporations or depositories or similar organizations;
(k) to make, execute, acknowledge and deliver any and all instruments
that it deems necessary or appropriate to carry out the powers herein granted;
and
(l) generally to exercise any of the powers of an owner with respect to
all or any part of the Trust Fund.
The Employer specifically acknowledges and authorizes that affiliates of
the Trustee may act as its agent in the performance of
54
<PAGE>
8/1/93
ministerial, nonfiduciary duties under the Trust. The expenses and compensation
of such agent shall be paid by the Trustee.
The Trustee shall provide the Employer with reasonable notice of any
claim filed against the Plan or Trust or with regard to any related matter, or
of any claim filed by the Trustee on behalf of the Plan or Trust or with regard
to any related matter.
14.05. Accounts. The Trustee will keep full accounts of all receipts and
--------
disbursements and other transactions hereunder. Within 60 days after the close
of each Plan Year, within 60 days after termination of the Trust, and at such
other times as may be appropriate, the Trustee will determine the then net fair
market value of the Trust Fund as of the close of the Plan Year, as of the
termination of the Trust, or as of such other time, whichever is applicable, and
will render to the Employer and Administrator an account of its administration
of the Trust during the period since the last such accounting, including all
allocations made by it during such period.
14.06. Approving of Accounts. To the extent permitted by law, the written
---------------------
approval of any account by the Employer or Administrator will be final and
binding, as to all matters and transactions stated or shown therein, upon the
Employer, Administrator, Participants and all persons who then are or thereafter
become interested in the Trust. The failure of the Employer or Administrator to
notify the Trustee within six (6) months after the receipt of any account of its
objection to the account will, to the extent permitted by law, be the
equivalent of written approval. If the Employer or Administrator files any
objections within such six (6) month period with respect to any matters or
transactions stated or shown in the account, and the Employer or Administrator
and the Trustee cannot amicably settle the question raised by such objections,
the Trustee will have the right to have such questions settled by judicial
proceedings. Nothing herein contained will be construed so as to deprive the
Trustee of the right to have judicial settlement of its accounts. In any
proceeding for a judicial settlement of any account or for instructions, the
only necessary parties will be the Trustee, the Employer and the Administrator.
14.07. Distribution from Trust Fund. The Trustee shall make such distribution
----------------------------
from the Trust Fund as the Employer or Administrator may in writing direct, as
provided by the terms of the Plan, upon certification by the Employer or
Administrator that the same is for the exclusive benefit of Participants or
their Beneficiaries, or for the payment of expenses of administering the Plan.
14.08. Transfer of Amounts from Qualified Plan. If the Plan provides that
---------------------------------------
amounts may be transferred to the Plan from another qualified plan, or trust
under Section 401(a) of the Code, such transfer shall be made in accordance with
the provisions of the Plan and with such rules as may be established by the
Trustee. The Trustee will only accept assets which are in a medium proper for
investment under this Agreement or in cash. Such amounts shall be accompanied by
written instructions showing separately the respective contributions by the
prior employer and the transferring Employee, and identifying the assets
attributable to such contributions. The Trustee shall hold such assets for
investment in accordance with the provisions of this Agreement.
14.09. Transfer of Assets from Trust. Subject to the provisions of the Plan,
-----------------------------
the Employer may direct the Trustee to transfer all or a specified portion of
the Trust assets to any other plan or plans maintained by the Employer or the
employer or employers of a former Participant or Participants, provided that the
Trustee has received evidence satisfactory to it that such other plan meets all
applicable requirements of the Code. The assets so transferred shall be
55
<PAGE>
8/1/93
accompanied by written instructions from the Employer naming the persons for
whose benefit such assets have been transferred, showing separately the
respective contributions by the Employer and by each Participant, if any, and
identifying the assets attributable to the various contributions. The Trustee
shall have no further liabilities with respect to assets so transferred.
14.10. Separate Trust or Fund for Existing Plan Assets. With the consent of
-----------------------------------------------
the Trustee, the Employer may maintain a trust or fund (including a group
annuity contract) under this prototype plan document separate from the Trust
Fund for Plan assets purchased prior to the adoption of this prototype plan
document which are not Fidelity Funds listed in Section 1.14(b). The Trustee
shall have no authority and no responsibility for the Plan assets held in such
separate trust or fund. The duties and responsibilities of the trustee of a
separate trust shall be provided by a separate trust agreement, between the
Employer and the trustee.
Notwithstanding the preceding paragraph, the Trustee or an affiliate of the
Trustee may agree in writing to provide ministerial recordkeeping services for
guaranteed investment contracts held in the separate trust or fund. The
guaranteed investment contract(s) shall be valued as directed by the Employer or
the Trustee of the separate trust.
The trustee of the separate trust (hereafter referred to as "trustee") will
be the owner of any insurance contract purchased prior to the adoption of this
prototype plan document. The insurance contract(s) must provide that proceeds
will be payable to the trustee, however the trustee shall be required to pay
over all proceeds of the contract(s) to the Participant's designated
Beneficiary in accordance with the distribution provisions of this plan. A
Participant's spouse will be the designated Beneficiary of the proceeds in all
circumstances unless a qualified election has been made in accordance with
Article 8. Under no circumstances shall the trust retain any part of the
proceeds. In the event of any conflict between the terms of this plan and the
terms of any insurance contract purchased hereunder, the plan provisions shall
control.
Any life insurance contracts held in the Trust Fund or in the separate trust
are subject to the following limits:
(a) Ordinary life - For purposes of these incidental insurance provisions,
ordinary life insurance contracts are contracts with both nondecreasing
death benefits and nonincreasing premiums. If such contracts are held, less
than 1/2 of the aggregate employer contributions allocated to any
Participant will be used to pay the premiums attributable to them.
(b) Term and universal life - No more than 1/4 of the aggregate employer
contributions allocated to any participant will be used to pay the premiums
on term life insurance contracts, universal life insurance contracts, and
all other life insurance contracts which are not ordinary life.
(c) Combination The sum of 1/2 of the ordinary life insurance premiums and
all other life insurance premiums will not exceed 1/4 of the aggregate
employer contributions allocated to any Participant.
14.11. Voting; Delivery of Information. The Trustee shall deliver, or cause to
-------------------------------
be executed and delivered, to the Employer or Plan Administrator all notices,
prospectuses, financial statements, proxies and proxy soliciting materials
received by the Trustee relating to securities held by the Trust or, if
applicable, deliver these materials
56
<PAGE>
8/1/93
to the appropriate Participant or the Beneficiary of a deceased Participant. The
Trustee shall not vote any securities held by the Trust except in accordance
with the written instructions of the Employer, Participant or the Beneficiary of
the Participant, if the Participant is deceased; provided, however, that the
Trustee may, in the absence of instructions, vote "present" for the sole purpose
of allowing such shares to be counted for establishment of a quorum at a
shareholders' meeting. The Trustee shall have no duty to solicit instructions
from Participants, the Beneficiary or the Employer.
14.12. Compensation and Expenses of Trustee. The Trustee's fee for performing
------------------------------------
its duties hereunder will be such reasonable amounts as the Trustee may from
time to time specify by written agreement with the Employer. Such fee, any
taxes of any kind which may be levied or assessed upon or in respect of the
Trust Fund and any and all expenses, including without limitation legal fees and
expenses of administrative and judicial proceedings, reasonably incurred by the
Trustee in connection with its duties and responsibilities hereunder will,
unless some or all have been paid by said Employer, be paid first from
forfeitures resulting under Section 7.07, then from the remaining Trust Fund and
will, unless allocable to the Accounts of particular Participants, be charged
against the respective Accounts of all Participants, in such reasonable manner
as the Trustee may determine.
14.13. Reliance by Trustee on Other Persons. The Trustee may rely upon and act
------------------------------------
upon any writing from any person authorized by the Employer or Administrator to
give instructions concerning the Plan and may conclusively rely upon and be
protected in acting upon any written order from the Employer or Administrator or
upon any other notice, request, consent, certificate, or other instructions or
paper reasonably believed by it to have been executed by a duly authorized
person, so long as it acts in good faith in taking or omitting to take any such
action. The Trustee need not inquire as to the basis in fact of any statement
in writing received from the Employer or Administrator.
The Trustee will be entitled to rely on the latest certificate it has
received from the Employer or Administrator as to any person or persons
authorized to act for the Employer or Administrator hereunder and to sign on
behalf of the Employer or Administrator any directions or instructions, until it
receives from the Employer or Administrator written notice that such authority
has been revoked.
Notwithstanding any provision contained herein, the Trustee will be under
no duty to take any action with respect to any Participant's Account (other than
as specified herein) unless and until the Employer or Administrator furnishes
the Trustee with written instructions on a form acceptable to the Trustee, and
the Trustee agrees thereto in writing. The Trustee will not be liable for any
action taken pursuant to the Employer's or Administrator's written instructions
(nor for the collection of contributions under the Plan, nor the purpose or
propriety of any distribution made thereunder).
14.14. Indemnification by Employer. The Employer shall indemnify and save
---------------------------
harmless the Trustee from and against any and all liability to which the Trustee
may be subjected by reason of any act or conduct (except willful misconduct or
negligence) in its capacity as Trustee, including all expenses reasonably
incurred in its defense.
14.15. Consultation by Trustee with Counsel. The Trustee may consult with
------------------------------------
legal counsel (who may be but need not be counsel for the Employer or the
Administrator) concerning any question which may arise with respect to its
rights and duties under the Plan and Trust, and the opinion of such counsel
will, to the extent permitted by law, be full and complete protection in respect
of any action taken or omitted by the
57
<PAGE>
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Trustee hereunder in good faith and in accordance with the opinion of such
counsel.
14.16. Persons Dealing with the Trustee. No person dealing with the Trustee
--------------------------------
will be bound to see to the application of any money or property paid or
delivered to the Trustee or to inquire into the validity or propriety of any
transactions.
14.17. Resignation or Removal of Trustee. The Trustee may resign at any time
---------------------------------
by written notice to the Employer, which resignation shall be effective 60 days
after delivery to the Employer. The Trustee may be removed by the Employer by
written notice to the Trustee, which removal shall be effective 60 days after
delivery to the Trustee.
Upon resignation or removal of the Trustee, the Employer may appoint a
successor trustee. Any such successor trustee will, upon written acceptance of
his appointment, become vested with the estate, rights, powers, discretion,
duties and obligations of the Trustee hereunder as if he had been originally
named as Trustee in this Agreement.
Upon resignation or removal of the Trustee, the Employer will no longer
participate in this prototype plan and will be deemed to have adopted an
individually designed plan. In such event, the Employer shall appoint a
successor trustee within said 60-day period and the Trustee will transfer the
assets of the Trust to the successor trustee upon receipt of sufficient evidence
(such as a determination letter or opinion letter from the Internal Revenue
Service or an opinion of counsel satisfactory to the Trustee) that such trust
will be a qualified trust under the Code.
The appointment of a successor trustee shall be accomplished by delivery to
the Trustee of written notice that the Employer has appointed such successor
trustee, and written acceptance of such appointment by the successor trustee.
The Trustee may, upon transfer and delivery of the Trust Fund to a successor
trustee, reserve such reasonable amount as it shall deem necessary to provide
for its fees, compensation, costs and expenses, or for the payment of any other
liabilities chargeable against the Trust Fund for which it may be liable. The
Trustee shall not be liable for the acts or omissions of any successor trustee.
14.18. Fiscal Year of the Trust. The fiscal year of the Trust will coincide
------------------------
with the Plan Year.
14.19. Discharge of Duties by Fiduciaries. The Trustee and the Employer and
----------------------------------
any other fiduciary shall discharge their duties under the Plan and this Trust
Agreement solely in the interests of Participants and their Beneficiaries in
accordance with the requirements of ERISA.
14.20. Amendment. In accordance with provisions of the Plan, and subject to
---------
the limitations set forth therein, this Trust Agreement may be amended by an
instrument in writing signed by the Employer and the Trustee. No amendment to
this Trust Agreement shall divert any part of the Trust Fund to any purpose
other than as provided in Section 2 hereof.
14.21. Plan Termination. Upon termination or partial termination of the Plan
----------------
or complete discontinuance of contributions thereunder, the Trustee will make
distributions to the Participants or other persons entitled to distributions as
the Employer or Administrator directs in accordance with the provisions of the
Plan. In the absence of such instructions and unless the Plan otherwise
provides, the Trustee will notify the Employer or Administrator of such
situation and the Trustee
58
<PAGE>
8/1/93
will be under no duty to make any distributions under the Plan until it receives
written instructions from the Employer or Administrator. Upon the completion
of such distributions, the Trust will terminate, the Trustee will be relieved
from all liability under the Trust, and no Participant or other person will have
any claims thereunder, except as required by applicable law.
14.22. Permitted Reversion of Funds to Employer. If it is determined by the
----------------------------------------
Internal Revenue Service that the Plan does not initially qualify under Section
401 of the Code, all assets then held under the Plan will be returned by the
Trustee, as directed by the Administrator, to the Employer, but only if the
application for determination is made by the time prescribed by law for filing
the Employer's return for the taxable year in which the Plan was adopted or such
later date as may be prescribed by regulations. Such distribution will be made
within one year after the date the initial qualification is denied. Upon such
distribution the Plan will be considered to be rescinded and to be of no force
or effect.
Contributions under Plan are conditioned upon their deductibility under
Section 404 of the Code. In the event the deduction of a contribution made by
the Employer is disallowed under Section 404 of the Code, such contribution (to
the extent disallowed) must be returned to the Employer within one year of the
disallowance of the deduction.
Any contribution made by the Employer because of a mistake of fact must be
returned to the Employer within one year of the contribution.
14.23. Governing Law. This Trust Agreement will be construed, administered and
-------------
enforced according to ERISA and, to the extent not preempted thereby, the laws
of the Commonwealth of Massachusetts.
59
<PAGE>
Exhibit 10.57
KLEARFOLD, INC.
FLEXIBLE BENEFITS PLAN FOR SALARIED EMPLOYEES
(Restated, Effective March 1, 1997)
<PAGE>
KLEARFOLD, INC.
FLEXIBLE BENEFITS PLAN
(Restated, Effective March 1, 1997)
TABLE OF CONTENTS
-----------------
ARTICLE SUBJECT MATTER PAGE
- ------- -------------- ----
I PURPOSE OF PLAN . . . . . . . . . . . . . . . . . . . . 1
II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
III ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . 5
IV BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . 9
V FUNDING AND EXPENSES . . . . . . . . . . . . . . . . . . 11
VI COORDINATION OF BENEFITS . . . . . . . . . . . . . . . . 15
VII NONALIENATION OF BENEFITS . . . . . . . . . . . . . . . 20
VIII FIDUCIARY RESPONSIBILITY . . . . . . . . . . . . . . . . 20
IX THE ADMINISTRATIVE COMMITTEE . . . . . . . . . . . . . . 21
X CLAIMS PROCEDURES . . . . . . . . . . . . . . . . . . . 22
XI PLAN AMENDMENT, TRANSFER OF LIABILITIES, MERGER OR
CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . 25
XII PLAN TERMINATION . . . . . . . . . . . . . . . . . . . . 25
XIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 26
<PAGE>
KLEARFOLD, INC.
FLEXIBLE BENEFITS PLAN
(Restated, effective March 1, 1997)
WHEREAS, Klearfold, Inc., a Pennsylvania corporation ("Employer"),
presently maintains certain welfare plans, personnel policies providing medical,
dental, life insurance, vision, accidental death and dismemberment and long-term
disability benefits for the exclusive benefit of certain eligible employees of
the Employer; and
WHEREAS, the Employer now desires to provide such benefits under the
Klearfold, Inc. Flexible Benefits Plan ("Plan"), which Plan is intended to
constitute a "cafeteria plan" under Section 125 of the Code;
NOW, THEREFORE, restatement effective March 1, 1997, the Employer
hereby adopts the Klearfold, Inc. Flexible Benefits Plan, as set forth herein:
ARTICLE I
PURPOSE OF PLAN
---------------
1.1 Type and Purpose of Plan. This Plan is a cafeteria plan
------------------------
established for the purpose of furnishing Eligible Class Employees of the
Employer with a choice between receiving cash and certain Qualified Benefits
hereunder. It is intended that this Plan meet the requirements of Section 125
of the Code, and that the benefits which an Employee elects to receive under the
Plan, to the extent such benefits are Qualified Benefits, be eligible for
exclusion from the Employee's income under Section 125(a) of the Code.
1.2 Coordination with Other Plans. The Plan shall also serve as an
-----------------------------
amendment to certain welfare plans currently in effect to the extent necessary
for the full implementation of this Plan and the coordination of this Plan with
such plans of the Employer.
ARTICLE II
DEFINITIONS
-----------
2.1 "Appropriate Form" shall mean the form prescribed or provided by
----------------
the Plan Administrator for the particular purpose.
2.2 "Beneficiary" shall mean a Participant's Dependent(s) or other
-----------
person or persons designated by the Participant, or entitled by the terms of the
Plan, to receive benefits under the Plan or, in the absence of a designation,
the estate of such Participant, if applicable.
<PAGE>
2.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
2.4 "Compensation" shall mean the total remuneration paid to the
------------
Participant by the Employer, including salary, wages, overtime payments,
bonuses, commissions and any other non-basic form of current compensation.
However, Compensation shall not include Employer contributions to this Plan or
any plan of deferred compensation (except such amounts of salary or wages as
would have been reportable on Form W-2 which are contributed to such plan or
plans pursuant to a Salary Reduction Agreement), Employer contributions to
Social Security, the value of any fringe benefits provided by the Employer,
amounts paid in reimbursement of, or in lieu of expenses incurred by the
Participant in the performance of his/her duties, or the value of non-money
awards or gifts made by the Employer.
2.5 "Controlled Group" shall mean any entity, which, with any entity
----------------
constituting the Employer, constitutes:
(a) A controlled group of corporations (as defined in Section
414(b) of the Code); or
(b) Trades or businesses (whether or not incorporated) which
are under common control (as defined in Section 414(c) of the Code); or
(c) Trades or businesses (whether or not incorporated) which
constitute an affiliated service group (as defined in Section 414(m) of the
Code); or
(d) Entities required to be aggregated pursuant to regulations
under Section 414(o) of the Code.
All employees of all corporations, trades or businesses which
are members of a Controlled Group shall be treated as employed by a single
employer for purposes of Sections 4.4 and 5.4.
2.6 "Core Benefits" shall mean the Qualified Benefits described in
-------------
Exhibit I which shall be provided to all Participants without regard to an
election by such Participants to receive such benefits.
2.7 "Dependent" shall mean any person as described in the benefit
---------
plans set forth in Exhibit I, and in the absence of such definition, any person
so designated in Section 152 of the Code.
-2-
<PAGE>
2.8 "Effective Date" shall mean February 1, 1991, the date on which
--------------
the Plan became effective, except as otherwise specified in a Constituent Plan.
The effective date of this Restatement is March 1, 1997.
2.9 "Eligible Class Employee" shall mean any Employee of the
-----------------------
Employer, other than an Employee whose terms and conditions of employment are
determined pursuant to a collective bargaining agreement which does not require
inclusion of such Employee as a Participant in this Plan, and with respect to
which the collective bargaining process included good faith bargaining on the
issue of the type(s) of benefit(s) provided under this Plan. In addition, the
term Eligible Class Employee shall not include any person who is treated as an
Employee pursuant to Section 414(n) of the Code.
2.10 "Employee" shall mean each person in the employ of the Employer.
--------
2.11 "Employer" or "Plan Sponsor" shall mean Klearfold, Inc., a
--------------------------
Pennsylvania corporation.
2.12 "ERISA" shall mean the Employee Retirement Income Security Act
-----
of 1974, as amended.
2.13 "Exhibit I" shall mean the welfare benefit plans and the other
---------
descriptions of benefits provided under the Plan and described or referenced in
the attachment hereto which is identified as "Exhibit I" . Exhibit I and any
other exhibit attached hereto shall constitute part of the Plan in any and all
respects.
2.14 "Fiduciary" shall mean any person who is described in Section
---------
3(21) of ERISA.
2.15 "Highly Compensated Participant" shall mean any Participant who
------------------------------
is a highly compensated Participant, as defined in Section 125(e) of the Code.
2.16 "Individual Election Period" shall mean a period not to exceed
--------------------------
thirty (30) days commencing on the date on which an Eligible Class Employee
first becomes a Participant pursuant to Section 3.2.
2.17 "Initial Election Period" shall mean the period from February 1,
-----------------------
1991 through February 14, 1991.
2.18 "Key Employee" shall mean any Participant who is described in
------------
Section 416(i)(1) of the Code.
-3-
<PAGE>
2.19 "Open Election Period" shall mean the period beginning each
--------------------
February 1st and ending on the following March 15th.
2.20 "Optional Benefits" shall mean the Qualified Benefits described
-----------------
in Exhibit I, which shall be provided to a Participant upon his/her election to
receive such benefits.
2.21 "Participant" shall mean any person who is an Eligible Class
-----------
Employee of the Employer and who has been admitted to participation in this Plan
pursuant to the provisions of Article III.
2.22 "Plan" shall mean the Klearfold, Inc. Flexible Benefits Plan as
----
set forth in this document, and as it may be amended from time to time.
2.23 "Plan Administrator" shall mean the Employer or Plan Sponsor or
------------------
such other person or committee as may be appointed from time to time by the
Board of Directors of the Employer to supervise the administration of the Plan.
2.24 "Plan Year" shall mean the twelve month period beginning each
---------
March 1st and ending on the following February 28th. The Plan Year which begins
on January 1, 1997 shall end on February 28, 1997. For any Plan Year beginning
prior to January 1, 1997, Plan Year shall mean the twelve month period beginning
each January 1st and ending the following December 31st.
2.25 "Qualified Benefit" shall mean any benefit which, with the
-----------------
application of Section 125(a) of the Code, is not includible in the gross income
of an employee by reason of an express provision of Chapter 1 of the Code (other
than Sections 117, 127 and 132 of the Code). "Qualified Benefit" includes any
group term life insurance which is includible in an employee's gross income
solely because it exceeds the dollar limitation of Section 79 of the Code.
2.26 "Salary Reduction Agreement" shall mean a written agreement on
--------------------------
an Appropriate Form prescribed by the Plan Administrator entered into by an
Eligible Class Employee with the Employer under which the Eligible Class
Employee's Compensation is reduced and the amount of such reduction is credited
as an Employer-provided benefit under this Plan.
2.27 "Similarly Situated Beneficiary" means an individual who has the
------------------------------
same coverage options under the Plan that a Participant or Dependent who
experiences a qualifying event, within the meaning of Section 4980B of the Code,
would have had if the qualifying event had not occurred. For purposes of
determining charges for continuation coverage under Section 3.4,
-4-
<PAGE>
a spouse of a Participant whose coverage terminates by reason of divorce or
legal separation shall be treated as similarly situated to an unmarried
individual; a dependent child whose coverage terminates because he/she ceased to
be a Dependent shall be treated as similarly situated to an unmarried
individual; and other determinations of similar status shall be made by the
Employer in good faith and in a manner not inconsistent with applicable law or
regulations requiring continued coverage for beneficiaries of the Plan.
2.28 "Third Party Provider" shall mean an insurance company,
--------------------
preferred provider organization or health maintenance organization ("HMO") with
which the Employer has entered into a contract relating to the provision of
Qualified Benefits.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.1 Eligibility.
-----------
(a) General. Any Eligible Class Employee whose customary employment,
-------
excluding overtime work, is at least thirty (30) hours per week shall be
eligible to participate in the Plan.
(b) Constituent Plans. A Participant shall be eligible to participate
-----------------
in the plans described in Exhibit I which constitute a part hereof in accordance
with the terms set forth in Exhibit I and the provisions of such plans.
3.2 Participation.
-------------
(a) Any Eligible Class Employee who satisfies the eligibility
requirements set forth in Section 3.1(a) before or during the Initial Election
Period shall become a Participant on the Effective Date, provided that he/she is
still an Employee on such date. Such Eligible Class Employee shall, during the
Initial Election Period, file with the Plan Administrator a written election on
an Appropriate Form prescribed by the Plan Administrator indicating the Optional
Benefits he/she elects to receive. In addition, such Eligible Class Employee
may file a Salary Reduction Agreement with the Plan Administrator. Such written
election and such Salary Reduction Agreement shall become effective in
accordance with uniform rules established by the Plan Administrator.
(b) Any Eligible Class Employee who first satisfies the eligibility
requirements set forth in Section 3.1(a) after the Initial Election Period ends,
shall become a Participant in accordance with uniform rules established by the
Plan Administrator. However, if a constituent plan
-5-
<PAGE>
contains eligibility requirements, such provisions shall control, provided that
he/she is still an Eligible Class Employee on such date. Such Eligible Class
Employee shall, during his/her Individual Election Period, file with the Plan
Administrator a written election on an Appropriate Form prescribed by the Plan
Administrator indicating the Optional Benefits he/she elects to receive. In
addition, such Eligible Class Employee may file a Salary Reduction Agreement
with the Plan Administrator during his/her Individual Election Period.
3.3 Duration of Participation.
-------------------------
(a) An Eligible Class Employee who has become a Participant in the
Plan in accordance with Section 3.2 shall remain a Participant until the earlier
of:
(1) The date he/she ceases to be an Eligible Class Employee;
or
(2) The date the Plan is terminated.
(b) Notwithstanding Section 3.3(a), an Eligible Class Employee shall
remain a Participant in the Plan as long as he/she remains a participant in any
plan set forth in Exhibit I which constitutes a part hereof, except that,
following the termination of the Eligible Class Employee's employment with the
Employer, no further contributions, other than contributions described in
Section 3.4, may be made by or shall be made on behalf of such Employee.
(c) Notwithstanding Section 3.3(a), a Participant who separates from
service may revoke prospectively his/her Salary Reduction Agreement. However,
if such Participant subsequently returns to service with the Employer and
becomes an Eligible Class Employee, such Participant may not execute a new
Salary Reduction Agreement with respect to the remainder of the Plan Year in
which such Participant separated from service. Such Participant may participate
in the constituent plans which are designated as Optional Benefits for the
remainder of the Plan Year in which he/she separated from service by making
after-tax contributions to such plans. For purposes of this paragraph, a
Participant who is absent by reason of an approved leave of absence shall not be
considered to have separated from service unless he/she fails to return to
service with the Employer upon expiration of the leave of absence.
3.4 Continuation Coverage. If a qualifying event, within the meaning
---------------------
of Section 4980B of the Code, occurs with respect to any Participant or
Dependent, (hereinafter referred to as a "Qualified Beneficiary"), he/she shall
be entitled to elect to continue health coverage of the type available to a
Similarly Situated Beneficiary under the Plan.
-6-
<PAGE>
The Employer shall notify the Plan Administrator within thirty (30)
days of the following events: the Employee's death; the termination (other than
by reason of the Employee's gross misconduct), or reduction of hours, of the
Employee's employment; the Employee becoming entitled to benefits under Title
XVIII of the Social Security Act; or a proceeding in a case under Title 11,
United States Code, with respect to the Employer from whose employment the
Employee retired at any time. A Qualified Beneficiary must furnish the Plan
Administrator with notice of the qualifying events of legal separation or
divorce, or a dependent child's ceasing to be a Dependent within sixty (60) days
of such event. The Plan Administrator shall notify the Qualified Beneficiary of
his/her rights to continue coverage within fourteen (14) days of the Plan
Administrator being notified of the qualifying event.
The Qualified Beneficiary may elect continuation coverage within sixty
(60) days after the receipt of such notice concerning the availability of such
continuation coverage. An election to continue coverage shall be made on forms
provided by the Plan Administrator in the manner prescribed by the Plan
Administrator.
If a Qualified Beneficiary who is entitled to elect to continue
coverage under this section waives such coverage, but subsequently, within the
election period for such coverage, revokes the waiver and elects to continue
coverage, such election to continue coverage shall be effective on a prospective
basis only from the date of the election to continue coverage.
Notwithstanding any provision in this Plan to the contrary, a
Qualified Beneficiary who elects to continue coverage under this section shall
be eligible to change such coverage in the same manner and at the same time as
an individual who is a Similarly Situated Beneficiary with respect to the
Qualified Beneficiary.
A Qualified Beneficiary who elects to continue coverage under this
section shall be charged one hundred and two percent (102%) of the cost of such
coverage to the Plan on a monthly basis.
3.5 Qualified Medical Child Support Orders.
-------------------------------------
(a) In General. Pursuant to Section 609 of ERISA, the Plan shall
----------
provide benefits in accordance with the terms of any Qualified Medical Child
Support Order ("QMCSO").
(b) Terms of the QMCSO. For purposes of this Section 3.5, a
------------------
QMCSO is any medical child support order (as
-7-
<PAGE>
that term is defined in Section 609 (a) (2) (B) of ERISA) ('Order') issued by a
court of competent jurisdiction which:
(1) Creates or recognizes the existence of an Alternate Recipient's
right, or assigns to an Alternate Recipient the right, to receive benefits for
which a Participant or Beneficiary is eligible under the Plan;
(2) Does not require the Plan to provide any type or form of benefit,
or any option, which is not otherwise available under the Plan except as
necessary to satisfy the requirements of Section 1908 of the Social Security
Act; and
(3) Contains the following information:
(i) The name and last known mailing address of the Participant
and each Alternate Recipient covered by the Order;
(ii) A reasonable description of the type of coverage to be
provided by the Plan or the manner in which such coverage is to be determined;
(iii) The period to which such Order applies; and
(iv) Specifies that such Order will apply to the Plan.
(c) Procedure for Determining Compliance of Order. Within a reasonable
---------------------------------------------
period after receipt of an Order, the Plan Administrator shall determine whether
such Order is a QMCSO. The determination of whether an Order is a QMCSO shall be
within the sole discretion and authority of the Plan Administrator. In reaching
its determination, the Plan Administrator shall evaluate the Order under
criteria set forth in Section 3.5(b) above. A determination that the Order is
not a QMCSO will be subject to the claims procedures set forth in the Plan.
(d) Notification Requirements. Upon receipt of an Order, the Plan
-------------------------
Administrator shall promptly notify the Participant and each Alternate Recipient
in the Order of its receipt and the written procedures for determining whether
the Order is a QMCSO. If the Order is deemed to be a QMCSO, the Plan
Administrator shall promptly notify the Participant and each Alternate Recipient
of the Alternate Recipient's right to receive benefits under the QMCSO. If the
Plan Administrator determines that the Order is not a QMCSO, the Plan
Administrator shall promptly notify the Participant and each Alternate Recipient
of such determination. An
-8-
<PAGE>
Alternate Recipient may designate a representative to receive copies of
such notices on his/her behalf.
ARTICLE IV
BENEFITS
--------
4.1 Benefits. The amount, type, duration, waiting period (if any),
--------
date of commencement and other conditions for payments of life insurance, long-
term disability, accidental death and dismemberment, dental, vision and medical
benefits are set forth in Exhibit I.
4.2 Election of Benefits.
--------------------
(a) General. An Eligible Class Employee shall be entitled to
-------
elect in writing on an Appropriate Form prescribed by the Plan Administrator,
during the Initial Election Period, or during his/her Individual Election
Period, or during any Open Election Period, whichever is applicable, to receive
any or all of the Optional Benefits available under the Plan, subject to the
limitations of Section 4.4.
(b) Default Plan. In the event an Eligible Class Employee fails
------------
to make an election on an Appropriate Form during the Initial Election Period,
during his/her Individual Election Period, or during any Open Election Period,
as the case may be, will be covered under the Default Plan as provided in
Exhibit I, subject to the limitations of Section 4.4. A Participant may waive
medical coverage for himself/herself and his/her Dependents.
4.3 Revocation and Changing of Elections.
------------------------------------
(a) General. Except as otherwise specifically provided in Section
-------
4.3(b) or the regulations promulgated under Section 125 of the Code, a
Participant's election to receive Optional Benefits, whether made during the
Initial Election Period, his/her Individual Election Period or a subsequent Open
Election Period, shall remain in effect until the last day of the Plan Year to
which such election applies. During each Open Election Period, each Participant
shall be entitled to elect in writing on an Appropriate Form prescribed by the
Plan Administrator the Optional Benefits he/she chooses to receive under the
Plan during the following Plan Year, subject to the limitations of Section 4.4.
In the event a Participant does not complete a new election during any Open
Election Period, his/her then current election shall continue in effect until
the last day of the Plan Year in which the Participant does make a new election
during an Open Election Period, except as otherwise provided in Section 4.3(b).
-9-
<PAGE>
(b) Change in Status. Notwithstanding Section 4.3(a), in the
----------------
event there is a change in a Participant's status, as described in Section
5.3(b), the Participant shall be entitled to make a prospective election in
writing on account of and consistent with such Change in Status, within the
period of time prescribed by the Plan Administrator, on an Appropriate Form to
change the Optional Benefits he/she is receiving under the Plan, subject to the
limitations of Section 4.4. Such election shall become effective within a
reasonable amount of time from the date of such election.
4.4 Limitations on Benefits.
-----------------------
(a) Top-Heavy Plan. In the event the Qualified Benefits to be
--------------
provided for Key Employees in any Plan Year exceed twenty-five percent (25%) of
the aggregate of such benefits to be provided for all Employees under the Plan
in such Plan Year, the Plan Administrator may, in its discretion, deny such Key
Employee elections for the Plan Year to the extent necessary to reduce such
benefits to be provided for Key Employees to be equal to twenty-five percent
(25%) of the aggregate of such benefits to be provided for all Employees. At
the time he/she completes his/her election of Optional Benefits for the Plan
Year during the Initial; Individual or Open Election Period, whichever is
applicable, a Key Employee may indicate the manner in which his/her Qualified
Benefits shall be reduced in the event this Section 4.4(a) becomes effective.
(b) Discriminatory Plan. In the event it is determined that the
-------------------
amount of Qualified Benefits to be provided for Highly Compensated Participants
for any Plan Year discriminates in favor of such Highly Compensated
Participants, the Plan Administrator may, in its discretion, deny such Highly
Compensated Participant elections for the Plan Year to the extent necessary to
eliminate such discrimination. At the time he/she completes his/her election of
Optional Benefits for the Plan Year during the Initial, Individual or Open
Election Period, whichever is applicable, a Highly Compensated Participant may
indicate the manner in which his/her Qualified Benefits shall be reduced in the
event this Section 4.4(b) becomes effective.
(c) Limitation on Dependent Care Assistance Benefits.
------------------------------------------------
Notwithstanding any provision in this Plan to the contrary, in no event shall
any Participant in the Klearfold, Inc. Dependent Care Assistance Plan receive
benefits in an amount exceeding, as of the last day of the month preceding the
date on which claims are submitted in accordance with such plan, the excess (if
any) of the Salary Reduction Amounts contributed to his/her Dependent Care
Assistance Account (as such term is defined in that plan) during the Plan Year,
over the amount of dependent care assistance benefits paid with respect to the
Plan Year.
-10-
<PAGE>
ARTICLE V
FUNDING AND EXPENSES
--------------------
5.1 Employer Payments.
-----------------
(a) Core Benefits. Subject to the limitations of Section 5.4, the
-------------
Employer shall pay the cost of providing the Core Benefits under the Plan in
such amounts, in such manner and at such times as set forth in Exhibit I, or in
the plans described in Exhibit I, or as otherwise determined by the Employer.
(b) Optional Benefits. Subject to the limitations of Section 5.4,
-----------------
the Employer shall be obligated on behalf of any Participant to provide, from
its general assets, contributions to Third Party Providers in an amount equal to
the excess of the cost of medical and/or vision insurance coverage, selected by
such Participant as an Optional Benefit hereunder, over the amount by which such
Participant's Compensation has been reduced as of the date of reference with
respect to the Plan Year.
(c) Expenses. Any expenses of administering the Plan shall be
--------
paid directly by the Employer.
5.2 Salary Reduction Contributions. Subject to the limitations of
------------------------------
Section 5.4, a Participant electing to have a portion of his/her Compensation
used to provide Optional Benefits under the Plan on a before-tax basis shall
execute a Salary Reduction Agreement specifying the amount or percentage by
which his/her Compensation is to be reduced to provide such Optional Benefits.
5.3 Revocation and Adjustment of Salary Reduction and Payroll
---------------------------------------------------------
Deduction Contribution Elections.
- --------------------------------
(a) General. Except as otherwise specifically provided in Section
-------
5.3(b) or the regulations promulgated under Section 125 of the Code, a
Participant's Salary Reduction Agreement, whether made during an Initial,
Individual or Open Election Period, shall remain in effect until the last day of
the Plan Year for which it was made. During each Open Election Period each
Participant shall be entitled, subject to the limitations of Section 5.4, to
enter into a new Salary Reduction Agreement to be effective for the following
Plan Year or to revoke such agreement, effective as of the first day of the
following Plan Year. In the event a Participant does not enter into a new
agreement during any Open Election Period, his/her then current Salary Reduction
Agreement shall remain in effect until the last day of the Plan Year in which
the Participant does
-11-
<PAGE>
enter into a new agreement or revoke such agreement during an Open Election
Period, except as otherwise provided in Section 5.3(b).
(b) Revocations and Adjustments.
---------------------------
(1) Change in Status. Notwithstanding Section 5.3(a), in the
----------------
event there is a "Change in a Participant's Status", the Participant shall be
entitled, within the period of time prescribed by the Plan Administrator and
subject to the limitations of Section 5.4, to revoke his/her current Salary
Reduction Agreement or to enter into a new Salary Reduction Agreement; provided,
however, that such revocation or new Salary Reduction Agreement is made on
account of and consistent with, the reason for such Change in Status. Such
revocation or new Salary Reduction Agreement shall become effective as of a
reasonable future date.
The following events shall be considered a "Change in a Participant's
Status": (i) the Participant's marriage, (ii) the Participant's divorce, (iii)
the death of the Participant's spouse or Dependent, (iv) the birth or adoption
of a child, (v) the termination or commencement of employment of the
Participant's spouse, (vi) the switching from part-time to full-time or full-
time to part-time employment status by the Participant or the Participant's
spouse, (vii) the taking of an unpaid leave of absence by the Participant or the
Participant's spouse, (viii) the cessation or significant curtailment of health
coverage provided by a Third Party Provider, (ix) a significant change in the
health coverage of the Participant or the Participant's spouse attributable to
the spouse's employment, (x) a significant increase in the cost of health
benefits provided by a Third Party Provider, or (xi) such other events which the
Plan Administrator determines will permit a revocation of a current Salary
Reduction Agreement or the making of a new Salary Reduction Agreement in
accordance with Section 125 of the Code.
(2) Adjustments to Salary Reduction Agreements.
------------------------------------------
Notwithstanding Section 5.3(a), if the costs of health benefits provided by a
Third Party Provider increase or decrease during the Plan Year, the Plan
Administrator may automatically adjust all affected Participants' Salary
Reduction Agreements to the extent necessary to take into account such increase
or decrease in the cost of such coverage.
5.4 Limitations on Contributions.
----------------------------
(a) Top-Heavy or Discriminatory Plan. In the event the Plan
--------------------------------
Administrator determines not to give effect to elections of benefits for Key
Employees and/or Highly Compensated Participants for any Plan Year in accordance
with Section 4.4 of
-12-
<PAGE>
the Plan, the Plan Administrator and the Employer shall similarly not give
effect to such Key Employees' and/or Highly Compensated Participants' Salary
Reduction Agreements except to the extent necessary to provide the cost of
benefits allowable under Section 4.4(b) of the Plan.
(b) Maximum Contributions. The maximum benefits provided by the
---------------------
Employer through contributions to Third Party Providers on behalf of any
Participant shall not exceed the sum of (1) the cost of Core Benefits provided
on behalf of such Participant with respect to the Plan Year of reference, (2)
the amount by which such Participant's Compensation has been reduced as of the
date of reference with respect to the Plan Year and (3) the excess of the cost
of the Optional Benefits described in Exhibit I as elected by a Participant over
the amount by which such Participant's Compensation has been reduced as of the
date of reference with respect to the Plan Year.
(c) Discriminatory Contributions. In the event it is determined
----------------------------
that the rate of Employer provided benefits or contributions to Third Party
Providers on behalf of Participants discriminates in favor of Highly Compensated
Participants, the Employer may, in its discretion, reduce benefits or
contributions, including salary reduction contributions, under the Plan in a
consistent manner to the extent necessary to eliminate such discrimination. In
the event Employer provided benefits or contributions to Third Party Providers
on behalf of Participants are reduced hereunder, the benefits or contributions
as so reduced shall be used to provide reduced benefits for the Highly
Compensated Participants. The amount of the reduction in benefits shall be
determined in accordance with Section 4.4(b) of the Plan.
5.5 Accounting. The Plan Administrator shall maintain complete
----------
records of all amounts to be credited as benefits or contributions to Third
Party Providers and debited as a payment of benefits on behalf of any
Participant. Except as otherwise specifically provided in Exhibit I or in the
plans described in Exhibit I, all funds necessary for the provision of benefits
or payment of premiums to Third Party Providers hereunder shall be held as part
of the general assets of the Employer and no trust fund shall be established and
no other segregation or investment of assets shall be made to maintain accounts
or benefits under this Plan. A Participant who has elected Optional Benefits
under the Plan through a Salary Reduction Agreement shall be a general unsecured
creditor of the Employer with respect to any salary reduction amount which has
not been expended to provide benefits for the Participant. At the end of the
Plan Year, the Participant shall forfeit all claim to such amounts whether or
not expended to provide benefits on his/her behalf.
-13-
<PAGE>
5.6 Reimbursement and Subrogation.
-----------------------------
(a) Right to Reimbursement. Notwithstanding any provision of this Plan to
----------------------
the contrary, any benefits paid under any of the Constituent Plans are subject
to the Plan's right of reimbursement. If a Participant, his or her spouse or
Dependent, or any of their successors, receives benefits under any of the
Constituent Plans for injuries caused by the actions or negligence of a third
party, then the Plan shall be entitled to direct, immediate and full
reimbursement of one hundred percent (100%) of the benefits paid to the extent
of the entire amount of all benefits paid from the first dollars paid or to be
paid to or on behalf of a Participant, his or her spouse or Dependent as damages
recoverable from such third party, or any insurance carrier, whether by suit,
judgment, settlement, compromise, or otherwise. The Plan shall be fully
reimbursed for one hundred percent (100%) of the entire amount of benefits paid
regardless of (i) the amount recoverable by the Participant, his or her spouse
or Dependent, or any of their successors; (ii) the expenses incurred, including
legal fees of the Participant, or the Participant's spouse, Dependent or any of
their successors, in obtaining such recovery; (iii) the reason or reasons stated
as the basis for the amount recoverable; and (iv) any settlement, compromise or
other recovery that purports to limit or reduce the right of the Plan to one
hundred percent (100%) reimbursement, unless the Plan otherwise agrees in
writing. For the purposes of this Section 5.6, a "third party" shall mean any
corporation, business, entity or individual other than the Participant, his or
her spouse or Dependent, or their successors.
(b) Right to Subrogation. In the event damages for injuries caused by the
--------------------
actions or negligence of a third party are not pursued by the Participant, his
or her spouse or Dependent, or any of their successors, this Plan, to the extent
permitted by applicable law, shall be entitled to recover against any such third
party and shall be subrogated and succeed to the Participant's, his or her
spouse's or any Dependent's, or any of their successors', rights of action
against third parties in any situation in which benefits are paid to a
Participant, his or her spouse or any Dependent, or any of their successors,
under any of the Constituent Plans. However, if any Constituent Plan (or the
underlying insurance contracts or other funding mechanism under which benefits
are provided with respect to such Constituent Plan) contains subrogation
provisions, then subrogation shall be determined in accordance with the
pertinent provisions of such Constituent Plan (or the applicable provisions of
the underlying insurance contracts or funding mechanisms).
(c) Right to Withhold or Set Off Payments. Notwithstanding any Plan
-------------------------------------
provision of this to the contrary, any benefit payments from the Constituent
Plans otherwise payable to the Participant,
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<PAGE>
his or her spouse or any Dependent, or any of their successors, may be:
(i) Withheld if a third party may be liable for the expenses
incurred by the Participant, his or her spouse or any Dependent until
liability is legally determined, unless the Participant, his or her spouse
or any Dependent, or any of their successors, shall (I) execute and deliver
instruments and papers and do whatever else is necessary to secure the
rights to the Plan, as provided in paragraphs (a) and (b) of this section,
including, but not limited to, entering into a reimbursement and
subrogation agreement acknowledging the rights of the Plan, and (II) do
nothing either before or after the payment by the Constituent Plan to
prejudice such rights;
(ii) Withheld indefinitely if the expenses to which the benefit
payments apply are incurred by reason of a third party's actions or
negligence and such expenses are incurred after the Participant, his or her
spouse or any Dependent, or any of their successors, recovered damages from
such third party, provided the total of the expenses incurred by reason of
a third party's actions or negligence do not exceed the damages recovered;
or
(iii) Used to set off any amount due to the Plan by reason of
paragraph (a) of this section.
ARTICLE VI
COORDINATION OF BENEFITS
------------------------
6.1 In General. Except as otherwise expressly provided in the
----------
coordination of benefits provisions of an applicable Constituent Plan pursuant
to Section 6.2 of this Flexible Benefits Plan, in the event that a Participant,
his/her spouse or any dependent incurs a medical expense covered under a
Qualified Benefit Plan which is also covered under this Flexible Benefits Plan,
then such Qualified Benefits Plan shall be the primary payor and this Flexible
Benefits Plan shall be the secondary payor.
6.2 Constituent Plans. If any Participant, his/her spouse or any
-----------------
dependent is also covered under one (1) or more Qualified Benefit Plans
providing benefits of the type provided under the Constituent Plans and if an
applicable Constituent Plan contains a coordination of benefits provision, the
benefits payable with respect to him/her under this Flexible Benefits Plan shall
be determined in accordance with the coordination of benefits provisions of such
Constituent Plan.
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<PAGE>
6.3 Application of Coordination of Benefits. In the event that
---------------------------------------
coordination of benefits is required with respect to this Flexible Benefits Plan
and one (1) or more Qualified Benefit Plans and the provisions of Sections 6.1
and 6.2 of this Flexible Benefits Plan are inapplicable, coordination of
benefits shall be determined in accordance with the ordering provisions of
Section 6.4 of this Flexible Benefits Plan.
For purposes of this article, the term 'Allowable Expense' means any
item of expense or service at least a portion of which is covered under at least
one of the Qualified Benefit Plans covering the Participant, his/her spouse or
any dependent for whom claim is made. If a Qualified Benefit Plan provides
benefits in the form of services in lieu of cash, the reasonable cash value of
each Service rendered will be considered to be both an Allowable Expense and a
benefit paid.
For purposes of this article, the term 'Qualified Benefit Plan' means
any cafeteria plan (as defined in Section 125(d) of the Code) and any other
plan, program or arrangement providing a qualified benefit (as defined in
Section 125(f) of the Code), or any welfare benefit plan (as defined in Section
3(1) of ERISA and Department of Labor regulations thereunder), covering any
Participant, his/her spouse or any dependent of any Participant as an employee,
former employee, retired employee, qualified beneficiary (as defined in Section
4980B(g)(1) of the Code) or dependent.
Coordination will apply in determining the benefits payable with
respect to a Participant for any Plan Year if, for the Allowable Expenses
incurred during such Plan Year, the sum of:
(a) The benefits that would be payable under this Flexible
Benefits Plan in the absence of coordination; and
(b) The benefits that would be payable under all Qualified
Benefit Plans in the absence of provisions for coordination in this Flexible
Benefits Plan, would exceed those Allowable Expenses.
Except as provided in the following paragraph, if coordination of
benefits applies to the benefits payable with respect to a Participant for a
Plan Year, the benefits that would be payable for Allowable Expenses incurred
during that period under this Flexible Benefits Plan, in the absence of
coordination of benefits, will be reduced to the extent necessary so that the
sum of those reduced benefits and all the benefits payable for those Allowable
Expenses under all Qualified Benefit Plans, including the benefits that would
have been payable had a claim been properly made for them, will not exceed the
benefits under
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<PAGE>
this Flexible Benefits Plan that would have been provided in the absence of
coordination of benefits.
If, in coordinating the benefits of this Flexible Benefits Plan with
those of another Qualified Benefit Plan, the rules set forth in Section 6.4
would require this Flexible Benefits Plan to be the primary payor and the
Qualified Benefit Plan, according to its provisions, to be the secondary payor,
then the benefits of such Qualified Benefit Plan will be ignored for the
purposes of determining the benefits payable under this Flexible Benefits Plan.
6.4 Order of Benefit Determination. The following rules establish
------------------------------
the order of benefit determination:
(a) The benefit under a Qualified Benefit Plan which covers the
Participant, his/her spouse or any dependent for whom a claim is made other than
as a dependent will be determined before the benefits under a Qualified Benefit
Plan which covers that Participant, his/her spouse or any dependent as a
dependent;
(b) Except as otherwise provided in Paragraph (c), the benefit
under a Qualified Benefit Plan which covers the Participant, his/her spouse or
any dependent for whom claim is made as a dependent of a person whose month and
date of birth occurs earlier in the calendar year shall be determined before the
benefit under a Qualified Benefit Plan which covers such person as a dependent
of a person whose month and date of birth occurs later in the calendar year.
However, this paragraph shall not apply if a Qualified Benefit Plan does not
have a provision coordinating benefits on the basis of birthdays.
(c) (1) If the parents are separated or divorced and the parent
with custody of the child has not remarried, the benefits under a Qualified
Benefit Plan which covers the child as a dependent of the parent with custody of
the child will be determined before the benefits under a Qualified Benefit Plan
which covers the child as a dependent of the parent without custody.
(2) If the parents are divorced and the parent with custody
of the child has remarried, the benefits under a Qualified Benefit Plan which
covers the child as a dependent of the parent with custody shall be determined
before the benefits under a Qualified Benefit Plan which covers that child as a
dependent of the step-parent, and the benefits under a Qualified Benefit Plan
which covers that child as a dependent of the step-parent will be determined
before the benefits under a Qualified Benefit Plan which covers that child as a
dependent of the parent without custody.
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<PAGE>
(3) Notwithstanding Subparagraphs (1) and (2) above, if
there is a court decree which would otherwise establish financial responsibility
for the Allowable Expenses with respect to the child, the benefits under a
Qualified Benefit Plan which covers the child as a dependent of the parent with
such financial responsibility shall be determined before the benefits under any
Qualified Benefit Plan which covers the child as a dependent child.
(d) The benefits under a Qualified Benefit Plan which covers a
Participant, who is not a retired or former employee, his/her spouse or any
dependent, will be determined before a Qualified Benefit Plan which covers that
person as a retired or former employee.
(e) The benefits under a Qualified Benefit Plan which covers a
Participant, who is not a retired or former employee, his/her spouse or any
dependent, will be determined before a Qualified Benefit Plan which covers that
person in accordance with the health plan continuation coverage provisions of
Section 4980B of the Code.
(f) If Paragraphs (a), (b), (c), (d) and (e) do not establish an
order of benefit determination, the benefits under the Qualified Benefit Plan
which has covered the Participant or his/her spouse or dependents for whom a
claim is made for the longer period of time will be determined before the
benefits under the Qualified Benefit Plan which has covered the Participant,
his/her spouse or any dependent for the shorter period of time.
(g) Benefits under a Qualified Benefit Plan which does not
contain a coordination of benefits provision will be determined before the
benefits under this Flexible Benefits Plan.
If coordination of benefits operates to reduce the total amount of
benefits otherwise payable during any Plan Year or with respect to a
Participant, his/her spouse or any Dependent covered under this Flexible
Benefits Plan each benefit that would be payable in the absence of coordination
of benefits will be reduced proportionately, and the reduced amount will be
charged against any applicable benefit limit of this Flexible Benefits Plan.
6.5 Release of Information. For the purposes of determining the
----------------------
applicability of, and implementing the terms of the provisions of this article
or any similar provision of another Qualified Benefit Plan, the Plan
Administrator may, without the consent of or notice to any Participant, his/her
spouse or any dependent, release to or obtain from any insurance company or
other organization or individuals any information concerning any Participant,
his/her spouse or any dependent which
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<PAGE>
the Plan Administrator considers to be necessary for those purposes. Any
Participant, his/her spouse or any Dependent receiving benefits under this
Flexible Benefits Plan will furnish to the Plan Administrator the information
that may be necessary to implement the provisions of this article.
6.6 Payment to Other Carriers. Whenever payments which should have
-------------------------
been made under this Flexible Benefits Plan in accordance with the provisions of
this article have been made under any other Qualified Benefit Plan, this
Flexible Benefits Plan will have the right, exercisable alone and in its sole
discretion, to pay to any organization making those payments any amounts it
determines to be warranted in order to satisfy the intent of the provisions of
this article, and amounts paid in this manner will be considered to be benefits
paid under this Flexible Benefits Plan and, to the extent of these payments,
this Flexible Benefits Plan will be fully discharged from liability.
6.7 Recovery. Whenever payments have been made by this Flexible
--------
Benefits Plan, at any time, for Allowable Expenses in a total amount in excess
of the maximum amount of payment necessary at that time to satisfy the intent of
the provisions of this article, the Plan Administrator will have the right to
recover those payments, to the extent of the excess, from among one or more of
the following, as the Plan Administrator will determine, including but not
limited to, any individuals to or for or with respect to whom these payments
were made, any insurance companies or other organizations.
6.8 Effect of State Mandated Automobile Insurance. This Flexible
---------------------------------------------
Benefits Plan shall have secondary liability for those Allowable Expenses
incurred as a result of a motor vehicle accident, on behalf of a Participant,
his/her spouse or any Dependent, subject to any applicable state automobile
insurance law, regardless of the terms and conditions of any specific automobile
policy.
Furthermore, if a Participant, his/her spouse or any Dependent has no
personal injury protection in a state where such coverage is mandated, coverage
under this Flexible Benefits Plan shall be reduced by the minimum coverage
requirement of the state with jurisdiction.
In addition to the above, for those Participants, their spouses or
Dependents subject to the law of any state which permits issuance of a state
mandated motor vehicle policy with an optional high personal injury protection
deductible, this Flexible Benefits Plan shall not recognize as an Allowable
Expense, the personal injury protection deductible selected by any Participant,
his/her spouse or any Dependent. Such deductible amount shall be the direct
responsibility of the Participant, his/her spouse or any Dependent.
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<PAGE>
6.9 Effect of Medicare. If a Participant or his/her spouse is age
------------------
sixty-five (65) or older, then this Flexible Benefits Plan shall be the primary
payor and Medicare shall be the secondary payor."
ARTICLE VII
NONALIENATION OF BENEFITS
-------------------------
7.1 Benefits Not Subject to Alienation or Assignment. Except for
------------------------------------------------
voluntary assignments of medical care benefits to any licensed medical
practitioner or hospital providing medical services to, or on behalf of, a
Participant or Beneficiary, and as otherwise specifically set forth in the plans
described in Exhibit I, the right of any Participant or Beneficiary to any
benefit payment shall not be subject to any voluntary or involuntary alienation
or assignment.
ARTICLE VIII
FIDUCIARY RESPONSIBILITY
------------------------
8.1 Allocation of Responsibility. Authority and responsibility for
----------------------------
management of the Plan shall be allocated among the following persons:
(a) The Board of Directors of the Employer shall have sole
responsibility for the appointment, removal and replacement of a person or
committee to supervise the administration of the Plan. To the extent that they
are carrying out this responsibility, the person or committee so appointed shall
be a "named fiduciary" of the Plan for purposes of Section 402(a)(l) of ERISA.
(b) The Plan Administrator shall have sole responsibility for
the administration of the Plan. To the extent it is carrying out this
responsibility, the Plan Administrator shall be a "named fiduciary" with respect
to the administration of the Plan.
8.2 Exclusive Responsibility. It is the purpose of this Plan to
------------------------
allocate to each Fiduciary exclusive responsibility for prudent execution of the
functions assigned to him/her (or to the entity of which he/she is a member) and
no responsibility for execution of functions assigned to others. Whenever one
Fiduciary is required by the Plan to follow the directions of another such
Fiduciary, the two Fiduciaries shall not be deemed to have been assigned a
shared responsibility, but the Fiduciary giving the directions shall have sole
responsibility for the functions assigned to him/her, including issuing of such
directions, and the Fiduciary receiving the directions shall have sole
responsibility for the functions assigned to him/her,
-20-
<PAGE>
including following such directions insofar as they are on their face proper
under this Plan and under applicable law.
8.3 Fiduciary Actions. In carrying out the responsibilities
-----------------
allocated to him/her under this Plan, each Fiduciary shall act solely in the
interests of the Plan's Participants and their Beneficiaries.
8.4 Employment of Advisors. A Fiduciary identified in Section 8.1(b)
----------------------
may employ one or more persons to render advice with regard to such Fiduciary's
responsibilities under the Plan.
ARTICLE IX
THE ADMINISTRATIVE COMMITTEE
----------------------------
9.1 Delegation of Fiduciary Responsibility. The Plan Administrator
--------------------------------------
may delegate to any person or entity any of its powers or duties under the Plan.
The Plan Administrator shall not, however, delegate any of its Fiduciary
functions. To the extent that the Board of Directors of the Employer appoints a
person or Committee to supervise the administration of the Plan, as provided for
in Section 8.1(a), such person or committee shall become a Fiduciary responsible
for the administration of the Plan (if the person or committee is a Fiduciary by
reason of such appointment); and the responsibilities and duties of the Plan
Administrator hereunder shall devolve upon such person or committee. Any action
by the Plan Administrator assigning any of its responsibilities to specific
persons who are all directors, officers, or employees of the Employer shall not
constitute delegation of the Plan Administrator's responsibility but rather
shall be treated as the manner in which the Plan Administrator has determined
internally to discharge such responsibility.
9.2 Administrative Functions. The Plan Administrator shall, in its
------------------------
sole and absolute discretion, interpret the Plan and shall resolve all questions
arising in the administration, interpretation, and application of the Plan. It
shall endeavor to act, whether by general rules or by Particular decisions, so
as not to discriminate in favor of or against, any person and so as to treat all
persons in similar circumstances uniformly. The Plan Administrator shall
correct any defect, reconcile any inconsistency, or supply any omission with
respect to this Plan. All such corrections, reconciliations, interpretations and
completions of Plan provisions shall be final and binding upon the parties.
9.3 Records and Reports. (a) The Plan Administrator shall keep a
-------------------
record of all proceedings and actions insofar as they relate to the Plan and
shall maintain all such books of account, records and other data as shall be
necessary to properly administer the Plan and, to meet the disclosure and
reporting
-21-
<PAGE>
requirements of ERISA and the Code. The Plan Administrator shall maintain
records which shall contain all relevant data pertaining to individual
Participants and their rights under the Plan. Such of its records as may
pertain solely to a particular Participant shall be made available for
examination by such Participant and his/her Beneficiary. The Plan Administrator
shall make available to each Participant who so requests a copy of the Plan.
(b) The Plan Administrator shall require a Third Party Provider
to maintain and make available to the Plan Administrator all such records and
other data as may be required in order for the Plan Administrator to properly
administer the Plan and otherwise meet the reporting and disclosure
requirements of ERISA and the Code.
9.4 Contracts for Necessary Services. The Plan Administrator may
--------------------------------
contract for legal, actuarial, advisory, medical, accounting, clerical, and
other services to carry out the Plan. The costs of such services and other
administrative expenses shall be paid by the Employer.
9.5 Nondiscrimination in Administration. All rules, decisions and
-----------------------------------
designations by the Plan Administrator under the Plan shall be made in a
nondiscriminatory manner, and persons similarly situated shall be treated alike.
9.6 Information Furnished by Participants. A Participant, his/her
-------------------------------------
spouse or any dependent shall not prejudice the Plan's right of subrogation
pursuant to Section 5.6, and shall be required to sign and deliver any documents
required by the Plan Administrator. The Plan Administrator shall have the right
to condition the processing of any claim upon the Participant's, his/her
spouse's or any dependent's completion of forms provided by the Plan
Administrator.
ARTICLE X
CLAIMS PROCEDURES
-----------------
10.1 Claims Procedures. To the extent Optional and Core Benefits are
-----------------
provided under this Plan through a Third Party Provider, such Third Party
Provider shall make all determinations as to the right of any claimant to an
insured benefit under this Plan in accordance with the Department of Labor's
regulations contained in 29 CFR (S)2560.503-1. Notwithstanding the foregoing,
with respect to any benefits provided under this Plan through a Third Party
Provider which is an HMO, the claims procedures designated by such HMO shall
be deemed to satisfy the claims procedure provisions of the Department of
Labor's regulations, provided, however, that such procedures comply with the
requirements set forth in the Department of Labor's regulations contained in 29
CFR (S) 2560.503-l(j). The Plan Sponsor acting as
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<PAGE>
the Plan Administrator shall make all determinations as to the right of any
claimant to an uninsured benefit under the Plan in accordance with the procedure
set forth below.
(a) All claims for benefits under the Plan shall be made in
writing and shall be signed by the applicant. Claims shall be submitted to a
representative designated by the Plan Sponsor and hereinafter referred to as the
"Plan Sponsor's Representative".
Each claim hereunder shall be acted on and approved or disapproved by
the Plan Sponsor within ninety (90) days following the receipt by the Plan
Sponsor's Representative of the information necessary to process the claim.
In the event the Plan Sponsor denies a claim for benefits, in whole or
in part, the Plan Sponsor shall notify the applicant in writing of the denial of
the claim and notify such applicant of his/her right to a review of the decision
by the Named Appeals Fiduciary. Such notice shall also set forth, in a manner
calculated to be understood by the applicant, the specific reason for such
denial, the specific Plan provisions on which the denial is based, a description
of any additional material or information necessary to perfect the claim, with
an explanation of why such material or information is necessary, and an
explanation of the Plan's claim review procedure as set forth in this Article
IX.
If no action is taken by the Plan Sponsor on an applicant's claim within
ninety (90) days after receipt by the Plan Sponsor's Representative, such
application shall be deemed to be denied for purposes of the following appeals
procedure.
(b) Any applicant whose claim for benefits is denied in whole or
in part (such applicant being hereinafter referred to as the "Claimant") may
appeal from such denial to the Named Appeals Fiduciary for a review of the
decision. Such appeal must be made within sixty (60) days after the Claimant has
received written notice of the denial as provided above in Section 9.1(a). An
appeal must be submitted in writing within such period and must:
(i) Request a review by the Named Appeals Fiduciary of
the claim for benefits under the Plan;
(ii) Set forth all of the grounds upon which the
Claimant's request for review is based and any facts in support
thereof; and
(iii) Set forth any issues or comments which the
Claimant deems pertinent to the appeal.
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<PAGE>
Upon receipt of a notice of denial, the Plan Sponsor's Representative
shall establish a hearing date on which the Claimant may make an oral
presentation in support of his/her appeal. All oral appeals shall be heard by
the Named Appeals Fiduciary. The Claimant may elect to forego the oral
presentation. In such event, the Named Appeals Fiduciary shall determine the
appeal on the basis of the written evidence as presented by the parties.
The Named Appeals Fiduciary shall act upon each appeal within sixty (60)
days after receipt thereof unless special circumstances require an extension of
the time for processing the Claimant's request for review. If such an extension
of time for processing is required, written notice of the extension shall be
forwarded to the Claimant prior to the commencement of the extension. In no
event shall such extension exceed a period of one hundred-twenty (120) days
after the request for review is received by the Named Appeals Fiduciary.
The Named Appeals Fiduciary shall make a full and fair review of each
appeal and any written materials submitted by the Claimant and/or the Employer
in connection therewith. The Named Appeals Fiduciary may require the Claimant
and/or the Employer to submit such additional facts, documents or other evidence
as the Named Appeals Fiduciary in its discretion deems necessary or advisable in
making its review. The Claimant shall be given the opportunity to review
pertinent documents or materials upon submission of a written request to the
Named Appeals Fiduciary, provided the Named Appeals Fiduciary finds the
requested documents or materials are pertinent to the appeal.
On the basis of its review, the Named Appeals Fiduciary shall make an
independent determination of the Claimant's eligibility for benefits under the
Plan. The decision of the Named Appeals Fiduciary on any claim for benefits
shall be final and conclusive upon all parties thereto.
In the event the Named Appeals Fiduciary denies an appeal, in whole or
in part, the Named Appeals Fiduciary shall give written notice of the decision
to the Claimant, which notice shall set forth, in a manner calculated to be
understood by the Claimant, the specific reasons for such denial and which shall
make specific reference to the pertinent Plan provisions on which the Named
Appeals Fiduciary's decision was based.
(c) The Named Appeals Fiduciary shall be the person or persons
named as such by the Plan Sponsor. Named Appeals Fiduciaries may at any time be
removed by the Plan Sponsor. All such removals may be with or without cause and
shall be effective on the date stated in the notice of removal. The Named
Appeals Fiduciary shall be a "Named Fiduciary" within the meaning of ERISA, and,
unless appointed to other fiduciary
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<PAGE>
responsibilities, shall have no authority, responsibility, or liability with
respect to any matter other than the proper discharge of the functions of the
Named Appeals Fiduciary as set forth herein.
10.2 Compliance with Regulations. It is intended that the claims
---------------------------
procedure of this Plan be administered in accordance with the claims procedure
regulations of the Department of Labor set forth in 29 CFR (S) 2560.503-1.
ARTICLE XI
PLAN AMENDMENT, TRANSFER OF LIABILITIES,
----------------------------------------
MERGER OR CONSOLIDATION
-----------------------
11.1 Amendment. The Employer shall have the right to amend this
---------
Flexible Benefits Plan at .any time, by resolution of its board of directors,
including the right to add or delete one or more Qualified Benefits, and provide
additional benefits, coverages or options under this Flexible Benefits Plan.
11.2 Successor Employer. In the event of the dissolution, merger,
------------------
consolidation or reorganization of the Employer, provision may be made by which
the Plan will be continued by the successor to the Employer; and, in that event,
such successor shall be substituted for the Employer under the Plan. The
substitution of the successor shall constitute an assumption of Plan liabilities
by the successor and the successor shall have all of the powers, duties, and
responsibilities of the Employer to which it succeeds under the Plan.
11.3 Merger or Consolidation. In the event of any merger or
-----------------------
consolidation of the Plan with any other cafeteria plan maintained or to be
established for the benefit of all or some of the Participants of this Plan, the
merger or consolidation shall occur only if:
(a) Resolutions of the Board of Directors of the Employer, and
of any new or successor employer of the affected Participants, shall authorize
such merger or consolidation; and
(b) Such other cafeteria plan satisfies the requirements of
Section 125 of the Code.
ARTICLE XII
PLAN TERMINATION
----------------
12.1 Termination. The Employer has established this Flexible
-----------
Benefits Plan with the intention of it being maintained for an indefinite period
of time. However, the Employer reserves the right to terminate this Flexible
Benefits Plan at any time,
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<PAGE>
by resolution of its board of directors. Upon termination of this Flexible
Benefits Plan, subject to Section 3.4 (if applicable), the rights provided
herein with respect to all Participants and their Beneficiaries affected by such
termination shall cease.
Notwithstanding the foregoing, in the event the Plan is
completely or partially terminated, any expenses incurred by an affected
Participant up to the date of complete or partial termination shall be
reimbursed in accordance with the terms of the Plan. Any amounts deducted from
an affected Participant's Compensation pursuant to a Salary Reduction Agreement
prior to the complete or partial termination of the Plan shall be available for
the provision of benefits for expenses incurred prior to the date of complete or
partial termination until the last day of the Plan Year in which such complete
or partial termination occurs. To the extent any such amounts remain after
application in accordance with the preceding sentence, such amounts shall be
forfeited by such Participant and distributed among all Participants in a
uniform and nondiscriminatory manner.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 Severability. If any provision of this Plan shall be held
------------
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision, and this Plan shall be construed as if such provision had
not been included.
13.2 Right to Terminate Employment. The Plan does not confer upon
-----------------------------
any Participant or other Employee any right to be continued in the employ of the
Employer and the Employer expressly reserves the right to terminate the
employment of any Employee whether or not a Participant, whenever the interests
of the Employer, in its sole judgment, may so require.
13.3 Controlling Law. This Plan shall be construed and enforced
---------------
according to the laws of the Commonwealth of Pennsylvania to the extent not
preempted by Federal law, which shall otherwise control.
13.4 Designation of Beneficiary. With respect to any death benefit
--------------------------
which may become due hereunder, any designation of Beneficiary shall be made in
accordance with the applicable plan described in Exhibit I.
13.5 Gender and Number. The masculine pronoun wherever used shall
-----------------
include the feminine, the neuter pronoun shall include both the masculine and
the feminine and the
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<PAGE>
singular may include the plural, and vice-versa, as the context may require.
13.6 Bonding. Insurance and Indemnity.
--------------------------------
(a) Bonding. To the extent required under ERISA or any other
-------
applicable Federal or State law of similar import, the Employer shall obtain,
pay for and keep current a bond or bonds with respect to every Fiduciary of the
Plan and any person who receives, handles, disburses, or otherwise exercises
custody or control of, any of the contributions made under the Plan.
(b) Insurance. The Employer may, in its discretion, obtain, pay
---------
for and keep current a policy or policies of insurance, insuring itself, the
members of its Board of Directors, the Plan Administrator and other Employees or
persons to whom any fiduciary responsibility with respect to the administration
of the Plan has been delegated against any and all liabilities, costs and
expenses incurred by such persons as a result of any act, or omission to act, in
connection with the performance of their duties, responsibilities and
obligations under the Plan and any applicable Federal or State law.
(c) Indemnity. If the Employer does not obtain, pay for and keep
---------
current the type of insurance policy or policies referred to in Section 13.6(b)
above, or if such insurance is provided but any of the parties referred to in
Section 13.6(b) above incurs any costs or expenses which are not covered under
such policies, then, in either event, the Employer shall, to the extent
permitted by law, indemnify and hold harmless such parties against any and all
costs, expenses and liabilities incurred by such parties in performing their
duties and responsibilities under this Plan, provided such party or parties were
acting in good faith within what was reasonably believed to have been in the
best interests 'of the Plan and its Participants, and further provided such
party or parties were not receiving fees for the performance of services to the
Plan.
13.7 Headings. Headings of articles, sections and subsections as
--------
used herein are inserted solely for convenience and reference and constitute no
part of the Plan.
13.8 Agent for Service of Legal Process. The name and address of the
----------------------------------
person designated as the agent for service of legal process is:
Plan Administrator - Flexible Benefits Plan
c/o Klearfold, Inc.
364 Valley Road
Warrington, PA 18976
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<PAGE>
13.9 Exhibits. Exhibit I and any other exhibit attached hereto shall
--------
be an integral part of the Plan in any and all respects.
13.10 Incapacity. If the Plan Administrator deems any person to be
----------
incapable of receiving any benefits by reason of illness, infirmity or other
incapacity established by medical evidence or because such person is a minor, it
may direct that payment be made directly for the benefit of such person or to a
legal guardian of the person. To the extent payments are made in this manner,
the Employer shall be discharged from all liability with regard to such
payments.
13.11 Rights to Employer's Assets. No Employee or Beneficiary shall
---------------------------
have any right to, or interest in, any assets of the Employer due to his/her
participation in this Plan, except as expressly provided in the Plan, and then
only to the extent of the benefits payable under this Plan to such Employee or
Beneficiary.
Notwithstanding the foregoing, to the extent that the United States
Department of Labor determines that the portion of the Employer's contribution
to the Plan which represents amounts of Compensation foregone by Participants
pursuant to Salary Reduction Agreements, constitutes a "plan asset" within the
meaning of 29 CFR (S) 2510.3-102, such amounts shall be transferred by the
Employer to a Third Party Provider, trustee or custodian.
IN WITNESS WHEREOF, and as evidence of the adoption of the foregoing as
an amendment and restatement of the Plan set forth herein, the Plan Sponsor has
caused the same to be executed this 1st day of March, 1997.
ATTEST: KLEARFOLD, INC.
[SIGNATURE APPEARS HERE] By: [SIGNATURE APPEARS HERE]
- -------------------------- -----------------------------
Secretary President
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<PAGE>
EXHIBIT I
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CORE BENEFITS
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The following Core Benefits are provided for the Plan Year:
1. Coverage under the Klearfold, Inc. Long-Term Group Disability
Income Plan, UNUM Life Insurance Company of America, Policy No.
0331569, as amended from time to time.
2. Coverage equal to 100% of a Participant's annual Compensation up
to a maximum of $150,000 under the Klearfold, Inc. Life and
Accidental Death and Dismemberment Insurance Plan, Security
Mutual Life Insurance Co., Policy #SP 70,188
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as amended from time to time.
3. Vision Care (for Salaried Employees covered under the
Inter-County Hospitalization Program) Plan #478.
OPTIONAL BENEFITS
- -----------------
The following Optional Benefits are available for the Plan Year with the
limitations, if any, specified below:
1. Participants may elect to receive coverage under one of the
following medical insurance plans:
(a) U.S. Healthcare - Patriot V/Quality Point of Service
Plan, Policy No. 4427, as amended from time to time.
-1-
<PAGE>
(b) U.S. Healthcare Patriot V Select HMO Plan No.
4427, as amended from time to time.
(c) Keystone Health Plan East - Keystone 5 HMO Pennsylvania,
Group No. 502110, as amended from time to time.
(d) Keystone Health Plan East - Point of Service Program
Group No. 81444, as amended from time to time.
(e) Inter-County Hospitalization Program (ICHP), Group No.
87341.
(f) Vision Service Plan (VSP) for dependents of Salaried
Employees covered under Inter-County Hospitalization
Program - Plan #478.
2. Klearfold, Inc. Dental Expense Insurance Plan with the Guardian
Life Insurance Co. of America, Policy No. 258025.
DEFAULT PLAN
- ------------
Any participant covered by the Default Plan will receive the Core Benefits
under this Plan. If there is no effective election with respect to Optional
Benefits for a Participant, he/she shall not receive medical insurance coverage
under this Plan.
<PAGE>
Exhibit 21.1
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List of Subsidiaries of IMPAC Group, Inc.
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AGI Incorporated, an Illinois corporation.
Klearfold, Inc., a Pennsylvania corporation.
KF - Delaware, Inc., a Delaware corporation.
KF - International, Inc., a United States Virgin Islands corporation.
