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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OF
GOSS HOLDINGS, INC.
a Delaware Corporation
IRS Employer Identification No. 36-4326281
SEC File Number 22-22447
700 OAKMONT LANE
WESTMONT, ILLINOIS 60559-5546
(630) 850-5600
Securities registered pursuant to section 12 (b) of the Act:
None
Securities registered pursuant to section 12 (g) of the Act:
$112,500,000 12.25% Senior Subordinated Notes Due 2005
The registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
The registrant has filed all documents and reports required to be filed
by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by
a court.
The registrant is unaware of any delinquent filers pursuant to Item 405
of Regulation S-K.
The registrant had 10,000,000 shares of Common Stock outstanding at
March 29, 2000.
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GOSS HOLDINGS, INC.
PART I
ITEM 1. BUSINESS
Goss Holdings, Inc. ("New Holdings") is a corporation whose principal asset
consists of an investment in 100 percent of the common stock of Goss Graphic
Systems, Inc. ("Systems"). Systems is the leading producer of newspaper and
insert printing press systems and also produces commercial printing press
systems. Established in Chicago in 1885, Systems was acquired (the
"Acquisition") by GGS Holdings, Inc. (a predecessor company of New Holdings)
on October 15, 1996 through the acquisition of Rockwell Graphic Systems, Inc.
from Rockwell International Corporation ("Rockwell").
On July 30, 1999, Systems, GGS Holdings, Inc., and Goss Realty LLC, a
wholly-owned subsidiary of Systems, (collectively, the "Petitioners") filed
voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy
Code in the Bankruptcy Court for the District of Delaware. The European and
Asian subsidiaries of the Petitioners were not included in the Chapter 11
filing.
The Petitioners, certain of its lenders under the pre-petition bank credit
facility (the "Lenders") and holders (the "Noteholders") of at least two-thirds
of Systems' $225 million 12% Senior Subordinated Notes Due 2006 (the "Old
Notes") entered into a Forbearance, Lock-up and Voting Agreement dated as of
July 28, 1999. Pursuant to that agreement, the Lenders and the Noteholders who
were party to the agreement agreed to forbear from exercising their rights and
remedies under the credit agreement and the indenture until the filing of the
Chapter 11 case, and agreed to vote their claims in favor of a plan of
reorganization.
At hearings held on October 19, 1999 and November 2, 1999, the Petitioners
received formal court confirmation of the plan of reorganization, as amended,
(the "Plan"). According to the Plan, the Petitioners will pay all claims owed to
unsecured trade creditors in three equal installments of approximately $20.0
million each at dates that are three, six, and nine months after November 19,
1999, the effective date of the Plan (the "Effective Date").
Pursuant to the Plan, on the Effective Date, the Noteholders exchanged the Old
Notes for a new issue of $112.5 million 12.25% Senior Subordinated Notes Due
2005 (the "New Notes") of New Holdings (the new holding company into which GGS
Holdings, Inc. was merged on the Effective Date) and common stock in New
Holdings representing an ownership interest of approximately 31 percent.
Interest on the New Notes for the two-year period immediately following the
Effective Date will be paid by issuing additional New Notes and interest
thereafter will be paid in cash with the first cash interest payment due May 19,
2002.
Also pursuant to the Plan, on the Effective Date, Stonington Capital
Appreciation 1994 Fund L.P. (the "Fund") made a $50 million cash investment
in the common stock of New Holdings and received common shares
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representing an ownership interest of approximately 65 percent in exchange
therefore, and Rockwell received a distribution of New Holdings common shares
representing an ownership interest of 3.5 percent in satisfaction of its
preferred stock equity claim against GGS Holdings, Inc. All common and
preferred equity interests, including all options to acquire such interests,
in GGS Holdings, Inc. at the date of the Chapter 11 filing were cancelled
pursuant to the Plan.
Additionally, on the Effective Date, and also pursuant to the Plan, Systems and
the Lenders entered into the second amended and restated credit agreement. The
new credit agreement, which amends and restates the $200 million pre-petition
revolving credit facility, permits borrowings of up to $250 million, including a
term loan in the amount of $150 million, revolving borrowings of up to $100
million, and up to $75 million in letters of credit. The new credit agreement
also contains certain financial covenants and limitations on the operations and
borrowings of Systems and its subsidiaries and provides for scheduled repayments
beginning in 2002. The provisions of the new credit agreement are more fully
discussed in Part II, Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Unless stated otherwise, hereinafter the name "Goss" or the "Company" refers to
the collective operations of New Holdings and any of its consolidated
subsidiaries, including any of their predecessor companies.
Goss's 1997 fiscal year ended September 30, 1997. The fiscal year data referred
to in this Item does not include the fourteen day "stub period" from October 1,
1996 through October 14, 1996 which preceded the Acquisition.
In June 1998, the Board of Directors approved a change in the Company's fiscal
year-end from September 30 to December 31, effective for the calendar year
beginning January 1, 1999. A three-month fiscal transition period from October
1, 1998, to December 31, 1998 preceded the start of the new calendar cycle.
PRODUCTS AND SERVICES
WEB OFFSET PRESS SYSTEMS
All of the printing press systems manufactured by Goss use web offset
technology. In "offset" printing, the text and images of a publication are
photographically or electronically transferred onto flexible printing plates.
The plates are wrapped around "plate cylinders" in a press unit. As a plate
cylinder rotates, it is first coated with a water-based solution and then with
an oil-based ink. Since the ink is oil based, it adheres only to the areas on
the plate that are not covered with water (I.E., the text or image.) The ink on
the plate then is transferred in a mirror-image to a second cylinder, a "blanket
cylinder," which rotates to come into contact with the paper where the ink is
transferred again, reversing from a mirror-image back to a normal image.
In the "web" printing process, the paper is fed continuously through the press
from a large paper roll in a long ribbon that forms a complex web of paper. This
contrasts with sheet-fed printing in
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which individual sheets of paper are fed through the press and printed
one-by-one. Web printing is substantially faster than sheet-fed printing, and,
for larger print runs, more economical.
Printing press systems vary substantially in design and size. Typically, a large
newspaper press system consists of multiple press units fed by separate paper
rolls with the resulting webs being merged together, folded and cut. For
multiple-color printing, the individual press units frequently are arranged into
horizontal units or stacked in vertical "towers" several floors high with one
unit for each of the basic colors. Press units vary in width and the number of
plates contained on the plate cylinders, which facilitate printing in different
formats. Commercial presses differ in that the webs run horizontally through the
units and frequently there is additional auxiliary equipment, such as dryers and
chilling units, designed specifically to meet commercial printing needs such as
printing on high-gloss paper.
Large newspaper press systems typically range in price from $6 million to $100
million, while commercial press systems typically range between $4 million and
$12 million and small newspaper and insert press systems typically range between
$1 million and $8 million.
In addition to the press units manufactured by Goss, press systems include
ancillary equipment such as electronic controls; reel stands which feed, splice
and control paper tension; register and cut-off control devices; dampening
systems; noise and dust control devices; and ink control devices. Each ancillary
device is available from a number of suppliers, and Goss is not dependent upon
any one supplier.
INDUSTRY SEGMENT
Goss's products fall into three broad categories:
- newspaper press systems for publishers of national,
regional and local news;
- commercial press systems for printers of brochures
and promotional materials, catalogues, magazines,
books, financial publications and directories; and
- insert press systems for printers of advertising
inserts, including Sunday newspaper inserts and
direct mail/point-of-purchase inserts.
Goss also provides parts and service support for the equipment that it sells.
NEWSPAPER PRESS SYSTEMS
Goss's core business, in which it has been engaged for 115 years, is the
production of newspaper press systems. Goss produces "large newspaper" press
systems, which use 50" and wider paper
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for large national and metropolitan newspapers, and "small newspaper" press
systems, which use 36" wide paper for smaller regional and local newspapers. All
are sold under the "Goss" trade name. Goss custom designs and engineers each
newspaper press system to meet the specific printing requirements and physical
space limitations of its customers.
Sales of new equipment to large newspaper customers, together with additions and
modifications to existing equipment, accounted for approximately 48% of Goss's
fiscal 1999 sales. Sales to and additions and modifications for small newspaper
customers accounted for approximately 31% of Goss's fiscal 1999 sales. Goss's
principal products in this area are its Newsliner-Registered Trademark- press
systems (for large newspapers) and Universal-Registered Trademark- press systems
(for small newspapers) models.
COMMERCIAL PRESS SYSTEMS
Sales from Goss's commercial press business represented approximately 2% of
its fiscal 1999 sales. Goss's principal products in this area are its
M16-TM-, G18-Registered Trademark- and G25-Registered Trademark- press
systems and special applications of its Universal-Registered Trademark-
product line. Until the Acquisition, Goss sold commercial press systems under
the "Baker-Perkins" and "Hantscho" trade names. Goss now is selling them
under the "Goss" trade name.
INSERT PRESS SYSTEMS
Sales from Goss's insert press business represented approximately 5% of its
fiscal 1999 sales. Goss's principal products in this area are its
Magnum-Registered Trademark- press systems and C700-TM- models. These insert
press systems also are marketed exclusively under the "Goss" trade name and
are sold principally to customers in North America.
AFTERMARKET PARTS AND CUSTOMER SERVICE
Goss provides aftermarket parts and customer service in connection with the
equipment that it has sold. Sales of aftermarket parts and equipment were
approximately 14% of Goss's fiscal 1999 sales. Although some non-consumable
parts are manufactured to customer order, as of December 31, 1999 Goss had parts
in inventory of approximately $24.4 million. Service and technical support
include site preparation and inspection, equipment installation, preventative
and corrective maintenance, paper width changes and color capability upgrades.
Service and technical support is provided by Goss's staff of approximately 275
field service engineers and additional field service engineers who work for
Goss's international agents.
PRODUCT DEMAND, MARKETING AND COMPETITION
Goss's success is dependent upon the demand for its products in the heavily
competitive market in which it operates.
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DEMAND CHARACTERISTICS
Given the significant cost of presses, both industry and Goss's sales can vary
substantially depending upon the timing of large press purchases. This
phenomenon relates to the long useful life of newspaper presses -- typically
twenty-five years -- and the deferability of press replacement. During periods
of economic growth, higher advertising expenditures lead to an increase in color
and page count demand and the profitability of publishers, thus encouraging
demand for printing presses generally to increase. Conversely, during periods of
economic recession, demand for press capacity generally decreases. Over the
longer term, Goss believes that continued demand for newspaper presses will be
driven by a number of factors, including:
- ECONOMIC GROWTH OF DEVELOPING COUNTRIES. Strong economic
growth typically results in higher personal incomes and
increased advertising expenditures. These factors, together
with higher literacy rates, newspaper circulation, color
content and page counts, drive demand for additional press
capacity.
- FINANCIAL MARKETS. Press demand can be impacted significantly
by interest rates and currency fluctuations. In periods of
high interest rates or low currency values for a potential
purchaser's country, purchases can be deferred.
- INNOVATION. Press demand historically has increased in
response to press innovations before returning to more
normalized levels of demand. A newspaper's ability to enhance
quality, add color and increase productivity while reducing
paper waste and staffing are important considerations as it
evaluates whether and when to add press equipment or replace
an old press. Accordingly, the aggregate demand for printing
presses as well as the demand for a particular manufacturer's
products is driven in part by the development of new products
which achieve market acceptance and provide tangible return on
investment.
- REPLACEMENT. Although press life can be extended through
refurbishing, enhancements and proper maintenance, older
presses result in declining productivity and quality, in each
case relative to that offered by new presses, ultimately
requiring that, over time, they be replaced.
INSTALLED BASE
Goss estimates that over one-half of all daily newspapers worldwide print on
Goss presses. Goss is one of only six major global suppliers of web offset
newspaper press systems and is the only supplier to have manufacturing,
engineering and sales operations in North America, Europe and Asia.
Goss's installed base of presses provides it with both service and parts
opportunities as well as an advantageous relationship with printers in
connection with the sale of new equipment.
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SALES FORCE
Goss maintains a direct sales force of approximately 65 individuals and an
extensive network of 48 local agents covering 95 countries. A sale to a
prospective customer can take several years from the initial planning phase to
the final sale. As a consequence, Goss's sale process requires consistent
long-term customer contact and service.
INTERNATIONAL OPERATIONS
During fiscal year 1999, approximately 55% of Goss's revenue was generated from
sales by international operations. International sales and operating profit for
prior years and identifiable assets attributable to foreign geographic
territories are summarized in note 17 to Goss's 1999 financial statements
contained in Part II.
BACKLOG
As of December 31, 1999, the total contract price of the backlog of customer
commitments for presses and related installations was $409.3 million, a 33%
decrease in the backlog from December 31, 1998. Approximately 90% of this
backlog is scheduled for delivery through December 31, 2000.
COMPETITION
The global newspaper printing press, insert printing press and commercial
printing press industries are heavily competitive in most product categories and
geographic regions. While competition is in part based on product features,
technological capabilities, quality, reliability and ability to meet the
specialized needs of customers, many purchasers utilize a multi-round,
price-focused bidding process that can result in a significantly competitive
impact on pricing and gross profit margins.
Goss's primary competitors for sales of large newspaper press systems are MAN
Roland AG and Koenig & Bauer-Albert ("KBA") AG of Germany. Other suppliers are
Wifag AG of Switzerland, Mitsubishi Heavy Industries Ltd. and Tokyo Kikai
Seisakusho, Ltd. of Japan. Competing major suppliers of small newspaper press
systems are MAN Roland and KBA. The major supplier of commercial presses in the
U.S. is Heidelberg Web, a subsidiary of Heidelberger Druckmaschinen AG of
Germany. Other competitors include MAN Roland and Mitsubishi. Goss's only
significant competitor for insert printing press systems is Heidelberg Web.
Over the past several years, certain foreign suppliers of large newspaper
printing presses have sought to increase their U.S. sales by offering aggressive
pricing and terms. As a result of pricing actions by Goss's foreign competitors,
on June 30, 1995, Goss filed an anti-dumping duty petition with the U.S.
Commerce Department and the International Trade Commission (the "ITC") alleging
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that competitors from Japan and Germany were selling large newspaper printing
presses and components in the U.S. at less than fair value and were materially
injuring a U.S. industry. As a result of Goss's petition, the Commerce
Department and the ITC initiated anti-dumping investigations.
On July 16, 1996, the U.S. Commerce Department issued final determinations that
imports from Japan and Germany had been sold at less than fair value. On August
21, 1996, the ITC also determined that imports from Japan and Germany caused
material injury or the threat of material injury to the U.S. industry. Based on
these determinations, the U.S. Customs Service was directed to require cash
deposits of anti-dumping duties with respect to such imports at rates that range
from 30% to 62% AD VALOREM. On appeal, the anti-dumping orders were upheld by
the Court of International Trade. The actual duties assessed could be increased
or reduced through annual administrative reviews, which are currently underway
The extent to which anti-dumping duties will benefit Goss's competitive position
in the U.S. market, if at all, cannot be projected with assurance.
On March 7, 2000, Goss filed a federal lawsuit under the Antidumping Act of 1916
against MAN Roland Druckmaschinen AG, Koenig & Bauer AG, Mitsubishi Heavy
Industries, Ltd., Tokyo Kikai Seisakusho, Ltd. and their United States
subsidiaries. The lawsuit claims unspecified damages as a result of the
importation of large newspaper presses into the United States by the defendants
and the sale of these presses at prices substantially below those prevailing in
foreign markets. While Goss believes it is entitled to receive significant
damages in this action, there can be no assurance that it will be successful.
SIGNIFICANT SUPPLIERS AND CUSTOMERS
Raw materials and ancillary equipment utilized in Goss's press systems are
available from a number of suppliers, and Goss is not dependent upon any one
supplier.
The newspaper, commercial and insert printing businesses are substantially
fragmented, and Goss is not dependent upon any one printer, or a related group
of printers, for a material portion of its revenue.
RESEARCH AND DEVELOPMENT AND INTELLECTUAL PROPERTY
Goss has an active research and development program and spent approximately
$12.5 million, $2.3 million, $17.8 million and $14.1 million on research and
development in fiscal 1999, the transition quarter ended December 31, 1998,
fiscal 1998 and fiscal 1997, respectively. Goss views its continuation of
significant research and development activities as critical to its long-term
competitiveness.
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Although patents and trademarks are critical to Goss's competitive role in
its industry, no single or related group of patents or trademarks is material
to Goss. Goss-Registered Trademark-, Newsliner-Registered Trademark-,
Colorliner-Registered Trademark-, Metroliner-Registered Trademark-,
Universal-Registered Trademark-, Community-Registered Trademark-,
G18-Registered Trademark-, G25-Registered Trademark-, Magnum-Registered
Trademark-, Singlefluid-Registered Trademark-, Suburban-Registered
Trademark-, Colorflow-Registered Trademark-, and Urbanite-Registered
Trademark- are registered trademarks belonging to Goss. Trademark
applications are pending for "SSC Magnum" and "Uniliner".
EMPLOYEES
As of December 31, 1999 Goss's employees consisted of:
<TABLE>
<CAPTION>
SALARIED NUMBER OF
EMPLOYEES
<S> <C>
Executive Management 7
Operations 402
Sales, Marketing and Customer Service 461
Engineering:
Design and Product Engineering 219
Research and Product Development 70
Support 52
Finance and Information Systems 159
Other 97
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Total Salaried 1,467
HOURLY(1) 1,378
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TOTAL 2,845(2)
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</TABLE>
Substantially all of Goss's hourly employees are represented by various
national, local or trade unions and are covered by collective bargaining
agreements.
(1) Does not include temporary employees hired from time to time to meet Goss's
installation services requirements.
(2) Includes 806 employees in Goss's majority owned China joint venture.
OTHER INFORMATION
New Holdings was incorporated in Delaware on November 3, 1999 and merged with
GGS Holdings, Inc. on November 19, 1999.
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Systems was incorporated in Delaware in 1969 and is the successor to Goss
Printing Company, which was formed in 1885, Miehle Printing Press and
Manufacturing Company, which was formed in 1890, and the Dexter Company, which
was formed in 1880. Systems, Miehle and Dexter combined in 1957 and were
acquired by Rockwell in 1969.
Goss's executive offices are located at 700 Oakmont Lane, Westmont, Illinois
60559-5546. Its telephone number is (630) 850-5600.
Goss files reports and other information with the Securities & Exchange
Commission pursuant to the Securities Exchange Act of 1934. These materials are
available on the SEC's web site at http:\\www.sec.gov. Copies of the materials
will be provided upon the request of any security holder addressed to the
Secretary of Goss.
ITEM 2. PROPERTIES
As of December 31, 1999, Goss's principal properties consisted of:
<TABLE>
<CAPTION>
SQUARE PERCENT
FACILITY LOCATION STATUS FUNCTION FEET UTILIZED*
<S> <C> <C> <C> <C>
Reading, Pennsylvania Owned Warehousing 458,628 0%(1)
Cedar Rapids, Iowa Owned Machining, assembly, engineering 346,200 100%
Preston, England Owned Administration, machining, assembly, 270,000 100%
engineering, warehousing
Westmont, Illinois Owned Headquarters, sales, engineering 280,674 60%(2)
Nantes, France Owned Administration, assembly, engineering, 263,300 80%
warehousing
Cicero, Illinois Leased Staging, assembly, warehousing 79,556 50%
Sayama, Japan Owned Assembly, engineering, warehousing 75,280 100%
Westmont, Illinois Leased Parts warehouse 33,350 100%
Offenbach, Germany Leased Parts warehouse 10,000 100%
Tokyo, Japan Leased Administration, sales 10,000 100%
Shanghai, China Owned Machining, assembly, engineering, 500,000 100%
warehousing
</TABLE>
* Percent utilized as of March 7, 2000 assuming facility is operating one
shift only.
(1) Ceased manufacturing operations in December 1999. This facility is
currently being used for warehousing only and is held for sale.
(2) This facility still operates as the Company's headquarters. As part of the
restructuring, this facility is also held for sale.
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Goss's Westmont facility secures a $28.4 million mortgage held by LaSalle
National Bank. This mortgage matures in 2001, bears interest at 8.66% per annum,
and is being amortized on a 20-year schedule. Additionally, the Plan requires
the Company to make prepayments of $166,667 per month on the mortgage note. The
Sayama, Japan facility secures $22.8 million in mortgages held by Industrial
Bank of Japan and Sanwa Bank, which mortgages mature in 2007, bear interest at
3.25% per annum and are being amortized over 10 years.
ITEM 3. LEGAL PROCEEDINGS
In the normal course of its business, Goss is subject to various claims and
lawsuits. Typically, these matters consist of product liability claims brought
by the individuals who operate the equipment sold by Goss, disputes with
customers over the performance and completion of equipment installation, and
workers' compensation claims by Goss's employees.
PRODUCT LIABILITY
In the event of injury, the individuals who operate printing press equipment
almost universally are limited by workers' compensation laws in the amount that
they can recover from their employers. As a consequence, in cases involving a
significant injury, the injured operators frequently bring "product liability"
claims against the manufacturer of the equipment alleging that the equipment was
improperly designed or manufactured, even though the equipment may be decades
old. Goss maintains insurance with a $250,000 per occurrence deductible for
product liability claims made after October 15, 1996. In connection with the
Acquisition, Goss assumed product liability claims made prior to October 15,
1996 for which Rockwell had a self-insured retention of $2 million and a $1
million per occurrence deductible.
EQUIPMENT PERFORMANCE AND INSTALLATION
Printing equipment is complex and expensive, and when disputes arise regarding
the performance and completion of installation of equipment, it is not uncommon
for those disputes to involve significant amounts. In some instances, those
disputes result in litigation. No litigation of this type is currently pending
that management believes is likely to be material.
ENVIRONMENTAL CONTINGENCIES
Goss has received either notices of potential liability or third-party claims
under the Federal Comprehensive Environmental Response, Compensation, and
Liability Act regarding four off-site disposal facilities or so-called
"Superfund Sites." Goss's share of the responsibility for these Superfund Sites
generally is minor, and although current law imposes joint and several liability
on any party deemed to be responsible at a Superfund Site, management believes
that the ultimate resolution of these matters will not be material to Goss.
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Goss's Reading, Pennsylvania facility has been operating a groundwater
remediation system under a 1981 Consent Order with the Commonwealth of
Pennsylvania as a result of its and its predecessor's historical waste disposal
practices. Goss has completed remediation at the site pursuant to a remediation
proposal approved by the Commonwealth and has submitted a monitoring proposal to
the Commonwealth for approval.
Rockwell has agreed to indemnify Goss for expenses attendant to environmental
matters existing on October 14, 1996 to the extent of one-half of those expenses
in excess of $1 million.
COMPETITION
On March 7, 2000, Goss filed a federal lawsuit under the Antidumping Act of 1916
against MAN Roland Druckmaschinen AG, Koenig & Bauer AG, Mitsubishi Heavy
Industries, Ltd., Tokyo Kikai Seisakusho, Ltd. and their United States
subsidiaries. The lawsuit claims unspecified damages as a result of the
importation of large newspaper presses into the United States by the defendants
and the sale of these presses at prices substantially below those prevailing in
foreign markets. While Goss believes it is entitled to receive significant
damages in this action, there can be no assurance that it will be successful.
GENERAL
The Company received creditor claims during its bankruptcy proceedings which the
Company believes are duplicative, erroneous or exaggerated and to which the
Company believes it has valid defenses. The Company is continuing to seek
resolution of these claims through negotiation. The Company will object to these
disputed claims in a timely fashion in the United States Bankruptcy Court in
Delaware. As of December 31, 1999, disputed claims amounted to $76.3 million.
The disputed claims are primarily comprised of trade accounts payable where the
claim amount differs from the Company's books and records, and breach of
contract and product liability claims. Although the majority of the claims filed
in the bankruptcy proceedings have been expunged or resolved within the
Company's reserves, a number of significant disputed claims remain pending in
the bankruptcy proceeding.
Goss maintains reserves for accrued liabilities that are its present estimates
of the total costs to resolve the contingencies described above. However, it is
impossible to determine the outcome of contingencies of these types in advance,
and there can be no assurances that a court will not enter a substantial award
against Goss for one or more of the contingencies of these types.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 7, 1999, the Company began the solicitation of noteholder votes
concerning the Company's plan of reorganization. Voting on the plan of
reorganization closed on October 12, 1999. The class representing the holders of
the Company's 12% Senior Subordinated Notes Due 2006 voted to approve the plan
of reorganization.
Votes of the holders of equity interests in GGS Holdings, Inc. were not
solicited since they were deemed to reject the plan of reorganization pursuant
to section 1126 (g) of the Bankruptcy Code and were therefore not entitled to
vote on the plan.
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PART II
ITEM 5. MARKET FOR GOSS'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
All of New Holdings' common stock is held by the Fund, Rockwell, and the
Noteholders and is not registered for sale on the securities exchanges.
Accordingly, there is no market for New Holdings' common stock.
The indenture under which the New Notes were issued contains restrictions on
the ability of New Holdings to pay dividends. These restrictions are based
upon debt and earnings levels and also prohibit the payment of dividends if
New Holdings is in default under the indenture. Additionally, the second
amended and restated bank credit facility prohibits the transfer of funds
from Systems to New Holdings for the purposes of paying dividends.
On January 28, 1999, the Fund made a capital contribution to GGS Holdings,
Inc. and received 35,000 shares of 15% Cumulative Senior Convertible
Preferred Stock with a liquidation preference of $1,000 per share.
In connection with the plan of reorganization, on November 19, 1999, the Fund,
the Noteholders, and Rockwell received 6,513,750, 3,136,250 and 350,000 shares,
respectively, of New Holdings common stock.
ITEM 6. SELECTED FINANCIAL DATA
The following selected historical financial data has been derived from Goss's
accounting records for fiscal 1997 forward and from the accounting records of
Rockwell Graphic Systems, Inc., as owned and managed by Rockwell International
Corporation, for the fiscal years ended 1995 and 1996. As a result of the
Acquisition, including the effects of purchase accounting and the Company's new
debt and equity structure, the data presented for 1997 forward may not be
comparable to data for years prior to the Acquisition. Readers are urged to
consider this data in conjunction with the audited financial statements and
related footnotes contained in Item 8 and Management's Discussion and Analysis
of Financial Condition and Results of Operations contained in Item 7.
Data presented for the fiscal year ended September 30, 1997 does not include the
fourteen-day "stub" period from October 1, 1996 through October 14, 1996 which
preceded Goss's acquisition on October 15, 1996. As a result, comparisons
between fiscal 1998 and 1997 involve comparisons of a twelve month period to an
eleven and one-half month period.
In June 1998, the Board of Directors approved a change in the Company's fiscal
year-end from September 30 to December 31, effective for the calendar year
beginning January 1, 1999. A three-month fiscal transition period from October
1, 1998, to December 31, 1998 preceded the start of the new calendar cycle. For
discussion purposes, calendar year 1999 results are compared to 1998 results
restated on a calendar year basis.
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<TABLE>
<CAPTION>
CONSOLIDATED CONSOLIDATED COMBINED COMBINED DATA FOR
DATA FOR THE DATA FOR THE CONSOLIDATED DATA FOR DATA FOR THE THE YEARS ENDED
YEAR ENDED 3 MONTHS ENDED THE YEARS ENDED PERIOD ENDED SEPTEMBER 30,
DEC. 31, 1999 DEC. 31, 1998 SEPTEMBER 30, OCTOBER 14 (PREDECESSOR COMPANY)
------------- ------------- ------------- ---------- ---------------------
1999 1998 1998 1997 1996 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales $ 607.8 $ 107.2 $ 764.1 $ 632.8 $ 4.6 $ 698.2 $ 709.3
Operating profit (loss) (a) (188.3) (59.1) (55.5) (0.2) (9.6) (27.0) 46.1
Other income (expense), net (2.1) (1.4) (5.0) 2.9 - (3.5) 1.9
-------- -------- ---------- -------- -------- -------- --------
Income (loss) before interest,
income taxes, and extraordinary items (190.4) (60.5) (60.5) 2.7 (9.6) (30.5) 48.0
Interest expense (43.8) (12.3) (46.4) (38.7) (0.2) (6.0) -
Customer notes interest income, net - - - - 0.7 17.1 12.4
-------- -------- ---------- -------- -------- -------- --------
Income (loss) before income taxes,
and extraordinary items (234.2) (72.8) (106.9) (36.0) (9.1) (19.4) 60.4
Income tax provision (benefit) 3.8 (0.4) 7.6 0.5 (3.4) (3.7) 24.2
Extraordinary gain (loss) 107.6 - - (5.2) - - -
-------- -------- ---------- -------- -------- -------- --------
Net income (loss) $ (130.4) $ (72.4) $ (114.5) $ (41.7) $ (5.7) $ (15.7) $ 36.2
======== ======== ========== ======== ======== ======== ========
Other data:
Backlog (at period end) $ 409.3 $ 606.3 $ 637.1 $ 606.1 n/a $ 388.7 $ 480.7
Depreciation and amortization 31.2 7.2 26.9 78.6 0.8 27.2 29.7
Other non cash items (46.4) (2.5) 2.6 0.3 0.0 0.0 0.0
EBITDA (b) (96.0) (55.8) (24.6) 80.3 (5.0) 57.4 83.9
Net cash provided by (used for)
operating activities (81.0) 10.4 (60.8) 15.3 17.0 71.5 157.5
Net cash used for investing
activities (12.4) (9.6) (36.7) (616.4) (0.6) (14.7) (9.4)
Net cash provided by (used) for
financing activities 66.1 26.2 78.1 650.7 (14.3) (61.2) (155.5)
Capital expenditures 12.4 9.6 27.0 11.0 n/a 5.9 11.5
Balance sheet data (at period end):
Total assets 784.2 997.6 1,016.1 906.8 n/a 816.0 947.0
Total debt 330.7 461.0 429.4 351.4 n/a 39.2 2.6
Net equity (89.4) (67.4) (0.2) 117.3 n/a n/a n/a
Rockwell's net investment in
Rockwell Graphic Systems n/a n/a n/a n/a n/a $ 457.1 $ 543.1
</TABLE>
13
<PAGE>
(a) The operating loss for the period ended September 30, 1996 includes a
$33.4 million charge for a change in accounting estimate with respect
to certain product and contract performance accruals relating to years
prior to fiscal 1996 and a restructuring charge of $3.9 million
associated primarily with severance payments for terminated employees
and the closure of certain redundant facilities.
The operating profit for the year ended September 30, 1997 includes a
charge of $46.7 million relating to the amortization of an inventory
step-up resulting from the utilization of the purchase method of
accounting as part of the acquisition of Rockwell Graphic Systems. The
inventory step-up was fully amortized at September 30, 1997.
The operating loss for the year ended September 30, 1998 included
charges of $13.8 million related to a realignment of manufacturing
operations, $24.5 million of reserves related to loss contracts, $17.1
million to write inventories down to net realizable values and $4.0
million related to development costs for a new insert press and folder.
For the three months ended December 31, 1998 the operating loss
included a restructuring charge of $7.1 million related to a 5%
reduction in workforce and a $29.9 million charge as a result of
decisions made to resolve certain customer disputes and to accelerate
the disposition of used equipment inventory.
The operating loss for the period ended December 31, 1999 was
negatively impacted by $84.1 million of restructuring charges (see Note
5 to the consolidated financial statements) and $63.8 million of
charges relating to inventory write-downs, contract performance issues
and cost overruns related to delayed shipments as a result of the
Company's Chapter 11 reorganization.
(b) EBITDA represents net income plus interest expense, taxes, depreciation
and amortization, and other non-cash items. EBITDA is presented because
it is a widely accepted financial indicator of a company's ability to
incur and service debt. EBITDA should not be considered as an
alternative to operating income as determined in accordance with GAAP,
as an indicator of Goss's operating performance or as an alternative to
net cash provided by (used for) operating activities as determined in
accordance with GAAP. In 1996, EBITDA excludes $48.3 million of charges
relating to certain product and performance accruals which the company
considers to be of a non-recurring nature, of which $33.4 million
relates to changes in estimates for product and contract performance
issues for sales recorded, or, in the case of contract performance
issues, for orders taken, prior to October 1, 1995. For the year ended
December 31, 1999 EBITDA excludes $47.8 million of asset impairment
charges and the $107.6 million gain on the forgiveness of debt.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Goss's fiscal year ended September 30, 1998 is compared to the fiscal year ended
September 30, 1997. Data presented for the fiscal year ended September 30, 1997
does not include the fourteen-day "stub" period from October 1, 1996 through
October 14, 1996 which preceded Goss's acquisition on October 15, 1996. As a
result, comparisons between fiscal 1998 and 1997 involve comparisons of a twelve
month period to an eleven and one-half month period.
In June 1998, the Board of Directors approved a change in the Company's fiscal
year-end from September 30 to December 31, effective for the calendar year
beginning January 1, 1999. A three-month fiscal transition period from October
1, 1998, to December 31, 1998, preceded the start of the new calendar cycle. For
discussion purposes calendar year 1999 results are compared to 1998 results
restated on a calendar year basis.
Readers are urged to consider carefully the financial statements and related
notes contained elsewhere in this report as they read the discussion below.
14
<PAGE>
The following Consolidated Statements of Operations and Consolidated Statements
of Cash Flows present 1999 results along with unaudited 1998 results restated on
a calendar year basis for purposes of the discussion that follows:
GOSS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
---- ----
<S> <C> <C>
Net sales $ 607.8 $ 765.4
Cost of sales 610.3 745.9
----- -----
Gross profit (loss) (2.5) 19.5
Operating expenses 93.4 112.4
Restructuring charge 84.1 7.1
Goodwill amortization 8.3 9.0
--- ---
Operating loss (188.3) (109.0)
Other expense (2.1) (5.7)
Interest expense (43.8) (47.8)
------ ------
Loss before income taxes and
extraordinary item (234.2) (162.5)
Provision for income taxes 3.8 13.9
--- ----
Loss before extraordinary item (238.0) (176.4)
Extraordinary gain 107.6 0.0
----- ---
Net loss $ (130.4) $ (176.4)
========= =========
</TABLE>
15
<PAGE>
GOSS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net Loss $ (130.4) $ (176.4)
Depreciation 23.2 17.5
Amortization of goodwill and other assets 8.0 9.0
Extraordinary non-cash gain (107.6) 0.0
Loss on investment in affiliate 0.0 6.8
Asset impairment charges 47.8 0.0
Changes in assets and liabilities:
Accounts receivable 7.7 30.0
Inventory 111.3 (67.9)
Accounts payable (9.7) 77.5
Customer advances (32.1) 57.8
Other current liabilities 14.1 45.2
Other assets 3.8 (3.0)
Other liabilities (17.1) 2.2
------ ---
NET CASH USED IN OPERATING ACTIVITIES (81.0) (1.3)
INVESTING ACTIVITIES:
Capital expenditures (12.4) (32.4)
Other 0.0 (2.2)
Investment in affiliate 0.0 (2.4)
--- -----
NET CASH USED IN INVESTING ACTIVITIES (12.4) (37.0)
FINANCING ACTIVITIES:
Capital contributions 76.4 0.0
Net borrowings under revolving credit facilities (155.5) 83.1
Term loan, original amount borrowed 150.0 0.0
Repayment of term loan 0.0 (12.8)
Repayment of mortgages/other, net (4.8) (0.8)
----- -----
NET CASH PROVIDED BY FINANCING ACTIVITIES 66.1 69.5
Net (decrease)/increase in cash (27.3) 31.2
Cash at the beginning of the period 57.2 26.0
---- ----
Cash at the end of the period $ 29.9 $ 57.2
======== ========
</TABLE>
16
<PAGE>
RESULTS OF OPERATIONS - CALENDAR 1999 AND CALENDAR 1998
NET SALES
Goss's net sales for the year ended December 31, 1999 decreased by 20.6% or
$157.6 million to $607.8 million compared to the year ended December 31, 1998.
Sales decreases in the Americas and Europe of $136.3 and $72.7 million to $274.5
and 182.0 million, respectively, were partially offset by a sales increase in
Asia of $51.4 million to $151.3 million. In the Americas decreased sales to
large newspaper, small newspaper, insert, and commercial customers were the
result of a lower order backlog as of December 31, 1998 in addition to lower
current year orders. The sales decrease in Europe is also attributable to a
lower order backlog at December 31, 1998 in addition to lower current year
orders from both large and small newspaper customers. In addition, the 1998
period included a large newspaper equipment sale of $35.1 million to one
European customer. The sales increase in Asia is attributable to a higher order
backlog at December 31, 1998 and higher current year orders resulting in
increased sales to both large and small newspaper customers.
The reduced 1999 order volume in the Americas and Europe is partly attributable
to customer concerns about Goss's financial condition while it was in Chapter 11
proceedings. Sales in the Americas were also negatively affected by shipment
delays resulting from Goss's inability to access sufficient capital resources to
purchase required materials and services in the period leading up to its Chapter
11 filing, as well as post-filing delays attributable to the time required to
negotiate terms with suppliers.
GROSS PROFIT
Gross profit for the year ended December 31, 1999 decreased $22.0 million to a
loss of $2.5 million compared to the year ended December 31, 1998. Results for
the year ended December 31, 1999 included significant charges totaling $63.8
million substantially all of which were recorded in the Americas. These
significant charges consist of $23.8 million for inventory write-downs related
to reduced order volume and $40.0 million for costs to address certain product
and contract performance issues arising from management's ongoing assessment of
the Americas business unit and from cost over-runs on contracts as a result of
delayed shipments. The shipment delays were caused by Goss's inability to access
sufficient capital resources to purchase required materials and services during
the period leading up to its Chapter 11 filing as well as post-filing delays
attributable to the time required to negotiate terms with suppliers. Results for
the year ended December 31, 1998 included significant charges of $86.3 million,
consisting of $9.3 million for manufacturing restructuring, $34.7 million for
inventory re-valuations and $42.3 million for loss contract provisions and
post-shipment charges on newspaper contracts, substantially all of which were
recorded in the Americas. Excluding these significant charges, gross profit in
1999 decreased by $44.5 million and the gross profit margin decreased from 13.8%
to 10.1%.
17
<PAGE>
The change in gross profit and gross profit margin, excluding the significant
charges described above, is explained below.
- In the Americas gross profit decreased by $28.6 million to $6.1
million and the gross profit margin decreased from 8.5% to 2.2%. The
decrease in gross profit is due to the reduced sales volume while
the decrease in gross profit margin is due to unrecovered fixed
costs resulting from unused capacity and lower depreciation in 1998,
partially offset by higher margins on 1999 shipments.
- In Europe gross profit decreased by $26.7 million to $22.0 million
and the gross profit margin decreased from 19.2% to 12.1%. These
decreases in gross profit and gross profit margin were due to lower
sales volume, lower margins on sales to large and small newspaper
customers and unrecovered fixed costs resulting from unused
capacity.
- In Asia gross profit increased by $14.2 million to $33.1 million and
the gross profit margin increased from 18.9% to 21.9%. The increase
in gross profit and gross profit margin is due to increased sales
volumes to large and small newspaper customers and higher margins on
sales to large newspaper customers.
OPERATING EXPENSES
Operating expenses, which consist primarily of engineering, selling, general and
administrative expenses, decreased by $19.0 million to $93.4 million in 1999
compared to 1998. The 1998 period included provisions for bad debt expense of
$9.1 million and $4.3 million of engineering costs associated with the
development of a new insert press. The 1999 period includes provisions for bad
debt expense of $4.4 million, a $4.4 million provision for the write-off of
trade credits, and a credit of $5.0 million relating to a legal settlement.
Excluding these items, operating expenses decreased by $9.4 million, or 9.5%
from the 1998 period. The decrease is attributable to lower spending on
development engineering, agent commissions, selling expenses and administrative
expenses as a result of lower sales volumes and the 1998 workforce reduction,
partly offset by increased depreciation expense attributable to new information
systems.
Restructuring Costs
Restructuring charges of $84.1 million and $7.1 million were recorded for the
years ended December 31, 1999 and 1998, respectively. The 1999 charges consist
of $21.6 million of expenses associated with the Chapter 11 filing, $47.8
million in asset impairment charges relating to the Company's Reading,
Pennsylvania manufacturing facility, the Westmont, Illinois headquarters
facility, and certain additional production equipment, and $14.7 million for
employee severance and other benefits attributable to the closure of the Reading
facility and a workforce reduction at the Company's Westmont, Illinois and
Preston, England facilities. The
18
<PAGE>
1998 charge was related to the five percent reduction in the Company's workforce
which was initiated in the quarter ended December 31, 1998.
On November 19, 1999, Goss announced that it would transfer the assembly
operations of its U.S.-based single width press lines from its Reading,
Pennsylvania facility to its Cedar Rapids, Iowa facility, beginning in January
2000. The transfer will result in the closure of the Reading facility in 2000.
As a result of this decision, approximately 160 employees are being terminated
from employment. Charges of $40.4 million for asset impairment, including $35.3
million of goodwill, and $2.0 million for other costs (primarily severance
costs) were recorded in 1999 for this action. All of the severance costs will be
paid in 2000.
On December 21, 1999, Goss announced a workforce reduction at its Preston,
England facility. Approximately 180 employees are being terminated from
employment at this facility. A charge of $12.6 million was recorded in 1999 for
severance and pension benefits related to this action. Approximately 80 percent
of these costs will be paid in 2000 and the balance will be paid in 2001 and
2002.
In December of 1999, the Company decided to sell its Westmont, Illinois
headquarters facility and relocate to a more appropriately sized facility. It is
anticipated that the sale and relocation will occur in 2000. As a result of this
decision, an asset impairment charge of $6.4 million was recorded in 1999.
INTEREST EXPENSE
Interest expense decreased by $4.0 million for the year ended December 31, 1999
compared to 1998. The decrease for the year is attributable to the
discontinuation of interest expense on the Company's $225 million Senior
Subordinated Notes Due 2006 since July 30, 1999 as a result of the Chapter 11
filing. This reduction in expense is slightly offset by additional interest due
to increased borrowings at higher rates under the Company's DIP and revolving
credit facilities, as well as interest on the Company's new $112.5 million
Senior Subordinated Notes Due 2005 since November 19, 1999.
INCOME TAXES
For the year ended December 31, 1999 the provision for income taxes decreased to
$3.8 million from $13.9 million in 1998. The 1998 expense arose from the
reevaluation of the effective income tax rate to be used for the year due to a
change in the geographic mix of income.
19
<PAGE>
EXTRAORDINARY ITEM
As part of the Chapter 11 plan of reorganization, the Noteholders exchanged the
Old Notes for the New Notes of New Holdings and common stock in New Holdings
representing an ownership interest of approximately 31 percent. As a result of
this transaction an extraordinary gain of $107.6 million was recorded in 1999
for forgiveness and restructuring of debt. Due to the significant net operating
loss carry forward in the United States, no tax provision was recorded on this
extraordinary gain.
RESULTS OF OPERATIONS -- FISCAL 1998 AND FISCAL 1997
NET SALES
Goss's net sales for fiscal 1998 increased by 20.7% to $764.1 million compared
to 1997, due primarily to a higher order backlog at the end of fiscal 1997 which
resulted in increased shipments in fiscal 1998. Sales increased by $42.9 million
to $395.8 million in the Americas. This increase was attributable to sales to
small newspaper and insert customers. Sales in Europe increased $75.9 million to
$267.8 million due to increased shipments to both large and small newspaper
customers. In Asia sales increased $12.4 million to $100.5 million also as a
result of increased shipments to both large and small newspaper customers.
GROSS PROFIT
Gross profit, which reflects net sales less cost of sales and amortization of
inventory step-up, decreased 33.9% to $60.7 in fiscal 1998. Goss's gross profit
margin decreased from 14.5% in fiscal 1997 to 8.0% in fiscal 1998.
Several significant items affected these results. In 1997, gross profit
reflected amortization of a $46.7 million step-up in the value of inventory
following Goss's 1996 acquisition. The 1998 results were affected by additional
costs resulting from the realignment of Goss's U.S. manufacturing operations
during a time of increased production volumes. This realignment, which began in
1997 and continued into 1998, was undertaken in response to increased market
demand for Goss's Universal presses and the desire to reduce manufacturing
costs. In the realignment, Goss's Reading, Pennsylvania plant was converted into
an assembly-only facility with Universal production capability and certain
functions were outsourced to suppliers or relocated to Goss's Cedar Rapids, Iowa
facility. These costs, which totaled $13.8 million, generally consisted of
start-up costs paid to new suppliers, costs of maintaining temporarily idle
facilities while production was being moved, and workforce realignments.
Through the end of fiscal 1998, Goss pursued a business strategy with the
objective of substantially increasing the level of orders and backlog. Pursuant
to this strategy, Goss entered into several large contracts in the Americas to
supply newly-developed newspaper press models at highly competitive price
levels. The heavy production levels associated with these contracts, and the
additional effort
20
<PAGE>
required to accommodate the new models and features, placed heavy demands on the
U.S. production and engineering facilities, which were already affected by
manufacturing realignment activities. As a result, several of these contracts
were in a loss position. These loss contracts, some of which were shipped in
1998 and some of which remain in backlog at September 30, 1998, resulted in a
net charge of $24.5 million in 1998. Also pursuant to this strategy, Goss
purchased significant amounts of materials in the U.S. based upon anticipated
orders. These orders did not occur as anticipated, resulting in a significant
growth in inventory. Consequently, in the fourth quarter of 1998, Goss evaluated
the net realizable value of its inventories and recorded a charge of $17.1
million to reflect current net realizable values. During fiscal 1998, Goss also
incurred $4.0 million of unanticipated costs associated with completing its
first shipments of a newly-developed insert press and folder.
Excluding these significant items which totaled $59.4 million in 1998 and $46.7
million in 1997, gross profit for fiscal 1998 was $120.1 million or 15.7% of
sales as compared to $138.7 million or 21.9% of sales in 1997. The decrease in
gross profit and gross profit margin in fiscal 1998 was due generally to the
effects of price competition and the mix of products sold. The decrease in gross
profit excluding the significant items is explained below.
- In the Americas gross profit decreased by $19.9 million to $50.1
million and the gross profit margin decreased from 19.8% to 12.7%.
The decrease in gross profit and gross profit margin for fiscal 1998
was due to lower pricing and the mix of products sold. Several
contracts that shipped in 1998 did not contribute any gross profit.
- In Europe gross profit increased by $2.2 million to $51.9 million
and the gross profit margin decreased from 25.9% to 19.4%. The
increase in gross profit was due to the increase in shipments for
the year. The decrease in gross profit margin was due to lower
margins on sales to large and small newspaper customers.
- In Asia gross profit decreased by $0.9 million to $18.2 million and
the gross profit margin decreased from 21.6% to 18.1%. The decrease
in gross profit and gross profit margin is due to lower margins on
sales to large newspaper customers.
OPERATING EXPENSES
Operating expenses -- I.E., engineering, selling, general and administrative
expenses -- increased by $22.6 million to $107.0 million in 1998 due to
engineering costs associated with the development of a new insert press,
increased marketing efforts, depreciation expenses resulting from the
implementation of new information systems and increased charges for bad debts in
1998. In addition, 1997 did not include the fourteen-day October 1996 stub
period in which operating expenses totaled $3.1 million.
21
<PAGE>
OTHER INCOME
Other income decreased by $1.1 million in 1998 to $1.6 million. In 1997, other
income was favorably affected by the settlement of certain customer disputes.
LOSS ON INVESTMENT IN AFFILIATE
In 1998, Goss made a 20% equity investment in DALiM Gmbh, a pre-press software
specialist. On November 18, 1998 DALiM filed for bankruptcy and the net
investment of $6.8 million as of September 30, 1998 was written-off.
INTEREST EXPENSE
Interest expense increased by $7.7 million in 1998 due to increased borrowings
under the Company's revolving credit facility during 1998 and accrued interest
relating to a customer settlement issue partially offset by lower interest
rates.
FINANCIAL CONDITION
CASH FLOW
For the year ended December 31, 1999, operating activities used $81.0 million of
cash compared to the year ended December 31, 1998 when operating activities used
$1.3 million of cash. The increase in negative cash flow from operations in the
1999 period is due to the increase in the net loss (before net non-cash credits)
and changes in working capital. Cash from operating activities for 1998 included
the effects of the sale of the $35.6 million in accounts receivable to BT
Commercial Corporation in November of 1998 and a substantial increase in trade
payables as the Company began to experience financial difficulties. Cash used in
investing activities decreased to $12.4 million in the 1999 period from $37.0
million in the 1998 period due to lower spending on capital projects. Financing
activities provided a net $66.1 million in cash in the 1999 period, including
collections of $26.4 million of the $35.6 million in accounts receivable that
were contributed to Goss's capital by the Fund in January 1999 and a $50.0
million capital contribution made by the Fund pursuant to the plan of
reorganization.
REORGANIZATION PROCEEDINGS
On July 30, 1999, the Petitioners filed voluntary petitions for reorganization
under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the
District of Delaware. The European and Asian subsidiaries of the Petitioners
were not included in the Chapter 11 filing.
22
<PAGE>
The Petitioners, certain of its lenders, and Noteholders holding at least
two-thirds of the Old Notes entered into a Forbearance, Lock-up and Voting
Agreement dated as of July 28, 1999. Pursuant to that agreement, the Lenders
and the Noteholders who were party to the agreement agreed to forbear from
exercising their rights and remedies under the credit agreement and the
indenture until the filing of the Chapter 11 case, and agreed to vote their
claims in favor of a plan of reorganization.
At hearings held on October 19, 1999 and November 2, 1999, the Petitioners
received formal court confirmation of the Plan. According to the Plan, the
Petitioners will pay all claims owed to unsecured trade creditors in three
equal installments of approximately $20.0 million each at dates that are
three, six, and nine months after November 19, 1999, the Effective Date of
the Plan.
Pursuant to the Plan, on the Effective Date, the Noteholders exchanged the
Old Notes for the New Notes of New Holdings (the new holding company into
which GGS Holdings, Inc. was merged on the Effective Date) and common stock
in New Holdings representing an ownership interest of approximately 31
percent.
Also pursuant to the Plan, on the Effective Date, the Fund made a $50 million
cash investment in the common stock of New Holdings and received common
shares representing an ownership interest of approximately 65 percent in
exchange therefore, and Rockwell received a distribution of New Holdings
common shares representing an ownership interest of 3.5 percent in
satisfaction of its preferred stock equity claim against GGS Holdings, Inc.
All common and preferred equity interests, including all options to acquire
such interests, in GGS Holdings, Inc. at the date of the Chapter 11 filing
were cancelled pursuant to the Plan.
Additionally, on the Effective Date, and also pursuant to the Plan, Systems
and the Lenders entered into the second amended and restated credit agreement
(the "Bank Facility"). The Bank Facility, which amends and restates the $200
million pre-petition revolving credit facility, permits borrowings of up to
$250 million, including a term loan in the amount of $150 million, revolving
borrowings of up to $100 million, and up to $75 million in letters of credit.
SOURCES OF LIQUIDITY
Other than cash flow from operations, Goss's primary source of liquidity is the
Bank Facility. The Bank Facility matures on September 30, 2003 and provides for
scheduled repayments of the term loan and scheduled reductions in the revolving
credit commitments starting in 2002. The Bank Facility bears interest, at the
Company's option, at Banker's Trust base rate plus 2.75% through March 31, 2002,
3.00% through September 30, 2002, and 3.75% through September 30, 2003, or the
applicable offshore rate (the mean of quotations for applicable currency loans,
or reserve-adjusted LIBOR) plus 3.75% through March 31, 2002, 4.00% through
September 30, 2002, and 4.75% through September 30, 2003. As of December 31,
1999, borrowings and letters of credit under the Bank Facility, excluding $2.2
million of revolving credit relating to Goss's joint venture in China, totaled
$186.7 million.
23
<PAGE>
Substantially all of the Company's assets have been pledged as collateral under
the Bank Facility, with the exception of the Sayama, Japan and Westmont,
Illinois facilities, which are subject to mortgage liens. Obligations under the
Bank Facility are guaranteed by New Holdings and by each of Systems' domestic
subsidiaries. In addition, Systems guarantees all obligations of Goss U.K., Goss
France, and Goss Japan under the Bank Facility.
Among other restrictions, the Bank Facility contains certain financial
covenants, including, but not limited to, a minimum fixed charge coverage test
and a minimum Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) test. Borrowings under the revolving credit portion are also limited by
a borrowing base test, which limits the amount of borrowings to a certain
percentage of the Company's U.S.-based accounts receivable, inventories,
equipment and real property. In addition, the Bank Facility contains other
customary affirmative and negative covenants relating to (among other things)
limitations of dividends, other indebtedness, liens, investments, guarantees,
restricted junior payments, mergers and acquisitions, sales of assets, capital
expenditures, leases, transactions with affiliates, and conduct of business,
with customary exceptions and baskets. The Bank Facility contains customary
events of default, including failure to make payments when due, defaults under
other agreements or instruments of indebtedness, noncompliance with covenants,
breaches of representations and warranties, bankruptcy, judgments in excess of
specified amounts, invalidity of guarantees, impairment of security interests in
collateral, and certain changes of control.
The financial covenants contained in the Bank Facility must be satisfied at the
end of each quarter and are cumulative from the period starting on January 1,
2000 and at December 31, 2000 become rolling twelve month covenants. The
covenants become more stringent over time. Covenant noncompliance entitles the
Lenders to declare a default under the Bank Facility and accelerate payment of
outstanding amounts.
At December 31, 1998 the Company had outstanding $225.0 million of 12%
unsecured senior subordinated notes (the "Old Notes"), under an indenture
dated October 15, 1996. Pursuant to the Plan, on the Effective Date, the
Noteholders exchanged the Old Notes for the New Notes of New Holdings and
common stock in New Holdings representing an ownership interest of
approximately 31 percent. The New Notes were issued under an indenture, dated
November 19, 1999 (the "Indenture") between New Holdings and HSBC Bank USA,
as Trustee. The New Notes have a principal amount of $112.5 million, mature
in 2005, and have an interest rate of 12.25% per annum. Interest on the New
Notes for the two-year period immediately following the Effective Date will
be paid by issuing additional New Notes and interest thereafter will be paid
semiannually on May 19th and November 19th in cash. The Bank Facility
prohibits the transfer of funds from Systems to New Holdings for the payment
of interest on the New Notes if Systems is in default under the Bank
Facility. Subject to certain conditions and dates, the New Notes are, in
part, redeemable in whole or in part at the option of New Holdings. The
payment of principal and interest on the New Notes is subordinated to the
Senior Debt under the Bank Facility (as defined in the Indenture). The
Indenture contains covenants similar to those in the Bank Facility and
includes cross-default provisions under which an event of default under the
Bank Facility would also be considered an event of default under the
Indenture.
24
<PAGE>
Goss is a highly leveraged business. As a consequence, it is dependent upon bank
credit facilities to provide essential liquidity. Should Goss fail to comply
with the terms of its bank credit facility at any time, it would significantly,
and negatively, affect Goss's business by, among other things, restricting
growth in sales or necessitating Goss's obtaining a replacement credit facility.
Goss's ability to obtain a replacement facility would be dependent on the
financial markets and its financial condition at that time.
OUTLOOK
Goss believes that its financial restructuring and improvement initiatives have
positioned it for an improvement in its financial condition. The financial
restructuring under Chapter 11 has provided significant debt relief, the
injection of an additional $50 million in equity capital, and an additional $50
million in borrowing capacity. At the same time, initiatives to reduce capacity
and globalize the product portfolio have been undertaken, which should have the
effect of lowering fixed operating costs. Additionally, Goss sees no near term
reduction in worldwide market demand for new presses or for color upgrades and
expansion for existing presses. Recent advertising expenditure projections
indicate positive advertising environments in most countries, which suggests
continued demand for additional color capacity by newspaper publishers.
However, Goss's recent financial difficulties have caused some potential
customers to award contracts to competitors or to defer purchasing decisions.
Since Goss's order backlog at December 31, 1999 has dropped to $409.3 million
from $606.3 million at December 31, 1998, it is essential to its ability to
operate within its available liquidity levels that the order level in 2000
increase significantly over the depressed level of the five fiscal quarters
ended December 31, 1999. While order prospects are strong there can be no
assurance that they will occur at the necessary level. A failure to achieve the
forecast level of orders could result in reduced liquidity and the inability to
comply with loan covenants.
YEAR 2000
Goss has completed all necessary modifications to computer systems, hardware
and software relating to the Year 2000 issue at a total cost of $16.9
million. All systems are compliant and operational, without any significant
issues or problems known to management. Goss does not anticipate any further
costs to be incurred as a result of the Year 2000 issue.
25
<PAGE>
EUROPEAN MONETARY UNION
Goss has begun its assessment of the effect of the initiation of the European
Monetary Union that will result in the issuance of a single currency ("the
euro") for use in participating countries. This conversion will result in
required modifications to certain computer systems hardware and software for
Goss's European operations. Goss does not believe the conversion will have a
material effect on its results of operations. In 2000, Goss will further analyze
the effect of the euro conversion, including the related conversion costs and
long-term competitive implications.
FORWARD LOOKING STATEMENTS
Certain of the statements contained in this Report, including those under
"Outlook," "Year 2000" and "Financial Condition," are forward-looking. While
Goss believes that these statements are accurate, Goss's business is dependent
upon general economic conditions, various conditions specific to its industry,
and future trends and these factors could cause actual results to differ
materially from the forward-looking statements that have been made. In
particular:
- Newspaper press sales historically have been
negatively influenced by increases in the cost of
newsprint.
- Purchases of printing equipment historically have
been dependent upon general economic conditions and,
in particular in connection with sales to newspapers,
advertising expenditures and page count. As discussed
under Item 1 above, press purchases frequently can be
deferred, and declines in general economic conditions
can negatively impact Goss's sales.
- Goss's primary competitors are located in Germany and
Japan. Currency markets and long-term interest rates
recently have provided its competitors with pricing
advantages. To the extent currency rates fluctuate in
the future, these pricing advantages may increase,
and Goss's sales would decrease.
- Selection of equipment frequently is dependent upon
the technological features. To the extent that Goss's
competition develops new technology that is
attractive to purchasers and Goss does not promptly
develop comparable technology, Goss will be at a
disadvantage and sales are likely to decline.
- Frequently industry capacity exceeds market demand
resulting in severe price competition. This price
competition can hurt both sales and gross profit
margins.
26
<PAGE>
- Goss is a leveraged business. As a consequence, its
profitability is sensitive to increases in interest
rates, and the negative impact of any decrease in
operating results is likely to be more significant
than it would be if Goss was less leveraged. In
addition, since Goss is dependent on its bank credit
facility for liquidity, any inability to fulfill its
commitments under the facility or a replacement
facility -- whether as a result of the failure to
satisfy financial covenants or otherwise -- would
have a significant negative impact to Goss.
- The Company's ability to continue operating as a
going concern is largely dependent upon the inflow of
new orders for equipment and the Company's ability to
implement operational restructuring elements and
improve efficiencies.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Goss is exposed to market risk from changes in interest rates and foreign
currency exchange rates which may adversely affect its results of operations and
financial condition. Goss seeks to minimize these risks through its regular
operating and financing activities and, when deemed appropriate, through the
limited use of derivative financial instruments. Goss does not use financial
instruments for trading or other speculative purposes and is not a party to any
leveraged financial instruments.
Goss periodically uses foreign currency forward contracts to hedge the exposure
to adverse changes in foreign currency exchange rates. Goss's principal currency
exposures relate to the British pound, the French franc and the Japanese yen
against the U.S. dollar. Goss's exposure to changes in foreign currency exchange
rates arise from intercompany loans between subsidiaries, receivables, payables
and firm commitments arising from international transactions. Goss attempts to
hedge significant exposures with internal natural offsets to the fullest extent
possible and, once these opportunities have been exhausted, through derivative
financial instruments with third parties using forward contracts. Gains and
losses on these transactions are offset by the gain or loss on the underlying
transaction. The gains and loses on such contracts in 1999 are not material. At
December 31, 1999 Goss had no open forward contracts.
27
<PAGE>
Goss periodically uses derivative financial instruments to hedge its exposure to
changes in foreign currency exchange rates for the translated U.S. dollar value
of net income of certain foreign subsidiaries. Forward contracts used to hedge
net income are marked to market and any resulting gains or losses are recognized
immediately in net income. No such instruments are outstanding as of December
31, 1999.
The effect of a 1% change in the interest rates on Goss's interest rate
sensitive financial instruments is approximately $1.7 million per annum.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
Data presented for the period ended September 30, 1997 does not include the
fourteen-day "stub" period from October 1, 1996 through October 14, 1996 which
preceded Goss's acquisition on October 15, 1996. As a result, comparisons
between fiscal 1998 and 1997 involve comparisons of a twelve month period to an
eleven and one-half month period.
In June 1998, the Board of Directors approved a change in the Company's fiscal
year-end from September 30 to December 31, effective for the calendar year
beginning January 1, 1999. A three-month fiscal transition period from October
1, 1998, to December 31, 1998, preceded the start of the new calendar cycle.
28
<PAGE>
INDEPENDENT AUDITORS' REPORT
To Goss Holdings, Inc:
We have audited the accompanying consolidated balance sheets of Goss Holdings,
Inc. (a Delaware Corporation - See Note 1), as of December 31, 1999 and 1998,
and the related consolidated statements of operations, shareholders' equity and
cash flows for each of the years ended December 31, 1999, September 30, 1998 and
September 30, 1997, and the three month period ending December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Goss Holdings, Inc.
as of December 31, 1999 and 1998, and the results of its operations and its cash
flows for each of the years ended December 31, 1999, September 30, 1998 and
September 30, 1997, and the three month period ending December 31, 1998 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 9, 2000
29
<PAGE>
GOSS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------
1999 1998
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $29.9 $57.2
Accounts receivable, net 133.9 135.3
Inventories, net 151.7 263.0
Other current assets 8.3 16.5
------ --------
Total current assets 323.8 472.0
Property and equipment, net 140.7 186.2
Goodwill, net 261.7 308.0
Assets held for sale 24.6 0.0
Other assets 33.4 31.4
------ --------
Total assets $784.2 $997.6
====== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $164.2 $173.9
Short term debt 23.4 178.9
Current portion of long-term debt 5.3 5.5
Advance payments from customers 134.2 169.2
Other current liabilities 199.8 197.0
------ --------
Total current liabilities 526.9 724.5
Long-term debt, less current portion 302.0 276.6
Other liabilities 36.2 55.1
------ --------
Total liabilities 865.1 1,056.2
Minority interest 8.5 8.8
Preferred stock - none authorized or outstanding at Dec. 31, 1999;
$.01 par value, 1,000,000 shares authorized; 51,288 shares
outstanding at December 31, 1998 0.0 0.0
Common stock - $.01 par value, 1999 - 15,000,000 shares
authorized; 10,000,000 shares outstanding 1998 -
10,007,500 shares authorized; 1,160,900 shares outstanding 0.1 0.0
Additional paid in capital 76.8 167.8
Retained earnings (164.1) (235.7)
Cumulative translation adjustment (2.2) 0.5
------ --------
Total shareholders' equity (89.4) (67.4)
------ --------
Total liabilities and shareholders' equity $784.2 $997.6
====== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
30
<PAGE>
GOSS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS)
<TABLE>
<CAPTION>
Three Months
Year Ended Ended For the Years Ended
December 31, December 31, September 30,
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 607.8 $ 107.2 $ 764.1 $ 632.8
Cost of sales 610.3 130.1 703.4 494.1
Amortization of inventory step-up 0.0 0.0 0.0 46.7
--- --- --- ----
Gross profit (loss) (2.5) (22.9) 60.7 92.0
Operating expenses 93.4 27.0 107.0 84.4
Restructuring charge 84.1 7.1 0.0 0.0
Goodwill amortization 8.3 2.1 9.2 7.8
--- --- --- ---
Operating loss (188.3) (59.1) (55.5) (0.2)
Other (expense) income (2.1) (1.4) 1.8 2.9
Write-off of investment in affiliate 0.0 0.0 (6.8) 0.0
Interest expense (43.8) (12.3) (46.4) (38.7)
------ ------ ------ ------
Loss before income taxes and
extraordinary item (234.2) (72.8) (106.9) (36.0)
Provision (benefit) for income taxes 3.8 (0.4) 7.6 0.5
--- ----- --- ---
Loss before extraordinary item (238.0) (72.4) (114.5) (36.5)
Extraordinary gain / (loss) on debt
extinguishment 107.6 0.0 0.0 (5.2)
----- --- --- -----
Net loss $ (130.4) $ (72.4) $ (114.5) $ (41.7)
========== ========= ========== =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
31
<PAGE>
GOSS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
Three Months
Year Ended Ended For The Years Ended
December 31, December 31, September 30,
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $(130.4) $(72.4) $(114.5) $(41.7)
Depreciation 23.2 5.1 17.5 23.9
Amortization of inventory step-up 0.0 0.0 0.0 46.7
Amortization of goodwill and other assets 8.0 2.1 9.4 8.0
Extraordinary items - non-cash (107.6) 0.0 0.0 5.2
Loss on investment in affiliate 0.0 0.0 6.8 0.0
Asset impairment charges 47.8 0.0 0.0 0.0
Changes in assets and liabilities:
Accounts receivable 7.7 86.7 (37.4) (37.9)
Inventory 111.3 (42.4) (70.9) (4.4)
Accounts payable (9.7) (14.2) 73.4 35.3
Customer advances (32.1) 51.7 42.0 (16.4)
Other current liabilities 14.1 (11.4) 34.6 5.4
Other assets 3.8 1.6 (20.3) 16.5
Other liabilities (17.1) 3.6 (1.4) (25.3)
------ --- ----- ------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (81.0) 10.4 (60.8) 15.3
INVESTING ACTIVITIES:
Capital expenditures (12.4) (9.6) (27.0) (11.0)
Other 0.0 0.0 (2.2) (3.0)
Investment in affiliate 0.0 0.0 (7.5) 0.0
Acquisition of Rockwell Graphic Systems, net of cash 0.0 0.0 0.0 (602.4)
--- --- --- -------
NET CASH USED IN INVESTING ACTIVITIES (12.4) (9.6) (36.7) (616.4)
FINANCING ACTIVITIES:
Issuance of senior subordinated notes 0.0 0.0 0.0 225.0
Issuance of stock 0.0 0.0 0.0 164.6
Sale of customer notes receivable 0.0 0.0 0.0 137.1
Capital contributions 76.4 0.0 0.0 0.0
Net borrowings under revolving credit facilities (155.5) 27.9 101.4 47.3
Term loan, original amount borrowed 150.0 0.0 0.0 75.0
Repayment of term loan 0.0 0.0 (21.9) (53.1)
Issue/(repay) mortgages/other, net (4.8) (1.7) (1.4) 54.8
----- ----- ----- ----
NET CASH PROVIDED BY FINANCING ACTIVITIES 66.1 26.2 78.1 650.7
Net (decrease)/increase in cash (27.3) 27.0 (19.4) 49.6
Cash at the beginning of the period 57.2 30.2 49.6 0.0
---- ---- ---- ---
Cash at the end of the period $ 29.9 $ 57.2 $ 30.2 $ 49.6
======= ======= ======= =======
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
32
<PAGE>
GOSS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
OTHER
COMMON PAID-IN RETAINED COMPREHENSIVE
STOCK CAPITAL EARNINGS INCOME (LOSS) TOTAL
- --------------------------------------- ------------- -------------- ---------------- ---------------------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, OCT. 15, 1996 $0.0 $0.0 $0.0 $0.0 $0.0
- --------------------------------------- ------------- -------------- ---------------- ---------------------- ------------
Net loss (41.7) (41.7)
Currency translation (3.1) (3.1)
-----
Comprehensive loss (44.8)
-----
Preferred stock dividend 0.7 (0.7) 0.0
Stock issued 164.6 164.6
- --------------------------------------- ------------- -------------- ---------------- ---------------------- ------------
BALANCE, SEPT. 30, 1997 $0.0 $165.3 $(42.4) $(3.1) $119.8
- --------------------------------------- ------------- -------------- ---------------- ---------------------- ------------
Net loss (114.5) (114.5)
Pension liability adjustment (5.3) (5.3)
Currency translation adj. 2.5 2.5
-----
Comprehensive loss (117.3)
-----
Stock issued/cancelled, net (0.1) (0.1)
Preferred stock dividend 3.1 (3.1) (0.0)
- --------------------------------------- ------------- -------------- ---------------- ---------------------- ------------
BALANCE, SEPT. 30, 1998 0.0 168.3 (160.0) (5.9) 2.4
- --------------------------------------- ------------- -------------- ---------------- ---------------------- ------------
Net loss (72.4) (72.4)
Pension liability adjustment 5.3 5.3
Currency translation adj. 1.1 1.1
-----
Comprehensive loss (66.0)
-----
Stock cancelled (0.5) (0.5)
Preferred stock dividend (3.3) (3.3)
- --------------------------------------- ------------- -------------- ---------------- ---------------------- ------------
BALANCE, DEC. 31, 1998 0.0 167.8 (235.7) 0.5 (67.4)
- --------------------------------------- ------------- -------------- ---------------- ---------------------- ------------
Net loss (130.4) (130.4)
Currency translation adj. (2.7) (2.7)
-----
Comprehensive loss (133.1)
-----
Preferred stock dividend 3.3 3.3
Cancelled old stock (206.5) 202.0 (4.5)
Issuance of new stock 0.1 112.2 112.3
- --------------------------------------- ------------- -------------- ---------------- ---------------------- ------------
BALANCE, DEC. 31, 1999 $0.1 $76.8 $(164.1) $(2.2) $ (89.4)
- --------------------------------------- ------------- -------------- ---------------- ---------------------- ------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
33
<PAGE>
GOSS HOLDINGS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999, THE TRANSITION PERIOD ENDED
DECEMBER 31, 1998 AND THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
1. BASIS OF PRESENTATION
Goss Holdings, Inc. ("New Holdings") is a Delaware corporation incorporated
November 3, 1999 pursuant to a plan of reorganization (the "Plan") approved by
the Bankruptcy Court for the District of Delaware (see Note 2). The principal
asset of New Holdings is an investment in 100 percent of the common stock of
Goss Graphic Systems, Inc. ("Systems"). Systems is a Delaware corporation
incorporated April 9, 1996, by Stonington Partners, Inc. ("Stonington") on
behalf of Stonington Capital Appreciation 1994 Fund L.P. (the "Fund") to acquire
(the "Acquisition") the operations of the Graphic Systems business unit
("Rockwell Graphic Systems") of Rockwell International Corporation ("Rockwell").
Systems is a manufacturer and supplier of web offset printing press systems for
newspaper, commercial, and insert printing. On November 19, 1999, GGS Holdings,
Inc. ("Holdings") was merged into New Holdings pursuant to the Plan.
Hereinafter, the name "Goss" or "The Company" refers to the collective
operations of New Holdings and any of its consolidated subsidiaries, including
any of their predecessor companies.
The Company's world headquarters is located in Westmont, Illinois, and the
Company has U.S. manufacturing operations in Cedar Rapids, Iowa, and
international operations in the United Kingdom, France, Germany, and Japan. The
Company also has a controlling interest in a joint venture in Shanghai, China.
On November 19, 1999, the Company announced that it would transfer the
manufacturing operations at its Reading, Pennsylvania facility to other Company
facilities in January 2000.
2. CHAPTER 11 FILING AND LIQUIDITY
On July 30, 1999, Systems, Holdings, and Goss Realty LLC, a wholly-owned
subsidiary of Systems, (collectively, the "Petitioners") filed voluntary
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the
Bankruptcy Court for the District of Delaware. The European and Asian
subsidiaries of the Petitioners were not included in the Chapter 11 filing.
The Petitioners, certain of its lenders under the pre-petition bank credit
facility (the "Lenders") and holders (the "Noteholders") of at least two-thirds
of Systems' $225 million 12% Senior Subordinated Notes Due 2006 (the "Old
Notes") entered into a Forbearance, Lock-up and Voting Agreement dated as of
July 28, 1999. Pursuant to that agreement, the Lenders and the Noteholders who
were party to the agreement agreed to forbear from exercising their rights and
remedies under the credit agreement and the indenture until the filing of the
Chapter 11 case, and agreed to vote their claims in favor of a plan of
reorganization.
34
<PAGE>
GOSS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
At hearings held on October 19, 1999 and November 2, 1999, the Petitioners
received formal court confirmation of the plan of reorganization, as amended,
(the "Plan"). According to the Plan, the Petitioners will pay all claims owed to
unsecured trade creditors in three equal installments of approximately $20.0
million each at dates that are three, six, and nine months after November 19,
1999, the effective date of the Plan (the "Effective Date").
Pursuant to the Plan, on the Effective Date, the Noteholders exchanged the Old
Notes for a new issue of $112.5 million 12.25% Senior Subordinated Notes due
2005 (the "New Notes") of New Holdings (the new holding company into which
Holdings was merged on the Effective Date) and common stock in New Holdings
representing an ownership interest of approximately 31 percent. Interest on the
New Notes for the two-year period immediately following the Effective Date will
be paid by issuing additional New Notes and interest thereafter will be paid in
cash with the first cash interest payment due May 19, 2002.
Also pursuant to the Plan, on the Effective Date, the Fund made a $50 million
cash investment in the common stock of New Holdings and received common
shares representing an ownership interest of approximately 65 percent in
exchange therefore, and Rockwell received a distribution of New Holdings
common shares representing an ownership interest of 3.5 percent in
satisfaction of its preferred stock equity claim against GGS Holdings, Inc.
All common and preferred equity interests, including all options to acquire
such interests, in GGS Holdings, Inc. at the date of the Chapter 11 filing
were cancelled pursuant to the Plan.
Additionally, on the Effective Date, and also pursuant to the Plan, Systems and
the Lenders entered into the second amended and restated credit agreement. The
new credit agreement, which amends and restates the $200 million pre-petition
revolving credit facility, permits borrowings of up to $250 million, including
up to $75 million in letters of credit. The new credit agreement also contains
certain financial covenants and limitations on the operations and borrowings of
Systems and its subsidiaries and provides for scheduled repayments beginning in
2002. The provisions of the new credit agreement are more fully discussed in
Note 10 to the Consolidated Financial Statements.
Management has taken additional actions in the fiscal year 1999 to increase
profitability, including additional workforce reductions, the closure of the
Reading, Pennsylvania manufacturing facility, and the decision to sell its
Westmont, Illinois headquarters facility. Additional profitability and cash flow
improvement initiatives have been instituted for the year 2000, including
changes in the manufacturing and product development processes. While the
Company's management believes that these actions, in conjunction with the
additional sources of liquidity arising from the Plan, will result in increased
profitability and the ability to operate within the available sources of
liquidity, there can be no assurances that they will be successful.
35
<PAGE>
3. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The Company's consolidated financial statements include the accounts of its
domestic and foreign subsidiaries and its majority-owned joint venture. All
intercompany transactions are eliminated.
REVENUE RECOGNITION
The Company recognizes revenue on press system units when title passes to the
customer in accordance with the contract terms, which may precede actual
delivery to the customer. The sales value of presses awaiting delivery amounted
to $28.3 million as of December 31, 1999 and $89.0, $113.4 million and $177.0
million at December 31, 1998, September 30, 1998 and September 30, 1997,
respectively. When a current contract estimate indicates a loss, provision is
made for the total estimated loss. Revenues on installation contracts are
recognized using the completed-contract method except for certain installation
contracts, generally in amounts over $1.0 million, for which the
percentage-of-completion, cost-to-cost method is utilized.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are comprised of cash and short-term investments
having maturities of three months or less at the time of purchase.
INVENTORIES
Inventories are stated at the lower of cost or market. Inventory cost is
determined on a first-in, first-out (FIFO) method and includes material, labor,
and manufacturing overhead.
Reserves are provided for excess inventory on a location-by-location basis based
on an analysis of historical usage and management's estimate of future inventory
requirements. Such reserves are based on the carrying cost of the related
inventory.
Inventories are classified as a current asset and include certain amounts not
expected to be realized within one year.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful life of the asset (generally three to thirteen years for machinery and
equipment and up to fifty years for buildings). Leasehold improvements are
amortized over the shorter of the useful life of the asset or the remaining
lease
36
<PAGE>
term. Presses which are maintained as test development units on a long-term
basis are included in property and equipment and depreciated over their
estimated useful lives (generally five to twelve years). Significant renewals
and betterments are capitalized, and replaced units are written off. Maintenance
and repairs, as well as renewals of minor amounts, are charged to expense.
PRODUCT WARRANTY
Product warranty costs include all costs associated with repairs through the end
of the expressed warranty period. These costs are accrued considering historical
warranty cost experience and a periodic assessment of expected warranty costs
associated with each sale.
Unreimbursed costs to repair equipment after the warranty period are incurred
solely at the discretion of management and are expensed as incurred.
WORKERS' COMPENSATION AND PRODUCT AND GENERAL LIABILITY COSTS
The financial statements include estimated costs, including costs not
reimbursable under insurance contracts, of settling workers' compensation and
product and general liability claims. These estimates are determined from
historical claims incurred experience, using actuarial computations of the
estimated ultimate settlement cost of such claims, including claims incurred but
not yet reported.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred. For the twelve and
three month periods ended December 31, 1999 and 1998, respectively, these costs
totaled $12.5 million and $2.3 million. For the periods ended September 30, 1998
and 1997, these costs totaled $17.8 million and $14.1 million, respectively.
GOODWILL
Goodwill represents the excess of the cost of purchased businesses over the fair
value of their net assets at October 14, 1996. Goodwill is being amortized over
40 years using the straight line method. Accumulated amortization of goodwill
totaled $23.9 million and $18.8 million at December 31, 1999 and 1998,
respectively.
LONG-LIVED ASSETS
The Company continuously evaluates whether events and circumstances have
occurred which indicate that the remaining estimated useful lives of its
intangibles and other long-lived assets may warrant revision or that the
remaining balance of such assets may not be recoverable. The Company uses an
estimate of the related undiscounted cash flows or, in the case of goodwill,
37
<PAGE>
undiscounted operating earnings, over the remaining life of the asset in
measuring whether or not the asset is recoverable.
COMPREHENSIVE INCOME
In 1998, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 130, Reporting Comprehensive Income. This statement establishes rules for
the reporting of comprehensive income and its components. Comprehensive income
consists of net income, minimum pension liability adjustments, and currency
translation adjustments and is presented in the Consolidated Statements of
Shareholders' Equity. The adoption of SFAS 130 had no effect on total
shareholders' equity.
INCOME TAXES
Income taxes are accounted for using the liability method, whereby deferred
income taxes reflect the net effect of temporary differences between the
carrying amount of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes.
Based on the weight of both negative and positive evidence, if it is more likely
than not that some portion or all of a deferred tax asset will not be realized,
a valuation reserve is established.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
FOREIGN CURRENCY TRANSLATION
The functional currency for the European and Pacific Rim subsidiaries is the
applicable local currency. The translation from the applicable foreign
currencies into U.S. dollars is performed for balance sheet accounts using
current exchange rates in effect at the balance sheet date and for revenue and
expense accounts using an average exchange rate prevailing during the period.
The gains and losses resulting from such translations are included in
stockholders' equity.
38
<PAGE>
FISCAL YEAR CHANGE
In June 1998, the Board of Directors approved a change in the Company's fiscal
year-end from September 30 to December 31, effective for the calendar year
beginning January 1, 1999. A three-month fiscal transition period from October
1, 1998, to December 31, 1998, preceded the start of the 1999 calendar cycle.
NEW ACCOUNTING STANDARDS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133, as amended by SFAS No. 137,
is effective for fiscal years beginning after June 30, 2000. SFAS No. 133 will
require that all derivatives be recorded on the balance sheet at their fair
value and that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Goss has not yet
determined the impact that the adoption of SFAS No. 133 will have on its
earnings or statement of financial position. However, Goss anticipates that, due
to its limited use of derivative instruments and the nature of its derivative
transactions, the adoption of SFAS No. 133 will not have a significant effect on
its results of operations or its financial position.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1998 financial statements to
conform to the classifications used in 1999.
4. FINANCIAL INSTRUMENTS
Goss enters into various financial instruments in the normal course of business.
Goss does not hold or issue financial instruments for trading or speculative
purposes. Periodically, Goss analyzes its derivative positions to assess the
current and projected status of these agreements.
FOREIGN EXCHANGE CONTRACTS
Goss enters into forward exchange contracts to manage foreign exchange exposure
related to transactions, assets and liabilities that are subject to risk from
foreign currency rate fluctuations. These include product cost revenues and
expenses; associated receivables and payables; intercompany obligations and
receivables; and other related cash flows.
At December 31, 1999 Goss did not have any contractual obligations under foreign
exchange contracts.
39
<PAGE>
CREDIT AND RISK
Goss enters into financial instruments with banks with which Goss has continuing
business relationships and regularly monitors the credit ratings of its counter
parties. Goss sells its products to a world wide customer base and extends
credit to its customers based upon ongoing credit evaluations and security is
obtained if required. Concentrations of credit risk with respect to trade
receivables are limited due to Goss's large customer base; however, periodic
concentrations can occur due to the cyclical nature of Goss's business.
FAIR VALUE
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," and No. 119, "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments," require
disclosure of the fair value of financial instruments. The following methods and
assumptions were used by the Company in estimating its fair value disclosures
for such financial instruments as defined by the Statements.
Cash and short-term investments: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
Revolving credit facility: The carrying amount reported in the balance sheet
for the revolving credit facility approximates its fair value.
Senior subordinated notes: The fair value at December 31, 1999 approximates the
carrying amount as these notes were valued at their fair value as of the
Effective Date of the Plan. The estimated fair value of the notes at December
31, 1998 is based on the trading prices of the notes at year-end. This value was
52% of par on December 31, 1998.
Term loan: The estimated fair value of the term loan at December 31, 1999, which
was based on LIBOR, is equal to its carrying value.
Mortgage loans: The estimated fair value of the mortgage loans on the Sayama,
Japan, and Westmont, Illinois, properties is based on prevailing interest rates
and credit spreads.
Foreign currency contracts: The Company enters into foreign currency forward
exchange contracts to protect against adverse currency rate fluctuations. The
carrying amount reported in the balance sheet for derivatives approximates fair
market value.
Letters of credit: The fair value of letters of credit is estimated to
approximate their contractual amounts.
40
<PAGE>
The carrying value and estimated fair value of the Company's financial
instruments are as follows (in millions):
<TABLE>
<CAPTION>
At December 31,
--------------------------------------------
1999 1998
------------------------------- ----------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------ --------- ------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 29.9 $ 29.9 $ 57.2 $ 57.2
Revolving credit facility 23.4 23.4 178.9 178.9
Senior subordinated notes 103.0 103.0 225.0 117.0
Term loan 150.0 150.0 0.0 0.0
Mortgage - Westmont, IL 28.4 28.2 29.2 30.2
Mortgage - Sayama, Japan 22.8 23.0 23.1 23.2
Foreign currency contracts 0.0 0.0 0.3 0.3
Other debt obligations 3.1 3.1 4.8 4.8
Off balance sheet financial
Instruments:
Letters of credit 15.4 15.4 21.2 21.2
</TABLE>
5. RESTRUCTURING CHARGES
Restructuring charges are comprised of items of income, expense and loss that
were realized or incurred by the Company as a result of its decision to
reorganize under Chapter 11 of the Bankruptcy Code, as well as plant
restructuring and workforce reduction costs. These charges were incurred in both
the transition quarter and the year ended December 31, 1999. Such items
consisted of the following (in millions):
<TABLE>
<CAPTION>
Year Ended 3 Months Ended
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Workforce reduction costs $14.7 $7.1
Asset impairment charges 47.8 0.0
Chapter 11 costs 21.6 0.0
---- ---
Total restructuring charges $84.1 $7.1
===== ====
</TABLE>
During the quarter ended December 31, 1998, Goss initiated a 5% reduction in its
worldwide workforce. This reduction, which affected both salaried and hourly
jobs, resulted in a charge for severance costs of $7.1 million. As of December
31, 1999, all terminations were complete and approximately $5.1 million in
severance costs had been paid. The balance will be paid in 2000.
In the fiscal quarter ended December 31, 1999, the Company recorded a charge of
$14.7 million related to a reduction of approximately 315 employees of its U.S.
and European workforce. Approximately 85% of these costs are expected to be paid
in 2000 with the balance paid in 2001.
41
<PAGE>
The non-cash impairment charges consist of $40.4 million relating to the
Company's Reading, Pennsylvania facility, including the write-off of $35.3
million of goodwill, $6.4 million related to the Company's Westmont, Illinois
headquarters facility, and $1.0 million relating to certain manfacturing
equipment.
6. ACCOUNTS RECEIVABLE
Accounts receivable are summarized as follows (in millions):
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Trade accounts receivable $131.2 $117.6
Unbilled receivables 36.4 34.8
Notes receivable 7.9 12.2
Less allowance for doubtful accounts (41.6) (29.3)
------ ------
Accounts receivable, net $133.9 $135.3
====== ======
</TABLE>
The activity of the allowance for doubtful accounts is summarized as follows (in
millions):
<TABLE>
<CAPTION>
For the Period Ended, For the Period Ended,
December 31, September 30,
------------ -------------
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Beginning of period $(29.3) $(21.6) $(15.9) $0.0
Acquisition 0.0 0.0 0.0 (14.9)
Consolidation of Joint Venture 0.0 0.0 0.0 (1.5)
Additions, net of recoveries (14.6) (9.3) (9.0) 0.0
Charges 2.3 1.6 3.3 0.5
---- ---- ---- ---
End of period $(41.6) $(29.3) $(21.6) $(15.9)
======= ======= ======= =======
</TABLE>
As of December 31, 1999 accounts receivable included $33.1 million of retainage
held by customers pending final acceptance of equipment. This balance was $28.9
million at December 31, 1998.
Unbilled receivables consist principally of revenues recognized on press system
units where title has passed to the customer in accordance with the terms of the
contract, which is prior to the occurrence of the contractual billing terms.
Unbilled receivables are invoiced in accordance with the terms of contract
provisions and do not include any amounts subject to uncertainty as to their
realization. Substantially all amounts are expected to be billed and collected
within one year.
42
<PAGE>
7. INVENTORIES
Net inventories are summarized as follows (in millions):
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Materials $64.7 $111.8
Work in process 57.9 94.6
Finished goods 4.7 27.8
Parts 24.4 28.8
---- ----
Total inventories, net $151.7 $263.0
====== ======
</TABLE>
8. PROPERTY AND EQUIPMENT
Property and equipment are summarized below (in millions):
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Land and land improvements $31.1 $33.7
Buildings and building improvements 45.3 73.6
Machinery, equipment and tooling 126.7 109.6
Construction in progress 4.2 20.7
--- ----
Total 207.3 237.6
Less accumulated depreciation (66.6) (51.4)
------ ------
Property and equipment, net $140.7 $186.2
====== ======
</TABLE>
Goss has classified on its balance sheet $24.6 million of assets held for sale,
consisting of the Reading, Pennsylvania facility, the Westmont, Illinois
facility and certain manufacturing equipment. These assets have a net book value
at December 31, 1999 of $24.6 million, after taking into account impairment
charges of $12.5 million which were recorded in 1999 in order to record the
assets at estimates of net realizable value. Net realizable values for the
assets held for sale was based on estimates of market value, less estimated
costs of disposition. These assets are being disposed of as part of the
Company's restructuring and cost reduction efforts. It is expected that these
assets will be sold by the end of 2000.
The impairment charges are recorded in the "Restructuring charge" line on the
Consolidated Statement of Operations.
43
<PAGE>
9. OTHER CURRENT LIABILITIES
Other current liabilities are summarized below (in millions):
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Accrued post shipment costs $49.9 $47.7
Accrued contract costs 34.7 55.4
Loss contract reserves 27.5 27.5
Other 87.7 66.4
---- ----
Total other current liabilities $199.8 $197.0
====== ======
</TABLE>
10. DEBT
The debt obligations of the Company consist of the following (in millions):
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Revolving credit facility (interest at 11.0% and 8.7% at year end) $23.4 $178.9
Term loan, due 2003, with interest at 9.5% to 9.8% 150.0 0.0
8.66% mortgage loan on Westmont, IL office building due 2001 28.4 29.2
3.25% Yen-based mortgage loan on Sayama, Japan, plant due 2007 22.8 23.1
$225 million senior subordinated 12% notes due 2006 0.0 225.0
$112.5 million senior subordinated 12.25% notes due 2005 103.0 0.0
Other debt obligations with interest at 7.9% to 8.7% 3.1 4.8
--- ---
Total debt 330.7 461.0
Less current portion 28.7 184.4
---- -----
Long-term debt $302.0 $276.6
====== ======
</TABLE>
Maturities of long-term debt for the next five years are as follows: 2000, $5.3
million; 2001, $31.5 million; 2002, $8.3 million; 2003, $148.0 million and
$114.2 million thereafter.
Amounts outstanding at December 31, 1998 under the revolving credit facility
represent borrowings under the $200 million pre-petition bank credit facility.
On the Effective Date, Systems and the Lenders entered into the second amended
and restated credit agreement (the "Bank Facility") pursuant to the Plan. The
Bank Facility, which amends and restates the $200 million pre-petition revolving
credit facility, provides for total borrowings of $250 million,
44
<PAGE>
including a term loan in the amount of $150 million, revolving borrowings of up
to $100 million, and up to $75 million in letters of credit. The Bank Facility
matures on September 30, 2003 and provides for scheduled repayments of the term
loan and scheduled reductions in the revolving credit commitments starting in
2002. The Bank Facility bears interest, at the Company's option, at Banker's
Trust base rate plus 2.75% through March 31, 2002, 3.00% through September 30,
2002, and 3.75% through September 30, 2003, or the applicable offshore rate (the
mean of quotations for applicable currency loans, or reserve-adjusted LIBOR)
plus 3.75% through March 31, 2002, 4.00% through September 30, 2002, and 4.75%
through September 30, 2003. The Company's average interest rate was 8.8%, 8.76%,
and 9.14% for the periods ended September 30, 1998, December 31, 1998, and
December 31, 1999, respectively, on borrowings under the Bank Facility. The
maximum amount borrowed under the Bank Facility, excluding letters of credit,
was $166.8 million, $176.7 million, and $235.3 million, and the average amount
borrowed respectively was $122.3 million, $174.6 million, and $190.5 million,
respectively, for the periods ended September 30, 1998, December 31, 1998, and
December 31, 1999. As of December 31, 1999, borrowings and letters of credit
under the Bank Facility, excluding $2.2 million of revolving credit relating to
Goss's joint venture in China, totaled $186.7 million.
Substantially all of the Company's assets have been pledged as collateral under
the Bank Facility, with the exception of the Sayama, Japan and Westmont,
Illinois facilities, which are subject to mortgage liens. Obligations under the
Bank Facility are guaranteed by New Holdings and by each of Systems' domestic
subsidiaries. In addition, Systems guarantees all obligations of Goss U.K., Goss
France, and Goss Japan under the Bank Facility.
Among other restrictions, the Bank Facility contains certain financial
covenants, including, but not limited to, a minimum fixed charge coverage test
and a minimum Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) test. Borrowing under the revolving credit portion is also limited by a
borrowing base test, which limits the amount of borrowing to a certain
percentage of the Company's U.S.-based accounts receivable, inventories,
equipment and real property. In addition, the Bank Facility contains other
customary affirmative and negative covenants relating to (among other things)
limitations of dividends, other indebtedness, liens, investments, guarantees,
restricted junior payments, mergers and acquisitions, sales of assets, capital
expenditures, leases, transactions with affiliates, and conduct of business,
with customary exceptions and baskets. The Bank Facility contains customary
events of default, including failure to make payments when due, defaults under
other agreements or instruments of indebtedness, noncompliance with covenants,
breaches of representations and warranties, bankruptcy, judgments in excess of
specified amounts, invalidity of guarantees, impairment of security interests in
collateral, and certain changes of control.
The financial covenants contained in the Bank Facility must be satisfied at the
end of each quarter and are cumulative from the period starting on January 1,
2000 and at December 31, 2000 become rolling twelve month covenants. The
covenants become more stringent over time.
45
<PAGE>
Covenant noncompliance entitles the Lenders to declare a default under the Bank
Facility and accelerate payment of outstanding amounts.
As of December 31, 1998 the Company had issued $225.0 million of 12% unsecured
senior subordinated obligations (the "Old Notes") under an indenture dated
October 15, 1996. Pursuant to the Plan, on the Effective Date, the Noteholders
exchanged the Old Notes for the New Notes of New Holdings and common stock in
New Holdings representing an ownership interest of approximately 31 percent. The
New Notes were issued under an indenture, dated November 19, 1999 (the
"Indenture") between New Holdings and HSBC Bank USA, as Trustee. The New Notes
have a principal amount of $112.5 million, mature in 2005, and have an interest
rate of 12.25% per annum. Interest on the New Notes for the two-year period
immediately following the Effective Date will be paid by issuing additional New
Notes and interest thereafter will be paid semiannually on May 19th and November
19th in cash. The Bank Facility prohibits the transfer of funds from Systems to
New Holdings for the payment of interest on the New Notes if Systems is in
default under the Bank Facility. Subject to certain conditions and dates, the
New Notes are, in part, redeemable in whole or in part at the option of New
Holdings. The payment of principal and interest on the New Notes is subordinated
to the Senior Debt under the Bank Facility (as defined in the Indenture). The
Indenture contains covenants similar to those in the Bank Facility and includes
cross-default provisions under which an event of default under the Bank Facility
would also be considered an event of default under the Indenture.
The New Notes were initially recorded at their estimated fair value of $101.2
million on November 19, 1999, the date of issuance, resulting in a discount to
face value of $11.3 million. The discount is being amortized to interest expense
over the six year period remaining to maturity.
As described above, as part of the Chapter 11 plan of reorganization, the
Noteholders exchanged the Old Notes for the New Notes of New Holdings and
common stock in New Holdings representing an ownership interest of
approximately 31 percent. As a result of this transaction an extraordinary
gain of $107.6 million was recorded in 1999 for forgiveness and restructuring
of debt. Also, included as an extraordinary loss in fiscal 1997 is the
write-off of $5.2 million in loan origination costs attributable to the
prepayment of a portion of the term loan related to the Acquisition. Due to
the significant net operating loss carry forward in the United States, no tax
provision was recorded on either of these extraordinary items.
46
<PAGE>
11. INCOME TAXES
The components of the provision (benefit) for income taxes are as follows (in
millions):
<TABLE>
<CAPTION>
Year Ended
Year Ended 3 Months Ended September 30,
December 31, December 31, -------------
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Current:
United States $0.0 $0.0 $0.0 0.0
Non-United States 7.1 (0.3) 3.3 2.2
State and local 0.0 0.0 0.0 0.0
--- --- --- ---
Total current 7.1 (0.3) 3.3 2.2
--- ----- --- ---
Deferred:
United States 0.0 0.0 0.0 0.0
Non-United States (3.3) (0.1) 4.3 (1.7)
State and local 0.0 0.0 0.0 0.0
--- --- --- ---
Total deferred (3.3) (0.1) 4.3 (1.7)
---- ---- --- -----
Provision (benefit) for
income taxes $3.8 $(0.4) $7.6 $0.5
==== ===== ==== ====
</TABLE>
A reconciliation of the statutory U.S. Federal income tax rate to the effective
income tax rate is as follows:
<TABLE>
<CAPTION>
Year Ended
Year Ended 3 Months Ended September 30,
December 31, December 31, -------------
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 35.0% 35.0%
Effect of:
Non deductible expenses (0.4)% (0.3)% (2.5)% (1.0)%
Goodwill amortization (0.3)% (0.3)% (2.4)% (2.7)%
Net loss for which no
benefit has been provided (37.2)% (35.1)% (38.4)% (32.2)%
Other 1.3% 1.3% 1.2% (0.6)%
---- ---- ---- ------
Effective Tax Rate (1.6)% 0.6% (7.1)% (1.5)%
====== ==== ===== =====
</TABLE>
47
<PAGE>
The domestic and foreign components of the loss before income taxes and
extraordinary items is as follows:
<TABLE>
<CAPTION>
Year Ended 3 Months Ended Year Ended
December 31, December 31, September 30,
--------------
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Domestic $(216.1) $(66.6) $(119.6) $(34.3)
Foreign (18.1) (6.2) 12.7 (1.7)
------ ----- ---- -----
Total $(234.2) $(72.8) $(106.9) $(36.0)
======== ======= ======== =======
</TABLE>
The company expects to have net operating loss carryforwards of approximately
$245.5 million in the U.S. and $52.3 million in the United Kingdom as of
December 31, 1999. $64.2 million of the U.S. loss will expire after December
2011, $77.7 million will expire after December 2012, $54.6 million will expire
after December 2013, and $49.0 million will expire after December 2014. The
United Kingdom loss can be carried forward indefinitely. Based upon the
difficulty in predicting the amount of future taxable income by jurisdiction in
the U.S. and the United Kingdom, management has decided to establish a valuation
allowance to offset fully any deferred tax asset otherwise attributable to the
existence of these losses.
48
<PAGE>
Current and noncurrent deferred income tax assets arise principally from the
following (in
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Current:
Accounts receivable reserves $13.1 $8.1
Inventory reserves 12.7 13.1
Product warranty reserves 7.1 6.7
Contract reserves 13.9 12.8
Accrued compensation 0.0 (0.4)
Restructuring reserves 2.1 (2.3)
Other 7.8 4.7
--- ---
Total current asset 56.7 42.7
---- ----
Noncurrent:
Insurance reserves 1.2 0.2
Property and equipment (8.8) (8.5)
Goodwill 7.2 (5.0)
Tax loss carryforwards 114.4 86.2
Other 7.8 7.2
--- ---
Total noncurrent asset 121.8 80.1
----- ----
Valuation allowance (U.S. and U.K.) (175.4) (123.9)
------ ------
Net deferred tax asset/(liability) $3.1 $(1.1)
==== =====
</TABLE>
12. PENSION PLANS
The Company has pension plans covering certain of its employees in the United
States, the United Kingdom, Germany, and Japan. The following represents the
obligations and plan assets at fair value for the Company's pension plans (in
millions):
<TABLE>
<CAPTION>
For the Period Ended
December 31,
------------
1999 1998
---- ----
<S> <C> <C>
Benefit obligation at beginning of period $ 81.7 $ 81.7
Service cost 2.2 0.6
Interest cost 4.8 1.2
Plan participants' contribution 0.7 0.2
Actuarial loss 9.3 0.0
Benefits paid (5.5) (1.1)
Curtailment gain (0.4) 0.0
Currency fluctuation (1.5) (0.9)
--- ---
Benefit obligation at end of year $ 91.3 $ 81.7
======== ========
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
For the Period Ended
December 31,
------------
1999 1998
---- ----
<S> <C> <C>
Fair value of plan assets at beginning of year $ 78.1 $ 68.5
Actual return on plan assets 9.1 11.1
Employer contributions 5.4 1.0
Plan participants' contributions 0.7 0.2
Benefits paid (5.3) (1.2)
Currency fluctuation (1.9) (1.5)
--- ---
Fair value of plan assets at end of year $ 86.1 $ 78.1
======== ========
</TABLE>
The funded status of the pension plans reconcile with amounts on the
consolidated balance sheets as follows (in millions):
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Funded status $ (5.2) $ (3.6)
Unrecognized net actuarial loss 12.3 5.3
Unrecognized prior year service cost 0.5 0.5
--- ---
Net amount recognized $ 7.6 $ 2.2
======== ========
</TABLE>
Amounts recognized in the consolidated balance sheets consist of (in millions):
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Prepaid benefit cost $ 13.2 $ 8.1
Accrued benefit liability (5.6) (5.9)
--- ---
Net amount recognized $ 7.6 $ 2.2
======== =======
</TABLE>
Net periodic pension cost for the Company's plans included in the accompanying
statements of operations consist of the following (in millions):
<TABLE>
<CAPTION>
Year Ended 3 Months Ended Year Ended
December 31, December 31, September 30,
-------------
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Service cost-benefits earned during the year $2.2 $0.6 $1.8 $1.7
Interest accrued on accumulated benefit
obligation 4.8 1.2 4.9 5.1
Expected return on plan assets (6.8) (1.5) 5.1 (5.5)
Net amortization and deferral 0.1 0.2 (11.6) (0.5)
--- --- ---- ---
Net periodic pension cost $0.3 $0.5 $0.2 $0.8
==== ==== ==== ====
</TABLE>
50
<PAGE>
In addition, a curtailment gain of $0.4 million was recognized in the period
ending December 31, 1999 due to the closure of the Reading facility.
The above pension amounts were determined using a December 31 measurement date
for the year and three month periods ended December 31, 1999 and 1998, and a
June 30 measurement date for the years ended September 30, 1998 and 1997. The
following assumptions were also used:
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
<S> <C> <C>
Discount rate 2.5% - 8.0% 2.5% - 6.5%
Annual salary increase 3.0% - 3.5% 3.0% - 3.5%
Asset return 3.0% - 9.0% 3.0% - 8.5%
</TABLE>
The Company sponsors defined contribution plans covering its U.S. salaried
employees and certain of its hourly employees. Employer contributions to these
plans which were charged to expense totaled $1.9 million and $0.6 million for
the twelve and three month periods ended December 31, 1999 and 1998,
respectively. For the years ended September 30, 1998 and 1997, these
contributions totaled $3.4 million and $2.1 million, respectively.
13. POST-RETIREMENT MEDICAL PLANS
The Company provides retiree medical and life insurance benefits for certain of
its hourly U.S. employees. Under Statement of Financial Accounting Standard No.
106, retiree benefits are viewed as a type of deferred compensation and are
treated as if they are earned over the working life of the employees, and the
cost should be fully charged to operations by the earliest date the employee is
eligible to retire.
The Company funds the benefits of these plans on a cash basis as benefits are
incurred. There are no assets that have been segregated and restricted to
provide for post-retirement benefits.
The following represents the obligations and plan assets at fair value for the
Company's post-retirement medical plans (in millions):
<TABLE>
<CAPTION>
For the Period Ended
December 31,
------------
1999 1998
---- ----
<S> <C> <C>
Benefit obligation at beginning of period $ 20.0 $ 19.5
Service cost 0.9 0.2
Interest cost 1.3 0.3
Benefits paid (0.2) 0.0
Actuarial gain (9.1) 0.0
Curtailment gain (0.4) 0.0
----- ---
Benefit obligation at end of year $ 12.5 $ 20.0
======== ========
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
For the Period Ended
December 31,
------------
1999 1998
---- ----
<S> <C> <C>
Fair value of plan assets at beginning of period $ 0.0 $ 0.0
Employer contributions 0.2 0.0
Benefits paid (0.2) 0.0
----- ---
Fair value of plan assets at end of year $ 0.0 $ 0.0
======= =======
</TABLE>
The funded status of the post-retirement medical plans reconcile with amounts on
the consolidated balance sheets as follows (in millions):
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Funded status $ (12.5) $ (20.0)
Unrecognized net actuarial (gain) loss (6.6) 3.2
Effect of curtailment 0.4 0.0
--- ---
Net amount recognized $ 18.7 $ 16.8
========= =========
</TABLE>
Amounts recognized in the consolidated balance sheets consist of (in millions):
<TABLE>
<CAPTION>
At December 31,
---------------
1999 1998
---- ----
<S> <C> <C>
Accrued benefit liability $ 18.7 $ 16.8
Prepaid benefit cost 0.0 0.0
--- ---
Net amount recognized $ 18.7 $ 16.8
======== ========
</TABLE>
The components of post-retirement medical expense are as follows (in millions):
<TABLE>
<CAPTION>
Year Ended
3 Months September 30,
Year Ended Ended -------------------
Dec. 31, 1999 Dec. 31, 1998 1998 1997
----------------- ---------------- ---- ----
<S> <C> <C> <C> <C>
Service cost $0.9 $0.2 $0.7 $0.6
Interest cost 1.3 0.3 1.1 1.0
Net amortization and deferral 0.1 0.0 0.0 0.0
--- --- --- ---
Retirement medical expense $2.3 $0.5 $1.8 $1.6
==== ==== ==== ====
</TABLE>
In addition, a curtailment gain of $0.4 million was recognized in the period
ending December 31, 1999 due to the closure of the Reading facility.
52
<PAGE>
The post-retirement medical obligation was comprised of the following (in
millions):
<TABLE>
<CAPTION>
At December 31,
-----------------
1999 1998
---- ----
<S> <C> <C>
Retirees $3.0 $0.3
Active employees:
Eligible to retire 5.2 3.8
Not eligible 4.3 15.9
--- ----
Retirement medical obligations $12.5 $20.0
Effect of curtailment (0.4) 0.0
Unrecognized actuarial gain/(loss) 6.6 (3.2)
--- -----
Accrued retirement medical liability $18.7 $16.8
===== =====
</TABLE>
The above post-retirement medical amounts were determined using a December 31
measurement date for the year and three month periods ended December 31, 1999
and 1998, and a June 30, measurement date for the years ended September 30, 1998
and 1997. The following assumptions were also used:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Discount rate 8.00% 6.75%
Health care cost trend rate 7.50% 7.50%
</TABLE>
The health care cost trend rate assumption has a significant effect on the
obligation amounts reported. If the assumed health care cost trend rate was
increased by one percentage point, this would increase the retirement medical
obligation at December 31, 1999 by $1.9 million and the retirement medical
expense for 1999 by $0.2 million. A decrease of the health care cost trend rate
would decrease the retirement medical obligation at December 31, 1999 by $1.6
million and the retirement medical expense for 1999 by $0.2 million.
14. LEASES
The Company leases certain operating assets with various renewal options.
Consolidated rental expense was $2.3 million, $0.9 million, $2.7 million, and
$3.2 million for the year ended December 31, 1999, the three months ended
December 31, 1998, and the years ended September 30, 1998 and 1997,
respectively.
53
<PAGE>
At December 31, 1999, the future minimum lease payments under operating and
capital leases were as follows (in millions):
<TABLE>
<CAPTION>
Operating Capital
Leases Leases
------ ------
<S> <C> <C>
2000 $0.2 $1.6
2001 0.2 1.3
2002 0.1 0.6
2003 0.1 0.1
2004 and Thereafter 0.0 0.0
--- ---
Total $0.6 3.6
====
Less amounts representing
interest and executory costs 0.5
---
Net present values $3.1
====
</TABLE>
15. RELATED PARTY TRANSACTIONS
The Company purchases drive systems, press controls, and related products from
Allen-Bradley, a subsidiary of Rockwell, the holder of the preferred stock
issued by Holdings as part of the Acquisition. As a result of the Chapter 11
reorganization, effective November 19, 1999 this preferred stock was cancelled
and common stock of New Holdings, representing a 3.5% equity interest, was
issued to Rockwell. Purchases from Allen-Bradley totaled $11.4 million in 1999,
$4.6 million for the three months ended December 31, 1998, $18.6 million in
fiscal 1998 and $18.0 million in fiscal 1997. The Company also purchased certain
services from Rockwell, including data processing, telecommunications, and
research pursuant to a services agreement with Rockwell which extended through
1998. Such purchases totaled $3.7 million in fiscal 1998 and $4.5 million in
fiscal 1997.
On November 30, 1998, Goss sold approximately $35.6 million in accounts
receivable to BT Commercial Corporation. The collectibility of the receivables
was guaranteed by an affiliate of Stonington, a related party.
The Company paid a one-time transaction and financing advisory fee in 1997 of
$6.0 million to Stonington related to the Acquisition which has been capitalized
as part of the transaction cost.
54
<PAGE>
16. CONTINGENCIES AND COMMITMENTS
LEGAL CONTINGENCIES
In the normal course of its business, the Company is subject to various claims
and lawsuits. Typically, these matters consist of product liability claims
brought by the individuals who operate the equipment that the Company sold,
disputes with customers over the performance and completion of installation of
equipment, and workers' compensation claims by the Company's own employees.
In the event of injury, the individuals who operate printing press equipment
almost universally are limited by workers' compensation laws in the amount that
they can recover from their employers. As a consequence, in cases involving a
significant injury, the injured operators frequently bring "product liability"
claims against the manufacturer of the equipment alleging that the equipment was
improperly designed or manufactured, even though the equipment may be decades
old. Goss maintains insurance with a $250,000 per occurrence deductible for
product liability claims made after October 15, 1996. In connection with the
Acquisition, Goss assumed product liability claims made prior to October 15,
1996 for which Rockwell had a self-insured retention of $2 million and a $1
million per occurrence deductible.
Printing equipment is complex and expensive, and when disputes arise regarding
the performance and completion of installation of equipment, it is not uncommon
for those disputes to involve significant amounts. In some instances, those
disputes result in litigation. No litigation of this type is currently pending
that management believes is likely to be material.
On March 7, 2000, Goss filed a federal lawsuit under the Antidumping Act of 1916
against MAN Roland Druckmaschinen AG, Koenig & Bauer AG, Mitsubishi Heavy
Industries, Ltd., Tokyo Kikai Seisakusho, Ltd. and their United States
subsidiaries. The lawsuit claims unspecified damages as a result of the
importation of large newspaper presses into the United States by the defendants
and the sale of these presses at prices substantially below those prevailing in
foreign markets. While Goss believes it is entitled to receive significant
damages in this action, there can be no assurance that it will be successful.
The Company received creditor claims during its bankruptcy proceedings which the
Company believes are duplicative, erroneous or exaggerated and to which the
Company believes it has valid defenses. The Company is continuing to seek
resolution of these claims through negotiation. The Company will object to these
disputed claims in a timely fashion in the United States Bankruptcy Court in
Delaware. As of December 31, 1999, disputed claims amounted to $76.3 million.
The disputed claims are primarily comprised of trade accounts payable where the
claim amount differs from the Company's books and records, and breach of
contract and product liability claims. Although the majority of the claims filed
in the bankruptcy proceedings have been expunged or resolved within the
Company's reserves, a number of significant disputed claims remain pending in
the bankruptcy proceeding.
The disputed claims in the bankruptcy proceedings and other legal proceedings
are in some cases in excess of recorded reserves. It is not presently possible
to determine the outcome of the claims and lawsuits against the Company.
However, the Company maintains as an accrued liability a reserve that is its
present estimate of the total cost to resolve all of these matters. Management
does not believe that the ultimate disposition of any of these matters will have
a material adverse effect on the Company's financial position or liquidity,
although it is possible that the resolution of these matters could be material
to the results of operations in a given period.
ENVIRONMENTAL CONTINGENCIES
The Company has received either notices of potential liability or third-party
claims under the Federal Comprehensive Environmental Response, Compensation, and
Liability Act at four off-site disposal facilities or so-called "Superfund
Sites". The Company's share of the responsibility for these Superfund Sites
generally is minor, and, although current law imposes joint and several
liability on any party deemed to be responsible at a Superfund Site, management
believes that the ultimate resolution of these matters will not be material to
the Company.
The Company's Reading, Pennsylvania, facility has been operating a groundwater
remediation system under a 1981 Consent Order with the Commonwealth of
Pennsylvania as a result of its and its predecessor's historical waste disposal
practices. The Company has completed remediation at the site pursuant to a
remediation proposal approved by the Commonwealth and has submitted a monitoring
proposal to the Commonwealth for approval.
55
<PAGE>
Rockwell has agreed to indemnify the Company for expenses attendant to
existing environmental matters to the extent of one-half of those expenses in
excess of $1.0 million. The Company maintains as an accrued liability a
reserve that is its present estimate of the total cost to resolve all of
these matters. Management does not believe that the ultimate disposition of
any of these matters will have a material adverse effect on the Company's
financial position or liquidity, although it is possible that the resolution
of these matters could be material to the results of operations in a given
period.
COMMITMENTS
The Company in certain instances provides letters of credit to guarantee the
performance of presses under certain long-term contracts. Such letters of credit
outstanding were $15.4 million as of December 31, 1999, and $21.2 million as of
December 31, 1998. The Company intends to perform fully the underlying contracts
and does not expect to incur any material liability beyond customary amounts for
warranty and similar claims.
56
<PAGE>
17. SEGMENT REPORTING
Information on Goss's reportable operating segments is detailed below. The
column labeled "Other" consists of corporate expenses that are not allocable to
the geographic operating segments and elimination of intersegment activity.
<TABLE>
<CAPTION>
Americas Europe Asia Other Total
-------- ------ ---- ----- -----
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Sales to external customers $ 274.5 $ 182.0 $ 151.3 $ 0.0 $ 607.8
Intersegment sales 14.7 18.4 0.4 (33.5) 0.0
Operating profit/(loss) (143.7) (19.8) 15.2 (40.0) (188.3)
Other (expense)/income (2.1) (2.1)
Interest expense (43.8) (43.8)
Loss before income taxes and
extraordinary item (234.2)
Total assets $ 199.2 $ 236.9 $ 142.6 $ 205.5 $ 784.2
THREE MONTHS ENDED DECEMBER 31, 1998
Sales to external customers $ 58.5 $ 32.5 $ 16.2 $ 0.0 $ 107.2
Intersegment sales 2.8 13.0 0.0 (15.8) 0.0
Operating profit/(loss) (46.3) (3.0) (0.4) (9.4) (59.1)
Other (expense)/income (1.4) (1.4)
Interest expense (12.3) (12.3)
Loss before income taxes (72.8)
Total assets $ 308.9 $ 275.5 $ 151.2 $ 262.0 $ 997.6
YEAR ENDED SEPTEMBER 30, 1998
Sales to external customers $ 395.8 $ 267.8 $ 100.5 $ 0.0 $ 764.1
Intersegment sales 16.4 55.5 0.1 (72.0) 0.0
Operating profit/(loss) (69.5) 22.0 5.0 (13.0) (55.5)
Other (expense)/income (5.0) (5.0)
Interest expense (46.4) (46.4)
Loss before income taxes (106.9)
Total assets $ 362.3 $ 285.3 $ 134.0 $ 237.0 $ 1,018.6
YEAR ENDED SEPTEMBER 30, 1997
Sales to external customers $ 352.8 $ 192.0 $ 88.0 $ 0.0 $ 632.8
Intersegment sales 10.9 29.7 0.0 (40.6) 0.0
Operating profit/(loss) 4.3 7.2 3.8 (15.5) (0.2)
Other (expense)/income 2.9 2.9
Interest expense (38.7) (38.7)
Loss before income taxes and
extraordinary item (36.0)
Total assets $ 202.6 $ 271.2 $ 127.5 $ 308.0 $ 909.3
</TABLE>
57
<PAGE>
The table below details customer sales for the Company's major foreign
operations (in millions):
<TABLE>
<CAPTION>
England France Japan
------- ------ -----
<S> <C> <C> <C>
Year ended December 31, 1999 $ 96.0 $ 85.6 $ 121.7
Three months ended December 31, 1998 $ 10.8 $ 21.4 $ 10.9
Year ended September 31, 1998 $ 172.7 $ 93.6 $ 82.7
Year ended September 31, 1997 $ 124.6 $ 66.4 $ 71.8
</TABLE>
The table below details long-lived assets for the Company's major foreign
operations (in millions):
<TABLE>
<CAPTION>
England France Japan
------- ------ -----
<S> <C> <C> <C>
Year ended December 31, 1999 $ 110.7 $ 6.2 $ 40.9
Three months ended December 31, 1998 $ 117.2 $ 7.6 $ 37.3
Year ended September 31, 1998 $ 122.0 $ 7.5 $ 31.1
Year ended September 31, 1997 $ 122.2 $ 7.4 $ 40.5
</TABLE>
18. ACQUISITION OF ROCKWELL GRAPHIC SYSTEMS
On October 14, 1996, Systems acquired Rockwell Graphic Systems from Rockwell.
The Acquisition was effected through the purchase by Systems of all the
outstanding stock of Rockwell Graphic Systems, Inc., a Delaware corporation
("Goss Delaware"), Rockwell Systemes Graphiques Nantes, a societe anonyme
organized under the laws of the Republic of France ("Goss France"), and through
the purchase by Systems and certain wholly-owned foreign subsidiaries of the
assets and the assumption of liabilities which constitute the remainder of
Systems. Immediately after the Acquisition, Systems merged with and into Goss
Delaware. The purchase price for the Acquisition was $601.8 million, which
consisted of $525.9 million in cash, subject to certain adjustments, 47,500
shares of preferred stock, $1,000 liquidation preference per share, issued by
Holdings, which directly owned all of the capital stock of Systems, and
approximately $28.4 million of transaction and acquisition costs. The purchase
price was subject to a post closing adjustment based upon the computation of
certain working capital amounts. This adjustment totaled $7.8 million and is in
addition to the $525.9 million mentioned above and was paid on November 7, 1997.
The Acquisition has been accounted for under the purchase method of accounting;
accordingly, the results of operations for fiscal year 1997 included in the
accompanying consolidated financial statements cover the period from October 15,
1996, to September 30, 1997.
Simultaneous with the closing of the Acquisition, Holdings raised $116.5
million of equity financing, comprised of $111.5 million in cash from the
sale of common stock of Holdings to the Fund, $1.0 million in cash from the
sale of Holdings common stock to an affiliate of a limited partner of the
Fund, and $4.0 million in cash from the sale of Holdings common stock to
certain members of the Company's management (the "Management Placement").
Holdings financed $2.0 million of the Management Placement. The balance of
the funds needed to consummate the Acquisition and pay related fees and
expenses came from: $225.0 million in proceeds from Systems issuance of 12%
Senior Subordinated Notes due 2006;
58
<PAGE>
$137.1 million in proceeds from the sale of a portfolio of notes receivable
issued in connection with customer financing provided by Rockwell Graphic
Systems to purchasers of its products; and $75.3 million in borrowings under
a new credit agreement between Goss Delaware, Bankers Trust Company and
certain other lenders.
The Acquisition has been accounted for under the purchase method of accounting.
Accordingly, the purchase price has been allocated to the tangible and
intangible assets and liabilities of the Company based on their respective fair
values as of the date of the Acquisition.
The final allocation of the total purchase price to the assets and liabilities
acquired is as follows (in millions):
<TABLE>
<S> <C>
PURCHASE PRICE
Purchase price of common stock and assets $573.4
Post-closing additional purchase price 7.8
Commissions, fees and expenses 28.4
--------
Total Purchase Price $609.6
========
FINAL ALLOCATION OF PURCHASE PRICE
Total current assets, net of deferred taxes $360.3
Property and equipment 192.6
Customer notes 137.1
Other long-term assets 28.7
Goodwill 322.9
Liabilities assumed (432.0)
-------
Total Purchase Price $609.6
=======
</TABLE>
The following unaudited pro forma financial information reflects the Acquisition
as if it had occurred at the beginning of each of the periods presented. The pro
forma information is presented for information purposes only and is not
necessarily indicative of what would have occurred had the Acquisition been
consummated as of those dates (in millions):
<TABLE>
<CAPTION>
Pro Forma (unaudited)
---------------------------------
Year ended Year ended
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Net sales $632.8 $698.2
Net loss (46.4) (95.9)
</TABLE>
59
<PAGE>
The inventory acquired from Rockwell Graphic Systems as part of the Acquisition
was revalued to its fair market value as of the date of the Acquisition. The
excess of the fair market value of that inventory over its carrying value to
Rockwell Graphic Systems as of the date of Acquisition was $46.7 million. The
$46.7 million step-up was charged to expense by the Company in fiscal year 1997,
as the revenue was recorded on the underlying inventory.
19. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and income taxes are as follows (in millions):
<TABLE>
<CAPTION>
Year Ended
3 Months September 30,
Year Ended Ended -------------
Dec. 31, 1999 Dec. 31, 1998 1998 1997
------------- ------------- ---- ----
<S> <C> <C> <C> <C>
Interest paid $33.7 $18.7 $40.5 $23.2
Income taxes paid $2.8 $1.0 $2.7 $4.6
</TABLE>
Other non-cash financing activities included (in millions):
<TABLE>
<CAPTION>
Inflow/(Outflow)
----------------------------------------------------------
Year Ended
3 Months September 30,
Year Ended Ended -------------
Dec. 31, 1999 Dec. 31, 1998 1998 1997
------------- ------------- ---- ----
<S> <C> <C> <C> <C>
Cancellation of Old Notes (225.0) 0.0 0.0 0.0
Cancellation of stock (206.1) 0.0 0.0 0.0
Issuance of New Notes 101.2 0.0 0.0 0.0
Issuance of stock 26.7 0.0 0.0 0.0
Interest on New Notes paid in kind 1.6 0.0 0.0 0.0
Payments of dividends in stock (3.3) 0.0 (3.1) (0.6)
</TABLE>
The cancellation of Old Notes and stock, the issuance of New Notes and stock,
and the interest on New Notes which was paid in kind are a result of the
reorganization under the Plan as described in Note 2.
20. STOCK OPTIONS PLAN
In fiscal 1997, the Company established the Management Stock Incentive Plan (the
"Incentive Plan") for various members of the Company's management.
As part of the Company's Chapter 11 reorganization all of the 57,200 options
outstanding pursuant to the Incentive Plan at the time of the reorganization
were cancelled. No new options have since been issued.
60
<PAGE>
As permitted by Statement of Financial Accounting Standard No. 123, the Company
accounts for this Plan under APB Opinion No. 25, under which no compensation
cost has been recognized. Had compensation cost under this Plan been determined,
the Company's net loss would have been increased to the following pro forma
amounts (in millions):
<TABLE>
<CAPTION>
Year Ended
Year Ended Year Ended September 30,
December 31, December 31, -------------
1999 1998 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
As Reported $130.4 $72.4 $114.5 $41.7
Pro Forma $131.1 $72.6 $115.4 $42.7
</TABLE>
The Incentive Plan permitted the Company to grant options for up to 71,500
shares. Under the Incentive Plan stock options expire 10 years from the date of
grant. The incentive options vest ratably over a five year period. The vesting
of performance options are dependent on the Company's future results of
operations through the fiscal year end 2001 but in any event will vest by
October 15, 2006.
Information with respect to options granted under the Company's stock option
plan is as follow:
<TABLE>
<CAPTION>
December 31, September 30,
------------ -------------
1999 1998 1998 1997
Shares Shares Shares Shares
(000) (000) (000) (000)
----- ----- ----- -----
<S> <C> <C> <C> <C>
Outstanding at beginning of year 60.4 72.7 68.4 0.0
Granted 0.0 0.0 9.3 69.2
Exercised 0.0 0.0 0.0 0.0
Forfeited (3.2) (12.3) (5.0) (0.8)
Expired/canceled (57.2) 0.0 0.0 0.0
----- ----- ----- -----
Outstanding at end of year 0.0 60.4 72.7 68.4
===== ===== ===== =====
Exercisable at end of year 0 0 0 0
Weighted average fair value of options granted n/a $42.92 $42.92 $48.09
</TABLE>
All of the options outstanding at the end of each period had exercise and
weighted average exercise prices of $100.00.
The minimum value of each option grant was estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions: risk-free interest of 5.61%; expected life of 10 years; and no
expected dividend yield or volatility.
61
<PAGE>
21. SUBSEQUENT EVENTS
Commencing on January 26, 2000, Goss made payments of approximately $19.8
million to its pre-petition trade creditors, representing the first of the three
payments required by the Plan. Substantially all of the $19.8 million in
payments was paid prior to the scheduled date of February 18, 2000.
On February 18, 2000, Goss received a $20.0 million payment in settlement of a
legal claim.
On March 7, 2000, Goss filed a federal lawsuit under the Antidumping Act of 1916
against MAN Roland Druckmaschinen AG, Koenig & Bauer AG, Mitsubishi Heavy
Industries, Ltd., Tokyo Kikai Seisakusho, Ltd. and their United States
subsidiaries. The lawsuit claims unspecified damages as a result of the
importation of large newspaper presses into the United States by the defendants
and the sale of these presses at prices substantially below those prevailing in
foreign markets. While Goss believes it is entitled to receive significant
damages in this action, there can be no assurance that it will be successful.
62
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth information concerning the directors of Goss
Holdings, Inc.:
<TABLE>
<CAPTION>
NAME AGE PERIOD SERVED/TERM*
---- --- -------------------
<S> <C> <C>
J. Joe Adorjan 61 November 19, 1999 to Present
Thomas R. Cochill 60 November 19, 1999 to Present
Robert F. End 44 November 19, 1999 to Present
Joseph P. Gaynor, III 51 November 19, 1999 to Present
James J. Kerley 76 November 19, 1999 to Present
Lester A. Kraft 66 November 19, 1999 to Present
Sam S. McKeel 73 November 19, 1999 to Present
Alexis P. Michas 41 November 19, 1999 to Present
James P. Sheehan 57 November 19, 1999 to Present
</TABLE>
* Each director is elected for a one-year term.
J. JOE ADORJAN is a Partner of Stonington and has been Chairman of Adven Capital
Partners, LLC since 1999. He was Chairman, Chief Executive Officer and President
of Borg Warner Security Corporation, Chicago, Illinois from 1995 to 1999 and
President of Emerson Electric Company from 1992 to 1995. Prior to that, he was
Chairman and Chief Executive Officer of ESCO Electronics Corporation. Mr.
Adorjan is a Director of The Earthgrains Company, Hussmann International, Inc.,
and Illinova Corporation.
63
<PAGE>
THOMAS R. COCHILL has been the President of Ingenium, LLC, a management
consulting firm, since 1998. Prior thereto he served as Chief Executive Officer
and President of Webcraft Technologies, a commercial printer, from 1992 to 1998
and as President, Commercial Products Group, of The Lehigh Press, Inc. from 1981
to 1992. Mr. Cochill is also a Director of Grand Union Company, Harvard
Industries, American Rice, Inc. and Golden Books Family Entertainment, Inc.
ROBERT F. END has been a Partner and Director of Stonington since 1993. He was a
Consultant of Merrill Lynch Capital Partners, Inc., a private investment firm
associated with Merrill Lynch & Co. from 1994 through December 31, 1999; a
Director of MLCP since 1993; a Partner of MLCP from 1993 to 1994; and Vice
President of MLCP from 1989 to 1993. Mr. End was also a Managing Director of the
Investment Banking Division of Merrill Lynch & Co. from 1993 to July 1994 and a
Director of the Investment Banking Division of Merrill Lynch & Co. from 1990 to
1993. Mr. End is also a Director of Packard BioScience Company and United
Artists Theatre Circuit, Inc.
JOSEPH P. GAYNOR, III has served as Executive Vice President Administration,
Chief Financial Officer and Treasurer of Goss Graphic Systems, Inc. since
January 1999, of GGS Holdings, Inc. from January 1999 to November 1999, and
of Goss Holdings, Inc. since November 1999. Mr. Gaynor also served as
Executive Vice President, Chief Financial Officer and Treasurer of Goss
Graphic Systems, Inc., from August 1998 to December 1998. Prior thereto he
served as a Managing Director of Shattuck Hammond Partners, an investment
banking unit of PricewaterhouseCoopers Securities, L.L.C. from 1997 to August
1998. Mr. Gaynor also served as the Executive Vice President and Chief
Financial Officer of Primary Health Systems, Inc. from 1995 to 1996 and as
Chief Financial Officer of the Sun Times Company from 1990 to 1994.
JAMES J. KERLEY has served as the non-executive Chairman of DT Industries, Inc.,
a manufacturer of automated test systems and pharmaceutical and plastic
packaging equipment, since May 1997. Mr. Kerley served as Chairman of Rohr,
Inc., a manufacturer of jet engine and other components for aircraft, from 1993
to 1994. Prior thereto he served as Vice Chairman and Chief Financial Officer of
Emerson Electric Co., a manufacturer of electrical products and systems for
consumer, commercial, industrial and defense markets. Mr. Kerley is also a
Director of Borg-Warner Automotive, Inc., DT Industries, Inc. and Atlantic Coast
Airlines, Inc.
LESTER A. KRAFT is a former executive with Rockwell Graphic Systems who retired
in 1992 and is currently a private investor. Mr. Kraft most recently served as
Executive Vice President of Marketing with Rockwell Graphic Systems and also
held the positions of Vice President and General Manager of the Goss Newspaper
Products business unit of Rockwell Graphic Systems.
SAM S. MCKEEL has been a Director of Guy Gannett Communications, a newspaper and
television company, from 1992 through December 1999. Prior thereto he was a
Director of American Publishing Co., a newspaper publishing company. He has also
served as President, Chief Executive Officer, and Publisher of the Chicago
Sun-Times and as Chairman and Publisher of the Philadelphia Enquirer and the
Philadelphia Daily News.
64
<PAGE>
ALEXIS P. MICHAS has been the Managing Partner and a Director of Stonington
since 1993 and the Managing Partner and a Director of Stonington II since 1994.
He has also been a Director of Merrill Lynch Capital Partners, Inc. since 1989,
a Partner of MLCP from 1993 to 1994 and Senior Vice President of MLCP from 1989
to 1993. Mr. Michas was also a Managing Director of the Investment Banking
Division of Merrill Lynch & Co. from 1991 to July 1994. Mr. Michas is also a
Director of Borg-Warner Automotive, Inc., Burns International Services,
Dictaphone Corporation and Packard BioScience Company.
JAMES P. SHEEHAN has served as Chairman of the Board, Goss Graphic Systems,
Inc. since November 1998, of GGS Holdings, Inc. from November 1998 to
November 1999, and of Goss Holdings, Inc. since November 1999. Mr. Sheehan
was self-employed as a private investor from January 1994 to November 1998.
Prior thereto he served as President and Chief Operating Officer of A.H. Belo
Corp., a media company that publishes newspapers and televises programs
through owned stations. In March 1999, Mr. Sheehan became a limited partner
of Stonington Partners, L.P.
The following table sets forth information concerning the executive officers of
Goss in addition to Messrs. Sheehan and Gaynor, who are listed above:
<TABLE>
<CAPTION>
NAME AGE POSITION/TERM*
---- --- --------------
<S> <C> <C>
Alex G. Brnilovich, Jr. 48 Executive Vice President, North America
J. Matthew Cribari 42 Senior Vice President, Manufacturing
Operations
Jack E. Merryman 52 Senior Vice President, General Counsel and
Secretary
Richard J. Sutis 56 Executive Vice President, Asia Pacific and
Chief Technology Officer
Randall Thomas 50 Executive Vice President and General
Manager, Europe
</TABLE>
* Officers are elected annually by the Board of Directors and can be removed
at any time.
ALEX G. BRNILOVICH, JR. has served as Executive Vice President, Americas of
Goss Graphic Systems, Inc. since November 1998, of GGS Holdings, Inc. from
November 1998 to November 1999, and of Goss Holdings, Inc. since November
1999. Mr. Brnilovich also served as Senior Vice President, North America of
Goss Graphic Systems, Inc. and GGS Holdings, Inc. from October to November
1998. Prior thereto, Mr. Brnilovich served as President of Asea Brown Boveri
(ABB) Power Generation, Inc. from 1996 to 1998; President of ABB Turbine
Services from 1993 to 1996; and President of ABB Utility Steam Turbine from
1991 to 1993.
65
<PAGE>
J. MATTHEW CRIBARI has served as Senior Vice President of Manufacturing
Operations of Goss Graphic Systems, Inc. since 1999 and as Vice President and
General Manager of Goss Graphic Systems, Inc. since 1998. Prior thereto Mr.
Cribari served as Senior Vice President and General Manager of Tenneco
Automotive from 1997 to 1998. Mr. Cribari also served as Vice President of
Operations for Walker Manufacturing, an automotive aftermarket company, since
1995.
JACK E. MERRYMAN has served as Senior Vice President, General Counsel and
Secretary of Goss Graphic Systems, Inc. since 1998, of GGS Holdings, Inc.
from 1998 to November 1999, and of Goss Holdings, Inc. since November 1999.
Mr. Merryman also served as Vice President, General Counsel and Secretary of
Goss Graphic Systems, Inc. and GGS Holdings, Inc. from 1996 to 1998. Prior
thereto Mr. Merryman served as General Counsel and Secretary for Reliance
Electric Company, a subsidiary of Rockwell International which makes
industrial motors and drive systems, since 1995; as Assistant General Counsel
& Assistant Secretary from 1993 to 1995; and as Senior Counsel from 1987 to
1993.
RICHARD J. SUTIS has served as Executive Vice President, Asia Pacific and Chief
Technology Officer Goss Graphic Systems, Inc. since June 1999, of GGS
Holdings, Inc. from June 1999 to November 1999, and of Goss Holdings, Inc.
since November 1999. Mr. Sutis also served as Executive Vice President, Asia
Pacific of Goss Graphic Systems, Inc. and of GGS Holdings, Inc. from 1998 to
June 1999, and as Vice President, Asia Pacific of Goss Graphic Systems, Inc.
and GGS Holdings, Inc. from 1996 to 1998. From 1994 to 1996 Mr.
Sutis served as Vice President, Business Development and Strategy for Stevens
International, Inc., a manufacturer and marketer of complete web fed printing
and packaging systems. Prior thereto Mr. Sutis served as Goss's Director,
Program Management from 1991 to August 1994.
RANDALL THOMAS has served as Executive Vice President & General Manager,
Europe of Goss Graphic Systems, Inc. since 1998, of GGS Holdings, Inc. from
1998 to November 1999, and of Goss Holdings, Inc. since November 1999. Mr.
Thomas also served as Vice President & General Manager, Europe of Goss Graphic
Systems, Inc. and GGS Holdings, Inc. from 1996 to 1998. Prior thereto Mr.
Thomas served as Vice President and General Manager, Europe of Rockwell's
Graphic Systems division from 1992 to 1996, as Managing Director of the
Preston, England facility of Rockwell Graphic Systems from 1989 to 1992, and
as Managing Director of two other divisions of Rockwell in the United Kingdom
prior to 1989.
66
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table set forth the cash compensation paid by Goss during fiscal
1999, 1998 and 1997 to (i) Goss's Chief Executive Officer, and (ii) each of
Goss's four most highly compensated executive officers other than the CEO who
were serving at December 31, 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION COMPENSATION
- --------------------------- ---- ------ ------ ------------ ------------
($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
James P. Sheehan 1999 400,000 1,450,000 (3) -0-
Chairman of the Board 1998 -0- -0- -0- -0-
1997 -0- -0- -0- -0-
Alex G. Brnilovich 1999 295,833 400,000 (3) 13,100(2)
Executive V.P., Americas 1998 -0- -0- -0- -0-
1997 -0- -0- -0- -0-
Joseph P. Gaynor, III 1999 300,000 300,000 (3) (3)
Executive V.P., Administration, 1998 26,603 -0- (3) -0-
Chief Financial Officer and Treasurer 1997 -0- -0- -0- -0-
Richard J. Sutis 1999 231,250 350,000 (3) 6,902(4)
Executive Vice President, Asia Pacific, 1998 175,000 -0- (3) 5,651(4)
and Chief Technology Officer 1997 152,496 100,053 (3) 4,365(4)
Randall Thomas 1999 245,279 270,000 (3) -0-
Executive Vice President, General 1998 222,772 -0- (3) -0-
Manager, Europe 1997 200,093 133,275 (3) -0-
</TABLE>
(1) Bonus amounts do not include retention and sale of business bonuses in the
aggregate amount of $1,803,000 paid by Rockwell International Corporation
to eleven officers subsequent to their cessation of employment by Rockwell.
(2) Home sale incentive payment.
(3) No disclosure required.
(4) Retiree savings plan contributions.
Goss had no grants of stock options, stock appreciation rights or shares of
restricted stock outstanding as of December 31, 1999. Additionally, no grants
were made or options exercised in 1999. All stock options and shares of
restricted stock previously granted to certain members of management and
independent directors by GGS Holdings, Inc. were cancelled pursuant to the
Chapter 11 plan of reorganization. The plan of reorganization authorizes a new
management stock plan with a value of $2,500,000 and a stock option plan for
options on a number of shares equal to 10 percent of the outstanding primary
shares of New Holdings. At December 31, 1999, formal plans had not yet been
approved.
67
<PAGE>
PENSION PLANS
Goss does not maintain a pension or defined benefit plan for its domestic
non-union employees. Goss assumed and adopted the Rockwell PMCX Pension Scheme
for its U.K. employees in connection with the acquisition. Mr. Thomas
participates in the renamed Goss Graphic Systems, Inc. United Kingdom Executive
Pension Plan, which is contracted out of the earnings related portion of the
state earnings related pension scheme (SERPS). Participants in the Plan pay
reduced national insurance contributions with the Company making up the
difference.
The benefit formula under the Plan is calculated as follows: 1/30th multiplied
by the participant's final pensionable salary (the average of the previous 12
months basic annual salary) multiplied by pensionable service (years and months
of continuous service from the date of entry into the Plan) minus an amount
equivalent to the SERPS benefit accrued in respect to any pensionable service
during which the participant was not contracted out of the SERPS. The overall
maximum pension to which a participant is entitled under the Plan is 2/3rds of
final pensionable salary minus the SERPS benefit to which the participant is
entitled. Participants who retire on or after age 55 but before the normal
retirement age of 60 receive a "reserved pension" which is generally reduced 3%
for each year of early retirement.
At December 31, 1999, Mr. Thomas' estimated annual benefit at age 60 under the
Plan was $159,747.
COMPENSATION OF DIRECTORS
Goss's independent directors receive an annual retainer in the amount of
$25,000, $1,500 per board meeting and $750 per committee meeting attended with
the exception of the committee chairman who receives $1,000 per committee
meeting attended. All board members are reimbursed their travel and other
expenses in connection with meeting attendance.
68
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The ownership of certain beneficial owners of the common shares of New Holdings
is as follows:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP OF CLASS
---- -------------------- --------
<S> <C> <C>
Stonington Partners, Inc.
767 Fifth Avenue
New York, NY 10153 6,513,750 65.138 %
The Noteholders(1) 3,136,250 31.363 %
Alexis P. Michas(2) 6,513,750 65.138%
Robert F. End(2) 6,513,750 65.138%
Directors and Executive Officers as a Group 6,513,750 65.138%
</TABLE>
(1)The common shares of New Holdings which were received by the Noteholders
pursuant to the Plan are held by a nominee. Goss does not know the percentage
ownership of individual Noteholders.
(2)The shares indicated as owned beneficially by Messrs. Michas and End are
owned by Stonington and are included because of their ownership of stock as
directors of Stonington. Messrs. Michas and End disclaim beneficial ownership of
such shares.
None of the Executive Officers named in Item 11 owned any equity interests in
Goss at December 31, 1999.
New Holdings does not have any preferred stock. Goss's plan of reorganzation
authorizes a management stock plan with a value of $2,500,000. A formal plan has
not been approved at December 31, 1999 and, accordingly, no grants of stock to
management have been made.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Goss purchases drive systems, press controls and related products from
Allen-Bradley, a subsidiary of Rockwell. These purchases totaled $11.4 million
in fiscal 1999 and $4.6 million for the transition quarter ended December 31,
1998.
On November 30, 1998, Goss sold approximately $35.6 million in accounts
receivable to BT Commercial Corporation. The collectibility of the receivables
was guaranteed by an affiliate of Stonington Partners, Inc., a related party.
69
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Annual Report on Form 10-K.
1. Financial Statements
Consolidated Balance Sheets as of December 31, 1999
and December 31, 1998, and Consolidated Statements of
Operations, Cash Flows and Shareholders' Equity for
the year ended December 31, 1999, the three months
ended December 31, 1998, and the years ended
September 30, 1998 and September 30, 1997.
2. Financial Schedules
None
3. Exhibits
<TABLE>
<S> <C> <C>
2.1 Stock and Asset Purchase Agreement dated as
of April 26, 1996, between Rockwell
International Corporation and Goss and
Amendment to Stock and Asset Purchase
Agreement dated as of July 18, 1996,
between Rockwell International Corporation
and Goss *
2.2 Second Amended Plan of Reorganization of Goss
Graphic Systems, Inc., GGS Holdings, Inc. and Goss
Realty, LLC Under Chapter 11 of the Bankruptcy
Code, dated as of September 7, 1999 ******
2.3 Amendment to Second Amended Plan of Reorganization
of Goss Graphic Systems, Inc., GGS Holdings, Inc.
and Goss Realty, LLC Under Chapter 11 of the
Bankrupcy Code, dated as of October 21, 1999 ******
2.4 Second Amendment to Second Amended Plan of
Reorganization of Goss Graphic Systems, Inc., GGS
Holdings, Inc. and goss Realty, LLC Under Chapter
11 of the Bankruptcy Code, dated as of November 2, ******
1999
70
<PAGE>
3.1 Restated certificate of Incorporation of Goss
Holdings, Inc. ***
3.2 By-Laws of Goss Holdings, Inc. ***
4.1 Form of Indenture between Goss Holdings, Inc. and
HSBC Bank USA, Trustee relating to the 12.25%
Senior Subordinated Notes due 2005 ***
4.2 Second Amended and Restated Credit Agreement among
Goss Graphic Systems, Inc. and the parties named
therein, as amended in 1999 ***
4.3 Mortgage Note and Mortgage between Goss Realty, LLC
and LaSalle National Bank relating to Westmont,
Illinois facility **
4.4 Loan Agreements and related mortgage
documents (summary English translations)
between Goss Graphic Systems Japan and
Sanwa Bank and Goss Graphic Systems Japan
and Industrial Bank of Japan relating to
Sayama, Japan facility **
10.1 Employment Agreement dated as of May 1, 1999
between Goss Graphic Systems, Inc. and
James P. Sheehan**** ***
10.2 Form of Employment Agreement between Goss Graphic
Systems, Inc. and certain Executive Officers of
Goss**** ***
10.3 Principal terms of employment for certain
Executive Officers**** ***
21.1 List of subsidiaries of Goss *****
27.1 Financial Data Schedule
</TABLE>
* Incorporated by reference to the exhibits to the Registration Statement
of Goss as filed with the Securities and Exchange Commission, File No.
333-08421.
** Incorporated by reference to the exhibits to the Form 8-K of Goss as
filed with the Securities and Exchange Commission on February 12, 1998.
*** Filed herewith.
**** Management contract or compensatory plan or arrangement.
71
<PAGE>
***** Incorporated by reference to the exhibits to the Form 10-K Goss filed
with the Securities and Exchange Commission with respect to its fiscal
year ended September 30, 1997.
****** Incorporated by reference to the exhibits to the Form 10-Q of Goss as
filed with the Securities and Exchange Commission on November 22, 1999.
(b) Reports on Form 8-K.
Goss did not file any reports on Form 8-K during the fourth quarter of
fiscal 1999.
(c) Exhibits.
See the exhibit list included as part of paragraph (a) (3) above.
(d) Financial Statement Schedules.
None.
72
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereto duly authorized on March 29, 2000.
GOSS HOLDINGS, INC.
By: /s/ James P. Sheehan
----------------------------------------
James P. Sheehan, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed on March 29, 2000, by the following persons on behalf of the
Registrant and in the capacities indicated.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
/s/ James P. Sheehan
- ------------------------------------ Chairman of the Board, President and
James P. Sheehan Chief Executive Officer
(Principal Executive Officer)
/s/ Joseph P. Gaynor, III
- ------------------------------------
Joseph P. Gaynor, III Executive Vice President of Finance
& Administration and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
/s/ J. Joe Adorjan
- ------------------------------------
J. Joe Adorjan Director
/s/ Thomas R. Cochill
- ------------------------------------
Thomas R. Cochill Director
/s/ Robert F. End
- ------------------------------------
Robert F. End Director
/s/ James J. Kerley
- ------------------------------------
James J. Kerley Director
/s/ Lester A. Kraft
- ------------------------------------
Lester A. Kraft Director
/s/ Sam S. McKeel
- ------------------------------------
Sam S. McKeel Director
/s/ Alexis P. Michas
- ------------------------------------
Alexis P. Michas Director
</TABLE>
73
<PAGE>
Exhibit 3.1
CERTIFICATE
OF
RESTATED CERTIFICATE OF INCORPORATION
BEFORE PAYMENT OF CAPITAL
OF
GOSS HOLDINGS, INC.
* * * *
ADOPTED IN ACCORDANCE WITH THE PROVISIONS
OF Section 241 AND Section 245 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
* * * *
The undersigned on behalf of Goss Holdings, Inc., a
corporation duly organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY
CERTIFY as follows:
FIRST: The Corporation filed its original Certificate of
Incorporation with the Delaware Secretary of State on November 3, 1999 (the
"Certificate of Incorporation") under the name of Goss Holdings, Inc.
SECOND: The Board of Directors of the Corporation, pursuant to
unanimous written consent, adopted resolutions authorizing the Corporation to
amend, integrate and restate the Corporation's Certificate in its entirety to
read as set forth in EXHIBIT A attached hereto and made a part hereof (the
"Restated Certificate of Incorporation").
THIRD: In accordance with Section 228, Section 241 and Section
245 of the General Corporation Law of the State of Delaware, the Restated
Certificate of Incorporation was duly approved and adopted by the Board of
Directors of the Corporation. No shares of stock of the Corporation have been
issued as of the date hereof.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned on behalf of the
Corporation for the purpose of amending and restating the Restated Certificate
of Incorporation of the Corporation pursuant to the General Corporation Law of
the State of Delaware, under penalties of perjury does hereby declare and
certify that this is the act and deed of the Corporation and the facts stated
herein are true, and accordingly has hereunto signed this Certificate of
Restated Certificate of Incorporation Before Payment of Capital this 19th day of
November, 1999.
Goss Holdings, Inc.,
a Delaware corporation
By: /s/ JOSEPH P. GAYNOR, III
---------------------------------
Name: Joseph P. Gaynor, III
Title: Executive Vice President
-2-
<PAGE>
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
GOSS HOLDINGS, INC.
ARTICLE I
The name of the corporation (which is hereinafter referred to
as the "Corporation") is:
Goss Holdings, Inc.
ARTICLE II
The address of the Corporation's registered office in the
State of Delaware is The Corporation Trust Center, 1209 Orange Street in the
City of Wilmington, County of New Castle. The name of the Corporation's
registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any
lawful act or activity for which corporations may organized and incorporated
under the General Corporation Law of the State of Delaware.
ARTICLE IV
SECTION I. AUTHORIZED SHARES
The total number of shares of capital stock which the
Corporation has authority to issue is 15,000,000 shares, consisting of:
1
<PAGE>
EXHIBIT A
(1) 11,863,750 shares of Class A Common Stock, par value $0.01 per share
("Class A Common"); and
(2) 3,136,250 shares of Class B Common Stock, par value $0.01 per share ("Class
B Common").
The Class A Common and Class B Common are referred to
collectively as the "Common Stock." The shares of Common Stock shall have the
rights, preferences and limitations set forth below.
SECTION II. COMMON STOCK AND DIRECTORS
Except as otherwise provided in this Part B or as otherwise
required by applicable law, all shares of Class A Common and Class B Common
shall be identical in all respects and shall entitle the holders thereof to the
same rights, preferences and privileges, subject to the same qualifications,
limitations and restrictions, as set forth herein.
Part A. VOTING RIGHTS. Except as otherwise provided in Part B or as
otherwise required by applicable law, all holders of Class A Common and Class B
Common shall be entitled to one vote per share on all matters to be voted on by
the Corporation's stockholders, and the holders of Class A Common and Class B
Common shall vote together as a single class.
Part B. NUMBER AND ELECTION OF DIRECTORS.
(a) The number of directors which shall constitute
the Corporation's board of directors shall be nine (9). Seven
(7) directors (the "Class A Directors") shall be elected by a
plurality of the votes of the shares of Class A Common present
in person or represented by proxy at the meeting and entitled
to vote in the
2
<PAGE>
EXHIBIT A
election of directors; provided, however, that the number of
Class A Directors shall be increased to eight at such time as
the number of Class B Directors is reduced to one pursuant to
the proviso clause of the next following sentence; and further
provided that the number of Class A Directors shall be
increased to none at such time as no shares of Class B Common
remain outstanding. Two (2) directors (the "Class B Directors"
and, together with the Class A Directors, the "Directors")
shall be elected by a plurality of the votes of the shares of
Class B Common present in person or represented by proxy at
the meeting and entitled to vote in the election of directors;
provided that if, at any time on or after the second
anniversary of the Effective Date (as defined in Part D
below), the number of shares of Class B Common remaining
issued and outstanding is less than 1,568,125 (as such number
is from time to time adjusted to reflect any subdivision or
combination of the Class B Common), then the number of
directors to be elected by the holders of Class B Common shall
forthwith be reduced to one and the holders of a majority of
the then outstanding shares of Class B Common shall forthwith
cause the number of Class B Directors then serving to be
reduced to one (and failing such action by such holders, the
younger of the Class B Directors shall automatically, without
further action, be deemed to have resigned.) All Directors
shall have one vote on all matters to be voted on by the
Corporation's board of directors.
3
<PAGE>
EXHIBIT A
(b) Directors shall be elected at an annual meeting
of stockholders, and each Director shall hold office until a
successor is duly elected and qualified, or until his or her
earlier death, resignation (including deemed resignation) or
removal; provided, however, that the term of office of all
Class B Directors shall automatically terminate at such
earlier time as no shares of Class B Common remain
outstanding.
(c) Any Class A Director may be removed at any time,
with or without cause, by the holders of a majority of the
Class A Common. Any Class B Director may be removed at any
time, with or without cause, by the holders of a majority of
the Class B Common. Any Director may resign at any time upon
written notice to the Corporation.
(d) Vacancies in Class A Directorships shall be
filled by a majority of the Class A Directors then in office,
though less than a quorum, or by plurality of the votes of the
holders of Class A Common if no Class A Directors are then in
office. Vacancies in Class B Directorships shall be filled by
a majority of the Class B Directors then in office, though
less than a quorum, or by plurality of the votes of the
holders of Class B Common if no Class B Directors are then in
office.
(e) A majority of the total number of Directors shall
constitute a quorum for the transaction of business. The vote
of a majority of Directors present at a meeting at which a
quorum is present shall be the act of the board of directors.
If a quorum shall not be present at any meeting of the board
of
4
<PAGE>
EXHIBIT A
directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than
adjournment at the meeting, until a quorum shall be present.
Part C. STOCK SPLITS AND STOCK DIVIDENDS. The Corporation shall not in
any manner subdivide (by stock split, stock dividend or otherwise) or combine
(by reverse stock split, combination or otherwise) the outstanding Common Stock
of one class unless the outstanding Common Stock of all the other classes shall
be proportionately subdivided or combined. All such subdivisions and
combinations shall be payable only in Class A Common to the holders of Class A
Common and in Class B Common to the holders of Class B Common.
Part D. CONVERSION INTO SHARES OF CLASS A COMMON.
(a) OPTIONAL CONVERSION. Any holder of shares of Class B Common
shall have the right at any time to convert any share of Class
B Common into one share of Class A Common, by presenting the
necessary certificates to the Corporation for transfer.
(b) MANDATORY CONVERSION.
(i) As used herein, (i) "Original Holder" shall mean any
person who became a beneficial owner of Class B
Common pursuant to and in accordance with the Second
Amended Plan of Reorganization of the Corporation, as
amended (the "Plan of Reorganization"), on the
effective date of the consummation of such Plan of
Reorganization (the "Effective Date"), (ii) an
"affiliate" of an Original Holder shall mean any
person directly or
5
<PAGE>
EXHIBIT A
indirectly controlling or controlled by, or under
direct or indirect common control with, such Original
Holder, where "control" as used with respect to any
person means that possession, directly or indirectly,
of the power to direct or cause the direction of the
management or policies of such person, whether
through ownership of voting securities, by agreement
or otherwise, (iii) "person" shall mean any
individual, corporation, partnership, joint venture,
association, joint stock company, trust,
unincorporated organization, government or any agency
or political subdivision thereof or any other entity,
and (iv) "beneficial ownership" shall have the same
meaning as such term has under Rule 13d-3 of the
Securities Act of 1933, as amended (or as defined in
any successor to such Rule).
(ii) Upon the transfer of beneficial ownership of any
shares of Class B Common by an Original Holder or by
an affiliate of such Original Holder to any person
(other than such Original Holder or any affiliate of
such Original Holder), then the shares of Class B
Common so transferred will automatically be converted
into the same number of shares of Class A Common.
(iii) If at any time prior to the second anniversary of the
Effective Date, the number of shares of Class B
Common at any time remaining issued and outstanding
is less than 450,000 (as such number is from time to
time
6
<PAGE>
EXHIBIT A
adjusted to reflect any subdivision or combination of
the Class B Common), then all shares of Class B
Common then issued and outstanding shall thereupon
automatically be converted without further action
into the same number of shares of Class A Common.
(iv) If at any time on or after the second anniversary of
the Effective Date, the number of shares of Class B
Common at any time remaining issued and outstanding
is less than 627,250 (as such number is from time to
time adjusted to reflect any subdivision or
combination of the Class B Common), then all shares
of Class B Common then issued and outstanding shall
thereupon automatically be converted without further
action into the same number of shares of Class A
Common.
(v) Each Original Holder shall cooperate with the
Corporation in monitoring transfers in beneficial
ownership and, from time to time upon request by the
Corporation, shall certify to the Corporation whether
or not such Original Holder or an affiliate of such
Original Holder is the beneficial owner of the shares
of Class B Common as to which such Original Holder
originally became the beneficial owner pursuant to
the Plan of Reorganization.
(vi) Upon any conversion of shares of Class B Common into
Class A Common pursuant to the provisions of this
paragraph (b) of Part D (including any deemed
conversion), the holder or holders of the shares of
Class B
7
<PAGE>
EXHIBIT A
Common so converted shall present the certificates
evidencing such shares to the Corporation for
reissuance as shares of Class A Common. Upon
conversion of shares of Class B Common into Class A
Common, the shares of Class B Common so converted
shall forthwith be cancelled and shall not be
reissued.
Part E. AMENDMENT AND WAIVER. No proposed amendment of any provision of
this Article IV shall be effective without the prior written consent of the
holders of at least a majority of the then outstanding shares of Class A Common
voting as a single class or Class B Common voting as a single class, as the case
may be, if the amendment would increase or decrease the aggregate number of
authorized shares of such class or increase or decrease the par value of the
shares of such class or alter or change the powers, preferences or special
rights of the shares of such class so as to affect them adversely.
ARTICLE V
Unless and except to the extent that the By-Laws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred
by law, the Board of Directors of the Corporation (the "Board") is expressly
authorized and empowered to make, alter and repeal the By-Laws of the
Corporation by a majority vote at any regular or special meeting of the Board or
by written consent, subject to the power of the stockholders of the Corporation
to alter or repeal any By-Laws made by the Board.
8
<PAGE>
EXHIBIT A
ARTICLE VII
The Corporation reserves the right at any time and from time
to time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and any other provisions authorized by the laws of
the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed by law; and all rights, preferences and
privileges of whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Certificate of Incorporation in
its present form or as hereafter amended are granted subject to the right
reserved in this Article.
ARTICLE VIII
Section 1. ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS. A
director of the Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omission snot
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
Section 2. INDEMNIFICATION AND INSURANCE.
(a) RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that
9
<PAGE>
EXHIBIT A
he or she, or a person of whom he or she is the legal representative, is or was
a director or officer of the Corporation or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the General Corporation Law of the State of Delaware, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines amounts paid or to be paid in
settlement, and excise taxes or penalties arising under the Employee Retirement
Income Security Act of 1974) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; PROVIDED, HOWEVER,
that, except as provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in this Section shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of this final disposition; PROVIDED.
10
<PAGE>
EXHIBIT A
HOWEVER, that, if the General Corporation Law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer (and not in any
other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of the Board, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under
paragraph (a) of this Section is not paid in full by the Corporation within
thirty days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant ha snot met the standards of
conduct which make it permissible under the General Corporation Law of the State
of Delaware for the Corporation to indemnify the claimant for the amount claims,
but the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board, independent legal counsel, or
its stockholders) to have made a
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EXHIBIT A
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation Law of the
State of Delaware, nor an actual determination by the Corporation (including its
Board, independent legal counsel, or its stockholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
(c) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification
and the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Section shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, By-law, agreement, vote of
stockholders or disinterested directors or otherwise.
(d) 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 such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
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Exhibit 3.2
BY-LAWS
OF
GOSS HOLDINGS, INC.
A Delaware corporation
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be located at The Corporation Trust Center, 1209
Orange Street, Wilmington, Delaware, County of New Castle. The name of the
corporation's registered agent at such address shall be The Corporation Trust
Company. The registered office and/or registered agent of the corporation may be
changed from time to time by action of the board of directors.
SECTION 2. OTHER OFFICES. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE AND TIME OF MEETINGS. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall be
determined by the president of the corporation; provided, that if the president
does not act, the board of directors shall determine the date, time and place of
such meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the board of directors or the president and shall be called by the president
upon the written request of holders of shares entitled to cast not less than a
majority of the votes at the meeting, such written request shall state the
purpose or purposes of the meeting and shall be delivered to the president.
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SECTION 3. PLACE OF MEETINGS. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting not
less than ten (10) nor more than sixty (60) days before the date of the meeting.
All such notices shall be delivered, either personally or by mail, by or at the
direction of the board of directors, the president or the secretary, and if
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, postage prepaid, addressed to the stockholder at his, her or its
address as the same appears on the records of the corporation. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends for the express purpose of objecting at the beginning of
the meeting to the transaction of any business because the meeting is not
lawfully called or convened.
SECTION 5. STOCKHOLDERS LIST. The officer having charge of the stock
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
SECTION 6. QUORUM. The holders of a majority of the outstanding shares
of capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.
SECTION 7. ADJOURNED MEETINGS. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty (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.
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SECTION 8. VOTE REQUIRED. When a quorum is present, the affirmative
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
SECTION 9. VOTING RIGHTS. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one (1) vote in person or by proxy for each share of common stock
held by such stockholder.
SECTION 10. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the stockholders,
and before any voting commences, all proxies filed at or before the meeting
shall be submitted to and examined by the secretary or a person designated by
the secretary, and no shares may be represented or voted under a proxy that has
been found to be invalid or irregular.
SECTION 11. ACTION BY WRITTEN CONSENT. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested provided, however, that no consent or consents
delivered by certified or registered mail shall be deemed delivered until such
consent or consents are actually received at the registered office. All consents
properly delivered in accordance with this section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take the
corporate action
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referred to therein unless, within sixty (60) days of the earliest dated consent
delivered to the corporation as required by this section, written consents
signed by the holders of a sufficient number of shares to take such corporate
action are so recorded. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Any action taken pursuant to
such written consent or consents of the stockholders shall have the same force
and effect as if taken by the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
SECTION 2. NUMBER, ELECTION AND TERM OF OFFICE. The number of directors
which shall constitute the first board shall be TWO (2).
--- ---
Thereafter, the number of directors shall be established from time to time by
resolution of the board. The directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the meeting and
entitled to vote in the election of directors. The directors shall be elected in
this manner at the annual meeting of the stockholders, except as provided in
Section 4 of this Article III. Each director elected shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
SECTION 3. REMOVAL AND RESIGNATION. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
SECTION 4. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
SECTION 5. ANNUAL MEETINGS. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
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SECTION 6. OTHER MEETINGS AND NOTICE. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at the
request of the president on at least twenty-four (24) hours notice to each
director, either personally, by telephone, by mail, or by telegraph.
SECTION 7. QUORUM, REQUIRED VOTE AND ADJOURNMENT. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum shall
not be present at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 8. COMMITTEES. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
SECTION 9. COMMITTEE RULES. Each committee of the board of directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
SECTION 10. COMMUNICATIONS EQUIPMENT. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
SECTION 11. WAIVER OF NOTICE AND PRESUMPTION OF ASSENT. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except when
such member attends for the express purpose of
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objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened. Such member shall be
conclusively presumed to have assented to any action taken unless his or her
dissent shall be entered in the minutes of the meeting or unless his or her
written dissent to such action shall be filed with the person acting as the
secretary of the meeting before the adjournment thereof or shall be forwarded by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to any member
who voted in favor of such action.
SECTION 12. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be elected by
the board of directors and shall consist of a president, one or more
vice-presidents, secretary, a treasurer, and such other officers and assistant
officers as may be deemed necessary or desirable by the board of directors. Any
number of offices may be held by the same person. In its discretion, the board
of directors may choose not to fill any office for any period as it may deem
advisable, except that the offices of president and secretary shall be filled as
expeditiously as possible.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall be elected annually by the board of directors at the
first meeting of the board of directors held after each annual meeting of
stockholders or as soon thereafter as conveniently may be. The president shall
appoint other officers to serve for such terms as he or she deems desirable.
Vacancies may be filled or new offices created and filled at any meeting of the
board of directors. Each officer shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
SECTION 4. VACANCIES. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
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SECTION 5. COMPENSATION. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
SECTION 6. THE PRESIDENT. The president shall be the chief executive
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors at which he is present; subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation. The
president shall have such other powers and perform such other duties as may be
prescribed by the board of directors or as may be provided in these by-laws.
SECTION 7. VICE-PRESIDENTS. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors or by the president, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions of
the president. The vice-presidents shall also perform such other duties and have
such other powers as the board of directors, the president or these by-laws may,
from time to time, prescribe.
SECTION 8. THE SECRETARY AND ASSISTANT SECRETARIES. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these
by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors, the president, or
secretary may, from time to time, prescribe.
SECTION 9. THE TREASURER AND ASSISTANT TREASURER. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the corporation as may be ordered by the board of directors;
shall cause the funds of the corporation to be disbursed when such disbursements
have been duly authorized, taking proper vouchers for such disbursements; and
shall render to the president and the
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board of directors, at its regular meeting or when the board of directors so
requires, an account of the corporation; shall have such powers and perform such
duties as the board of directors, the president or these by-laws may, from time
to time, prescribe. If required by the board of directors, the treasurer shall
give the corporation a bond (which shall be rendered every six (6) years) in
such sums and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of the office of
treasurer and for the restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of all books, papers, vouchers,
money, and other property of whatever kind in the possession or under the
control of the treasurer belonging to the corporation. The assistant treasurer,
or if there shall be more than one, the assistant treasurers in the order
determined by the board of directors, shall in the absence or disability of the
treasurer, perform the duties and exercise the powers of the treasurer. The
assistant treasurers shall perform such other duties and have such other powers
as the board of directors, the president or treasurer may, from time to time,
prescribe.
SECTION 10. OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
SECTION 11. ABSENCE OR DISABILITY OF OFFICERS. In the case of the
absence or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
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SECTION 1. NATURE OF INDEMNITY. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the corporation to the fullest extent which it is empowered to
do so unless prohibited from doing so by the General Corporation Law of the
State of Delaware, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said law permitted
the corporation to provide prior to such amendment) against all expense,
liability and loss (including attorneys' fees actually and reasonably incurred
by such person in connection with such proceeding) and such indemnification
shall inure to the benefit of his heirs, executors and administrators; provided,
however, that, except as provided in Section 2 hereof, the corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding initiated by such person only if such proceeding was authorized by
the board of directors of the corporation. The right to indemnification
conferred in this Article V shall be a contract right and, subject to Sections 2
and 5 hereof, shall include the right to be paid by the corporation the expenses
incurred in defending any such proceeding in advance of its final disposition.
The corporation may, by action of its board of directors, provide
indemnification to employees and agents of the corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
SECTION 2. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS. Any
indemnification of a director or officer of the corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall be
made promptly, and in any event within thirty (30) days, upon the written
request of the director or officer. If a determination by the corporation that
the director or officer is entitled to indemnification pursuant to this Article
V is required, and the corporation fails to respond within sixty (60) days to a
written request for indemnity, the corporation shall be deemed to have approved
the request. If the corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within thirty (30) days, the right to indemnification
or advances as granted by this Article V shall be enforceable by the director or
officer in any court of competent jurisdiction. Such person's costs and expenses
incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to the corporation) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation Law
of the State of Delaware for the corporation to indemnify the claimant for the
amount claimed, but the burden of such defense shall be on the corporation.
Neither the failure of the corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, nor
an actual determination by the corporation (including its board of
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directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
SECTION 3. ARTICLE NOT EXCLUSIVE. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 4. INSURANCE. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the corporation would have the power
to indemnify such person against such liability under this Article V.
SECTION 5. EXPENSES. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition unless otherwise
determined by the board of directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
SECTION 6. EMPLOYEES AND AGENTS. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
SECTION 7. CONTRACT RIGHTS. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
SECTION 8. MERGER OR CONSOLIDATION. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or
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<PAGE>
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this Article V with respect to the
resulting or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 1. FORM. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the president or a vice-president and the secretary or an assistant secretary of
the corporation, certifying the number of shares of a specific class or series
owned by such holder in the corporation. If such a certificate is countersigned
(1) by a transfer agent or an assistant transfer agent other than the
corporation or its employee or (2) by a registrar, other than the corporation or
its employee, the signature of any such president, vice-president, secretary, or
assistant secretary may be facsimiles. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
corporation whether because of death, resignation or otherwise before such
certificate or certificates have been delivered by the corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the corporation. All certificates for shares shall
be consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of stock
of the corporation shall only be transferred on the books of the corporation by
the holder of record thereof or by such holder's attorney duly authorized in
writing, upon surrender to the corporation of the certificate or certificates
for such shares endorsed by the appropriate person or persons, with such
evidence of the authenticity of such endorsement, transfer, authorization, and
other matters as the corporation may reasonably require, and accompanied by all
necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
SECTION 2. LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
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<PAGE>
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
SECTION 3. FIXING A RECORD DATE FOR STOCKHOLDER MEETINGS. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting. If no record date is fixed by the
board of directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be the close of business
on the next day preceding the day on which notice is given, or if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
SECTION 4. FIXING A RECORD DATE FOR ACTION BY WRITTEN CONSENT. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
SECTION 5. FIXING A RECORD DATE FOR OTHER PURPOSES. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty (60) days prior to such action. If no record date is fixed,
the record date for determining stockholders for any such purpose shall be at
the close of business on the day on which the board of directors adopts the
resolution relating thereto.
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<PAGE>
SECTION 6. REGISTERED STOCKHOLDERS. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
SECTION 7. SUBSCRIPTIONS FOR STOCK. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
SECTION 2. CHECKS, DRAFTS OR ORDERS. All checks, drafts, or other
orders for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
SECTION 3. CONTRACTS. The board of directors may authorize any officer
or officers, or any agent or agents, of the corporation to enter into any
contract or to execute and deliver any instrument in the name of and on behalf
of the corporation, and such authority may be general or confined to specific
instances.
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<PAGE>
SECTION 4. LOANS. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
SECTION 5. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
SECTION 6. CORPORATE SEAL. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
SECTION 7. VOTING SECURITIES OWNED BY CORPORATION. Voting securities in
any other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
SECTION 8. INSPECTION OF BOOKS AND RECORDS. Any stockholder of record,
in person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware or at its principal place of business.
SECTION 9. SECTION HEADINGS. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
SECTION 10. INCONSISTENT PROVISIONS. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
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<PAGE>
ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote. The fact
that the power to adopt, amend, alter, or repeal the by-laws has been conferred
upon the board of directors shall not divest the stockholders of the same
powers.
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<PAGE>
Exhibit 4.1
EXECUTION COPY
- --------------------------------------------------------------------------------
GOSS HOLDINGS, INC.
$112,500,000
12 1/4% SENIOR SUBORDINATED NOTES DUE 2005
-------------------
INDENTURE
DATED AS OF NOVEMBER 19, 1999
-------------------
HSBC BANK USA
TRUSTEE
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE TABLE
TRUST INDENTURE
ACT SECTION
<TABLE>
<CAPTION>
INDENTURE SECTION
<S> <C>
310 (a)(1)...................................................... 8.10
(a)(2)...................................................... 8.10
(a)(3)...................................................... N/A
(a)(4)...................................................... N/A
(a)(5)...................................................... 8.10
(b)......................................................... 8.10
(c)......................................................... N/A
311 (a)......................................................... 8.11
(b)......................................................... 8.11
(c)......................................................... N/A
312 (a)......................................................... 2.05
(b)......................................................... 12.03
(c)......................................................... 12.03
313 (a)......................................................... 11.02
(b)(i)...................................................... 11.02
(b)(2)...................................................... 8.06
(c)......................................................... 8.06; 11.02
(d)......................................................... 8.06
314 (a)......................................................... 8.03; 11.02
(b)......................................................... 11.03
(c)(1)...................................................... 12.04
(c)(2)...................................................... 12.04
(c)(3)...................................................... N/A
(d)......................................................... 11.02; 11.03
(e)......................................................... 12.05
(f)......................................................... N/A
315 (a)......................................................... 8.01
(b)......................................................... 8.05; 12.02
(c)......................................................... 8.01
(d)......................................................... 8.01
(e)......................................................... 7.11
316 (a)(1)(A)................................................... 7.05
(a)(1)(B)................................................... 7.04
(a)(2)...................................................... N/A
(b)......................................................... 7.07
317 (a)(1)...................................................... 7.08
(a)(2)...................................................... 7.09
(b)......................................................... 2.04
318 (a)......................................................... 12.01
(b)......................................................... N/A
(c) ........................................................ 12.01
</TABLE>
Note: This Cross-Reference Table shall not, for any purpose, be deemed to
be part of the Indenture.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS OF THE COMPANY........................................................1
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions...................................................1
Section 1.02 Other Definitions............................................15
Section 1.03 Incorporation by Reference of Trust Indenture Act............16
Section 1.04 Rules of Construction........................................16
ARTICLE II
THE NOTES
Section 2.01 Form and Dating..............................................16
Section 2.02 Execution and Authentication.................................17
Section 2.03 Registrar and Paying Agent...................................17
Section 2.04 Paying Agent to Hold Money In Trust..........................18
Section 2.05 Lists of Holders.............................................18
Section 2.06 Transfer and Exchange........................................18
Section 2.07 Replacement Notes............................................19
Section 2.08 Outstanding Notes............................................19
Section 2.09 Temporary Notes..............................................19
Section 2.10 Cancellation.................................................20
Section 2.11 Defaulted Interest...........................................20
Section 2.12 CUSIP Number.................................................20
ARTICLE III
REDEMPTION
Section 3.01 Notices to Trustee...........................................20
Section 3.02 Selection of Notes to be Redeemed............................21
Section 3.03 Notice of Redemption.........................................21
Section 3.04 Effect of Notice of Redemption...............................22
Section 3.05 Deposit of Redemption Price..................................22
Section 3.06 Notes Redeemed in Part.......................................22
ii
<PAGE>
ARTICLE IV
CHANGE OF CONTROL AND ENTERPRISE VALUATION EVENT
Section 4.01 Change of Control and Enterperise Valuation Event............22
ARTICLE V
COVENANTS
Section 5.01 Payment of Principal, Premium and Interest...................25
Section 5.02 Maintenance of Office or Agency..............................25
Section 5.03 SEC Reports..................................................25
Section 5.04 Limitation On Debt...........................................26
Section 5.05 Limitation on Debt and Preferred Stock of Subsidiaries
of Goss......................................................27
Section 5.06 Limitation On Restricted Payments............................28
Section 5.07 Limitation On Restrictions On Distributions from
Subsidiaries................................................31
Section 5.08 Limitation On Sales of Assets and Subsidiary Stock...........32
Section 5.09 Limitation On Affiliate Transactions.........................33
Section 5.10 Compliance Certificates......................................34
Section 5.11 Further Instruments and Acts.................................35
ARTICLE VI
SUCCESSORS
Section 6.01 When the Company May Merge or Transfer Assets................35
Section 6.02 Successor Company Substituted................................36
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.01 Events of Default............................................36
Section 7.02 Acceleration.................................................37
Section 7.03 Other Remedies...............................................38
Section 7.04 Waiver of Past Defaults......................................38
Section 7.05 Control by Majority..........................................38
Section 7.06 Limitation On Suits..........................................39
Section 7.07 Unconditional Right of Holders to Receive Payment............39
Section 7.08 Collection Suit by Trustee...................................39
Section 7.09 Trustee May File Proofs of Claim.............................39
Section 7.10 Priorities...................................................40
Section 7.11 Undertaking for Costs........................................40
Section 7.12 Waiver of Stay, Extension and Usury Laws.....................40
iii
<PAGE>
ARTICLE VIII
TRUSTEE
Section 8.01 Duties of Trustee............................................41
Section 8.02 Rights of Trustee............................................42
Section 8.03 Individual Rights of Trustee.................................43
Section 8.04 Trustee's Disclaimer.........................................43
Section 8.05 Notice of Default............................................43
Section 8.06 Reports by Trustee to Holders................................43
Section 8.07 Compensation and Indemnity...................................44
Section 8.08 Replacement of Trustee.......................................44
Section 8.09 Successor Trustee by Merger, Etc.............................45
Section 8.10 Eligibility: Disqualification................................46
Section 8.11 Preferential Collection of Claims Against the Company........46
Section 8.12 May Hold Securities..........................................46
ARTICLE IX
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01 Discharge of Liability on Notes; Defeasance..................46
Section 9.02 Conditions to Defeasance.....................................47
Section 9.03 Application of Trust Money...................................49
Section 9.04 Repayment to the Company.....................................49
Section 9.05 Indemnity for Government Obligations.........................49
Section 9.06 Reinstatement................................................49
ARTICLE X
AMENDMENT, SUPPLEMENT AND WAIVER
Section 10.01 Without Consent of Holders...................................49
Section 10.02 With Consent of Holders......................................50
Section 10.03 Compliance with Trust Indenture Act..........................52
Section 10.04 Revocation and Effect of Consents and Waivers................52
Section 10.05 Notation On or Exchange of Notes.............................52
Section 10.06 Trustee to Sign Amendments, Etc..............................52
Section 10.07 Payment for Consents.........................................52
ARTICLE XI
SUBORDINATION OF NOTES
iv
<PAGE>
Section 11.01 Agreement to Subordinate.....................................53
Section 11.02 Payment Over of Proceeds Upon Dissolution; Etc...............53
Section 11.03 No Payment When Senior Debt in Default.......................54
Section 11.04 Acceleration of Payment of Notes.............................55
Section 11.05 Payment Permitted If No Default..............................55
Section 11.06 Subrogation to Rights of Holders of Senior Debt..............55
Section 11.07 Provisions Solely to Define Relative Rights..................56
Section 11.08 Trustee to Effectuate Subordination..........................56
Section 11.09 No Waiver of Subordination Provisions........................56
Section 11.10 Notice to Trustee............................................57
Section 11.11 Reliance on Judicial Order or Certificate of Liquidating Age.57
Section 11.12 Trustee Not Fiduciary for Holders of Senior Debt.............58
Section 11.13 Rights of Trustee as holder of Senior Debt; Preservation of
Trustee's Rights.............................................58
Section 11.14 Article XI Applicable to Paying Agents.......................58
Section 11.15 Trust Moneys Not Subordinated................................58
Section 11.16 Reliance by holders of Senior Debt on Subordination
Provisions...................................................58
Section 11.17 Distribution or Notice to Representative.....................59
Section 11.18 Article XI Not To Prevent Events of Default or Limit Right
To Accelerate................................................59
ARTICLE XII
MISCELLANEOUS
Section 12.01 Trust Indenture Act Controls.................................59
Section 12.02 Notices......................................................59
Section 12.03 Communication by Holders with Other Holders..................60
Section 12.04 Certificate and Opinion as to Conditions Precedent...........60
Section 12.05 Statements Required in Certificate or Opinion................60
Section 12.06 Rules by Trustee and Agents..................................61
Section 12.07 No Personal Liability of Directors, Officers, Employees,
Incorporators and Stockholders...............................61
Section 12.08 Governing Law................................................61
Section 12.09 No Adverse Interpretation of Other Agreements................61
Section 12.10 Successors...................................................61
Section 12.11 Severabilily.................................................62
Section 12.12 Counterpart Originals........................................62
Section 12.13 Table of Contents, Headings, Etc.............................62
</TABLE>
EXHIBIT A -- Form of Note; Form of Trustee's Certificate of Authentication
v
<PAGE>
INDENTURE, dated as of November 19, 1999, between Goss Holdings, Inc. ("the
Company"), a corporation duly organized and existing under the laws of the State
of Delaware, and HSBC Bank USA, a New York banking corporation, as trustee (the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the original issuance of up to $112,500,000 aggregate
principal amount of the Company's 12 1/4% Senior Subordinated Notes Due 2005
(together with the additional such Notes issued in lieu of the payment of cash
interest as provided herein, the "Notes") issuable as provided in this
Indenture. All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done, and the Company has done
all things necessary to make the Notes, when executed by the Company and
authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company as hereinafter provided.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Notes, as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions.
"Additional Assets" means (i) any property or assets (other than Debt and
Capital Stock) used or useful in a Related Business; (ii) the Capital Stock of a
Person that becomes a Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Subsidiary or (iii) Capital Stock constituting a
minority interest in any Person that at such time is a Subsidiary; provided,
however, that any such Subsidiary described in clause (ii) or (iii) above is
primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Persons means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions described in Sections 5.06, 5.08 and 5.09 only,
"Affiliate" shall also mean any beneficial owner of Capital Stock representing
10% or more of the total voting power of the Voting Stock (on a fully diluted
basis) of the Company or of rights or warrants to purchase such Capital Stock
(whether or not currently exercisable) and any Person who would be an Affiliate
of any such beneficial owner pursuant to the first sentence hereof.
Notwithstanding the foregoing, none of the Banks shall be deemed to be an
Affiliate of the Company and its Subsidiaries solely
<PAGE>
as a result of the security interests held by the Banks in the Capital Stock of
the Company's Subsidiaries pursuant to the Credit Agreement.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Disposition" means any sale, transfer or other disposition (or
series of related sales, transfers or dispositions) by the Company or any
Subsidiary, including any disposition by means of a merger, consolidation or
similar transaction (each referred to for the purposes of this definition as a
"disposition"), of (i) any shares of Capital Stock of a Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be held by
a Person other than the Company or a Subsidiary), (ii) all or substantially all
the assets of any division or line of business of the Company or any Subsidiary
or (iii) any other assets of the Company or any Subsidiary outside of the
ordinary course of business of the Company or such Subsidiary (other than, in
the case of (i), (ii) and (iii) above, (v) any disposition, or related series of
dispositions, of assets with an aggregate fair market value of $1 million or
less for each such disposition or related series of dispositions, (w)
dispositions permitted under Article VI, (x) a disposition by a Subsidiary to
the Company or a Subsidiary to a Wholly Owned Subsidiary, (y) sales of Customer
Notes to third parties and (z) for purposes of the covenant described in Section
5.08 only, a disposition that constitutes a Restricted Payment permitted by the
covenant described under Section 5.06.
"Average Life" means, as of the date of determination, with respect to any
Debt or Preferred Stock, the quotient obtained by dividing (i) the sum of the
products of numbers of years from the date of determination to the dates of each
successive scheduled principal payment of such Debt or redemption or similar
payment with respect to such Preferred Stock multiplied by the amount of such
payment by (ii) the sum of all such payments.
"Banks" means the lenders under the Credit Facility.
"Bankruptcy Law" means the U.S. Bankruptcy Code, 11 U.S.C. ss. 101, et.
seq., 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
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of any Person means an obligation that is
required to be classified and accounted for as a capital lease on the face of
the balance sheet of such Person prepared in accordance with GAAP, and the
amount of Debt represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP; and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be terminated
by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in such Person
2
<PAGE>
(however designated) or the equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible or exchangeable into such
equity.
"Cash Equivalents" means (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof, or obligations
issued by any agency or instrumentality thereof and backed by the full faith and
credit of the United States of America, (ii) commercial paper rated the highest
grade by Moody's Investors Service, Inc. and Standard & Poor's Ratings Group and
maturing not more than one year from the date of creation thereof, (iii) time
deposits with, and certificates of deposit and banker's acceptances issued by,
any bank having capital surplus and undivided profits aggregating at least $500
million and maturing not more than one year from the date of creation thereof,
(iv) repurchase agreements that are secured by a perfected security interest in
an obligation described in clause (i) and are with any bank described in clause
(iii), (v) shares of any money market mutual fund that (a) has at least 95% of
its assets invested continuously in the types of investments referred to in
clauses (i) and (ii) above, (b) has net assets of not less than $500 million,
and (c) has the highest rating obtainable from either Standard & Poor's Ratings
Group or Moody's Investors Service, Inc. and (vi) readily marketable direct
obligations issued by any state of the United States of America or any political
subdivision thereof having one of the two highest rating categories obtainable
from either Moody's Investors Service, Inc. or Standard & Poor's Ratings Group.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days prior to the date of
such determination to (ii) Consolidated Interest Expense for such four fiscal
quarters; provided, however, that (1) if the Company or any Subsidiary has
Incurred any Debt since the beginning of such period that remains outstanding
(other than revolving credit Debt Incurred under the Credit Facility with
respect to which the related commitment remains outstanding) or if the
transaction giving rise to the need to calculate the Consolidated Coverage Ratio
is an Incurrence of Debt, or both, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving effect on a pro forma basis to such
Debt as if such Debt had been Incurred on the first day of such period and the
discharge of any other Debt repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Debt as if such discharge had occurred
on the first day of such period, (2) if since the beginning of such period any
Debt of the Company or any Subsidiary has been repaid, repurchased, defeased or
otherwise discharged or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio will include any such repayment, repurchase,
defeasement or discharge not otherwise covered in clause (1) above, or both (in
either case other than revolving credit Debt Incurred pursuant to the Credit
Facility or any similar arrangement unless such revolving credit Debt has been
permanently repaid and has not been replaced), Consolidated Interest Expense for
such period shall be calculated, after giving effect thereto on a pro forma
basis, as if such Debt had been repaid, repurchased, defeased or otherwise
discharged on the first day of such period, (3) if since the beginning of such
period the Company or any Subsidiary shall have made any Asset Disposition, the
EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Disposition for such period, or increased by an amount equal to the EBITDA
(if negative), directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest
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Expense directly attributable to any Debt of the Company or any Subsidiary
repaid, repurchased, defeased or otherwise discharged with respect to the
Company and its continuing Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Subsidiary is sold,
the Consolidated Interest Expense for such period directly attributable to the
Debt of such Subsidiary to the extent the Company and its continuing
Subsidiaries are no longer liable for such Debt after such sale), (4) if since
the beginning of such period the Company or any Subsidiary (by merger or
otherwise) shall have made an Investment in any Subsidiary (or any Person which
becomes a Subsidiary) or an acquisition of assets, including any acquisition of
assets occurring in connection with a transaction requiring a calculation to be
made hereunder, which constitutes all or substantially all of an operating unit
of a business, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including the Incurrence of
any Debt) as if such Investment or acquisition occurred on the first day of such
period and (5) if since the beginning of such period any Person (that
subsequently became a Subsidiary or was merged with or into the Company or any
Subsidiary since the beginning of such period) shall have made any Asset
Disposition, any Investment or acquisition of assets that would have required an
adjustment pursuant to clause (3) or (4) above if made by the Company or a
Subsidiary during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any Debt
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.
If any Debt bears a floating rate of interest and is being given pro forma
effect, the interest of such Debt shall be calculated as if the rate in effect
on the date of determination had been the applicable rate for the entire period
(taking into account any Interest Rate Agreement applicable to such Debt if such
Interest Rate Agreement has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Subsidiaries, plus, to the extent
not included in such total interest expense, and to the extent incurred by the
Company or its Subsidiaries, (i) interest expense attributable to Capital Lease
Obligations, (ii) amortization of debt discount, (iii) capitalized interest,
(iv) non-cash interest expenses, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) net costs associated with Interest Rate Agreements (including
amortization of fees), (vii) Preferred Stock dividends in respect of all
Preferred Stock (except dividends payable solely in shares of Capital Stock of
the Company (other than Disqualified Stock of the Company)) held by Persons
other than the Company or a Wholly Owned Subsidiary, (viii) interest incurred in
connection with Investments in discontinued operations, (ix) interest accruing
on any Debt of any other Person to the extent such Debt is Guaranteed by the
Company or any Subsidiary and (x) the cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Debt Incurred by such plan or trust; provided,
however, that there shall not be included in such Consolidated Interest Expense
any amount of Interest Expense of any Subsidiary if the net income of such
Subsidiary is excluded in the calculation of Consolidated Net Income (but only
in the same proportion as such net income is excluded) because the declaration
or payment of dividends or similar distributions by such Subsidiary of
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such net income is not at the time permitted by the operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to such Subsidiary.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income: (i) any net income of any
Person if such Person is not a Subsidiary, except that (A) subject to the
exclusion contained in clause (iv) below, the Company's equity in the net income
of any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such Person
during such period to the Company or a Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution paid to a
Subsidiary, to the limitations contained in clause (iii) below) and (B) the
Company's equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income to the extent of any cash
actually contributed by the Company or a Subsidiary to such Person during such
Period; (ii) any net income (or loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition; (iii) any net income of any Subsidiary if such
Subsidiary is subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Subsidiary, directly or
indirectly, to the Company, except that (A) subject to the exclusion contained
in clause (iv) below, the Company's equity in the net income of any such
Subsidiary for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by such Subsidiary during
such period to the Company or another Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution paid to
another Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Subsidiary for such period shall be
included in determining such Consolidated Net Income to the extent of any cash
actually contributed by the Company or a Subsidiary to such Person during such
Period; (iv) any gain or loss net of tax realized upon the sale or other
disposition of any assets of the Company or its consolidated Subsidiaries
(including pursuant to any sale-and-leaseback arrangement) which is not sold or
otherwise disposed of in the ordinary course of business and any gain or loss
net of tax realized upon the sale or other disposition of any Capital Stock of
any Person; (v) extraordinary gains or losses net of tax; and (vi) the
cumulative effect of a change in accounting principles, net of tax.
Notwithstanding the foregoing, for the purposes of Section 5.06 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from a Subsidiary to the extent
such dividends, repayments or transfers increase the amount of Restricted
Payments permitted under such covenant pursuant to clause (a)(3)(D) thereof.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending at least 45 days prior to the taking of any
action for the purpose of which the determination is being made, as (i) the par
or stated value of all outstanding Capital Stock of the Company plus (ii)
paid-in capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (A) any accumulated deficit and (B) any
amounts attributable to Disqualified Stock.
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"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 or such other address as to which the Trustee
may give notice to the Company.
"Credit Facility" means the credit facility consisting of the Tranche A,
Tranche B and term facilities made pursuant to that certain Second Amended and
Restated Credit Agreement, dated as of November 19, 1999, among Goss, certain
Subsidiaries of Goss, Bankers Trust Company as administrative agent, Lehman
Brothers as documentation agent, the co-agents named therein and the lenders
named therein, including (i) 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, in whole or in part, and (ii) any credit agreements, notes,
guarantees, collateral documents, instruments and agreements executed in
connection with any such amendment, modification, renewal, refunding,
replacement or refinancing and any credit facilities or agreements that replace,
refund or refinance any part of the loans, credit facilities or commitments
thereunder (subject to Sections 5.04 and 5.05), including such replacement,
refunding or refinancing facility that increased the amount borrowable
thereunder, alters the maturity date thereof or alters the allocation of term
loans and revolving loans.
"Credit Facility Guaranty" means the Second Amended and Restated Guaranty
dated as of November 19, 1999 between the Company and Bankers Trust Company, as
agent and the Guaranty dated as of November 19, 1999 between the Company and
Bankers Trust Company as agent for the Banks including (i) any guarantees and
instruments executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time, in whole
or in part, and (ii) any guarantees and instruments executed in connection with
any such amendment, modification, renewal, refunding, replacement or refinancing
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or a beneficiary.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Customer Notes" means notes receivable, on terms consistent with the past
practices of the Company and its Subsidiaries and with prevailing industry
practices, issued in connection with customer financing provided to purchasers
of the Company's and its Subsidiaries' products and secured by a valid and
enforceable first priority Lien on the products being purchased.
"Customer Notes Guarantees" means Guarantees by the Company and its
Subsidiaries, on terms consistent with the past practices of the Company and its
Subsidiaries and with prevailing industry practices, of all or a portion of
Customer Notes issued by the Company or its Subsidiaries and sold to third
parties, or of all or a portion of customer notes or other financing provided by
third parties to purchasers of the Company's and its Subsidiaries' products;
provided, however, that "Customer Notes Guarantees" shall not include the
provision of letters of credit in respect of financing provided by a third party
to purchasers of the Company's and its Subsidiaries' products to the extent such
letters of credit are Incurred under the Revolving Credit Facility.
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"Debt" of any Person means, without duplication, (i) the principal of and
premium (if any) in respect of (A) debt of such Person for money borrowed and
(B) debt evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person; (iii) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of such Person and all obligations of such Person under any title
retention agreement (but excluding (x) trade accounts payable and other current
trade liabilities arising in the ordinary course of business and payable in
accordance with customary practices and (y) deferred purchase price obligations
where payment is due within six months of delivery); (iv) all obligations of
such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance, or other similar credit transaction (other than obligations
with respect to letters of credit and related Hedging Obligations securing
obligations (other than obligations described in (i) through (iii) above)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the third Business Day following
receipt by such Person of a demand for reimbursement following payment on the
letter of credit); (v) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, any Preferred Stock (but
excluding, in each case, any accrued dividends); (vi) all Hedging Obligations of
such Person (other than Hedging Obligations excluded pursuant to clause (iv)
above); (vii) all obligations of the type referred to in clauses (i) through (v)
of other Persons and all dividends of other Persons for the payment of which, in
either case, such Person is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise, including by means of any Guarantee; and (viii)
all obligations of the type referred to in clauses (i) through (vi) of other
Persons secured by any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person), the amount of such obligation
being deemed to be the lesser of the value of such property or assets or the
amount of the obligation so secured. The amount of Debt of any Person at any
date shall be the outstanding balance of all obligations as described above and
the maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date; provided, however, that
the amount outstanding at any time of any Debt Incurred with original issue
discount is the face amount of such Debt less the remaining unamortized portion
of the original issue discount of such Debt at such time as determined in
conformity with GAAP.
"Deemed Asset Value" means 75% of the fair market value of assets (other
than cash) received by the Company from the issuance or sale of its Capital
Stock or as a capital contribution, in either case as determined in good faith
by the Board of Directors; provided, however, that such determination shall be
confirmed by a nationally recognized investment banking firm or appraisal firm
in the event that the value determined by the Board of Directors exceeds $10
million.
"Default" means any event that is, or after notice or with the passage of
time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event (i) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is convertible or exchangeable for Debt or Disqualified Stock or (iii) is
redeemable at the option of the Holder thereof, in whole or in part,
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in each case on or prior to the first anniversary of the Stated Maturity of the
Notes; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving Holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions described under Section 5.08 and Article IV.
"EBITDA" for any period means the sum of Consolidated Net Income, plus
Consolidated Interest Expense plus the following to the extent deducted in
calculating such Consolidated Net Income: (a) all income tax expense of the
Company, (b) depreciation expense, (c) amortization expense and (d) all other
non-cash items reducing Consolidated Net Income (other than any non-cash item to
the extent it represents an accrual of, or a reserve for, cash disbursements for
any subsequent period prior to the Stated Maturity of the Notes) and less, to
the extent added in calculating Consolidated Net Income, non-cash items (other
than any non-cash item to the extent it represents an accrual for cash receipts
reasonably expected to be received within 12 months after the date of such
accrual), in each case for such period. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, and the depreciation and
amortization of, a Subsidiary of the Company shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that
the net income of such Subsidiary was included in calculating Consolidated Net
Income and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
approval other than for the board of directors of such Subsidiary (that has not
been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to such Subsidiary or its stockholders.
"Enterprise Valuation" means the aggregate Fair Market Value of the Company
or Goss as of the date of the occurrence of an Enterprise Valuation Event.
"Enterprise Valuation Event" means any Change of Control consisting of or
resulting from one or more transactions wherein the aggregate consideration
therefor has a value in excess of $600,000,000 or which fairly reflects an
Enterprise Valuation for the Company and its Subsidiaries in excess of
$600,000,000.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means with respect to an asset or a business, the price
at which such asset or business would change hands between a willing buyer and
willing seller, neither being under compulsion to buy or sell and both having
reasonable knowledge of all relevant facts as of the applicable valuation date.
"Foreign Subsidiary" means a subsidiary that is organized under the laws of
any country other than the U.S. and substantially all the assets of which are
located outside of the U.S.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth (i) in
the opinions and
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pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants, (ii) statements and pronouncements of the
Financial Accounting Standards Board, (iii) in such other statements by such
other entity as approved by a significant segment of the accounting profession,
and (iv) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the Exchange Act,
including opinions and pronouncements in staff accounting bulletins and similar
written statements from the accounting staff of the SEC.
"Goss" means Goss Graphic Systems, Inc., a Delaware corporation or any
successor thereof.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Debt or other obligation of any Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or other obligation of such Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise); or (ii) entered into for purposes of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb shall have a corresponding
meaning. The term "Guarantor" shall mean any Person guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Debt or Capital Stock of a Person existing at
the time such Person becomes a Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at
the time it becomes a Subsidiary. The term "Incurrence" when used as a noun
shall have a correlative meaning. The accretion of principal of a non-interest
bearing or other discount security shall be deemed to be the Incurrence of Debt.
"Indenture" means this Indenture, as amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement or other financial agreement or arrangement designed to
protect the Company or any Subsidiary against fluctuations in interest rates.
"Investment" in any Person means any loan or advance (other than advances
to customers in the ordinary course of business on commercially reasonable terms
that are recorded as accounts receivable on the balance sheet of such Person)
to, any acquisition of Capital Stock, equity interest, obligation or other
security of, or capital contribution or other investment in, or any other credit
extension to (including by way of Guarantee of any Debt of), such Person.
"Issue Date" means the date on which the Plan has been declared effective.
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"Joint Venture Contract" means that certain Joint Venture Contract, dated
October 29, 1993, between Rockwell Graphic Systems, Inc. and Shanghai Printing &
Packaging Machinery Corp., as in effect on October 15, 1996.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment we authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday, 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.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Debt or other obligations relating to such
properties or assets that are the subject of such Asset Disposition or received
in any other noncash form) therefrom, in each case net of (i) all legal, title
and recording expenses, commissions and other fees and expenses incurred, and
all Federal, state, provincial, foreign and local taxes required to be accrued
as a liability under GAAP, as a consequence of such Asset Disposition; (ii) all
payments made on any Debt which is secured by any assets subject to such Asset
Disposition, in accordance with the terms of any Lien upon or other security
agreement of any kind with respect to such assets, or which must by its terms,
or in order to obtain a necessary consent to such Asset Disposition, or by
applicable law be repaid out of the proceeds from such Asset Disposition; (iii)
all distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset Disposition;
and (iv) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
property or other assets disposed in such Asset Disposition and retained by the
Company or any Subsidiary after such Asset Disposition.
"Net Cash Proceeds" means with respect to any issuance or sale of Capital
Stock, the cash proceeds (including cash equivalents) of such issuance or sale
net of attorneys' fees, accountants' fees, underwriters' or placement agents'
fees, discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Note Register" means the register of the Notes and the transfer and
exchange of the Notes as provided in Section 2.03 of this Indenture.
"Notes" has the meaning set forth in the first recital.
"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, Controller, Secretary or any Vice-President of
such Person.
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"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, principal financial officer, treasurer or principal accounting officer
of the Company.
"Opinion of Counsel" means a written opinion from legal counsel, who may be
an employee of or counsel to the Company.
"Permitted Holders" means Stonington and its Affiliates.
"Permitted Investment" means (A) an Investment by the Company or any
Subsidiary in (i) the Company or a Wholly Owned Subsidiary or a Person that
will, upon the making of such Investment, become a Wholly Owned Subsidiary; (ii)
another Person if as a result of, and contemporaneously with, such Investment
such other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all its assets to, the Company or a Wholly Owned
Subsidiary; (iii) Temporary Cash Investments; (iv) receivables owing to the
Company or any Subsidiary if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
(v) payroll, travel and similar advances to cover matters that are expected at
the time of such advances ultimately to be treated as expenses for accounting
purposes, that are made in the ordinary course of business; (vi) loans or
advances to employees, officers or directors made in the ordinary course of
business consistent with past practices of the Company or a Subsidiary and that
do not in the aggregate exceed $ 4 million at any time; (vii) stock, obligations
or securities received in settlement of debts created in the ordinary course of
business and owing to the Company or any Subsidiary or in satisfaction of
judgments; and (viii) any Person to the extent such Investment represents the
non-cash portion of the consideration received for an Asset Disposition as
permitted pursuant to the covenant described under Section 5.08, (B) any
Investment by the Company in the Permitted Joint Venture at the times and in the
amounts and manner required by the Joint Venture Contract and (C) Customer Notes
issued following the Issue Date by the Company and its Subsidiaries; provided
that the amount of Investments made pursuant to Customer Notes following the
Issue Date, in the aggregate, at any one time outstanding may not exceed $30
million less the amount of Customer Notes Guarantees Incurred following the
Issue Date then outstanding pursuant to Section 5.04(b)(4) and 5.05(i).
"Permitted Joint Venture" means Shanghai Rockwell Graphic Systems Co.,
Ltd., a joint venture formed by the Company and Shanghai Printing & Packaging
Machinery Corp. pursuant to the Joint Venture Contract.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Plan" means the Joint Plan of Reorganization of Goss Graphic Systems, Inc.
("Systems"), Goss Holdings, Inc. and Goss Realty, L.L.C. ("Realty") under
Chapter 11 of the United States Bankruptcy Code filed with the United States
Bankruptcy Court for the District of Delaware and confirmed by such court on
October 21, 1999 with respect to the Company and Systems and November 4, 1999
with respect to Realty, as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
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"Preferred Stock" means, as applied to the Capital Stock of any
corporation, Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.
"Public Equity Offering" means a primary public offering of any class of
common stock of the Company or Goss pursuant to an effective registration
statement under the Securities Act.
"Public Market" means any time after (x) a Public Equity Offering has been
consummated, and (y) at least 15% of the total issued and outstanding common
stock of the Company or Goss, as the case may be, has been distributed by means
of an effective registration statement under the Securities Act or sales
pursuant to Rule 144 under the Securities Act.
"Refinance" means, with respect to any Debt, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue other Debt in
exchange or replacement for, such indebtedness. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Debt" means Debt that Refinances any Debt of the Company or
any Subsidiary existing on the Issue Date or Incurred in compliance with this
Indenture, including Debt that Refinances Refinancing Debt; provided, however,
that (i) such Refinancing Debt has a Stated Maturity no earlier than the Stated
Maturity of the Debt being Refinanced; (ii) such Refinancing Debt has an Average
Life at the time such Refinancing Debt is Incurred that is equal to or greater
than the Average Life of the Debt being Refinanced; (iii) such Refinancing Debt
has an aggregate principal amount (or if Incurred with original issue discount,
an aggregate issue price) that is equal to or less than the aggregate principal
amount (or if Incurred with original issue discount, the aggregate accreted
value) then outstanding or committed (plus fees and expenses, including any
premium and defeasance costs) under the Debt being Refinanced; and (iv) with
respect to any Refinancing Debt of Debt other than Senior Debt, such Refinancing
Debt shall rank no more senior, and shall be at least as subordinated, in right
of payment to the Notes as the Debt being so extended, renewed, refunded or
refinanced; provided, further, however, that Refinancing Debt shall not include
Debt of a Subsidiary that Refinances Debt of the Company.
"Related Business" means the business of the Company and its Subsidiaries
on the Issue Date and any business related, ancillary or complementary to the
businesses of the Company and its Subsidiaries on the Issue Date.
"Representative" means any trustee, agent or representative (if any) for an
issue of Senior Debt of the Company.
"Responsible Officer" means, when used with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee (or any successor group
of the Trustee) with direct responsibility for the administration of the
Indenture and also means with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his or her
knowledge and familiarity with the particular subject.
"Restricted Payment" with respect to any Person means (i) the declaration
or payment of any dividends or any other distributions of any sort in respect of
its Capital Stock
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(including any payment in connection with any merger or consolidation involving
such Person) or similar payment to the direct or indirect holders of its Capital
Stock (other than (x) dividends or distributions payable solely in its Capital
Stock (other than Disqualified Stock) or rights to acquire its Capital Stock
(other than Disqualified Stock), (y) dividends or distributions payable solely
to the Company or a Subsidiary, and (z) pro rata dividends or other
distributions made by a Subsidiary that is not a Wholly Owned Subsidiary to
minority stockholders (or owners of an equivalent interest in the case of a
Subsidiary that is an entity other than a corporation)), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the Company held by any Person or of any Capital Stock of a Subsidiary held by
any Affiliate of the Company (other than a Subsidiary), including the exercise
of any option to exchange any Capital Stock (other than into Capital Stock of
the Company that is not Disqualified Stock), (iii) the purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment of any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of acquisition) or (iv) the making of any
Investment in any Person (other than a Permitted Investment).
"SEC" means the Securities and Exchange Commission.
"Secured Debt" means any Debt of the Company or a Subsidiary secured by a
Lien.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means (i) Debt of the Company whether outstanding on the
Issue Date or thereafter incurred (including, without limitation, Debt (and
other obligations including for fees, expenses, reimbursements, indemnities or
otherwise) Incurred pursuant to the Credit Facility Guaranty, any Interest Rate
Agreement or Currency Agreement entered into with a Bank in connection with the
Credit Facility and any other Guarantee by the Company of any Debt or monetary
obligation of any of its Subsidiaries under the Credit Facility or any such
Interest Rate Agreement or Currency Agreement) and (ii) accrued and unpaid
interest thereon (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company or a
Subsidiary at the rate otherwise applicable thereto whether or not post-filing
interest is allowed in such proceeding).
"Senior Subordinated Debt" means the Notes and any other Debt of the
Company that specifically provides that such Debt is to rank pari passu with the
Notes in right of payment and is not subordinated by its terms in right of
payment to any Debt or other obligation of the Company which is not Senior Debt.
"Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" of the Company as such term is defined in Rule 1-02 of Regulation
S-X, promulgated by the SEC.
"Stated Maturity" means with respect to any security the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision
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providing for the repurchase of such security at the option of the holder
thereof upon the happening of any contingency unless such contingency has
occurred).
"Stonington" means Stonington Partners, Inc.
"Subordinated Obligation" means any Debt of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which by its written terms
is subordinate or junior in right of payment to the Notes.
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) 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 (i) such Person; (ii) such
Person and one or more Subsidiaries of such Person; or (iii) one or more
Subsidiaries of such Person.
"Tangible Property" means all land, buildings, machinery and equipment and
leasehold interests and improvements which would be reflected on a balance sheet
of the Company prepared in accordance with generally accepted accounting
principles, excluding (i) all rights, contracts and other intangible assets of
any nature whatsoever; and (ii) all inventories and other current assets.
"Temporary Cash Investments" means any of the following: (i) any investment
in direct obligations of the United States of America or any agency thereof or
obligations guaranteed by the United States of America or any agency thereof,
(ii) investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 270 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50,000,000 (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
investments in commercial paper, maturing not more than 180 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America, any
jurisdiction thereof or any foreign country recognized by the United States of
America with a rating at the time as of which any investment therein is made of
"P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Group, and (v) investments in
securities with maturities of nine months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's
Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb)
as in effect on the date on which this Indenture is qualified under the TIA.
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"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture, and thereafter
such term shall mean such successor serving hereunder.
"U.S. Government Obligation" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock of which
(other than directors' qualifying shares and shares held by other Persons to the
extent such shares are required by applicable law to be held by a Person other
than the Company or a Subsidiary) is owned by the Company or one or more Wholly
Owned Subsidiaries.
Section 1.02 Other Definitions.
Term Defined in
Article/Section
"Affiliate Transaction"................. Section 5.09
"Blockage Notice"....................... Section 11.03
"Change of Control"..................... Article IV
"covenant defeasance"................... Section 9.01
"Default Amount"........................ Section 7.02
"Excess Proceeds Offer"................. Section 5.08
"Excess Proceeds Payment"............... Section 5.08
"Event of Default"...................... Section 7.01
"Final Payment Default"................. Section 7.01
"legal defeasance"...................... Section 9.01
"Non-payment Default"................... Section 7.01
"Notes Payment"......................... Section 11.02
"Paying Agent".......................... Section 2.03
"parent corporation".................... Article IV
"Payment Blockage Period"............... Section 11.03
"Proceeding"............................ Section 11.02
"Registrar"............................. Section 2.03
"specified corporation"................. Article IV
"Successor Company"..................... Section 6.01
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Section 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
(i) "indenture securities" means the Notes;
(ii) "indenture security holder" means a Holder or Noteholder;
(iii) "indenture to be qualified" means this Indenture;
(iv) "indenture trustee" or "institutional trustee" means the Trustee;
(v) "obligor" upon the Notes means each of the Company and any successor
obligor upon the Notes.
All other terms used in this Indenture that are (i) defined by the TIA;
(ii) defined by TIA reference to another statute; or (iii) 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:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(iii) the word "or" shall not be deemed to be exclusive;
(iv) words in the singular include the plural, and words in the plural
include the singular; and
(v) provisions apply to successive events and transactions.
ARTICLE II
THE NOTES
Section 2.01 Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The Notes may have such
notations, legends or endorsements approved as to form by the Company and
required, as applicable, by law, stock exchange rule, agreements to which the
Company is subject and/or usage. Each Note shall be dated the date of its
authentication. The Notes shall be issuable only in denominations of $1.00 and
integral multiples thereof.
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Section 2.02 Execution and Authentication.
Two Officers of the Company shall sign the Notes for the Company by manual
or facsimile signature. The Company's seal shall be reproduced on the Notes.
If an Officer whose signature is on a Note no longer holds that office at
the time such Note is authenticated, such Note shall be valid nevertheless.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature of the Trustee shall be conclusive evidence that a
Note has been authenticated in accordance with the terms of this Indenture.
The Trustee, upon a written order of the Company signed by two Officers of
the Company, shall authenticate the Notes for original issue up to an aggregate
principal amount stated in paragraph 4 of the Notes. The aggregate principal
amount of Notes outstanding at any time shall not exceed the amount set forth
therein except as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate the Notes. Unless limited by the terms of such appointment, any
such authenticating agent may authenticate the Notes whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such authenticating agent of the Trustee. An authenticating
agent has the same rights as an Agent to deal with the Company or an Affiliate
of the Company.
The Trustee shall have the right to decline to authenticate and deliver any
Notes under this Section 2.02 if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in good
faith shall determine that such action would expose the Trustee to personal
liability to existing Holders for which the Trustee is not indemnified.
Section 2.03 Registrar and Paying Agent.
The Company shall maintain (i) an office or agency where the Notes may be
presented for registration of transfer or for exchange (including any
co-registrar, the "Registrar"); and (ii) an office or agency where the Notes may
be presented for payment ("Paying Agent"). The Registrar shall keep a register
of the Holders and of the transfer and exchange of the Notes (the "Note
Register"). The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" shall include any such
additional paying agent. The Company may change any Paying Agent, Registrar or
co-registrar without prior notice to any Holder. The Company shall notify the
Trustee and the Trustee shall notify the Holders of the name and address of any
Agent not a party to this Indenture. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar. The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which shall incorporate the provisions
of the TIA. Any such agency agreement shall implement the provisions of this
Indenture that relate to such Agent. If the Company fails to maintain a
Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee
shall act as such, as appropriate, and shall be entitled to appropriate
compensation in accordance with Section 8.07.
The Company initially appoints the Trustee as Registrar, Paying Agent and
agent for service of notices and demands in connection with the Notes.
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Section 2.04 Paying Agent to Hold Money In Trust.
On or prior to each due date of the principal of, premium, if any, and
interest on any Note, the Company shall deposit with the Paying Agent a sum
sufficient to pay such principal, premium, if any, and interest when so becoming
due. The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all money held by the Paying Agent for the payment of
principal of, premium, if any, and interest on the Notes, and shall 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 its domestically incorporated Wholly
Owned Subsidiaries) shall have no further liability for the money delivered to
the Trustee. If the Company or its domestically incorporated Wholly Owned
Subsidiaries 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.
Section 2.05 Lists of Holders.
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
the Holders. If the Trustee is not the Registrar, the Company shall furnish to
the Trustee at least five 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.
Section 2.06 Transfer and Exchange.
Notes shall be issued in registered form. When Notes are presented to the
Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Notes of other denominations, the Registrar shall
register the transfer or make the exchange; provided, however, that any Note
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar and the Trustee duly executed by the Holder
thereof or by his attorney duly authorized in writing. To permit registrations
of transfer and exchanges, the Company shall execute and the Trustee shall
authenticate Notes at the Registrar's request.
Neither the Company nor the Registrar shall be required to (i) issue,
register the transfer of or exchange Notes during a period beginning at the
opening of business on a Business Day 15 days before the day of any selection of
Notes for redemption under Section 3.02; (ii) register the transfer of or
exchange any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (iii) register the
transfer of or exchange any Note during a period beginning at the opening of
business 15 days before an interest payment date and ending at the close of
business on the interest payment date.
No service charge shall be made to any Holder of a Note for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith.
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Prior to due presentment to the Trustee for registration of the transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered in the Note Register as the absolute owner
of such Note for the purpose of receiving payment of principal of, premium, if
any, and interest on such Note and for all other purposes whatsoever, whether or
not such Note is overdue, and none of the Trustee, any Agent nor the Company
shall be affected by any notice to the contrary.
Section 2.07 Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the Company and the
Trustee receive evidence to their satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee shall authenticate a
replacement Note if the Company's and the Trustee's reasonable requirements for
the replacements of Notes are met. If required by the Trustee or the Company, an
indemnity bond shall 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 or any authenticating agent from any loss which any of them may suffer if
a Note is replaced. The Company and the Trustee may charge the Holder for their
expenses in replacing a Note.
Every replacement Note shall be an obligation of the Company.
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 and those described in this Section 2.08 as not outstanding. A Note
does not cease to be outstanding because the Company, a Subsidiary of the
Company or an Affiliate of the Company holds such Note.
If a Note is replaced pursuant to Section 2.07, it shall cease to be
outstanding unless the Trustee receives proof satisfactory to it that such
replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be
outstanding upon surrender of such Note and replacement thereof pursuant to
Section 2.07.
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a redemption date or maturity date money sufficient to pay all
principal and interest payable on that date with respect to the Notes (or
portions thereof) to be redeemed or maturing, as the case may be, and the Paying
Agent is not prohibited from paying such money to the Holders on that date
pursuant to the terms of this Indenture, then on and after that date such Notes
(or portions thereof) shall cease to be outstanding and interest thereon shall
cease to accrue.
Section 2.09 Temporary Notes.
Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have such variations as
the Company and the Trustee consider appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
definitive Notes in exchange for temporary Notes. Until such exchange, temporary
Notes shall be entitled to the same rights, benefits and privileges as
definitive Notes.
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Section 2.10 Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and the 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 dispose of
such cancelled Notes in accordance with its customary procedures, unless the
Company directs cancelled Notes to be returned to it. The Company may not issue
new Notes to replace Notes it has redeemed, paid or delivered to the Trustee for
cancellation.
Section 2.11 Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, the Company
shall pay such defaulted interest in any lawful manner and shall pay interest on
defaulted installments of interest at the rate borne by the Notes to the extent
lawful. The Company may pay such defaulted interest to the Persons who are
Holders of the Notes on a subsequent special record date, which date shall be at
the earliest practicable date but in all events at least five Business Days
prior to the payment date, in each case at the rate provided in the Notes. The
Company shall fix or cause to be fixed any such special record date and payment
date, and, at least 15 days prior to the special record date, the Company shall
mail or cause to be mailed to each Holder of a Note a notice that states such
special record date, such related payment date and the amount of any such
defaulted interest to be paid to Holders of the Notes.
Section 2.12 CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and, if the
Company shall do so, the Trustee shall use such CUSIP number in notices of
redemption or exchange as a convenience to Holders; provided, however, that any
such notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in such notice or on the Notes and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Company will notify the Trustee of any change in a CUSIP number.
ARTICLE III
REDEMPTION
Section 3.01 Notices to Trustee.
If the Company elects to redeem Notes pursuant to paragraph 5 of the Notes,
the Company shall notify the Trustee in writing of the redemption date, the
principal amount of Notes to be redeemed, the CUSIP number of such Notes and the
paragraph of the Notes pursuant to which the redemption will occur.
The Company shall give each notice to the Trustee provided for in this
Section 3.01 at least 60 but not more than 90 days before the redemption date
unless the Trustee consents to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an Opinion of Counsel from the
Company to the effect that such redemption will comply with the conditions
herein. If fewer than all of the Notes are to be redeemed, the record date
relating to such
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redemption shall be selected by the Company and given to the Trustee, which
record date shall not be less than 15 days after the date of notice to the
Trustee.
Section 3.02 Selection of Notes to be Redeemed.
If fewer than all the Notes are to be redeemed, the Trustee shall select
the Notes to be redeemed by lot or by such other methods as the Trustee in its
sole discretion shall deem to be fair and appropriate and that comply with the
applicable legal and securities exchange requirements, if any. The Trustee shall
make the selection from outstanding Notes not previously called for redemption.
Notes and portions of Notes the Trustee selects shall be in amounts of $1.00 or
a whole multiple of $1.00. Provisions of this Indenture that apply to Notes
called for redemption also apply to portions of Notes called for redemption. The
Trustee shall notify the Company promptly of the Notes or portions of Notes to
be redeemed.
Section 3.03 Notice of Redemption.
The Company shall, at least 30 days but not more than 60 days before a
redemption date, mail or cause to be mailed, by first class-mail, a notice of
redemption to each Holder of Notes of that are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) 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;
(iv) the name and address of the Paying Agent;
(v) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(vi) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Notes called for redemption
ceases to accrue on and after the redemption date;
(vii) the paragraph of the Notes and/or the Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(viii) 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, at least five Business Days prior to the date
upon which such notice is to be mailed unless the Trustee consents to a shorter
period, the Trustee shall give the notice of redemption in the Company's name
and at the Company's expense. In
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such event, the Company shall provide the Trustee with the information required
by this Section 3.03.
Section 3.04 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03, Notes
called for redemption shall become due and payable on the redemption date and at
the redemption price stated in such notice of redemption. Upon surrender to the
Paying Agent, such Notes shall be paid at the redemption price stated in such
notice of redemption, plus accrued interest to the redemption date. Failure to
give notice to a Holder or any defect in any notice shall not affect the
validity of any notice to any other Holder.
Section 3.05 Deposit of Redemption Price.
On or prior to any redemption date, the Company shall deposit with the
Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) 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
on that date other than Notes or portions of Notes called for redemption which
have been delivered by the Company to the Trustee for cancellation.
Section 3.06 Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and 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.
ARTICLE IV
CHANGE OF CONTROL AND ENTERPRISE VALUATION EVENT
Section 4.01 Change of Control and Enterprise Valuation Event.
(a) Upon the occurrence, from time to time, of any of the following events
(each a "Change of Control"), each Holder shall have the right to require that
the Company repurchase such Holder's Notes at a purchase price in cash equal to,
in the case of an Enterprise Valuation Event, 107% or, in all other cases, 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date):
(i) prior to a Public Equity Offering, the Permitted Holders cease to
be the "beneficial owner" (as defined in Rules l3d-3 and l3d-5 under the
Exchange Act), directly or indirectly, of a majority in the aggregate of
the total voting power of the Voting Stock of the Company or Goss, whether
as a result of issuance of securities of the Company or Goss, any merger,
consolidation, liquidation or dissolution of the Company or Goss, any
direct or indirect transfer of securities or otherwise (for purposes of
this clause (i) and clause (ii) below, the Permitted Holders shall be
deemed to beneficially own any Voting Stock of a corporation
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(the "specified corporation") held by any other corporation (the "parent
corporation") so long as the Permitted Holders beneficially own (as so
defined), directly or indirectly, in the aggregate a majority of the voting
power of the Voting Stock of the parent corporation);
(ii) on or after a Public Equity Offering, (A) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), other than
one or more Permitted Holders, is or becomes the beneficial owner (as
defined in clause (i) above, except that for purposes of this clause (ii)
such person shall be deemed to have "beneficial ownership" of all shares
that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 40% of the total voting power of the Voting Stock
of the Company or Goss; provided, however, that the Permitted Holders
beneficially own (as defined in clause (i) above), directly or indirectly,
in the aggregate a lesser percentage of the total voting power of the
Voting Stock of the Company or Goss than such other person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors (for the
purposes of this clause (ii), such other person shall be deemed to
beneficially own any voting stock of a specified corporation held by a
parent corporation, if such other person is the beneficial owner (as
defined in this clause (ii)), directly or indirectly, of more than 40% of
the voting power of the Voting Stock of such parent corporation and the
Permitted Holders beneficially own (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the voting
power of the Voting Stock of such parent corporation and do not have the
right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of such parent
corporation);
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company or Goss (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of
the Company or Goss, as the case may be, was approved by a vote of not less
than 66-2/3% of the directors of the Company or Goss, as the case may be,
then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office; or
(iv) the merger or consolidation of the Company or Goss with or into
another Person or the merger of another Person with or into the Company or
Goss or the sale or transfer in one or a series of transactions of all or
substantially all the assets of the Company or Goss to another Person, and,
in the case only of any such merger or consolidation, the securities of the
Company or Goss, as the case may be, that are outstanding immediately prior
to such transaction and which represent 100% of the aggregate voting power
of the Voting Stock of the Company or Goss are changed into or exchanged
for cash, securities or property unless pursuant to such transaction such
securities are changed into or exchanged
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for, in addition to any other consideration, securities of the surviving
corporation that represent immediately after such transaction, at least, a
majority of the aggregate voting power of the Voting Stock of the surviving
corporation.
(b) Notwithstanding the foregoing, if at the time of the occurrence of a
Change of Control the terms of the Credit Agreement restrict or prohibit the
repurchase of Notes pursuant to Section 4.01(a), then, prior to the mailing of
the notice to Holders provided for in Section 4.01(c) but in any event within 30
days following any such Change of Control, the Company shall (i) repay in full
all Debt under the Credit Agreement or offer to repay in full all such Debt and
repay the Debt of each Bank that has accepted such offer or (ii) obtain any
required consent or waiver under the Credit Agreement to permit the repurchase
of the Notes as provided for in Section 4.01(a).
(c) Within 30 days following any Change of Control, the Company shall mail
a notice to each Holder with a copy to the Trustee stating: (1) that a Change of
Control has occurred and that such Holder has the right to require the Company
to purchase such Holder's Notes at a purchase price in cash equal to, in the
case of an Enterprise Valuation Event, 107% or, in all other cases, 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date); (2) the
circumstances and, to the extent available, relevant facts regarding such Change
of Control (including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to such Change of Control); (3)
the repurchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed); (4) the instructions, determined by
the Company consistent with the covenant described hereunder, that a Holder must
follow in order to have its Notes purchased and, in the case of a Change of
Control that is not treated by the Company as an Enterprise Valuation Event, (5)
a written report from a nationally recognized investment bank or financial
advisory firm addressed to the Trustee confirming such treatment and setting
forth such bank's or firm's analysis thereof in reasonable detail.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to the
provisions of this Article IV. To the extent that the provisions of any
securities laws and regulations conflict with the provisions of this Section
4.01, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Article IV by virtue thereof.
(e) In the event that an Enterprise Valuation Event shall have occurred
within the period of 180 days following any optional redemption of Notes
pursuant to Section 5 of the Notes, the Company shall pay to each Holder whose
Notes were redeemed the difference between the optional redemption price
received by such Holder and the purchase price such Holder would have received
had redeemed Notes instead been purchased as provided in this Article IV, in
each case excluding any portion of such redemption and purchase prices
consisting of accrued interest. Such payment shall be made within 30 days of the
occurrence of such Enterprise Valuation Event, in a manner agreed to by the
Company and the Trustee.
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ARTICLE V
COVENANTS
Section 5.01 Payment of Principal, Premium and Interest.
The Company shall duly and punctually pay the principal of (and premium, if
any) and interest on the Notes in accordance with the terms of this Indenture
and the Notes.
Section 5.02 Maintenance of Office or Agency.
The Company shall maintain an office or agency (which may be an office of
the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where
Notes may be surrendered for registration of transfer or 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 such 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 also from time to time may designate one or more additional
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and from time to time may rescind any such designation;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
Section 5.03 SEC Reports.
So long as any of the Notes remain outstanding, the Company shall cause
copies of all quarterly and annual financial reports and of the information,
documents, and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company or Goss is
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act, to be filed with the Trustee and mailed to the Holders at their addresses
appearing in the Note Register maintained by the Registrar, in each case, within
5 Business Days of filing with the SEC. If neither the Company nor Goss is
subject to the requirements of such Section 13 or 15(d) of the Exchange Act, the
Company shall nevertheless continue to file with the SEC, in conformity with
Section 13 or Section 15(d) of the Exchange Act, and provide the Trustee and
Holders with such annual and quarterly reports (without exhibits in the case of
documents provided to the Trustee and Holders) and such information, documents
and other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) which are specified in Section 13 or
Section 15(d) of the Exchange Act. The Company shall also comply with the
provisions of TIA ss. 314(a).
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein,
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including the Company's compliance with any of its covenants hereunder (as to
which the Trustee is entitled to rely exclusively on Officers' Certificates).
Section 5.04 Limitation On Debt.
(a) The Company shall not, and shall not permit Goss to, Incur, directly or
indirectly, any Debt unless, on the date of such Incurrence, the Consolidated
Coverage Ratio exceeds 2.0 to 1.0.
(b) Notwithstanding the foregoing paragraph (a), the Company or Goss, as
the case may be, may Incur any or all of the following Debt:
(i) Debt Incurred pursuant to the Revolving Credit Facility and the
Credit Facility Guaranty in respect thereof; provided, however, that, after
giving effect to any such Incurrence, the aggregate principal amount of
such Debt then outstanding does not exceed $250 million (excluding, for
purposes of calculating such aggregate principal amount, the amount of
Hedging Obligations guaranteed pursuant to the Credit Agreement Guaranty).
(ii) Customer Notes Guarantees Incurred following the Issue Date in an
aggregate amount at any one time outstanding not to exceed $30 million less
the amount of Customer Notes Guarantees Incurred following the Issue Date
then outstanding pursuant to Section 5.05(i) and less the amount of
Investments in Customer Notes made following the Issue Date then
outstanding pursuant to clause (c) of the definition of "Permitted
Investment";
(iii) Debt owed to and held by a Wholly Owned Subsidiary of Goss;
provided, however, that any subsequent issuance or transfer of any Capital
Stock which results in any such Wholly Owned Subsidiary ceasing to be a
Wholly Owned Subsidiary or any subsequent transfer of such Debt (other than
to another Wholly Owned Subsidiary of Goss) shall be deemed, in each case,
to constitute the Incurrence of such Debt by the Company or Goss, as the
case may be;
(iv) the Notes;
(v) Debt (including without limitation Customer Notes Guarantees)
outstanding on the Issue Date (other than Debt described in clauses (i),
(ii), (iii), (iv), (v), or (vii) of this Section 5.04);
(vi) Refinancing Debt in respect of Debt Incurred pursuant to
paragraph (a) above or pursuant to clause (iv) or (v) above or this clause
(vi);
(vii) Hedging Obligations with respect to (1) Debt permitted to be
Incurred by the Company or its Subsidiaries pursuant to this Indenture or
(2) transactions denominated in foreign currencies; and
(viii) Debt (which Debt may, but need not, be Incurred in whole or in
part under the Credit Agreement) in an aggregate principal amount which,
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together with all other Debt of the Company and Goss outstanding on the
date of such Incurrence (other than Debt permitted by clauses (i) through
(x) of this paragraph (b) or paragraph (a) above), and giving effect to any
concurrent Refinancing of Debt permitted by this Indenture, does not exceed
$15 million.
For purposes of determining compliance with this covenant, (i) in the event
that an item of Debt meets the criteria of more than one of the types of Debt
described in paragraph (b) or is entitled to be incurred pursuant to paragraph
(a), the Company, in its sole discretion, will classify such item of Debt in any
manner that complies with this covenant and such debt will be treated as having
been incurred pursuant to only one of such clauses of paragraph (b) or pursuant
to paragraph (a); and (ii) an item of Debt may be divided and classified in more
than one of the types of Debt in paragraph (b) or pursuant to paragraph (a).
(c) Notwithstanding paragraph (a) and paragraph (b) above, the Company
shall not Incur any Debt if the proceeds thereof are used, directly or
indirectly, to Refinance any Subordinated Obligations unless such Debt shall be
subordinated to the Notes to at least the same extent as such Subordinated
Obligations.
(d) Notwithstanding paragraph (a) and paragraph (b) above, (i) the Company
shall not Incur any Debt if such Debt is subordinated or junior in ranking in
right of payment to any Senior Debt, unless such Debt is Senior Subordinated
Debt or is expressly subordinated in right of payment to Senior Subordinated
Debt; and (ii) the Company shall not issue any Secured Debt which is not Senior
Debt unless contemporaneously therewith effective provision is made to secure
the Notes equally and ratably with such Secured Debt for so long as such Secured
Debt is secured by a Lien.
Section 5.05 Limitation on Debt and Preferred Stock of Subsidiaries of Goss.
The Company shall not permit any Subsidiary of Goss to Incur, directly or
indirectly, any Debt or Preferred Stock except:
(a) Guarantees by such Subsidiaries of Debt of the Company or Goss
described in clause (b)(i), (ii) and (iv) of Section 5.04, other Debt of the
Company or Goss Incurred under the Credit Facility which is permitted to be
Incurred pursuant to the terms of this Indenture, and Debt of Foreign
Subsidiaries described in clauses (e) and (f) below;
(b) Debt or Preferred Stock issued to and held by the Company, Goss or a
Wholly Owned Subsidiary; provided, however, that any subsequent issuance or
transfer of any Capital Stock which results in any such Wholly Owned Subsidiary
ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of such Debt
or Preferred Stock (other than to the Company or a Wholly Owned Subsidiary)
shall be deemed, in each case, to constitute the issuance of such Debt or
Preferred Stock by the issuer thereof;
(c) Debt or Preferred Stock of a Subsidiary of Goss Incurred and
outstanding on or prior to the date on which such Subsidiary was acquired by the
Company (other than Debt or Preferred Stock Incurred in connection with, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary or was acquired by the Company); provided,
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however, that on the date of such acquisition and after giving effect thereto,
the Company would have been able to Incur at least $1.00 of additional Debt
pursuant to Section 5.04(a);
(d) Debt or Preferred Stock outstanding on the Issue Date (other than Debt
described in clause (a), (b) or (c));
(e) Debt of a Foreign Subsidiary Incurred pursuant to the Credit Facility;
provided, however, that, after giving effect to any such Incurrence, the
aggregate principal amount of Debt outstanding of such Foreign Subsidiary
pursuant to this clause (e) does not exceed the greater of (x) $175 million and
(y) the sum of 85% of the gross book value of the accounts receivable of such
Foreign Subsidiary and 65% of the gross book value of the inventories of such
Foreign Subsidiary;
(f) Refinancing Debt Incurred in respect of Debt or Preferred Stock
referred to in clause (a), (c) or (d) or this clause (f); provided, however,
that to the extent such Refinancing Debt directly or indirectly Refinances Debt
or Preferred Stock of a Subsidiary described in clause (c), such Refinancing
Debt shall be Incurred only by such Subsidiary;
(g) Hedging Obligations by a Subsidiary with respect to (x) Debt permitted
to be Incurred by such Subsidiary pursuant to this Indenture and (y)
transactions by such Subsidiary denominated in foreign currencies; and
(h) Customer Notes Guarantees Incurred following the Issue Date in an
aggregate amount at any one time outstanding not to exceed $30 million less the
amount of Customer Notes Guarantees Incurred following the Issue Date then
outstanding pursuant to Section 5.04(b)(ii) and less the amount of Investments
in Customer Notes made following the Issue Date then outstanding pursuant to
clause (B) of the definition of "Permitted Investment."
Section 5.06 Limitation On Restricted Payments.
(a) The Company shall not, and shall not permit any Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Subsidiary makes such Restricted Payment:
(i) a Default shall have occurred and be continuing (or would result
therefrom);
(ii) the Company, after giving pro forma effect to such Restricted
Payment, would not be permitted to Incur an additional $1.00 of Debt
pursuant to Section 5.04(a); or
(iii) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal quarter
during which the Notes were originally issued to the end of the most recent
fiscal quarter ending at least 45 days prior to the date of such
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Restricted Payment (or, in case such Consolidated Net Income shall be a
deficit, minus 100% of such deficit); (B) the aggregate Net Cash Proceeds
and aggregate Deemed Asset Value received by the Company from the issue or
sale of its Capital Stock (other than Disqualified Stock) or capital
contributions with respect thereto subsequent to the Issue Date (other than
an issuance or sale to a Subsidiary of the Company and except as set forth
in clause (C) other than an issuance or sale to an employee stock ownership
plan or to a trust established by the Company or any of its Subsidiaries
for the benefit of their employees); (C) the aggregate Net Cash Proceeds
received by the Company from the issuance or sale of its Capital Stock
(other than Disqualified Stock) to an employee stock ownership plan or
trust established by the Company or any of its Subsidiaries for the benefit
of their employees subsequent to the date on which the Notes were
originally issued, other than any such issuance or sale to the extent the
purchase by such plan or trust is financed by Debt of such plan or trust
and for which the Company is liable as guarantor or otherwise; and (D) the
amount by which Debt of the Company is reduced on the Company's balance
sheet upon the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to the Issue Date, of any Debt of the Company
convertible or exchangeable for Capital Stock (other than Disqualified
Stock) of the Company (less the amount of any cash, or the fair value of
any other property, distributed by the Company or any Subsidiary upon such
conversion or exchange, except to the extent that such distribution results
in a reduction in Consolidated Net Income reflected pursuant to clause (A)
above).
(b) The provisions of the foregoing paragraph (a) shall not prohibit:
(i) any purchase or redemption of Capital Stock or Subordinated
Obligations of the Company made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Capital Stock of the Company (other
than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary of the Company or an employee stock ownership plan or to a trust
established by the Company or any of its Subsidiaries for the benefit of
their employees to the extent the purchase by such plan or trust is
financed by Debt of such plan or trust and for which the Company or any
Subsidiary is liable as guarantor or otherwise), provided, however, that
(A) such purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Net Cash Proceeds from such sale
shall be excluded from the calculation of amounts under clauses (iii)(B)
and (iii)(C) of paragraph (a) above;
(ii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations together
with any premium payable in connection therewith made by exchange for, or
out of the proceeds of the substantially concurrent sale of, Debt of the
Company which is permitted to be Incurred pursuant to Section 5.04;
provided, however, that such purchase, repurchase, redemption, defeasance
or other acquisition or retirement
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for value shall be excluded in the calculation of the amount of Restricted
Payments;
(iii) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this covenant; provided, however, that at the time of declaration of
such dividend, no other Default shall have occurred and be continuing (or
would result therefrom); and provided, further, however, that such dividend
shall be included in the calculation of the amount of Restricted Payments;
(iv) the repurchase of shares of, or options to purchase shares of,
common stock of the Company or any of its Subsidiaries from employees,
former employees, directors or former directors of the Company or any of
its Subsidiaries (or permitted transferees of such employees, former
employees, directors or former directors), pursuant to the terms of the
agreements (including employment agreements) or plans (or amendments
thereto) approved by the Board of Directors under which such individuals
purchase or sell or are granted the option to purchase or sell, shares of
such common stock; provided, however, that the aggregate amount of such
repurchases in any calendar year shall not exceed the sum of (x) $2 million
and (y) the aggregate Net Cash Proceeds from any reissuance during such
calendar year of Capital Stock to employees, officers or directors of the
Company or its Subsidiaries; provided further, however, that to the extent
that the aggregate amount of such repurchases is less than $2 million in
any calendar year, the unused portion of such $2 million may be carried
forward to the succeeding calendar year (provided that the aggregate amount
of the repurchases in any calendar year shall, in no event, exceed $4
million plus the amount of aggregate Net Cash Proceeds from any reissuance
of Capital Stock described above) in any calendar year; and provided,
further, however, that such repurchases shall be excluded in the
calculation of the amount of Restricted Payments;
(v) Investments in any Person primarily engaged in a Related Business
in an aggregate amount not to exceed $10 million; provided, however, that
the amount of such Investments shall be excluded in the calculation of the
amount of Restricted Payments;
(vi) the payment of any cash dividend on the common stock of the
Company following a Public Equity Offering by the Company and a payment to
the Company used solely to pay dividends on the common stock of the
Company, in each case as long as no Default or Event of Default has
occurred and is continuing or would thereby result; provided that the
aggregate amount of all such dividends and payments under this clause (vi)
shall not exceed 6% of the Net Cash Proceeds received by the Company in any
such Public Equity Offering in any calendar year; provided further,
however, that such dividends and payments shall be included in the
calculation of Restricted Payments;
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(vii) Investments in Customer Notes to the extent such Investments are
in existence on the Issue Date; provided, however, that the amount of such
Investments shall be excluded in the calculation of the amount of
Restricted Payments; or
(viii) Restricted Payments in an aggregate amount not to exceed $10
million; provided, however, that the amount of such Restricted Payments
shall be excluded in the calculation of the amount of Restricted Payments.
Section 5.07 Limitation On Restrictions On Distributions from Subsidiaries.
(a) The Company shall not, and shall not permit any Subsidiary to, create
or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary to:
(i) pay dividends or make any other distributions on its Capital Stock
to the Company or a Subsidiary or pay any Debt owed to the Company,
(ii) make any loans or advances to the Company or
(iii) transfer any of its property or assets to the Company, except:
(1) any encumbrance or restriction pursuant to the Credit
Facility or any agreement in effect or entered into on the Issue Date or
pursuant to the issuance of the Notes;
(2) any encumbrance or restriction with respect to a Subsidiary
of Goss pursuant to an agreement relating to any Debt Incurred by such
Subsidiary on or prior to the date on which such Subsidiary was acquired by
the Company (other than Debt Incurred as consideration in, or to provide
all or any portion of the funds or credit support utilized to consummate,
the transaction or series of related transactions pursuant to which such
Subsidiary became a Subsidiary or was acquired by the Company) and
outstanding on such date;
(3) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Debt Incurred pursuant to an agreement referred
to in clause (1) or (2) or contained in any amendment to an agreement
referred to in clause (1) or clause (2); provided, however, that the
encumbrances and restrictions contained in any of such refinancing
agreement or amendment are no less favorable to the Noteholders than
encumbrances and restrictions with respect to such Subsidiary contained in
such agreements;
(4) any such encumbrance or restriction (A) that restricts in a
customary manner the subletting, assignment or transfer of any property or
asset that is a lease, license, conveyance or contract or similar property
or asset the subject of such encumbrance or restriction, (B) existing by
virtue of any transfer of, agreement to transfer, option or right with
respect to, or Lien on, any property or assets of the Company or any
Subsidiary not otherwise prohibited by this Indenture or (C) arising or
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agreed to in the ordinary course of business, not relating to any
Indebtedness, and that do not, individually or in the aggregate, detract
from the value of property or assets of the Company or any Subsidiary in
any manner material to the Company or any Subsidiary; provided that, in
each case, such encumbrance or restriction relates to, and restricts
dealings with, only the property or asset the subject of such encumbrance
or restriction; provided further, that such encumbrance or restriction does
not prohibit, limit or otherwise restrict the making or payment of any
dividend or other distribution to the Company or any Subsidiary;
(5) in the case of this clause (iii), restrictions contained in
security agreements or mortgages securing Debt of a Subsidiary of Goss to
the extent such restrictions restrict the transfer of the property subject
to such security agreements or mortgages;
(6) any encumbrance or restriction imposed solely upon a Foreign
Subsidiary pursuant to an agreement relating to Indebtedness Incurred by
such Foreign Subsidiary which is permitted under the covenant described in
Section 5.05; and
(7) any restriction with respect to a Subsidiary of Goss imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Subsidiary pending
the closing of such sale or disposition.
Section 5.08 Limitation On Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Subsidiary to, directly
or indirectly, consummate any Asset Disposition unless
(i) the Company or such Subsidiary receives consideration at the time
of such Asset Disposition at least equal to the fair market value, as
determined in good faith by the Board of Directors (including as to the
value of all non-cash consideration), of the shares and assets subject to
such Asset Disposition and at least 75% of the consideration thereof
received by the Company or such Subsidiary is in the form of cash or Cash
Equivalents, and
(ii) the Company (x) within 180 days (in the case of (A) below) or 360
days (in the case of (B) below) after receipt of such Net Available Cash,
(A) to the extent the Company so elects (or is so required by the terms of
any Senior Debt), applies an amount equal to 100% of the Net Available Cash
to repay, prepay, redeem or purchase Senior Debt of the Company or Goss or
Debt (other than any Disqualified Stock) of a Wholly Owned Subsidiary of
Goss (in each case other than Debt owed to the Company or an Affiliate of
the Company) or (B) invests or commits to invest the balance of such Net
Available Cash not applied pursuant to clause (A), in Additional Assets;
provided, however, that in the case of any commitment to invest such
investment must be made within one month thereafter, and any amount not so
invested shall be treated as Excess Proceeds (as defined below); and (y)
applies the balance of such Net Available Cash not
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applied pursuant to clause (x), as provided in the following paragraphs of
this covenant. Notwithstanding the foregoing provisions of this paragraph,
the Company and its Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this paragraph except to the extent that
the aggregate Net Available Cash from all Asset Dispositions which are not
applied in accordance with this paragraph exceeds $10 million. The amount
of Net Available Cash required to be applied and not applied as so required
shall constitute "Excess Proceeds". Pending application of Net Available
Cash pursuant to this covenant, such Net Available Cash shall be invested
in Temporary Cash Investments or applied to repay Debt Incurred under the
Revolving Credit Facility without commitment reduction thereunder.
For the purposes of this covenant, the following are deemed to be included
in Cash Equivalents: (x) the assumption of Debt of the Company or any Subsidiary
and the release of the Company or such Subsidiary from all liability on such
Debt in connection with such Asset Disposition, (y) Temporary Cash Investments,
and (z) securities received by the Company or any Subsidiary from the transferee
that are promptly converted by the Company or such Subsidiary into cash.
(b) If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as defined
below) totals at least $10 million, the Company must, not later than the
fifteenth Business Day of such month, make an offer (an "Excess Proceeds Offer")
to purchase from the Holders (and to purchase Debt from the holders of any other
Senior Subordinated Debt) on a pro rata basis an aggregate principal amount of
Notes equal to the Excess Proceeds (rounded down to the nearest multiple of
$1,000) on such date, at a purchase price equal to 100% of the principal amount
of such Notes, plus, in each case, accrued interest (if any) to the date of
purchase (or, in respect of such other Senior Subordinated Debt, such lesser
price, if any, as may be provided for by the terms of such Senior Subordinated
Debt) (the "Excess Proceeds Payment").
(c) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 5.08. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 5.08, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this clause by virtue thereof.
Section 5.09 Limitation On Affiliate Transactions.
(a) The Company shall not, and shall not permit any Subsidiary to, enter
into or permit to exist any transaction or series of similar transactions
(including the purchase, sale, lease or exchange of any property, employee
compensation arrangements or the rendering of any service with any Affiliate of
the Company or of Goss (an "Affiliate Transaction") unless (x) such transaction
does not consist of the issuance of securities pursuant to stock options, stock
ownership plans or other similar employee compensation arrangements and (y) the
terms thereof:
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(i) are no less favorable to the Company or such Subsidiary than those
that could be obtained at the time of such transaction in arm's length
dealings with a Person who is not such an Affiliate,
(ii) if such Affiliate Transaction involves an amount in excess of $3
million, (1) are set forth in writing and (2) have been approved by a
majority of the members of the Board of Directors having no personal stake
in such Affiliate Transaction, and
(iii) if such Affiliate Transaction involves an amount in excess of
$15 million, have been determined by a nationally recognized investment
banking firm to be fair, from a financial standpoint, to the Company and
its Subsidiaries.
(b) The provisions of the foregoing paragraph (a) shall not prohibit:
(i) any Restricted Payment permitted to be paid pursuant to Section
5.06;
(ii) any issuance of securities, or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board
of Directors and, with respect to stock options and stock ownership plans,
issued pursuant to the Plan;
(iii) loans or advances to employees in the ordinary course of
business in accordance with the past practices of the Company or its
Subsidiaries and their predecessors, but in any event not to exceed $4
million in the aggregate outstanding at any one time;
(iv) the payment of reasonable and customary fees to directors of the
Company and its Subsidiaries who are not employees of the Company or its
Subsidiaries; and
(v) any Affiliate Transaction between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.
Section 5.10 Compliance Certificates.
The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year, an Officers' Certificate stating that a review of the
activities of the 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 Officers' Certificate, that to the best of his or her knowledge the
Company has kept, observed, performed and fulfilled each 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
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Default of which he or she may have knowledge and what action each is taking or
proposes to take with respect thereto). The Company shall also comply with TIA
ss. 314(a)(4).
Section 5.11 Further Instruments and Acts.
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
ARTICLE VI
SUCCESSORS
Section 6.01 When the Company May Merge or Transfer Assets.
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under
the Notes and this Indenture;
(ii) immediately after giving effect to such transaction (and treating
any Debt which becomes an obligation of the Successor Company or any
Subsidiary of the Successor Company as a result of such transaction as
having been Incurred by such Successor Company or such Subsidiary at the
time of such transaction), no Default shall have occurred and be
continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of Debt
pursuant to Section 5.04(a);
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount which is
not less than the Consolidated Net Worth of the Company prior to such
transaction; and
(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the terms of this Indenture.
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Section 6.02 Successor Company Substituted.
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture, but the predecessor Company in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Notes.
ARTICLE VII
DEFAULTS AND REMEDIES
Section 7.01 Events of Default.
Each of the following shall constitute an "Event of Default":
(i) the Company defaults in any payment of interest on any Note when
the same becomes due and payable, whether or not such payment shall be
prohibited by Article XI, and such default continues for a period of 30
days;
(ii) the Company defaults in the payment of the principal of any Note
when the same becomes due and payable at its Stated Maturity, upon optional
redemption, upon declaration, upon required repurchase or otherwise,
whether or not such payment shall be prohibited by Article XI;
(iii) the Company fails to comply with Article VI;
(iv) the Company fails to comply for 30 days after the notice
specified in this Section 7.01 with any of its obligations contained in
Article IV (other than a failure to purchase Notes), Section 5.03, Section
5.04, Section 5.05, Section 5.06, Section 5.07, Section 5.08 (other than a
failure to purchase Notes), or Section 5.09;
(v) the Company fails to comply with any of its agreements in this
Indenture (other than those referred to in clause (i), clause (ii), clause
(iii) or clause (iv) of this Section 7.01) and such failure continues for
60 days after the notice specified in this Section 7.01;
(vi) a default under the Credit Agreement or under any other mortgage,
indenture or instrument under which there may be issued or by which there
may be secured or evidenced any Debt for money borrowed by the Company or
any of its Subsidiaries (or the payment of which is Guaranteed by the
Company or any of its Subsidiaries) whether such Debt or Guarantee now
exists, or is created after the date of this Indenture, which default (1)
is caused by failure to pay principal of or premium, if any, or interest on
such Debt within any applicable grace period after final maturity ("Final
Payment Default"), or (2) results in the acceleration of such Debt prior to
its final stated maturity and, in each case, the principal amount of any
such Debt, together with the principal amount of any other such Debt under
which there has been a Final Payment Default or the maturity of which has
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been so accelerated, aggregates $10 million or more and such default or
acceleration continues for 30 days after the notice specified in this
Section 7.01;
(vii) the Company or any Significant Subsidiary of the Company
pursuant to or within the meaning of Bankruptcy Law: (1) commences a
voluntary case, (2) consents to the entry of an order for relief against it
in an involuntary case, (3) consents to the appointment of a Custodian of
it or for all or substantially all of its property; or (4) makes a general
assignment for the benefit of its creditors;
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (1) is for relief against the Company or any
Significant Subsidiary of the Company in an involuntary case, (2), appoints
a Custodian of the Company or any Significant Subsidiary of the Company or
for all or substantially all of the property of the Company or any
Significant Subsidiary of the Company, or (3) orders the liquidation of the
Company or any Significant Subsidiary of the Company, and any such order or
decree remains unstayed and in effect for 60 consecutive days; and
(ix) any final non-appealable judgment or decree for the payment of
money in excess of $10 million is rendered against the Company or a
Significant Subsidiary, remains outstanding for a period of 60 days
following such judgment and is not discharged, waived or stayed within 10
days after notice; provided, that, the amount of such money judgment or
decree shall be calculated net of any insurance coverage that the Company
has determined in good faith is available in whole or in part with respect
to such money, judgment or decree.
A Default under clauses (iv), (v), (vi) or (ix) will not constitute an
Event of Default until the Trustee or the Holders of at least 25% in principal
amount of the outstanding Notes notify the Company of the Default and the
Company does not cure such Default within the time specified after receipt of
such notice.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, an Officers' Certificate of any Event of Default pursuant to
clause (iii), clause (vii) or clause (viii) and any event which with the giving
of notice or the lapse of time would become an Event of Default pursuant to
clauses (iv), (v), (vi) or (ix), its status and what action the Company is
taking or proposes to take in respect thereof.
Section 7.02 Acceleration.
If an Event of Default (other than an Event of Default specified in clause
(vii) or clause (viii) of Section 7.01) occurs and is continuing, the Trustee or
the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes, may declare the principal of and accrued but unpaid interest
on all the Notes to be due and payable (collectively, the "Default
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Amount") by notice in writing to the Company, the administrative agent under the
Credit Agreement (if any Debt is then outstanding under the Credit Facility) and
the Trustee specifying the respective Event of Default and that it is a "notice
of acceleration"; provided, however, that the failure to so notify the
administrative agent under the Credit Facility shall not affect the validity of
such acceleration. Upon such a declaration, the Default Amount shall be due and
payable immediately, subject to Article IX and XI of this Indenture.
Notwithstanding the foregoing, in case of an Event of Default specified in
clause (vii) or clause (viii) of Section 7.01, all outstanding Notes shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holders of the Notes. Under certain
circumstances, the Holders of a majority in aggregate principal amount of the
then outstanding Notes by written notice to the Trustee may on behalf of all of
the Holders rescind an acceleration and its consequences (i) if the rescission
would not conflict with any judgment or decree (ii) all existing Events of
Default (except nonpayment of principal, interest or premium that has become due
solely because of the acceleration) have been cured or waived and (iii) the
Company has paid the Trustee all amounts due pursuant to Section 8.07.
Section 7.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes and this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any such Notes in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon any Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in such Event of Default. No remedy
shall be exclusive of any other remedy. All remedies shall be cumulative to the
extent permitted by law.
Section 7.04 Waiver of Past Defaults.
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 an existing Default and its consequences, except (i) a Default in
the payment of the principal of, premium, if any, or interest on, the Notes; or
(ii) a Default in respect of a provision that under Section 10.02 cannot be
amended without the consent of each Holder affected thereby. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section 7.05 Control by Majority.
Subject to certain restrictions, Holders of a majority in principal amount
of the Notes then outstanding 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 the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or the terms of this
Indenture or if, subject to Section 8.01, the Trustee reasonably determines that
such action, if taken, would be unduly prejudicial to the rights of other
Holders or may involve the Trustee in personal liability.
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Section 7.06 Limitation On Suits.
Except to enforce the right to receive payment of principal, premium, if
any, or interest when due, no Holder of a Note may pursue any remedy with
respect to this Indenture or the Notes, unless:
(i) such Holder has previously given the Trustee written notice that
an Event of Default is continuing;
(ii) Holders of at least 25% in principal amount of the Notes then
outstanding have made a written request to the Trustee to pursue the
remedy;
(iii) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense;
(iv) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity; and
(v) Holders of a majority in principal amount of the Notes then
outstanding have not given the Trustee a direction inconsistent with such
request within such 60-day period.
A Holder of a Note shall 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 7.07 Unconditional Right of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, and interest
on such Note, on or after the respective due dates expressed in such Note, 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 any such Holder
of a Note.
Section 7.08 Collection Suit by Trustee.
If an Event of Default specified in Section 7.01(i) or Section 7.01(ii)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company for the entire amount then
due and owing, plus the amounts provided for in Section 8.07.
Section 7.09 Trustee May File Proofs of Claim.
The Trustee may 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 and the
Holders of the Notes allowed in any judicial proceedings relative to the
Company, the Company's creditors or the Company's property, and, unless
prohibited by law or applicable regulations, may vote on behalf of the Holders
in any election of a trustee in bankruptcy or other Person performing similar
functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make 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
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the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due to Trustee under
Section 8.07. 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 thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
Section 7.10 Priorities.
If the Trustee collects any money pursuant to this Article VII, it shall
pay out the money in the following order:
(i) FIRST: to the Trustee for amounts due to it under Section 8.07;
(ii) SECOND: to holders of Senior Debt to the extent required by
Article XI;
(iii) THIRD: to Holders for amounts due and unpaid on the Notes for
principal, premium, 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, if any, and interest, respectively; and
(iv) FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 7.10.
Section 7.11 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 7.11
shall not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
7.07, or a suit by Holders of more than 10% in principal amount of the Notes
then outstanding.
Section 7.12 Waiver of Stay, Extension and Usury Laws.
The Company (to the extent that it may lawfully do so) shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and 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 had been enacted.
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ARTICLE VIII
TRUSTEE
Section 8.01 Duties of Trustee.
(a) If an Event of Default of which a Responsible Officer of the Trustee is
aware 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 their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default of which a
Responsible Officer of the Trustee is aware:
(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
(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 shall not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct or bad faith, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section 8.01;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith, 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 taken
or omitted to be taken by it in good faith in accordance with a direction
received by it pursuant to Section 7.05.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraph (a),
paragraph (b) and paragraph (c) of this Section 8.01.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers,
if the Trustee shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
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(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.
(g) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section 8.01 and to the provisions of the TIA.
Section 8.02 Rights of Trustee.
(a) The Trustee may rely upon any document reasonably 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 any such document
(b) Before the Trustee acts or refrains from taking any action, the Trustee
may require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action taken or omitted to be taken by it in
good faith in reliance on such Officers' Certificate or such Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent; provided, however, that any such agent is
appointed by the Trustee with due care.
(d) The Trustee shall not be liable for any action taken or omitted to be
taken by it in good faith which it reasonably believes to be authorized or
within its rights or powers conferred upon it by this Indenture; provided,
however, that the Trustee's conduct does not constitute negligence, willful
misconduct or bad faith.
(e) The Trustee may consult with counsel of its selection, and the written
advice or opinion of counsel with respect to legal matters shall be full and
complete authorization and protection from liability in respect to any action
taken, omitted or suffered by the Trustee hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(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 pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction.
(g) The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Trustee
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and
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premises of the Company, personally or by agent or attorney at the sole cost of
the Company, and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation, provided, however, that the Trustee's
conduct does not constitute negligence, willful misconduct or bad faith.
Section 8.03 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 as it would have if the Trustee were not the
trustee hereunder. However, in the event the Trustee acquires any conflicting
interest in accordance with the TIA it must eliminate such conflicting interest
within 90 days, apply to the SEC for permission to continue as Trustee or
resign. Any Paying Agent, Registrar or co-registrar may do the same-with like
rights and duties. The Trustee shall at all times remain subject to Section 8.10
and Section 8.11.
The Trustee shall not be charged with knowledge of any default or event of
default with respect to the Notes, other than a Default or Event of Default
under Section 7.01(i) or (ii), unless either (i) a Responsible Officer of the
Trustee shall have actual knowledge of such Default or Event of default or (ii)
written notice of such Default or Event of Default shall have been given to the
Trustee by the Company or by any Holder of the Notes.
Section 8.04 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 of the Notes and it shall not
be responsible for any statement contained herein or any statement contained in
the Notes or any other document in connection with the sale of the Notes or
pursuant to this Indenture other than the Trustee's certificates of
authentication.
Section 8.05 Notice of Default.
If a Default occurs and is continuing and if such Default is known to the
Responsible Officer of the Trustee, the Trustee must mail to each Holder a
notice of such Default within 90 days (or such shorter period as may be required
by applicable law) after such Default occurs. Except in the case of a Default in
payment of principal of, premium, if any, or interest on any Note, the Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of the Holders.
Section 8.06 Reports by Trustee to Holders.
Within 60 days after each May 15, beginning with the May 15 following the
date of this Indenture, the Trustee shall mail to Holders of the Notes a brief
report dated as of such reporting date that complies with TIA ss. 313(a) to the
extent such a report is required by TIA ss. 313(a). The Trustee also shall
comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to the Holders shall be
mailed to the Company and filed with the SEC and each stock exchange, if any, on
which the Notes may be listed. The Company shall promptly notify the Trustee
upon the Notes being listed on any stock exchange and any delisting thereof.
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Section 8.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time compensation as such
parties shall agree in writing for the Trustee's acceptance of this Indenture
and its services hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of the trustee of an express
trust). The Company shall reimburse the Trustee for all reasonable out-of-pocket
expenses incurred or made by it in the course of its services hereunder. Such
expenses shall include the reasonable compensation and expenses, disbursements
and advances of the Trustee's agents, counsel, accountants and experts.
The Company shall indemnify the Trustee and any predecessor Trustee and
their agents against any and all loss, liability or reasonable expense,
including taxes (other than taxes based upon, measured by or determined by the
income of the Trustee) incurred in connection with the administration of this
trust, including attorneys fees and expenses, and the performance of its duties
under this Indenture, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its power or duties hereunder, except any such loss, liability or expense
attributable to the negligence, willful misconduct or bad faith of the Trustee.
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 except to the extent that the
Company may be materially prejudiced by such failure. The Company shall defend
the claim and the Trustee shall cooperate in the defense of such claim. The
Trustee may have separate counsel of its selection and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not reimburse any
expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own negligence, willful misconduct or bad faith.
The Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
The Company's payment obligations under this Section 8.07 shall survive the
resignation or removal of the Trustee or the satisfaction and discharge of this
Indenture.
To secure the Company's payment obligations under this Section 8.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except such money or property that is held by it in
trust for the benefit of Holders to pay principal and interest on particular
Notes.
If the Trustee shall incur expenses after the occurrence of a Default
specified in Section 7.01(vii) or Section 7.01(viii), such expenses (including
the reasonable fees and expenses of its agents and counsel) are intended to
constitute expenses of administration under Bankruptcy Law.
Section 8.08 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 8.08.
The Trustee may resign at any time and be discharged from the trust hereby
created by so notifying the Company in writing. The Holders of not less than a
majority in
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principal amount of the Notes then outstanding may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company shall remove the
Trustee if:
(i) the Trustee fails to comply with Section 8.10;
(ii) the Trustee is adjudged bankrupt or insolvent;
(iii) a Custodian or other public officer takes charge of the Trustee
or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), 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 30 days after the
retiring Trustee gives notice of its resignation or is removed, the retiring
Trustee, the Company or the Holders of at least 10% in principal amount of the
then outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee after written request by any Holder who has been a Holder
for at least six months fails to comply with Section 8.10, such Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any 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 of the rights, powers and duties of the Trustee under
this Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, subject to the Lien provided for in Section
8.07. Notwithstanding replacement of the Trustee pursuant to this Section 8.08,
the Company's obligations under Section 8.07 shall continue for the benefit of
the retiring Trustee.
Section 8.09 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
entity without any further act shall constitute the successor Trustee; provided,
however, that such entity shall be otherwise qualified and eligible under this
Article VIII.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated, and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full
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force which it is anywhere in the Notes or in this Indenture provided that the
certificate of the Trustee shall have.
Section 8.10 Eligibility: Disqualification.
This Indenture at all times shall have a Trustee which satisfies the
requirements of TIA ss. 310(a). Trustee shall be a corporation organized and
doing business under the laws of the United States of America or of any State
thereof authorized under such laws to exercise corporate trustee power, shall be
subject to supervision or examination by federal or state authority and shall
have a combined capital and surplus of at least $50 million as set forth in its
most recently published annual report of condition. The Trustee shall be subject
to TIA ss. 310 (b); provided, however, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA ss. 310(b)(1) are met.
Section 8.11 Preferential Collection of Claims Against the Company.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee which has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
Section 8.12 May Hold Securities
The Trustee, any authenticating agent, any paying agent, any registrar or
any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to Section 8.11 hereof
and the provisions of the TIA, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, authenticating agent, paying agent,
security registrar or such other agent.
ARTICLE IX
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01 Discharge of Liability on Notes; Defeasance.
(a) When (i) the Company delivers to the Trustee all outstanding Notes (other
than Notes replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Notes have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III of this
Indenture and the Company irrevocably deposits with the Trustee funds sufficient
to pay at maturity or upon redemption all outstanding Notes including interest
thereon to maturity or such redemption date (other than Notes replaced pursuant
to Section 2.07), and if in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject to Section 9.01(c),
cease to be of further effect. The Trustee shall acknowledge satisfaction and
discharge of this Indenture on demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Company.
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(b) Subject to Section 9.01(c) and Section 9.02, the Company at any time
may terminate (i) all of the Company obligations under the Notes and this
Indenture ("legal defeasance"), except for certain obligations, including those
respecting the defeasance trust and obligations to register the transfer or
exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and
to maintain a registrar and paying agent in respect of the Notes; or (ii) its
obligations under Article IV, Section 5.03, Section 5.04, Section 5.05, Section
5.06, Section 5.07, Section 5.08, Section 5.09, Section 5.10, Section 6.01(iii),
Section 6.01(iv) and the operation of Section 7.01(iv), Section 7.01(vi),
Section 7.01(vii) (with respect only to Significant Subsidiaries), Section
7.01(viii) (with respect only to Significant Subsidiaries) and Section 7.01(ix)
("covenant defeasance"). The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the Notes
may not be accelerated because of an Event of Default with respect thereto. If
the Company exercises its covenant defeasance option, payment of the Notes may
not be accelerated because of an Event of Default specified in Section 7.01
(iv), Section 7.01(vi), Section 7.01(vii) (with respect only to Significant
Subsidiaries), Section 7.01(viii) (with respect only to Significant
Subsidiaries) or Section 7.01(ix), or because of the failure of the Company to
comply with Article IV or Section 6.01(iii) or Section 6.01(iv).
Upon satisfaction of the conditions set forth herein and at the request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations of the Company terminated thereby.
(c) Notwithstanding clause (a) and clause (b) above, the Company's
obligations contained in Section 2.03, Section 2.04, Section 2.05, Section 2.06,
Section 2.07, Section 8.07, Section 8.08 and this Article IX shall survive until
the Notes have been paid in full. Thereafter, the Company's obligations
contained in Section 8.07, Section 9.04 and Section 9.05 shall survive.
Section 9.02 Conditions to Defeasance.
The Company may exercise its legal defeasance option or its covenant
defeasance option only if:
(i) the Company irrevocably deposits in trust (the "defeasance trust")
with the Trustee money or U.S. Government Obligations for the payment of
principal, premium (if any) and interest on the Notes to maturity or
redemption, as the case may be;
(ii) such defeasance does not result in a breach or violation of, or
constitute a default under, this Indenture, the Credit Agreement or any
other material agreement or instrument to which the Company is a party or
by which it is bound;
(iii) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without
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investment will provide cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all the Notes to
maturity or redemption, as the case may be;
(iv) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 7.01(vii) or Section 7.01(viii) in
either case with respect to the Company occurs which is continuing at the
end of the period;
(v) the deposit does not result in a breach or violation of, or
constitute a default under, this Indenture (including, without limitation,
Article XI hereof), the Credit Agreement or any other material agreement or
instrument to which the Company is a party or by which the Company is
bound;
(vi) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the U.S. Investment
Company Act of 1940, as amended;
(vii) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
stating that (1) the Company has received from or there has been published
by, the Internal Revenue Service a ruling, or (2) since the date of this
Indenture there has been a change in the applicable U.S. Federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders will not recognize income, gain or
loss for U.S. Federal income tax purposes as a result of such defeasance
and will be subject to U.S. Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred;
(viii) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States to the effect that the Holders will not recognize income, gain or
loss for U.S. Federal income tax purposes as a result of such covenant
defeasance and will be subject to U.S. 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; and
(ix) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Notes as contemplated by this Article IX
have been complied with.
Before or after a deposit, the Company may make arrangements satisfactory
to the Trustee for the redemption of the Notes at a future date in accordance
with Article III.
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Section 9.03 Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to this Article IX. The Trustee shall apply the
deposited money and the money from U.S. Government Obligations through the
Paying Agent and in accordance with this Indenture to the payment of principal
of, premium, if any, and interest on the Notes.
Section 9.04 Repayment to the Company.
The Trustee and the Paying Agent shall promptly turn over to the Company
upon request any excess money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years, and,
thereafter, Holders entitled to the money shall look to the Company for payment
as general creditors.
Section 9.05 Indemnity for Government Obligations.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.
Section 9.06 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article IX by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to this Article IX until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with this Article IX; provided,
however, that, if the Company has made any payment of interest on or principal
of any of the Notes because of 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 or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE X
AMENDMENT, SUPPLEMENT AND WAIVER
Section 10.01 Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or the
Notes without the consent of any Holder:
(i) to cure any ambiguity, omission, defect or inconsistency;
(ii) to provide for the assumption of the Company's obligations to the
Holders in the case of a merger or consolidation pursuant to Article VI;
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(iii) to provide for uncertificated Notes in addition to or in place
of certificated Notes (provided that the uncertificated Notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated Notes are described in Section 163(f)(2)(B) of
the Code);
(iv) to add guarantees with respect to the Notes;
(v) to secure the Notes;
(vi) to add to the covenants of the Company and its Subsidiaries
hereunder for the benefit of the Holders or to surrender any right or power
conferred upon the Company;
(vii) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the rights
hereunder of any Holder; or
(viii) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
No amendment may be made to any provision of Article XI that would
adversely affect the rights of any holder of Senior Debt then outstanding unless
the holders of such Senior Debt (or their Representative) consent to such
change.
Upon the request of the Company accompanied by a resolution of the Board of
Directors of the Company authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Sections 10.06 and 12.04, the Trustee shall join with the Company
in the execution of any amended or supplemental Indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be contained therein, but the Trustee
shall not be obligated to enter into such amended or supplemental Indenture
which affects its own rights, dudes or immunities under this Indenture or
otherwise.
After an amendment, supplement or waiver under this Section 10.01 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing any such amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not in any way impair
or affect the validity of any such amended or supplement Indenture or waiver.
Subject to Section 7.04 and Section 7.07, the Holders of a majority in aggregate
principal amount of the Notes then outstanding may waive compliance by the
Company in any particular instance with any provision of this Indenture or the
Notes.
Section 10.02 With Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture, the
Notes or any amended or supplemental Indenture with the written 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 Lender
offer or exchange for the Notes) and any existing Event of Default and its
consequences 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
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Notes then outstanding. However, without the consent of each Holder of an
outstanding Note affected thereby, any amendment, supplement or waiver may not,
among other things:
(i) reduce the amount of Notes the Holders of which must consent to an
amendment;
(ii) reduce the rate of or extend the time for payment of interest on
any Note;
(iii) reduce the principal of or extend the Stated Maturity of any
Note;
(iv) reduce the premium payable upon the redemption of any Note or
change the time at which any Note may be redeemed in accordance with
Article III;
(v) make any Note payable in money other than that stated in the Note;
(vi) impair the right of any Holder of the Notes to receive payment of
principal of and interest on such Holder's Notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such Holder's Notes;
(vii) make any change in Section 7.04 or Section 7.07 or the second
sentence of this Section 10.02; or
(viii) make any change in any provision of Article XI that adversely
affects the interests of any Holder.
Upon the request of the Company accompanied by a resolution of the Board of
Directors of the Company authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory with the Trustee of the consent of the Holders as aforesaid and
upon receipt by the Trustee of the documents described in Sections 10.06 and
12.04, the Trustee shall join with the Company in the execution of such amended
or supplemental Indenture unless such amended or supplemental Indenture affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders under this Section
10.02 to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 10.02 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing any such amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not in any way impair
or affect the validity of any such amended or supplemental Indenture or waiver.
Subject to Section 7.04 and Section 7.07, the Holders of a majority in aggregate
principal amount of the Notes then outstanding may waive compliance by the
Company in any particular instance with any provision of this Indenture or the
Notes.
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Section 10.03 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in an amended or supplemental Indenture that complies with the TIA as then
in effect.
Section 10.04 Revocation and Effect of Consents and Waivers.
Until an amendment, supplement or waiver becomes effective, a consent to
such amendment, supplement or waiver by a Holder is a continuing and binding
consent by the Holder and every subsequent Holder of the Notes or portion of a
Note that evidences the same Debt as the consenting Holder's Note, even if a
notation of the consent or waiver is not made on any Note. However, any such
Holder or subsequent Holder may revoke the consent as to its Note if the Trustee
receives written notice of revocation before the date the waiver, supplement or
amendment becomes effective. An amendment, supplement or waiver shall become
effective in accordance with its terms and thereafter shall bind every Holder.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to give their consent or take any
other action described above or required or permitted to be taken pursuant to
this Indenture. If a record date is fixed, then notwithstanding the immediately
preceding paragraph, such Persons which were Holders at such record date (or
their duly designated proxies), and only such Persons, shall be entitled to give
such consent or to revoke any consent previously given or to take any such
action, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 120 days after
such record date.
Section 10.05 Notation On or Exchange of Notes.
If an amendment or supplement changes the terms of a Note, the Trustee may
require the Holder to deliver such Note to the Trustee. The Trustee may place an
appropriate notation on the Note regarding the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for such Note shall issue and the Trustee shall authenticate
a new Note that reflects such changed terms. Failure to make the appropriate
notation or to issue a new Note shall not affect the validity of such amendment
or supplement.
Section 10.06 Trustee to Sign Amendments, Etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article X if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may but need not sign it. In signing such amendment or supplement
the Trustee shall be entitled to receive, and (subject to Section 8.01) shall be
fully protected in relying upon, an Officer's Certificate and an Opinion of
Counsel stating that such amendment or supplement is authorized or permitted
pursuant to this Indenture. The Company shall not sign any amendment or
supplemental Indenture until the Board of Directors approves any such amendment
or supplemental Indenture.
Section 10.07 Payment for Consents.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or
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otherwise, to any Holder for or as an inducement to any consent, amendment,
supplement or waiver with respect to any term or provision of this Indenture or
the Notes, unless such consideration is offered to be paid or agreed to be paid
to all Holders that consent, waive or agree to amend or supplement in the time
frame set forth in the solicitation documents relating to any such consent,
waiver or agreement to amend or supplement.
ARTICLE XI
SUBORDINATION OF NOTES
Section 11.01 Agreement to Subordinate.
The Company agrees, and each Holder by accepting the Notes agrees, that the
Indebtedness evidenced by the Notes is subordinated in right of payment, to the
extent and in the manner provided in this Article XI, to the prior payment in
full in cash or Cash Equivalents of all Senior Debt and that the subordination
is for the benefit of and enforceable by the holders of Senior Debt. The Notes
shall in all respects rank pari passu with all other Senior Subordinated Debt of
the Company and only Indebtedness of the Company which is Senior Debt shall rank
senior to the Notes in accordance with the provisions set forth herein. All
provisions of this Article XI shall be subject to Section 11.15 hereof.
Section 11.02 Payment Over of Proceeds Upon Dissolution; Etc.
In the event of (i) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as such, or
to its assets; or (ii) any liquidation, dissolution or other winding up of the
Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy; or (iii) any assignment for the benefit of creditors
or any other marshalling of assets or liabilities of the Company, then and in
any such event specified in clause (i), clause (ii) or clause (iii) above (each
such event, if any, herein sometimes referred to as a "Proceeding"):
(1) the holders of Senior Debt will be entitled to receive payment of such
Senior Debt in full in cash or Cash Equivalents before the Noteholders
are entitled to receive any payment or distribution of cash, securities
or other property with respect to the principal of, premium, (if any),
or interest on or other obligations in respect of the Notes, or on
account of any purchase or other acquisition of Notes by the Company
(all such payments, distributions, purchases and acquisitions herein
referred to, individually and collectively, as a "Notes Payment"), and
to that end the holders of Senior Debt of the Company shall be entitled
to receive, for application to the payment thereof, any Notes Payment
which may be payable or deliverable in respect of the Notes in any such
Proceeding; and
(2) until the Senior Debt is paid in full in cash or Cash Equivalents, any
Notes Payment to which Noteholders would be entitled but for this
Article XI will be made to holders of such Senior Debt as their
interests may appear. If a Notes Payment is made to Noteholders that,
due to this Article XI should not have been made to them such
Noteholders are required to hold it in trust for the holders of Senior
Debt and pay it over to them as their interests may appear.
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In the event that, notwithstanding the foregoing provisions of this Section
11.02, the Trustee receives payment or distribution of assets of the Company of
any kind or character, before all the Senior Debt of the Company is paid in full
in cash or Cash Equivalents, then and in such event, such Notes Payment shall be
paid over or delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other Person making payment
or distribution of assets of the Company for application to the payment of all
Senior Debt of the Company remaining unpaid, to the extent necessary to pay the
Senior Debt of the Company in full in cash or Cash Equivalents, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt of the Company.
The consolidation of the Company with, or the merger of the Company into,
another Person or the liquidation or dissolution of the Company following the
conveyance or transfer of all or substantially all of its properties and assets
as an entirety to another Person upon the terms and conditions set forth in
Article VI shall not be deemed a Proceeding for the purposes of this Section
11.02 if the person formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance or transfer such properties
and assets as an entirety, as the case may be, shall, as part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article VI.
Section 11.03 No Payment When Senior Debt in Default.
The Company may not make any Notes Payment or make any deposit pursuant to
the provisions described under Article IX if (i) any Senior Debt is not paid
when due or (ii) any other default on Senior Debt occurs and the maturity of
such Senior Debt is accelerated in accordance with its terms unless, in either
case, the default has been cured or waived or has ceased to exist and any such
acceleration has been rescinded or such Senior Debt has been discharged or paid
in full; provided, however, that the Company may make Notes Payments or make any
deposit pursuant to the provisions described under Article IX without regard to
the foregoing if the Company and the Trustee receive written notice approving
such payment from the Representative of the Senior Debt with respect to which
either of the events set forth in clause (i) or (ii) of the immediately
preceding sentence has occurred and is continuing. During the continuance of any
default (other than a default described in clause (i) or (ii) of the second
preceding sentence) (a "non-payment default") with respect to any Senior Debt
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
accelerations) or the expiration of any applicable grace periods, the Company
may not make Notes Payments for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to the Company) of
written notice (a "Blockage Notice") of such default from the Representative of
the holders of such Designated Senior Debt specifying an election to effect a
Payment Blockage Period and ending 179 days thereafter (or earlier if such
Payment Blockage Period is terminated (i) by written notice to the Trustee and
the Company from the Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice is no longer continuing
or (iii) because Senior Debt has been discharged or repaid in full).
Notwithstanding the provisions described in the immediately preceding sentence,
unless an event described in clause (i) or (ii) of the first sentence of this
paragraph has occurred, the Company may resume payments on the Notes after the
end of such Payment Blockage Period. The Notes shall not be subject to more than
one Payment Blockage Period in any consecutive 360-day period. For all purposes
of this paragraph, no non-payment default with respect to Senior Debt that
existed or was continuing on the date of
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the commencement of any Payment Blockage Period with respect to the Senior Debt
initiating such Payment Blockage Period will be, or can be, made the basis for
the commencement of a second Payment Blockage Period, unless such default has
been cured or waived for a period of not less than 90 consecutive days.
In the event that, notwithstanding the foregoing, the Company shall make
any Notes Payment to the Trustee or any Holder prohibited by the foregoing
provisions of this Section 11.03, then and in such event, such Notes Payment
shall be paid over and delivered forthwith to the holders of the Senior Debt of
the Company remaining unpaid, to the extent necessary to pay in full in cash or
Cash Equivalents all the Senior Debt of the Company.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify the holders of Senior Debt or the Representative
of such holders of the acceleration.
The provisions of this Section 11.03 shall not apply to any Notes Payment
with respect to which Section 11.02 would be applicable.
Section 11.04 Acceleration of Payment of Notes.
If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of all Senior Debt (or
the Representative of such holders) of the acceleration. If any Senior Debt is
outstanding none of the Company or any Guarantor may pay the Notes until five
Business Days after the Representative of all Senior Debt receives notice of
such acceleration and, thereafter, may pay the Notes only if such payments are
otherwise permitted pursuant to this Article XI at such time.
Section 11.05 Payment Permitted If No Default.
Nothing contained in this Article XI or elsewhere in this Indenture or in
any of the Notes shall prevent the Company, at any time except during the
pendency of any Proceeding referred to in Section 11.02 or under the conditions
described in Section 11.03, from making Notes Payments.
Section 11.06 Subrogation to Rights of Holders of Senior Debt.
Subject to the payment in full of all amounts due or to become due on or in
respect of Senior Debt of the Company, or the provision for such payment, in
cash or Cash Equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt of the Company, the Holders shall be subrogated (equally and ratably
with the holders of all Debt of the Company, if any, which by its express terms
is subordinated to Senior Debt of the Company to substantially the same extent
as the Notes are subordinated to the Senior Debt of the Company and is entitled
to like rights of subrogation by reason of any payments or distributions made to
holders of such Senior Debt) in right of payment to the rights of the holders of
such Senior Debt of the Company to receive payments and distributions of cash,
property and securities applicable to the Senior Debt of the Company until the
principal of (and premium, if any) and interest on the Notes shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Debt of the Company of any cash, property or securities to
which the Holders or the Trustee would be entitled except for the provisions of
this Article XI, and no payments over pursuant to the provisions of this Article
XI to the holders of Senior Debt of the
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Company by Holders or the Trustee, shall, as among the Company, its creditors
other than holders of Senior Debt and the Holders, be deemed to be a payment or
distribution by the Company to or on account of the Senior Debt of the Company.
Section 11.07 Provisions Solely to Define Relative Rights.
The provisions of this Article XI are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Debt of the Company on the other hand. Nothing contained in
this Article XI or elsewhere in this Indenture or in the Notes is intended to or
shall (i) impair, as among the Company, its creditors other than holders of
Senior Debt and the Holders, the obligation of the Company, which is absolute
and unconditional, to pay to the Holders the principal of (and premium, if any)
and interest on the Notes as and when the same shall become due and payable in
accordance with their terms; or (ii) affect the relative rights against the
Company of the Holders and creditors of the Company other than the holders of
Senior Debt; or (iii) prevent the Trustee or the Holder from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article XI of the holders
of Senior Debt of the Company to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
Section 11.08 Trustee to Effectuate Subordination.
Each Holder of a Note by such 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 provided in this
Article XI and appoints the Trustee his attorney-in-fact for any and all such
purposes. If the Trustee does not file a proper claim or proof of debt in the
form required in any bankruptcy, insolvency or receivership proceeding prior to
30 days before the expiration of the time to file such claim or claims, then the
holders of the Senior Debt or their Representative are hereby authorized to file
an appropriate claim for and on behalf of the Holders. Nothing herein contained
shall be deemed to authorize the Trustee or the holders of Senior Debt or their
Representative to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arraignment, adjudication or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee for the holder of Senior Debt or their Representative to vote in respect
of the claim of any Holder in any such proceeding.
Section 11.09 No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt of the Company
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture.
Without in any way limiting the generality of the foregoing paragraph, the
holders of the 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 Holders and without impairing or releasing the
subordination provided in this Article 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 or any instrument evidencing the same or any
agreement under which Senior Debt is outstanding; provided, however, that any
such alteration shall not increase the amount of Senior Debt
56
<PAGE>
outstanding in a manner prohibited by this Indenture; (b) sell, exchange,
release 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 of refrain from exercising any
rights against the Company or any other Person; provided, however, that in no
event shall any such actions limit the right of the Holder to take any action to
accelerate the maturity of the Notes in accordance with the provisions set forth
in Article V or to pursue any rights or remedies against the parties to the
Indenture under the Indenture or under applicable laws if the taking of such
action does not otherwise violate the terms of this Article.
Section 11.10 Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Notes. Notwithstanding the provisions of this Article
XI or any other provision of this Indenture, the Trustee shall not be charged
with knowledge of the existence of any facts which could prohibit the making of
any payment to or by the Trustee in respect of the Notes, unless and until the
Trustee shall have received written notice thereof specifically referencing this
Article XI from the Company or a holder of Senior Debt of the Company or from
any Representative or trustee therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Section 8.01, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 11.10 at least three Business Days prior to the date upon which by the
terms hereof any money may became payable for any purpose (including, without
limitation, the payment of the principal of (and premium, if any) or interest on
any Note), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money and to apply
the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within three
Business Days prior to such date.
Subject to the provisions of Section 8.01, the Trustee and the Holders
shall be entitled to rely on the Representative for the holders of Senior Debt
for the purpose of ascertaining the Persons entitled to participate in any
payment or distribution pursuant to this Article XI. In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any person as a holder of Senior Debt of the Company to
participate in any payment or distribution pursuant to this Article XI, the
Trustee may request each Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt of the Company held
by such Person, the extent to which such Person is entitled to participate in
such payment or distribution and any other facts pertinent to the rights of such
Person under this Article XI, and if such evidence is not finished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
Section 11.11 Reliance on Judicial Order or Certificate of Liquidating Age.
Upon any payment or distribution of assets of the Company referred to in
this Article XI, the Trustee, subject to the provisions of Section 8.01, and the
Holders shall be entitled to rely upon any order or decree entered by any court
of competent jurisdiction in which such Proceeding is pending, or a certificate
of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee
for the benefit of creditors, agent or other Person making such
57
<PAGE>
payment or distribution, delivered to the Trustee or to the Holders, for the
purpose of ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Debt of the Company and other Debt 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
XI.
Section 11.12 Trustee Not Fiduciary for Holders of Senior Debt.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Debt of the Company and shall not be liable to any such holders if it
shall mistakenly in the absence of gross negligence or willful misconduct pay
over or distribute to Holders or to the Company or to any other Person cash,
property or securities to which any holders of Senior Debt of the Company shall
be entitled by virtue of this Article XI or otherwise. With respect to the
holders of Senior Debt of the Company, the Trustee undertakes to perform or to
observe only such of its covenants or obligations as are specifically set forth
in this Article XI and no implied covenants or obligations with respect to
holders of Senior Debt of the Company shall be read into this Indenture against
the Trustee.
Section 11.13 Rights of Trustee as holder of Senior Debt; Preservation of
Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article XI with respect to any Senior Debt of the Company
which may at any time be held by it, to the same extent as any other holder of
Senior Debt of the Company, and nothing in this Indenture shall deprive the
Trustee of any of its rights as such holder.
Nothing in this Article XI shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.07.
Section 11.14 Article XI Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article XI shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article XI in addition to or in place of the Trustee; provided,
however, that Section 11.13 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
Section 11.15 Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from
money or the proceeds of U.S. Government Obligations held in trust under Article
IX by the Trustee for the payment of principal of, premium, if any, and interest
on the Notes shall not be subordinated to the prior payment of any Senior Debt
or subject to the restrictions on this Article XI, and none of the Trustee or
the Holders shall be obligated to pay over any such amount to the Company or any
holder of Senior Debt of the Company or any other creditor of the Company.
Section 11.16 Reliance by holders of Senior Debt on Subordination Provisions.
Each Holder by accepting a Note acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each
58
<PAGE>
holder of any Senior Debt, whether such Senior Debt was created or acquired
before or after the issuance of the Notes, to acquire and continue to hold, or
to continue to hold, such Senior Debt and such holder of Senior Debt shall be
deemed conclusively to have relied on such subordination provisions in acquiring
and continuing to hold, or in continuing to hold, such Senior Debt.
Section 11.17 Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative (if any).
Section 11.18 Article XI Not To Prevent Events of Default or Limit Right To
Accelerate.
The failure to make a payment pursuant to the Notes by reason of any
provision in this Article XI shall not be construed as preventing the occurrence
of a Default. Nothing in this Article XI shall have any effect on the right of
the Holders or the Trustee to accelerate the maturity of the Notes.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss. 318(c), such imposed duties shall control.
Section 12.02 Notices.
Any notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the other's address:
If to the Company:
Goss Holdings, Inc.
700 Oakmont Lane
Westmont, Illinois 60559
Telecopier No.: (708) 850-5807
Attention: Chief Financial Officer
If to the Trustee:
HSBC Bank USA
140 Broadway
New York, NY 10005
Telecopier No: (212) 658-6425
Attention: Vice President - Issuer Services
59
<PAGE>
The Company or the Trustee, by notice each to the other 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 Note
Register. Any notice or communication shall also be so mailed to any Person
described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail
a notice or communication to a Holder or any defect in such notice shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner set forth above within
the time prescribed, such notice or communication shall be deemed to be duly
given whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall make a
copy to the Trustee and each Agent at the same time.
Section 12.03 Communication by Holders with Other Holders.
Holders pursuant to TIA ss. 312(b) may communicate with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar, the Paying Agent and any other Person shall have the
protection of TIA ss. 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:
(i) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(ii) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all conditions 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 contained in this Indenture shall include:
(i) a statement that the Person making such certificate or opinion has
read such condition or covenant;
60
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(ii) 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;
(iii) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether such condition or covenant has
been satisfied; and
(iv) a statement as to whether, in the opinion of such Person, such
condition or covenant has been satisfied.
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 and Paying Agent may make reasonable rules and set
reasonable requirements for their functions.
Section 12.07 No Personal Liability of Directors, Officers, Employees,
Incorporators and Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations. Each Holder by
accepting a Note waives and releases all such liability. Such waiver and release
form a part of the consideration for issuance of the Notes.
Section 12.08 Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICT OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 12.09 No Adverse Interpretation of Other Agreements.
This Indenture may not he used to interpret another indenture, loan or debt
agreement of the Company or its Subsidiaries. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 12.10 Successors.
All agreements of the Company contained in this Indenture and the Notes
shall bind the Company and its successors. All agreements of the Trustee in this
Indenture shall bind the Trustee and its successors.
61
<PAGE>
Section 12.11 Severabilily.
In case any provision of this Indenture or 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 such
signed copy shall be deemed to be an original, and all of such signed copies
together shall represent one and the same agreement.
Section 12.13 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience only, and
shall not, for any reason, be deemed to be part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
62
<PAGE>
SIGNATURES
Dated as of November __, 1999 GOSS HOLDINGS, INC.
By:
----------------------------
Name:
Title:
Dated as of November __, 1999 HSBC BANK USA
as Trustee
By:
----------------------------
Title:
<PAGE>
EXHIBIT A
GOSS HOLDINGS, INC.
12 1/4% SENIOR SUBORDINATED NOTES DUE 2005
No. 1 Principal Amount $112,500,000
CUSIP No. 383413 AA 9
GOSS HOLDINGS, INC., a Delaware corporation, promises to pay to CEDE & CO.
or registered assigns, the principal sum of $112,500,000 Dollars on November 19,
2005.
Interest Payment Dates: May 19 and November 19.
Record Dates: May 1 and November 1.
Additional provisions of this Note are set forth on the reverse side of
this Note.
Date:
-----------------------
[Seal]
GOSS HOLDINGS, INC.
By
------------------------------
Name:
Title:
By
------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
HSBC BANK USA,
as Trustee, certifies
that this is one of the
Notes referred to in the
Indenture.
Dated:
-------------------------------
By:
----------------------------------
Name:
Title:
A-1
<PAGE>
A-9
REVERSE SIDE OF NOTE
12 1/4% Senior Subordinated Notes Due 2005
1. Interest
GOSS HOLDINGS, INC., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called "the Company"), promises to pay interest on the principal amount of this
Note at the rate per annum shown above provided, however, interest payments due
on and before November 19, 2001 shall be paid in the form of additional Notes
identical in form to this Note, in lieu of cash. The Company will pay interest,
whether in cash or in the form of additional Notes as aforesaid, semi-annually
on May 19 and November 19 of each year, commencing May 19, 2000. 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 November 19, 1999. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. The Company shall pay
interest on overdue principal at the rate borne by the Notes and shall pay
interest on overdue installments of interest at such rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Notes (except defaulted interest) to
the Persons who are registered holders of Notes at the close of business on the
May 1 or November 1 next preceding the interest payment date even if Notes are
cancelled after the record date and on or before the interest payment date.
Holders must surrender Notes to a Paying Agent to collect principal payments.
The Company will pay principal and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal and interest by check payable in such
money. The Company may deliver any such interest payment to the Paying Agent or
to a Holder at the Holder's registered address. On each Interest Payment Date on
and prior to November 19, 2001, the Trustee shall authenticate additional Notes
for original issuance to each Holder on the relevant Record Date in the
aggregate principal amount required to pay such interest. Additional Notes are
an additional obligation of the Company and shall be governed by, and entitled
to the benefits of, the Indenture (as such term is defined below) and shall be
subject to the terms of the Indenture and shall rank pari passu with and be
subject to the same terms (including the rate of interest from time to time
payable thereon) as this Note (except, as the case may be, with respect to the
issuance date and aggregate principal amount).
3. Paying Agent and Registrar
Initially, HSBC Bank USA, a New York banking corporation (the "Trustee"),
will act as Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice. The Company or any of
its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.
A-2
<PAGE>
4. Indenture
The Company issued the Notes under an Indenture dated as of November 19,
1999 (the "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 (15 U.S.C. ss.ss. 77aaa-77bbbb)
as in effect on the date of the Indenture (the "TIA"). Terms defined in the
Indenture and not defined herein have the meanings ascribed thereto in the
Indenture. The Notes are subject to all such terms, and Holders are referred to
the Indenture and the TIA for a statement of those terms.
The Notes are unsecured senior subordinated obligations of the Company
limited to $112,500,000 aggregate principal amount (except as otherwise provided
in Section 1 of this Note relating to the Company's option to make certain
interest payments on the Notes in the form of additional Notes). The Indenture
imposes certain limitations on the incurrence of additional indebtedness by the
Company and certain of its subsidiaries, the payment of dividends on, and the
redemption of, capital stock of the Company and certain of its Subsidiaries, the
making of Investments, restrictions on distributions from certain Subsidiaries,
the use of proceeds from the sale of assets and Subsidiary stock and
transactions with affiliates. The Indenture also restricts the ability of the
Company to consolidate or merge with or into, or to transfer all or
substantially all its assets to, another person.
5. Optional Redemption
The Notes will be redeemable, at the Company's option, in whole or in part,
at any time and from time to time, upon not less than 30 nor more than 60 days'
prior notice mailed by first-class mail to each Holder's registered address, at
a redemption price (expressed as a percentage of principal amount), equal to
103.5%, plus accrued interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date).
In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate and in compliance with the applicable legal and securities exchange
requirements, if any. If any Note is to be redeemed in part only, the notice of
redemption relating 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.
6. Notice of Redemption
Notice of redemption shall be mailed 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. Notes in denominations larger than $1,000 may be redeemed in
part but only in whole multiples of $1.00 if money sufficient to pay the
redemption price of and accrued interest on all Notes (or portions thereof) to
be redeemed on the redemption date is deposited with the Paying Agent on or
before the redemption date and certain other conditions are satisfied, on and
after such date interest ceases to accrue on such Notes (or such portions
thereof) called for redemption.
A-3
<PAGE>
7. Put Provisions
Upon a Change of Control, any Holder will have the right to cause the
Company to repurchase all or any part of the Notes of such Holder at a purchase
price equal to, in the case of an Enterprise Valuation Event, 107% or, in all
other cases, 101% of the principal amount of the Notes to be repurchased plus
accrued interest to the date of repurchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the interest
payment date) as provided in, and subject to the terms of, the Indenture.
8. Subordination
The Notes are subordinated to Senior Debt, as such term is defined in the
Indenture. To the extent provided in the Indenture, Senior Debt must be paid in
full in cash or Cash Equivalents before the Notes may be paid. The Company
agrees, and each Holder by accepting a Note agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give effect
to such subordination provisions and appoints the Trustee as attorney-in-fact
for such purpose.
9. Denominations, Transfer, Exchange
The Notes are in registered form without coupons in denominations of $1.00
and integral multiples of $1.00 (except that, as provided in Section 1 of this
Note, additional Notes shall be issued in the amount of accrued and unpaid
interest on the Notes due on and before November 19, 2001). Holders may transfer
or exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any Note
selected for redemption (except, in the case of a Note to be redeemed in part,
the portion of the Note not to be redeemed) or any Notes for a period of 15 days
before a selection of Notes to be redeemed or 15 days before an interest payment
date.
10. Persons Deemed Owners
The registered Holder of this Note may be treated as the sole owner of such
Note for all purposes.
11. Unclaimed Money
Subject to applicable abandoned property law, if money for the payment of
principal or interest remains unclaimed for two years, the Trustee or Paying
Agent shall pay the money back to the Company at its request. After any such
payment, Holders entitled to the money must look only to the Company and not to
the Trustee or Paying Agent for payment as general creditors.
12. Discharge and Defeasance
A-4
<PAGE>
Subject to certain conditions, the Company at any time may terminate some
or all of its obligations under the Notes and the Indenture if the Company
deposits with the Trustee money or U.S. Government Obligations for the payment
of principal and interest on the Notes to redemption or maturity, as the case
may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Notes may be amended with the written consent of the Holders of at least
a majority in principal amount outstanding of the Notes; and (ii) any default or
compliance with any provision may be waived with the written consent of the
Holders of a majority in principal amount of the Notes then outstanding. Subject
to certain exceptions set forth in the Indenture, without the consent of any
Holder, the Company and the Trustee may amend the Indenture or the Notes to cure
any ambiguity, omission, defect or inconsistency, or to comply with Article VI
of the Indenture, or to provide for uncertificated Notes, in addition to or in
place of certificated Notes, or to add guarantees with respect to the Notes or
add additional covenants or surrender rights and powers conferred on the
Company, or to make any change that would provide additional rights or benefits
to the Holders or that does not adversely affect the rights of any Holder or to
comply with requirements of the SEC in connection with the qualification of the
Indenture under the TIA.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30 days in
payment of interest; (ii) default in payment of principal on the Notes at
maturity, upon redemption, upon declaration, upon required repurchase or
otherwise; (iii) failure by the Company to comply with other covenants in the
Indenture or the Notes, in certain cases subject to notice and lapse of time;
(iv) certain accelerations (including failure to pay within any grace period
after final maturity) of other Debt of the Company or any of its Subsidiaries if
the amount accelerated (or so unpaid) aggregates $10 million or more; (v)
certain events of bankruptcy or insolvency with respect to the Company and its
Significant Subsidiaries; and (vi) certain judgments or decrees for the payment
of money in excess of $10 million. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Notes may declare all the Notes to be due and payable immediately. Certain
events of bankruptcy or insolvency are Events of Default which will result in
the Notes being due and payable immediately upon the occurrence of such Events
of Default.
Holders may not enforce the Indenture or the Notes except as provided in
the Indenture. The Trustee may refuse to enforce the Indenture or the Notes
unless it receives reasonable indemnity or security. Subject to certain
limitations, Holders of a majority in principal amount of the Notes may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing Default (except a Default in payment of
principal or interest) if it determines that withholding such notice is in the
interest of the Holders.
A-5
<PAGE>
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with and collect obligations owed to it
by the Company or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A past, present or future director, officer, employee or stockholder, as
such, of the Company or the Trustee shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of such obligations. By accepting a Note,
each Holder waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Notes.
17. Authentication
This Note shall not be valid until an authorized signatory of the Trustee
(or an authenticating agent) manually signs the certificate of authentication on
the face of this Note.
18. 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 rights of survivorship and not as tenants in common),
CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
19. Governing Law
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICT OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
20. CUSIP Numbers
Pursuant to the recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use such 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.
------------------------
A-6
<PAGE>
The Company will furnish to any Holder upon written request and without
charge to such Holder a copy of the Indenture which contains the text of this
Note in larger type.
Requests may be made to:
Goss Holdings, Inc.
700 Oakmont Lane,
Westmont Illinois 60559
Attention: Chief Financial Officer
A-7
<PAGE>
================================================================================
ASSIGNMENT FORM
To assign this Note, complete the form below:
I or we assign and transfer this Note to:
[Print or type assignee's name, address and zip code]
[Insert assignee's soc. sec. or tax I.D. No. ]
and irrevocably appoint __________________________ agent 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Guaranteed:
---------------------------------
(Signature must be guaranteed by an "eligible guarantor
institution", that is, a bank, stockbroker, saving and loan
association or credit union meeting the requirements of the
Registrar, which requirements include membership or participation in
the Securities Transfer Agents Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.)
A-8
<PAGE>
OPTION OF HOLDER OF NOTE TO ELECT PURCHASE
If you elect to have this Note purchased by the Company pursuant to Article IV,
check the box:
[ ]
If you elect to have only part of this Note purchased by the Company pursuant to
Article IV, state the amount:
$
---------------------------------
Date: Your Signature:
------------------------ ----------------------------------
(Sign exactly as your name
appears on the face of the
Note)
Guaranteed:
--------------------------------------------------------------------
(Signature must be guaranteed by an "eligible guarantor
institution", that is, a bank, stockbroker, saving and loan
association or credit union meeting the requirements of the
Registrar, which requirements include membership or participation in
the Securities Transfer Agents Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.)
A-9
<PAGE>
Exhibit 4.2
================================================================================
$250,000,000
SECOND AMENDED AND RESTATED
MULTICURRENCY CREDIT AGREEMENT
DATED AS OF NOVEMBER 19, 1999
AMONG
GOSS GRAPHIC SYSTEMS, INC.,
GOSS GRAPHIC SYSTEMS LIMITED,
GOSS SYSTEMES GRAPHIQUES NANTES S.A.,
AND
GOSS GRAPHIC SYSTEMS JAPAN CORPORATION,
AS BORROWERS,
THE LENDERS LISTED HEREIN,
AS LENDERS,
AND
BANKERS TRUST COMPANY,
AS ADMINISTRATIVE AGENT
================================================================================
<PAGE>
GOSS GRAPHIC SYSTEMS, INC.,
GOSS GRAPHIC SYSTEMS LIMITED,
GOSS SYSTEMES GRAPHIQUES NANTES S.A.,
AND
GOSS GRAPHIC SYSTEMS JAPAN CORPORATION
$250,000,000
SECOND AMENDED AND RESTATED
MULTICURRENCY CREDIT AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 1.......................................................................DEFINITIONS 4
1.1 Certain Defined Terms...............................................................4
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement..........................................................................48
1.3 Other Definitional Provisions......................................................48
Section 2.......................................AMOUNTS AND TERMS OF COMMITMENTS AND LOANS 48
2.1 Commitments; Making of Loans; the Register; Notes..................................48
2.2 Interest on the Loans..............................................................61
2.3 Fees...............................................................................65
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments..............................................66
2.5 Use of Proceeds....................................................................75
2.6 Special Provisions Governing Offshore Rate Loans...................................76
2.7 Increased Costs; Taxes; Capital Adequacy...........................................78
2.8 Obligations of Lenders and Issuing Lenders to Mitigate; Replacement of Lenders.....78
2.9 Indemnifying Lenders...............................................................78
Section 3................................................................LETTERS OF CREDIT 78
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein......78
3.2 Letter of Credit Fees..............................................................82
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of Credit................83
3.4 Obligations Absolute...............................................................86
3.5 Indemnification; Nature of Issuing Lenders' Duties.................................87
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3.6 Increased Costs and Taxes Relating to Letters of Credit............................88
Section 4........................................CONDITIONS TO LOANS AND LETTERS OF CREDIT 89
4.1 Conditions to Initial Effectiveness................................................89
4.2 Conditions to All Loans............................................................98
4.3 Conditions to Letters of Credit....................................................99
4.4 Conditions to Japanese Loans.......................................................99
Section 5.......................................BORROWERS' REPRESENTATIONS AND WARRANTIES 100
5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries.....100
5.2 Authorization of Borrowing, etc...................................................101
5.3 Financial Condition...............................................................102
5.4 No Material Adverse Change; No Restricted Junior Payments.........................102
5.5 Title to Properties; Liens........................................................102
5.6 Litigation; Adverse Facts.........................................................103
5.7 Payment of Taxes..................................................................103
5.8 Performance of Agreements; No Materially Adverse Agreements.......................104
5.9 Governmental Regulation...........................................................104
5.10 Securities Activities.............................................................104
5.11 Employee Benefit Plans............................................................104
5.12 Certain Fees......................................................................105
5.13 Environmental Protection..........................................................105
5.14 Employee Matters..................................................................107
5.15 Solvency..........................................................................107
5.16 Matters Relating to Collateral....................................................107
5.17 Disclosure........................................................................108
Section 6................................................BORROWERS' AFFIRMATIVE COVENANTS 109
6.1 Financial Statements and Other Reports............................................109
6.2 Corporate Existence, etc..........................................................115
6.3 Payment of Taxes and Claims; Tax Consolidation....................................115
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/
Condemnation Proceeds.............................................................115
6.5 Inspection; Records; Lender Meeting...............................................117
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6.6 Compliance with Laws, etc.........................................................117
6.7 Environmental Disclosure and Inspection...........................................117
6.8 Execution of Future Guaranties and Collateral Documents...........................121
6.9 Additional Real Property Collateral...............................................122
6.10 Assignability and Recording of Lease Agreements...................................124
6.11 Year 2000 Covenant................................................................125
6.12 Cash Maintenance..................................................................125
6.13 Assumption by New Holdings of Obligations Under this Agreement....................125
6.14 Delivery of Additional Documents..................................................125
Section 7...................................................BORROWERS' NEGATIVE COVENANTS 127
7.1 Indebtedness......................................................................127
7.2 Liens and Related Matters.........................................................128
7.3 Investments; Joint Ventures.......................................................129
7.4 Contingent Obligations............................................................130
7.5 Restricted Junior Payments........................................................131
7.6 Financial Covenants...............................................................132
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions..................133
7.8 Consolidated Capital Expenditures.................................................134
7.9 Sales and Lease-Backs.............................................................134
7.10 Transactions with Shareholders and Affiliates.....................................135
7.11 Disposal of Subsidiary Stock......................................................135
7.12 Conduct of Business; Limitations on Subsidiaries..................................135
7.13 Amendments of Certain Documents; Designation of Senior Debt.......................135
7.14 Fiscal Year.......................................................................136
7.15 Foreign Unfunded Pension Plans....................................................136
Section 8...............................................................EVENTS OF DEFAULT 136
8.1 Failure to Make Payments When Due.................................................136
8.2 Default in Other Agreements.......................................................136
8.3 Breach of Certain Covenants.......................................................137
8.4 Breach of Warranty................................................................137
8.5 Other Defaults Under Loan Documents...............................................137
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8.6 Involuntary Bankruptcy; Appointment of Receiver, etc..............................137
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc................................138
8.8 Judgments and Attachments.........................................................138
8.9 Dissolution.......................................................................139
8.10 Employee Benefit Plans............................................................139
8.11 Change in Control.................................................................139
8.12 Invalidity of Loan Documents......................................................140
8.13 Failure of Security...............................................................140
8.14 Action Relating to Certain Subordinated Indebtedness..............................140
8.15 Amendment of Certain Documents of New Holdings....................................140
8.16 Conduct of Business Relating to New Holdings......................................140
8.17 Failure of Goss Realty and LaSalle Bank National Associate to Perform.............142
Section 9............................................................ADMINISTRATIVE AGENT 142
9.1 Appointment.......................................................................142
9.2 Powers and Duties; General Immunity...............................................142
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness..................................................................144
9.4 Right to Indemnity................................................................144
9.5 Successor Agent...................................................................144
9.6 Collateral Documents and Guaranties...............................................145
9.7 Documentation Agent...............................................................146
Section 10..................................................................MISCELLANEOUS 146
10.1 Assignments and Participations in Loans and Letters of Credit.....................146
10.2 Expenses..........................................................................149
10.3 Indemnity.........................................................................150
10.4 Set-Off; Security Interest in Deposit Accounts....................................151
10.5 Ratable Sharing...................................................................152
10.6 Amendments and Waivers............................................................152
10.7 Independence of Covenants.........................................................154
10.8 Notices...........................................................................154
10.9 Survival of Representations, Warranties and Agreements............................155
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10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.............................155
10.11 Marshalling; Payments Set Aside...................................................155
10.12 Severability......................................................................155
10.13 Obligations Several; Independent Nature of Lenders' Rights........................156
10.14 Headings..........................................................................156
10.15 Applicable Law....................................................................156
10.16 Successors and Assigns............................................................156
10.17 Consent to Jurisdiction and Service of Process....................................156
10.18 Waiver of Jury Trial..............................................................157
10.19 Confidentiality...................................................................157
10.20 Judgment Currency.................................................................158
10.21 Counterparts; Effectiveness.......................................................158
10.22 No Immunity.......................................................................158
10.23 Intention to Secure Obligations Under Hedge Agreements............................159
Signature pages ................................................................. S-1
</TABLE>
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<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF REQUEST FOR ISSUANCE OF LETTER OF CREDIT
IV FORM OF TERM NOTE
V FORM OF TRANCHE A REVOLVING NOTE
VI FORM OF TRANCHE B REVOLVING NOTE
VII FORM OF SWING LINE NOTE
VIII FORM OF COMPLIANCE CERTIFICATE
IX FORM OF AUDITOR'S LETTER
X-A FORM OF OPINION OF KIRKLAND & ELLIS
X-B INTENTIONALLY OMITTED
X-C FORM OF OPINION OF LINKLATERS & PAINES
X-D INTENTIONALLY OMITTED
XI FORM OF OPINION OF O'MELVENY & MYERS LLP
XII FORM OF ASSIGNMENT AGREEMENT
XIII FORM OF COLLATERAL ACCOUNT AGREEMENT
XIV FORM OF GUARANTY
XV FORM OF SECURITY AGREEMENT
XVI FORM OF SUBSIDIARY GUARANTY
XVII FORM OF NOTICE OF ALLOCATION
XVIII FORM OF BORROWING BASE CERTIFICATE
XIX FORM OF INTERCREDITOR AGREEMENT
XX FORM OF MASTER ASSIGNMENT AGREEMENT
vi
<PAGE>
SCHEDULES
1.1(a) BANK OF ENGLAND RELATIVE RESERVE RATIO REQUIREMENT CALCULATION
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1A TAX GOOD STANDINGS TO BE DELIVERED POST-CLOSING
5.1 SUBSIDIARIES OF COMPANY
5.5 REAL PROPERTY ASSETS
5.6 LITIGATION
5.12 CERTAIN FEES
5.13 ENVIRONMENTAL MATTERS
7.1A CERTAIN INTERCOMPANY INDEBTEDNESS
7.1B CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS; EXISTING LETTERS OF CREDIT
ANNEXES
A 2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY
B 2.8 OBLIGATIONS OF LENDERS AND ISSUING LENDERS TO MITIGATE
C 2.9 INDEMNIFYING LENDERS
vii
<PAGE>
GOSS GRAPHIC SYSTEMS, INC.,
GOSS GRAPHIC SYSTEMS LIMITED,
GOSS SYSTEMES GRAPHIQUES NANTES S.A.,
AND
GOSS GRAPHIC SYSTEMS JAPAN CORPORATION
$250,000,000
SECOND AMENDED AND RESTATED
MULTICURRENCY CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT is dated as
of November 19, 1999 and entered into by and among GOSS GRAPHIC SYSTEMS, INC., a
corporation organized under the laws of the State of Delaware ("COMPANY") and
whose registered office is at 700 Oakmont Lane, Westmont, Illinois 60559, GOSS
GRAPHIC SYSTEMS LIMITED (Company Number 3212468), a company organized under the
laws of England ("GOSS UK") and whose registered office is at Greenbank Street,
Preston, Lancashire PR1 7LA, GOSS SYSTEMES GRAPHIQUES NANTES S.A., a societe
anonyme organized under the laws of the Republic of France ("GOSS FRANCE") and
whose registered office is at 20, rue de Koufra, 44300 Nantes, GOSS GRAPHIC
SYSTEMS JAPAN CORPORATION, a corporation organized under the laws of Japan
("GOSS JAPAN") and whose registered office is at Mitsuya Toranomon Building,
22-14 Toranomon 1-Chome, Minato-Ku, Tokyo 105, THE FINANCIAL INSTITUTIONS ACTING
AS LENDERS AND LISTED ON THE SIGNATURE PAGES HEREOF, THE FINANCIAL INSTITUTIONS
ACTING AS INDEMNIFYING LENDERS AND IDENTIFIED AS SUCH ON SCHEDULE 2.1 ANNEXED
HERETO, BANKERS TRUST COMPANY ("BTCO"), as administrative agent for Lenders (in
such capacity, "ADMINISTRATIVE AGENT") and whose registered office is at One
Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006, and LEHMAN
BROTHERS, as documentation agent for Lenders (in such capacity, "DOCUMENTATION
AGENT") and whose registered office is at 3 World Financial Center, New York,
New York 10285.
R E C I T A L S
WHEREAS, (i) Borrowers, BTCo and certain Lenders (this and other terms used
in these recitals without definition being used as defined in subsection 1.1)
are parties to that certain $200,000,000 Amended and Restated Multicurrency
Credit Agreement dated as of January 29, 1998, as amended from time to time (as
so amended, the "EXISTING CREDIT Agreement"), and (ii) Company issued 12% senior
subordinated notes due 2006 in an aggregate principal amount of $225,000,000
(the "OLD NOTES") to certain noteholders (the "OLD NOTEHOLDERS") in October
1996;
WHEREAS, on July 30, 1999, Old Holdings, Company and Goss Realty (the
"DEBTOR ENTITIES") filed voluntary petitions for relief under the Bankruptcy
Code with the
1
<PAGE>
United States Bankruptcy Court for the District of Delaware (the "COURT") (such
proceedings jointly administered as Case No. 99-02756 are hereinafter referred
to as the "CHAPTER 11 CASES");
WHEREAS, in connection with the Chapter 11 Cases, Borrowers, BTCo and
certain Lenders entered into that certain $50,000,000 Debtor-in-Possession
Multicurrency Credit Agreement and Amendment to Multicurrency Credit Agreement,
in each case dated as of July 30, 1999, as amended from time to time (as so
amended, collectively, the "DIP CREDIT AGREEMENT");
WHEREAS, the Debtor Entities and certain creditors thereof agreed to the
terms of the Reorganization Plan, which Reorganization Plan shall have been
confirmed by the Court and become effective on or before the Effective Date;
WHEREAS, pursuant to the Reorganization Plan, on or before the Effective
Date, (i) Stonington or Affiliates thereof will form New Holdings and Old
Holdings shall merge with and into New Holdings with New Holdings as the
surviving entity, (ii) New Holdings shall authorize 15,000,000 shares and issue
10,000,000 shares of New Holdings Common Stock, 3,136,250 of which shall be
issued to the Old Noteholders, 350,000 of which shall be issued to Rockwell
International Corporation, and 6,513,750 of which shall be issued to Stonington
or Affiliates thereof, each representing approximately 31.3%, 3.5% and 65.1% of
the issued and outstanding shares of New Holdings Common Stock respectively,
prior to any issuance under New Holdings' management equity plan, (iii) New
Holdings shall issue to the Old Noteholders the New Holdings Subordinated Notes
in an aggregate principal amount of $112,500,000, (iv) Stonington or Affiliates
thereof will contribute not less than $50,000,000 as common equity to New
Holdings (the "STONINGTON EQUITY CONTRIBUTION"), $25,000,000 of which shall be a
Cash contribution by Stonington or Affiliates thereof and $25,000,000 of which
shall be from the conversion of Stonington's or its Affiliate's $25,000,000
commitment under the DIP Credit Agreement into Cash, which Cash shall be
transferred to New Holdings, and (v) New Holdings will in turn contribute the
Stonington Equity Contribution to Company as common equity;
WHEREAS, pursuant to the Reorganization Plan, the obligations of the
Borrowers under the Existing Credit Agreement (including the Existing Letters of
Credit) shall be continued as and/or converted into Term Loans to Company and
Goss UK in an aggregate principal amount of $150,000,000 and Tranche B Revolving
Loans and Tranche B Letters of Credit to all Borrowers in an aggregate principal
of $50,000,000 pursuant to an amendment and restatement of the Existing Credit
Agreement and a Master Assignment Agreement;
WHEREAS, the Domestic Tranche A Lenders have agreed to provide Domestic
Tranche A Revolving Loans to Company in an aggregate principal amount of
$50,000,000 which Loans will be documented with the amendment and restatement of
the Existing Credit Agreement;
WHEREAS, pursuant to such amendment and restatement of the Existing Credit
Agreement, a portion of such revolving credit facilities shall be available for
Swing Line Loans
2
<PAGE>
in an aggregate principal amount of $5,000,000 and for Letters of Credit
(including all Existing Letters of Credit) up to an aggregate sublimit of
$75,000,000 in order to provide for the working capital requirements and general
corporate purposes of Borrowers and their respective Subsidiaries;
WHEREAS, pursuant to the Reorganization Plan, the Company shall use the
proceeds of the Stonington Equity Contribution to repay the DIP Credit Agreement
(such amendment and restatement and related transactions are hereinafter
collectively referred to as the "REFINANCINGS");
WHEREAS, to facilitate the Refinancings, all lenders under the Existing
Credit Agreement, pursuant to the Master Assignment Agreement, have agreed to
assign (or have been deemed under the Reorganization Plan to have assigned) to
Administrative Agent all of their existing loans and existing commitments under
the Existing Credit Agreement and Administrative Agent, pursuant to the Master
Assignment Agreement, has agreed to assign to each Lender under this Agreement
the Loans and Commitments set forth on Schedule 2.1 annexed hereto;
WHEREAS, Company desires to secure all of its Obligations hereunder and
under the other Loan Documents (i) with respect to the Domestic Tranche A
Revolving Loan Commitments by granting to Administrative Agent, on behalf of
Domestic Tranche A Lenders, a senior Lien on substantially all of its real,
personal and mixed property, including a pledge of all of the capital stock of
each of its Domestic Subsidiaries and 66% of the capital stock of each of its
Foreign Subsidiaries, and (ii) with respect to the Domestic Term Loans and the
Domestic Tranche B Revolving Loan Commitments by granting to Administrative
Agent, on behalf of Domestic Tranche B Lenders, a Lien on substantially all of
their real, personal and mixed property, including a pledge of all of the
capital stock of each of their respective Domestic Subsidiaries and 66% of the
capital stock of each of their respective Foreign Subsidiaries, subject only to
the senior Lien described in the foregoing clause (i);
WHEREAS, Goss UK and Goss Japan desire to secure all of their respective
Obligations hereunder and under the other Loan Documents with respect to the
Term Loans and Tranche B Revolving Loan Commitments by granting to
Administrative Agent, on behalf of UK Lenders and Japanese Lenders,
respectively, a Lien on substantially all of their real, personal and mixed
property;
WHEREAS, Goss France desires to secure all of its respective Obligations
hereunder and under the other Loan Documents with respect to the Tranche B
Revolving Loan Commitments by granting to Administrative Agent, on behalf of
French Lenders, a Lien on substantially all of its real, personal and mixed
property;
WHEREAS, New Holdings and the Domestic Subsidiaries have agreed to guaranty
the Obligations of Company hereunder and under the other Loan Documents with
respect to the Domestic Tranche A Revolving Loan Commitments, and all such Loan
Parties have agreed to secure such guaranties with a senior Lien on
substantially all of their respective
3
<PAGE>
real, personal and mixed property, including a pledge of all of the capital of
each of their respective Domestic Subsidiaries and 66% of the capital stock of
each of their respective Foreign Subsidiaries; and
WHEREAS, New Holdings and the Domestic Subsidiaries have agreed to guaranty
the Obligations of Borrowers hereunder and under the other Loan Documents with
respect to the Term Loans and the Tranche B Revolving Loan Commitments, and
Company has agreed to guaranty the Obligations of Goss UK, Goss France and Goss
Japan hereunder and under the other Loan Documents with respect to the Term
Loans and the Tranche B Revolving Loan Commitments, and all such Loan Parties
have agreed to secure such guaranties with a Lien on substantially all of their
respective real, personal and mixed property, including a pledge of all of the
capital of each of their respective Domestic Subsidiaries and 66% of the capital
stock of each of their respective Foreign Subsidiaries, subject only to the
senior Lien described in the preceding recital.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrowers, Lenders and Administrative
Agent agree as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ACCOUNT" means, with respect to any Person, all present and future rights
of such Person to payment for goods sold or leased or for services rendered
(except those evidenced by instruments or chattel paper), whether now existing
or hereafter arising and wherever arising, and whether or not they have been
earned by performance.
"ADDITIONAL MORTGAGE" has the meaning assigned to that term in subsection
6.9A(a).
"ADDITIONAL MORTGAGE POLICY" has the meaning assigned to that term in
subsection 6.9A(d).
"ADDITIONAL FLOOD HAZARD PROPERTY" has the meaning assigned to that term in
subsection 6.9A(f).
"ADJUSTED OFFSHORE RATE" means, for any Interest Rate Determination Date
with respect to an Interest Period for an Offshore Rate Loan, the rate per annum
equal to the sum of (x) the rate determined by Administrative Agent to be the
arithmetic mean (rounded upwards, if necessary, to the nearest five decimal
places) of the offered quotations for deposits (for delivery on the first day of
such Interest Period) in the Applicable Currency with maturities comparable to
4
<PAGE>
such Interest Period as of approximately 11:00 A.M. (London time) on such
Interest Rate Determination Date as set forth on Telerate Display Screen page
number 3740 or 3750 (or such other page(s) as may replace such page(s) from time
to time on such Telerate system) (provided that in the event the rate referenced
in the preceding clause (x) does not appear on such Telerate page 3740 or 3750
(or otherwise), such rate shall be the offered quotation (rounded upwards, if
necessary, to the nearest five decimal places) to first class banks in the
London interbank market by Administrative Agent for deposits (for delivery on
the first day of such Interest Period) in the Applicable Currency of amounts in
Same Day Funds comparable to the principal amount of the Offshore Rate Loan of
the Administrative Agent for which the Adjusted Offshore Rate is then being
determined with maturities comparable to such Interest Period as of
approximately 11:00 A.M. (London time) on such Interest Rate Determination Date)
plus (y) the additional cost (expressed as a percentage per annum and rounded
upwards, if necessary, to the nearest five decimal places) to Lenders of
complying with (i) the relative reserve asset ratio required by the Bank of
England from time to time, if any, expressed as a percentage per annum and
calculated in the manner set forth in Schedule 1.1(a), or (ii) any analogous
requirement of any central banking or financial regulatory authority imposed in
respect of the funding or maintenance of Commitments or Loans of the type
contemplated hereby and applicable to the Applicable Currency.
"ADMINISTRATIVE AGENT" has the meaning assigned to that term in the
introduction to this Agreement, and includes any Affiliates of Administrative
Agent (including, without limitation, Deutsche Bank) performing such functions
or acting as collateral agent or as an Issuing Lender, and in each case includes
any such successor Administrative Agent appointed pursuant to subsection 9.5.
"AFFECTED CLASS" has the meaning assigned to that term in subsection 10.6.
"AFFECTED LENDER" has the meaning assigned to that term in subsection 2.6C.
"AFFECTED LOANS" has the meaning assigned to that term in subsection 2.6C.
"AFFILIATE", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise; provided that Administrative Agent shall not be
considered to be an "Affiliate" of New Holdings or any of its Subsidiaries.
"AGGREGATE AMOUNTS DUE" has the meaning assigned to that term in subsection
10.5.
5
<PAGE>
"AGREEMENT" means this Second Amended and Restated Multicurrency Credit
Agreement dated as of November 19, 1999, as it may be amended, supplemented or
otherwise modified from time to time.
"APPLICABLE BASE RATE MARGIN" means, as of any date of determination, a
percentage per annum as set forth below opposite the applicable period:
PERIOD APPLICABLE BASE RATE MARGIN
------ ---------------------------
from and including the Effective Date 2.75%
through and including March 31, 2002
from but excluding March 31, 2002 3.00%
through and including September 30, 2002
from but excluding September 30, 2002 3.75%
through and including the Commitment
Termination Date
"APPLICABLE CURRENCY" means with respect to any particular Loan or Letter
of Credit, Dollars or the applicable Offshore Currency in which such Loan or
Letter of Credit is denominated or payable.
"APPLICABLE OFFSHORE RATE MARGIN" means, as of any date of determination, a
percentage per annum as set forth below opposite the applicable period:
PERIOD APPLICABLE BASE RATE MARGIN
------ ---------------------------
from and including the Effective Date 3.75%
through and including March 31, 2002
from but excluding March 31, 2002 4.00%
through and including September 30, 2002
from but excluding September 30, 2002 4.75%
through and including the Commitment
Termination Date
"APPLIED AMOUNT" has the meaning assigned to that term in subsection
2.4B(iv).
"ASSET SALE" means the sale, assignment or other transfer for value by
Company or any of its Subsidiaries to any Person other than Company or any of
its wholly-owned Subsidiaries of (i) any of the stock of any of Company's
Subsidiaries, (ii) substantially all of the assets of any division or line of
business of Company or any of its Subsidiaries, or (iii) any other assets
(whether tangible or intangible) of Company or any of its Subsidiaries (other
than (a) inventory sold in the ordinary course of business, (b) the sale of
obsolete, surplus or excess
6
<PAGE>
equipment and machinery in the ordinary course of business or consistent with
past practice, (c) the sale of equipment and machinery returned by or taken in
trade from a customer in the ordinary course of business and consistent with
past practice, and (d) any such other assets to the extent that the aggregate
value of such assets sold in any single transaction or related series of
transactions is equal to $500,000 or less, or $2,000,000 or less in the
aggregate for all such excluded assets under this clause (d)); provided that the
term "Asset Sale" shall not include the sale of Accounts, notes and other
evidences of Indebtedness, whether secured or unsecured, which sale is
non-recourse to Company and its Subsidiaries, in each case in the ordinary
course of business and consistent with the past practices of Company and its
Subsidiaries as part of a governmental sponsored or private agency export credit
program.
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in substantially the
form of Exhibit XII annexed hereto.
"AUDITOR'S LETTER" means a letter, substantially in the form of Exhibit IX
annexed hereto, acknowledged by Arthur Andersen LLP and delivered to
Administrative Agent pursuant to subsection 6.1(iii).
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute, and any
similar or comparable law of any applicable Governmental Authority.
"BASE AUDITS AND APPRAISALS" has the meaning assigned to that term in
subsection 6.5B.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or (y) the
rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BORROWER" means (i) with respect to Domestic Term Loans, Domestic
Revolving Loans and Swing Line Loans, Company, (ii) with respect to UK Term
Loans and UK Tranche B Revolving Loans, Goss UK, (iii) with respect to French
Tranche B Revolving Loans, Goss France, and (iv) with respect to Japanese
Tranche B Revolving Loans, Goss Japan, and "BORROWERS" means any combination
thereof, collectively.
"BORROWING BASE CERTIFICATE" means a certificate substantially in the form
of Exhibit XVIII annexed hereto delivered by Company pursuant to subsection
6.1(xviii).
"BUSINESS DAY" means (i) for all purposes other than as covered by clauses
(ii) and (iii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or is a day on which
banking institutions located in either such state are authorized or required by
law or other governmental action to close, (ii) with respect to all notices,
determinations, fundings and payments in connection with the Adjusted Offshore
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Rate or any Offshore Rate Loans, any day that is a Business Day described in
clause (i) above and that is also a day for trading by and between banks in
Dollar deposits in the London interbank market, and (iii) with respect to all
notices, determinations, fundings and payments in any Offshore Currency in
connection with the Adjusted Offshore Rate or any Offshore Rate Loans, any day
that is a Business Day described in clause (i) above and that is also a day on
which banks and foreign exchange markets are open for foreign exchange business
in London and on which banks and foreign exchange markets are also open for
foreign exchange business in the principal financial center of the country of
that Offshore Currency.
"CAPITAL LEASE", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i) (a)
marketable securities (1) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (2) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (b) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (c) commercial paper maturing no more than
one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (d) certificates of deposit or bankers' acceptances maturing within one
year after such date and issued or accepted by any Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (1) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (2) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (e) shares of any money market mutual fund that (1)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (a) and (b) above, (2) has net assets of not less than
$500,000,000, and (3) has the highest rating obtainable from either S&P or
Moody's, and (ii) with respect to Goss UK, Goss France or Goss Japan, such other
European, Japanese or Australian investments which are comparable in term and
credit quality to those described in the foregoing clause (i)(a)-(e).
"CERTIFICATE RE NON-BANK STATUS" means a certificate in form and substance
satisfactory to Administrative Agent delivered by a Lender to Administrative
Agent pursuant to subsection 2.7B(iii) (as fully set forth in Annex A) pursuant
to which such Lender certifies, under penalty of perjury, that it is not (i) a
"bank" as such term is defined in subsection 881(c)(3) of the Internal Revenue
Code; (ii) a 10 percent shareholder of Company within the meaning of Section
871(h)(3)(B) or Section 881(c)(3)(B) of the Internal Revenue Code; or (iii) a
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"controlled" foreign corporation related to Company within the meaning of
Section 864(d)(4) of the Internal Revenue Code.
"CLASS" means, as applied to Lenders, each of the following two classes of
Lenders: (i) Lenders having Domestic Tranche A Revolving Loan Exposure, and (ii)
Lenders having Term Loan Exposure and Tranche B Revolving Loan Exposure (which
together constitute a single class).
"COLLATERAL" means, collectively, all of the real, personal and mixed
property (including capital stock) in which Liens are purported to be granted by
the Collateral Documents.
"COLLATERAL ACCOUNT" has the meaning assigned to that term in the
Collateral Account Agreement.
"COLLATERAL ACCOUNT AGREEMENT" means (i) each Second Amended and Restated
Collateral Account Agreement executed by each of Company, Goss UK and Goss
Japan, on the one hand, and Administrative Agent, on the other hand, and (ii)
the Amended and Restated Collateral Account Agreement executed by Goss France
and Administrative Agent, in each case pursuant to which each such Borrower may
pledge cash to Administrative Agent to secure the obligations of such Borrower
to reimburse an Issuing Lender for payments made under one or more Letters of
Credit as provided in Section 3, substantially in the form of Exhibit XIII
annexed hereto, as each such Collateral Account Agreement may hereafter be
amended, supplemented or otherwise modified from time to time.
"COLLATERAL DOCUMENTS" means the Collateral Account Agreements, the
Security Agreements and the Mortgages and all other instruments and documents
delivered by any Loan Party pursuant to this Agreement or any of the other Loan
Documents in order to grant to Administrative Agent, on behalf of Lenders, Liens
on any real, personal or mixed property of that Loan Party as security for the
Obligations.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by a Borrower
or any of its Subsidiaries in the ordinary course of business of such Borrower
or such Subsidiary.
"COMMITMENT TERMINATION DATE" means September 30, 2003.
"COMMITMENTS" means the Domestic Term Loan Commitments, the Domestic
Tranche A Revolving Loan Commitments, the Domestic Tranche B Revolving Loan
Commitments, the Tranche A Swing Line Loan Commitment, the Tranche B Swing Line
Commitment, the UK Term Loan Commitments, the UK Tranche B Revolving Loan
Commitments, the French Tranche B Revolving Loan Commitments, the Japanese
Tranche B Revolving Loan Commitments or any combination thereof.
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"COMPANY" has the meaning assigned to that term in the introduction to this
Agreement.
"COMPANY COMMON STOCK" means the common stock of Company, par value $0.01
per share.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form of
Exhibit VIII annexed hereto delivered to Administrative Agent and Lenders by
Company pursuant to subsection 6.1(iv).
"COMPUTATION DATE" has the meaning assigned to that term in subsection
2.1F(i).
"CONSOLIDATED ADJUSTED EBITDA" means, for any period, (a) the sum, without
duplication, of the amounts for such period of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) provisions for taxes based on income, (iv)
total depreciation expense, (v) total amortization expense, and (vi) other
non-cash items reducing Consolidated Net Income less (b) other non-cash items
increasing Consolidated Net Income, all of the foregoing determined on a
consolidated basis for Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum of the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period, Consolidated
Interest Expense for such period excluding, however, any interest expense not
payable in Cash (including amortization of discount and amortization of debt
issuance costs).
"CONSOLIDATED CURRENT ASSETS" means, as at any date of determination, the
total assets of Company and its Subsidiaries on a consolidated basis which may
properly be classified as current assets in conformity with GAAP, excluding Cash
and Cash Equivalents.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of determination,
the total liabilities of Company and its Subsidiaries on a consolidated basis
which may properly be classified as current liabilities in conformity with GAAP,
excluding the current portions of any Indebtedness.
"CONSOLIDATED EXCESS CASH FLOW" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for such
period of (a) Consolidated Adjusted EBITDA and (b) the Consolidated Working
Capital Adjustment minus (ii) the sum, without duplication, of the amounts for
such period of (a) voluntary and scheduled repayments of Consolidated Total Debt
(excluding repayments of Revolving Loans except to the
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extent the Revolving Loan Commitments are permanently reduced in connection with
such repayments), (b) Consolidated Capital Expenditures (net of any proceeds of
any related financings with respect to such expenditures), (c) Consolidated Cash
Interest Expense, and (d) the provision for current taxes based on income of
Company and its Subsidiaries and payable in cash with respect to such period.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum (without
duplication) of the amounts for such period of (i) Consolidated Cash Interest
Expense accrued after the Effective Date, (ii) scheduled principal payments made
on Consolidated Total Debt, (iii) consolidated cash taxes accrued after the
Effective Date, (iv) the aggregate of all expenditures by Company and its
Subsidiaries with respect to Operating Leases, and (v) Restricted Junior
Payments made to New Holdings with respect to regularly scheduled interest in
respect of the New Holdings Subordinated Notes, all of the foregoing as
determined on a consolidated basis for Company and its Subsidiaries in
conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to Consolidated Total Debt, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit, but excluding, however, (x) any amounts referred
to in subsection 2.3 payable to Administrative Agent and Lenders on or before
the Effective Date and (y) any net interest income; provided further that with
respect to discounts relating to sales of Accounts, which sales are off-balance
sheet and non-recourse to Company and its Subsidiaries, such discounts shall be
included in the definition of "Consolidated Interest Expense" for purposes of
this Agreement.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or loss)
of 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 Person (other than a
Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of 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, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
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"CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED WORKING CAPITAL" means, as at any date of determination, the
excess (or deficit) of Consolidated Current Assets over Consolidated Current
Liabilities.
"CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to 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 (iii)
under Hedge Agreements. Contingent Obligations shall include, without
limitation, (a) the direct or indirect guaranty, endorsement (other than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of another, (b) the obligation to make take-or-pay or similar payments if
required regardless of non-performance by any other party or parties to an
agreement, and (c) any liability of such Person for the obligation of another
through any agreement (contingent or otherwise) (X) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise) or (Y) to
maintain the solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under subclauses
(X) or (Y) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of
any Security issued by that Person or of any material indenture, mortgage, deed
of trust, contract, undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject.
"COURT ORDER" has the meaning assigned to that term in subsection 4.1H.
"COURT" has the meaning assigned to such term in the Recitals to this
Agreement.
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"COVERED REAL PROPERTY ASSET" has the meaning assigned to that term in
subsection 6.9A
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
"DOCUMENTATION AGENT" shall have the meaning assigned to such term in the
introduction to this Agreement. The Documentation Agent, in its capacity as
Documentation Agent, shall have no duties or responsibilities in addition to
those of a Lender as provided under this Agreement.
"DIP CREDIT AGREEMENT" has the meaning assigned to such term in the
Recitals to this Agreement.
"DOLLAR EQUIVALENTS" means, at any time, (x) as to any amount denominated
in Dollars, the amount thereof at such time, and (y) as to any amount
denominated in an Offshore Currency or any other currency other than Dollars,
the equivalent amount in Dollars as determined by Administrative Agent at such
time on the basis of the Exchange Rate for the purchase of Dollars with such
Offshore Currency or other currency on the most recent Computation Date provided
for in subsection 2.1F(i) or such other time as may be reasonably specified by
Administrative Agent.
"DOLLARS" and the sign "$" mean the lawful money of the United States of
America.
"DOMESTIC LENDERS" means the Domestic Tranche A Lenders or the Domestic
Tranche B Lenders or both.
"DOMESTIC LOANS" means the Domestic Term Loans or the Domestic Revolving
Loans or both.
"DOMESTIC REVOLVING LOAN COMMITMENTS" means the Domestic Tranche A
Revolving Loan Commitments or the Domestic Tranche B Revolving Loan Commitments
or both.
"DOMESTIC REVOLVING LOAN EXPOSURE" means the Domestic Tranche A Revolving
Loan Exposure or the Domestic Tranche B Revolving Loan Exposure or both.
"DOMESTIC REVOLVING LOANS" means the Domestic Tranche A Revolving Loans or
the Domestic Tranche B Revolving Loans or both.
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"DOMESTIC SUBSIDIARY" means a direct or indirect Subsidiary of Company that
is incorporated or organized under the laws of a state of the United States of
America.
"DOMESTIC TERM LOAN COMMITMENT" means the commitment of a Lender to make
Term Loans to Company pursuant to subsection 2.1A(i)(a), and "DOMESTIC TERM LOAN
COMMITMENTS" means such commitments of all such Lenders in the aggregate.
"DOMESTIC TERM LOAN EXPOSURE" means, with respect to any Domestic Lender as
of any date of determination, (i) prior to the funding of the Domestic Term
Loans, that Lender's Domestic Term Loan Commitment and (ii) after the funding of
the Domestic Term Loans, the outstanding principal amount of the Domestic Term
Loans of that Lender.
"DOMESTIC TERM LOANS" means the Loans made by Lenders to Company pursuant
to subsection 2.1A(i)(a).
"DOMESTIC TRANCHE A LENDER" and "DOMESTIC TRANCHE A LENDERS" means the
Lenders that have Domestic Tranche A Revolving Loan Commitments or a Tranche A
Swing Line Loan Commitment or that have Domestic Tranche A Revolving Loans or
Tranche A Swing Line Loans outstanding, together with their successors and
permitted assigns pursuant to subsection 10.1, and the term "DOMESTIC TRANCHE A
LENDERS" shall include Swing Line Lender unless the context otherwise requires.
"DOMESTIC TRANCHE A REVOLVING LOAN COMMITMENT" means the commitment of a
Domestic Tranche A Lender (i) to make Domestic Tranche A Revolving Loans to
Company pursuant to subsection 2.1A(ii)(a), (ii) to issue and/or purchase
participations in Tranche A Letters of Credit for the account of Company
pursuant to Section 3, and (iii) except for Swing Line Lender, to purchase
participations in Tranche A Swing Line Loans pursuant to subsection 2.1A(iii),
and "DOMESTIC TRANCHE A REVOLVING LOAN COMMITMENTS" means such commitments of
all such Lenders in the aggregate.
"DOMESTIC TRANCHE A REVOLVING LOAN EXPOSURE" means, with respect to any
Domestic Tranche A Lender as of any date of determination, (i) prior to the
termination of the Domestic Tranche A Revolving Loan Commitments, that Lender's
Domestic Tranche A Revolving Loan Commitment and (ii) after the termination of
the Domestic Tranche A Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Domestic Tranche A Revolving Loans of that
Lender plus (b) in the event that Lender is an Issuing Lender, the aggregate
Tranche A Letter of Credit Usage in respect of all Tranche A Letters of Credit
issued by that Lender for the benefit of Company (in each case net of any
participations purchased by other Lenders in such Tranche A Letters of Credit or
any unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Tranche A Letters of
Credit for the benefit of Company or any unreimbursed drawings under any such
Tranche A Letters of Credit plus (d) in the case of Swing Line Lender, the
aggregate outstanding principal amount of all Tranche A Swing Line Loans (net of
any participations therein purchase by other Lenders) plus (e) the aggregate
amount of all participations purchased by that Lender in any outstanding Tranche
A Swing Line Loans.
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"DOMESTIC TRANCHE A REVOLVING LOANS" means the Loans made by Lenders to
Company pursuant to subsection 2.1A(ii)(a).
"DOMESTIC TRANCHE B LENDER" and "DOMESTIC TRANCHE B LENDERS" means the
Lenders that have Domestic Term Loan Commitments, Domestic Tranche B Revolving
Loan Commitments or a Tranche B Swing Line Loan Commitment or that have Domestic
Term Loans, Domestic Tranche B Revolving Loans or Tranche B Swing Line Loans
outstanding, together with their successors and permitted assigns pursuant to
subsection 10.1, and the term "DOMESTIC TRANCHE B LENDERS" shall include Swing
Line Lender unless the context otherwise requires.
"DOMESTIC TRANCHE B REVOLVING LOAN COMMITMENT" means the commitment of a
Domestic Tranche B Lender (i) to make Domestic Tranche B Revolving Loans to
Company pursuant to subsection 2.1A(ii)(b), (ii) to issue and/or purchase
participations in Tranche B Letters of Credit for the account of Company
pursuant to Section 3, and (iii) except for Swing Line Lender, to purchase
participations in Tranche B Swing Line Loans pursuant to subsection 2.1A(iii),
and "DOMESTIC TRANCHE B REVOLVING LOAN COMMITMENTS" means such commitments of
all such Lenders in the aggregate.
"DOMESTIC TRANCHE B REVOLVING LOAN EXPOSURE" means, with respect to any
Domestic Lender as of any date of determination, (i) prior to the termination of
the Domestic Tranche B Revolving Loan Commitments, that Lender's Domestic
Tranche B Revolving Loan Commitment and (ii) after the termination of the
Domestic Tranche B Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Domestic Tranche B Revolving Loans of that
Lender plus (b) in the event that Lender is an Issuing Lender, the aggregate
Tranche B Letter of Credit Usage in respect of all Tranche B Letters of Credit
issued by that Lender for the benefit of Company (in each case net of any
participations purchased by other Lenders in such Tranche B Letters of Credit or
any unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Tranche B Letters of
Credit for the benefit of Company or any unreimbursed drawings under any such
Tranche B Letters of Credit plus (d) in the case of Swing Line Lender, the
aggregate outstanding principal amount of all Tranche B Swing Line Loans (net of
any participations therein purchase by other Lenders) plus (e) the aggregate
amount of all participations purchased by that Lender in any outstanding Tranche
B Swing Line Loans.
"DOMESTIC TRANCHE B REVOLVING LOANS" means the Loans made by Lenders to
Company pursuant to subsection 2.1A(ii)(b).
"EFFECTIVE DATE" means the date on or before November 19, 1999, on which
the initial Loans are made under this Agreement.
"EFFECTIVE DATE MORTGAGE" has the meaning assigned to that term in
subsection 4.1I(i).
"EFFECTIVE DATE MORTGAGED PROPERTY" has the meaning assigned to that term
in subsection 4.1I(i).
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"EFFECTIVE DATE MORTGAGE POLICIES" has the meaning assigned to that term in
subsection 4.1I(iv).
"ELIGIBLE ACCOUNTS RECEIVABLE" means the aggregate amount of all Accounts
of Company deemed by Administrative Agent in the exercise of its Permitted
Discretion to be eligible for inclusion in the calculation of the Tranche A
Borrowing Base. In determining the amount to be so included, the face amount of
such Accounts shall be reduced by the amount of all returns, discounts,
deductions, claims, credits, charges, or other allowances. Unless otherwise
approved in writing by Administrative Agent, an Account shall not be an Eligible
Account Receivable if:
(a) it arises out of a sale made by Company to an Affiliate; or
(b) the goods giving rise to such Account have been shipped, delivered
and invoiced, and title has passed, to the account debtor and such Account
is classified by Company in accordance with its past practices and
procedures as an "account receivable not yet due" (collectively, the
"EXTENDED PAYMENT ACCOUNTS"), but only to the extent (1) the aggregate
amount of all such Extended Payment Accounts of Company exceeds 20% of all
Accounts of Company or (2) final payment on such an Extended Payment
Account shall not be received by Company within 270 days after shipment and
delivery of the goods giving rise to such Extended Payment Account; or
(c) it is unpaid more than 90 days after the original payment due
date; or
(d) it is from the same account debtor or its Affiliate and fifty
percent (50%) or more of all Accounts from that account debtor (and its
Affiliates) are ineligible under (c) above; or
(e) when aggregated with all other Accounts of an account debtor, such
Account exceeds 25% in face value of all Accounts of Company then
outstanding, but only to the extent of such excess, unless such excess is
supported by an irrevocable letter of credit satisfactory to Administrative
Agent (as to form, substance and issuer) and assigned to Administrative
Agent; or
(f) the account debtor for such Account is a creditor of Company, has
or has asserted a right of setoff against Company, or has disputed its
liability or otherwise has made any claim with respect to such Account or
any other Account which has not been resolved, in each case to the extent
of the amount owed by Company to such account debtor, the amount of such
actual or asserted right of setoff, or the amount of such dispute or claim,
as the case may be; or
(g) the account debtor is (or its assets are) the subject of any of
the events described in subsection 8.6 or 8.7; or
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(h) (1) such Account is not payable in Dollars or (2) the account
debtor for such Account is located outside the United States or Canada; or
(i) the sale to the account debtor is on a bill-and-hold, guarantied
sale, sale-and-return, sale on approval or consignment basis or made
pursuant to any other written agreement providing for repurchase or return;
or
(j) Administrative Agent determines by its own credit analysis that
collection of such Account is uncertain or that such Account may not be
paid; or
(k) the account debtor is any federal, state, local, provincial, or
other comparable or similar governmental authority, agency or
instrumentality; or
(l) such Account does not comply with all requirements of all
applicable laws, rules, regulations and orders of any governmental
authority, including without limitation the Federal Consumer Credit
Protection Act, the Federal Truth in Lending Act, Regulation Z of the Board
of Governors of the Federal Reserve System and all Environmental Laws; or
(m) such Account arises as a result of any progress billing or such
Account is subject to any adverse security deposit, progress payment or
other similar advance made by or for the benefit of the applicable account
debtor; or
(n) it is not subject to a valid and perfected First Priority Lien in
favor of Administrative Agent or does not otherwise conform to the
representations and warranties contained in the Loan Documents; or
(o) it is an Account with a customer credit balance that is unpaid
more than 90 days after the original payment date for which a debit balance
exists; or
(p) it is not owned solely by Company or Company does not have good,
valid and marketable title thereto;
provided that Administrative Agent, in the exercise of its Permitted Discretion,
may impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in this definition.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act)
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which extends credit or buys loans as one of its businesses including, but not
limited to, insurance companies, mutual funds and lease financing companies, in
each case (under clauses (i) through (iv) above) that is reasonably acceptable
to Administrative Agent; and (B) any Lender and any Affiliate of any Lender;
provided that no Affiliate of Company shall be an Eligible Assignee.
"ELIGIBLE EQUIPMENT" means the aggregate amount of all Equipment of Company
deemed by Administrative Agent in the exercise of its Permitted Discretion to be
eligible for inclusion in the calculation of the Tranche A Borrowing Base. In
determining the amount to be so included, such Equipment shall be valued at the
liquidation value of such Equipment. Unless otherwise approved in writing by
Administrative Agent, an item of Equipment shall not be included in Eligible
Equipment if:
(a) it is not owned solely by Company or Company does not have good,
valid and marketable title thereto; or
(b) it is not located in the United States; or
(c) it is not subject to a valid and perfected First Priority Lien in
favor of Administrative Agent ; or
(d) it is not first-quality goods, is obsolete or slow moving, or does
not otherwise conform to the representations and warranties contained in
the Loan Documents;
provided that Administrative Agent, in the exercise of its Permitted Discretion,
may impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in this definition.
"ELIGIBLE INVENTORY" means the aggregate amount of Inventory of Company
deemed by Administrative Agent in the exercise of its Permitted Discretion to be
eligible for inclusion in the calculation of the Tranche A Borrowing Base. In
determining the amount to be so included, such Inventory shall be valued at the
lower of cost or market, on a basis consistent with Company's current and
historical accounting practice. Unless otherwise approved in writing by
Administrative Agent, an item of Inventory shall not be included in Eligible
Inventory if:
(a) it is not owned solely by Company or Company does not have good,
valid and marketable title thereto; or
(b) it is not located in the United States; or
(c) it consists of goods or Inventory (including consigned goods or
Inventory) not located on property owned or leased by Company or in a
contract warehouse; provided that such goods or Inventory (other than
consigned goods or Inventory) shall not
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be excluded under this clause (c) if such goods are located on property
owned or leased by Company or in a contract warehouse, in each case that is
subject to a collateral access agreement (in form and substance
satisfactory to Administrative Agent) executed by any applicable mortgagee,
lessor or contract warehouseman, as the case may be, and such goods are
segregated or otherwise separately identifiable from goods of others, if
any, stored on the premises; or
(d) it is not subject to a valid and perfected First Priority Lien in
favor of Administrative Agent except, with respect to Inventory stored at
sites described in clause (c) above, for Liens for unpaid rent or normal
and customary warehousing charges; or
(e) it consists of goods (1) inspected by Company and determined by
Company to be returnable to the supplier or (2) returned or rejected by
Company's customers, or goods in transit to third parties (other than to
warehouse sites covered by a collateral access agreement (in form and
substance satisfactory to Administrative Agent)); or
(f) it consists of raw materials constituting Inventory which are
sub-assemblies or works in process or other partially manufactured goods
constituting Inventory; or
(g) it consists of raw materials located at the Redding, Pennsylvania
Facility not assigned to a specific contract with customers; or
(h) it consists of raw materials, such as castings, that are not
currently used by Company in the manufacture of goods for its customers; or
(i) it is not first-quality goods, is obsolete or slow moving, or is
not accountable due to loss or shrinkage or valuation capitalization, or
does not otherwise conform to the representations and warranties contained
in the Loan Documents; or
(j) it consists of Inventory to be included in finished goods and such
Inventory has been assigned to specific contracts with customers who have
made advance payments with respect to such Inventory on such contracts;
provided that Administrative Agent, in the exercise of its Permitted Discretion,
may impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in this definition.
"ELIGIBLE REAL PROPERTY" means the aggregate amount of all Real Property
Assets of Company deemed by Administrative Agent in the exercise of its
Permitted Discretion to be eligible for inclusion in the calculation of the
Tranche A Borrowing Base. In determining the amount to be so included, such Real
Property Assets shall be valued at fair market value. Unless otherwise approved
in writing by Administrative Agent, an item of Real Property Assets shall not be
included in Eligible Real Property Assets if:
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(a) it is not owned solely by a Company or such Company does not have
good, valid and marketable title thereto; or
(b) it is not located in the United States; or
(c) it is not subject to a valid and perfected First Priority Lien in
favor of Administrative Agent , or does not otherwise conform to the
representations and warranties contained in the Loan Documents;
provided that Administrative Agent, in the exercise of its Permitted Discretion,
may impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in this definition.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is, or was at any time, maintained or contributed to
by Company or any of its ERISA Affiliates. Any such plan of a former ERISA
Affiliate of the Company shall continue to be considered an Employee Benefit
Plan within the meaning of this definition solely with respect to the period
during which such former ERISA Affiliate was an ERISA Affiliate of the Company
and with respect to liabilities existing after such period for which the Company
could be liable under the Internal Revenue Code or ERISA.
"ENVIRONMENTAL CLAIM" means any allegation, investigation, notice, notice
of violation, claim, demand, action, suit, proceeding, abatement order or other
direction (conditional or otherwise) by any Governmental Authority or any other
Person arising (i) pursuant to or in connection with any actual or alleged
violation of any Environmental Law, (ii) in connection with any Hazardous
Materials or any actual or alleged Hazardous Materials Activity, or (iii) in
connection with any actual or alleged damage, injury, threat or harm to health,
safety, natural resources or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future statutes,
ordinances, orders, rules, regulations, plans, policies or decrees and
requirements having the force of law of any Governmental Authority relating to
(i) environmental matters, including, without limitation, those relating to any
Hazardous Materials Activity, (ii) the generation, use, storage, transportation
or disposal of Hazardous Materials, or (iii) occupational safety and health,
industrial hygiene, land use or the protection of human, plant or animal health
or welfare from environmental hazards, in any manner applicable to Company or
any of its Subsidiaries or any of their respective properties, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. ss. 9601 et seq.) ("CERCLA"), the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water Pollution Control
Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss.136 et seq.),
the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.) and the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et
seq.), each as
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amended, and any analogous future or present local, state and federal laws,
statutes and regulations promulgated pursuant to any of the foregoing.
"EQUIPMENT" means, with respect to a Person, all equipment in all of its
forms, all parts thereof and all accessions thereto owned or held by such
Person, including without limitation all equipment, parts and accessions
relating to the manufacture, production, servicing, maintenance or repair of
press systems, printing presses and related finished goods and spare parts;
provided that "Equipment" shall not include any materials or other items that
would otherwise constitute "Inventory".
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute, and any similar or
comparable laws in a jurisdiction outside of the U.S. applicable to Company or
any of its Subsidiaries.
"ERISA AFFILIATE", as applied to any Person, means (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
except for purposes of Title IV of ERISA, any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Internal Revenue Code
of which that Person, any corporation described in clause (i) above or any trade
or business described in clause (ii) above is a member. Any former ERISA
Affiliate of a Person shall continue to be considered an ERISA Affiliate within
the meaning of this definition solely with respect to the period during which
such entity was an ERISA Affiliate of the Person and with respect to liabilities
arising after such period for which the Person could be liable under the
Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any Pension
Plan (excluding those for which the provision for 30-day notice to the PBGC has
been waived by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any Pension
Plan or the failure to make any required contribution to a Multiemployer Plan;
(iii) the provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the withdrawal by
Company or any of its ERISA Affiliates from any Pension Plan with two or more
contributing sponsors or the termination of any such Pension Plan resulting in
liability pursuant to Sections 4063 or 4064 of ERISA; (v) the institution by the
PBGC of proceedings to terminate any Pension Plan, or the occurrence of any
event or condition which could reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on Company or any
of its
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ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal by Company or
any of its ERISA Affiliates in a complete or partial withdrawal (within the
meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there
is any potential liability therefor, or the receipt by Company or any of its
ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could reasonably be expected
to give rise to the imposition on Company or any of its ERISA Affiliates of
material fines, penalties, taxes or related charges under Chapter 43 of the
Internal Revenue Code or under Section 409 or 502(c), (i) or (l) or 4071 of
ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material
claim (other than routine claims for benefits) against any Employee Benefit Plan
other than a Multiemployer Plan or the assets thereof, or against Company or any
of its ERISA Affiliates in connection with any such Employee Benefit Plan; (x)
receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Benefit Plan intended to be qualified under
Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of
the Internal Revenue Code, or the failure of any trust forming part of any
Pension Plan to qualify for exemption from taxation under Section 501(a) of the
Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with
respect to any Pension Plan; provided that any event described in the foregoing
clauses shall not be an ERISA Event if Company and/or its Subsidiaries are (or
would be) liable for any potential liability resulting from such event solely
because of their affiliation with an ERISA Affiliate (excluding Company and all
Subsidiaries) and (i) such events could not reasonably be expected to result
(individually or in the aggregate) in liability (including joint and several
liability) of Company and its Subsidiaries of more than $1,000,000, or (ii)
neither Company and its Subsidiary could reasonably be expected to be liable
(either individually or on a joint and several basis) for any potential
liability resulting from such event; provided further that any event described
in the foregoing proviso shall be an ERISA Event if the PBGC or any other
governmental authority notifies Company or one of its Subsidiaries that Company
or one of its Subsidiaries is liable for any potential liability resulting from
such event.
"EURO" has the meaning assigned to that term in subsection 2.1F(ii).
"EU" means the European Union.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute, and any comparable or similar laws in a
jurisdiction outside of the United States applicable to Company or any of its
Subsidiaries.
"EXCHANGE RATE" means, with respect to any currency other than Dollars, the
rate of exchange quoted by the Wall Street Journal on the date of determination
as applicable to trading among banks at 4:00 P.M. (New York time) on the
immediately preceding Business Day
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(or at such other time and on such other date specified in the Wall Street
Journal) in the New York foreign exchange market for such other currency.
"EXISTING CREDIT AGREEMENT" has the meaning assigned to such term in the
Recitals to this Agreement.
"EXISTING LETTERS OF CREDIT" means the letters of credit identified as such
in Schedule 7.4 annexed hereto (but not any refinancings, renewals or extensions
thereof).
"FACILITIES" means the manufacturing plants, offices, warehouses and all
other real property (including, without limitation, all buildings, fixtures or
other improvements located thereon) and related facilities now, hereafter or
heretofore owned, leased, operated or used by Company or any of its Subsidiaries
or any of their respective predecessors or Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"FEE PROPERTY" means a Real Property Asset consisting of a fee interest in
real property.
"FINANCIAL PLAN" has the meaning assigned to that term in subsection
6.1(xiii).
"FIRST PRIORITY" means, with respect to any Lien purported to be created in
any Collateral pursuant to any Collateral Document, that (i) such Lien has
priority over any other Lien (other than those Permitted Encumbrances that as a
matter of statutory law have priority over any other Lien irrespective of the
prior perfection or filing of such other Lien) on such Collateral and (ii) such
Lien is the only Lien (other than Permitted Encumbrances that as a matter of
statutory law have priority over any other Lien irrespective of the prior
perfection or filing of such other Lien) to which such Collateral is subject.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its Subsidiaries ending
on December 31 of each calendar year.
"FLOOD HAZARD PROPERTY" means a Mortgaged Property located in an area in
the United States designated by the Federal Emergency Management Agency as
having special flood or mud slide hazards.
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"FOREIGN SUBSIDIARY" means a direct or indirect Subsidiary of Company that
is incorporated or organized under the laws of a jurisdiction other than that of
the United States of America.
"FOREIGN UNFUNDED PENSION PLAN" means a Pension Plan described in Section
4(b)(4) of ERISA that is not required to be funded pursuant to applicable
foreign law.
"FRANCS" and the sign "FF" mean the lawful money of the Republic of France.
"FRENCH INDEMNIFYING LENDER" means each financial institution that is
designated as a French Indemnifying Lender on Schedule 2.1 annexed hereto, and
each financial institution which is designated, with the approval of
Administrative Agent, as a French Indemnifying Lender in an Assignment
Agreement.
"FRENCH LENDER" and "FRENCH LENDERS" means the Lenders that have French
Tranche B Revolving Loan Commitments or that have French Revolving Loans
outstanding, together with their successors and permitted assigns pursuant to
subsection 10.1.
"FRENCH TRANCHE B REVOLVING LOAN COMMITMENT" means the commitment of a
French Lender (i) to make French Tranche B Revolving Loans to Goss France
pursuant to subsection 2.1A(ii)(b) and (ii) to issue and/or purchase
participations in Tranche B Letters of Credit for the account of Goss France
pursuant to Section 3, and "FRENCH TRANCHE B REVOLVING LOAN COMMITMENTS" means
such commitments of all such Lenders in the aggregate.
"FRENCH TRANCHE B REVOLVING LOAN EXPOSURE" means, with respect to any
French Lender as of any date of determination (i) prior to the termination of
the French Tranche B Revolving Loan Commitments, that Lender's French Tranche B
Revolving Loan Commitment and (ii) after the termination of the French Tranche B
Revolving Loan Commitments, the sum of (a) the aggregate outstanding principal
amount of the French Tranche B Revolving Loans of that Lender plus (b) in the
event that Lender is an Issuing Lender, the aggregate Tranche B Letter of Credit
Usage in respect of all Tranche B Letters of Credit issued by that Lender for
the benefit of Goss France (in each case net of any participations purchased by
other Lenders in such Tranche B Letters of Credit or any unreimbursed drawings
thereunder) plus (c) the aggregate amount of all participations purchased by
that Lender in any outstanding Tranche B Letters of Credit for the benefit of
Goss France or any unreimbursed drawings under any such Tranche B Letters of
Credit.
"FRENCH TRANCHE B REVOLVING LOANS" means the Loans made by Lenders to Goss
France pursuant to subsection 2.1A(ii)(b).
"FUNDING DATE" means the date of the funding of a Loan.
"FUNDING AND PAYMENT OFFICE" means (i) the office or offices of
Administrative Agent and/or Swing Line Lender set forth on the signature pages
hereof, or (ii) such other office or offices of Administrative Agent and/or
Swing Line Lender as may from time to time hereafter
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be designated as such in a written notice delivered by Administrative Agent
and/or Swing Line Lender to Borrowers and Lenders.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
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 may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination.
"GOSS FRANCE" has the meaning assigned to that term in the introduction to
this Agreement and is a wholly-owned Subsidiary of Company.
"GOSS REALTY" means Goss Realty, L.L.C., a limited liability company
organized under the laws of Delaware and a wholly-owned Subsidiary of Company.
"GOSS JAPAN" has the meaning assigned to that term in the introduction to
this Agreement and is a wholly-owned Subsidiary of Company.
"GOSS UK" has the meaning assigned to that term in the introduction to this
Agreement and is a wholly-owned Subsidiary of Company.
"GOVERNMENTAL AUTHORITY" means any federal, state or local governmental
authority, agency or court in the United States, or other comparable or similar
governmental authority, agency or court in a jurisdiction outside of the United
States, in each case applicable to Company or any of its Subsidiaries.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any Governmental
Authority.
"GUARANTOR" means, at any time, New Holdings, Company or any of their
respective Subsidiaries that is then a party to any of the Guaranties or
Subsidiary Guaranties.
"GUARANTY" means each of (i) the Guaranty executed and delivered by New
Holdings, (ii) the Second Amended and Restated Guaranty executed and delivered
by New Holdings and (iii) the Second Amended and Restated Guaranty executed and
delivered by Company, in each case on the Effective Date substantially in the
form of Exhibit XIV attached hereto, and any other guaranty, document or
instrument with a similar or comparable effect executed by any Foreign
Subsidiary that is a Borrower, in form and substance satisfactory to
Administrative Agent, in each case as such Guaranty may be amended, supplemented
or otherwise modified from time to time, and "GUARANTIES" means all such
Guaranties, collectively.
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"HAZARDOUS MATERIALS" means (i) any chemical, material or substance which,
at the time of determination, is defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials", "extremely
hazardous waste", "restricted hazardous waste", "infectious waste", "toxic
substances" or any other formulations intended to define, list or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar meaning and regulatory effect
under any applicable Environmental Laws; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling fluids, produced
waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) any
asbestos-containing material; (vii) urea formaldehyde foam insulation; (viii)
electrical equipment which contains any oil or dielectric fluid containing a
mixture of polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited,
regulated or determined by any Governmental Authority or which may or could pose
a hazard to the health and safety of the owners, occupants or any Persons in the
vicinity of the Facilities or to the indoor or outdoor environment.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.
"HEDGE AGREEMENT" means an Interest Rate Agreement or a Currency Agreement
designed to hedge against fluctuations in interest rates or currency values,
respectively.
"INDEBTEDNESS", as applied to any Person, means, without duplication, (i)
all indebtedness for borrowed money, (ii) that portion of obligations with
respect to Capital Leases that is properly classified as a liability on a
balance sheet in conformity with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money, (iv) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding any such obligations incurred
under ERISA), which purchase price is (a) due more than six months from the date
of incurrence of the obligation in respect thereof or (b) evidenced by a note or
similar written instrument, and (v) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person. Obligations under Interest Rate
Agreements and Currency Agreements constitute Contingent Obligations and not
Indebtedness.
"INDEMNIFIED ENVIRONMENTAL LIABILITIES" has the meaning assigned to that
term in subsection 10.3.
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"INDEMNIFIED LIABILITIES" has the meaning assigned to that term in
subsection 10.3.
"INDEMNIFYING LENDER" means each UK Indemnifying Lender, each French
Indemnifying Lender and each Japanese Indemnifying Lender, and "INDEMNIFYING
LENDERS" means, collectively, all such financial institutions.
"INDEMNITEE" has the meaning assigned to that term in subsection 10.3.
"INDEMNITY AMOUNT" means for each Indemnifying Lender which is a signatory
hereto the amount and the percentage that is so designated and set forth
opposite such Indemnifying Lender's name on Schedule 2.1 annexed hereto, and for
each financial institution which becomes an Indemnifying Lender pursuant to an
Assignment Agreement the amount and the percentage that is so designated in such
Assignment Agreement.
"INDEMNITY PARTICIPATION" shall have the meaning set forth therefor in
subsection 2.9A as set forth in Annex C attached hereto.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement, substantially
in the form of Exhibit XIX annexed hereto, executed and delivered on the
Effective Date by Borrowers, Administrative Agent, Domestic Tranche A Lenders
and Tranche B Lenders.
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan, each
first Business Day after each March 31, June 30, September 30 and December 31 of
each year, commencing on the first such date to occur after the Effective Date,
and (ii) with respect to any Offshore Rate Loan, the last day of each Interest
Period applicable to such Loan; provided that in the case of each Interest
Period of six months "Interest Payment Date" shall also include the date that is
three months after the commencement of such Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement.
"INTEREST RATE DETERMINATION DATE" means, (i) with respect to any Interest
Period relating to any Loan (other than Loans denominated in Sterling), the
second Business Day prior to the first day of such Interest Period, and (ii)
with respect to any Interest Period relating to any Loan denominated in
Sterling, the first day of such Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter, and any successor statute,
and any similar or comparable laws in a jurisdiction outside of the United
States applicable to Company or any of its Subsidiaries.
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"INVENTORY" means, with respect to a Person, all goods, merchandise and
other personal property which are held by such Person for sale or lease,
including those held for display or demonstration or out on lease or consignment
or to be furnished under a contract of service, including without limitation
(but without duplication) raw materials, components, works in process, finished
goods (including without limitation all completed offset newspaper press
systems, insert web offset press systems and commercial web offset printing
presses, or accessories thereto, and other related goods and merchandise, in
each case constituting finished goods which are held for sale or lease by such
Person, including those held for display or demonstration), spare parts
(including without limitation all components, goods, merchandise or spare parts
relating to press equipment held for sale or lease by such Person in connection
with the servicing, maintenance or repair of finished goods sold or leased by
such Person), or other materials used or consumed, or to be used or consumed, in
the business of such Person; provided that "Inventory" shall not include any
materials or other items that would otherwise constitute "Equipment".
"INVESTMENT" means (i) any direct or indirect purchase or other acquisition
by Company or any of its Subsidiaries of, or of a beneficial interest in, any
Securities of any other Person (other than a Person that prior to such purchase
or acquisition was a wholly-owned Domestic Subsidiary of Company), (ii) any
direct or indirect redemption, retirement, purchase or other acquisition for
value, by any Subsidiary of Company from any Person other than Company or any of
its Subsidiaries, of any equity Securities of such Subsidiary, or (iii) any
direct or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar expenditures in
the ordinary course of business) or capital contribution by Company or any of
its Subsidiaries to any other Person other than a wholly-owned Domestic
Subsidiary of Company, including all indebtedness and accounts receivable from
that other Person that are not current assets or did not arise from sales to
that other Person in the ordinary course of business. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto and minus returns of capital thereon, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment. The definition of "INVESTMENT" shall not
include any Indebtedness or Accounts that are current assets and that arose from
sales of goods and services in the ordinary course of business and consistent
with the past practices of Company and its Subsidiaries.
"ISSUING LENDER" means, with respect to any Letter of Credit, the Lender
which agrees or is otherwise obligated to issue such Letter of Credit,
determined as provided in subsection 3.1B(ii).
"JAPANESE INDEMNIFYING LENDER" means each financial institution that is
designated as a Japanese Indemnifying Lender on Schedule 2.1 annexed hereto, and
each financial institution which is designated, with the approval of
Administrative Agent, as a Japanese Indemnifying Lender in an Assignment
Agreement.
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"JAPANESE LENDER" and "JAPANESE LENDERS" means the Lenders that have
Japanese Tranche B Revolving Loan Commitments or that have Japanese Tranche B
Revolving Loans outstanding, together with their successors and permitted
assigns pursuant to subsection 10.1.
"JAPANESE TRANCHE B REVOLVING LOAN COMMITMENT" means the commitment of a
Japanese Lender (i) to make Japanese Tranche B Revolving Loans to Goss Japan
pursuant to subsection 2.1A(ii)(b) and (ii) to issue and/or purchase
participations in Tranche B Letters of Credit for the account of Goss Japan
pursuant to Section 3, and "JAPANESE REVOLVING LOAN COMMITMENTS" means such
commitments of all such Lenders in the aggregate.
"JAPANESE TRANCHE B REVOLVING LOAN EXPOSURE" means, with respect to any
Japanese Lender as of any date of determination (i) prior to the termination of
the Japanese Tranche B Revolving Loan Commitments, that Lender's Japanese
Tranche B Revolving Loan Commitment and (ii) after the termination of the
Japanese Tranche B Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Japanese Tranche B Revolving Loans of that
Lender plus (b) in the event that Lender is an Issuing Lender, the aggregate
Tranche B Letter of Credit Usage in respect of all Tranche B Letters of Credit
issued by that Lender for the benefit of Goss Japan (in each case net of any
participations purchased by other Lenders in such Tranche B Letters of Credit or
any unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Tranche B Letters of
Credit for the benefit of Goss Japan or any unreimbursed drawings under any such
Tranche B Letters of Credit.
"JAPANESE TRANCHE B REVOLVING LOANS" means the Loans made by Lenders to
Goss Japan pursuant to subsection 2.1A(ii)(b).
"JOINT VENTURE" means a joint venture, partnership, limited liability
company or other similar arrangement, whether in corporate, partnership, limited
liability company or other legal form; provided that in no event shall any
corporate Subsidiary of any Person be considered to be a Joint Venture to which
such Person is a party.
"LENDER" and "LENDERS" means the Domestic Lenders, the UK Lenders, the
French Lenders or the Japanese Lenders or any combination thereof; provided that
the term "Lenders," when used in the context of a particular Commitment, shall
mean Lenders having that Commitment.
"LENDING OFFICE" means, with respect 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 the signature pages hereof, or
such other office or offices as such Lender may from time to time notify
Borrowers and Administrative Agent.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Tranche A Letters of Credit
or Tranche B Letters of Credit or both.
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"LETTER OF CREDIT USAGE" means the Tranche A Letter of Credit Usage or the
Tranche B Letter of Credit Usage or both.
"LIEN" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"LOAN" or "LOANS" means one or more of the Term Loans, the Revolving Loans
or the Swing Line Loans or any combination thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters of Credit
(and any applications for, or reimbursement agreements or other documents or
certificates executed by a Borrower in favor of an Issuing Lender relating to,
the Letters of Credit), the Guaranties and the Collateral Documents and, solely
for purposes of the use of the term "Loan Documents" in the definition of the
term "Obligations," the Hedging Agreements to which a Loan Party and any Lender
or any of its Affiliates is a party.
"LOAN PARTIES" means each of the Borrowers, the Guarantors or any of
Company's Subsidiaries executing any other Loan Document.
"LOCAL TIME" means (i) with respect to Base Rate Loans, New York time, and
(ii) with respect to Offshore Rate Loans, London time.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.
"MARKS" and the sign "DM" mean the lawful money of the Federal Republic of
Germany.
"MASTER ASSIGNMENT AGREEMENT" means that certain Master Assignment
Agreement, substantially in the form of Exhibit XX annexed hereto, among
Company, the lenders under the Existing Credit Agreement, the Lenders under this
Agreement and Administrative Agent, pursuant to which all lenders under the
Existing Credit Agreement assign (or are deemed under the Reorganization Plan to
have assigned) their loans and commitments thereunder to Administrative Agent,
and Administrative Agent assigns to each Lender under this Agreement, and such
Lender purchases from Administrative Agent, the Loans and Commitments as set
forth in Schedule 2.1 annexed hereto.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of (a) Company and its Domestic Subsidiaries, taken as a whole, (b)
Goss UK and its Subsidiaries, taken as a whole, (c) Goss France and its
Subsidiaries, taken as a whole, (d) Goss Japan and its Subsidiaries, taken as a
whole, or (e) Company and its Subsidiaries, taken as a whole; provided that in
the event of the occurrence of a material adverse effect as described in the
foregoing clauses (a), (b), (c) or
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(d), such Borrower shall have five days after receipt of notice from
Administrative Agent to cure such material adverse effect (without causing a
material adverse effect for any other Borrower) before it shall become a
"Material Adverse Effect" as defined in this clause (i); (ii) the impairment in
any material respect of the ability of any Loan Party to perform, or of
Administrative Agent or any Lender to enforce, the Obligations; or (iii) a
material adverse effect on the value of the Collateral or the amount which
Administrative Agent or any Lender would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
of the Collateral.
"MATERIAL CONTRACT" means any contract or other arrangement to which any
Borrower or any of its Subsidiaries is a party (other than the Loan Documents)
for which breach, nonperformance, cancellation or failure to renew could
reasonably be expected to have a Material Adverse Effect.
"MATERIAL LEASEHOLD" means a Real Property Asset consisting of a leasehold
interest in an Operating Lease or a Capital Lease which is reasonably determined
by Administrative Agent to be of material value as collateral for the
Obligations.
"MATERIAL SUBSIDIARY" means any Subsidiary of New Holdings that (i) owns 5%
or more of the assets of New Holdings and its Subsidiaries, measured on a
consolidated basis, or (ii) accounts for 5% or more of Consolidated Net Income.
"MAXIMUM LETTER OF CREDIT AMOUNT" means, as of any date of determination,
for all Borrowers, the Dollar Equivalent of $75,000,000 less the aggregate
amount of all reductions made to all Tranche A Revolving Loan Commitments and
Tranche B Revolving Loan Commitments pursuant to subsections 2.4A(iii), 2.4B(ii)
and 2.4.B(iii), as the case may be.
"MAXIMUM TERM LOAN COMMITMENTS" means, as of any date of determination, (i)
for Company, the Dollar Equivalent of the Domestic Term Loan Commitments
available to Company less the aggregate amount of all reductions made to
Domestic Term Loan Commitments pursuant to subsections 2.4A(i) and 2.4B(iii),
(ii) for Goss UK, the Dollar Equivalent of the UK Term Loan Commitments
available to Goss UK less the aggregate amount of all reductions made to UK Term
Loan Commitments pursuant to subsections 2.4A(i) and 2.4B(iii), and (iii) for
Company and Goss UK together, $150,000,000 less the aggregate amount of all
reductions made to all Term Loan Commitments pursuant to subsections 2.4A(i) and
2.4B(iii).
"MAXIMUM TRANCHE A REVOLVING LOAN COMMITMENTS" means, as of any date of
determination, for Company, the Dollar Equivalent of $50,000,000 less the
aggregate amount of all reductions made to all Tranche A Revolving Loan
Commitments pursuant to subsections 2.4A(iii), 2.4B(ii) and 2.4.B(iii).
"MAXIMUM TRANCHE B REVOLVING LOAN COMMITMENTS" means, as of any date of
determination, (i) for Company, the Dollar Equivalent of the Tranche B Revolving
Loan Commitments available to Company as set forth in the most recent Notice of
Allocation
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delivered by Borrowers to Administrative Agent pursuant to subsection
2.1A(ii)(c), (ii) for Goss UK, the Dollar Equivalent of the Tranche B Revolving
Loan Commitments available to Goss UK as set forth in the most recent Notice of
Allocation delivered by Borrowers to Administrative Agent pursuant to subsection
2.1A(ii)(c), which Maximum Tranche B Revolving Loan Commitments for Goss UK
shall not exceed the Dollar Equivalent of $35,000,000, (iii) for Goss France,
the Dollar Equivalent of the Tranche B Revolving Loan Commitments available to
Goss France as set forth in the most recent Notice of Allocation delivered by
Borrowers to Administrative Agent pursuant to subsection 2.1A(ii)(c), which
Maximum Tranche B Revolving Loan Commitments for Goss France shall not exceed
the Dollar Equivalent of $500,000, (iv) for Goss Japan, the Dollar Equivalent of
the Tranche B Revolving Loan Commitments available to Goss Japan as set forth in
the most recent Notice of Allocation delivered by Borrowers to Administrative
Agent pursuant to subsection 2.1A(ii)(c), which Maximum Tranche B Revolving Loan
Commitments for Goss Japan shall not exceed the Dollar Equivalent of
$35,000,000, and (v) for all Borrowers, the Dollar Equivalent of $50,000,000
less the aggregate amount of all reductions made to all Tranche B Revolving Loan
Commitments pursuant to subsections 2.4A(iii), 2.4B(ii) and 2.4.B(iii).
"MINIMUM AMOUNT" means (i) in the case of Swing Line Loans, $250,000 and
integral multiples of $100,000 in excess of that amount, (ii) in the case of
Base Rate Loans and Offshore Rate Loans denominated in Dollars and having a
particular Interest Period, $1,000,000 and integral multiples of $100,000 in
excess of that amount, (iii) in the case of Offshore Rate Loans denominated in
Sterling and having a particular Interest Period, (pound)1,000,000 and integral
multiples of (pound)100,000 in excess of that amount, (iv) in the case of
Offshore Rate Loans denominated in Francs and having a particular Interest
Period, FF6,000,000 and integral multiples of FF600,000 in excess of that
amount, (v) in the case of Offshore Rate Loans denominated in Marks and having a
particular Interest Period, DM3,000,000 and integral multiples of DM300,000 in
excess of that amount, and (vi) in the case of Offshore Rate Loans denominated
in Yen and having a particular Interest Period, (Y)150,000,000 and integral
multiples of (Y)15,000,000 in excess of that amount.
"MORTGAGE" means an instrument (whether designated as a deed of trust, a
trust deed or a mortgage or by any similar title) executed and delivered by any
Borrower or any of its Subsidiaries encumbering a Fee Property or a Material
Leasehold, as such instrument may be amended, supplemented or otherwise modified
from time to time, and "MORTGAGES" means all such instruments, including the
Mortgages set forth on Schedule 5.5 and any Additional Mortgages (as defined in
subsection 6.9), collectively.
"MORTGAGED PROPERTY" means any property so identified on Schedule 5.5 or an
Additional Mortgaged Property (as defined in subsection 6.9).
"MULTIEMPLOYER PLAN" means a "multiemployer plan", as defined in Section
3(37) of ERISA, to which Company or any of its ERISA Affiliates is contributing,
or ever has contributed, or to which Company or any of its ERISA Affiliates has,
or ever has had, an obligation to contribute.
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"NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including without limitation (i)
income taxes reasonably estimated to be actually payable as a result of such
Asset Sale within two years of the date of such Asset Sale and (ii) payment of
the outstanding principal amount of, premium or penalty, if any, and interest on
any Indebtedness (other than the Loans) that is secured by a Lien on the stock
or assets in question and that is required to be repaid under the terms thereof
as a result of such Asset Sale.
"NET DEBT PROCEEDS" has the meaning assigned to that term in subsection
2.4B(iii).
"NET EQUITY PROCEEDS" has the meaning assigned to that term in subsection
2.4B(iii).
"NET INSURANCE/CONDEMNATION PROCEEDS" means any Cash payments or proceeds
received by Administrative Agent or by any Borrower or any of such Borrower's
Subsidiaries (i) under any business interruption or casualty insurance policy in
respect of a covered loss thereunder or (ii) as a result of the taking of any
assets of any Borrower or any of its respective Subsidiaries by any Person
pursuant to the power of eminent domain, condemnation or otherwise, or pursuant
to a sale of any such assets to a purchaser with such power under threat of such
a taking, in each case net of any actual and reasonable documented costs
incurred by such Borrower or any of its respective Subsidiaries in connection
with the adjustment or settlement of any claims of such Borrower or such
Subsidiary in respect thereof.
"NET PROCEEDS AMOUNT" has the meaning assigned to that term in subsection
2.4B(iii).
"NET REVERSION AMOUNT" has the meaning assigned to that term in subsection
2.4B(iii)(c).
"NET SETTLEMENT PROCEEDS" means any Cash payments or proceeds received by
any Borrower or any of such Borrower's Subsidiaries as a result of or in
connection with any settlement of any claim, action or proceeding, before any
court, arbitrator or other governmental body involving such Borrower or such
Subsidiary (including any trade action existing as of the Effective Date), net
of legal fees relating to such settlement and income taxes reasonably estimated
to be actually payable as a result of such settlement within two years of the
date of such settlement.
"NEW HOLDINGS" means Goss Holdings, Inc., a corporation organized under the
laws of the State of Delaware and successor by merger to Old Holdings.
"NEW HOLDINGS COMMON STOCK" means the voting and nonvoting common stock of
New Holdings.
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"NEW HOLDINGS SUBORDINATED NOTE INDENTURE" means the subordinated note
indenture dated as of November 19, 1999 by and between New Holdings and HSBC
Bank USA, as Trustee, pursuant to which the New Holdings Subordinated Notes are
issued, as such indenture may be amended from time to time to the extent
permitted under subsection 7.13.
"NEW HOLDINGS SUBORDINATED NOTES" means those certain 12.25% subordinated
notes due 2005 in an aggregate principal amount of $112,500,000 issued by New
Holdings to the Old Noteholders pursuant to the New Holdings Subordinated Note
Indenture, with interest payable by New Holdings only in additional New Holdings
Subordinated Notes until the interest payable as of April __, 2002, as such
notes may be amended from time to time to the extent permitted under subsection
7.13.
"NON-FRENCH LENDER" has the meaning assigned to that term in subsection
2.7B(iii).
"NON-JAPANESE LENDER" has the meaning assigned to that term in subsection
2.7B(iii).
"NON-US LENDER" has the meaning assigned to that term in subsection
2.7B(iii).
"NOTES" means one or more of the Term Notes, the Revolving Notes or the
Swing Line Notes or any combination thereof.
"NOTICE OF ALLOCATION" means a notice substantially in the form of Exhibit
XVII annexed hereto delivered by Borrowers to Administrative Agent pursuant to
subsection 2.1A(ii)(c) for the purpose of (i) allocating the Tranche B Revolving
Loan Commitments among the Domestic Tranche B Revolving Loan Commitments, the UK
Tranche B Revolving Loan Commitments, the French Tranche B Revolving Loan
Commitments and the Japanese Tranche B Revolving Loan Commitments, and (ii)
suballocating such Tranche B Revolving Loan Commitment amounts for each Borrower
between the Tranche B Revolving Loan Suballocation and Tranche B Letters of
Credit Suballocation for each Borrower.
"NOTICE OF BORROWING" means a notice substantially in the form of Exhibit I
annexed hereto delivered by a Borrower to Administrative Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in the
form of Exhibit II annexed hereto delivered by a Borrower to Administrative
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"OBLIGATIONS" means all obligations of every nature of each Loan Party from
time to time owed to Administrative Agent or any Lender under the Loan
Documents, whether for principal, interest (including interest accruing on or
after the occurrence of any of the events
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described in subsection 8.6 or 8.7 whether or not allowed), reimbursement of
amounts drawn under Letters of Credit, fees, expenses, indemnification or
otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents (or comparable officer
in the case of Goss UK, Goss France or Goss Japan) and by its chief financial
officer or its treasurer; provided that any Officers' Certificate required to be
delivered by any Loan Party on the Effective Date may be executed on behalf of
such Loan Party by any one of the foregoing officers; provided further that
every Officers' Certificate with respect to the compliance with a condition
precedent to the making of any Loans hereunder shall include (i) a statement
that the officer or officers making or giving such Officers' Certificate have
read such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed opinion as
to whether or not such condition has been complied with, and (iii) a statement
as to whether, in the opinion of the signers, such condition has been complied
with.
"OFFSHORE CURRENCY" means Sterling, Francs, Marks, or Yen.
"OFFSHORE CURRENCY LOANS" means any Loans denominated in an Offshore
Currency.
"OFFSHORE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Adjusted Offshore Rate as provided in subsection 2.2A.
"OLD HOLDINGS" means GGS Holdings, Inc., a Delaware corporation.
"OLD NOTEHOLDERS" has the meaning assigned to such term in the Recitals to
this Agreement.
"OLD NOTES" has the meaning assigned to such term in the Recitals to this
Agreement.
"OPERATING LEASE" means, as applied to any Person, any lease (including,
without limitation, leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation (or any successor
thereto), or any similar or comparable governmental agency or authority in a
jurisdiction outside of the United States applicable to Company or any of its
Subsidiaries.
"PENSION PLAN" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Section 412 of the Internal Revenue Code or Section
302 of ERISA.
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"PERMITTED DISCRETION" means Administrative Agent's good faith judgment
based upon any factor which it believes in good faith: (i) will or could
adversely affect the value of any Collateral, the enforceability or priority of
Administrative Agent's Liens thereon or the amount which Administrative Agent
and Lenders would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of such Collateral; (ii)
suggests that any collateral report or financial information delivered to
Administrative Agent by any Person on behalf of any Loan Party is incomplete,
inaccurate or misleading in any material respect; (iii) materially increases the
likelihood of a bankruptcy, reorganization or other insolvency proceeding
involving any Borrower or any of its Subsidiaries or any of the Collateral; or
(iv) creates or reasonably could be expected to create a Potential Event of
Default or Event of Default. In exercising such judgment, Administrative Agent
may consider such factors already included in or tested by the definition of
Eligible Accounts Receivable, Eligible Inventory, Eligible Equipment and
Eligible Real Property, as well as any of the following: (i) the financial and
business climate of any Borrower's industry and general macroeconomic
conditions, (ii) changes in collection history and dilution with respect to any
such Borrower's Accounts, (iii) changes in demand for, and pricing of, any such
Borrower's Inventory, (iv) changes in any concentration of risk with respect to
such Accounts, Inventory, Equipment or Real Property Assets, and (v) any other
factors that change the credit risk of lending to any Borrower on the security
of such Accounts, Inventory, Equipment or Real Property Assets, including
without limitation any foreign exchange risks or uncertainties. The burden of
establishing lack of good faith shall be on Borrowers.
"PERMITTED ENCUMBRANCES" means the following types of Liens (other than any
such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6.3 (other
than any Lien relating to or imposed in connection with any Environmental
Claim);
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics and materialmen and other Liens imposed by law incurred in the
ordinary course of business for sums not yet delinquent or being contested
in good faith, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money); provided, however, that "Permitted
Encumbrances" shall not include Liens for the benefit of any customer of
Company or any of its Subsidiaries or for
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any advances, deposits, progress payments or other similar payments made to
Company or any of its Subsidiaries by a customer;
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8 (other than any Lien relating to or imposed in
connection with any Environmental Claim);
(v) leases or subleases granted to others not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, covenants, declarations,
encroachments, minor defects or irregularities in title, and other similar
charges or encumbrances not interfering in any material respect with the
ordinary conduct of the business of Company or any of its Subsidiaries;
(vii) any (a) restriction or encumbrance that the interest or title of
a lessor or sublessor may be subject to, or (b) subordination of the
interest of the lessee or sublessee under a lease to any restriction or
encumbrance referred to in the preceding clause (a);
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(x) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary; and
(xi) the title exceptions approved by Administrative Agent and shown
on Schedule B of the Mortgages set forth on Schedule 5.5.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"PHASE I REPORT" has the meaning assigned to that term in subsection 6.7B.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after notice
or passage of time or both, would constitute an Event of Default.
"PRIME RATE" means the rate that BTCo announces from time to time as its
prime lending rate as in effect from time to time. The Prime Rate is a reference
rate and does not
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necessarily represent the lowest or best rate actually charged to any customer.
Administrative Agent or any other Lender may make commercial loans or other
loans at rates of interest at, above or below the Prime Rate.
"PRO RATA SHARE" means, on any date of determination,
(i) with respect to all payments, computations and other matters
relating to a Type of Term Loan Commitment or a Type of Term Loan of any
Lender, the percentage obtained by dividing (x) the Term Loan Exposure of
such Type of that Lender by (y) the aggregate Term Loan Exposure of such
Type of all Lenders;
(ii) with respect to all payments, computations and other matters
relating to a Type of Revolving Loan Commitment or a Type of Revolving
Loans of any Lender or any Letters of Credit of such Type or participations
in such Revolving Loans or Letters of Credit purchased by any Lender, the
percentage obtained by dividing (x) the Revolving Loan Exposure of such
Type of that Lender by (y) the aggregate Revolving Loan Exposure of such
Type of all Lenders; and
(iii) for all other purposes with respect to each Lender, the
percentage obtained by dividing (x) the Term Loan Exposure of all Types of
that Lender plus the Revolving Loan Exposure of all Types of that Lender by
(y) the sum of the aggregate Term Loan Exposure of all Types of all Lenders
plus the aggregate Revolving Loan Exposure of all Types of all Lenders;
in any such case as the applicable percentage may be adjusted by assignments
permitted pursuant to subsection 10.1. The initial Pro Rata Share of each Lender
is set forth opposite the name of that Lender in Schedule 2.1 annexed hereto.
"PUBLIC OFFERING" means any bona fide primary underwritten public offering
of New Holdings Common Stock or Company Common Stock pursuant to an effective
registration statement under the Securities Act (other than pursuant to a
registration statement on Form S-8 or otherwise relating to equity securities
issuable exclusively under any employee benefit plan of New Holdings).
"REAL PROPERTY ASSETS" means all real property from time to time owned in
fee by any Loan Party and all rights, title and interest in and to any and all
leases of real property as to which any Loan Party has a leasehold or license
interest, including without limitation any such fee or leasehold or license
interests acquired by any Loan Party after the date hereof.
"REFINANCINGS" has the meaning assigned to such term in the Recitals to
this Agreement.
"REFUNDED SWING LINE LOANS" has the meaning assigned to that term in
subsection 2.1A(iii).
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"REGION" has the meaning assigned to that term in subsection 6.1(i).
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time, and any similar or comparable
laws in the UK, France or Japan.
"REIMBURSEMENT DATE" has the meaning assigned to that term in subsection
3.3B.
"RELEASE" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the environment (including, without
limitation, the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), or into or out of any
Facility, including the movement of any Hazardous Material through the air,
soil, surface water or groundwater.
"RELEVANT DATE" has the meaning assigned to that term in subsection
2.7B(iii).
"REORGANIZATION PLAN" means that certain Second Amended Plan of
Reorganization of Goss Graphic Systems, Inc., GGS Holdings, Inc. and Goss
Realty, L.L.C. under Chapter 11 of the Bankruptcy Code dated September 7, 1999.
"REPLACED LENDER" has the meaning assigned to that term in subsection 2.8B.
"REPLACEMENT LENDER" has the meaning assigned to that term in subsection
2.8B.
"REQUEST FOR ISSUANCE OF LETTER OF CREDIT" means a notice substantially in
the form of Exhibit III annexed hereto delivered by a Borrower to Administrative
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"REQUISITE CLASS LENDERS" means, at any time of determination, (i) for the
Class of Lenders having Domestic Tranche A Revolving Loan Exposure, Lenders
having or holding more than a majority of the sum of the aggregate Domestic
Tranche A Revolving Loan Exposure of all Lenders, and (ii) for the Class of
Lenders having Term Loan Exposure and Tranche B Revolving Loan Exposure, Lenders
having or holding more than a majority of the aggregate Term Loan Exposure of
all Lenders plus the aggregate Tranche B Revolving Loan Exposure of all Lenders.
"REQUISITE LENDERS" means Lenders having or holding a majority of the sum
of the aggregate Term Loan Exposure of all Types of all Lenders plus the
aggregate Revolving Loan Exposure of all Types of all Lenders.
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"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Company
now or hereafter outstanding, except a dividend payable solely in shares of that
class of stock to the holders of that class, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Company now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Company now or hereafter outstanding, and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Subordinated Indebtedness.
"REVOLVING LOAN COMMITMENTS" means the Domestic Tranche A Revolving Loan
Commitments, the Domestic Tranche B Revolving Loan Commitments, the UK Tranche B
Revolving Loan Commitments, the French Tranche B Revolving Loan Commitments or
the Japanese Tranche B Revolving Loan Commitments or any combination thereof.
"REVOLVING LOAN EXPOSURE" means the Domestic Tranche A Revolving Loan
Exposure, the Domestic Tranche B Revolving Loan Exposure, the UK Tranche B
Revolving Loan Exposure, the French Tranche B Revolving Loan Exposure or the
Japanese Tranche B Revolving Loan Exposure or any combination thereof.
"REVOLVING LOANS" means the Domestic Tranche A Revolving Loans, the
Domestic Tranche B Revolving Loans, the UK Tranche B Revolving Loans, the French
Tranche B Revolving Loans or the Japanese Tranche B Revolving Loans or any
combination thereof.
"REVOLVING NOTES" means the Tranche A Revolving Notes and the Tranche B
Revolving Notes.
"SAME DAY FUNDS" means (i) with respect to disbursements and payments in
Dollars, immediately available funds, and (ii) with respect to disbursements and
payments in an Offshore Currency, same day or other funds as may be determined
by Administrative Agent to be customary in the place of disbursement or payment
for the settlement of international banking transactions in the relevant
Offshore Currency.
"SECOND PRIORITY" means, with respect to any Lien purported to be created
in any Collateral pursuant to any Collateral Document, that (i) such Lien has
priority over any other Lien (other than First Priority Liens permitted under
this Agreement and the other Loan Documents and those Permitted Encumbrances
that as a matter of statutory law have priority over any other Lien irrespective
of the prior perfection or filing of such other Lien) on such Collateral and
(ii) such Lien is the only Lien (other than First Priority Liens permitted under
this Agreement and the other Loan Documents and Permitted Encumbrances that as a
matter of statutory law have priority over any other Lien irrespective of the
prior perfection or filing of such other Lien) to which such Collateral is
subject.
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"SECURITIES" means any stock, shares, partnership interests, equity
interests, voting trust certificates, certificates of interest or participation
in any profit-sharing agreement or arrangement, whether certificated or
uncertificated, options, warrants, bonds, debentures, notes, or other evidences
of indebtedness, secured or unsecured, convertible, subordinated or otherwise,
or in general any instruments commonly known as "securities" or any certificates
of interest, shares or participations in temporary or interim certificates for
the purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time, and any successor statute, and any comparable or similar laws in a
jurisdiction outside of the United States applicable to Company or any of its
Subsidiaries.
"SECURITY AGREEMENT" means each of (i) the Security Agreement executed and
delivered by New Holdings, Company and, if applicable, Domestic Subsidiaries of
Company, and (ii) the Second Amended and Restated Security Agreement executed
and delivered by New Holdings, Company and, if applicable, Domestic Subsidiaries
of Company, in each case on the Effective Date, substantially in the form of
Exhibit XV annexed hereto, or any other security or pledge agreement, document
or instrument with a similar or comparable effect executed by Company and/or any
Foreign Subsidiary that is a Borrower, in form and substance satisfactory to
Administrative Agent, as such Security Agreement may be amended or supplemented
or otherwise modified from time to time, and "SECURITY AGREEMENTS" means all
such Security Agreements, collectively.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or similar
instrument issued for the purpose of supporting (i) Indebtedness of Company or
any of its Subsidiaries in respect of industrial revenue or development bonds or
financings; (ii) workers' compensation liabilities of Company or any of its
Subsidiaries; (iii) the obligations of third party insurers of Company or any of
its Subsidiaries arising by virtue of the laws of any jurisdiction requiring
third party insurers; (iv) obligations with respect to Capital Leases or
Operating Leases
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of Company or any of its Subsidiaries; (v) performance, payment, deposit or
surety obligations of Company or any of its Subsidiaries, in any case if
required by law or governmental rule or regulation or in accordance with custom
and practice in the industry; and (vi) Currency Agreements that are Hedge
Agreements with respect to customer contracts for the sale of finished goods
entered into in the ordinary course of business and consistent with past
practices; provided that Standby Letters of Credit may not be issued for the
purpose of supporting (a) trade payables or (b) any Indebtedness constituting
"antecedent debt" (as that term is used in the Bankruptcy Code).
"STERLING" and the sign "(POUND)" mean the lawful money of the UK.
"STONINGTON" means Stonington Partners, Inc., a corporation organized under
the laws of Delaware.
"STONINGTON EQUITY CONTRIBUTION" shall have the meaning assigned to such
term in the Recitals to this Agreement.
"STONINGTON EQUITY SUB" means Stonington Financing II, LLC, a Delaware
limited liability company and an Affiliate of Stonington."
"SUBORDINATED INDEBTEDNESS" means (i) the Indebtedness of New Holdings
evidenced by the New Holdings Subordinated Notes, and (ii) any other
Indebtedness of New Holdings or the Company (other than Indebtedness to any of
its Subsidiaries) that is subordinated in right of payment to the Obligations
pursuant to documentation containing maturities, amortization schedules,
covenants, defaults, remedies, subordination provisions and other material terms
in form and substance satisfactory to Administrative Agent and Requisite
Lenders.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"SUBSIDIARY GUARANTOR" means any Subsidiary that is party to a Subsidiary
Guaranty.
"SUBSIDIARY GUARANTY" means each of (i) the Subsidiary Guaranty, if any,
executed and delivered by Domestic Subsidiaries on the Effective Date, (ii) the
Second Amended and Restated Subsidiary Guaranty, if any, executed and delivered
by Domestic Subsidiaries on the Effective Date, and (iii) any Subsidiary
Guaranty and any Second Amended and Restated Subsidiary Guaranty to be executed
and delivered by Domestic Subsidiaries from time to time
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thereafter in accordance with subsection 6.8A, substantially in the form of
Exhibit XVI annexed hereto, or any other guaranty, document or instrument with a
similar or comparable effect executed by any Foreign Subsidiary other than a
Borrower, in form and substance satisfactory to Administrative Agent, as such
Subsidiary Guaranty may be amended, supplemented or otherwise modified from time
to time, and "SUBSIDIARY GUARANTIES" means all such Subsidiary Guaranties
collectively.
"SWING LINE LENDER" means BTCo, or any Person serving as successor
Administrative Agent hereunder, in its capacity as Swing Line Lender hereunder.
"SWING LINE LOAN COMMITMENT" means the Tranche A Swing Line Loan Commitment
or the Tranche B Swing Line Loan Commitment or both.
"SWING LINE LOANS" means the Tranche A Swing Line Loans or the Tranche B
Swing Line Loans or both.
"SWING LINE NOTES" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E on the Effective Date and (ii) any promissory notes
issued by Company to any successor Administrative Agent and Swing Line Lender
pursuant to the last sentence of subsection 10.1B(i), in each case substantially
in the form of Exhibit VII annexed hereto, as it may be amended, supplemented or
otherwise modified from time to time.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person's principal office (and/or, in the case of a Lender, its lending office)
is located or in which that Person is deemed to be doing business on all or part
of the net income, profits or gains of that Person (whether worldwide, or only
insofar as such income, profits or gains are considered to arise in or to relate
to a particular jurisdiction, or otherwise).
"TAX CREDIT" shall have the meaning assigned to that term in subsection
2.7.B.
"TERM LOAN COMMITMENTS" means the Domestic Term Loan Commitments or the UK
Term Loan Commitments or any combination thereof.
"TERM LOAN EXPOSURE" means the Domestic Term Loan Exposure or the UK Term
Loan Exposure or any combination thereof.
"TERM LOANS" means the Domestic Term Loans or the UK Term Loans or any
combination thereof.
"TERM NOTES" means (i) the promissory notes of Borrowers issued pursuant to
subsection 2.1E on the Effective Date and (ii) any promissory notes issued by
Borrowers pursuant to the last sentence of subsection 10.1B(i) in connection
with assignments of Term
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Loan Commitments and Term Loans of any Lender, in each case substantially in the
form of Exhibit IV annexed hereto, as they may be amended, supplemented or
otherwise modified from time to time.
"TITLE COMPANY" means First American Title Insurance Company.
"TOTAL OUTSTANDING TERM LOANS" means, as of any date of determination, the
Dollar Equivalent of the total aggregate principal amount of Term Loans then
outstanding.
"TOTAL UTILIZATION OF TRANCHE A REVOLVING LOAN COMMITMENTS" means, as at
any date of determination, for Company the Dollar Equivalent of the sum of (i)
the aggregate principal amount of all outstanding Tranche A Revolving Loans made
to Company (other than Tranche A Revolving Loans made for the purpose of
repaying any Refunded Swing Line Loans, or reimbursing the applicable Issuing
Lender for any amount drawn under any Tranche A Letter of Credit but not yet so
applied) plus (ii) the Tranche A Letter of Credit Usage with respect to all
Tranche A Letters of Credit issued for the account of Company plus (iii) the
aggregate principal amount of all outstanding Tranche A Swing Line Loans made to
Company.
"TOTAL UTILIZATION OF TRANCHE B REVOLVING LOAN COMMITMENTS" means, as at
any date of determination, for any Borrower the Dollar Equivalent of the sum of
(i) the aggregate principal amount of all outstanding Tranche B Revolving Loans
made to such Borrower (other than Tranche B Revolving Loans made for the purpose
of repaying any Refunded Swing Line Loans in the case of Company, or reimbursing
the applicable Issuing Lender for any amount drawn under any Tranche B Letter of
Credit but not yet so applied in the case of all Borrowers) plus (ii) the
Tranche B Letter of Credit Usage with respect to all Tranche B Letters of Credit
issued for the account of such Borrower plus (iii) in the case of Company, the
aggregate principal amount of all outstanding Tranche B Swing Line Loans made to
Company.
"TRANCHE A BORROWING BASE" means, as at any date of determination, an
aggregate amount equal to:
(i) eighty-five percent (85%) of Eligible Accounts Receivable of
Company, plus
(ii) sixty-five percent (65%) of Eligible Inventory of Company, plus
(iii) fifty percent (50%) of Eligible Equipment of Company, plus
(iv) fifty percent (50%) of Eligible Real Property of Company, minus
(v) the aggregate amount of reserves, if any, established by
Administrative Agent in the exercise of its Permitted Discretion against
Eligible Accounts Receivable, Eligible Inventory, Eligible Equipment and
Eligible Real Property of Company;
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provided that Administrative Agent, in the exercise of its Permitted Discretion,
may (a) increase or decrease reserves against Eligible Accounts Receivable,
Eligible Inventory, Eligible Equipment and Eligible Real Property of Company and
(b) reduce the advance rates provided in this definition, or restore such
advance rates to any level equal to or below the advance rates in effect as of
the Effective Date.
"TRANCHE A LETTER OF CREDIT" or "TRANCHE A LETTERS OF CREDIT" means
Commercial Letters of Credit and Standby Letters of Credit issued or to be
issued by Issuing Lenders for the account of Company with respect to Tranche A
Revolving Loan Commitments pursuant to subsection 3.1.
"TRANCHE A LETTER OF CREDIT USAGE" means, as at any date of determination,
for Company the Dollar Equivalent of the sum of (i) the maximum aggregate amount
which is or at any time thereafter may become available for drawing under all
Tranche A Letters of Credit then outstanding issued for the account of Company
plus (ii) the aggregate amount of all drawings under such Tranche A Letters of
Credit honored by Issuing Lenders not theretofore reimbursed.
"TRANCHE A REVOLVING NOTE" means (i) the promissory note of Borrowers
issued pursuant to subsection 2.1E on the Effective Date and (ii) any promissory
note or notes issued by Borrowers pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of Domestic Tranche A Revolving Loan
Commitments and Domestic Tranche A Revolving Loans of any Lender, in each case
substantially in the form of Exhibit V annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time, and "TRANCHE A REVOLVING
NOTES" means all such Tranche A Revolving Notes, collectively.
"TRANCHE A SWING LINE LOAN COMMITMENT" means the commitment of Swing Line
Lender to make Tranche A Swing Line Loans to Company pursuant to subsection
2.1A(iii).
"TRANCHE A SWING LINE LOANS" means the Loans made by Swing Line Lender to
Company with respect to the Domestic Tranche A Revolving Loan Commitments
pursuant to subsection 2.1A(iii).
"TRANCHE B BORROWING BASE" means, as at any date of determination, an
aggregate amount equal to:
(i) seventy-five percent (75%) of the aggregate stated balance sheet
amount of all of the Accounts of Company and its Subsidiaries determined on
a consolidated basis in conformity with GAAP, plus
(ii) ten percent (10%) of the aggregate stated balance sheet amount of
all of the Inventory of Company and its Subsidiaries determined on a
consolidated basis in conformity with GAAP, minus
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(iii) the amount of (1) the aggregate outstanding Domestic Tranche A
Revolving Loans plus (2) the aggregate Tranche A Letter of Credit Usage
plus (3) the aggregate outstanding amount of all Tranche A Swing Line
Loans.
"TRANCHE B LETTER OF CREDIT" or "TRANCHE B LETTERS OF CREDIT" means
Commercial Letters of Credit and Standby Letters of Credit issued or to be
issued by Issuing Lenders for the account of a Borrower with respect to Tranche
B Revolving Loan Commitments pursuant to subsection 3.1 and the Existing Letters
of Credit.
"TRANCHE B LETTERS OF CREDIT SUBALLOCATION" means, as of any date of
determination, for any Borrower, the Dollar Equivalent of the amount of Tranche
B Revolving Loan Commitments allocated to such Borrower to be made available for
issuing Tranche B Letters of Credit for the account of such Borrower as set
forth in the most recent Notice of Allocation delivered to Administrative Agent
pursuant to subsection 2.1A(ii)(c); provided that the Tranche B Letters of
Credit Suballocation shall be automatically adjusted in accordance with the
second proviso contained in subsection 2.1A(ii)(c).
"TRANCHE B LETTER OF CREDIT USAGE" means, as at any date of determination,
for any Borrower the Dollar Equivalent of the sum of (i) the maximum aggregate
amount which is or at any time thereafter may become available for drawing under
all Tranche B Letters of Credit then outstanding issued for the account of such
Borrower plus (ii) the aggregate amount of all drawings under such Tranche B
Letters of Credit honored by Issuing Lenders not theretofore reimbursed.
"TRANCHE B REVOLVING LOAN COMMITMENTS" means the Domestic Tranche B
Revolving Loan Commitment, the UK Tranche B Revolving Loan Commitments, the
French Tranche B Revolving Loan Commitments or the Japanese Tranche B Revolving
Loan Commitments or any combination thereof.
"TRANCHE B REVOLVING LOAN EXPOSURE" means the Domestic Tranche B Revolving
Loan Exposure, the UK Tranche B Revolving Loan Exposure, the French Tranche B
Revolving Loan Exposure or the Japanese Tranche B Revolving Loan Exposure or any
combination thereof.
"TRANCHE B REVOLVING LOAN SUBALLOCATION" means, as of any date of
determination, for any Borrower, the Dollar Equivalent of the amount of Tranche
B Revolving Loan Commitments allocated to such Borrower to be made available for
making Tranche B Revolving Loans to such Borrower as set forth in the most
recent Notice of Allocation delivered to Administrative Agent pursuant to
subsection 2.1A(ii)(c); provided that the Tranche B Revolving Loan Suballocation
shall be automatically adjusted in accordance with the second proviso contained
in subsection 2.1A(ii)(c).
"TRANCHE B REVOLVING LOANS" means the Domestic Tranche B Revolving Loans,
the UK Tranche B Revolving Loans, the French Tranche B Revolving Loans or the
Japanese Tranche B Revolving Loans or any combination thereof.
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"TRANCHE B REVOLVING NOTE" means (i) the promissory note of Borrowers
issued pursuant to subsection 2.1E on the Effective Date and (ii) any promissory
note or notes issued by Borrowers pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of Domestic Tranche B Revolving Loan
Commitments and Domestic Tranche A Revolving Loans of any Lender, in each case
substantially in the form of Exhibit VI annexed hereto, as they may be amended,
supplemented or otherwise modified from time to time, and "TRANCHE B REVOLVING
NOTES" means all such Tranche B Revolving Notes, collectively.
"TRANCHE B SWING LINE LOAN COMMITMENT" means the commitment of Swing Line
Lender to make Tranche B Swing Line Loans to Company pursuant to subsection
2.1A(iii).
"TRANCHE B SWING LINE LOANS" means the Loans made by Swing Line Lender to
Company with respect to the Domestic Tranche B Revolving Loan Commitments
pursuant to subsection 2.1A(iii).
"TRIGGERING EVENT" means (i) the occurrence and continuation of any Event
of Default under subsection 8.1, 8.6 or 8.7 or (ii) the acceleration of the
maturity of the Obligations as a result of any Event of Default, which
acceleration has not been rescinded in accordance with the provisions of Section
8.
"TYPE" means:
(i) with respect to a Commitment, a Domestic Term Loan Commitment, a
UK Term Loan Commitment, a Domestic Tranche A Revolving Loan Commitment, a
Domestic Tranche B Revolving Loan Commitment, a UK Tranche B Revolving Loan
Commitment, a French Tranche B Revolving Loan Commitment, a Japanese
Tranche B Revolving Loan Commitment, a Tranche A Swing Line Loan Commitment
or a Tranche B Swing Line Loan Commitment;
(ii) with respect to a Term Loan Commitment, a Domestic Term Loan
Commitment or a UK Term Loan Commitment;
(iii) with respect to a Revolving Loan Commitment, a Domestic Tranche
A Revolving Loan Commitment, a Domestic Tranche B Revolving Loan
Commitment, a UK Tranche B Revolving Loan Commitment, a French Tranche B
Revolving Loan Commitment or a Japanese Tranche B Revolving Loan
Commitment;
(iv) with respect to a Swing Line Commitment, a Tranche A Swing Line
Commitment or a Tranche B Swing Line Commitment;
(v) with respect to a Loan, a Domestic Term Loan, UK Term Loan, a
Domestic Tranche A Revolving Loan, a Domestic Tranche B Revolving Loan, a
UK Tranche B Revolving Loan, a French Tranche B Revolving Loan or a
Japanese Tranche B Revolving Loan;
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(vi) with respect to a Term Loan, a Domestic Term Loan or a UK Term
Loan;
(vii) with respect to a Revolving Loan, a Domestic Tranche A Revolving
Loan, a Domestic Tranche B Revolving Loan, a French Tranche B Revolving
Loan and a Japanese Tranche B Revolving Loan;
(viii) with respect to a Swing Line Loan, a Tranche A Swing Line Loan
or a Tranche B Swing Line Loan; and
(ix) with respect to a Letter of Credit, a Tranche A Letter of Credit
or a Tranche B Letter of Credit.
"UK" means the United Kingdom of Great Britain and Northern Ireland.
"UK DOUBLE TAX TREATY LENDER" means a Person resident in a jurisdiction
with a double tax treaty with the UK under which payments of interest by Goss UK
to such Person may be made without withholding or deduction for or on account of
Tax.
"UK INDEMNIFYING LENDER" means each financial institution that is
designated as a UK Indemnifying Lender on Schedule 2.1 annexed hereto, and each
financial institution which is designated, with the approval of the
Administrative Agent, as a UK Indemnifying Lender in an Assignment Agreement.
"UK LENDER" and "UK LENDERS" means the Lenders that have UK Term Loan
Commitments or UK Tranche B Revolving Loan Commitments or that have UK Term
Loans or UK Tranche B Revolving Loans outstanding, together with their
successors and permitted assigns pursuant to subsection 10.1.
"UK QUALIFYING LENDER" means a Person entitled to receive payments of
interest in respect of each UK Revolving Loan under this Agreement free of
withholding or deduction for or on account of UK income tax under Section
349(3)(a) of the Income and Corporation Taxes Act 1988 of the UK.
"UK TERM LOAN COMMITMENT" means the commitment of a Lender to make Term
Loans to Goss UK pursuant to subsection 2.1A(i)(b), and "UK TERM LOAN
COMMITMENTS" means such commitments of all such Lenders in the aggregate.
"UK TERM LOAN EXPOSURE" means, with respect to any UK Lender as of any date
of determination, (i) prior to the funding of the UK Term Loans, that Lender's
UK Term Loan Commitment and (ii) after the funding of the UK Term Loans, the
outstanding principal amount of the UK Term Loans of that Lender.
"UK TERM LOANS" means the Loans made by Lenders to Goss UK pursuant to
subsection 2.1A(i)(b).
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"UK TRANCHE B REVOLVING LOAN COMMITMENT" means the commitment of a UK
Lender (i) to make UK Tranche B Revolving Loans to Goss UK pursuant to
subsection 2.1A(ii)(b) and (ii) to issue and/or purchase participations in
Tranche B Letters of Credit for the account of Goss UK pursuant Section 3, and
"UK TRANCHE B REVOLVING LOAN COMMITMENTS" means such commitments of all such
Lenders in the aggregate.
"UK TRANCHE B REVOLVING LOAN EXPOSURE" means, with respect to any UK Lender
as of any date of determination (i) prior to the termination of the UK Tranche B
Revolving Loan Commitments, that Lender's UK Tranche B Revolving Loan Commitment
and (ii) after the termination of the UK Tranche B Revolving Loan Commitments,
the sum of (a) the aggregate outstanding principal amount of the UK Tranche B
Revolving Loans of that Lender plus (b) in the event that Lender is an Issuing
Lender, the aggregate Tranche B Letter of Credit Usage in respect of all Tranche
B Letters of Credit issued by that Lender for the benefit of Goss UK (in each
case net of any participations purchased by other Lenders in such Tranche B
Letters of Credit or any unreimbursed drawings thereunder) plus (c) the
aggregate amount of all participations purchased by that Lender in any
outstanding Tranche B Letters of Credit for the benefit of Goss UK or any
unreimbursed drawings under any such Tranche B Letters of Credit.
"UK TRANCHE B REVOLVING LOANS" means the Loans made by the Lenders to Goss
UK pursuant to subsection 2.1A(ii)(b).
"YEAR 2000 PROBLEM" means any significant risk that computer hardware,
software or equipment containing embedded microchips essential to the business
or operations of Company or any of its Subsidiaries will not, in the case of
dates or time periods occurring after December 31, 1999, function at least as
effectively and reliably as in the case of times or time periods occurring
before January 1, 2000, including the making of accurate leap year calculations.
"YEN" and the sign "(Y)" mean the lawful money of Japan.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT.
Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Company to Lenders pursuant to clauses (i), (ii), (iii) and (xiii)
of subsection 6.1 shall be prepared in accordance with GAAP (to the extent GAAP
is applicable thereto) as in effect at the time of such preparation (and
delivered together with the reconciliation statements provided for in subsection
6.1(v)). Calculations in connection with the definitions, covenants and other
provisions of this Agreement shall utilize accounting principles and policies in
conformity with those used to prepare the financial statements referred to in
subsection 5.3.
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1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. An Event of Default shall "continue" or be "continuing" until such
Event of Default has been waived in accordance with subsection 10.6 hereof.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
A. COMMITMENTS.
(i) Term Loans. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Borrowers set forth
herein, Lenders hereby severally agree (or are deemed under the Reorganization
Plan to have agreed) to make the Term Loans described in subsections 2.1A(i)(a)
and 2.1A(i)(b):
(a) Domestic Term Loans. Each Domestic Tranche B Lender severally
agrees to lend to Company on the Effective Date an amount in Dollars not
exceeding its Pro Rata Share of the aggregate amount of the Domestic Term
Loan Commitments to be used for the purposes identified in subsection 2.5A.
The amount of each such Lender's Domestic Term Loan Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the aggregate amount
of the Domestic Term Loan Commitments is $131,243,580; provided that the
Domestic Term Loan Commitments of Lenders shall be adjusted to give effect
to any assignments of the Domestic Term Loan Commitments pursuant to
subsection 10.1B. Each Lender's Domestic Term Loan Commitment shall expire
immediately and without further action on November 19, 1999 if the Domestic
Term Loans are not made on or before that date. Company may make only one
borrowing under the Domestic Term Loan Commitments. Amounts borrowed under
this subsection 2.1A(i)(a) and subsequently repaid or prepaid may not be
reborrowed.
(b) UK Term Loans. Each UK Lender severally agrees to lend to Goss UK
on the Effective Date an amount in Sterling not exceeding its Pro Rata
Share of the aggregate amount of the UK Term Loan Commitments to be used
for the purposes identified in subsection 2.5A. The amount of each such
Lender's UK Term Loan Commitment is set forth opposite its name on Schedule
2.1 annexed hereto and the aggregate amount of the UK Term Loan Commitments
is $18,756,420; provided that the UK Term Loan Commitments of Lenders shall
be adjusted to give effect to any assignments of the UK Term Loan
Commitments pursuant to subsection 10.1B. Each Lender's UK Term Loan
Commitment shall expire immediately and without further action on November
19, 1999 if the UK Term Loans are not made on or before that date.
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Goss UK may make only one borrowing under the UK Term Loan Commitments.
Amounts borrowed under this subsection 2.1A(i)(b) and subsequently repaid
or prepaid may not be reborrowed.
(ii) Revolving Loans. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Borrowers set forth
herein, Lenders hereby severally agree (or are deemed under the Reorganization
Plan to have agreed) to make the Revolving Loans described in subsections
2.1A(ii)(a) and 2.1A(ii)(b):
(a) Tranche A Revolving Loan Commitments and Tranche A Revolving
Loans. Each Domestic Tranche A Lender severally agrees, subject to the
limitations set forth in subsection 2.1A(ii)(c) and 2.1A(ii)(d), to lend to
Company from time to time during the period from the Effective Date to but
excluding the Commitment Termination Date an aggregate amount not exceeding
its Pro Rata Share of the aggregate amount of the applicable Domestic
Tranche A Revolving Loan Commitments as in effect from time to time to be
used for the purposes identified in subsection 2.5A; provided, however,
that Domestic Tranche A Lenders may not make, and Company may not borrow,
Domestic Tranche A Revolving Loans (x) on the Effective Date, or (y) at any
other time so long as an amount equal to or greater than the applicable
Minimum Amount with respect to Tranche B Revolving Loan Commitments remains
outstanding at such time. The original amount of each Lender's applicable
Domestic Tranche A Revolving Loan Commitment is set forth opposite its name
on Schedule 2.1 annexed hereto and the aggregate original amount of all
Domestic Tranche A Revolving Loan Commitments is $50,000,000; provided that
the applicable Domestic Tranche A Revolving Loan Commitments of a Lender
shall be adjusted to give effect to any assignments of the Tranche A
Revolving Loan Commitments of such Lender pursuant to subsection 10.1B;
provided further that the amount of the Domestic Tranche A Revolving Loan
Commitments shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsections 2.4A(iii), 2.4B(ii) and
2.4B(iii); and provided further that Domestic Tranche A Revolving Loans may
be made in Dollars only. Each Lender's applicable Domestic Tranche A
Revolving Loan Commitment shall expire on the Commitment Termination Date
and all Domestic Tranche A Revolving Loans and all other amounts owed
hereunder with respect to the Domestic Tranche A Revolving Loans and the
Domestic Tranche A Revolving Loan Commitments shall be paid in full no
later than that date; provided that each Lender's applicable Domestic
Tranche A Revolving Loan Commitment shall expire immediately and without
further action on November 19, 1999 if the Term Loans are not made on or
before that date. Subject to the terms and conditions of this Agreement,
amounts borrowed under this subsection 2.1A(ii)(a) may be repaid and
reborrowed to but excluding the Commitment Termination Date.
(b) Tranche B Revolving Loan Commitments and Tranche B Revolving
Loans. Each Domestic Tranche B Lender, UK Lender, French Lender and
Japanese Lender severally agrees, subject to the limitations set forth in
subsection
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2.1A(ii)(c) and 2.1A(ii)(d), to lend to Company, Goss UK, Goss France and
Goss Japan, respectively, from time to time during the period from the
Effective Date to but excluding the Commitment Termination Date an
aggregate amount in the Applicable Currency, when valued in Dollar
Equivalents, not exceeding its Pro Rata Share of the aggregate amount of
the applicable Tranche B Revolving Loan Commitments as in effect from time
to time to be used for the purposes identified in subsection 2.5A. The
original amount of each Lender's applicable Tranche B Revolving Loan
Commitment is set forth opposite its name on Schedule 2.1 annexed hereto
and the Dollar Equivalent of the aggregate original amount of all Tranche B
Revolving Loan Commitments is $50,000,000, and the Dollar Equivalent of the
aggregate original amount of the Tranche B Revolving Loan Commitments,
Tranche B Revolving Loan Suballocations and Tranche B Letters of Credit
Suballocations allocated to each Borrower are set forth on Schedule 2.1;
provided that the Tranche B Revolving Loan Commitments, the Tranche B
Revolving Loan Suballocations and the Tranche B Letters of Credit
Suballocations shall be adjusted to give effect to any Notice of Allocation
pursuant to subsection 2.1A(ii)(c); provided further that the applicable
Tranche B Revolving Loan Commitments of a Lender shall be adjusted to give
effect to any assignments of the Tranche B Revolving Loan Commitments of
such Lender pursuant to subsection 10.1B; provided further that the amount
of the Tranche B Revolving Loan Commitments shall be reduced from time to
time by the amount of any reductions thereto made pursuant to subsections
2.4B(ii) and 2.4B(iii); and provided further that (w) Domestic Tranche B
Revolving Loans may be made only in Dollars or any Offshore Currency, (x)
UK Tranche B Revolving Loans may be made only in Sterling, Marks or
Dollars, (y) French Tranche B Revolving Loans may be made only in Francs or
Dollars, and (z) Japanese Tranche B Revolving Loans may be made only in Yen
or Dollars. Each Lender's applicable Tranche B Revolving Loan Commitment
shall expire on the Commitment Termination Date and all Tranche B Revolving
Loans and all other amounts owed hereunder with respect to the Tranche B
Revolving Loans and the Tranche B Revolving Loan Commitments shall be paid
in full no later than that date; provided that each Lender's applicable
Tranche B Revolving Loan Commitment shall expire immediately and without
further action on November 19, 1999 if the Term Loans and the Initial
Tranche B Revolving Loans are not made on or before that date. Subject to
the terms and conditions of this Agreement, amounts borrowed under this
subsection 2.1A(ii)(b) may be repaid and reborrowed to but excluding the
Commitment Termination Date.
(c) Allocation of Tranche B Revolving Loan Commitments; Notices of
Allocation. The initial amounts allocated to the Tranche B Revolving Loan
Commitments, the Tranche B Revolving Loan Suballocations and the Tranche B
Letters of Credit Suballocations for each Borrower are set forth in
Schedule 2.1 annexed hereto. Borrowers may change the amount of the Tranche
B Revolving Loan Commitments, the Tranche B Revolving Loan Suballocations
and the Tranche B Letters of Credit Suballocations allocated to each
Borrower at any time by delivering a Notice of Allocation to Administrative
Agent at least three (3) Business Days prior to the date upon which such
allocation is to be effective. Such Notice of Allocation shall specify the
new
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amounts for each of (i) the Domestic Tranche B Revolving Loan Commitments,
the Tranche B Revolving Loan Suballocation for Company and the Tranche B
Letters of Credit Suballocation for Company, (ii) the UK Tranche B
Revolving Loan Commitments, the Tranche B Revolving Loan Suballocation for
Goss UK and the Tranche B Letters of Credit Suballocation for Goss UK,
(iii) the French Tranche B Revolving Loan Commitments, the Tranche B
Revolving Loan Suballocation for Goss France and the Tranche B Letters of
Credit Suballocation for Goss France, and (iv) the Japanese Tranche B
Revolving Loan Commitments, the Tranche B Revolving Loan Suballocation for
Goss Japan and the Tranche B Letters of Credit Suballocation of Goss Japan;
provided that
(1) the sum of all Tranche B Revolving Loan Suballocations for
all Borrowers shall always equal the Maximum Tranche B Revolving Loan
Commitments for all Borrowers then in effect;
(2) the sum of the Tranche B Revolving Loan Suballocation for any
Borrower plus the Tranche B Letters of Credit Suballocation for such
Borrower shall always equal the Maximum Tranche B Revolving Loan
Commitments for such Borrower;
(3) (a) the Tranche B Revolving Loan Suballocation plus the
Tranche B Letters of Credit Suballocation for Goss UK shall not exceed
$35,000,000, (b) the Tranche B Revolving Loan Suballocation plus the
Tranche B Letters of Credit Suballocation for Goss France shall not
exceed $500,000 and (c) the Tranche B Revolving Loan Suballocation
plus the Tranche B Letters of Credit Suballocation for Goss Japan
shall not exceed $35,000,000;
(4) the sum of the Tranche B Letters of Credit Suballocations for
all Borrowers shall not exceed (x) the Maximum Letter of Credit Amount
less (y) the Tranche A Letter of Credit Usage;
(5) the Tranche B Revolving Loan Commitments for any Borrower
shall not in any event be reduced to an amount that is less than the
Total Utilization of Tranche B Revolving Loan Commitments for such
Borrower;
(6) the Tranche B Revolving Loan Suballocation for any Borrower
shall not in any event be reduced to an amount that is less than the
Dollar Equivalent of the sum of the aggregate principal amount of all
outstanding Tranche B Revolving Loans made to such Borrower (other
than Tranche B Revolving Loans made for the purpose of repaying any
Refunded Tranche B Swing Line Loans in the case of Company, or
reimbursing the applicable Issuing Lender for any amount drawn under
any Tranche B Letter of Credit but not yet so applied in the case of
all Borrowers) plus in the case of Company, the aggregate principal
amount of all outstanding Tranche B Swing Line Loans made to Company;
and
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(7) the Tranche B Letters of Credit Suballocation for any
Borrower shall not in any event be reduced to an amount less than the
Tranche B Letter of Credit Usage with respect to all Tranche B Letters
of Credit issued for the account of such Borrower;
provided further that in the event that Tranche B Revolving Loans are
made with respect to any Borrower pursuant to subsection 3.3B to
reimburse an Issuing Lender for honoring a drawing under a Tranche B
Letter of Credit, then (x) the Tranche B Revolving Loan Suballocation
for such Borrower shall be increased automatically by an amount equal to
the amount of such Tranche B Revolving Loans made and (y) the Tranche B
Letters of Credit Suballocation for such Borrower shall be reduced
automatically by an equal amount, in each case such increase or decrease
shall occur without any further action by any Borrower or Administrative
Agent. Administrative Agent shall promptly notify each Lender of any
requested change in the allocation of the Tranche B Revolving Loan
Commitments and the amount of such Lender's Pro Rata Share of the new
Domestic Tranche B Revolving Loan Commitments, the UK Tranche B
Revolving Loan Commitments, the French Tranche B Revolving Loan
Commitments and the Japanese Tranche B Revolving Loan Commitments, as
the case may be.
(d) Limitation on Revolving Loans. Anything contained in this
Agreement to the contrary notwithstanding, the Revolving Loans and the
Revolving Loan Commitments shall be subject to the limitations that:
(1) in no event shall the Total Utilization of Tranche A
Revolving Commitments for Company exceed (x) the Maximum Tranche
A Revolving Loan Commitments then in effect or (y) the Tranche A
Borrowing Base then in effect;
(2) in no event shall (x) the Total Utilization of Tranche B
Revolving Loan Commitments for any Borrower exceed the Maximum
Tranche B Revolving Loan Commitments for such Borrower then in
effect, and (y) the Total Utilization of Tranche B Revolving
Commitments for all Borrowers exceed (i) the Maximum Tranche B
Revolving Loan Commitments for all Borrowers then in effect or
(ii) the Tranche B Borrowing Base then in effect; and
(3) with respect to any Borrower, in no event shall the
Dollar Equivalent of the sum of (x) the aggregate principal
amount of all outstanding Tranche B Revolving Loans made to such
Borrower (other than Tranche B Revolving Loans made for the
purpose of repaying any Refunded Swing Line Loans in the case of
Company, or reimbursing the applicable Issuing Lender for any
amount drawn under any Tranche B Letter of Credit but not yet so
applied in the case of all Borrowers) plus (y) in the case of
Company, the aggregate principal amount of all outstanding
Tranche B Swing Line Loans made to Company, exceed the Tranche B
Revolving Loan Suballocation for such Borrower then in effect.
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(iii) Swing Line Loans. Swing Line Lender agrees, subject to the
limitations set forth below with respect to the maximum amount of Swing Line
Loans permitted to be outstanding from time to time, to make a portion of either
the Tranche A Revolving Loan Commitments or the Tranche B Revolving Loan
Commitments available to Company, from time to time during the period from the
Effective Date to but excluding the Commitment Termination Date, by making
Tranche A Swing Line Loans or Tranche B Swing Line Loans, respectively, in
Dollars to Company, in an aggregate amount not exceeding the amount of the
applicable Swing Line Loan Commitment to be used for the purposes identified in
subsection 2.5A, notwithstanding the fact that (x) such Tranche A Swing Line
Loans, when aggregated with Swing Line Lender's outstanding Domestic Tranche A
Revolving Loans and such Swing Line Lender's Pro Rata Share of the Tranche A
Letter of Credit Usage for Company then in effect, may exceed such Swing Line
Lender's Domestic Tranche A Revolving Loan Commitment, or (y) such Tranche B
Swing Line Loans, when aggregated with Swing Line Lender's outstanding Domestic
Tranche B Revolving Loans and such Swing Line Lender's Pro Rata Share of the
Tranche B Letter of Credit Usage for Company then in effect, may exceed such
Swing Line Lender's Domestic Tranche B Revolving Loan Commitment, as the case
may be; provided, however, that at any time Swing Line Lender may make, and
Company may borrow, only one Type of Swing Line Loan; provided further that
Swing Lender may not make, and Company may not borrow, Tranche A Swing Line
Loans so long as an amount equal to the applicable Minimum Amount with respect
to Tranche B Revolving Loan Commitments remains outstanding. The original amount
of the Tranche A Swing Line Loan Commitment is $5,000,000 and the original
amount of the Tranche B Swing Line Loan Commitment is $5,000,000; provided that
any reduction of the Domestic Tranche A Revolving Loan Commitments or Tranche B
Revolving Loan Commitments, as the case may be, made pursuant to subsection
2.4A(iii), 2.4B(ii) or 2.4B(iii) which reduces the aggregate Domestic Tranche A
Revolving Loan Commitments or Tranche B Revolving Loan Commitments,
respectively, to an amount less than the then current amount of the Tranche A
Swing Line Loan Commitment or Tranche B Swing Line Loan Commitment,
respectively, shall result in an automatic corresponding reduction of the
Tranche A Swing Line Loan Commitment or Tranche B Swing Line Loan Commitment,
respectively, to the amount of the Domestic Tranche A Revolving Loan
Commitments, as so reduced, or the Tranche B Revolving Loan Commitments, as so
reduced, respectively, without any further action on the part of Company,
Administrative Agent or the Swing Line Lender. Each Swing Line Loan Commitment
shall expire on the Commitment Termination Date and all Swing Line Loans and all
other amounts owed hereunder with respect to the Swing Line Loans shall be paid
in full no later than that date; provided that each Swing Line Loan Commitment
shall expire immediately and without further action on November 19, 1999 if the
Term Loans are not made on or before that date. Amounts borrowed under this
subsection 2.1A(iii) may be repaid and reborrowed to but excluding the
Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding, the
Swing Line Loans and the Swing Line Loan Commitments shall be subject to the
limitations that:
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(1) in no event shall the Total Utilization of Tranche A Revolving
Commitments for Company exceed (x) the Maximum Tranche A Revolving Loan
Commitments then in effect or (y) the Tranche A Borrowing Base then in
effect;
(2) in no event shall (x) the Total Utilization of Tranche B Revolving
Loan Commitments for Company exceed the Maximum Tranche B Revolving Loan
Commitments for Company then in effect, and (y) the Total Utilization of
Tranche B Revolving Commitments for all Borrowers exceed (i) the Maximum
Tranche B Revolving Loan Commitments for all Borrowers then in effect or
the Tranche B Borrowing Base then in effect; and
(3) in no event shall the Dollar Equivalent of the sum of (x) the
aggregate principal amount of all outstanding Tranche B Revolving Loans
made to Company (other than Tranche B Revolving Loans made for the purpose
of repaying any Refunded Swing Line Loans, or reimbursing the applicable
Issuing Lender for any amount drawn under any Tranche B Letter of Credit
but not yet so applied) plus (y) the aggregate principal amount of all
outstanding Tranche B Swing Line Loans made to Company, exceed the Tranche
B Revolving Loan Suballocation for Company then in effect.
With respect to Swing Line Loans which have not been voluntarily prepaid by
Company pursuant to subsection 2.4B(i), Swing Line Lender may, at any time in
its sole and absolute discretion, deliver to Administrative Agent (with a copy
to Company), no later than 12:00 P.M. (New York time) on the first Business Day
in advance of the proposed Funding Date, a notice (which shall be deemed to be a
Notice of Borrowing given by Company) requesting the Domestic Tranche A Lenders
or Tranche B Lenders, as the case may be, to make Domestic Tranche A Revolving
Loans or Tranche B Revolving Loans, as the case may be, that are Base Rate Loans
on such Funding Date in an amount equal to the amount of such Swing Line Loans
(the "REFUNDED SWING LINE LOANS") outstanding on the date such notice is given
which Swing Line Lender requests such applicable Lenders to prepay. Anything
contained in this Agreement to the contrary notwithstanding, (i) the proceeds of
such Revolving Loans made by such Lenders other than Swing Line Lender shall be
immediately delivered by Administrative Agent to Swing Line Lender (and not to
Company) and applied to repay a corresponding portion of such Refunded Swing
Line Loans and (ii) on the day such Revolving Loans are made, Swing Line
Lender's Pro Rata Share of such Refunded Swing Line Loans shall be deemed to be
paid with the proceeds of a Revolving Loan made by Swing Line Lender, and such
portion of such Swing Line Loans deemed to be so paid shall no longer be
outstanding as Swing Line Loans and shall no longer be due under the Swing Line
Note of Swing Line Lender but shall instead constitute part of Swing Line
Lender's applicable outstanding Revolving Loans and shall be due under the
applicable Revolving Note of Swing Line Lender. Company hereby authorizes
Administrative Agent and Swing Line Lender to charge Company's accounts with
Administrative Agent and Swing Line Lender (up to the amount available in each
such account) in order to immediately pay Swing Line Lender the amount of such
Refunded Swing Line Loans to the extent the proceeds of such Revolving Loans
made by the applicable Lenders, including the Revolving Loan deemed to be made
by Swing Line Lender, are not sufficient to repay in full such Refunded
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Swing Line Loans. If any portion of any such amount paid (or deemed to be paid)
to Swing Line Lender should be recovered by or on behalf of Company from Swing
Line Lender in bankruptcy, by assignment for the benefit of creditors or
otherwise, the loss of the amount so recovered shall be ratably shared among all
applicable Lenders in the manner contemplated by subsection 10.5.
If for any reason (a) the applicable Revolving Loans are not made upon the
request of Swing Line Lender as provided in the immediately preceding paragraph
in an amount sufficient to repay any amounts owed to Swing Line Lender in
respect of any outstanding Swing Line Loans or (b) the applicable Revolving Loan
Commitments are terminated at a time when any Swing Line Loans are outstanding,
each applicable Lender shall be deemed to, and hereby agrees to, have purchased
a participation in such outstanding Swing Line Loans in an amount equal to its
Pro Rata Share (calculated, in the case of the foregoing clause (b), immediately
prior to such termination of the applicable Revolving Loan Commitments) of the
unpaid amount of such Swing Line Loans together with accrued interest thereon.
Upon one Business Day's notice from Swing Line Lender, each applicable Lender
shall deliver to Swing Line Lender an amount equal to its respective
participation in Same Day Funds at the Funding and Payment Office. In the event
any such applicable Lender fails to make available to Swing Line Lender the
amount of such applicable Lender's participation as provided in this paragraph,
Swing Line Lender shall be entitled to recover such amount on demand from such
applicable Lender together with interest thereon at the rate customarily used by
Swing Line Lender for the correction of errors among banks for three Business
Days and thereafter at the Base Rate. In the event Swing Line Lender receives a
payment of any amount in which other applicable Lenders have purchased
participations as provided in this paragraph, Swing Line Lender shall promptly
distribute to each such other applicable Lender its Pro Rata Share of such
payment.
Anything contained herein to the contrary notwithstanding, each applicable
Lender's obligation to make the applicable Revolving Loans for the purpose of
repaying any Refunded Swing Line Loans pursuant to the second preceding
paragraph and each applicable Lender's obligation to purchase a participation in
any unpaid Swing Line Loans pursuant to the immediately preceding paragraph
shall be absolute and unconditional and shall not be affected by any
circumstance, including (a) any set-off, counterclaim, recoupment, defense or
other right which such applicable Lender may have against Swing Line Lender,
Company or any other Person for any reason whatsoever; (b) the occurrence or
continuation of an Event of Default or a Potential Event of Default; (c) any
adverse change in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Company or any of its Subsidiaries; (d)
any breach of this Agreement or any other Loan Document by any party thereto; or
(e) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing; provided that such obligations of each
applicable Lender are subject to the condition that (X) Swing Line Lender
believed in good faith that all conditions under Section 4 to the making of the
applicable Refunded Swing Line Loans or other unpaid Swing Line Loans, as the
case may be, were satisfied at the time such Refunded Swing Line Loans or unpaid
Swing Line Loans were made or (Y) the satisfaction of any such condition not
satisfied had been waived in accordance with subsection 10.6 prior to or at the
time such Refunded Swing Line Loans or other unpaid Swing Line Loans were made.
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B. BORROWING MECHANICS.
(i) Minimum Amounts. Revolving Loans made on any Funding Date (other than
Revolving Loans made pursuant to a request by a Swing Line Lender pursuant to
subsection 2.1A(iii) for the purpose of repaying any Refunded Swing Line Loans
or Revolving Loans made pursuant to subsection 3.3B for the purpose of
reimbursing any Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it) shall be in an aggregate minimum amount equal to the
applicable Minimum Amount. Swing Line Loans made on any Funding Date shall be in
an aggregate minimum amount equal to the applicable Minimum Amount.
(ii) Notice of Borrowing. Whenever a Borrower desires that Lenders make
Term Loans or Revolving Loans it shall deliver to Administrative Agent a Notice
of Borrowing (1) no later than 12:00 Noon (London time) at least three Business
Days in advance of the proposed Funding Date in the case of an Offshore Rate
Loan or (2) no later than 12:00 Noon (New York time) at least one Business Day
in advance of the proposed Funding Date in the case of a Revolving Loan made as
a Base Rate Loan. Whenever a Borrower desires that Swing Line Lender make a
Swing Line Loan, it shall deliver to Administrative Agent a Notice of Borrowing
no later than 1:30 P.M. (Chicago time) on the proposed Funding Date. The Notice
of Borrowing shall specify (i) the Borrower, (ii) the proposed Funding Date
(which shall be a Business Day), (iii) the amount and Type of Loans requested,
(iv) in the case of Swing Line Loans and any Loans made on the Effective Date,
that such Loans shall be Base Rate Loans, (v) in the case of (x) any Domestic
Tranche A Revolving Loans or (y) any Domestic Tranche B Revolving Loans not made
on the Effective Date, whether such Loans shall be Base Rate Loans or Offshore
Rate Loans, (vi) in the case of any Tranche B Revolving Loans other than
Domestic Tranche B Revolving Loans made after the Effective Date, that such
Loans shall be Offshore Rate Loans, (vii) in the case of any Revolving Loans
requested to be made as Offshore Rate Loans, the initial Interest Period
requested therefor, and (viii) the Applicable Currency the Loan is to be made
in.
(iii) Continuation/Conversion. (a) Term Loans and Revolving Loans
denominated in Dollars may be continued as or converted into Base Rate Loans and
Offshore Rate Loans and (b) Term Loans and Revolving Loans denominated in an
Offshore Currency may be continued as Offshore Rate Loans and may not be
converted into Base Rate Loans, in each case in the manner provided in
subsection 2.2D.
(iv) Telephonic Notice. In lieu of delivering the above-described Notice of
Borrowing, a Borrower may give Administrative Agent telephonic notice by the
required time of any proposed borrowing under this subsection 2.1B; provided
that such notice shall be promptly confirmed in writing by delivery of a Notice
of Borrowing to Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability to
Borrower in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of such
Borrower or for otherwise acting in good faith under this subsection 2.1B, and
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upon funding of Loans by Lenders in accordance with this Agreement pursuant to
any such telephonic notice such Borrower shall have effected Loans hereunder.
(v) Certification of Certain Items. The applicable Borrower shall notify
Administrative Agent prior to the funding of any Loans in the event that any of
the matters to which such Borrower is required to certify in the applicable
Notice of Borrowing is no longer true and correct as of the applicable Funding
Date, and the acceptance by such Borrower of the proceeds of any Loans shall
constitute a re-certification by such Borrower, as of the applicable Funding
Date, as to the matters to which such Borrower is required to certify in the
applicable Notice of Borrowing.
(vi) Offshore Rate Loans. Except as otherwise provided in subsections 2.6B,
2.6C and 2.6G, a Notice of Borrowing for an Offshore Rate Loan (or telephonic
notice in lieu thereof) shall be irrevocable on and after the related Interest
Rate Determination Date, and the Borrower giving such notice shall be bound to
make a borrowing in accordance therewith.
C. DISBURSEMENT OF FUNDS.
(i) Subject to this subsection 2.1C and subsection 2.1D,
(a) all Domestic Term Loans under this Agreement shall be made by
Domestic Tranche B Lenders simultaneously and proportionately to their
respective Pro Rata Shares of Domestic Term Loan Commitments;
(b) all UK Term Loans under this Agreement shall be made by UK Lenders
simultaneously and proportionately to their respective Pro Rata Shares of
UK Term Loan Commitments;
(c) all Domestic Tranche A Revolving Loans under this Agreement shall
be made by Domestic Tranche A Lenders simultaneously and proportionately to
their respective Pro Rata Shares of the Domestic Tranche A Revolving Loan
Commitments;
(d) all Domestic Tranche B Revolving Loans under this Agreement shall
be made by Domestic Tranche B Lenders, respectively, simultaneously and
proportionately to their respective Pro Rata Shares of the Domestic Tranche
B Revolving Loan Commitments;
(e) all UK Tranche B Revolving Loans under this Agreement shall be
made by UK Lenders simultaneously and proportionately to their respective
Pro Rata Shares of the UK Tranche B Revolving Loan Commitments;
(f) all French Tranche B Revolving Loans under this Agreement shall be
made by French Lenders simultaneously and proportionately to their
respective Pro Rata Shares of the French Tranche B Revolving Loan
Commitments; and
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(g) all Japanese Tranche B Revolving Loans under this Agreement shall
be made by Japanese Lenders simultaneously and proportionately to their
respective Pro Rata Shares of the Japanese Tranche B Revolving Loan
Commitments;
in each case it being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender's obligation to make a Loan
requested hereunder nor shall the Commitment of any Lender to make any Type of
Loan requested be increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make a Loan requested hereunder.
(ii) Promptly after receipt by Administrative Agent of a Notice of
Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu thereof),
Administrative Agent shall notify each applicable Lender or Swing Line Lender,
as the case may be, of the proposed borrowing. Each such Lender shall make the
amount of its applicable Loan available to Administrative Agent, at the
applicable Funding and Payment Office, not later than 12:00 Noon (Local Time) on
the applicable Funding Date, and Swing Line Lender shall make the amount of its
applicable Swing Line Loan available to Administrative Agent not later than 3:00
P.M. (Chicago time) on the applicable Funding Date, in each case in Same Day
Funds in the Applicable Currency, at the Funding and Payment Office. Except as
provided in subsection 2.1A(iii) and subsection 3.3B with respect to Revolving
Loans used to repay Refunded Swing Line Loans or to reimburse any Issuing Lender
for the amount of a drawing under a Letter of Credit issued by it, upon
satisfaction or waiver of the conditions precedent specified in subsection 4.1
(in the case of Loans made on the Effective Date) and, subject to the provisions
set forth in the immediately preceding paragraph, subsection 4.2 (in the case of
all Loans), Administrative Agent shall make the proceeds of such Loans available
to the applicable Borrower on the applicable Funding Date by causing an amount
of Same Day Funds in the Applicable Currency equal to the proceeds of all such
Loans received by Administrative Agent from Lenders or Swing Line Lender, as the
case may be, to be credited to the account of such Borrower at the Funding and
Payment Office.
Unless Administrative Agent shall have been notified by any Lender prior to
the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Borrower a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Borrower and Borrower shall immediately pay such corresponding amount in
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the Applicable Currency to Administrative Agent together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent at the rate payable under this Agreement for Base Rate
Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Borrower may have against any Lender as a result of any default by
such Lender hereunder.
D. THE REGISTER.
(i) Administrative Agent shall maintain, at its address referred to in
subsection 10.8, a register for the recordation of the names and addresses of
Lenders and the Commitments and Loans of each Lender from time to time (the
"REGISTER"). The Register shall be available for inspection by any Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(ii) Administrative Agent shall record in the Register the applicable Term
Loan Commitment (if any) and applicable Revolving Loan Commitment and the
applicable Term Loan (if any) and applicable Revolving Loans from time to time
of each Lender, the applicable Swing Line Loan Commitment and the applicable
Swing Line Loans from time to time of Swing Line Lender, and each repayment or
prepayment in respect of the principal amount of the applicable Term Loan (if
any) or applicable Revolving Loans of each Lender or the applicable Swing Line
Loans of Swing Line Lender. Any such recordation shall be conclusive and binding
on each Borrower and each Lender, absent manifest error; provided that failure
to make any such recordation, or any error in such recordation, shall not affect
any Lender's Commitments or any Borrower's Obligations in respect of any
applicable Loans.
(iii) Each Lender shall record on its internal records (including, without
limitation, the Notes held by such Lender) the amount of the applicable Term
Loan (if any) and each applicable Revolving Loan made by it and each payment in
respect thereof. Any such recordation shall be conclusive and binding on each
applicable Borrower, absent manifest error; provided that failure to make any
such recordation, or any error in such recordation, shall not affect Lender's
Commitments or any Borrower's Obligations in respect of any applicable Loans;
and provided further that in the event of any inconsistency between the Register
and any Lender's records, the recordations in the Register shall govern.
(iv) Borrowers, Administrative Agent and Lenders shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes hereof, and
no assignment or transfer of any such Commitment or Loan shall be effective, in
each case unless and until an Assignment Agreement effecting the assignment or
transfer thereof shall have been accepted by Administrative Agent and recorded
in the Register as provided in subsection 10.1B(ii). Prior to such recordation,
all amounts owed with respect to the applicable Commitment or Loan shall be owed
to the Lender listed in the Register as the owner thereof, and any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or
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consent, is listed in the Register as a Lender shall be conclusive and binding
on any subsequent holder, assignee or transferee of the corresponding
Commitments or Loans.
(v) Each Borrower hereby designates BTCo to serve as such Borrower's agent
solely for purposes of maintaining the Register as provided in this subsection
2.1D, and each Borrower hereby agrees that, to the extent BTCo serves in such
capacity, BTCo and its officers, directors, employees, agents and affiliates
shall constitute Indemnitees for all purposes under subsection 10.3.
E. NOTES. Each Borrower shall execute and deliver on the Effective Date (i)
to each applicable Lender (or to Administrative Agent for that Lender) (a) a
Term Note, substantially in the form of Exhibit IV annexed hereto, to evidence
that Lender's Term Loans, in the principal amount of that Lender's applicable
Term Loan and with other appropriate insertions, (b) a Tranche A Revolving Note,
substantially in the form of Exhibit V annexed hereto, to evidence that Lender's
Tranche A Revolving Loans, in the principal amount of that Lender's applicable
Domestic Tranche A Revolving Loan Commitments and with other appropriate
insertions and (c) a Tranche B Revolving Note, substantially in the form of
Exhibit VI annexed hereto to evidence that Lender's Tranche B Revolving Loans,
in the principal amount of that Lender's applicable Tranche B Revolving Loan
Commitments and with other appropriate insertions and (ii) to Swing Line Lender
(or to Administrative Agent for that Lender) a Swing Line Note with respect to
the Domestic Tranche A Revolving Loan Commitments and a Swing Line Note with
respect to the Tranche B Revolving Loan Commitments, in each case substantially
in the form of Exhibit VII annexed hereto, to evidence Swing Line Lender's
Tranche A Swing Line Loans and Tranche B Swing Line Loans, respectively, in the
principal amount of the Tranche A Swing Line Loan Commitment and Tranche B Swing
Line Loan Commitment, respectively, and with other appropriate insertions.
F. SPECIAL PROVISIONS GOVERNING OFFSHORE CURRENCY LOANS AND OFFSHORE
CURRENCY LETTERS OF CREDIT. Notwithstanding any other provision of this
Agreement to the contrary, the following provisions shall govern with respect to
Offshore Currency Loans and to Letters of Credit denominated in a currency other
than Dollars, in each case as to the matters covered:
(i) Calculation of Dollar Equivalent Amount of Offshore Currency Loans
and Foreign Currency Letters of Credit. For purposes of determining (1)
whether the Total Utilization of Tranche B Revolving Loan Commitments
exceeds the Maximum Tranche B Revolving Loan Commitments then in effect,
(2) the Letter of Credit Usage, or (3) whether the aggregate Total
Utilization of the Tranche B Revolving Loans and the Total Outstanding Term
Loans exceeds the MaximumTerm Loan Commitment then in effect,
Administrative Agent shall determine the Dollar Equivalent amounts with
respect to any Revolving Loans that are Offshore Currency Loans and with
respect to any Letters of Credit denominated in a currency other than
Dollars (a) at the time a Notice of Allocation is given, (b) on the first
Business Day of each month of each calendar year, and (c) at such other
dates as Administrative Agent may reasonably require (each such date under
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clauses (a) - (c) being a "COMPUTATION DATE"). Administrative Agent shall
determine the Dollar Equivalent amount for a particular Revolving Loan at
the time a Notice of Borrowing or a Notice of Conversion/Continuation is
given with respect to such Revolving Loan and for a particular Letter of
Credit at the time a Request for Issuance of Letter of Credit is given with
respect to such Letter of Credit.
(ii) European Union. The EU has introduced a single currency (the
"EURO") and has initiated the process of substituting the Euro for the
national currencies of the member states participating in the EU. On the
date on which any Offshore Currency is replaced by the Euro, it is hereby
acknowledged and agreed that "Sterling," "Francs" and "Marks," each as
defined herein, shall include the Euro and that conversion of any
outstanding Loans denominated in such Offshore Currency into the Euro shall
take effect; provided that the original Offshore Currency shall be retained
for so long as legally permissible; provided further that any such
conversion shall be based on the rate of conversion officially fixed by the
EU on the date the Euro replaces the applicable Offshore Currency.
Notwithstanding anything contained herein to the contrary, none of the
introduction of the Euro, the substitution of such currency for any
Offshore Currency, the fixing of such official rate of conversion nor any
economic consequences that arise from any of the aforementioned events or
otherwise in connection with the EU shall give rise to any right to
terminate prematurely, contest, cancel, rescind, modify or renegotiate this
Agreement or any of its provisions or to raise any other objections and/or
exceptions or to assert any claims for compensation.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and 2.7,
each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
to the Adjusted Offshore Rate. Subject to the provisions of subsection 2.7, each
Swing Line Loan shall bear interest on the unpaid principal amount hereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate. The applicable basis for determining
the rate of interest with respect to any Term Loan or any Revolving Loan shall
be selected by the Borrower initially at the time a Notice of Borrowing is given
with respect to such Loan pursuant to subsection 2.1B, and the basis for
determining the interest rate with respect to any Term Loan or any Revolving
Loan may be changed from time to time pursuant to subsection 2.2D. If on any day
a Term Loan or a Revolving Loan denominated in Dollars is outstanding with
respect to which notice has not been delivered to Administrative Agent in
accordance with the terms of this Agreement specifying the applicable basis for
determining the rate of interest, then for that day that Loan shall bear
interest determined by reference to the Base Rate. If on any day a Term Loan or
a Revolving Loan denominated in an Offshore Currency is outstanding with respect
to which notice has not been delivered to Administrative Agent in accordance
with the terms of this Agreement specifying the applicable basis for determining
the rate of interest, then such Loan
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shall bear interest determined by reference to the Offshore Rate Loan with an
Interest Period of, and the applicable Interest Period shall be deemed to be,
one month.
Subject to the provisions of subsections 2.2E and 2.7, the Term Loans and
Revolving Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus the
Applicable Base Rate Margin; or
(b) if an Offshore Rate Loan, then at the sum of the Adjusted Offshore
Rate plus the Applicable Offshore Rate Margin.
Subject to the provisions of subsections 2.2E and 2.7, the Swing Line Loans
shall bear interest through maturity at the sum of the Base Rate plus the
Applicable Base Rate Margin.
B. INTEREST PERIODS. In connection with each Offshore Rate Loan, a Borrower
may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Borrower's option, either a one, two, three or six month period; provided
that:
(i) the initial Interest Period for any such Loan shall commence on
the Funding Date in respect of such Loan, in the case of a Loan initially
made as an Offshore Rate Loan or on the date specified in the applicable
Notice of Conversion/Continuation, in the case of a Loan converted to an
Offshore Rate Loan;
(ii) in the case of immediately successive Interest Periods applicable
to an Offshore Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) 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,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Term Loans
and no Interest period with respect to any portion of the Revolving Loans
shall extend beyond the Commitment Termination Date;
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(vi) no Interest Period with respect to any portion of the Term Loans
of any Borrower shall extend beyond a date on which such Borrower is
required to make a scheduled payment of principal of the Term Loans of such
Borrower unless the sum of (a) the aggregate principal amount of Term Loans
of such Borrower that are Base Rate Loans plus (b) the aggregate principal
amount of Term Loans of such Borrower that are Offshore Rate Loans with
Interest Periods expiring on or before such date equals or exceeds the
principal amount required to be paid on the Term Loans of such Borrower on
such date;
(vii) no Interest Period with respect to any portion of the Domestic
Tranche A Revolving Loans shall extend beyond the date on which a permanent
reduction of the Domestic Tranche A Revolving Loan Commitments is scheduled
to occur unless the sum of (a) the aggregate principal amount of Domestic
Tranche A Revolving Loans that are Base Rate Loans plus (b) the aggregate
principal amount of Domestic Tranche A Revolving Loans that are Offshore
Rate Loans with Interest Periods expiring on or before such date plus (c)
the excess of the Domestic Tranche A Revolving Loan Commitments then in
effect over the aggregate principal amount of Domestic Tranche A Revolving
Loans then outstanding equals or exceeds the permanent reduction of the
Domestic Tranche A Revolving Loan Commitments that is scheduled to occur on
such date;
(viii) there shall be no more than twelve (12) Interest Periods for
any Borrower outstanding at any time; and
(ix) in the event a Borrower fails to specify an Interest Period for
any Offshore Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, such Borrower shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or any Revolving
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i),
interest accrued on such Swing Line Loans or Revolving Loans through the date of
such prepayment shall be payable on the next succeeding Interest Payment Date
applicable to Base Rate Loans (or, if earlier, at final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection 2.6,
a Borrower shall have the option (i) to convert at any time all or any part of
its outstanding Term Loans or Revolving Loans denominated in Dollars equal to
the Minimum Amount from Loans bearing interest at a rate determined by reference
to one basis to Loans bearing interest at a rate determined by reference to an
alternative basis, or (ii) upon the expiration of any Interest Period applicable
to any Offshore Rate Loan to continue all or any portion of such Loan equal to
the Minimum Amount as an Offshore Rate Loan; provided, however, that any
Offshore Rate Loan denominated in Dollars may only be converted into a Base Rate
Loan on the expiration date of
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an Interest Period applicable thereto; provided further that Revolving Loans
denominated in an Offshore Currency may not be converted into Base Rate Loans
and that Loans denominated in one currency may not be converted into Loans
denominated in another currency.
A Borrower shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 12:00 Noon (Local Time) at least one Business
Day in advance of the proposed conversion date (in the case of a conversion of
an Offshore Rate Loan denominated in Dollars to a Base Rate Loan) and at least
three Business Days in advance of the proposed conversion/continuation date (in
the case of a conversion to, or a continuation of, an Offshore Rate Loan). A
Notice of Conversion/Continuation shall specify (i) the proposed conversion/
continuation date (which shall be a Business Day), (ii) the amount and Type of
the Loan to be converted/continued, (iii) the nature of the proposed
conversion/continuation, (iv) in the case of a conversion to, or a continuation
of, an Offshore Rate Loan, the requested Interest Period, and (v) in the case of
a conversion to, or a continuation of, an Offshore Rate Loan, that no Potential
Event of Default or Event of Default has occurred and is continuing. In lieu of
delivering the above-described Notice of Conversion/Continuation, a Borrower may
give Administrative Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Administrative Agent on or before the proposed
conversion/continuation date.
Upon receipt of written or telephonic notice of any proposed
conversion/continuation under this subsection 2.2D, Administrative Agent shall
promptly transmit said notice by telefacsimile or telephone to each applicable
Lender.
Neither Administrative Agent nor any Lender shall incur any liability to
any Borrower in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of such Borrower
or for otherwise acting in good faith under this subsection 2.2D, and upon
conversion or continuation of the applicable basis for determining the interest
rate with respect to any Loans in accordance with this Agreement pursuant to any
such telephonic notice any Borrower shall have effected a conversion or
continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Conversion/Continuation for conversion to, or continuation of, an Offshore
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Borrower shall be bound
to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in
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any proceeding under the Bankruptcy Code) payable upon demand at a rate that is
2.00% per annum in excess of the interest rate otherwise payable under this
Agreement with respect to Base Rate Loans. Payment or acceptance of the
increased rates of interest provided for in this subsection 2.2E is not a
permitted alternative to timely payment and shall not constitute a waiver of any
Event of Default or otherwise prejudice or limit any rights or remedies of
Administrative Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans (other than Loans
denominated in Sterling) shall be computed on the basis of a 360-day year and
interest on Loans denominated in Sterling shall be computed on the basis of a
365-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, (i) the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from an Offshore Rate
Loan, the date of conversion of such Offshore Rate Loan to such Base Rate Loan
shall be included, and (ii) the date of payment of such Loan or the expiration
date of an Interest Period applicable to such Loan or, with respect to a Base
Rate Loan being converted to an Offshore Rate Loan, the date of conversion of
such Base Rate Loan to such Offshore Rate Loan shall be excluded; provided that
if a Loan is repaid on the same day on which it is made, no interest shall be
paid on that Loan.
G. EFFECTIVE GLOBAL RATE. For the purposes of Articles L 313-1 to L 313-6
of the French Code de la Consummation, the parties acknowledge that the taux
effectif global for Offshore Rate Loans denominated in Francs may only be
determined during the course of the Offshore Rate Loans denominated in Francs.
By way of example, the taux effectif global applicable on November 19, 1999,
taking into account the fees, commissions and expenses which are payable or
estimated to be payable by Goss France and assuming a base interest rate of
3.50563% per annum (being the Adjusted Offshore Rate for Francs for a period of
three months) if the French Revolving Loan Commitment were fully drawn from the
Effective Date to the Commitment Termination Date, would be 6.106% per annum and
the taux de periode would be 1.5265% for a period of three months.
2.3 FEES.
A. COMMITMENT FEES.
(i) Company. Company agrees to (1) pay to Administrative Agent in Dollars,
for distribution to each Domestic Tranche A Lender in proportion to that
Lender's Pro Rata Share of the Domestic Tranche A Revolving Loan Commitment,
commitment fees for the period from and including the Effective Date to and
excluding the Commitment Termination Date in an amount equal to (x) the average
of the daily excess of the Domestic Tranche A Revolving Loan Commitments over
the sum of (i) the aggregate principal amount of outstanding Domestic Tranche A
Revolving Loans (but not any outstanding Tranche A Swing Line Loans) plus (ii)
the Tranche A Letter of Credit Usage of Company multiplied by (y) 0.500%, and
(2) pay to Administrative Agent in Dollars, for distribution to each Domestic
Tranche B Lender in
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proportion to that Lender's Pro Rata Share of the Domestic Tranche B Revolving
Loan Commitment, commitment fees for the period from and including the Effective
Date to and excluding the Commitment Termination Date in an amount equal to (x)
the average of the daily excess of the Domestic Tranche B Revolving Loan
Commitments over the sum of (i) the Dollar Equivalent of the aggregate principal
amount of outstanding Domestic Tranche B Revolving Loans (but not any
outstanding Tranche B Swing Line Loans) plus (ii) the Tranche B Letter of Credit
Usage of Company multiplied by (y) 0.500%.
(ii) Goss UK. Goss UK agrees to pay to Administrative Agent in Dollars, for
distribution to each UK Lender in proportion to that Lender's Pro Rata Share of
the UK Tranche B Revolving Loan Commitment, commitment fees for the period from
and including the Effective Date to and excluding the Commitment Termination
Date in an amount equal to (x) the average of the daily excess of the UK Tranche
B Revolving Loan Commitments over the sum of (i) the Dollar Equivalent of the
aggregate principal amount of outstanding UK Tranche B Revolving Loans plus (ii)
the Tranche B Letter of Credit Usage of Goss UK multiplied by (y) 0.500%.
(iii) Goss France. Goss France agrees to pay to Administrative Agent in
Dollars, for distribution to each French Lender in proportion to that Lender's
Pro Rata Share of the French Tranche B Revolving Loan Commitment, commitment
fees for the period from and including the Effective Date to and excluding the
Commitment Termination Date in an amount equal to (x) the average of the daily
excess of the French Tranche B Revolving Loan Commitments over the sum of (i)
the Dollar Equivalent of the aggregate principal amount of outstanding French
Tranche B Revolving Loans plus (ii) the Tranche B Letter of Credit Usage of Goss
France multiplied by (y) 0.500%.
(iv) Goss Japan. Goss Japan agrees to pay to Administrative Agent in
Dollars, for distribution to each Japanese Lender in proportion to that Lender's
Pro Rata Share of the Japanese Tranche B Revolving Loan Commitment, commitment
fees for the period from and including the Effective Date to and excluding the
Commitment Termination Date in an amount equal to (x) the average of the daily
excess of the Japanese Tranche B Revolving Loan Commitments over the sum of (i)
the Dollar Equivalent of the aggregate principal amount of outstanding Japanese
Tranche B Revolving Loans plus (ii) the Tranche B Letter of Credit Usage of Goss
Japan multiplied by (y) 0.500%.
(v) Calculation. Such commitment fees shall be calculated on the basis of a
360-day year and the actual number of days elapsed and be payable quarterly in
arrears on each date that is three Business Days after each March 31, June 30,
September 30 and December 31 of each year, commencing on the first such date to
occur after the Effective Date, and on the Commitment Termination Date. For
purposes of calculating commitment fees under this subsection 2.3A, the Dollar
Equivalent amount of the aggregate principal amount of any outstanding Offshore
Currency Loans shall be determined based upon the Exchange Rate as of March 31,
June 30, September 30 or December 31, as the case may be, of each year with
respect to such Offshore Currency Loan. Administrative Agent shall provide to
Borrowers on each first
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Business Day after each March 31, June 30, September 30 and December 31 of each
year a report specifying the commitment fees payable by each Borrower and
including the calculations of such commitment fees and the Exchange Rate used,
and Borrowers shall pay such commitment fees no later than two Business Days
after delivery of such report.
B. FACILITY FEES. Company hereby agrees to pay to Administrative Agent, on
the Effective Date, for distribution to each Domestic Tranche A Lender as set
forth on Schedule 2.1 annexed hereto, facility fees in the aggregate amount of
$3,750,000.
C. OTHER FEES. Each Borrower agrees to pay to Administrative Agent such
other fees in the amounts and at the times separately agreed upon between such
Borrower and Administrative Agent.
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN COMMITMENTS;
GENERAL PROVISIONS REGARDING PAYMENTS.
A. SCHEDULED PAYMENTS OF TERM LOANS AND SCHEDULED REDUCTIONS OF DOMESTIC
TRANCHE A REVOLVING LOAN COMMITMENTS.
(i) Scheduled Payments of Domestic Term Loans. Company shall make principal
payments on the Domestic Term Loans in installments on the dates and in the
amounts set forth below:
DATE SCHEDULED REPAYMENT OF
---- ----------------------
DOMESTIC TERM LOANS
-------------------
December 31, 2002 $5,000,000
March 31, 2003 $5,000,000
June 30, 2003 $5,000,000
September 30, 2003 $116,243,580
============
TOTAL $131,243,580
; provided that the scheduled installments of principal of the Domestic Term
Loans set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Term Loans in accordance with subsection 2.4B(iv);
and provided further that the Domestic Term Loans and all other amounts owed
hereunder with respect to the Domestic Term Loans shall be paid in full no later
than the Commitment Termination Date, and the final installment payable by
Company in respect of the Domestic Term Loans on such date shall be in an
amount, if such amount is different from that specified above, sufficient to
repay all amounts owing by Company under this Agreement with respect to the
Domestic Term Loans.
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(ii) Scheduled Payments of UK Term Loans. Goss UK shall pay in full the UK
Term Loans and all other amounts owed hereunder with respect to the UK Term
Loans no later than the Commitment Termination Date.
(iii) Scheduled Reductions of Domestic Tranche A Revolving Loan
Commitments. The Domestic Tranche A Revolving Loan Commitments shall be
permanently reduced on the dates and in the amounts set forth below:
DATE SCHEDULED REDUCTION OF DOMESTIC
---- -------------------------------
TRANCHE A REVOLVING LOAN COMMITMENTS
------------------------------------
March 31, 2002 $6,250,000
June 30, 2002 $6,250,000
September 30, 2002 $6,250,000
December 31, 2002 $6,250,000
March 31, 2003 $6,250,000
June 30, 2003 $6,250,000
September 30, 2003 $12,500,000
===========
TOTAL $50,000,000
; provided that the scheduled reductions of the Domestic Tranche A Revolving
Loan Commitments set forth above shall be reduced in connection with any
voluntary or mandatory reductions of the Domestic Tranche A Revolving Loan
Commitments in accordance with subsection 2.4B(iv).
B. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN REVOLVING LOAN COMMITMENTS.
(i) Voluntary Prepayments. Company may, upon written or telephonic notice
to Administrative Agent on or prior to 12:00 Noon (New York time) on the date of
prepayment, which notice, if telephonic, shall be promptly confirmed in writing,
at any time from time to time prepay any Swing Line Loan on any Business Day in
whole or in part in an aggregate minimum amount equal to the applicable Minimum
Amount. Each Borrower may, upon not less than one Business Day's prior written
or telephonic notice, in the case of Base Rate Loans, and three Business Days'
prior written or telephonic notice, in the case of Offshore Rate Loans, in each
case given to Administrative Agent by 12:00 Noon (Local Time) on the date
required and, if given by telephone, promptly confirmed in writing to
Administrative Agent (which original written or telephonic notice Administrative
Agent will promptly transmit by telefacsimile or telephone to each Lender), at
any time and from time to time prepay any Term Loans or Revolving Loans on any
Business Day in whole or in part in an aggregate minimum amount equal to the
applicable Minimum Amount; provided, however, that an Offshore Rate Loan may not
be prepaid prior to the expiration of the Interest Period applicable thereto
unless such
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Borrower pays to each Lender all such amounts as are payable pursuant to
subsection 2.6D. Notice of prepayment having been given as aforesaid, the
principal amount of the Loans specified in such notice shall become due and
payable on the prepayment date specified therein. Any such voluntary prepayment
shall be applied as specified in subsection 2.4B(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments. Company may, upon
not less than three Business Days' prior written or telephonic notice confirmed
in writing to Administrative Agent (which original written or telephonic notice
such Administrative Agent will promptly transmit by telefacsimile or telephone
to each Lender), at any time and from time to time terminate in whole or
permanently reduce in part, without premium or penalty, the Revolving Loan
Commitments in an amount up to the amount by which the Revolving Loan
Commitments exceed the Total Utilization of Commitments with respect to all
Borrowers; provided that any such partial reduction of the Revolving Loan
Commitments shall be in an aggregate minimum amount equal to the applicable
Minimum Amount. Company's notice to Administrative Agent shall designate the
date (which shall be a Business Day) of such termination or reduction and the
amount of any partial reduction, and such termination or reduction of such
Revolving Loan Commitments shall be effective on the date specified in such
notice and shall reduce such Revolving Loan Commitment of each Lender
proportionately to its Pro Rata Share.
(iii) Mandatory Prepayments of Loans and Mandatory Reductions of Revolving
Loan Commitments. The Loans shall be prepaid, and the Revolving Loan Commitments
shall be permanently reduced (unless otherwise specified below), in the amounts
and under the circumstances set forth below, all such prepayment and/or
reductions to be applied as set forth below or as more specifically provided in
subsection 2.4B(iv):
(a) Prepayments and Reductions from Net Asset Sale Proceeds. No later
than the first Business Day following the date of receipt by any Borrower
or any of its Subsidiaries of any Net Asset Sale Proceeds in respect of any
Asset Sale, (1) such Borrower shall prepay its Loans and/or such Borrower's
Revolving Loan Commitments shall be permanently reduced in an aggregate
amount equal to 100% of such Net Asset Sale Proceeds, and (2) to the extent
that any such Net Asset Sale Proceeds remain after the applications
required pursuant to the foregoing clause (1), such Borrower shall cause
the excess of such Net Asset Sale Proceeds to be applied to prepay the
remaining outstanding Loans of all other Borrowers and/or the Revolving
Loan Commitments of all other Borrowers shall be permanently reduced, in
each case on a pro rata basis (in accordance with the respective
outstanding amount of Revolving Loan Commitments).
(b) Prepayments and Reductions from Net Insurance/Condemnation
Proceeds. No later than the first Business Day following the date of
receipt by Administrative Agent or by any Borrower or any of its
Subsidiaries of any Net Insurance/Condemnation Proceeds that are required
to be applied to prepay the Loans and/or reduce the Revolving Loan
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Commitments pursuant to the provisions of subsection 6.4C, (1) such
Borrower shall prepay its Loans and/or such Borrower's Revolving Loan
Commitments shall be permanently reduced, in an aggregate amount equal to
100% of such Net Insurance/Condemnation Proceeds, and (2) to the extent
that any such Net Insurance/Condemnation Proceeds remain after the
applications required pursuant to the foregoing clause (1), such Borrower
shall cause the excess of such Net Insurance/ Condemnation Proceeds to be
applied to prepay the remaining outstanding Loans of all other Borrowers
and/or the Revolving Loan Commitments of all other Borrowers shall be
permanently reduced, in each case on a pro rata basis (in accordance with
the respective outstanding amount of Revolving Loan Commitments).
(c) Prepayments and Reductions Due to Reversion of Surplus Assets of
Pension Plans. On the date of return to any Borrower or any of its
Subsidiaries of any surplus assets of any pension plan of such Borrower or
any of its Subsidiaries, (1) such Borrower shall prepay its Loans and/or
such Borrower's Revolving Loan Commitments shall be permanently reduced in
an aggregate amount (such amount being the "NET REVERSION AMOUNT") equal to
100% of such returned surplus assets, net of transaction costs and expenses
incurred in obtaining such return, including incremental taxes payable as a
result thereof, and (2) to the extent that any such Net Reversion Amount
remains after the applications required pursuant to the foregoing clause
(1), such Borrower shall cause the excess of such Net Reversion Amount to
be applied to prepay the remaining outstanding Loans of all other Borrowers
and/or the Revolving Loan Commitments of all other Borrowers shall be
permanently reduced, in each case on a pro rata basis (in accordance with
the respective outstanding amount of Revolving Loan Commitments).
(d) Prepayments and Reductions Due to Issuance of Equity Securities.
No later than the first Business Day following the date of receipt by New
Holdings or Company of the Cash proceeds (any such proceeds, net of
underwriting discounts and commissions and other reasonable costs
associated therewith, including reasonable legal fees and expenses, being
the "NET EQUITY PROCEEDS") from the issuance of any equity Securities of
New Holdings or Company (other than proceeds from New Holdings Common Stock
issued to officers and employees of Company and its Subsidiaries pursuant
to option plans or other similar plans or agreements adopted by New
Holdings' Board of Directors), (1) Company shall prepay its Loans and/or
Company's Revolving Loan Commitments shall be permanently reduced in an
aggregate amount equal to 100% of such Net Equity Proceeds, and (2) to the
extent that any such Net Equity Proceeds remain after the applications
required pursuant to the foregoing clause (1), Company shall cause such
remaining Net Equity Proceeds to be applied to prepay the remaining
outstanding Loans of all other Borrowers and/or the Revolving Loan
Commitments of all other Borrowers shall be permanently reduced, in each
case on a pro rata basis (in accordance with the respective outstanding
amount of Revolving Loan Commitments). In the case of the receipt by New
Holdings of such Net Equity Proceeds from the issuance of any equity
Securities of New Holdings, Company shall cause New Holdings to immediately
contribute such Net Equity Proceeds to Company and Company shall apply such
Net Equity Proceeds pursuant to this subsection 2.4B(iii)(d) as though
initially received by Company from the issuance of its own equity
Securities; provided, however,
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that the Net Equity Proceeds from the Stonington Equity Contribution shall
be excluded from the provisions of this subsection 2.4B(iii)(d).
(e) Prepayments and Reductions Due to Issuance of Debt Securities. No
later than the first Business Day following the date of receipt by any
Borrower or any of its Subsidiaries of the Cash proceeds (any such
proceeds, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including reasonable
legal fees and expenses, being the "NET DEBT Proceeds") from the issuance
of any debt Securities of New Holdings, such Borrower or any such
Subsidiary, (1) such Borrower shall prepay its Loans and/or such Borrower's
Revolving Loan Commitments shall be permanently reduced in an aggregate
amount equal to 100% of such Net Debt Proceeds, and (2) to the extent that
such Net Debt Proceeds remain after the applications required pursuant to
the foregoing clause, such Borrower shall cause the excess of such Net Debt
Proceeds to be applied to prepay the remaining outstanding Revolving Loans
of all other Borrowers and/or the Revolving Loan Commitments of all other
Borrowers shall be permanently reduced in each case on a pro rata basis (in
accordance with the respective outstanding amount of Revolving Loan
Commitments). In the case of the receipt by New Holdings of such Net Debt
Proceeds from the issuance of any debt Securities of New Holdings, New
Holdings shall immediately contribute such Net Debt Proceeds to Company and
Company shall apply such Net Debt Proceeds pursuant to this subsection
2.4B(iii)(e) as though initially received by Company from the issuance of
its own debt Securities.
(f) Prepayments from Net Settlement Proceeds. No later than the first
Business Day following the date of receipt by Agent or by any Borrower or
any of its Subsidiaries of any Net Settlement Proceeds, (1) such Borrower
shall prepay its Loans in an aggregate amount equal to 100% of such Net
Settlement Proceeds, and (2) to the extent that any such Net Settlement
Proceeds remain after the applications required pursuant to the foregoing
clause (1), such Borrower shall cause the excess of such Net Settlement
Proceeds to be applied to prepay the remaining outstanding Loans of all
other Borrowers on a pro rata basis (in accordance with the respective
outstanding amount of Revolving Loan Commitments). No reductions of
Revolving Loan Commitments shall be due in respect of receipts of Net
Settlement Proceeds.
(g) Prepayments and Reductions from Consolidated Excess Cash Flow. In
the event that there shall be Consolidated Excess Cash Flow for any Fiscal
Year (commencing with Fiscal Year 2002), Company shall, no later than 100
days after the end of such Fiscal Year, prepay the Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an aggregate
amount equal to 75% of such Consolidated Excess Cash Flow.
(h) Calculations of Net Proceeds Amounts; Additional Prepayments and
Reductions Based on Subsequent Calculations. Concurrently with any
prepayment of the Loans and/or reduction of the Revolving Loan Commitments
pursuant to subsections
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2.4B(iii)(a)-(e) and (g), Borrower shall deliver to Administrative Agent an
Officers' Certificate demonstrating the calculation of the amount (the "NET
PROCEEDS AMOUNT") of the applicable Net Asset Sale Proceeds or Net
Insurance/Condemnation Proceeds, the applicable Net Reversion Amount, Net
Equity Proceeds or Net Debt Proceeds (as such terms are defined in
subsections 2.4B(iii)(c), (d) and (e)) or the Net Settlement Proceeds or
Consolidated Excess Cash Flow, as the case may be, that gave rise to such
prepayment and/or reduction. In the event that Borrower shall subsequently
determine that the actual Net Proceeds Amount was greater than the amount
set forth in such Officers' Certificate, Borrower shall promptly make an
additional prepayment of the Loans (and/or, if applicable, the Revolving
Loan Commitments shall be permanently reduced) in an amount equal to the
amount of such excess, and Borrower shall concurrently therewith deliver to
Administrative Agent an Officers' Certificate demonstrating the derivation
of the additional Net Proceeds Amount resulting in such excess.
(i) Prepayments Due to Restrictions of Revolving Loan Commitments.
Company shall from time to time promptly (x) prepay first its Swing Line
Loans and second its Revolving Loans and/or (y) cash collateralize its
outstanding Letters of Credit, and each Goss UK, Goss France and Goss Japan
shall from time to time promptly (x) prepay its Revolving Loans and/or (y)
cash collateralize its outstanding Letters of Credit, in each case to the
extent necessary (1) so that the Total Utilization of Tranche A Revolving
Loan Commitments and Total Utilization of Tranche B Revolving Loan
Commitments shall not exceed the Maximum Tranche A Revolving Loan
Commitments and Maximum Tranche B Revolving Loan Commitments, respectively,
then in effect and/or (2) to give effect to the limitations set forth in
subsection 2.1A(ii)(d) and the second paragraph of subsection 2.1A(iii).
(j) Prepayments Due to Currency Fluctuations.
(1) If on any Computation Date Administrative Agent shall have
determined that the Total Utilization of Tranche B Revolving Loan
Commitments exceeds the Maximum Tranche B Revolving Loan Commitments
(whether for a particular Borrower or all Borrowers) because of a change in
applicable rates of exchange between Dollars and Offshore Currencies, then
Administrative Agent shall give notice to the applicable Borrower(s) that a
prepayment is required under this subsection 2.4B(iii)(j)(1), and (I) in
the case of Company, Company shall promptly (x) prepay first its Swing Line
Loans and second its Tranche B Revolving Loans and/or (y) cash
collateralize its outstanding Tranche B Letters of Credit, and (II) in the
case of a Borrower other than Company, such Borrower shall promptly (x)
prepay its Tranche B Revolving Loans and/or (y) cash collateralize its
outstanding Tranche B Letters of Credit, in each case to the extent
necessary so that the Total Utilization of Tranche B Revolving Loan
Commitments shall not exceed the Maximum Tranche B Revolving Loan
Commitments (whether for such Borrower or all Borrowers) then in effect.
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(2) If on any Computation Date Administrative Agent shall have
determined that the Total Outstanding Term Loans exceeds the Maximum Term
Loan Commitments, (whether for the Company or Goss UK or both) because of a
change in applicable rates of exchange between Dollars and Offshore
Currencies, then Administrative Agent shall give notice to the applicable
Borrower(s) that a prepayment is required under this subsection
2.4B(iii)(j)(2), and each affected Borrower shall promptly prepay its Term
Loans, in each case to the extent necessary so that the Total Outstanding
Term Loans shall not exceed the Maximum Term Loan Commitments (whether for
such Borrower or all Borrowers) then in effect.
(k) Prepayments of Domestic Tranche A Revolving Loans Due to
Availability of Tranche B Revolving Loan Commitments. Company shall from
time to time prepay first its Tranche A Swing Line Loans and second its
Domestic Tranche A Revolving Loans in the event that an equivalent amount
or more of Tranche B Revolving Loan Commitments becomes available.
(l) Reductions of Revolving Loan Commitments Not Limited to Amount of
Revolving Loans Outstanding. The amount of any required reduction of the
Revolving Loan Commitments pursuant to any provision of this subsection
2.4B(iii) shall not be affected by the fact that the outstanding principal
amount of Revolving Loans at the time of such reduction is less than the
amount of such reduction.
(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments by Type of Loans. Any
voluntary prepayments pursuant to subsection 2.4B(i) shall be applied (x)
in the case of Company, first to repay Company's outstanding Swing Line
Loans to the full extent thereof, second to repay Company's outstanding
Domestic Tranche A Revolving Loans to the full extent thereof, third to
repay Company's outstanding Domestic Tranche B Revolving Loans to the full
extent thereof, and fourth to repay Company's outstanding Domestic Term
Loans to the full extent thereof, or (y) in case of any Borrower other than
Company, first to repay such Borrower's outstanding Tranche B Revolving
Loans to the full extent thereof, and second to repay such Borrower's
outstanding Term Loans to the full extent thereof. Any voluntary
prepayments of the Term Loans pursuant to subsection 2.4B(i) shall be
applied on a pro rata basis (in accordance with the respective outstanding
principal amounts thereof) to each scheduled installment of principal of
the Term Loans of each Borrower set forth in subsections 2.4A(i) and
2.4A(ii) that is unpaid at the time of such prepayment.
(b) Application of Mandatory Prepayments by Type of Loans. Any amount
(the "APPLIED AMOUNT") required to be applied as a mandatory prepayment of
the Loans and a reduction of the Revolving Loan Commitments pursuant to
subsections 2.4B(iii)(a)-(h) shall be applied, (x) in the case of Company,
first to prepay the Swing
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Line Loans to the full extent thereof and to permanently reduce the
applicable Revolving Loan Commitments by the amount of such prepayments,
second, to the extent of any remaining portion of the Applied Amount, to
prepay the Domestic Tranche A Revolving Loans to the full extent thereof
and to further permanently reduce the Domestic Tranche A Revolving Loan
Commitments by the amount of such prepayment, third, to the extent of any
remaining portion of the Applied Amount, to prepay the Domestic Tranche B
Revolving Loans to the full extent thereof and to further permanently
reduce the Domestic Tranche B Revolving Loan Commitments then in effect by
the amount of such prepayment, fourth, to the extent of any remaining
portion of the Applied Amount, to prepay the Domestic Term Loans to the
full extent thereof, fifth, to the extent of any remaining portion of the
Applied Amount, to prepay on a pro rata basis the UK Tranche B Revolving
Loans, the French Tranche B Revolving Loans and the Japanese Tranche B
Revolving Loans to the full extent thereof and to further permanently
reduce on a pro rata basis the UK Tranche B Revolving Loan Commitments, the
French Tranche B Revolving Loan Commitments and the Japanese Tranche B
Revolving Loan Commitments then in effect by the amount of such prepayment,
and sixth, to the extent of any remaining portion or the Applied Amount, to
prepay the UK Term Loans to the full extent thereof, and (y) in the case of
any Borrower other than Company, first to prepay the Tranche B Revolving
Loans of that Borrower to the full extent thereof and to further
permanently reduce the Tranche B Revolving Loan Commitments of that
Borrower by the amount of such prepayment, second, to the extent of any
remaining portion of the Applied Amount, to prepay the Term Loans, if any,
of that Borrower to the full extent thereof, third, to the extent of any
remaining portion of the Applied Amount, to prepay the Domestic Tranche A
Revolving Loans of Company to the full extent thereof and to further
permanently reduce the Domestic Tranche A Revolving Loan Commitments of
Company then in effect by the amount of such prepayment, fourth, to the
extent of any remaining portion of the Applied Amount, to prepay on a pro
rata basis the Tranche B Revolving Loans of each of the other Borrowers to
the full extent thereof and to further reduce on a pro rata basis the
Tranche B Revolving Loan Commitments of each of the other Borrowers then in
effect by the amount of such prepayment, and fifth, to the extent of any
remaining portion of the Applied Amount, to prepay the Domestic Term Loans
of Company to the full extent thereof.
(c) Application of Mandatory Prepayments of Term Loans to the
Scheduled Installments of Principal Thereof. Any mandatory prepayments of
the Term Loans pursuant to subsection 2.4B(iii) shall be applied to prepay
the Term Loans on a pro rata basis (in accordance with the respective
outstanding principal amounts thereof) and shall be applied to reduce the
scheduled installments of principal of the Term Loans set forth in
subsections 2.4A(i) and 2.4A(ii) in inverse order of maturity.
(d) Application of Prepayments to Base Rate Loans and Offshore Rate
Loans. Considering Term Loans and Revolving Loans being prepaid separately,
any prepayment of thereof shall be applied first to Base Rate Loans to the
full extent thereof
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before application to Offshore Rate Loans, in each case in a manner which
minimizes the amount of any payments required to be made by Borrowers
pursuant to subsection 2.6D.
(e) Application of Unscheduled Reductions of Domestic Tranche A
Revolving Loan Commitments. Any voluntary reduction of the Domestic Tranche
A Revolving Loan Commitments pursuant to subsection 2.4B(ii) shall be
applied to reduce the scheduled reductions of the Domestic Tranche A
Revolving Loan Commitments set forth in subsection 2.4A(iii) in forward
chronological order. Any mandatory reduction of the Domestic Tranche A
Revolving Loan Commitments pursuant to subsection 2.4B(iii) shall be
applied on a pro rata basis (in accordance with the respective outstanding
principal amounts thereof) to each scheduled reduction of the Domestic
Tranche A Revolving Loan Commitments set forth in subsection 2.4A(iii) that
is remaining at the time of such mandatory reduction in inverse order of
maturity.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. Borrowers shall make all payments in
respect of any Loan denominated in an Applicable Currency in the same Applicable
Currency. All payments by Borrower of (x) principal and interest in respect of
Loans hereunder and under any Notes shall be made in the same Applicable
Currency as incurred, and (y) except as may be otherwise provided elsewhere in
this Agreement, all fees and all other Obligations hereunder and under any Notes
shall be made in Dollars (amounts denominated in a currency other than Dollars
shall be converted into Dollars by reference to the applicable Exchange Rate),
in each case in Same Day Funds and without defense, setoff, counterclaim or
other deduction, free of any restriction or condition, and delivered to
Administrative Agent not later than 12:00 Noon (Local Time) on the date due to
the applicable Funding and Payment Office. Funds received by Administrative
Agent after the times specified above on the due dates specified above shall be
deemed to have been paid by Borrowers on the next succeeding Business Day. Each
Borrower hereby authorizes Administrative Agent to charge its accounts with
Administrative Agent in order to cause timely payment to be made to
Administrative Agent of all principal, interest, fees and expenses due hereunder
(subject to sufficient funds being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except as provided
in subsection 2.2C, all payments in respect of the principal amount of any Loan
shall include payment of accrued interest on the principal amount being repaid
or prepaid, and all such payments (and, in any event, any payments in respect of
any Loan on a date when interest is due and payable with respect to such Loan)
shall be applied to the payment of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest payments
in respect of Term Loans and Revolving Loans shall be apportioned among all
outstanding Loans to which such payments relate, in each case proportionately to
such Lenders' respective Pro Rata Shares. Administrative Agent shall promptly
distribute to the applicable Lender, at its
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primary address set forth below its name on the appropriate signature page
hereof or at such other address as such Lender may request, its Pro Rata Share
of all such payments received by Administrative Agent and the commitment fees of
such Lender when received by Administrative Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if,
pursuant to the provisions of subsection 2.6C, any Notice of Conversion/
Continuation is withdrawn as to any Affected Lender or if any Affected Lender
makes Base Rate Loans in lieu of its Pro Rata Share of any Offshore Rate Loans,
Administrative Agent shall give effect thereto in apportioning payments received
thereafter.
(iv) Payments on Business Days. Whenever any payment to be made hereunder
shall be stated to be due on a day that is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in the computation of the payment of interest hereunder or of
the commitment or Letter of Credit fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing of any
Note held by it, or any part thereof (other than by granting participations
therein), that Lender will make a notation thereon of all Loans evidenced by
that Note and all principal payments previously made thereon and of the date to
which interest thereon has been paid; provided that the failure to make (or any
error in the making of) a notation of any Loan made under such Note shall not
limit or otherwise affect the obligations of any Borrower hereunder or under
such Note with respect to any Loan or any payments of principal or interest on
such Note.
2.5 USE OF PROCEEDS.
A. TERM LOANS. The obligations of the Borrowers under the Existing Credit
Agreement (including the Existing Letters of Credit) shall be continued as
and/or converted into Domestic Term Loans in an aggregate principal amount of
$131,243,580, UK Term Loans in an aggregate principal amount of $18,756,420 and
Tranche B Revolving Loans and Tranche B Letters of Credit in an aggregate
principal amount of $50,000,000.
B. REVOLVING LOANS; SWING LINE LOANS. Up to $50,000,000 of the Tranche B
Revolving Loan Commitments shall be used by Borrowers on the Effective Date in
connection with the continuation and/or conversion of the obligations of the
Borrowers under the Existing Credit Agreement (including the Existing Letters of
Credit) into Tranche B Revolving Loans and Tranche B Letters of Credit
hereunder. The proceeds of any other Revolving Loans and Swing Line Loans shall
be used for working capital and general corporate purposes, which may include
without limitation the making of intercompany loans to any of Company's
wholly-owned Subsidiaries for their own working capital and general corporate
purposes in accordance with subsection 7.1(iii).
C. MARGIN REGULATIONS. No portion of the proceeds of any borrowing under
this Agreement shall be used by any Borrower or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation U, Regulation T or Regulation X of the Board of Governors of
the Federal Reserve System or any
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other regulation of such Board or to violate the Exchange Act, or to violate any
other similar or comparable laws of the UK, France or Japan in each case as in
effect on the date or dates of such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING OFFSHORE RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Offshore Rate Loans as to the
matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable after
11:00 A.M. (London time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Offshore Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to the Borrower and
each applicable Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Offshore Rate Loans that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Offshore Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to the Borrower and each applicable Lender, of such determination,
whereupon (i) no Loans may be made as, or converted to, Offshore Rate Loans
until such time as Administrative Agent notifies such Borrower and such Lenders
that the circumstances giving rise to such notice no longer exist and (ii) any
Notice of Borrowing or Notice of Conversion/Continuation given by a Borrower
with respect to the Loans in respect of which such determination was made shall
be deemed to be rescinded by such Borrower.
C. ILLEGALITY OR IMPRACTICABILITY OF OFFSHORE RATE LOANS. In the event that
on any date any Lender shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto but shall be made only after
consultation with the Borrower and Administrative Agent) that the making,
maintaining or continuation of its Offshore Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the interbank Eurodollar market or the position
of such Lender in that market, then, and in any such event, such Lender shall be
an "AFFECTED LENDER" and it shall on that day give notice (by telefacsimile or
by telephone confirmed in writing) to the Borrower and Administrative Agent of
such determination (which
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notice Administrative Agent shall promptly transmit to each other applicable
Lender). Thereafter (a) the obligation of the Affected Lender to make Loans as,
or to convert Loans to, Offshore Rate Loans shall be suspended until such notice
shall be withdrawn by the Affected Lender, (b) to the extent such determination
by the Affected Lender relates to an Offshore Rate Loan then being requested by
a Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding Offshore Rate Loans (the "AFFECTED
LOANS"), shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
applicable Base Rate Loans on the date of such termination. Notwithstanding the
foregoing, to the extent a determination by an Affected Lender as described
above relates to an Offshore Rate Loan then being requested by a Borrower
pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation, such
Borrower shall have the option, subject to the provisions of subsection 2.6D, to
rescind such Notice of Borrowing or Notice of Conversion/Continuation as to all
Lenders by giving notice (by telefacsimile or by telephone confirmed in writing)
to Administrative Agent of such rescission on the date on which the Affected
Lender gives notice of its determination as described above (which notice of
rescission Administrative Agent shall promptly transmit to each other applicable
Lender). Except as provided in the immediately preceding sentence, nothing in
this subsection 2.6C shall affect the obligation of any Lender other than an
Affected Lender to make or maintain Loans as, or to convert Loans to, Offshore
Rate Loans in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS. A
Borrower shall compensate each Lender, upon written request by that Lender
(which request shall set forth in reasonable detail the basis for requesting
such amounts), for all reasonable losses, expenses and liabilities (including,
without limitation, any interest paid by that Lender to lenders of funds
borrowed by it to make or carry its Offshore Rate Loans, and any loss, expense
or liability sustained by that Lender in connection with the liquidation or
re-employment of such funds) which that Lender may sustain: (i) if for any
reason (other than a default by that Lender) a borrowing of any Offshore Rate
Loan does not occur on a date specified therefor in a Notice of Borrowing or a
telephonic request for borrowing, or a conversion to or continuation of any
Offshore Rate Loan does not occur on a date specified therefor in a Notice of
Conversion/Continuation or a telephonic request for conversion or continuation,
(ii) if any prepayment or other principal payment or any conversion of any of
its Offshore Rate Loans occurs on a date prior to the last day of an Interest
Period applicable to that Loan, (iii) if any prepayment of any of its Offshore
Rate Loans is not made on any date specified in a notice of prepayment given by
the Borrower, or (iv) as a consequence of any other default by the Borrower in
the repayment of its Offshore Rate Loans when required by the terms of this
Agreement.
E. BOOKING OF OFFSHORE RATE LOANS. Any Lender may make, carry or transfer
Offshore Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender.
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F. ASSUMPTIONS CONCERNING FUNDING OF OFFSHORE RATE LOANS. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A (as fully set forth in Annex A) shall be made as though that Lender had
actually funded each of its relevant Offshore Rate Loans through the purchase of
a Eurodollar deposit bearing interest at the rate obtained pursuant to clause
(i) of the definition of Adjusted Offshore Rate in an amount equal to the amount
of such Offshore Rate Loan and having a maturity comparable to the relevant
Interest Period and through the transfer of such Eurodollar deposit from an
offshore office of that Lender to a domestic office of that Lender; provided,
however, that each Lender may fund each of its Offshore Rate Loans in any manner
it sees fit and the foregoing assumptions shall be utilized only for the
purposes of calculating amounts payable under this subsection 2.6 and under
subsection 2.7A.
G. OFFSHORE RATE LOANS AFTER DEFAULT. After the occurrence of and during
the continuation of a Potential Event of Default or an Event of Default, (i)
Borrowers may elect to have an Offshore Rate Loan denominated in an Offshore
Currency made or maintained as an Offshore Rate Loan, (ii) Borrowers may not
elect to have a Base Rate Loan denominated in Dollars converted to an Offshore
Rate Loan, after the expiration of any Interest Period then in effect for that
Loan, (iii) Borrowers may not elect to have an Offshore Rate Loan denominated in
Dollars maintained as an Offshore Rate Loan, and such Loan shall be converted
into a Base Rate Loan, and (iv) subject to the provisions of subsection 2.6D,
any Notice of Borrowing or Notice of Conversion/Continuation given by any
Borrower with respect to a requested borrowing or conversion/continuation that
has not yet occurred shall be deemed to be rescinded by such Borrower.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
Provisions regarding increased costs, taxes, and capital adequacy are set
forth in Annex A attached hereto and such Annex A is incorporated herein by this
reference.
2.8 OBLIGATIONS OF LENDERS AND ISSUING LENDERS TO MITIGATE; REPLACEMENT OF
LENDERS.
Provisions regarding obligations of Lenders and Issuing Lenders to mitigate
are set forth in Annex B attached hereto and such Annex B is incorporated herein
by this reference.
2.9 INDEMNIFYING LENDERS.
Provisions regarding Indemnifying Lenders are set forth in Annex C attached
hereto and such Annex C is incorporated herein by this reference.
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SECTION 3. LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
THEREIN.
A. LETTERS OF CREDIT. In addition to Borrowers requesting that Lenders make
Revolving Loans pursuant to subsection 2.1A(ii) and that Swing Line Lender makes
Swing Line Loans pursuant to subsection 2.1A(iii), Borrowers may request, in
accordance with the provisions of this subsection 3.1, from time to time during
the period from the Effective Date to but excluding the date which is (x) the
fifth Business Day prior to the Commitment Termination Date (in the case of
Standby Letters of Credit) and (y) the thirtieth Business Day prior to the
Commitment Termination Date (in the case of Commercial Letters of Credit), that
one or more Lenders issue Letters of Credit payable on a sight basis for the
account of such Borrower for the purposes specified in the definitions of
Commercial Letters of Credit and Standby Letters of Credit. Subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties of Borrowers set forth herein, any one or more Lenders may, but
(except as provided in subsection 3.1B(ii)) shall not be obligated to, issue
such Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Borrowers shall not request that any Lenders issue (and no Lender
shall issue):
(i) any Letter of Credit if, after giving effect to such issuance, the
Total Utilization of Tranche A Revolving Loan Commitments for Company would
exceed (x) the Maximum Tranche A Revolving Loan Commitments then in effect
or (y) the Borrowing Base then in effect;
(ii) any Letter of Credit if, after giving effect to such issuance,
(x) the Total Utilization of Tranche B Revolving Loan Commitments for all
Borrowers would exceed the Maximum Tranche B Revolving Loan Commitments for
all Borrowers then in effect, or (y) the Total Utilization of Tranche B
Revolving Loan Commitments for any Borrower would exceed the Maximum
Tranche B Revolving Loan Commitments for such Borrower then in effect;
(iii) any Letter of Credit if, after giving effect to such issuance,
(x) the Tranche A Letter of Credit Usage of Company plus the Tranche B
Letter of Credit Usage of all Borrowers would exceed the Maximum Letter of
Credit Amount, and (y) the Tranche B Letter of Credit Usage of any Borrower
would exceed the Tranche B Letters of Credit Suballocation for such
Borrower then in effect;
(iv) any Standby Letter of Credit having an expiration date later than
the earlier of (a) the date which is five (5) Business Days prior to the
Commitment Termination Date and (b) the date which is one year from the
date of issuance of such Standby Letter of Credit; provided that the
immediately preceding clause (b) shall not prevent any Issuing Lender from
agreeing that a Standby Letter of Credit will automatically be extended for
one or more successive periods not to exceed one year each unless such
Issuing Lender elects not to extend for any such additional period; and
provided further that such Issuing Lender shall elect not to extend such
Standby Letter of
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Credit if it has knowledge that an Event of Default has occurred and is
continuing (and has not been waived in accordance with subsection 10.6) at
the time such Issuing Lender must elect whether or not to allow such
extension; or
(v) any Commercial Letter of Credit having an expiration date (a)
later than the earlier of (X) the date which is thirty (30) Business Days
prior to the Revolving Commitment Termination Date and (Y) the date which
is 180 days from the date of issuance of such Commercial Letter of Credit
or (b) that is otherwise unacceptable to the applicable Issuing Lender in
its reasonable discretion.
B. MECHANICS OF ISSUANCE.
(i) Request for Issuance. Whenever any Borrower desires the issuance
of a Letter of Credit, it shall deliver to Administrative Agent a Request
for Issuance of Letter of Credit in the form of Exhibit III annexed hereto
no later than 12:00 Noon (New York time) at least two (2) Business Days, or
such shorter period as may be agreed to by the Issuing Lender in any
particular instance, in advance of the proposed date of issuance. The
Request for Issuance of Letter of Credit shall specify (a) the proposed
date of issuance (which shall be a Business Day), (b) the Type of Letter of
Credit and whether the Letter of Credit is to be a Standby Letter of Credit
or a Commercial Letter of Credit, (c) the face amount of the Letter of
Credit expressed in Dollars or in a currency other than Dollars, (d) the
expiration date of the Letter of Credit, (e) the name and address of the
beneficiary, and (f) either the verbatim text of the proposed Letter of
Credit or the proposed terms and conditions thereof, including a precise
description of any documents to be presented by the beneficiary which, if
presented by the beneficiary prior to the expiration date of the Letter of
Credit, would require the Issuing Lender to make payment under the Letter
of Credit; provided that the Issuing Lender, in its reasonable discretion,
may require changes in the text of the proposed Letter of Credit or any
such documents.
Such Borrower shall notify the applicable Issuing Lender (and
Administrative Agent, if Administrative Agent or one of its Affiliates is
not such Issuing Lender) prior to the issuance of any Letter of Credit in
the event that any of the matters to which it is required to certify in the
applicable Request for Issuance of Letter of Credit is no longer true and
correct as of the proposed date of issuance of such Letter of Credit, and
upon the issuance of any Letter of Credit such Borrower shall be deemed to
have re-certified, as of the date of such issuance, as to the matters to
which it is required to certify in the applicable Request for Issuance of
Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Administrative
Agent of a Request for Issuance of Letter of Credit pursuant to subsection
3.1B(i) requesting the issuance of a Letter of Credit, in the event
Administrative Agent or one of its Affiliates elects to issue such Letter
of Credit, Administrative Agent shall promptly so notify Borrower, and
Administrative Agent or such Affiliate shall be the Issuing Lender with
respect thereto. In the event that Administrative Agent or one of its
Affiliates, in the sole
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discretion of the Administrative Agent or such Affiliate, elects not to
issue such Letter of Credit, Administrative Agent shall promptly notify
Borrower, whereupon Borrower may request any other applicable Lender to
issue such Letter of Credit by delivering to such Lender a copy of the
applicable Request for Issuance of Letter of Credit. Any applicable Lender
so requested to issue such Letter of Credit shall promptly notify Borrower
and Administrative Agent whether or not, in its sole discretion, it has
elected to issue such Letter of Credit, and any such applicable Lender
which so elects to issue such Letter of Credit shall be the Issuing Lender
with respect thereto. In the event that all other applicable Lenders shall
have declined to issue such Letter of Credit, notwithstanding the prior
election of Administrative Agent or its Affiliates not to issue such Letter
of Credit, Administrative Agent or one of its Affiliates shall be obligated
to issue such Letter of Credit and shall be the Issuing Lender with respect
thereto, notwithstanding the fact that (x) with respect to any such Tranche
A Letter of Credit, the Tranche A Letter of Credit Usage with respect to
such Tranche A Letter of Credit and with respect to all other Tranche A
Letters of Credit issued by the Administrative Agent or one of its
Affiliates, when aggregated with Administrative Agent's outstanding
Domestic Tranche A Revolving Loans and Tranche A Swing Line Loans, may
exceed Administrative Agent's Domestic Tranche A Revolving Loan Commitments
for such Borrower then in effect, or (y) with respect to any such Tranche B
Letter of Credit, the Tranche B Letter of Credit Usage with respect to such
Tranche B Letter of Credit and with respect to all other Tranche B Letters
of Credit issued by the Administrative Agent or its Affiliates, when
aggregated with Administrative Agent's outstanding Tranche B Revolving
Loans and Tranche B Swing Line Loans, may exceed Administrative Agent's
Tranche B Revolving Loan Commitments for such Borrower then in effect.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating procedures.
(iv) Notification to Lenders. Upon the issuance of or amendment to any
Standby Letter of Credit, the applicable Issuing Lender shall promptly
notify the applicable Borrower and Administrative Agent of such issuance or
amendment and which notice shall be accompanied by a copy of such Standby
Letter of Credit or amendment. Promptly after receipt of such notice (or,
if Administrative Agent or one of its Affiliates is the Issuing Lender,
together with such notice), Administrative Agent shall notify each
applicable Lender of such issuance or modification and the amount of such
Lender's respective participation in such Standby Letter of Credit or
amendment, as determined in accordance with subsection 3.1C. Upon request
of any applicable Lender, Administrative Agent will furnish such Lender
with copies of any such issuance or amendment.
(v) Reports to Lenders. In the event that the Issuing Lender is other
than Administrative Agent or one of its Affiliates, such Issuing Lender
will send by facsimile transmission to Administrative Agent, promptly on
the first Business Day of each week,
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its daily maximum amount available to be drawn under the Commercial Letters
of Credit issued by such Issuing Lender for the previous week.
Administrative Agent shall deliver to each Lender upon each calendar month
end, and upon each Commercial Letter of Credit fee payment, a report
setting forth the daily maximum amount available to be drawn for all
Issuing Lenders during such period.
C. REVOLVING LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit for the benefit of
Company, Goss UK, Goss France or Goss Japan, as the case may be, each applicable
Lender shall be deemed to, and hereby agrees to, have irrevocably purchased from
the Issuing Lender a participation in such Letter of Credit and drawings
thereunder in an amount equal to such Lender's Pro Rata Share of the applicable
Revolving Loan Commitment of the maximum amount which is or at any time may
become available to be drawn thereunder. Upon satisfaction of the conditions set
forth in subsection 4.1, the Existing Letters of Credit shall, effective as of
the Effective Date, become Tranche B Letters of Credit under this Agreement to
the same extent as if initially issued hereunder and each Domestic Tranche B
Lender, UK Lender, French Lender and/or Japanese Lender, as the case may be,
shall be deemed to have irrevocably purchased from the Issuing Lender(s) of such
Existing Letters of Credit a participation in such applicable Tranche B Letters
of Credit and drawings thereunder in an amount equal to such Lender's Pro Rata
Share of the maximum amount which is or at any time may become available to be
drawn thereunder. All such Existing Letters of Credit which become Tranche B
Letters of Credit under this Agreement shall be fully secured by the Collateral
commencing on the Effective Date to the same extent as if initially issued
hereunder on such date.
3.2 LETTER OF CREDIT FEES.
Each Borrower agrees to pay the following amounts with respect to Letters
of Credit issued hereunder for such Borrower's account:
(i) with respect to each Standby Letter of Credit, (a) a fronting fee,
payable in Dollars directly to the applicable Issuing Lender for its own
account, equal to the greater of (X) $500 per year per Letter of Credit and
(Y) 0.25% per annum of the Dollar Equivalent of the daily maximum amount
available to be drawn under such Standby Letter of Credit, and (b) a letter
of credit fee, payable in Dollars to Administrative Agent for the account
of Lenders, equal to (x) the Applicable Offshore Rate Margin multiplied by
(y) the Dollar Equivalent of the daily maximum amount available to be drawn
under such Standby Letter of Credit, in each case payable in arrears on and
to (but excluding) the date that is three Business Days after each March
31, June 30, September 30 and December 31 of each year and computed on the
basis of a 360-day year for the actual number of days elapsed;
(ii) with respect to each Commercial Letter of Credit, (a) a fronting
fee, payable in Dollars directly to the applicable Issuing Lender for its
own account, equal to the greater of (X) $500 per year per Letter of Credit
and (Y) 0.25% per annum of the
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Dollar Equivalent of the daily maximum amount available to be drawn under
such Commercial Letter of Credit, in each case payable in arrears on and to
(but excluding) the date that is three Business Days after each March 31,
June 30, September 30 and December 31 of each year and computed on the
basis of a 360-day year for the actual number of days elapsed; and
(iii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each payment of a drawing made thereunder (without
duplication of the fees payable under clauses (i) and (ii) above),
documentary and processing charges payable directly to the applicable
Issuing Lender for its own account in accordance with such Issuing Lender's
standard schedule for such charges in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.
For purposes of calculating any fees payable under clauses (i) or (ii) of
this subsection 3.2, (1) the Dollar Equivalent of the daily amount available to
be drawn under any Letter of Credit shall be determined as of the close of
business on any date of determination, (2) any adjustments in the Applicable
Offshore Rate Margin shall be made in accordance with subsection 2.2A, (3) any
amount which is denominated in a currency other than Dollars shall be determined
based on the applicable Exchange Rate for such currency as of each first
Business Day after each March 31, June 30, September 30 or December 31, as the
case may be, of each year, and (4) Administrative Agent shall provide to
Borrowers on each first Business Day after each March 31, June 30, September 30
or December 31 of each year a report specifying the Letter of Credit fees
payable by each Borrower and including the calculations of such fees and the
Exchange Rate used, and Borrowers shall pay such fees no later than two Business
Days after delivery of such report. Promptly upon receipt by Administrative
Agent of any amount described in clause (i)(b) and (ii)(b) of this subsection
3.2, Administrative Agent shall distribute to each other applicable Lender its
Pro Rata Share of such amount. With respect to Existing Letters of Credit, the
fees described in clauses (i) and (ii) above shall accrue from and including the
Effective Date.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to exercise
reasonable care to determine that the documents required to be delivered under
such Letter of Credit have been delivered and that they substantially comply on
their face with the requirements of such Letter of Credit.
B. REIMBURSEMENT BY BORROWERS OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, (i) such Issuing Lender shall immediately notify the
Borrower and
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Administrative Agent and (ii) Borrower shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "REIMBURSEMENT DATE") in an amount in same day funds in Dollars
(which amount, in the case of a drawing under a Letter of Credit which is
denominated in a currency other than Dollars, shall be calculated by reference
to the applicable Exchange Rate) equal to the amount of such drawing; provided
that, anything contained in this Agreement to the contrary notwithstanding, (i)
unless the Borrower shall have notified Administrative Agent and such Issuing
Lender prior to 12:00 Noon (New York time) on the date such drawing is honored
that such Borrower intends to reimburse such Issuing Lender for the amount of
such drawing with funds other than the proceeds of Revolving Loans, such
Borrower shall be deemed to have given a timely Notice of Borrowing to
Administrative Agent requesting Lenders to make applicable Revolving Loans that
are (x) Base Rate Loans (in the case of Company) or (y) Offshore Rate Loans with
an Interest Period of one week (in the case of Goss UK, Goss France or Goss
Japan) on the Reimbursement Date in an amount in Dollars (which amount, in the
case of a drawing under a Letter of Credit which is denominated in a currency
other than Dollars, shall be calculated by reference to the applicable Exchange
Rate) equal to the amount of such drawing and (ii) subject to satisfaction or
waiver of the conditions specified in subsection 4.2C, Lenders shall, on the
Reimbursement Date, make applicable Revolving Loans denominated in Dollars that
are (x) Base Rate Loans (in the case of Company) or (y) Offshore Rate Loans with
an Interest Period of one week (in the case of Goss UK, Goss France or Goss
Japan) in the amount of such drawing, the proceeds of which shall be applied
directly by Administrative Agent to reimburse such Issuing Lender for the amount
of such drawing; and provided further that if for any reason proceeds of
applicable Revolving Loans are not received by such Issuing Lender on the
Reimbursement Date in an amount equal to the amount of such drawing, such
Borrower shall reimburse such Issuing Lender, on demand, in an amount in same
day funds equal to the excess of the amount of such drawing over the aggregate
amount of such applicable Revolving Loans, if any, which are so received.
Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its
obligation to make applicable Revolving Loans on the terms and conditions set
forth in this Agreement, and such Borrower shall retain any and all rights it
may have against any Lender resulting from the failure of such Lender to make
such applicable Revolving Loans under this subsection 3.3B.
C. PAYMENT BY LENDERS OF UNREIMBURSED DRAWINGS UNDER LETTERS OF CREDIT.
(i) Payment by Lenders. In the event that the Borrower shall fail for
any reason to reimburse any Issuing Lender as provided in subsection 3.3B
in an amount (calculated in the case of a drawing under a Letter of Credit
denominated in an Offshore Currency, by reference to the applicable
Exchange Rate) equal to the amount of any drawing honored by such Issuing
Lender under a Letter of Credit issued by it, such Issuing Lender shall
promptly notify each other Lender having a Revolving Loan Commitment of
such Type, of the unreimbursed amount of such drawing and having a
Revolving Loan Commitment of such Type, of such other Lender's respective
participation therein based on such Lender's Pro Rata Share. Each such
Lender shall make available to such Issuing Lender an amount equal to its
respective participation in
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same day funds in Dollars, at the office of such Issuing Lender specified
in such notice, not later than 12:00 Noon (New York time) on the first
business day (under the laws of the jurisdiction in which such office of
such Issuing Lender is located) after the date notified by such Issuing
Lender. In the event that any such Lender fails to make available to such
Issuing Lender on such business day the amount of such Lender's
participation in such Letter of Credit or the amount of the unreimbursed
drawing regarding such Letter of Credit as provided in this subsection
3.3C, such Issuing Lender shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the rate
customarily used by such Issuing Lender for the correction of errors among
banks for three Business Days and thereafter at the Base Rate. Nothing in
this subsection 3.3C shall be deemed to prejudice the right of any such
Lender to recover from any Issuing Lender any amounts made available by
such Lender to such Issuing Lender pursuant to this subsection 3.3C in the
event that it is determined by the final judgment of a court of competent
jurisdiction that the payment with respect to a Letter of Credit by such
Issuing Lender in respect of which payment was made by such Lender
constituted gross negligence or willful misconduct (as determined by a
final judgment of a court of competent jurisdiction) on the part of such
Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From
Borrowers. In the event any Issuing Lender shall have been reimbursed by
other Lenders pursuant to subsection 3.3C(i) for all or any portion of any
drawing honored by such Issuing Lender under a Letter of Credit issued by
it, such Issuing Lender shall distribute to each other Lender which has
paid all amounts payable by it under subsection 3.3C(i) with respect to
such drawing such other Lender's Pro Rata Share of all payments
subsequently received by such Issuing Lender from a Borrower in
reimbursement of such drawing when such payments are received. Any such
distribution shall be made to a Lender at its primary address set forth
below its name on the appropriate signature page hereof or at such other
address as such Lender may request.
D. INTEREST ON AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Borrowers. Each Borrower agrees to pay to
Issuing Lender, with respect to drawings made under any Letters of Credit
issued by such Issuing Lender at such Borrower's request, interest on the
amount paid by such Issuing Lender in respect of each such drawing from the
date of such drawing to but excluding the date such amount is reimbursed by
the Borrower (including any such reimbursement out of the proceeds of
Revolving Loans pursuant to subsection 3.3B) at a rate equal to (a) for the
period from the date of such drawing to but excluding the Reimbursement
Date, the rate then in effect under this Agreement with respect to
Revolving Loans that are Base Rate Loans and (b) thereafter, a rate which
is 2.00% per annum in excess of the rate of interest otherwise payable
under this Agreement with respect to Revolving Loans that are Base Rate
Loans. Interest payable pursuant to this subsection 3.3D(i) shall be
computed on the basis of a 360-day year for the actual number of days
elapsed in the
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period during which it accrues and shall be payable on demand or, if no
demand is made, on the date on which the related drawing under a Letter of
Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly
upon receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing under a Letter of Credit
issued by it, (a) such Issuing Lender shall distribute to each other
applicable Lender, out of the interest received by such Issuing Lender in
respect of the period from the date of such drawing to but excluding the
date on which such Issuing Lender is reimbursed for the amount of such
drawing (including any such reimbursement out of the proceeds of Revolving
Loans pursuant to subsection 3.3B), the amount that such other Lender would
have been entitled to receive in respect of the letter of credit fee that
would have been payable in respect of such Letter of Credit for such period
pursuant to subsection 3.2 if no drawing had been made under such Letter of
Credit, and (b) in the event such Issuing Lender shall have been reimbursed
by other Lenders pursuant to subsection 3.3C(i) for all or any portion of
such drawing, such Issuing Lender shall distribute to each other Lender
which has paid all amounts payable by it under subsection 3.3C(i) with
respect to such drawing such other Lender's Pro Rata Share of any interest
received by such Issuing Lender in respect of that portion of such drawing
so reimbursed by such other Lender for the period from the date on which
such Issuing Lender was so reimbursed by such other Lender to but excluding
the date on which such portion of such drawing is reimbursed by the
Borrower. Any such distribution shall be made to a Lender at its primary
address set forth below its name on the appropriate signature page hereof
or at such other address as such Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
The obligation of a Borrower to reimburse an Issuing Lender for drawings
made under the Letters of Credit issued by it and to repay any Revolving Loans
made by Lenders pursuant to subsection 3.3B and the obligations of Lenders under
subsection 3.3C(i) shall be unconditional and irrevocable, and any such payments
shall be made strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
any Borrower or any Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against any Borrower, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between
Borrower or one of its Subsidiaries and the beneficiary for which any
Letter of Credit was procured);
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(iii) any draft or 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;
(iv) payment by the applicable Issuing Lender under any Letter of
Credit against presentation of a draft or document which does not
substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Borrower or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES.
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, each Borrower hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and reasonable allocated costs of
internal counsel) which such Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of Credit by
such Issuing Lender, other than as a result of (a) the gross negligence or
willful misconduct of such Issuing Lender as determined by a final judgment of a
court of competent jurisdiction or (b) subject to the following clause (ii), the
wrongful dishonor by such Issuing Lender of a proper demand for payment made
under any Letter of Credit issued by it or (ii) the failure of such Issuing
Lender to honor a drawing under any such Letter of Credit as a result of any act
or omission, whether rightful or wrongful, of any Governmental Authority (all
such acts or omissions herein called "GOVERNMENTAL ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between any Borrower on the one
hand and any Issuing Lender on the other hand, Borrower assumes all risks of the
acts and omissions of, or misuse of the Letters of Credit issued by such
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Issuing Lender by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, such Issuing Lender shall
not be responsible (absent a determination of a court of competent jurisdiction
of gross negligence or willful misconduct by Issuing Lender) for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such 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; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including without limitation any Governmental
Acts, and none of the above shall affect or impair, or prevent the vesting of,
any of such Issuing Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to any Borrower.
Notwithstanding anything to the contrary contained in this subsection 3.5,
each Borrower shall retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction or out of a wrongful dishonor by Issuing Lender of a
proper demand for payment made under any Letter of Credit.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
In the event that any Issuing Lender or Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by any Issuing Lender or Lender with any guideline,
request or directive issued or made after the date hereof by any central bank or
other governmental or quasi-governmental authority (whether or not having the
force of law):
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(i) subjects such Issuing Lender or Lender (or its applicable lending
or letter of credit office) to any additional Tax (other than any Tax on
the overall net income of such Issuing Lender or Lender) with respect to
the issuing or maintaining of any Letters of Credit or the purchasing or
maintaining of any participations therein or any other obligations under
this Section 3, whether directly or by such being imposed on or suffered by
any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing
Lender or participations therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Issuing Lender or Lender (or its applicable
lending or letter of credit office) regarding this Section 3 or any Letter
of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto in an amount deemed by such Issuing Lender or Lender (in its sole
discretion) to be material; then, in any case, such Borrower shall promptly pay
to such Issuing Lender or Lender, upon receipt of the statement referred to in
the next sentence, such additional amount or amounts as may be necessary to
compensate such Issuing Lender or Lender for any such increased cost or
reduction in amounts received or receivable hereunder. Such Issuing Lender or
Lender shall deliver to the Borrower a written statement, setting forth in
reasonable detail the basis for calculating the additional amounts owed to such
Issuing Lender or Lender under this subsection 3.6, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters of
Credit hereunder are subject to the satisfaction of the following conditions.
4.1 CONDITIONS TO INITIAL EFFECTIVENESS.
The obligations of Lenders to purchase or make the Term Loans, the Initial
Tranche B Revolving Loans and/or Swing Line Loans on the Effective Date are, in
addition to the conditions precedent specified in subsection 4.2, subject to
prior or concurrent satisfaction of the following conditions, and the Existing
Letters of Credit shall become Tranche B Letters of Credit under this Agreement
upon the prior or concurrent satisfaction of the following conditions:
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A. BORROWER DOCUMENTS. On or before the Effective Date, each Borrower shall
deliver or cause to be delivered to Lenders (or to Administrative Agent for
Lenders with sufficient originally executed copies, where appropriate, for each
Lender and its counsel) the following, each, unless otherwise noted, dated the
Effective Date:
(i) Certified copies of its Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State of
its jurisdiction of incorporation and each other state in which it is
qualified as a foreign corporation to do business and, to the extent
generally available and except with respect to those jurisdictions set
forth on Schedule 4.1A, a certificate or other evidence of good standing as
to payment of any applicable franchise or similar taxes from the
appropriate taxing authority of each of such jurisdictions, and in the case
of Goss UK, Goss France and Goss Japan, the comparable or equivalent
documentation under the laws of the applicable Governmental Authority, each
dated a recent date prior to the Effective Date;
(ii) Copies of its Bylaws, certified as of the Effective Date by its
corporate secretary or an assistant secretary, and in the case of Goss UK,
Goss France and Goss Japan, the comparable or equivalent documentation,
certified as of the Effective Date by a duly authorized officer;
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents to which it is a party, certified as of the Effective Date
by its corporate secretary, an assistant secretary or other duly authorized
officer as being in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents to which it is a party;
(v) Executed and acknowledged (where applicable) originals of this
Agreement, the Notes (duly executed in accordance with subsection 2.1E,
drawn to the order of each applicable Lender and with appropriate
insertions) and the other Loan Documents to which it is a party and which
are required to be delivered on the Effective Date, which Loan Documents
shall include:
a. in the case of Company: a Collateral Account Agreement,
Guaranties of Obligations of Goss UK, Goss France and Goss Japan,
Security Agreements and/or amendments thereto and Mortgages and/or
amendments thereto, if any;
b. in the case of Goss UK: a Collateral Account Agreement,
Security Agreements and Mortgages, if any;
c. in the case of Goss France: a Collateral Account Agreement,
Security Agreements and/or amendments thereto, if any;
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d. in the case of Goss Japan: a Collateral Account Agreement;
(vi) An Officers' Certificate from each Borrower as to authorized
signatories of that Borrower for Notices of Borrowing, Notices of
Conversion/Continuation, Requests of Issuance of Letters of Credit and
Notices of Allocation; and
(vii) Such other documents as Administrative Agent may reasonably
request.
B. NEW HOLDINGS AND SUBSIDIARY DOCUMENTS. On or before the Effective Date,
Company shall cause New Holdings and each Borrower shall cause each of its
Subsidiaries to deliver to Lenders (or to Administrative Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel) the following, each, unless otherwise noted, dated the Effective
Date:
(i) Certified copies of the Certificate or Articles of Incorporation
of such Person, together with a good standing certificate from the
Secretary of State of the State of its jurisdiction of incorporation and
each other state in which such Person is qualified as a foreign corporation
to do business and, to the extent generally available, a certificate or
other evidence of good standing as to payment of any applicable franchise
or similar taxes from the appropriate taxing authority of each of such
jurisdictions, and in the case of any Foreign Subsidiary, to the extent
generally available the comparable or equivalent documentation under the
laws of the applicable Governmental Authority, each dated a recent date
prior to the Effective Date;
(ii) Copies of the Bylaws of such Person, certified as of the
Effective Date by such Person's corporate secretary or an assistant
secretary, and in the case of any Foreign Subsidiary, the comparable or
equivalent documentation, certified as of the Effective Date by a duly
authorized officer;
(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, certified as of the Effective Date by the
corporate secretary, an assistant secretary or other duly authorized
officer of such Person as being in full force and effect without
modification or amendment;
(iv) Signature and incumbency certificates of the officers of such
Person executing the Loan Documents to which it is a party;
(v) Executed originals of the Loan Documents to which such Person is a
party, which Loan Documents shall include:
a. in the case of New Holdings: Guaranties of Obligations of each
Borrower, and, with respect to such Guaranties, Security Agreements
pledging 100% of the stock of Company;
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b. in the case of each Domestic Subsidiary: Subsidiary Guaranties
of the Obligations of each Borrower, and with respect to such
Subsidiary Guaranties, Subsidiary Security Agreements and Mortgages,
if any;
c. in the case of each other Foreign Subsidiary (other than
Sayama Sub): to the extent available without causing adverse tax
consequences for Company and its Subsidiaries, Subsidiary Guaranties
of the Obligations of each Borrower, and with respect to such
Subsidiary Guaranties, a Security Agreement and Mortgages, if any; and
(vi) Such other documents as Administrative Agent may reasonably request.
C. NO MATERIAL ADVERSE EFFECT. Since July 31, 1999, no Material Adverse
Effect shall have occurred.
D. PROCEEDS OF EQUITY CAPITALIZATION OF NEW HOLDINGS AND COMPANY.
(i) New Holdings Common Stock. On or before the Effective Date, New
Holdings shall have authorized 15,000,000 shares of New Holdings Common
Stock and shall have issued 10,000,000 shares of New Holdings Common Stock
to the Old Noteholders and Stonington or Affiliates thereof and Rockwell
International Corporation.
(ii) Stonington Equity Contribution. On or before the Effective Date,
(1) Stonington or Affiliates thereof shall have contributed to New Holdings
not less than $50,000,000 in Cash as common equity, $25,000,000 of which
shall be a Cash contribution by Stonington or Affiliates thereof and
$25,000,000 of which shall be from the conversion of Stonington's or its
Affiliate's $25,000,000 commitment under the DIP Credit Agreement into
Cash, which Cash shall be transferred to New Holdings, and (2) New Holdings
shall have contributed such $50,000,000 amount to Company as common equity.
(iii) Use of Proceeds by Company. Company shall have provided evidence
satisfactory to Administrative Agent that the proceeds of the equity
capitalization of Company described in the immediately preceding clause
(ii) have been irrevocably committed, prior to the conversion and/or
continuation of the obligations of the Borrowers under the Existing Credit
Agreement as or into Term Loans, Tranche B Revolving Loans and Tranche B
Letters of Credit on the Effective Date, to the repayment of the DIP Credit
Agreement pursuant to subsection 4.1E below.
E. TERMINATION OF DIP CREDIT AGREEMENT AND RELATED LIENS; EXISTING LETTERS
OF CREDIT; EXISTING CREDIT AGREEMENT. On the Effective Date, Company and its
Subsidiaries shall have (a) repaid in full all Indebtedness outstanding under
the DIP Credit Agreement (the aggregate principal of which Indebtedness shall
not exceed $50,000,000), (b) terminated any commitments to lend or make other
extensions of credit thereunder, (c) delivered to Administrative Agent all
documents or instruments necessary to release all Liens securing
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Indebtedness or other obligations of Company and its Subsidiaries thereunder,
and (d) made arrangements satisfactory to Administrative Agent with respect to
the cancellation of any letters of credit (other than the Existing Letters of
Credit) outstanding thereunder or the issuance of Tranche B Letters of Credit to
support the obligations of Company and its Subsidiaries with respect thereto. On
the Effective Date, the obligations of the Borrowers under the Existing Credit
Agreement (including the Existing Letters of Credit), which obligations shall be
in an aggregate principal amount not to exceed $200,000,000, shall be continued
as and/or converted into Term Loans, Tranche B Revolving Loans and Tranche B
Letters of Credit hereunder pursuant to this Agreement and the Master Assignment
Agreement. Borrowers shall have furnished to Administrative Agent copies of all
Existing Letters of Credit and all amendments thereto. Borrowers shall have paid
to the applicable Lenders with respect to such Existing Letters of Credit all
fees and other amounts owing with respect thereto but excluding the Effective
Date.
F. NECESSARY CONSENTS. Company and its Subsidiaries shall have obtained all
Governmental Authorizations and all consents of other Persons, in each case that
are necessary or advisable in connection with the Refinancings and the continued
operation of the business to be conducted by Company and its Subsidiaries in
substantially the same manner as conducted prior to the consummation of the
Refinancings, and each of the foregoing shall be in full force and effect, in
each case other than those the failure to obtain, which either individually or
in the aggregate, would not be reasonably likely to have a Material Adverse
Effect. All applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on the Refinancings. No action,
request for stay, petition for review or rehearing, reconsideration or appeal
with respect to any of the foregoing shall be pending, and the time for any
applicable agency to take action to set aside its consent on its own motion
shall have expired. Administrative Agent shall have received an Officer's
Certificate of Company to the effect set forth in this subsection 4.1F.
G. LENDER AGREEMENTS.
(i) On or before the Effective Date, Borrowers, each lender under the
Existing Credit Agreement, BTCo, as administrative agent under the Existing
Credit Agreement, each Lender under this Agreement and Administrative Agent
shall have executed and delivered the Master Assignment Agreement, and on the
Effective Date, each such lender, BTCo, Lender and Administrative Agent shall
have sold, purchase and/or assigned such loans and/or commitments pursuant to
the Master Assignment Agreement such that each Lender's Pro Rata Share of the
Loans and/or Commitments upon consummation of the closing of the Refinancing
shall be as set forth on Schedule 2.1 annexed hereto.
(ii) On or before the Effective Date, Borrowers, Lenders and Administrative
Agent shall have executed and delivered the Intercreditor Agreement.
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H. REORGANIZATION PLAN; RELATED ORDERS.
(i) The Reorganization Plan shall have been confirmed by the Court pursuant
to an order of the Court (the "COURT ORDER"), in form and substance satisfactory
to Administrative Agent, entered by the Court and such Court Order shall be
unstayed.
(ii) The Reorganization Plan shall have become effective in accordance with
the terms of the Court Order.
I. EFFECTIVE DATE MORTGAGES; EFFECTIVE DATE MORTGAGE POLICIES; AMENDMENTS
TO EXISTING MORTGAGES; ETC. Administrative Agent shall have received from
Company and each applicable Subsidiary Guarantor:
(i) Effective Date Mortgages; Amendments to Existing Mortgages. Fully
executed and notarized Mortgages (each a "EFFECTIVE DATE MORTGAGE" and,
collectively, the "EFFECTIVE DATE MORTGAGES"), in proper form for recording
in all appropriate places in all applicable jurisdictions, encumbering each
Real Property Asset listed in Schedule 5.5 annexed hereto (each a
"EFFECTIVE DATE MORTGAGED PROPERTY" and, collectively, the "EFFECTIVE DATE
MORTGAGED PROPERTIES"), and fully executed and notarized amendments to
Mortgages, if any, in proper form for recording in all appropriate places
in all applicable jurisdictions, with respect to any Mortgages existing as
of the Effective Date and listed on Schedule 5.5 annexed hereto;
(ii) Opinions of Local Counsel. An opinion of counsel (which counsel
shall be reasonably satisfactory to Administrative Agent) in each state in
which a Effective Date Mortgaged Property is located with respect to the
enforceability of the form(s) of Effective Date Mortgages and the
amendments to existing Mortgages to be recorded in such state and such
other matters as Administrative Agent may reasonably request, in each case
in form and substance reasonably satisfactory to Administrative Agent;
(iii) Title Insurance. (a) ALTA mortgagee title insurance policies or
unconditional commitments therefor (the "EFFECTIVE DATE MORTGAGE POLICIES")
issued by the Title Company with respect to the Effective Date Mortgaged
Properties listed in Part A of Schedule 5.5 annexed hereto, in amounts not
less than the respective amounts designated therein with respect to any
particular Effective Date Mortgaged Properties, insuring fee simple title
to, or a valid leasehold interest in, each such Effective Date Mortgaged
Property vested in such Loan Party and assuring Administrative Agent that
the applicable Effective Date Mortgages create valid and enforceable
mortgage Liens on the respective Effective Date Mortgaged Properties
encumbered thereby and that the applicable amendments to Mortgages create
valid and enforceable mortgage Liens on the respective Mortgages encumbered
thereby, subject only to a standard survey exception, which Effective Date
Mortgage Policies (1) shall include an endorsement for mechanics' liens,
for future advances under this Agreement and for any other matters
reasonably requested by Administrative Agent and (2) shall provide for
affirmative insurance and such reinsurance as Administrative Agent may
reasonably request, all of the foregoing in
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form and substance reasonably satisfactory to Administrative Agent; and (b)
evidence satisfactory to Administrative Agent that such Loan Party has (i)
delivered to the Title Company all certificates and affidavits required by
the Title Company in connection with the issuance of the Effective Date
Mortgage Policies and (ii) paid to the Title Company or to the appropriate
governmental authorities all expenses and premiums of the Title Company in
connection with the issuance of the Effective Date Mortgage Policies and
all recording and stamp taxes (including mortgage recording and intangible
taxes) payable in connection with recording the Effective Date Mortgages in
the appropriate real estate records;
(iv) Environmental Indemnity. If requested by Administrative Agent, an
environmental indemnity agreement, satisfactory in form and substance to
Administrative Agent and its counsel, with respect to the indemnification
of Administrative Agent and Lenders for any liabilities that may be imposed
on or incurred by any of them as a result of any Hazardous Materials
Activity.
J. SECURITY INTERESTS IN PERSONAL AND MIXED PROPERTY. To the extent not
otherwise satisfied pursuant to subsection 4.1I, Agent shall have received
evidence satisfactory to it that New Holdings, Company and Subsidiary Guarantors
shall have taken or caused to be taken all such actions, executed and delivered
or caused to be executed and delivered all such agreements, documents and
instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii), (iv)
and (v) below) that may be necessary or, in the opinion of Administrative Agent,
desirable in order to (x) create in favor of Administrative Agent, for the
benefit of Domestic Tranche A Lenders, a valid and (upon such filing and
recording) perfected First Priority security interest in the entire personal and
mixed property Collateral, and (y) create and/or continue in favor of
Administrative Agent, for the benefit of Tranche B Lenders, a valid and (upon
such filing and recording) perfected Second Priority security interest in the
entire personal and mixed property Collateral. Such actions shall include the
following:
(i) Schedules to Collateral Documents. Delivery to Administrative
Agent of accurate and complete schedules to all of the applicable
Collateral Documents.
(ii) Stock Certificates and Instruments. Delivery to Administrative
Agent of (a) certificates (which certificates shall be accompanied by
irrevocable undated stock powers, duly endorsed in blank and otherwise
satisfactory in form and substance to Administrative Agent) representing
all capital stock pledged pursuant to the Security Agreement and (b) all
promissory notes or other instruments (duly endorsed, where appropriate, in
a manner satisfactory to Administrative Agent) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery to
Administrative Agent of (a) the results of a recent search, by a Person
satisfactory to Administrative Agent, of all effective UCC financing
statements and fixture filings and all judgment and tax lien filings which
may have been made with respect to any personal
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or mixed property of any Loan Party, together with copies of all such
filings disclosed by such search, and (b) UCC termination statements duly
executed by all applicable Persons for filing in all applicable
jurisdictions as may be necessary to terminate any effective UCC financing
statements or fixture filings disclosed in such search (other than any such
financing statements or fixture filings in respect of Liens permitted to
remain outstanding pursuant to the terms of this Agreement).
(iv) UCC Financing Statements, Fixture Filings and Amendments to UCC
Financing Statements and Fixture Filings. Delivery to Administrative Agent
of UCC financing statements and, where appropriate, fixture filings, and
amendments to UCC financing statements, and, where appropriate, amendments
to fixture filings, in each case duly executed by each applicable Loan
Party with respect to all personal and mixed property Collateral of such
Loan Party, for filing in all jurisdictions as may be necessary or, in the
opinion of Administrative Agent, desirable to perfect or maintain the
perfection of the security interests created in such Collateral pursuant to
the Collateral Documents;
(v) PTO Cover Sheets, Etc. Delivery to Administrative Agent of all
cover sheets or other documents or instruments required to be filed with
the United States Patent and Trademark Office in order to create and/or
continue or perfect and/or maintain perfected Liens in respect of any
intellectual property Collateral; and
(vi) Opinions of Local Counsel. Delivery to Administrative Agent of an
opinion of counsel (which counsel shall be reasonably satisfactory to
Administrative Agent) under the laws of each jurisdiction in which any Loan
Party or any personal or mixed property Collateral is located with respect
to the creation and/or continuation and perfection of the security
interests in favor of Administrative Agent in such Collateral and such
other matters governed by the laws of such jurisdiction regarding such
security interests as Administrative Agent may reasonably request, in each
case in form and substance reasonably satisfactory to Administrative Agent.
K. AUDIT OF INVENTORY AND ACCOUNTS RECEIVABLE. On or before the Effective
Date, Administrative Agent (or an independent auditor satisfactory to
Administrative Agent) shall have completed audits of the Inventory and Accounts
receivable of Company and its Subsidiaries, and Administrative Agent shall be
satisfied with the results thereof.
L. FINANCIAL STATEMENTS; PRO FORMA BALANCE SHEET; BORROWING BASE
CERTIFICATES. On or before the Effective Date, Lenders shall have received from
Company:
(i) audited financial statements of Borrowers, consisting of combined
balance sheets for Fiscal Years ended September 30, 1998, September 30,
1997 and September 30, 1996, and the combined statements of operations and
cash flows for Fiscal Years ended September 30, 1998, September 30, 1997,
and September 30, 1996;
(ii) unaudited financial statements of Borrowers as at August 31,
1999, consisting of a combined balance sheet and the related combined
statement of operations
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and cash flows for the three Fiscal Quarter period ending on such date, all
in reasonable detail and certified by the chief financial officer of
Company that they fairly present the financial condition of Borrowers as at
the dates indicated and the results of its operations and its cash flows
for the periods indicated, subject to changes resulting from audit and
normal year-end adjustments;
(iii) pro forma combined balance sheet of Company and its Subsidiaries
as at the Effective Date, prepared in accordance with GAAP and reflecting
the consummation of the Refinancings which pro forma financial statements
shall be in form and substance satisfactory to Administrative Agent;
(iv) projected financial statements of Company and its Subsidiaries
consisting of a combined balance sheet and the related combined statements
of operations and cash flows for the five-year period after the Effective
Date (including financial projections for each month during the
twelve-month period following the Effective Date), which financial
projections shall be in form and substance satisfactory to Lenders; and
(v) Borrowing Base Certificates for Company certifying the applicable
Tranche A Borrowing Base and Tranche B Borrowing Base for Company as of
September 30, 1999, in form and substance satisfactory to Administrative
Agent.
M. EVIDENCE OF INSURANCE. Agent shall have received a certificate from
Company's insurance broker or other evidence satisfactory to it that all
insurance required to be maintained pursuant to subsection 6.4 is in full force
and effect and that Administrative Agent, on behalf of Lenders, has been named
as additional insured and/or loss payee thereunder to the extent required under
subsection 6.4.
N. OPINIONS OF BORROWERS' COUNSEL. Lenders shall have received (i)
originally executed copies of one or more favorable written opinions of Kirkland
& Ellis, counsel for Borrowers, in form and substance reasonably satisfactory to
Administrative Agent and its counsel, dated as of the Effective Date and setting
forth substantially the matters in the opinions designated in Exhibit X-A
annexed hereto and as to such other matters as Administrative Agent acting on
behalf of Lenders may reasonably request, and (ii) originally executed copies of
one or more favorable written opinions of Linklaters & Paines, local counsel for
Goss UK, in form and substance reasonably satisfactory to Administrative Agent
and its counsel, dated as of the Effective Date and setting forth substantially
the matters in the opinions designated in Exhibit X-C annexed hereto and as to
such other matters as Administrative Agent acting on behalf of Lenders may
reasonably request.
O. OPINIONS OF O'MELVENY & MYERS LLP. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & Myers LLP, dated as of the Effective Date, substantially in the form
of Exhibit XI annexed hereto and as to such other matters as Administrative
Agent acting on behalf of Lenders may reasonably request.
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P. EXPENSES AND FEES. Company shall have paid to Administrative Agent, for
distribution (as appropriate) to Lenders, the fees payable on the Effective Date
referred to in subsection 2.3. Company shall have paid to Administrative Agent
all of the Administrative Agent's costs and expenses incurred in connection with
the consummation of the transactions contemplated hereby and shall have paid all
of the fees, costs and expenses of all of Administrative Agent's experts,
consultants, auditors, appraisers, counsel and other advisors, including without
limitation the fees and expenses of O'Melveny & Myers LLP and of local and
foreign counsel to Administrative Agent.
Q. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Each Borrower
shall have delivered to Administrative Agent an Officers' Certificate, in form
and substance satisfactory to Administrative Agent, to the effect that the
representations and warranties in Section 5 hereof are true, correct and
complete in all material respects on and as of the Effective Date to the same
extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and that such Borrower shall have
performed in all material respects all agreements and satisfied all conditions
which this Agreement provides shall be performed or satisfied by it on or before
the Effective Date except as otherwise disclosed to and agreed to in writing by
Administrative Agent and Requisite Lenders, and, if no Loans are made on the
Effective Date, that all conditions precedent described in subsection 4.2B have
been satisfied to the same extent as if the Existing Letters of Credit becoming
Tranche B Letters of Credit under this Agreement were the making of a Loan and
the date of the Existing Letters of Credit becoming Tranche B Letters of Credit
under this Agreement were a Funding Date.
R. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, and its counsel shall be satisfactory in
form and substance to Administrative Agent and such counsel, and Administrative
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Administrative Agent may reasonably
request.
Each Lender hereby agrees that by its execution and delivery of its
signature pages thereto and by the funding of its loans to be made on the
Effective Date, such Lender approves of and consents to each of the matters set
forth in this subsection 4.1 which must be approved by, or which must be
satisfactory to, all or Requisite Lenders; provided that in the case of any
agreement or document which must be approved by, or which must be satisfactory
to, all or Requisite Lenders, Administrative Agent or Company shall have
delivered a copy of such agreement or document in substantially the form in
which executed or delivered to such Lender on or prior to the Effective Date.
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4.2 CONDITIONS TO ALL LOANS.
The obligations of Lenders to make Loans on each Funding Date are subject
to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed Notice
of Borrowing, in each case signed by the chief executive officer, the chief
financial officer or the treasurer of the Borrower or by any other authorized
signatory of such Borrower.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made
on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) Borrower shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall not
violate any law including, without limitation, Regulation T, Regulation U
or Regulation X of the Board of Governors of the Federal Reserve System or
any other comparable or similar law of any Governmental Authority; and
(vi) There shall not be pending or, to the knowledge of Borrower,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed
by any Borrower in writing pursuant to subsection 5.6 or 6.1(x) prior to
the making of the last preceding Loans (or, in the case of the initial
Loans, prior to the execution of this Agreement), and there shall have
occurred no development not so disclosed in any such action, suit,
proceeding, governmental investigation or arbitration so disclosed, that,
in either event, in the opinion of Administrative Agent or of Requisite
Lenders, would be expected to have a Material Adverse Effect; and no
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injunction or other restraining order shall have been issued and no hearing
to cause an injunction or other restraining order to be issued shall be
pending or noticed with respect to any action, suit or proceeding seeking
to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated by
this Agreement or the making of Loans hereunder.
C. The Existing Letters of Credit shall have become Tranche B Letters of
Credit under this Agreement.
4.3 CONDITIONS TO LETTERS OF CREDIT.
The issuance of any Letter of Credit hereunder (whether or not the Issuing
Lender is obligated to issue such Letter of Credit) is subject to the following
conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Request for Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer or the treasurer of Borrower, or by any other authorized signatory of
Borrower, together with all other information specified in subsection 3.1B(i)
and such other documents or information as the Issuing Lender may reasonably
require in connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, (x) with respect to
Company, all conditions precedent described in subsection 4.2B shall be
satisfied to the same extent as if the issuance of such Letter of Credit were
the making of a Loan and the date of issuance of such Letter of Credit were a
Funding Date, and (y) with respect to Goss Japan, as the case may be, all
conditions precedent described in subsections 4.2B and 4.4 shall be satisfied to
the same extent as if the issuance of such Letter of Credit were the making of a
Loan and the date of issuance of such Letter of Credit were a Funding Date.
4.4 CONDITIONS TO JAPANESE LOANS.
The obligations of Lenders to purchase or make any Japanese Tranche B
Revolving Loans pursuant to the Tranche B Revolving Loan Commitments following
the Effective Date are, in addition to the conditions precedent specified in
subsections 4.1 and 4.2, subject to prior or concurrent satisfaction of the
following conditions:
A. JAPANESE SECURITY DOCUMENTS. On or before the applicable Funding
Date with respect to such Japanese Tranche B Revolving Loans,
Administrative Agent shall have received evidence satisfactory to it that
Goss Japan shall have (i) taken or caused to be taken such actions, (ii)
executed and delivered or caused to be executed and delivered all such
agreements, amendments, documents and instruments and, if requested
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by Administrative Agent, legal opinions (in each case, in form and
substance satisfactory to Administrative Agent and its counsel), and (iii)
made or caused to be made all such filings and recordings, in each case of
clauses (i), (ii) and (iii) that may be necessary or, in the opinion of
Administrative Agent, desirable to, maintain and continue in favor of
Administrative Agent, for the benefit of Lenders, a valid and perfected
security interest as of such date in the entire real, personal and mixed
property Collateral of Goss Japan and Administrative Agent shall have
received executed copies of all such agreements, amendments, documents and
instruments and, if requested by Administrative Agent, legal opinions, and
such other documents and instruments as may be requested by Administrative
Agent.
SECTION 5. BORROWERS' REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lenders to issue Letters of Credit and to induce other
Lenders to purchase participations therein, each Borrower represents and
warrants to each Lender, on the date of this Agreement, on each Funding Date and
on the date of issuance of each Letter of Credit, that the following statements
are true, correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each Loan Party has all requisite corporate power
and authority to own and operate its properties, to carry on its business as now
conducted and as proposed to be conducted, to enter into the Loan Documents to
which it is a party and to carry out the transactions contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions, individually or in the aggregate for all such jurisdictions,
where the failure to be so qualified or in good standing has not had and will
not have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.12.
D. SUBSIDIARIES. All of the Subsidiaries of New Holdings are identified in
Schedule 5.1 annexed hereto. The capital stock of each of the Subsidiaries of
New Holdings identified in Schedule 5.1 annexed hereto is duly authorized,
validly issued, fully paid and nonassessable and none of such capital stock
constitutes Margin Stock. Each of the Subsidiaries of New Holdings identified in
Schedule 5.1 annexed hereto is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein, has all requisite corporate power and authority
to own and operate its properties
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and to carry on its business as now conducted and as proposed to be conducted,
and is qualified to do business and in good standing in every jurisdiction where
its assets are located and wherever necessary to carry out its business and
operations, in each case except where failure to be so qualified or in good
standing or a lack of such corporate power and authority, individually or in the
aggregate, has not had and will not have a Material Adverse Effect. Schedule 5.1
annexed hereto correctly sets forth, the ownership interest of New Holdings and
each of its Subsidiaries in each of the Subsidiaries of New Holdings identified
therein.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance of
the Loan Documents have been duly authorized by all necessary corporate action
on the part of each Loan Party that is a party thereto.
B. NO CONFLICT. The execution, delivery and performance by any Loan Party
of the Loan Documents to which it is a party and the consummation of the
transactions contemplated by the Loan Documents do not and will not (i) violate
any provision of any law or any governmental rule or regulation applicable to
any Loan Party, the Certificate or Articles of Incorporation or Bylaws, or other
organizational or governing documents, of any Loan Party or any order, judgment
or decree of any court or other Governmental Authority binding on any Loan
Party, (ii) conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under any Contractual Obligation of any Loan
Party, except for such breaches, conflicts and defaults which could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of any Loan Party (other than any
Liens created under any of the Loan Documents in favor of Administrative Agent
on behalf of Lenders), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of any Loan
Party, except for such approvals or consents (a) which will be obtained on or
before the Effective Date or (b) which the failure to obtain could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by any
Loan Party of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body, except for
filings required in connection with the perfection of security interests granted
pursuant to the Loan Documents, and such other registrations, consents,
approvals, notices or other actions which have been or will be made, obtained,
given or taken on or before the Effective Date or which the failure to obtain or
take could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
D. BINDING OBLIGATION. Each of the Loan Documents has been duly executed
and delivered by each Loan Party that is a party thereto and is the legally
valid and binding obligation of such Loan Party, enforceable against such Loan
Party in accordance with
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its respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
E. VALID ISSUANCE OF COMPANY COMMON STOCK AND NEW HOLDINGS COMMON STOCK.
All issued and outstanding shares of Company Common Stock and New Holdings
Common Stock are duly and validly issued, fully paid and nonassessable. No
stockholder of Company nor any stockholder of New Holdings has any preemptive
rights to subscribe for any additional equity Securities of Company or equity
Securities of New Holdings. Any issuance and sale of such Company Common Stock
or New Holdings Common Stock, upon such issuance and sale, will either (a) have
been registered or qualified under applicable federal and state securities laws
or (b) be exempt therefrom.
5.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders' request, the
financial statements and information described in subsection 4.1L. All such
statements (other than the projected financial statements of Company and its
Subsidiaries) were prepared in conformity with GAAP and fairly present the
financial position (on a consolidated and, where applicable, consolidating
basis) of the entities described in such financial statements as at the
respective dates thereof and the results of operations and cash flows (on a
consolidated and, where applicable, consolidating basis) of the entities
described therein for each of the periods then ended, subject, in the case of
any such unaudited financial statements, to changes resulting from audit and
normal year-end adjustments. None of the Loan Parties has any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that is not reflected in the foregoing
financial statements or the notes thereto and which in any such case is material
in relation to the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Company and its Subsidiaries, taken as
a whole.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Since July 31, 1999, no event or change has occurred that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect.
Since July 31, 1999, neither Company nor any of its Subsidiaries has directly or
indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Junior Payment or agreed to do so except as permitted by
subsection 7.5.
5.5 TITLE TO PROPERTIES; LIENS.
A. TITLE TO PROPERTIES; LIENS. New Holdings, Company and its Subsidiaries
have (i) good, sufficient and legal title to (in the case of fee interests in
real property), (ii) valid leasehold interests in (in the case of leasehold
interests in real or personal property), or (iii) good title to (in the case of
all other personal property), all of their respective properties and assets
reflected in the financial statements referred to in subsection 5.3 or in the
most recent financial
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statements delivered pursuant to subsection 6.1, in each case except for assets
disposed of since the date of such financial statements in the ordinary course
of business or as otherwise permitted under subsection 7.7. Except as permitted
by this Agreement, all such properties and assets are free and clear of Liens.
B. REAL PROPERTY. As of the Effective Date, Schedule 5.5 annexed hereto
contains a true, accurate and complete list of (i) all Fee Properties and (ii)
all leases, subleases or assignments of leases (together with all amendments,
modifications, supplements, renewals or extensions of any thereof) affecting
each Real Property Asset of any Loan Party, regardless of whether such Loan
Party is the landlord or tenant (whether directly or as an assignee or successor
in interest) under such lease, sublease or assignment. Except as specified in
Schedule 5.5 annexed hereto, each agreement listed in clause (ii) of the
immediately preceding sentence is in full force and effect and Company does not
have knowledge of any default that has occurred and is continuing thereunder,
and each such agreement constitutes the legally valid and binding obligation of
each applicable Loan Party, enforceable against such Loan Party in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles.
5.6 LITIGATION; ADVERSE FACTS.
Except as set forth in Schedule 5.6 annexed hereto or, with respect to
Environmental Claims, as set forth on Schedule 5.13 annexed hereto, there are no
actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of New Holdings, Company or any of their
respective Subsidiaries) at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of any
Borrower, threatened against or affecting New Holdings, Company or any of their
respective Subsidiaries or any property of New Holdings, Company or any of their
respective Subsidiaries that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither New Holdings nor
Company nor any of their respective Subsidiaries is (i) in violation of any
applicable laws (excluding Environmental Laws which are covered in subsection
5.13) that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect or (ii) subject to or in default with
respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3, all material tax returns
and reports of New Holdings, Company and their respective Subsidiaries required
to be filed by any of them have been timely filed or extensions with respect to
filing have been properly obtained,
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and all material taxes, assessments, fees and other governmental charges upon
New Holdings, Company and their respective Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. None of the Borrowers knows of
any material proposed tax assessment against New Holdings, Company or any of
their respective Subsidiaries which is not being actively contested by New
Holdings, Company or such Subsidiary in good faith and by appropriate
proceedings; provided that such reserves or other appropriate provisions, if
any, as shall be required in conformity with GAAP shall have been made or
provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; NO MATERIALLY ADVERSE AGREEMENTS.
A. Neither New Holdings nor Company nor any of their respective
Subsidiaries is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any of its Contractual
Obligations, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default, except where the
consequences, direct or indirect, of such default or defaults, if any,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
B. Neither New Holdings nor Company nor any of their respective
Subsidiaries is a party to or is otherwise subject to any agreements or
instruments or any charter or other internal restrictions which, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect.
C. The Contractual Obligations of each of New Holdings and Company and
their respective Subsidiaries are in full force and effect and no defaults that
could reasonably be expected to result in a Material Adverse Effect currently
exist thereunder.
5.9 GOVERNMENTAL REGULATION.
Neither New Holdings nor Company nor any of their respective Subsidiaries
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation or under any
other comparable or similar laws of any Governmental Authority which may limit
its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.
5.10 SECURITIES ACTIVITIES.
Neither New Holdings nor Company nor any of their respective Subsidiaries
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any Margin Stock.
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5.11 EMPLOYEE BENEFIT PLANS.
A. New Holdings and Company and each of their respective Subsidiaries are
in compliance in all material respects with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder and the terms of each Employee Benefit Plan, and have performed all
their material obligations under each Employee Benefit Plan.
B. No ERISA Event has occurred or is reasonably expected to occur that
could reasonably be expected to result in an aggregate liability to the Company
or any of its Subsidiaries of more than $1,000,000.
C. In accordance with the most recent actuarial valuation for any Pension
Plan, the excess of the aggregated accumulated benefit obligations, as defined
in Statement of Financial Accounting Standards No. 87, over the aggregate total
fair market value for all such Pension Plans (excluding for purposes of such
computation (1) any Pension Plans with respect to which the fair market value of
the assets exceeds such accumulated benefit obligations and (2) any Foreign
Unfunded Pension Plan), does not exceed $12,000,000.
5.12 CERTAIN FEES.
Except as set forth in Schedule 5.12 annexed hereto, no broker's or
finder's fee or commission will be payable with respect to this Agreement or any
of the transactions contemplated hereby, and each Borrower hereby indemnifies
Lenders against, and agrees that it will hold Lenders harmless from, any claim,
demand or liability for any such broker's or finder's fees alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.
5.13 ENVIRONMENTAL PROTECTION.
Except as set forth in Schedule 5.13 annexed hereto:
(i) the operations of Company and each of its Subsidiaries (including,
without limitation, all operations and conditions at or in the Facilities)
comply in all material respects with all Environmental Laws;
(ii) Company and each of its Subsidiaries have obtained all
Governmental Authorizations under Environmental Laws necessary to their
respective operations, and all such Governmental Authorizations are being
maintained in good standing, and Company and each of its Subsidiaries are
in compliance in all material respects with such Governmental
Authorizations;
(iii) neither Company nor any of its Subsidiaries has received (a) any
notice or claim to the effect that it is or may be liable to any Person as
a result of or in connection
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with any Hazardous Materials or (b) any letter or request for information
under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9604) or comparable state
laws, and, to the best of the Borrowers' knowledge, none of the operations
of Company or any of its Subsidiaries is the subject of any federal or
state investigation relating to or in connection with any Hazardous
Materials at any Facility or at any other location except for such of the
foregoing which would not reasonably be expected to have a Material Adverse
Effect;
(iv) none of the operations of Company or any of its Subsidiaries is
subject to any judicial or administrative proceeding alleging the violation
of or liability under any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse Effect;
(v) neither Company nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written
order, consent, decree or settlement agreement with any Person relating to
(a) any Environmental Laws, (b) any Environmental Claims, or (c) any
Hazardous Materials Activity, except for such of the foregoing which would
not reasonably be expected to have a Material Adverse Effect;
(vi) neither Company nor any of its Subsidiaries has any contingent
liability in connection with any Release by Company or any of its
Subsidiaries except for such of the foregoing which would not reasonably be
expected to have a Material Adverse Effect;
(vii) neither Company nor any of its Subsidiaries nor, to the best
knowledge of the Borrowers, any predecessor of Company or any of its
Subsidiaries has filed any notice under any Environmental Laws indicating
past or present treatment of Hazardous Materials at any Facility and none
of Company's or any of its Subsidiaries' operations involves the
generation, transportation, treatment, storage or disposal of hazardous
waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent;
(viii) there are and, to Company's knowledge, have been no conditions,
occurrences, or Hazardous Materials Activities which could reasonably be
expected to form the basis of an Environmental Claim against Company or any
of its Subsidiaries that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect;
(ix) neither Company nor any of its Subsidiaries nor, to the best
knowledge of Company, any of their respective predecessors has disposed of
any Hazardous Materials in a manner that would reasonably be expected to
give rise to an Environmental Claim having a Material Adverse Effect;
(x) to the best knowledge of Company, no underground storage tanks or
surface impoundments are on or at any Facility;
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(xi) no Lien in favor of any Person relating to or in connection with
any Environmental Claim has been filed or has been attached to any Facility
except for any such Lien which would not reasonably be expected to have a
Material Adverse Effect;
(xii) commencing at least ten years prior to the Effective Date,
Company has maintained an environmental management system for its and each
of its Subsidiaries' operations that demonstrates a commitment to
environmental compliance and includes procedures for (a) preparing and
updating written compliance manuals covering pertinent regulatory areas,
(b) tracking changes in applicable Environmental Laws and modifying
operations to comply with new requirements thereunder, (c) training
employees to comply with applicable environmental requirements and updating
such training as necessary, (d) performing regular internal compliance
audits of each Facility and ensuring correction of any incidents of
non-compliance detected by means of such audits, and (e) reviewing the
compliance status of off-site waste disposal facilities; and
(xiii) compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws will not, individually
or in the aggregate, have a reasonable possibility of giving rise to a
Material Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the contrary, no event
or condition has occurred or is occurring with respect to Company or any of its
Subsidiaries relating to any Environmental Laws, any Release of any Hazardous
Materials at any Facility or any other location, or any Hazardous Materials
Activity, including without limitation any matter disclosed in Schedule 5.13
annexed hereto which, individually or in the aggregate, has had or could
reasonably be expected to have, a Material Adverse Effect.
5.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened involving
Company or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
5.15 SOLVENCY.
(i) Company and each of its Subsidiaries is and, upon the incurrence of any
Obligations by any Borrower on any date on which this representation is made,
will be, Solvent.
(ii) With respect to Goss France: (a) Goss France has not ceased or
suspended or threatened or announced an intention to cease or suspend payment of
its debts whether pursuant to Article 3 of law No. 85-98 dated 25 January, 1985
or otherwise; (b) Goss France has not become insolvent or had any moratorium
declared in respect of any of its indebtedness; (c) Goss France has not applied
for the appointment of a conciliator pursuant to law No. 84-148 dated 1 March,
1984; (d) Goss France has not applied for the appointment of a mandataire ad
hoc; (e) Goss France is not the object of a judgment declaring its redressement
or liquidation judiciaire pursuant to law No. 85-98 dated 25 January 1985 or
subject to a plan for the transfer of the whole or part of its business; and (f)
no administrator, receiver, liquidator or similar officer
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has been appointed with respect to Goss France or its assets nor so far as is
aware is any petition or proceeding for any such appointment pending nor has any
resolution for any such appointment been passed.
5.16 MATTERS RELATING TO COLLATERAL.
A. CREATION, CONTINUATION, PERFECTION AND PRIORITY OF LIENS. The execution
and delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 4.1I, 4.1J,
6.8 and 6.9 and (ii) the delivery to Administrative Agent of any Pledged
Collateral not delivered to Administrative Agent at the time of execution and
delivery of the applicable Collateral Document (all of which Pledged Collateral
has been so delivered) are effective to create and/or continue in favor of
Administrative Agent for the benefit of Lenders, as security for the respective
Secured Obligations (as defined in the applicable Collateral Document in respect
of any Collateral), a valid and perfected senior Lien on all of the Collateral
with respect to the Domestic Tranche A Revolving Loan Commitments and a valid
and perfected junior Lien on all of the Collateral with respect to the Tranche B
Revolving Loan Commitments and Term Loans, and all filings and other actions
necessary or desirable to perfect and maintain the perfection and First senior
status and junior status of such Liens, as the case may be, have been duly made
or taken and remain in full force and effect, other than the filing of any UCC
financing statements and/or UCC financing statement amendments delivered to
Administrative Agent for filing (but not yet filed) and the periodic filing of
UCC continuation statements in respect of UCC financing statements filed by or
on behalf of Administrative Agent.
B. GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for either (i) the pledge or grant by any Loan Party of the
Liens purported to be created in favor of Agent pursuant to any of the
Collateral Documents or (ii) the exercise by Administrative Agent of any rights
or remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Collateral Documents or created or provided for
by applicable law), except for filings or recordings contemplated by subsection
5.16A and except as may be required, in connection with the disposition of any
Pledged Collateral, by laws generally affecting the offering and sale of
securities.
C. ABSENCE OF THIRD-PARTY FILINGS. Except such as may have been filed in
favor of Administrative Agent as contemplated by subsection 5.16A or as
otherwise permitted under this Agreement and the other Loans Documents, (i) no
effective UCC financing statement, fixture filing or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office and (ii) no effective filing covering all or any part of the
intellectual property Collateral is on file in the United States Patent and
Trademark Officer.
D. MARGIN REGULATIONS. The pledge of the Pledged Collateral pursuant to the
Collateral Documents does not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
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E. INFORMATION REGARDING COLLATERAL. All information supplied to
Administrative Agent by or on behalf of any Loan Party with respect to any of
the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
5.17 DISCLOSURE.
No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to any Borrower, in the case of any document not furnished
by it) necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by the Borrowers to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There are no facts known (or which should upon the
reasonable exercise of diligence be known) to the Borrowers (other than matters
of a general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
SECTION 6. BORROWERS' AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
such Borrower shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Each Borrower will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. Company will deliver to Administrative Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event within
30 days after the end of each month ending after the Effective Date, (a)
the consolidated and consolidating (by geographic region, which regions
shall consist of the United States, Europe and Asia, each, a "REGION")
balance sheets of each Borrower and its Subsidiaries as at the end of such
month and the related consolidated and consolidating (by Region)
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statements of income, stockholders' equity and cash flows of such Borrower
and its Subsidiaries for such month and for the period from the beginning
of the then current Fiscal Year to the end of such month and setting forth
in comparative form the corresponding figures for the corresponding periods
of the previous Fiscal Year and the corresponding figures from the
Financial Plan for the current Fiscal Year, all in reasonable detail and
certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of such Borrower
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments, and (b) a
report describing the operations of such Borrower and its Subsidiaries in
the form prepared for presentation to senior management for such month and
for the period from the beginning of the then current Fiscal Year to the
end of such month, and (c) a report comparing the achievements of Company
with respect to contract margin improvement, collection of Accounts and
disposition of stale Inventory against the corresponding figures from the
Financial Plan for the current Fiscal Year;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each Fiscal Quarter, (a) the consolidated
and consolidating (by Region) balance sheets of each Borrower and its
Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated and consolidating (by Region) statements of income,
stockholders' equity and cash flows of such Borrower and its Subsidiaries
for such Fiscal Quarter and for the period from the beginning of the then
current Fiscal Year to the end of such Fiscal Quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding
figures from the Financial Plan for the current Fiscal Year, all in
reasonable detail and certified by the chief financial officer of Company
that they fairly present, in all material respects, the financial condition
of such Borrower and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments,
and (b) a narrative report describing the operations of such Borrower and
its Subsidiaries in the form prepared for presentation to senior management
for such Fiscal Quarter and for the period from the beginning of the then
current Fiscal Year to the end of such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any event
within 100 days after the end of each Fiscal Year, (a) the consolidated and
consolidating (by Region) balance sheets of such Borrower and its
Subsidiaries as at the end of such Fiscal Year and the related consolidated
and consolidating (by Region) statements of income, stockholders' equity
and cash flows of such Borrower and its Subsidiaries for such Fiscal Year,
setting forth in each case in comparative form the corresponding figures
for the previous Fiscal Year and the corresponding figures from the
Financial Plan for the Fiscal Year covered by such financial statements,
all in reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the financial
condition of such Borrower and its Subsidiaries as at the dates indicated
and the
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results of their operations and their cash flows for the periods indicated,
(b) a narrative report describing the operations of such Borrower and its
Subsidiaries in the form prepared for presentation to senior management for
such Fiscal Year, and (c) in the case of such consolidated financial
statements with respect to Company and its Subsidiaries, (1) a report
thereon of Arthur Andersen LLP or other independent certified public
accountants of recognized national standing selected by Company and
satisfactory to Administrative Agent, which report shall be unqualified as
to scope of audit, shall express no doubts about the ability of Company and
its Subsidiaries to continue as a going concern, and shall state that such
consolidated financial statements fairly present, in all material respects,
the consolidated financial position of Company and its Subsidiaries as at
the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards and (2) an Auditor's
Letter, substantially in the form of Exhibit IX annexed hereto with such
changes as are approved by Administrative Agent, acknowledged by such
accounting firm acknowledging that Lenders will receive such consolidated
financial statements in such report and will use such financial statements
and report in their credit analyses of each Borrower and its Subsidiaries;
(iv) Officers' and Compliance Certificates: (a) together with each
delivery of financial statements of each Borrower and its Subsidiaries
pursuant to subdivisions (i), (ii) and (iii) above, an Officers'
Certificate of Company stating that the signers have reviewed the terms of
this Agreement and have made, or caused to be made under their supervision,
a review in reasonable detail of the transactions and condition of each
Borrower and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signers do not
have knowledge of the existence as at the date of such Officers'
Certificate, of any condition or event that constitutes an Event of Default
or Potential Event of Default, or, if any such condition or event existed
or exists, specifying the nature and period of existence thereof and what
action Borrowers have taken, are taking and propose to take with respect
thereto; and (b) together with each delivery of financial statements
pursuant to subdivision (ii) and (iii) above, a Compliance Certificate
demonstrating in reasonable detail compliance during and at the end of the
applicable accounting periods with the restrictions contained in Section 7;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Company and its Subsidiaries delivered
pursuant to subdivisions (i), (ii), (iii) or (xiii) of this subsection 6.1
will differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such subdivisions had
no such change in accounting principles and policies been made, then (a)
together with the first
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delivery of financial statements pursuant to subdivision (i), (ii), (iii)
or (xiii) of this subsection 6.1 following such change, consolidated
financial statements of Company and its Subsidiaries for (y) the current
Fiscal Year to the effective date of such change and (z) the full Fiscal
Year immediately preceding the Fiscal Year in which such change is made, in
each case prepared on a pro forma basis as if such change had been in
effect during such periods, and (b) together with each delivery of
financial statements pursuant to subdivision (i), (ii), (iii) or (xiii) of
this subsection 6.1 following such change, a written statement of the chief
accounting officer or chief financial officer of Company setting forth the
differences (including without limitation any differences that would affect
any calculations relating to the financial covenants set forth in
subsection 7.6) which would have resulted if such financial statements had
been prepared without giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting
matters, (b) stating whether, in connection with their audit examination,
any condition or event that constitutes an Event of Default or Potential
Event of Default has come to their attention and, if such a condition or
event has come to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not be liable by
reason of any failure to obtain knowledge of any such Event of Default or
Potential Event of Default that would not be disclosed in the course of
their audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to believe
either or both that the information contained in the certificates delivered
therewith pursuant to subdivision (iv) above is not correct or that the
matters set forth in the Compliance Certificates delivered therewith
pursuant to subdivision (iv) above for the applicable Fiscal Year are not
stated in accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to any Borrower by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of any Borrower and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by any Borrower to its
security holders or by any Subsidiary of any Borrower to its security
holders other than any Borrower or another Subsidiary of a Borrower, (b)
all regular and periodic reports and all registration statements (other
than on Form S-8 or a similar form) and prospectuses, if any, filed by a
Borrower or any of its
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Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority,
and (c) all press releases and other statements made available generally by
a Borrower or any of its Subsidiaries to the public concerning material
developments in the business of such Borrower or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of any Loan
Party obtaining knowledge (a) of any condition or event that constitutes an
Event of Default or Potential Event of Default, or becoming aware that any
Lender has given any notice (other than to Administrative Agent) or taken
any other action with respect to a claimed Event of Default or Potential
Event of Default, (b) that any Person has given any notice to a Borrower or
any of its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 8.2,
(c) of any condition or event that would be required to be disclosed in a
current report filed by a Borrower with the Securities and Exchange
Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on
the date hereof) if such Borrower were required to file such reports under
the Exchange Act, or (d) of the occurrence of any event or change that has
caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect, an Officers' Certificate specifying the nature and period
of existence of such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of such claimed
Event of Default, Potential Event of Default, default, event or condition,
and what action Borrowers have taken, are taking and propose to take with
respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any officer of
any Loan Party obtaining knowledge of (X) the institution of, or
non-frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting such Borrower or any of its Subsidiaries
or any property of such Borrower or any of its Subsidiaries (collectively,
"PROCEEDINGS") not previously disclosed in writing by Company or any of its
Subsidiaries to Lenders or (Y) any material development in any Proceeding
that, in any case:
(1) could reasonably be expected to result in a Material Adverse
Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to such Borrower to enable Lenders and their
counsel to evaluate such matters; and (b) within twenty days after the
end of each Fiscal Quarter, a schedule of all Proceedings involving an
alleged liability of, or claims against or affecting, any Borrower or
any of its Subsidiaries equal to or greater than
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$500,000, and promptly after request by Administrative Agent such
other information as may be reasonably requested by Administrative
Agent to enable Administrative Agent and its counsel to evaluate any
of such Proceedings;
(xi) ERISA Events: promptly upon becoming aware of the occurrence of
or forthcoming occurrence of any ERISA Event, a written notice specifying
the nature thereof, what action Company or any of its ERISA Affiliates has
taken, is taking or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Company or any of its ERISA Affiliates with the Internal Revenue
Service with respect to each Pension Plan; (b) all notices received by
Company or any of its ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (c) such other documents or governmental
reports or filings relating to any Employee Benefit Plan as Administrative
Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event no
later than 45 days after the beginning of each Fiscal Year, a consolidated
and consolidating (by Region and by product line) plan and financial
forecast for such Fiscal Year (the "FINANCIAL PLAN" for such Fiscal Year),
including without limitation (a) a forecasted consolidated and
consolidating (by Region and by product line) balance sheet and forecasted
consolidated and consolidating (by Region and by product line) statements
of income and cash flows of each Borrower and its Subsidiaries for such
Fiscal Year, together with a pro forma Compliance Certificate for such
Fiscal Year and an explanation of the assumptions on which such forecasts
are based, and (b) forecasted consolidated and consolidating (by Region and
by product line) balance sheet and forecasted consolidated and
consolidating (by Region and by product line) statements of income and cash
flows of each Borrower and its Subsidiaries for each month of such Fiscal
Year, together with an explanation of the assumptions on which such
forecasts are based;
(xiv) Insurance: as soon as practicable and in any event by the last
day of each Fiscal Year, a report in form and substance satisfactory to
Administrative Agent outlining all material insurance coverage maintained
as of the date of such report by Company and its Subsidiaries and all
material insurance coverage planned to be maintained by Company and its
Subsidiaries in the immediately succeeding Fiscal Year and confirming the
status of Administrative Agent as loss payee under all such insurance to
the extent required by subsection 6.4;
(xv) Board of Directors: with reasonable promptness, written notice of
any change in the Board of Directors of any Borrower;
(xvi) New Subsidiaries: promptly upon any Person becoming a Subsidiary
of Company, a written notice setting forth with respect to such Person (a)
the date on which
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such Person became a Subsidiary of Company and (b) all of the data required
to be set forth in Schedule 5.1 annexed hereto with respect to all
Subsidiaries of Company (it being understood that such written notice shall
be deemed to supplement Schedule 5.1 annexed hereto for all purposes of
this Agreement);
(xvii) UCC Search Report: as promptly as practicable after the date of
delivery to Administrative Agent of any UCC financing statement executed by
any Loan Party pursuant to subsection 4.1J or 6.8A, copies of completed UCC
searches evidencing the proper filing, recording and indexing of all such
UCC financing statements and listing all other effective financing
statements in that jurisdiction that name such Loan Party as debtor,
together with copies of all such financing statements not previously
delivered to Administrative Agent by or on behalf of any Borrower or such
Loan Party;
(xviii) Borrowing Base Certificate: (a) as soon as available and in
any event within fifteen (15) days after the last Business Day of each
month ending after the Effective Date or (b) as soon as available and in
any event within three (3) Business Days after a written request from
Administrative Agent, a Borrowing Base Certificate dated and certified as
of the last Business Day of such month or such date of request, as
applicable, together with any additional schedules and other information
as Administrative Agent may reasonably request, and such Borrowing Base
Certificate shall, with respect to Equipment and Real Property Assets, use
the most recently available appraised values for Equipment and Real
Property Assets; and
(xix) Other Information: with reasonable promptness, such other
information and data with respect to any Borrower or any of its
Subsidiaries as from time to time may be reasonably requested by
Administrative Agent on its own behalf or on behalf of any Lender.
6.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 7.7, each Borrower will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force
and effect its corporate existence and all rights and franchises material to its
business.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Each Borrower will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any material penalty accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a material Lien upon any of its properties or assets, prior to the time
when any material penalty or fine shall be incurred with respect thereto;
provided that no such charge or claim need be paid if being contested in good
faith by appropriate proceedings promptly instituted and
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diligently conducted and if such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor.
B. None of the Borrowers will nor will any such Borrower permit any of its
Subsidiaries to, file or consent to the filing of any consolidated income tax
return with any Person (other than New Holdings or any of its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE; APPLICATION OF NET INSURANCE/
CONDEMNATION PROCEEDS.
A. MAINTENANCE OF PROPERTIES. Each Borrower will, and will cause each of
its Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all of their respective
material properties used or useful in the business of such Borrower and its
Subsidiaries (including, without limitation, all patents, trademarks,
tradenames, copyrights, registered names, service marks, technology, know-how
and processes used in or necessary for the conduct of the business of Company
and its Subsidiaries as currently conducted that are material to the condition
(financial or otherwise), business or operations of Company and its
Subsidiaries) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof such that the properties
will remain in substantially the same condition and working order, ordinary wear
and tear excepted, that exists as of the Effective Date.
B. INSURANCE. Each Borrower will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business and the properties and businesses of its Subsidiaries
against loss or damage of the kinds customarily carried or maintained under
similar circumstances by corporations of established reputation engaged in
similar businesses. Without limiting the generality of the foregoing, each
Borrower will maintain or cause to be maintained (i) flood insurance with
respect to each Flood Hazard Property or Covered Real Property Asset (as defined
in subsection 6.9) that is Flood Hazard Property to the extent that such Flood
Hazard Property or Covered Real Property Asset that is Flood Hazard Property is
located in a community that participates in the National Flood Insurance Program
and (ii) public liability insurance, third party property damage insurance and
replacement value insurance on the Collateral under such policies of insurance,
with such insurance companies, in such amounts and covering such risks as are at
all times satisfactory to Administrative Agent in its commercially reasonable
judgment. Each such policy of insurance that insures against loss or damage with
respect to any Collateral or against losses due to business interruption shall
name Administrative Agent for the benefit of Lenders as the loss payee
thereunder for any covered loss in excess of $500,000 and shall provide for at
least 30 days (15 days in the event of non-payment of premium) prior written
notice to Administrative Agent of any modification or cancellation of such
policy.
C. APPLICATION OF NET INSURANCE/CONDEMNATION PROCEEDS. Upon receipt by
Administrative Agent of any Net Insurance/Condemnation
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Proceeds as loss payee (i) in respect of any such business interruption
insurance constituting Net Insurance/Condemnation Proceeds, (a) Administrative
Agent shall, so long as no Event of Default shall have occurred and be
continuing, deliver such Net Insurance/Condemnation Proceeds to the applicable
Borrower, and (b) if an Event of Default shall have occurred and be continuing,
Administrative Agent shall, and Borrowers hereby authorize Administrative Agent
to, apply such Net Insurance/ Condemnation Proceeds to prepay the Loans as
provided in subsection 2.4B(iii)(b), and (ii) in respect of any such insurance
against loss or damage with respect to any Collateral, (a) to the extent that
any Borrower or any of its Subsidiaries intends to use any such insurance
proceeds to repair, restore or replace the assets of such Borrower or Subsidiary
in respect of which such Net Insurance/Condemnation Proceeds were received,
Administrative Agent shall, so long as no Event of Default shall have occurred
and be continuing, (A) in the event the aggregate amount of such Net
Insurance/Condemnation Proceeds in respect of any covered loss does not exceed
$2,500,000, deliver such Net Insurance/Condemnation Proceeds to such Borrower,
and such Borrower shall, or shall cause such Subsidiary to, use such Net
Insurance/Condemnation Proceeds to effect such repair, restoration or
replacement, and (B) in the event the aggregate amount of such Net Insurance/
Condemnation Proceeds exceeds $2,500,000, hold such proceeds in a cash
collateral account and so long as any Borrower or any of its Subsidiaries
proceeds to repair, restore or replace the assets of such Borrower or such
Subsidiary in respect of which such Net Insurance/ Condemnation Proceeds were
received, Administrative Agent shall from time to time disburse to such Borrower
or such Subsidiary amounts necessary to pay the cost of such repair, restoration
or replacement after the receipt by Administrative Agent of invoices or other
documentation reasonably satisfactory to Administrative Agent describing the
amount of costs so incurred; provided, however, that if in the reasonable good
faith belief of Administrative Agent, such Borrower or such Subsidiary is not
proceeding diligently with the repair, restoration or replacement,
Administrative Agent shall, and Borrowers hereby authorize Administrative Agent
to, apply such insurance proceeds to prepay the Loans as provided in subsection
2.4B(iii)(b), and (b) if an Event of Default shall have occurred and be
continuing or to the extent that neither the applicable Borrower nor any of its
Subsidiaries intends to use any such Net Insurance/ Condemnation Proceeds to
repair, restore or replace assets of such Borrower or any of its Subsidiaries as
described above, Administrative Agent shall, and Borrowers hereby authorize
Administrative Agent to, apply such Net Insurance/ Condemnation Proceeds to
prepay the Loans as provided in subsection 2.4B(iii)(b).
6.5 INSPECTION; RECORDS; LENDER MEETING.
A. INSPECTION RIGHTS; RECORDS. Each Borrower shall, and shall cause each of
its Subsidiaries to, permit any authorized representatives designated by
Administrative Agent (which may include representatives of any Lender at such
Lender's expense) to visit and inspect any of the properties of such Borrower or
any of its Subsidiaries, including its and their financial and accounting
records, and to make copies and take extracts therefrom, and to discuss its and
their affairs, finances and accounts with its and their officers and independent
public accountants (provided that such Borrower may, if it so chooses, be
present at or participate in any such discussion). Each Borrower shall, and
shall cause each of its Subsidiaries to, maintain all of their financial and
accounting records in accordance with GAAP (or the equivalent of GAAP in
jurisdictions outside of the United States).
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B. AUDITS AND APPRAISALS. Upon the request of Administrative Agent, each
Borrower shall, and shall cause each of its Subsidiaries to, permit any
authorized representatives designated by Administrative Agent to conduct one or
more audits of all Accounts and Inventory of Loan Parties and one or more
appraisals of all Equipment and Real Property Assets, in each case during each
twelve-month period after the Effective Date (exclusive of any audits or
appraisals required under subsections 4.1K and 4.1L (the "BASE AUDITS AND
APPRAISALS")), or upon the occurrence and during the continuation of an Event of
Default, such additional audits of Accounts and Inventory and appraisals of
Equipment and Real Property Assets as Administrative Agent may require, each
such audit and/or appraisal to be substantially similar in scope and substance
to the Base Audits and Appraisals, all upon reasonable notice and at such
reasonable times during normal business hours and as often as may be reasonably
requested.
C. LENDER MEETING. Without in any way limiting the foregoing, each Borrower
will participate in a meeting of Administrative Agent and Lenders at least once
during each Fiscal Year to be held at such Borrower's corporate offices (or such
other location as may be agreed to by such Borrower and Administrative Agent) at
such time as may be agreed to by such Borrower and Administrative Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
Each Borrower shall, and shall cause each of its Subsidiaries to, comply
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority (including without limitation all Environmental
Laws), noncompliance with which could reasonably be expected to cause,
individually or in the aggregate at any time, a Material Adverse Effect.
6.7 ENVIRONMENTAL DISCLOSURE AND INSPECTION.
A. COMPLIANCE WITH ENVIRONMENTAL LAWS. Each Borrower shall, and shall cause
each of its Subsidiaries to, exercise all due diligence in order to comply in
all material respects and cause (i) all tenants under any leases or occupancy
agreements affecting any portion of the Facilities and (ii) all other Persons on
or occupying such property, to comply in all material respects with all
Environmental Laws.
B. ENVIRONMENTAL REPORTS; ENVIRONMENTAL REVIEW AND INSPECTION.
(i) Upon request by Administrative Agent from time to time, Borrowers shall
deliver as soon as practicable to Administrative Agent reports and other
information, in form, scope and substance satisfactory to Administrative Agent,
regarding environmental matters relating to the Facilities, which reports shall
include (i) a Phase I environmental assessment for each of the Facilities
currently owned, leased, operated or used by Company or any of its Domestic
Subsidiaries (collectively, the "PHASE I REPORT") which (a) conforms to the ASTM
Standard Practice for Environmental Site Assessments: Phase I Environmental Site
Assessment Process, E 1527, (b) was conducted by one or more environmental
consulting firms reasonably satisfactory to Administrative Agent, and (c)
includes an estimate of the reasonable worst-case
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cost of investigating and remediating any Hazardous Materials Activity
identified in the Phase I Report as giving rise to an actual or potential
material violation of any Environmental Law or as presenting a material risk of
giving rise to a material Environmental Claim, and (ii) a current compliance
audit setting forth an assessment of Company's, its Domestic Subsidiaries' and
such Facilities' current and past compliance with Environmental Laws and an
estimate of the cost of rectifying any non-compliance with current Environmental
Laws identified therein and the cost of compliance with reasonably anticipated
future Environmental Laws identified therein.
(ii) Each Borrower agrees that Administrative Agent may, from time to time
and in its reasonable discretion, (a) retain, at Borrower's expense, an
independent professional consultant to review any environmental audits,
investigations, analyses and reports relating to Hazardous Materials prepared by
or for Borrower and (b)conduct its own investigation of any Facility; provided
that, in the case of any Facility no longer owned, leased, operated or used by
Borrower or any of its Subsidiaries, Borrower shall only be obligated to use its
best efforts to obtain permission for Administrative Agent's professional
consultant to conduct an investigation of such Facility. For purposes of
conducting such a review and/or investigation, each Borrower hereby grants to
Administrative Agent and its agents, employees, consultants and contractors the
right to enter into or onto any Facilities currently owned, leased, operated or
used by Borrower or any of its Subsidiaries and to perform such tests on such
property (including taking samples of soil, groundwater and suspected
asbestos-containing materials) as are reasonably necessary in connection
therewith. Any such investigation of any Facility shall be conducted, unless
otherwise agreed to by Borrower and Administrative Agent, during normal business
hours and, to the extent reasonably practicable, shall be conducted so as not to
interfere with the ongoing operations at such Facility or to cause any damage or
loss to any property at such Facility. Each Borrower and Administrative Agent
hereby acknowledge and agree that any report of any investigation conducted at
the request of Administrative Agent pursuant to this subsection 6.7B will be
obtained and shall be used by Administrative Agent and Lenders for the purposes
of Lenders' internal credit decisions, to monitor and police the Loans and to
protect Lenders' security interests, if any, created by the Loan Documents.
Administrative Agent agrees to deliver a copy of any such report to Company with
the understanding that each Borrower acknowledges and agrees that (x) it will
indemnify and hold harmless Administrative Agent and each Lender from any costs,
losses or liabilities relating to Borrower's use of or reliance on such report,
(y) neither Administrative Agent nor any Lender makes any representation or
warranty with respect to such report, and (z) by delivering such report to
Borrower, neither Administrative Agent nor any Lender is requiring or
recommending the implementation of any suggestions or recommendations contained
in such report.
C. ENVIRONMENTAL DISCLOSURE. Each Borrower and its Subsidiaries will
deliver to Administrative Agent and Lenders:
(i) Environmental Audits and Reports. As soon as practicable following
receipt thereof, copies of all environmental audits, investigations,
analyses and reports of any kind or character, whether prepared by
personnel of Borrower or any of its Subsidiaries or by independent
consultants, governmental authorities or any other
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Persons, with respect to significant environmental matters at any Facility
which, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect or with respect to any Environmental
Claims which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect;
(ii) Notice of Certain Releases, Remedial Actions, Etc. Each Borrower
shall promptly upon the occurrence thereof advise Administrative Agent and
Lenders in writing and in reasonable detail of (i) any Release required to
be reported to any Governmental Authority under any applicable
Environmental Laws, (ii) any Environmental Claims made to or on such
Borrower or any of its Subsidiaries or Affiliates that could reasonably be
expected to give rise to a Material Adverse Effect or with respect to any
Release required to be reported to any Governmental Authority, (iii) any
remedial action taken by such Borrower or any other Person in response to
(x) any Hazardous Materials Activities the existence of which could
reasonably be expected to give rise to an Environmental Claim having a
Material Adverse Effect, or (y) any Environmental Claim made to or on such
Borrower or any of its Subsidiaries or Affiliates that could have a
Material Adverse Effect, (iv) such Borrower's discovery of any occurrence
or condition on any real property adjoining or in the vicinity of any
Facility that could cause such Facility or any part thereof to be subject
to any restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws, and (v) any request for information
from any Governmental Authority that suggests such agency is investigating
whether such Borrower or any of its Subsidiaries may be potentially
responsible for a Release, except for in each case those matters set forth
on Schedule 5.13.
(iii) Written Communications Regarding Environmental Claims, Releases,
Etc. As soon as practicable following the sending or receipt thereof by
Borrower or any of its Subsidiaries, a copy of any and all written
communications with respect to (a) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect, (b) any Release required to be reported
to any federal, state or local governmental or regulatory agency, and (c)
any request for information from any governmental agency that suggests such
agency is investigating whether Borrower or any of its Subsidiaries may be
potentially responsible for any Hazardous Materials Activity.
(iv) Notice of Certain Proposed Actions Having Environmental Impact.
Prompt written notice describing in reasonable detail (a) any proposed
acquisition of stock, assets, or property by Borrower or any of its
Subsidiaries that could reasonably be expected to (1) expose Borrower or
any of its Subsidiaries to, or result in, Environmental Claims that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or (2) affect the ability of Borrower or any of its
Subsidiaries to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their respective
operations and (b) any proposed action to be taken by Borrower or any of
its Subsidiaries to commence new manufacturing or other
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industrial operations or to modify current operations in a manner that
could reasonably be expected to subject Borrower or any of its Subsidiaries
to any material additional obligations or requirements under any
Environmental Laws that could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
(v) Other Information. Each Borrower shall, at its own expense,
provide copies of such documents or information as Administrative Agent may
reasonably request in relation to any matters disclosed pursuant to this
subsection 6.7.
D. BORROWER'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
(i) Remedial Actions Relating to Hazardous Materials Activities. Each
Borrower shall promptly undertake, and shall cause each of its Subsidiaries
promptly to undertake, any and all investigations, studies, sampling,
testing, abatement, cleanup, removal, remediation or other response actions
necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity on, under or about any Facility that is in violation of any
Environmental Laws or that presents a material risk of giving rise to an
Environmental Claim. In the event Borrower or any of its Subsidiaries
undertakes any such action with respect to any Hazardous Materials,
Borrower or such Subsidiary shall conduct and complete such action in
compliance with all applicable Environmental Laws and in accordance with
the policies, orders and directives of all federal, state and local
governmental authorities except when, and only to the extent that,
Borrower's or such Subsidiary's liability with respect to such Hazardous
Materials Activity is being contested in good faith by Borrower or such
Subsidiary.
(ii) Actions with Respect to Environmental Claims and Violations of
Environmental Laws. Each Borrower shall promptly take, and shall cause each
of its Subsidiaries promptly to take, any and all actions necessary to (i)
cure any violation of applicable Environmental Laws by Borrower or its
Subsidiaries that could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect and (ii) make an appropriate
response to any Environmental Claim made to or on Borrower or any of its
Subsidiaries and discharge any obligations it may have to any Person
thereunder where failure to do so could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
6.8 EXECUTION OF FUTURE GUARANTIES AND COLLATERAL DOCUMENTS.
A. EXECUTION OF FUTURE SUBSIDIARY GUARANTY AND COLLATERAL DOCUMENTS. In the
event that any Person becomes a Domestic Subsidiary of Company after the date
hereof, Company will promptly notify Administrative Agent of that fact, will
execute a pledge amendment to the Security Agreement executed and delivered by
Company pledging 100% of the capital stock of such Domestic Subsidiary owned by
Company and cause such Subsidiary to execute and deliver to Administrative Agent
a counterpart of the Subsidiary Guaranty, a counterpart of the Security
Agreement, and, if applicable, Additional Mortgages (as defined in subsection
6.9) and to take all such further action and execute all such further documents
and
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instruments as may be reasonably required to (x) grant and perfect in favor of
Administrative Agent, for the benefit of Domestic Tranche A Lenders, a First
Priority security interest in all of the Real Property Assets and all of the
personal property assets of such Subsidiary described in the applicable
Collateral Documents, and (y) grant and perfect in favor of Administrative
Agent, for the benefit of Domestic Tranche B Lenders, a Second Priority security
interest in all of the Real Property Assets and all of the personal property
assets of such Subsidiary described in the applicable Collateral Documents.
B. EXECUTION OF FUTURE FOREIGN SUBSIDIARY GUARANTY AND COLLATERAL
Documents. In the event that any Person becomes a direct Foreign Subsidiary of
Company or any Domestic Subsidiary of Company after the date hereof, Company
will promptly notify Administrative Agent of that fact and Company or such
Domestic Subsidiary will execute a pledge amendment to the Security Agreement
executed and delivered by Company or such Domestic Subsidiary pledging not less
than 66% of the capital stock of such Foreign Subsidiary. In the event that U.S.
tax laws are amended to permit a Foreign Subsidiary to guarantee the Domestic
Term Loans, the Domestic Tranche A Revolving Loans, the Domestic Tranche B
Revolving Loans and the Swing Line Loans without the incurrence of an investment
in U.S. property or other deemed dividends for U.S. tax purposes or without
otherwise resulting in U.S. taxable income, Company will promptly notify
Administrative Agent of that fact and Company or such Domestic Subsidiary will
execute pledge amendments to the Security Agreement executed and delivered by
Company or such Domestic Subsidiary pledging not less than 100% of the stock of
its Foreign Subsidiaries and Company will cause its Foreign Subsidiaries to
execute and deliver to Administrative Agent a counterpart of the Subsidiary
Guaranty, a counterpart of the Security Agreement and. if applicable, Additional
Mortgages and to take all such further action and execute all such further
documents and instruments as may be reasonably required to (x) grant and perfect
in favor of Administrative Agent, for the benefit of Domestic Tranche A Lenders,
a First Priority security interest in all of the Real Property Assets and all of
the personal property assets of such Subsidiary described in the applicable
Collateral Documents, and (y) grant and perfect in favor of Administrative
Agent, for the benefit of Domestic Tranche B Lenders, a Second Priority security
interest in all of the Real Property Assets and all of the personal property
assets of such Subsidiary described in the applicable Collateral Documents.
C. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. With respect to any
such new Subsidiary, Company shall deliver to Administrative Agent, together
with the applicable Guaranty and such Collateral Documents if, and to the
extent, requested by Administrative Agent:
(i) certified copies of such Subsidiary's Articles or Certificate of
Incorporation, together with a good standing certificate from the Secretary
of State (or comparable official) of the jurisdiction of its incorporation,
each to be dated a recent date prior to their delivery to Administrative
Agent
(ii) a copy of such Subsidiary's Bylaws (or comparable or equivalent
documentation), certified by its corporate secretary or an assistant
corporate secretary or
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other appropriate officer as of a recent date prior to their delivery to
Administrative Agent;
(iii) a certificate executed by the secretary or an assistant
secretary or other appropriate officer of such Subsidiary as to (a) the
incumbency and signatures of the officers of such Subsidiary executing such
Guaranty and the Collateral Documents to which such Subsidiary is a party
and (b) the fact that the attached resolutions of the Board of Directors of
such Subsidiary authorizing the execution, delivery and performance of such
Guaranty and such Collateral Documents are in full force and effect and
have not been modified or rescinded; and
(iv) a favorable opinion of counsel to such Subsidiary, in form and
substance satisfactory to Administrative Agent and its counsel, as to (a)
the due organization and good standing of such Subsidiary, (b) the due
authorization, execution and delivery by such Subsidiary of such Guaranty
and such Collateral Documents, (c) the enforceability of such Guaranty and
such Collateral Documents against such Subsidiary, and (d) such other
matters as Administrative Agent may reasonably request, all of the
foregoing to be satisfactory in form and substance to Administrative Agent
and its counsel.
6.9 ADDITIONAL REAL PROPERTY COLLATERAL.
A. ADDITIONAL MORTGAGES, ETC. From and after the Effective Date, in the
event that (i) any Borrower or any of its Subsidiaries acquires any Fee Property
or any Material Leasehold (other than any Fee Property or Material Leasehold
which Administrative Agent in its sole discretion affirmatively waives the
requirements set forth in this subsection 6.9 with respect to such Fee Property
or Material Leasehold) (each a "COVERED REAL PROPERTY ASSET") or (ii) at the
time any Person becomes a Subsidiary of any Borrower, such Person owns or holds
any Covered Real Property Asset, such Borrower or such Subsidiary shall, as soon
as practicable after the acquisition of such Covered Real Property Asset or such
Person's becoming a Subsidiary of any Borrower, as the case may be, deliver to
Administrative Agent the following:
(a) Additional Mortgage. Fully executed and acknowledged counterparts
of Mortgages (each an "ADDITIONAL MORTGAGE" and collectively, the
"ADDITIONAL Mortgages") in recordable form encumbering such Covered Real
Property Asset, which Mortgages shall create a valid and enforceable First
Priority Lien (or such other priority lien as may be specified in the
applicable Additional Mortgage), subject to Permitted Encumbrances, on such
Covered Real Property Asset in favor of Administrative Agent (or such other
trustee as may be required or desired under local law) for the benefit of
Lenders;
(b) Opinion of Counsel. If required by Administrative Agent, an
opinion of local counsel (which counsel shall be reasonably satisfactory to
Administrative Agent) in the jurisdiction in which such Covered Real
Property Asset is located with respect to the enforceability of Additional
Mortgage recorded in such jurisdiction and such other
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matters as Administrative Agent may reasonably request, in form and
substance reasonably satisfactory to Administrative Agent;
(c) Landlord Consent and Estoppel; Recorded Leasehold Interest. In the
case of a Covered Real Property Asset consisting of a Material Leasehold,
such estoppel letters from the landlord on such Material Leasehold as may
be reasonably requested by Administrative Agent, in form and substance
reasonably satisfactory to Administrative Agent;
(d) Title Insurance. (1) If required by Administrative Agent, in the
case of each such Covered Real Property Asset consisting of a Fee Property,
an ALTA mortgagee title insurance policy issued by a title insurer
reasonably satisfactory to Administrative Agent (an "ADDITIONAL MORTGAGE
POLICY"), in an amount reasonably satisfactory to Administrative Agent,
ensuring Administrative Agent that the applicable Additional Mortgage
creates a valid and enforceable First Priority mortgage Lien (or such other
priority lien as may be specified in the applicable Additional Mortgage) on
such Covered Real Property Asset, free and clear of all defects and
encumbrances except Permitted Encumbrances, which Additional Mortgage
Policy (x) shall be in form and substance satisfactory to Administrative
Agent and (y) shall include an endorsement for mechanics' liens, for future
advances under this Agreement, the Notes and the other Loan Documents, and
for any other matters that Administrative Agent may request, and (z) shall
provide for affirmative insurance and such reinsurance as Administrative
Agent may request, all of the foregoing in form and substance reasonably
satisfactory to Administrative Agent; and (2) a current survey prepared in
accordance with the Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys jointly established and adopted by ALTA and ACSM in 1992 and
meeting the requirement of a Class A Survey, as defined therein with
respect to such Covered Real Property Asset showing gross area of such
Covered Real Property Asset, lot lines and monuments, building lines,
easements both burdening and benefiting such Covered Real Property Asset,
utilities, including water and sewer lines to the point of connection with
the public system, the improvements (including loading docks and the
location and number of parking spaces), encroachments, if any, on such
Covered Real Property Asset or over adjoining properties, and other matters
located on or affecting such Covered Real Property Asset requested by the
Administrative Agent. Each such Survey will contain a certificate addressed
to the Administrative Agent and First American Title Insurance Company in
form and substance satisfactory to Administrative Agent;
(e) Title Report. If no Additional Mortgage Policy is required with
respect to such Covered Real Property Asset, a title report obtained by
Borrower in respect of any such Covered Real Property Asset, dated not more
than 30 days prior to the date such Additional Mortgage is to be recorded
and satisfactory in form and substance to Administrative Agent;
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(f) Matters Relating to Flood Hazard Properties. (i) Evidence, which
may be in the form of a letter from an insurance broker or a municipal
engineer, as to whether (1) such Covered Real Property Asset (an
"ADDITIONAL FLOOD HAZARD PROPERTY") is Flood Hazard Property and (2) the
community in which such Covered Real Property Asset (if it is an Additional
Flood Hazard Property) is located is participating in the National Flood
Insurance Program; (ii) if such Covered Real Property Asset is an
Additional Flood Hazard Property, Borrower's written acknowledgement of
receipt of written notification from Administrative Agent (1) as to the
existence of such Additional Flood Hazard Property and (2) as to whether
the community in which such Flood Hazard Property is located is
participating in the National Flood Insurance Program; and (iii) in the
event such Covered Real Property Asset is an Additional Flood Hazard
Property that is located in a community that participates in the National
Flood Insurance Program, evidence that Borrower has obtained flood
insurance in respect of such Flood Hazard Property to the extent required
under the applicable regulations of the Board of Governors of the Federal
Reserve System; and
(g) Environmental Audit. If required by Administrative Agent, in the
case of each such Covered Real Property Asset consisting of a Fee Property,
environmental audits, reports and other information prepared by
professional consultants mutually acceptable to Borrower and Administrative
Agent, in form, scope and substance satisfactory to Administrative Agent in
its reasonable discretion, concerning any environmental hazards or
liabilities to which Borrower or any of its Subsidiaries may be subject
with respect to such Additional Mortgaged Property.
B. REAL ESTATE APPRAISALS. Each Borrower shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by
Administrative Agent, upon reasonable notice, to visit and inspect any
Additional Mortgaged Property for the purpose of obtaining an appraisal of
value, conducted by consultants retained by Administrative Agent in compliance
with all applicable banking regulations, with respect to such Covered Real
Property Asset.
6.10 ASSIGNABILITY AND RECORDING OF LEASE AGREEMENTS.
From and after the Effective Date, in the event that any Borrower or any of
its Subsidiaries enters into any lease that is a Material Leasehold (other than
any Material Leasehold as to which Administrative Agent in its sole discretion
affirmatively waives the requirements set forth in this subsection 6.10), such
Borrower shall, or shall cause such Subsidiary to, (i) obtain lease terms
permitting (or not expressly prohibiting) the encumbrancing of such Material
Leasehold pursuant to an Additional Mortgage and the assignment of such Material
Leasehold interest to the successful bidder at a foreclosure or similar sale
(and to a subsequent third party assignee by Administrative Agent or any Lender
to the extent Administrative Agent or such Lender is the successful bidder at
such sale) in the event of a foreclosure or similar action pursuant to such
Additional Mortgage and (ii) cause such lease, or a memorandum of lease with
respect thereto, or other evidence of such lease in form and substance
reasonably satisfactory to
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Administrative Agent, to be recorded in all places to the extent necessary or
desirable, in the reasonable judgment of Administrative Agent, so as to enable
an Additional Mortgage encumbering such Material Leasehold to effectively create
a valid and enforceable Lien (subject to Permitted Encumbrances) on such
Material Leasehold in favor of Administrative Agent (or such other Person as may
be required or desired under local law) for the benefit of Lenders.
6.11 YEAR 2000 COVENANT.
Each Borrower has reviewed, or will expeditiously review, its operations
and those of its Subsidiaries with a view to assessing whether its businesses,
or the businesses of any of its Subsidiaries, will be vulnerable to a Year 2000
Problem or to the effects of a Year 2000 Problem suffered by any of Company's or
any of its Subsidiaries' major commercial counter-parties. Each Borrower shall
take all actions necessary and commit adequate resources to assure that its
computer-based and other systems (and those of all Subsidiaries) are able to
effectively process data, including dates before, on and after January 1, 2000,
without experiencing any Year 2000 Problem that could cause a Material Adverse
Effect. At the request of Administrative Agent, each Borrower will provide
Administrative Agent with assurances and substantiations (including without
limitation the results of internal or external audit reports prepared in the
ordinary course of business) reasonably acceptable to Administrative Agent as to
the capability of each Borrower and its Subsidiaries to conduct its and their
businesses and operations before, on and after January 1, 2000 without
experiencing a Year 2000 Problem causing a Material Adverse Effect. Each
Borrower represents and warrants that it has a reasonable basis to believe that
no Year 2000 Problem will cause a Material Adverse Effect.
6.12 CASH MAINTENANCE.
Each Borrower shall, and shall cause each of its Subsidiaries to, (x)
deposit, transfer and otherwise maintain all Cash in Deposit Accounts
established and maintained with Lenders and (y) maintain all Cash Equivalents
with Lenders. Any Cash of a Borrower not on deposit or otherwise maintained in a
Deposit Account established and maintained with a Lender and any Cash
Equivalents not maintained with a Lender, in each case as of the Effective Date,
shall be transferred by such Borrower to a Deposit Account established and
maintained with a Lender or to a Lender, as the case may be, no later than six
(6) months after the Effective Date. In the event that a Lender is replaced
pursuant to subsection 2.8 or a financial institution is no longer a Lender
under this Agreement, then all Cash and Cash Equivalents maintained with such
former Lender shall be transferred to a Lender no later than six (6) months
after such former Lender is replaced or is no longer a Lender, as the case may
be.
6.13 ASSUMPTION BY NEW HOLDINGS OF OBLIGATIONS UNDER THIS AGREEMENT.
Company shall cause New Holdings to assume its Obligations under this
Agreement by executing and delivering on or prior to the Effective Date executed
and acknowledged originals of this Agreement.
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6.14 DELIVERY OF ADDITIONAL DOCUMENTS .
A. COLLATERAL DOCUMENTS TO BE DELIVERED BY GOSS JAPAN. No later than one
hundred twenty (120) days after the Effective Date, Goss Japan shall (i) execute
and deliver to Administrative Agent executed and acknowledged (where applicable)
originals of any and all Security Agreements and Mortgages and/or amendments
thereto, (ii) deliver to Lenders originally executed copies of one or more
favorable written opinions of Anderson Mori, local counsel for Goss Japan, in
form and substance reasonably satisfactory to Administrative Agent and its
counsel, setting forth substantially the matters in the opinions designated in
Exhibit X-B annexed hereto and as to such other matters as Administrative Agent
acting on behalf of Lenders may reasonably request, and (iii) take any and all
other actions, including, without limitation, the recording, filing and/or
registration of any and all applicable Security Agreements and Mortgages and/or
amendments thereto, necessary or desirable, in the opinion of Administrative
Agent, to continue and maintain in favor of Administrative Agent, on behalf of
Japanese Lenders, a perfected Lien in the real, personal and mixed property
Collateral of Goss Japan.
B. COLLATERAL DOCUMENTS AND OTHER DOCUMENTS TO BE DELIVERED BY COMPANY. No
later than one hundred twenty (120) days after the Effective Date, Company shall
deliver to Administrative Agent:
(a) Landlord Consents and Estoppels; Recorded Leasehold Interests. In
the case of each Effective Date Mortgaged Property consisting of a
Leasehold Property, (a) a Landlord Consent and Estoppel with respect
thereto and (b) evidence that such Leasehold Property is a Recorded
Leasehold Interest;
(b) Title Reports. With respect to each Effective Date Mortgaged
Property listed in Part B of Schedule 5.5 annexed hereto, a title report
issued by the Title Company with respect thereto, dated not more than 30
days prior to the Effective Date and satisfactory in form and substance to
Administrative Agent;
(c) Copies of Documents Relating to Title Exceptions. Copies of all
recorded documents listed as exceptions to title or otherwise referred to
in the Effective Date Mortgage Policies or in the title reports delivered
pursuant to subsection 6.14C(b); and
(d) Matters Relating to Flood Hazard Properties. (a) Evidence, which
may be in the form of a letter from an insurance broker or a municipal
engineer, as to whether (1) any Effective Date Mortgaged Property is a
Flood Hazard Property and (2) the community in which any such Flood Hazard
Property is located is participating in the National Flood Insurance
Program, (b) if there are any such Flood Hazard Properties, such Loan
Party's written acknowledgement of receipt of written notification from
Administrative Agent (1) as to the existence of each such Flood Hazard
Property and (2) as to whether the community in which each such Flood
Hazard Property is located is participating in the National Flood Insurance
Program, and (c) in the event any such Flood Hazard Property is located in
a community that participates in the National Flood Insurance Program,
evidence that Company has obtained flood insurance in respect of
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such Flood Hazard Property to the extent required under the applicable
regulations of the Board of Governors of the Federal Reserve System.
(e) Tax Good Standings. Copies of all certificates or other evidence
of good standing as to payment of any applicable franchise or similar taxes
from the appropriate taxing authority from the jurisdictions identified on
Schedule 4.1A.
SECTION 7. BORROWERS' NEGATIVE COVENANTS
New Holdings and each Borrower, as the case may be, covenants and agrees
that, so long as any of the Commitments hereunder shall remain in effect and
until payment in full of all of the Loans and other Obligations and the
cancellation or expiration of all Letters of Credit, unless Requisite Lenders
shall otherwise give prior written consent, New Holdings or such Borrower, as
the case may be, shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 7.
7.1 INDEBTEDNESS.
New Holdings and each Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Borrowers may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(iii) Company may become and remain liable with respect to
Indebtedness to any of its wholly-owned Subsidiaries, and any wholly-owned
Subsidiary of Company may become and remain liable with respect to
Indebtedness to Company or any other wholly-owned Subsidiary of Company;
provided that (a) all such intercompany Indebtedness shall be evidenced by
promissory notes that are pledged to Administrative Agent pursuant to the
terms of the applicable Collateral Documents, (b) all such intercompany
Indebtedness owed by any Borrower to any of its Subsidiaries shall be
subordinated in right of payment to the payment in full of the applicable
Obligations pursuant to the terms of the such promissory notes or an
intercompany subordination agreement, and (c) any payment by any Subsidiary
of any Borrower under any guaranty of the applicable Obligations shall
result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to such Borrower or to any of its
Subsidiaries for whose benefit such payment is made; provided further that
(x) the aggregate amount of all such intercompany Indebtedness owing at any
time from Goss UK to Company or the Domestic Subsidiaries of Company shall
not exceed (1) the
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amount listed on Schedule 7.1A relating to Goss UK or if all or any portion
of such amount is repaid at any time, such lesser amount as is then
outstanding plus (2) $36,902,321, (y) the aggregate amount of all such
intercompany Indebtedness owing at any time from Goss France to Company or
the Domestic Subsidiaries of Company shall not exceed (1) the amount listed
on Schedule 7.1A relating to Goss France or if all or any portion of such
amount is repaid at any time, such lesser amount as is then outstanding
plus (2) $20,914,540, and (z) the aggregate amount of all such intercompany
Indebtedness owing at any time from Goss Japan to Company or the Domestic
Subsidiaries of Company shall not exceed (1) the amount listed on Schedule
7.1A relating to Goss Japan or if all or any portion of such amount is
repaid at any time, such lesser amount as is then outstanding plus (2)
$21,824,773;
(iv) Company and its Subsidiaries, as applicable, may remain liable
with respect to Indebtedness described in Schedule 7.1B annexed hereto;
(v) Goss Realty may become and remain liable with respect to (x)
mortgage Indebtedness in the original principal amount of $30,000,000
secured by the Real Property Assets relating to such mortgage Indebtedness
and (y) any Indebtedness incurred to refinance the then outstanding
aggregate principal amount of such mortgage Indebtedness (provided that
such refinancing Indebtedness shall be in an aggregate principal amount not
to exceed the then outstanding aggregate principal amount of such mortgage
Indebtedness plus the amount of accrued but unpaid interest thereon and
shall contain such other terms and conditions satisfactory to
Administrative Agent), and Sayama Sub may become and remain liable with
respect to mortgage Indebtedness in the original principal amount of (Y)3
billion secured by the Real Property Assets relating to such mortgage
Indebtedness;
(vi) New Holdings may become and remain liable with respect to
Indebtedness evidenced by the New Holdings Subordinated Notes in an
original aggregate principal amount of $112,500,000; and
(vii) Company and its Subsidiaries may become and remain liable with
respect to Capital Leases, other Indebtedness and Contingent Obligations
permitted pursuant to subsection 7.4(ix) in an aggregate principal amount
not exceed $7,500,000 at any time outstanding.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. None of New Holdings nor any Borrower shall, nor
shall New Holdings or any Borrower permit any of its Subsidiaries to, directly
or indirectly, create, incur, assume or permit to exist any Lien on or with
respect to any property or asset of any kind (including any document or
instrument in respect of goods or accounts receivable) of New Holdings, such
Borrower or any of their respective Subsidiaries, whether now owned or hereafter
acquired, or any income or profits therefrom, or file or permit the filing of,
or permit to remain in effect, any financing statement or other similar notice
of any Lien with respect to any
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such property, asset, income or profits under the Uniform Commercial Code of any
State or under any similar recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the applicable Collateral Documents;
(iii) Liens described in Schedule 7.2 annexed hereto;
(iv) Liens securing the mortgage Indebtedness permitted under
subsection 7.1(v); and
(v) Liens securing Capital Leases and other Indebtedness permitted
under subsection 7.1(vii).
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If New Holdings, any Borrower or any
of their respective Subsidiaries shall create or assume any Lien upon any of its
properties or assets, whether now owned or hereafter acquired, other than Liens
excepted by the provisions of subsection 7.2A, it shall make or cause to be made
effective a provision whereby the Obligations will be secured by such Lien
equally and ratably with any and all other Indebtedness secured thereby as long
as any such Indebtedness shall be so secured; provided that, notwithstanding the
foregoing, this covenant shall not be construed as a consent by Requisite
Lenders to the creation or assumption of any such Lien not permitted by the
provisions of subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, none of New Holdings,
the Borrowers or any of their respective Subsidiaries shall enter into any
agreement prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO BORROWERS OR OTHER
SUBSIDIARIES. Except as provided herein, none of New Holdings or any Borrower
will, nor will New Holdings or any Borrower permit any of its Subsidiaries to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to
(i) pay dividends or make any other distributions on any of such Subsidiary's
capital stock owned by New Holdings or such Borrower or any other Subsidiary of
New Holdings or such Borrower, (ii) repay or prepay any Indebtedness owed by
such Subsidiary to New Holdings or such Borrower or any other Subsidiary of New
Holdings or such Borrower, (iii) make loans or advances to New Holdings or such
Borrower or any other Subsidiary of New Holdings or such Borrower, or (iv)
transfer any of its property or assets to New Holdings or such Borrower or any
other Subsidiary of New Holdings or such Borrower.
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7.3 INVESTMENTS; JOINT VENTURES.
None of New Holdings or any Borrower shall, nor shall New Holdings or any
Borrower permit any of its Subsidiaries to, directly or indirectly, make or own
any Investment in any Person, including any Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in Cash
Equivalents;
(ii) Company and its Subsidiaries may (1) continue to own the
Investments owned by them as of the Effective Date in Borrowers; (2)
continue to own the Investments owned by them as of the Effective Date in
their respective Subsidiaries; and (3) make additional Investments in such
wholly-owned Subsidiaries or any other Person or Persons that after giving
effect thereto are or will be a wholly-owned Subsidiary of the Company or
any of its other Subsidiaries of up to $1,000,000 in the aggregate for all
such additional Investments;
(iii) in addition to the amounts permitted pursuant to subsection
7.3(ii), Company and its Subsidiaries may make intercompany loans to the
extent permitted under subsection 7.1(iii);
(iv) Company and its Subsidiaries may continue to own the Investments
owned by them and described in Schedule 7.3 annexed hereto;
(v) Company may continue to own its Joint Venture interests in
Shanghai Goss Graphic Systems Co., Ltd. pursuant to the terms of its joint
venture contract with Shanghai Printing & Packaging Machinery Co., as in
effect on the Effective Date, and may make additional Investments in such
Joint Venture of up to $2,500,000 in the aggregate;
(vi) Company and its Subsidiaries may make and maintain Investments in
non-cash proceeds of Asset Sales in accordance with the provisions of
subsection 7.7(iii);
(vii) Company and its Subsidiaries may make and maintain investments
received in connection with the bankruptcy or reorganization of suppliers
and customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers, in each case arising in the
ordinary course of business;
(viii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8; and
(ix) Company and its Subsidiaries may make and own other Investments
in an aggregate amount not to exceed at any time $1,000,000.
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7.4 CONTINGENT OBLIGATIONS.
None of New Holdings or any Borrower shall, nor shall New Holdings or any
Borrower permit any of its Subsidiaries to, directly or indirectly, create or
become or remain liable with respect to any Contingent Obligation, except:
(i) New Holdings and its Subsidiaries may become and remain
liable with respect to Contingent Obligations arising under their
respective Guaranties, including Contingent Obligations thereunder
with respect to Interest Rate Agreements and Currency Agreements
entered into with any Lender or any of its Affiliates;
(ii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of Letters of
Credit, including without limitation the Existing Letters of Credit
listed on Schedule 7.4 annexed hereto; provided that no Loan Party
shall have granted any Lien securing obligations (including any
reimbursement obligations) relating to any Existing Letters of
Credit (other than pursuant to the Loan Documents);
(iii) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of
customary indemnification and purchase price adjustment obligations
incurred in connection with Asset Sales or other sales of assets;
(iv) Company may become and remain liable with respect to
Contingent Obligations in respect of any Indebtedness of any of
Company's Subsidiaries permitted by subsection 7.1;
(v) Company and its Subsidiaries, as applicable, may remain
liable with respect to Contingent Obligations described in Schedule
7.4 annexed hereto;
(vi) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations under Hedge Agreements
entered into in the ordinary course of business;
(vii) Company may become and remain liable with respect to
Contingent Obligations in respect of performance guarantees entered
into in favor of a customer of Goss UK, Goss France or Goss Japan,
in the ordinary course of business and consistent with past
practice, whereby Company guarantees the performance obligations of
Goss UK, Goss France or Goss Japan in connection with the
manufacture and delivery of any printing press and/or other
machinery or equipment, including without limitation the repayment
of any downpayment or other customer advance amount;
(viii) Company may become and remain liable with respect to
Contingent Obligations in respect of performance bonds in favor of a
customer (or designee of such customer) of Goss UK, Goss France or
Goss Japan, in the ordinary course of business and consistent with
past practice, in an aggregate amount not to exceed $10,000,000; and
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(ix) Company and its Subsidiaries may become and remain liable
with respect to other Contingent Obligations; provided that the
maximum aggregate liability, contingent or otherwise, of Company and
its Subsidiaries in respect of all such other Contingent Obligations
shall at no time exceed $1,000,000; provided further that the
maximum aggregate amount of such other Contingent Obligations and
Capital Leases and Indebtedness permitted pursuant to subsection
7.1(vii) shall not exceed $7,500,000 at any time outstanding.
7.5 RESTRICTED JUNIOR PAYMENTS.
No Borrower shall nor shall any Borrower permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing or shall be
caused thereby, Company may make Restricted Junior Payments to New Holdings in
an amount necessary to permit New Holdings to make payments of regularly
scheduled interest in respect of the New Holdings Subordinated Notes, in
accordance to the terms of and to the extent required by, and subject to the
subordination provisions contained in, the New Holdings Subordinated Note
Indenture; provided further that so long as (x) no Event of Default or Potential
Event of Default shall have occurred and be continuing or shall be caused
thereby and (y) the Consolidated Leverage Ratio for the immediately preceding
four consecutive Fiscal Quarter period prior to such date of determination does
not exceed 3.00:1.00, Company may make Restricted Junior Payments to New
Holdings (i) in an aggregate amount not to exceed $250,000 in any Fiscal Year in
order to permit New Holdings to pay general administrative costs and expenses,
and (ii) in an amount necessary to permit New Holdings to discharge the
consolidated tax liabilities of New Holdings, Company and Company's
Subsidiaries, in each case so long as New Holdings applies the amount of any
such Restricted Junior Payment for such purpose.
7.6 FINANCIAL COVENANTS.
A. MINIMUM FIXED CHARGE RATIO. Company shall not permit the ratio of (i)
Consolidated Adjusted EBITDA to (ii) Consolidated Fixed Charges for any
four-Fiscal Quarter period ending on any of the dates set forth below to be less
than the correlative ratio indicated:
PERIOD MINIMUM FIXED CHARGE RATIO
------ --------------------------
December 31, 2000 0.76:1.00
March 31, 2001 1.05:1.00
June 30, 2001 1.20:1.00
September 30, 2001 1.46:1.00
December 31, 2001 1.34:1.00
March 31, 2002 1.37:1.00
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June 30, 2002 1.26:1.00
September 30, 2002 1.19:1.00
December 31, 2002 1.03:1.00
March 31, 2003 1.02:1.00
June 30, 2003 0.96:1.00
and thereafter
B. MINIMUM CONSOLIDATED ADJUSTED EBITDA.
Company shall not permit Consolidated Adjusted EBITDA for any four-Fiscal
Quarter period ending as of the last day of any Fiscal Quarter ending on any of
the dates set forth below to be less than the correlative amount indicated:
PERIOD MINIMUM CONSOLIDATED
------ --------------------
ADJUSTED EBITDA
---------------
March 31, 2000 ($2,000,000)
June 30, 2000 $5,000,000
September 30, 2000 $13,000,000
December 31, 2000 $31,000,000
March 31, 2001 $40,000,000
June 30, 2001 $45,000,000
September 30, 2001 $54,000,000
December 31, 2001 $52,500,000
March 31, 2002 $55,000,000
June 30, 2002 $56,000,000
September 30, 2002 $58,000,000
December 31, 2002 $60,000,000
March 31, 2003 $63,000,000
June 30, 2003 $64,000,000
and thereafter
; provided that, for purposes of this subsection 7.6B only, (i) with respect to
the Fiscal Quarter ended on March 31, 2000, Consolidated Adjusted EBITDA shall
be for the immediately preceding one Fiscal Quarter period; (ii) with respect to
the Fiscal Quarter ended on June 30, 2000, Consolidated Adjusted EBITDA shall be
for the immediately preceding two-consecutive
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Fiscal Quarter period; (iii) with respect to the Fiscal Quarter ended on
September 30, 2000, Consolidated Adjusted EBITDA shall be for the immediately
preceding three-consecutive Fiscal Quarter period; and (iv) for each subsequent
Fiscal Quarter after the Fiscal Quarter ended on September 30, 2000,
Consolidated Adjusted EBITDA shall be for the immediately preceding
four-consecutive Fiscal Quarter period ending as of the last day of any Fiscal
Quarter ending on any of the dates set forth above.
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
No Borrower shall nor shall any Borrower permit any of its Subsidiaries to,
alter the corporate, capital or legal structure of such Borrower or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sub-lessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or fixed assets
(including without limitation any Accounts or other accounts receivables),
whether now owned or hereafter acquired, or acquire by purchase or otherwise all
or substantially all the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:
(i) any Subsidiary of Company may be merged with or into Company or
any wholly-owned Subsidiary of Company, or may be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any wholly-owned
Subsidiary of Company; provided that, in the case of such a merger, Company
or such wholly-owned Subsidiary shall be the continuing or surviving
corporation and if any such transaction involves a Subsidiary Guarantor,
the surviving corporation shall be the Company or such Subsidiary
Guarantor;
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;
(iii) Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales (provided that
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof) and make Investments pursuant to
subsection 7.3; and
(iv) Company and its Subsidiaries may make Asset Sales of Real
Property Assets located at Redding, Pennsylvania and at Westmont, Illinois;
provided that (x) the consideration received for such assets shall be in an
amount at least equal to the fair market value thereof; (y) the
consideration received therefor shall be in Cash; and (z) the Net Asset
Sale Proceeds of such Asset Sales shall be applied as mandatory prepayments
as required by subsection 2.4B(iii)(a).
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7.8 CONSOLIDATED CAPITAL EXPENDITURES.
No Borrower shall nor shall any Borrower permit any of its Subsidiaries to
make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated
below, in an aggregate amount in excess of the corresponding amount set forth
below opposite such Fiscal Year:
FISCAL YEAR MAXIMUM CONSOLIDATED
CAPITAL EXPENDITURES
Fiscal Year 2000 $17,500,000
Fiscal Year 2001 $17,500,000
Fiscal Year 2002 $18,500,000
Fiscal Year 2003 $20,000,000
and thereafter
7.9 SALES AND LEASE-BACKS.
Except with respect to Goss Realty and Sayama Sub, no Borrower shall nor
shall any Borrower permit any of its Subsidiaries to, directly or indirectly,
become or remain liable as lessee or as a guarantor or other surety with respect
to any lease, whether an Operating Lease or a Capital Lease, of any property
(whether real, personal or mixed), whether now owned or hereafter acquired, (i)
which such Borrower or any of its Subsidiaries has sold or transferred or is to
sell or transfer to any other Person (other than such Borrower or any of its
Subsidiaries) or (ii) which such Borrower or any of its Subsidiaries intends to
use for substantially the same purpose as any other property which has been or
is to be sold or transferred by such Borrower or any of its Subsidiaries to any
Person (other than such Borrower or any of its Subsidiaries) in connection with
such lease.
7.10 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
No Borrower shall nor shall any Borrower permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of New Holdings or Company or with any Affiliate of
New Holdings or Company or of any such holder, on terms that are less favorable
to New Holdings or Company or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not such a holder or
Affiliate; provided that the foregoing restriction shall not apply to (i) any
transaction between Company and any of its wholly-owned Subsidiaries or between
any of its wholly-owned Subsidiaries, (ii) reasonable and customary fees paid to
members of the Boards of Directors of Company and its Subsidiaries, (iii)
reasonable financial advisory or structuring fees paid to Stonington for
services rendered by
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Stonington and reimbursement of out-of-pocket expenses, and (iv) arms-length
transactions in the ordinary course of business with other companies managed by
Stonington.
7.11 DISPOSAL OF SUBSIDIARY STOCK.
Except pursuant to the Collateral Documents and except for any sale of 100%
of the capital stock or other equity Securities of any of its Subsidiaries in
compliance with the provisions of subsection 7.7(i) or (iii), no Borrower shall:
(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity Securities of any
of its Subsidiaries, except to qualify directors if required by applicable
law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including such
Subsidiary), except to Company, another Subsidiary of Company, or to
qualify directors if required by applicable law.
7.12 CONDUCT OF BUSINESS; LIMITATIONS ON SUBSIDIARIES.
From and after the Effective Date, no Borrower shall nor shall any Borrower
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by such Borrower and its Subsidiaries on the Effective
Date and similar or related businesses and (ii) such other lines of business as
may be consented to by Requisite Lenders.
7.13 AMENDMENTS OF CERTAIN DOCUMENTS; DESIGNATION OF SENIOR DEBT.
Except as may be permitted by subsection 7.5, none of New Holdings or any
Borrower shall, nor shall New Holdings or any Borrower permit any of its
Subsidiaries to, amend or otherwise change the terms of any Subordinated
Indebtedness or any agreement related thereto or any guaranty entered into by
any Loan Party in connection therewith, or make any payment consistent with an
amendment thereof or change thereto, if the effect of such amendment or change
is to increase the interest rate on such Subordinated Indebtedness, change any
dates upon which payments of principal or interest are due thereon, change the
terms of any payments from payment-in-kind to cash pay, change any of the
covenants with respect thereto in a manner which is more restrictive to such
Borrower or any of its Subsidiaries, change any event of default or condition to
an event of default with respect thereto in a manner which is more restrictive
to such Borrower, change the redemption, prepayment or defeasance provisions
thereof, change the subordination provisions thereof (or of any guaranty
thereof), or change any collateral therefor (other than to release such
collateral), or if the effect of such amendment or change, together with all
other amendments or changes made, is to increase the obligations of the obligor
thereunder or to confer any additional rights on the holders of such
Subordinated Indebtedness (or a trustee or other representative on their behalf)
which would be adverse to any Loan Party or Lenders.
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7.14 FISCAL YEAR.
None of Company nor any of its Subsidiaries shall change its Fiscal
Year-end from December 31 without giving 60 days notice to Administrative Agent
and Lenders of such change.
7.15 FOREIGN UNFUNDED PENSION PLANS.
No Borrower shall, nor shall any Borrower permit any of its Subsidiaries
to, adopt or amend any Foreign Unfunded Pension Plan if such adoption or
amendment could reasonably be expected to result in a Material Adverse Effect.
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT") shall
occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by any Borrower to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by any Borrower to pay
when due any amount payable to an Issuing Lender in reimbursement of any drawing
under a Letter of Credit; or failure by any Borrower to pay interest on any Loan
or any fee or any other amount due under this Agreement within five (5) days
after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of any Borrower or any of its Subsidiaries to pay when due
any principal of or interest on one or more items of Indebtedness (other
than Indebtedness referred to in subsection 8.1) or Contingent Obligations
in an aggregate principal amount of $5,000,000 or more, in each case beyond
the end of any grace period provided therefor; or
(ii) breach or default by any Borrower or any of its Subsidiaries with
respect to any other material term of (a) one or more items of Indebtedness
or Contingent Obligations in the aggregate principal amounts referred to in
clause (i) above or (b) any loan agreement, mortgage, indenture or other
agreement relating to such item(s) of Indebtedness or Contingent
Obligation(s), if the effect of such breach or default is to cause, or to
permit the holder or holders of that Indebtedness or Contingent
Obligation(s) (or a trustee on behalf of such holder or holders) to cause,
that Indebtedness or Contingent Obligation(s) to become or be declared due
and payable prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be (upon the giving or receiving of
notice, lapse of time, both, or otherwise); or
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8.3 BREACH OF CERTAIN COVENANTS.
Failure of any Borrower to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by any
Borrower or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by any Borrower or any of its Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the date as of which made; or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
Any Borrower or any of its Subsidiaries shall default in the performance of
or compliance with any term contained in this Agreement or any of the other Loan
Documents, other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within 30
days after receipt by any Borrower of notice from Administrative Agent or any
Lender of such default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of New Holdings, any Borrower or any of its
Material Subsidiaries in an involuntary case under the Bankruptcy Code
which decree or order is not stayed; or (ii) an involuntary case shall be
commenced against New Holdings, any Borrower or any of its Material
Subsidiaries under the Bankruptcy Code; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over New Holdings, any Borrower or any of its Material
Subsidiaries, or over all or a substantial part of its property, shall have
been entered; or there shall have occurred the involuntary appointment of
an interim receiver, trustee or other custodian of New Holdings, any
Borrower or any of its Material Subsidiaries for all or a substantial part
of its property; or a warrant of attachment, execution or similar process
shall have been issued against any substantial part of the property of New
Holdings, any Borrower or any of its Material Subsidiaries, and any such
event described in this clause (ii) shall continue for 60 days unless
dismissed, bonded or discharged; or (iii) with respect to Goss France: (a)
Goss France ceases or threatens or announces an intention to cease or
suspend payment of its debts whether pursuant to Article 3 of law No. 85-89
dated 25 January 1985 or otherwise, (b) Goss France becomes insolvent or
has any moratorium declared in respect of any of its indebtedness, (c) Goss
France applies for the appointment of a conciliator pursuant to law No.
84-148 dated 1 March 1984, (d) Goss France applies for the appointment of a
mandataire ad hoc, (e) Goss France becomes the object of a judgment
declaring its redressment judiciare (after notice to terminate addressed to
the administrateur
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remaining without response for one month or upon the administrateur
electing to terminate) or liquidation judiciaire pursuant to law No. 85-998
of 25 January 1985 or subject to a plan for the transfer of the whole or
part of its business, or (f) an administrator, receiver, liquidator or
similar officer is appointed with respect to Goss France or its assets or
any petition or proceedings for any such appointment is brought or a
resolution for such appointment is passed; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) New Holdings, any Borrower or any of its Material Subsidiaries
shall have an order for relief entered with respect to it or commence a
voluntary case under the Bankruptcy Code, or shall consent to the entry of
an order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or shall consent
to the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; or New Holdings,
any Borrower or any of its Material Subsidiaries shall make any assignment
for the benefit of creditors; or (ii) New Holdings, any Borrower or any of
its Material Subsidiaries shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its debts as such debts become
due; or the Board of Directors of New Holdings, any Borrower or any of its
Material Subsidiaries (or any committee thereof) shall adopt any resolution
or otherwise authorize any action to approve any of the actions referred to
in clause (i) above or this clause (ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $2,500,000 or (ii)
in the aggregate at any time an amount in excess of $5,000,000 (in either case
to the extent not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) shall be entered or
filed against New Holdings, any Borrower or any of its Subsidiaries or any of
their respective assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 60 days (or in any event later than five days prior to
the date of any proposed sale thereunder); or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against New Holdings, any
Borrower or any of its Subsidiaries decreeing the dissolution or split up of New
Holdings, any Borrower or that Subsidiary and such order shall remain
undischarged or unstayed for a period in excess of 60 days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually or in the
aggregate results in or might reasonably be expected to result in liability of
any Borrower or any
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of its Subsidiaries in excess of $2,500,000 during the term of this Agreement;
or there shall exist an excess of aggregated accumulated benefit obligations, as
defined in Statement of Financial Accounting Standards No. 87, over the
aggregate total fair market value for all Pension Plans (excluding for purposes
of such computation (1) each Pension Plan with respect to which the fair market
value of the assets exceeds such accumulated benefit obligations and (2) each
Foreign Unfunded Pension Plan), which exceeds $12,000,000; or
8.11 CHANGE IN CONTROL.
(i) A change shall occur in the Board of Directors of New Holdings so
that a majority of the Board of Directors of New Holdings ceases to consist
of the individuals who constituted the Board of Directors of New Holdings
on the Effective Date (or individuals whose election or nomination for
election was approved by a vote of at least 75% of the directors then in
office who either were directors of New Holdings on the Effective Date or
whose election or nomination for election previously was so approved); or
(ii) any Person or Group (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission), other than Stonington and its
Affiliates, shall become or be the owner, directly or indirectly,
beneficially or of record, of shares representing more than 30% of the
aggregate ordinary voting power represented by the issued and outstanding
capital stock of New Holdings on a fully diluted basis, unless Stonington
and its Affiliates shall own and continue to so own capital stock
representing not less than a majority of such aggregate ordinary voting
power; or
(iii) at any time prior to a Public Offering, Stonington shall cease
to own, directly or indirectly, beneficially or of record, at least 51% of
each of the New Holdings Common Stock or any other class of voting capital
stock of New Holdings; or
(iv) New Holdings shall cease to beneficially own and control,
directly or indirectly, 100% of the issued and outstanding shares of
capital stock of Company or shall cease to have the ability to elect all of
the Board of Directors of Company; or
(v) Company shall cease to beneficially own and control, directly or
indirectly, 100% of the issued and outstanding shares of capital stock of
each of the other Borrowers (other than directors' qualifying shares) or
Company shall cease to have the ability to elect all of the Board of
Directors of each of the other Borrowers; or
8.12 INVALIDITY OF LOAN DOCUMENTS.
Any Guaranty for any reason, other than the satisfaction in full of all
Obligations, ceases to be in full force and effect (other than in accordance
with its terms) or is declared to be null and void; or any Loan Party denies
that it has any further liability, including without limitation with respect to
future advances by Lenders, under any Loan Document to which it is a party, or
gives notice to such effect; or the validity of any Loan Document shall be
contested by
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any Governmental Authority (whether by a general suspension of payments or a
moratorium on the payment of any class of indebtedness or otherwise); or any
treaty, law, regulation, communique, decree, ordinance or policy of any
Governmental Authority shall purport to render any provision of any Loan
Document invalid or unenforceable or shall purport to prevent or materially
delay the performance or observance by any Loan Party of its obligations under
any Loan Documents; or
8.13 FAILURE OF SECURITY.
Any Collateral Document shall, at any time, cease to be in full force and
effect (other than by reason of a release of Collateral in accordance with the
terms thereof) or shall be declared null and void, or the validity or
enforceability thereof shall be contested by any Loan Party, or Administrative
Agent shall not have or shall cease to have a valid and perfected First Priority
security interest in the Collateral; or
8.14 ACTION RELATING TO CERTAIN SUBORDINATED INDEBTEDNESS.
Any event shall occur which, under the terms of the New Holdings
Subordinated Note Indenture shall require New Holdings or any of its
Subsidiaries to purchase, redeem or otherwise acquire or offer to purchase,
redeem or otherwise acquire all or a portion of any such Subordinated
Indebtedness; or New Holdings or any of its Subsidiaries shall for any other
reason purchase, redeem or otherwise acquire or offer to purchase, redeem or
otherwise acquire, or make any other payments in respect of, all or any portion
of any such Subordinated Indebtedness, except to the extent expressly permitted
by subsection 7.5; or
8.15 AMENDMENT OF CERTAIN DOCUMENTS OF NEW HOLDINGS.
New Holdings shall agree to any material amendment to, or waive any of its
material rights under, or otherwise change any material terms of the New
Holdings Subordinated Note Indenture as in effect on the Effective Date, in a
manner adverse to New Holdings or any of its Subsidiaries or to Lenders without
the prior written consent of Administrative Agent and Requisite Lenders; or
8.16 CONDUCT OF BUSINESS RELATING TO NEW HOLDINGS.
New Holdings shall engage in any business other than owning 100% of the
capital stock of Company, issuing and servicing the New Holdings Subordinated
Notes and entering into and performing its obligations under and in accordance
with the Loan Documents to which it is a party and the New Holdings Subordinated
Note Indenture, or shall own any assets other than (a) the capital stock of
Company and (b) Cash and Cash Equivalents in an amount not to exceed $1,000,000
at any one time for the purpose of paying general operating expenses of New
Holdings or shall incur or permit to exist any Indebtedness or any other
liabilities other than liabilities related to the permitted business of New
Holdings and which are not material in amount, either individually or in the
aggregate:
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THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by each Borrower, and the obligation of each Lender to make any Loan, the
obligation or right of any Issuing Lender to issue any Letter of Credit
hereunder shall thereupon terminate, and (ii) upon the occurrence and during the
continuation of any other Event of Default, Administrative Agent shall, upon the
written request or with the written consent of the applicable Requisite Class
Lenders in accordance with the terms and conditions set forth in the
Intercreditor Agreement, by written notice to each applicable Borrower, declare
all or any portion of the amounts described in clauses (a) through (c) above
with respect to the Type of Loans and Commitments of such requesting or
consenting Class to be, and the same shall forthwith become, immediately due and
payable, without presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by each applicable Borrower, and the
obligation of each Lender to make any Loan, the obligation or right of any
Issuing Lender to issue any Letter of Credit hereunder shall thereupon
terminate; provided that the foregoing shall not affect in any way the
obligations of Lenders under subsection 3.3C(i).
Any amounts described in clause (b) above, when received by Administrative
Agent, shall be held by Administrative Agent pursuant to the terms of the
Collateral Account Agreement and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph, if at
any time within 60 days after an acceleration of the Loans pursuant to clause
(ii) of such paragraph each applicable Borrower shall pay all arrears of
interest and all payments on account of principal which shall have become due
otherwise than as a result of such acceleration (with interest on principal and,
to the extent permitted by law, on overdue interest, at the rates specified in
this Agreement) and all Events of Default and Potential Events of Default (other
than non-payment of the principal of and accrued interest on the Loans, in each
case which is due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to subsection 10.6, then the applicable Requisite
Class Lenders, by written notice to each applicable Borrower, may at their
option rescind and annul such acceleration and its consequences; but such action
shall not affect any subsequent Event of Default or Potential Event of Default
or impair any right consequent thereon. The provisions of this paragraph are
intended merely to bind applicable Lenders to a decision which may be made at
the election of Requisite Class Lenders and are not intended to benefit any
Borrower and do not grant any Borrower the right to require applicable Lenders
to rescind or annul any acceleration hereunder, even if the conditions set forth
herein are met.
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8.17 FAILURE OF GOSS REALTY AND LASALLE BANK NATIONAL ASSOCIATE TO PERFORM..
Goss Realty or LaSalle Bank National Association shall fail to execute all
documents necessary to consummate the transactions contemplated by that certain
Stipulation and Plan Modification to the Reorganization Plan as confirmed by the
Court on November 2, 1999, on or before November 30, 1999 or such later date as
may be approved by the Court.
SECTION 9. ADMINISTRATIVE AGENT
9.1 APPOINTMENT.
BTCo and its applicable Affiliates are hereby appointed by each Lender as
the Administrative Agent so appointed hereunder and under the other Loan
Documents, and each such Lender hereby authorizes Administrative Agent to act as
its agent in accordance with the terms of this Agreement and the other Loan
Documents. Administrative Agent agrees to act upon the express conditions
contained in this Agreement and the other Loan Documents, as applicable. The
provisions of this Section 9 are solely for the benefit of Administrative Agent
and Lenders and Borrowers shall have no rights as a third party beneficiary of
any of the provisions thereof. In performing its functions and duties under this
Agreement, Administrative Agent shall act solely as an agent of Lenders and does
not assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for any Borrower or any of its
Subsidiaries.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes
Administrative Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are specifically delegated or granted to Administrative Agent by the terms
hereof and thereof, together with such powers, rights and remedies as are
reasonably incidental thereto. Administrative Agent shall have only those duties
and responsibilities that are expressly specified in this Agreement and the
other Loan Documents. Administrative Agent may exercise such powers, rights and
remedies and perform such duties by or through its agents or employees.
Administrative Agent shall not have, by reason of this Agreement or any of the
other Loan Documents, a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon
Administrative Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Administrative Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or
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certificates or any other documents furnished or made by Administrative Agent to
Lenders or by or on behalf of any Borrower to Administrative Agent or any Lender
in connection with the Loan Documents and the transactions contemplated thereby
or for the financial condition or business affairs of any Borrower or any other
Person liable for the payment of any Obligations, nor shall Administrative Agent
be required to ascertain or inquire as to the performance or observance of any
of the terms, conditions, provisions, covenants or agreements contained in any
of the Loan Documents or as to the use of the proceeds of the Loans or the use
of the Letters of Credit or as to the existence or possible existence of any
Event of Default or Potential Event of Default. Anything contained in this
Agreement to the contrary notwithstanding, Administrative Agent shall not have
any liability arising from confirmations of the amount of outstanding Loans or
the Letter of Credit Usage or the component amounts thereof.
C. EXCULPATORY PROVISIONS. Neither Administrative Agent nor any of their
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by Administrative Agent under or in connection with any
of the Loan Documents except to the extent caused by an Agent's gross negligence
or willful misconduct. If Administrative Agent shall request instructions from
Lenders with respect to any act or action (including the failure to take an
action) in connection with this Agreement or any of the other Loan Documents,
Administrative Agent shall be entitled to refrain from such act or taking such
action unless and until Administrative Agent shall have received instructions
from Requisite Lenders. Without prejudice to the generality of the foregoing,
(i) Administrative Agent shall be entitled to rely, and shall be fully protected
in relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for Borrowers and
their Subsidiaries), accountants, experts and other professional advisors
selected by it; and (ii) no Lender shall have any right of action whatsoever
against Administrative Agent as a result of Administrative Agent acting or
(where so instructed) refraining from acting under this Agreement or any of the
other Loan Documents in accordance with the instructions of Requisite Lenders.
Administrative Agent shall be entitled to refrain from exercising any power,
discretion or authority vested in it under this Agreement or any of the other
Loan Documents unless and until it has obtained the instructions of Requisite
Lenders.
D. ADMINISTRATIVE AGENT ENTITLED TO ACT AS LENDER. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Administrative Agent in their individual
capacity as a Lender hereunder. With respect to their participation in the Loans
and the Letters of Credit, Administrative Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not performing the duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Administrative Agent, in each case in its
individual capacity. Administrative Agent and each of its respective Affiliates
may accept deposits from, lend money to and generally engage in any kind of
banking, trust, financial advisory or other business with any Borrower or any of
its Affiliates as if it were not performing the duties specified herein, and may
accept fees and other
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consideration from any Borrower for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of each Borrower and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of each Borrower and its Subsidiaries.
Administrative Agent shall not have any duty or responsibility, either initially
or on a continuing basis, to make any such investigation or any such appraisal
on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter, and Administrative Agent
shall not have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Administrative Agent and its respective officers, directors, employees
or agents to the extent that Administrative Agent and such officers, directors,
employees or agents shall not have been reimbursed by Borrowers, for and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits and reasonable costs and expenses (including, without
limitation, reasonable counsel fees and disbursements) or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against Administrative Agent and such officers, directors, employees or agents
in exercising its or their powers, rights and remedies or performing its or
their duties hereunder or under the other Loan Documents or otherwise in its or
their capacity as Administrative Agent or as an officer, director, employee or
agent of Administrative Agent in any way relating to or arising out of this
Agreement or the other Loan Documents; provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Administrative Agent's or such officer's, director's, employee's or agent's
gross negligence or willful misconduct. If any indemnity furnished to
Administrative Agent or any such officer, director, employee or agent for any
purpose shall, in the opinion of Administrative Agent or such officer, director,
employee or agent be insufficient or become impaired, Administrative Agent or
such officer, director, employee or agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against until such additional
indemnity is furnished.
9.5 SUCCESSOR AGENT.
Administrative Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and each Borrower, and Administrative Agent
may be removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to
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each Borrower and Administrative Agent, as the case may be, and signed by
Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five Business Days' notice to each
Borrower, to appoint a successor Administrative Agent. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor Administrative
Agent that successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Administrative Agent and the retiring or removed Administrative Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring or removed Administrative Agent's resignation or removal hereunder
as Administrative Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
9.6 COLLATERAL DOCUMENTS AND GUARANTIES.
Each Lender hereby further authorizes Administrative Agent to enter into
each Collateral Document as secured party on behalf of and for the benefit of
Lenders and agrees to be bound by the terms of each Collateral Document;
provided that, subject to any provision of subsection 10.6 requiring the consent
of any additional Lenders, Administrative Agent shall not enter into or consent
to any amendment, modification, termination or waiver of any provision contained
in any Collateral Document or any Guaranty without the prior consent of
Requisite Lenders, but Administrative Agent may (i) release any Lien covering
any items of Collateral that are the subject of a sale or other disposition of
assets permitted by this Agreement or to which Requisite Lenders have consented
and (ii) release any Guarantor (other than any Borrower or New Holdings) from
its Guaranty if all of the capital stock of such Guarantor is sold to a Person
that is not any Affiliate of Company pursuant to a sale or other disposition
permitted hereunder or to which Requisite Lenders have consented. Anything
contained in any of the Loan Documents to the contrary notwithstanding, each
Lender agrees that no Lender shall have any right individually to realize upon
any of the Collateral under any Collateral Document or to enforce any of the
Guaranties, it being understood and agreed that all rights and remedies under
the Collateral Documents and the Guaranties may be exercised solely by
Administrative Agent for the benefit of Lenders in accordance with the terms
thereof.
It is hereby specified that the obligations of the Company under this
Agreement shall be substituted in lieu of its obligations resulting from the
Existing Credit Agreement and that therefore Administrative Agent hereby
reserves, as provided under Article 1278 of French Civil Code, as security for
the obligations of the Company under this Agreement, the benefit, of the
security interest created by the Share Pledge Agreement dated October 15, 1996
as amended on January 29, 1998 among Company and Administrative Agent relating
to the pledge of Goss France's shares by Company.
It is hereby specified that the obligations of Goss France under this
Agreement shall be substituted in lieu of its obligations resulting from the
Existing Credit Agreement and that therefore Administrative Agent hereby
reserves, as provided under Article 1278 of French Civil Code, as security for
the obligations of Goss France under this Agreement, the benefit, of
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the security interest created by the Trademark Pledge Agreement date January 29,
1998, among Goss France and Administrative Agent.
9.7 DOCUMENTATION AGENT.
Any Lender identified on the facing page, the introduction, the signature
pages or in any provision of this Agreement as "documentation agent" shall have
no right, power, obligation, liability, responsibility or duty under this
Agreement or any other Loan Document other those applicable to all Lenders as
such. Without limiting the foregoing, any Lender so identified as "documentation
agent" shall not have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on
any of Lenders so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.
SECTION 10. MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitments or any
Loan or Loans made by it or its Letters of Credit or participations therein or
any other interest herein or in any other Obligations owed to it; provided that
no such sale, assignment, transfer or participation shall, without the consent
of Company, require Company to file a registration statement with the Securities
and Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided further that no
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 10.1B(ii); and provided
further that no such sale, assignment, transfer or participation of any Letter
of Credit or any participation therein may be made separately from a sale,
assignment, transfer or participation of a corresponding interest in the
Revolving Loan Commitment and the Revolving Loans of the Lender effecting such
sale, assignment, transfer or participation. Except as otherwise provided in
this subsection 10.1, no Lender shall, as between Borrowers and such Lender, be
relieved of any of its obligations hereunder as a result of any sale, assignment
or transfer of, or any granting of participations in, all or any part of its
Commitments or the Loans, the Letters of Credit or participations therein, or
the other Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter of
Credit or participation therein, or other Obligation may (a) be assigned in
any amount to another Lender, or to an Affiliate of the assigning Lender or
another Lender, with the
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giving of notice to Company and Administrative Agent or (b) be assigned in
an aggregate amount of not less than $5,000,000 (or such lesser amount as
shall constitute the aggregate amount of the Commitments, Loans, Letters of
Credit and participations therein, and other Obligations of the assigning
Lender) to any other Eligible Assignee with the consent of Company if there
has not occurred and is then continuing an Event of Default and of
Administrative Agent and, in the case of an assignment of an Indemnity
Amount or an Indemnity Participation, the consent of Administrative Agent
(which consent of Company and Administrative Agent shall not be
unreasonably withheld); provided that any such assignment by a Lender in
accordance with either clause (a) or (b) above (x) of any Domestic Tranche
A Revolving Loan Commitment, any Domestic Tranche A Revolving Loan or any
Tranche A Letter of Credit shall effect a pro rata assignment of each such
Type of Commitment and each such Type of Loan of the assigning Lender and
(y) of any Tranche B Revolving Loan Commitment, any Term Loan Commitment,
any Tranche B Revolving Loans, any Term Loans or any Tranche B Letters of
Credit shall effect a pro rata assignment of each such Type of Commitment
and each such Type of Loan of the assigning Lender, and in the event that
any such assigning Lender is an Indemnifying Lender, shall also effect a
pro rata assignment of any Indemnity Participation and Indemnity Amount;
provided further that notwithstanding the foregoing, in the event that an
Indemnifying Lender is making an assignment to any other Lender or Eligible
Assignee, which Lender or Eligible Assignee desires to become a UK Lender,
a French Lender or a Japanese Lender hereunder, as the case may be,
Administrative Agent shall be entitled to assign to such other Lender or
Eligible Assignee, without making a pro rata assignment of any other Type
of Commitment or Type of Loan of Administrative Agent, that portion of its
UK Tranche B Revolving Loan Commitment, its French Tranche B Revolving Loan
Commitment or its Japanese Tranche B Revolving Loan Commitment, as the case
may be, which represents the portion of the Indemnity Participation and
Indemnity Amount being assigned to such other Lender or Eligible Assignee
by such Indemnifying Lender, and upon such assignment by Administrative
Agent, such other Lender or Eligible Assignee shall become a UK Lender, a
French Lender or a Japanese Lender hereunder, as the case may be. To the
extent of any such assignment in accordance with either clause (a) or (b)
above, the assigning Lender shall be relieved of its obligations with
respect to its Commitments, Loans, Letters of Credit or participations
therein, or other Obligations or the portion thereof so assigned. The
parties to each such assignment shall execute and deliver to Administrative
Agent, for its acceptance and recording in the Register, an Assignment
Agreement, together with a processing and recordation fee of $3,500, and
with such forms, certificates or other evidence, if any, with respect to
any withholding tax matters as the assignee under such Assignment Agreement
may be required to deliver to Administrative Agent or the appropriate
persons, as the case may be, pursuant to subsection 2.7B(iii)(a) (as fully
set forth in Annex A). Upon such execution, delivery, acceptance and
recordation, from and after the effective date specified in such Assignment
Agreement, (y) 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 Agreement, shall have the rights and
obligations of a Lender hereunder and
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(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment Agreement covering all or
the remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto; provided
that, anything contained in any of the Loan Documents to the contrary
notwithstanding, if such Lender is the Issuing Lender with respect to any
outstanding Letters of Credit such Lender shall continue to have all rights
and obligations of an Issuing Lender with respect to such Letters of Credit
until the cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder). The Commitments hereunder
shall be modified to reflect the Commitment of such assignee and any
remaining Commitment of such assigning Lender and, if any such assignment
occurs after the issuance of the Notes hereunder, the assigning Lender
shall, upon the effectiveness of such assignment or as promptly thereafter
as practicable, surrender its applicable Notes to Administrative Agent for
cancellation, and thereupon new Notes shall be issued to the assignee
and/or to the assigning Lender, substantially in the form of Exhibit IV,
Exhibit V, Exhibit VI or Exhibit VII annexed hereto, as the case may be,
with appropriate insertions, to reflect the new Commitments and/or
outstanding Loans, as the case may be, of the assignee and/or the assigning
Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register;
Recording Fees in Japan. Upon its receipt of an Assignment Agreement
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee, together with the processing and recordation fee
referred to in subsection 10.1B(i) and any forms, certificates or other
evidence with respect to any withholding tax matters that such assignee may
be required to deliver to Administrative Agent or the appropriate persons,
as the case may be, pursuant to subsection 2.7B(iii) (as fully set forth in
Annex A), Administrative Agent shall, if Administrative Agent and Company
have consented to the assignment evidenced thereby (in each case to the
extent such consent is required pursuant to subsection 10.1B(i)), (a)
accept such Assignment Agreement by executing a counterpart thereof as
provided therein (which acceptance shall evidence any required consent of
Administrative Agent to such assignment), (b) record the information
contained therein in the Register, and (c) give prompt notice thereof to
Company. Administrative Agent shall maintain a copy of each Assignment
Agreement delivered to and accepted by it as provided in this subsection
10.1B(ii). Each Eligible Assignee shall be solely responsible for all fees,
costs and expenses (including reasonable attorney fees, costs and expenses
incurred by Administrative Agent) relating to the registering and recording
the security interests of such Eligible Assignee with respect to any
Mortgages in Japan.
C. PARTICIPATIONS. The holder of any participation (other than an Indemnity
Participation), other than an Affiliate of the Lender granting such
participation, shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly affecting (i) the extension of
the scheduled final maturity date of any Loan allocated to such
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participation or (ii) a reduction of the principal amount of or the rate of
interest payable on any Loan or fees payable on any Letter of Credit allocated
to such participation, and all amounts payable by Borrowers hereunder (including
without limitation amounts payable to such Lender pursuant to subsections 2.6D,
2.7 and 3.6) shall be determined as if such Lender had not sold such
participation. Each Borrower and each Lender hereby acknowledges and agrees
that, solely for purposes of subsections 10.4 and 10.5, (a) any participation
will give rise to a direct obligation of such Borrower to the participant and
(b) the participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments and
participations permitted under the foregoing provisions of this subsection 10.1,
any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between any Borrower and such
Lender, be relieved of any of its obligations hereunder as a result of any such
assignment and pledge and (ii) in no event shall such Federal Reserve Bank be
considered to be a "Lender" or be entitled to require the assigning Lender to
take or omit to take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning Company
and its Subsidiaries in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to subsection 10.19.
10.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be consummated,
each Borrower agrees to pay promptly (i) all the actual and reasonable costs and
expenses of preparation of the Loan Documents and any consents, amendments,
waivers or other modifications thereto; (ii) all the actual and reasonable costs
of furnishing all opinions by counsel for any Borrower (including without
limitation any opinions requested by Lenders as to any legal matters arising
hereunder) and of any Borrower's performance of and compliance with all
agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including, without limitation, with
respect to confirming compliance with environmental and insurance requirements;
(iii) the actual and reasonable fees, expenses and disbursements of counsel to
Administrative Agent (including actual and reasonable allocated costs of
internal counsel) in connection with the negotiation, preparation, execution and
administration of the Loan Documents and any consents, amendments, waivers or
other modifications thereto and any other documents or matters requested by any
Borrower; (iv) all the actual and reasonable costs and expenses of creating and
perfecting Liens in favor of Administrative Agent on behalf of Lenders pursuant
to the Loan Documents, including without limitation costs of conducting record
searches, examining Collateral, costs of title insurance premiums, real estate
survey costs, and fees and taxes in connection with the filing of financing
statements, costs of preparing and recording Loan Documents, fees and expenses
of counsel for providing such opinions as Administrative Agent or Requisite
Lenders may reasonably request,
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and fees and expenses of legal counsel to Administrative Agent; (v) all the
actual costs and reasonable expenses of obtaining and reviewing any appraisals
provided for under this Agreement and any environmental audits or reports
provided for under this Agreement; (vi) all other actual and reasonable costs
and expenses incurred by Administrative Agent in connection with the syndication
of the Commitments and the negotiation, preparation and execution of the Loan
Documents and any consents, amendments, waivers or other modifications thereto
and the transactions contemplated thereby; (vii) after the occurrence of an
Event of Default, all costs and expenses, including reasonable attorneys' fees
(including actual and reasonable allocated costs of internal counsel) and costs
of settlement, incurred by Administrative Agent and Lenders in enforcing any
Obligations of or in collecting any payments due from any Loan Party hereunder
or under the other Loan Documents by reason of such Event of Default or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or pursuant to any
insolvency or bankruptcy proceedings, and (viii) all fees, expenses,
disbursements and other costs or liabilities of any financial advisors,
accountants, auditors or appraisers retained by Administrative Agent or its
counsel in connection with this Agreement or any other Loan Document or the
transactions contemplated thereby.
10.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 10.2, whether
or not the transactions contemplated hereby shall be consummated, each Borrower
agrees to defend, indemnify, pay and hold harmless Administrative Agent and
Lenders, and the officers, directors, employees, agents and affiliates of
Administrative Agent and Lenders (collectively called the "INDEMNITEES") from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including without limitation the reasonable
fees and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including without limitation securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby (including without limitation Lenders' agreement
to make the Loans hereunder or the use or intended use of the proceeds of any of
the Loans or the issuance of Letters of Credit hereunder or the use or intended
use of any of the Letters of Credit) or the statements contained in the
commitment letter delivered by any Lender to any Borrower with respect thereto
(collectively called the "INDEMNIFIED LIABILITIES"); provided that Borrowers
shall not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, each Borrower
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shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them.
Without limiting the generality of the foregoing, each Borrower further
agrees to fully and promptly pay, perform, discharge, defend (subject to
Indemnitee's selection of counsel), indemnify and hold harmless each Indemnitee
from and against any Indemnified Environmental Liabilities; provided that
Borrowers shall not have any obligation to any Indemnitee hereunder with respect
to any Indemnified Environmental Liabilities to the extent such Indemnified
Environmental Liabilities arise solely from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction. To the extent that the undertaking to defend, indemnify,
pay and hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, each Borrower shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Environmental
Liabilities incurred by the Indemnitees or any of them. As used herein,
"INDEMNIFIED ENVIRONMENTAL LIABILITIES" means any liabilities, obligations,
losses, damages (including, without limitation, natural resource damages),
penalties, actions, judgments, suits, claims (including Environmental Claims),
costs (including, without limitation, the costs of any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation, or other response
action necessary to remove, remediate, clean up, or abate any Hazardous
Materials or any activity relating to Hazardous Materials that is in violation
of any Environmental Laws or that presents a material risk of giving rise to an
Environmental Claim), expenses and disbursements of any kind or nature
whatsoever, whether direct, indirect or consequential and whether based on any
federal, state or foreign laws, statutes, rules or regulations (including
without limitation securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of: (i) any
Release, threatened Release or disposal of any Hazardous Materials at any of the
Facilities; (ii) the Release, threatened Release, or disposal at any location of
any Hazardous Materials generated at or originating from any of the Facilities
by or at the direction of Company or any of its Subsidiaries; (iii) any
Environmental Claim in connection with any of the Facilities; or (iv) the
operation of or violation of any Environmental Law at any of the Facilities.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence of any Event of
Default and consultation with Administrative Agent each Lender is hereby
authorized by each Borrower at any time or from time to time, without notice to
any Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any other
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Indebtedness at any time held or owing by that Lender or any of its Affiliates
to or for the credit or the account of such Borrower against and on account of
the obligations and liabilities of such Borrower under this Agreement, the
Letters of Credit and participations therein and the other Loan Documents,
including, but not limited to, all claims of any nature or description arising
out of or connected with this Agreement, the Letters of Credit and
participations therein or any other Loan Document, irrespective of whether or
not (i) that Lender shall have made any demand hereunder or (ii) the principal
of or the interest on the Loans or any amounts in respect of the Letters of
Credit or any other amounts due hereunder shall have become due and payable
pursuant to Section 8 and although said obligations and liabilities, or any of
them, may be contingent or unmatured. Each Borrower hereby further grants to
Administrative Agent and each Lender for the benefit of all Lenders a security
interest in all deposits and accounts maintained with Administrative Agent or
such Lender as security for the Obligations.
10.5 RATABLE SHARING
Lenders hereby agree among themselves that if any of them shall, whether by
voluntary payment, by realization upon security, through the exercise of any
right of set-off or banker's lien, by counterclaim or cross action or by the
enforcement of any right under the Loan Documents or otherwise, or as adequate
protection of a deposit treated as cash collateral under the Bankruptcy Code,
receive payment or reduction of a proportion of the aggregate amount of
principal, interest, amounts payable in respect of Letters of Credit, fees and
other amounts then due and owing to that Lender from a Borrower hereunder or
under the other Loan Documents (collectively, the "AGGREGATE AMOUNTS DUE" to
such Lender) which is greater than the proportion received by any other Lender
in respect of the Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (i) notify Administrative
Agent and each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously upon the
receipt by such seller of its portion of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of such Borrower or otherwise, those purchases
shall be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Each Borrower expressly consents to the foregoing arrangement
and agrees that any holder of a participation so purchased may exercise any and
all rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by such Borrower to that holder with respect thereto as fully as if
that holder were owed the amount of the participation held by that holder.
10.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any provision of this
Agreement or of the Notes, and no consent to any departure by any Borrower
therefrom, shall in
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any event be effective without the written concurrence of such Borrower and
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which:
(a) amends, modifies or waives any provision of this subsection 10.6;
or
(b) reduces the percentage specified in the definition "Requisite
Lenders"; or
(c) consents to the assignment or transfer by any Borrower of any of
its rights and obligations under this Agreement or any other Loan Document;
shall be effective only if evidenced in a writing signed by or on behalf of all
Lenders; provided further that any such amendment, modification, termination,
waiver or consent which:
(a) extends the final scheduled maturity of any Domestic Tranche A
Revolving Loan or any Notes relating thereto, or extends the stated
maturity of any Tranche A Letter of Credit beyond the Commitment
Termination Date, or reduces the rate or extends the time of payment of
interest or fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates), or reduces
the principal amount thereof (except to the extent repaid in cash); or
(b) releases all or substantially all of (x) the Collateral (except as
expressly provided in the Loan Documents) under all the Collateral
Documents with respect to the Domestic Tranche A Revolving Loan
Commitments, or (y) the Guarantors (except as expressly provided in the
Loan Documents) from their obligations under any of the Guaranties with
respect to the Domestic Tranche A Revolving Loan Commitments; or
(c) increases the advance rates provided for in the definition of
"Tranche A Borrowing Base" or "Tranche B Borrowing Base" to any level above
the advance rates in effect as of the Effective Date;
shall be effective only if evidenced in a writing signed by or on behalf of all
Domestic Tranche A Lenders (with Obligations being directly affected in the case
of clause (a) above); provided further that any such amendment, modification,
termination, waiver or consent which:
(a) extends the final scheduled maturity of any Term Loan or Tranche B
Revolving Loan or any Notes relating thereto, or extends the stated
maturity of any Tranche B Letter of Credit beyond the Commitment
Termination Date, or reduces the rate or extends the time of payment of
interest or fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates), or reduces
the principal amount thereof (except to the extent repaid in cash); or
(b) releases all or substantially all of (x) the Collateral (except as
expressly provided in the Loan Documents) under all the Collateral
Documents with respect to the Term Loans or Tranche B Revolving Loan
Commitments, or (y) the Guarantors (except
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as expressly provided in the Loan Documents) from their obligations under any of
the Guaranties with respect to the Term Loans or Tranche B Revolving Loan
Commitments;
shall be effective only if evidenced in a writing signed by or on behalf of all
Domestic Tranche B Lenders, UK Lenders, French Lenders and Japanese Lenders
(with Obligations being directly affected in the case of clause (a) above).
In addition, (i) no amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
Lender which is the holder of that Note, (ii) no amendment, modification,
termination or waiver of any provision of subsection 2.1A(iii) or any other
provision of this Agreement relating to the Swing Line Lender shall be effective
without the written concurrence of Swing Line Lender, (iii) to the extent
related to (a) UK Indemnifying Lenders or UK Tranche B Revolving Loan
Commitments, (b) French Indemnifying Lenders or French Tranche B Revolving Loan
Commitments, or (c) Japanese Indemnifying Lenders or Japanese Tranche B
Revolving Loan Commitments, no amendment, modification, termination or waiver of
any provision of subsection 2.9 or of related definitions shall be effective
without the written concurrence of, respectively, (x) the UK Indemnifying
Lenders holding a majority of the UK Tranche B Revolving Loan Exposure and of
Administrative Agent, (y) the French Indemnifying Lenders holding a majority of
the French Tranche B Revolving Loan Exposure and of Administrative Agent, and
(z) the Japanese Indemnifying Lenders holding a majority of the Japanese Tranche
B Revolving Loan Exposure and of Administrative Agent, (iv) no amendment,
modification, termination or waiver of any provision of Section 9 or of any
other provision of this Agreement which, by its terms, expressly requires the
approval or concurrence of Administrative Agent shall be effective without the
written concurrence of Administrative Agent, and (v) no amendment, modification,
termination or waiver of any provision of subsection 2.4 which has the effect of
(x) extending or reducing any interim scheduled payments applicable to either
Class or (y) changing any interim scheduled payments, voluntary and mandatory
prepayments, or Commitment reductions applicable to either Class (the "AFFECTED
CLASS") in a manner that disproportionately disadvantages such Class relative to
the other Class, shall be effective without the written concurrence of Requisite
Class Lenders of such Class or such Affected Class (it being understood and
agreed that any amendment, modification, termination or waiver of voluntary or
mandatory prepayment, or Commitment reduction from those set forth in subsection
2.4 with respect to one Class but not the other Class shall be deemed to
disadvantage such other Class for purposes of this clause (v)).
Administrative Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on any Borrower in any case shall entitle such Borrower to
any other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by any Borrower, on such
Borrower.
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10.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or three Business Days
after depositing it in the mail with postage prepaid and properly addressed;
provided that notices to Administrative Agent shall not be effective until
received. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or (i) as to
Borrowers and Administrative Agent, such other address as shall be designated by
such Person in a written notice delivered to the other parties hereto and (ii)
as to each other party, such other address as shall be designated by such party
in a written notice delivered to Administrative Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall survive
the execution and delivery of this Agreement and the making of the Loans and the
issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Borrowers set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the cancellation or
expiration of the Letters of Credit and the reimbursement of any amounts drawn
thereunder, and the termination of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Administrative Agent or any Lender in
the exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
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10.11 MARSHALLING; PAYMENTS SET ASIDE.
None of Administrative Agent or any Lender shall be under any obligation to
marshal any assets in favor of any Borrower or any other party or against or in
payment of any or all of the Obligations. To the extent that any Borrower makes
a payment or payments to Administrative Agent or Lenders (or to Agent for the
benefit of Lenders), or Administrative Agent or Lenders enforce any security
interests or exercise their rights of setoff, and such payment or payments or
the proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.
10.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 HEADINGS.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE
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GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
10.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). None of
Borrowers' rights or obligations hereunder nor any interest therein may be
assigned or delegated by any Borrower without the prior written consent of all
Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY BORROWER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH BORROWER ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH
OBLIGATION. Each Borrower hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to such Borrower at its address provided in subsection 10.8,
such service being hereby acknowledged by such Borrower to be sufficient for
personal jurisdiction in any action against such Borrower in any such court and
to be otherwise effective and binding service in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of any Lender to bring proceedings against any Borrower in
the courts of any other jurisdiction.
10.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that
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each will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
10.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement which has been identified in writing as
confidential by any Borrower in accordance with such Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, it being understood and agreed
by each Borrower that in any event a Lender may make disclosures to Affiliates
of such Lender, to the legal counsel and accountants of such Lender or of such
Affiliates, or disclosures reasonably required by any bona fide assignee,
transferee or participant (who shall have agreed to the confidentiality of the
same) in connection with the contemplated assignment or transfer by such Lender
of any Loans or any participations therein or disclosures required or requested
by any governmental agency or representative thereof or pursuant to legal
process; provided that, unless specifically prohibited by applicable law or
court order, each Lender shall notify Company of any request by any governmental
agency or representative thereof (other than any such request in connection with
any examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided further that in no event shall any Lender be
obligated or required to return any materials furnished by Company or any of its
Subsidiaries.
10.20 JUDGMENT CURRENCY.
(a) If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due hereunder in any currency (the "ORIGINAL
CURRENCY") into another currency (the "OTHER CURRENCY"), the parties hereto
agree, to the fullest extent permitted by law, that the rate of exchange used
shall be that at which in accordance with normal banking procedures
Administrative Agent or a Lender could purchase the Original Currency with such
Other Currency in New York, New York on the Business Day immediately preceding
the day on which any such judgment, or any relevant part thereof, is given.
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(b) The obligations of each Borrower in respect of any sum due from it to
Administrative Agent or any Lender hereunder shall, notwithstanding any judgment
in such Other Currency, be discharged only to the extent that on the Business
Day following receipt by Administrative Agent or Lender of any sum adjudged to
be so due in such Other Currency Administrative Agent or Lender may in
accordance with normal banking procedures purchase the Original Currency with
such Other Currency; if the Original Currency so purchased is less than the sum
originally due Administrative Agent or Lender in the Original Currency, such
Borrower agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify Administrative Agent or Lender against such loss, and if the
Original Currency so purchased exceed the sum originally due to Administrative
Agent or Lender in the Original Currency, Lender shall remit such excess to such
Borrower.
10.21 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by each Borrower
and Administrative Agent of written or telephonic notification of such execution
and authorization of delivery thereof.
10.22 NO IMMUNITY.
To the extent that any Borrower has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, such Borrower
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement and, without limiting the generality of the foregoing, agrees that the
waivers set forth in this subsection 10.22 shall have the fullest scope
permitted under the Foreign Sovereign Immunities Act of 1976 of the United
States and are intended to be irrevocable for purposes of such Act.
10.23 INTENTION TO SECURE OBLIGATIONS UNDER HEDGE AGREEMENTS.
Borrowers may from time to time enter into one or more Hedging Agreements
with or one or more Lenders in accordance with the terms of the Credit
Agreement, and it is intended that the obligations of Borrowers under the
Hedging Agreements, including the obligation of Borrowers to make payments
thereunder in the event of early termination thereof be secured pursuant to the
Loan Documents.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
[Signature pages to come]
S-1
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ANNEX A
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the provisions of
subsection 2.7B, in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, commitment fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender (other than
any such reserve or other requirements with respect to Offshore Rate Loans
that are reflected in the definition of Adjusted Offshore Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market for the
Applicable Currency;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto in an amount deemed by such Lender (in its sole discretion) to
be material; then, in any such case, the applicable Borrower shall promptly pay
to such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to the applicable Borrower (with a copy to
Administrative Agent) a written statement, setting forth in reasonable detail
the basis for calculating the additional amounts owed to such Lender under this
subsection 2.7A, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
Annex A-1
<PAGE>
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Borrowers under
this Agreement and the other Loan Documents shall be paid free and clear
of, and, except to the extent required by law, without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by
or within the United States of America, the UK, France or Japan or any
political subdivision in or of the United States of America, the UK, France
or Japan or any other jurisdiction from or to which a payment is made by or
on behalf of any Borrower or by any federation or organization of which the
United States of America, the UK, France or Japan or any such jurisdiction
is a member at the time of payment.
(ii) Grossing-up of Payments. If any Borrower or any other Person
(including any Funding Lender with respect to any payments made to an
Indemnifying Lender under subsection 2.9) is required by law to make any
deduction or withholding on account of any such Tax from any sum paid or
payable by any Borrower to Administrative Agent or any Lender under any of
the Loan Documents or by any Funding Lender with respect to any payments
made to an Indemnifying Lender under subsection 2.9:
(a) such Borrower shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as such
Borrower becomes aware of it;
(b) such Borrower shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on such Borrower) for its own account or (if that
liability is imposed on Administrative Agent or any such Lender, as
the case may be) on behalf of and in the name of Administrative Agent
or any such Lender;
(c) the sum payable by such Borrower or by such Funding Lender in
respect of which the relevant deduction, withholding or payment is
required shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment,
Administrative Agent, such Lender or Indemnifying Lender, as the case
may be, receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been required
or made; and
(d) within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30 days after
the due date of payment of any Tax which it is required by clause (b)
above to pay, such Borrower shall deliver to Administrative Agent
evidence reasonably satisfactory to the other affected parties of such
deduction, withholding or payment and of its making payment thereof to
the relevant taxing or other authority;
Annex A-2
<PAGE>
provided that no such additional amount of United States Tax shall be
required to be paid to any Lender under clause (c) above except to the
extent that any change after the date hereof (in the case of each
Lender listed on the signature pages hereof) or after the date of the
Assignment Agreement pursuant to which such Lender became a Lender (in
the case of each other Lender) in any such requirement for a
deduction, withholding or payment as is mentioned therein shall result
in an increase in the rate of such deduction, withholding or payment
from that in effect at the date of this Agreement or at the date of
such Assignment Agreement, as the case may be, in respect of payments
to such Lender; provided further that any such additional amount of
UK, French, or Japanese Tax, as the case may be, shall be required to
be paid by Borrower to Administrative Agent, any applicable
Indemnifying Lender or to any other Lender under clause (c) above
whether or not any such payment shall be required as a result of any
change in applicable laws and regulations after the date hereof (i.e.,
Borrower shall be required to pay such additional amount of UK,
French, or Japanese Tax, as the case may be, even if the obligation to
make such payment shall have arisen under applicable laws and
regulations as in effect on the date hereof); and provided further
that notwithstanding anything to the contrary contained in this
Agreement or in any other Loan Document, to the extent that
Administrative Agent is required by any applicable law or regulation,
whether or not in effect on the date hereof, to make any deduction or
withholding on account of any such UK, French, or Japanese Tax from
any sum paid or payable by Administrative Agent to any Indemnifying
Lender pursuant to subsection 2.9, (a) Borrower shall pay any such Tax
before the date on which penalties attach thereto, such payment to be
made (if the liability to pay is imposed on such Borrower) for its own
account or (if that liability is imposed on Administrative Agent or
such Indemnifying Lender, as the case may be) on behalf of and in the
name of Administrative Agent or such Indemnifying Lender; and (b) the
sum payable by such Borrower or by Administrative Agent in respect of
which the relevant deduction, withholding or payment is required shall
be increased to the extent necessary to ensure that, after the making
of that deduction, withholding or payment, Administrative Agent or
Indemnifying Lender, as the case may be, receives on the due date a
net sum equal to what it would have received had no such deduction,
withholding or payment been required or made. Borrower shall indemnify
Administrative Agent and each applicable Indemnifying Lender for any
Tax (other than a Tax on the overall net income of any Lender)
imposed, levied, collected, withheld or assessed by or under any
applicable Governmental Authority with respect to the payments to be
made pursuant to subsection 2.9.
(iii) Evidence of Exemption from Withholding Taxes.
(a) (1) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "NON-US LENDER") shall deliver to Administrative Agent
for transmission to Company, on or prior to the Effective Date (in the
case of each Lender listed on the signature pages hereof) or on or
prior to the date of the Assignment Agreement pursuant to which it
becomes
Annex A-3
<PAGE>
a Lender (in the case of each other Lender), and at such other times
as may be necessary in the determination of Company or Administrative
Agent (each in the reasonable exercise of its discretion), (X) two
original copies of Internal Revenue Service Form 1001 or 4224 (or any
successor forms), properly completed and duly executed by such Non-US
Lender, together with any other certificate or statement of exemption
required under the Internal Revenue Code or the regulations issued
thereunder to establish that such Non-US Lender is not subject to
deduction or withholding of United States federal income tax with
respect to any payments to such Non-US Lender of principal, interest,
fees or other amounts payable under any of the Loan Documents or (Y)
if such Non-US Lender is not a "bank" or other Person described in
Section 881(c)(3) of the Internal Revenue Code and cannot deliver
either Internal Revenue Service Form 1001 or 4224 pursuant to clause
(X) above, a Certificate re Non-Bank Status together with two original
copies of Internal Revenue Service Form W-8 (or any successor form),
properly completed and duly executed by such Non-US Lender, together
with any other certificate or statement of exemption required under
the Internal Revenue Code or the regulations issued thereunder to
establish that such Non-US Lender is not subject to deduction or
withholding of United States federal income tax with respect to any
payments to such Non-US Lender of interest payable under any of the
Loan Documents.
(2) Each UK Lender (other than a UK Qualifying Lender; provided
that this clause 2.7B(iii)(a)(3) shall apply to a UK Qualifying Lender
who loses such status, other than through a change in any applicable
law, treaty or governmental rule, regulation or order, or any change
in the interpretation, administration or application thereof after the
Relevant Date (as defined below) as set out in clause 2.7B(iii)(c),
from the date of such loss) shall deliver to the appropriate Person
such application forms, certificates, documents or other evidence as
may be required from time to time, properly completed and duly
executed by such UK Lender, to enable Goss UK to be able to pay
interest on the UK Loans from it without withholding or deduction for
or on account of any UK income tax. Each UK Lender severally warrants
to Goss UK that on the Relevant Date (as defined in clause
2.7B(iii)(c)) (i) it is a UK Qualifying Lender or (ii) it is a UK
Double Tax Treaty Lender that has or will timely fulfill its
obligations under subsection 2.7B(iii).
(3) Each French Lender that is organized under the laws of any
jurisdiction other than France or any political subdivision thereof
(for purposes of this subsection 2.7B(iii), a "NON-FRENCH LENDER")
agrees to deliver to Goss France and Administrative Agent upon request
such certificates, documents or other evidence as may be required from
time to time, properly completed and duly executed by such Non-French
Lender, to establish the basis for any applicable exemption from or
reduction of Taxes with respect to any payments to such Non-
Annex A-4
<PAGE>
French Lender of principal, interest, fees, commissions or any other
amount payable under this Agreement or the French Revolving Loans.
(4) Each Japanese Lender that is organized under the laws of any
jurisdiction other than Japan or any political subdivision thereof
(for purposes of this subsection 2.7B(iii), a "NON-JAPANESE LENDER")
agrees to deliver to Goss Japan and Administrative Agent upon request
such certificates, documents or other evidence as may be required from
time to time, properly completed and duly executed by such
Non-Japanese Lender, to establish the basis for any applicable
exemption from or reduction of Taxes with respect to any payments to
such Non-Japanese Lender of principal, interest, fees, commissions or
any other amount payable under this Agreement or the Japanese
Revolving Loans.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters or UK, French or Japanese income tax withholding
matters pursuant to subsection 2.7B(iii)(a) hereby agrees, from time
to time after the initial delivery by such Lender of such forms,
certificates or other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other evidence
obsolete or inaccurate in any material respect, that such Lender shall
(1)(W) in the case of any Non-US Lender, promptly deliver to
Administrative Agent for transmission to Company two new original
copies of Internal Revenue Service Form 1001 or 4224, or a Certificate
re Non-Bank Status and two original copies of Internal Revenue Service
Form W-8, as the case may be, (X) in the case of any Non-French
Lender, promptly deliver to Administrative Agent for transmission to
Goss France such certificates, documents or other evidence as may be
required from time to time under the third paragraph of subsection
2.7B(iii)(a), (Y) in the case of any Non-Japanese Lender, promptly
deliver to Administrative Agent for transmission to Goss Japan such
certificates, documents or other evidence as may be required from time
to time under the fourth paragraph of subsection 2.7B(iii)(a), or (Z)
in the case of any UK Lender, promptly deliver to the appropriate
Persons such application forms, certificates, documents or other
evidence as may be required from time to time under the second
paragraph of subsection 2.7B(iii)(a), in each case properly completed
and duly executed by such Lender, together with any other certificate
or statement of exemption required in order to confirm or establish
that such Lender is not subject to deduction or withholding of United
States, French, Japanese or UK (as applicable) Tax with respect to
payments to such Lender under the Loan Documents or (2) notify
Administrative Agent and Borrower of its inability to deliver any such
forms, certificates or other evidence.
(c) The Borrower shall not be required to pay any additional
amount to or in respect of any payment to any Non-US Lender,
Non-French Lender, Non-Japanese Lender or UK Lender that is not a UK
Indemnifying Lender in respect of
Annex A-5
<PAGE>
that payment, as the case may be, under clause (c) of subsection
2.7B(ii) if such Lender shall both (i) have failed to satisfy the
requirements of clause (a) or (b) (provided that for the purpose of
this subsection 2.7B(iii)(c) its obligations under such clause (b)
shall not be considered to be duly fulfilled by its notification to
Administrative Agent and Borrower of its inability to deliver any
form, certificate or other evidence) of this subsection 2.7B(iii) and
(ii) is not a UK Qualifying Lender; provided further that if such
Lender shall have satisfied the requirements of subsection
2.7B(iii)(a) (in the case of any payment, or part thereof, connected
with any Commitment, Loan, Letter of Credit or Indemnity
Participation, sold, assigned or transferred pursuant to an Assignment
Agreement) after the date of such Assignment Agreement or (in any
other case) after the Effective Date (hereinafter, the "RELEVANT
DATE"), or is a UK Qualifying Lender on the Relevant Date, as the case
may be, nothing in this subsection 2.7B(iii)(c) shall relieve the
Borrower of its obligation to pay any additional amounts pursuant to
clause (c) of subsection 2.7B(ii) in the event that, as a result of
any change in any applicable law, treaty or governmental rule,
regulation or order, or any change in the interpretation,
administration or application thereof, such Lender either is no longer
a UK Qualifying Lender or is no longer properly entitled to deliver
forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is exempt from withholding tax
or is subject to withholding tax at a rate higher than on the Relevant
Date, as described in subsection 2.7B(iii)(a), as the case may be.
(d) The Borrower shall not be required to pay any additional
amount under clause (c) of subsection 2.7B(ii) to any French
Indemnifying Lender if Administrative Agent is not either a French
corporation or a bank which has and acts through a permanent
establishment in France and holds a valid Certificate of Exemption
from withholding tax for foreign corporations or non-residents,
provided, however, that nothing in this subsection 2.7(iii) shall
relieve the applicable Borrower of its obligation to pay any
additional amounts pursuant to clause (c) of subsection 2.7B(ii) to an
Indemnifying Lender which becomes a French Lender, Japanese Lender or
a UK Lender, as the case may be, upon the occurrence of a Triggering
Event under subsection 2.9A, notwithstanding the fact that such
Indemnifying Lender is not properly entitled to deliver forms,
certificates or other evidence establishing that such Indemnifying
Lender is exempt from Tax (other than Tax on its overall net income)
with respect to payments received from such Borrower, whether or not
as a result of any change in applicable law, treaty or governmental
rule, regulation or order, or any change in the interpretation,
administration or application thereof after the Effective Date.
(e) The Borrower shall not be required to pay any additional
amount under clause (c) of subsection 2.7B(ii) to any Japanese
Indemnifying Lender if Administrative Agent is not either a Japanese
corporation or a bank which has and acts through a permanent
establishment in Japan and holds a valid Certificate of
Annex A-6
<PAGE>
Exemption from withholding tax for foreign corporations or
non-residents, provided, however, that nothing in this subsection
2.7(iii) shall relieve the applicable Borrower of its obligation to
pay any additional amounts pursuant to clause (c) of subsection
2.7B(ii) to an Indemnifying Lender which becomes a Japanese Lender, a
French Lender or a UK Lender, as the case may be, upon the occurrence
of a Triggering Event under subsection 2.9A, notwithstanding the fact
that such Indemnifying Lender is not properly entitled to deliver
forms, certificates or other evidence establishing that such
Indemnifying Lender is exempt from Tax (other than Tax on its overall
net income) with respect to payments received from such Borrower,
whether or not as a result of any change in applicable law, treaty or
governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof after the
Effective Date.
(f) If:
(i) Goss UK makes a payment under paragraph (c) of
subsection 2.7B(ii) (a "TAX PAYMENT") in respect of a payment to
a UK Double Tax Treaty Lender (that had duly fulfilled its
obligations under subsection 2.7B(iii)), such payment having been
made prior to Goss UK receiving a notice from the Inland Revenue
permitting it to pay gross, and
(ii) that UK Double Tax Treaty Lender determines that it has
obtained a refund of Tax or obtained and used a credit against
Tax on its Overall Net Income (a "TAX CREDIT") which that UK
Lender is attributable to that Tax Payment
then, if in its absolute discretion it can do so without any
adverse consequences, that UK Double Tax Treaty Lender shall
reimburse Goss UK such amount as that UK Double Tax Treaty Lender
shall reasonably determine to be such proportion of that Tax
Credit as will leave that UK Double Tax Treaty Lender (after that
reimbursement) in no better or worse position in respect of its
world wide Tax liabilities than it would have been in if no Tax
Payment had been required. No UK Double Tax Treaty Lender shall
be obliged to disclose any information regarding its Tax affairs
and computations.
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or
Annex A-7
<PAGE>
with reference to, such Lender's Loans, Commitments or Letters of Credit or any
participations therein or any other obligations hereunder with respect to the
Loans or the Letters of Credit, in the case of any Lender, to a level below that
which such Lender or such controlling corporation could have achieved but for
such adoption, effectiveness, phase-in, applicability, change or compliance
(taking into consideration the policies of such Lender or such controlling
corporation with regard to capital adequacy and in an amount deemed by such
Lender (in its sole discretion) to be material), then from time to time, within
five Business Days after receipt by the Borrower from such Lender of the
statement referred to in the next sentence, Borrowers shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to the Borrower (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error. Notwithstanding any provision of this
subsection 2.7 to the contrary, Borrowers shall pay, on terms and conditions
consistent with this subsection 2.7, any additional amount or amounts as will
compensate any Lender or any corporation controlling such Lender on an after-tax
basis for any reduction in the rate of return on the capital of such Lender or
such controlling entity because of any overlap of the Revolving Loan
Commitments, whether or not as a result of any change in applicable law, treaty
or governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof.
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Annex A-8
<PAGE>
ANNEX B
2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE; REPLACEMENT OF
LENDERS.
A. Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender or Issuing Lender to receive payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be
materially reduced and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of such Commitments
or Loans or Letters of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or Loans or Letters of
Credit or the interests of such Lender or Issuing Lender; provided that such
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless the applicable
Borrower agrees to pay all incremental expenses incurred by such Lender or
Issuing Lender as a result of utilizing such other lending or letter of credit
office as described in clause (i) above or if the use of such other office is
inconsistent with the internal policies of such Lender or any applicable legal
or regulatory restrictions. A certificate as to the amount of any such expenses
payable by a Borrower pursuant to this subsection 2.8 (setting forth in
reasonable detail the basis for requesting such amount) submitted by such Lender
or Issuing Lender to such Borrower (with a copy to Administrative Agent) shall
be conclusive absent manifest error.
B. If any Borrower receives a notice pursuant to subsection 2.6C, Borrowers
shall have the right, if no Potential Event of Default or Event of Default then
exists, to replace such Lender (a "REPLACED LENDER") with one or more Eligible
Assignees (collectively, the "REPLACEMENT LENDER") acceptable to Administrative
Agent; provided that (i) at the time of any replacement pursuant to this
subsection 2.8B, the Replacement Lender shall enter into one or more Assignment
Agreements pursuant to subsection 10.1B (and with all fees payable pursuant to
such subsection 10.1B to be paid by the Replacement Lender) pursuant to which
the Replacement Lender shall acquire all of the outstanding Loans and
Commitments of, and in each case participations in Letters of Credit and Swing
Line Loans by, the Replaced Lender and, in connection therewith, shall pay to
(x) the Replaced Lender in respect thereof an amount equal to the sum of (A) an
amount equal to the principal of, and all accrued interest on, all outstanding
Annex B-1
<PAGE>
Loans of the Replaced Lender, (B) an amount equal to all unpaid drawings with
respect to Letters of Credit that have been funded by (and not reimbursed to)
such Replaced Lender, together with all then unpaid interest with respect
thereto at such time and (C) an amount equal to all accrued, but theretofore
unpaid, fees owing to the Replaced Lender with respect thereto, (y) the
appropriate Issuing Lender an amount equal to such Replaced Lender's Pro Rata
Share of any unpaid drawings with respect to Letters of Credit (which at such
time remains an unpaid drawing) issued by it to the extent such amount was not
theretofore funded by such Replaced Lender, and (z) Swing Line Lender an amount
equal to such Replaced Lender's Pro Rata Share of any Refunded Swing Line Loans
to the extent such amount was not theretofore funded by such Replaced Lender,
and (ii) all obligations (including without limitation all such amounts, if any,
owing under subsection 2.6D) of Company owing to the Replaced Lender (other than
those specifically described in clause (i) above in respect of which the
assignment purchase price has been, or is concurrently being, paid), shall be
paid in full to such Replaced Lender concurrently with such replacement. Upon
the execution of the respective Assignment Agreements, recordation of such
assignment in the Register by Administrative Agent pursuant to subsection 2.1D,
the payment of amounts referred to in clauses (i) and (ii) above and delivery to
the Replacement Lender of the appropriate Note or Notes executed by Borrowers,
the Replacement Lender shall become a Lender hereunder and the Replaced Lender
shall cease to constitute a Lender hereunder except with respect to
indemnification provisions under this Agreement which by the terms of this
Agreement survive the termination of this Agreement, which indemnification
provisions shall survive as to such Replaced Lender. Notwithstanding anything to
the contrary contained above, no Issuing Lender may be replaced hereunder at any
time while it has Letters of Credit outstanding hereunder unless arrangements
satisfactory to such Issuing Lender (including the furnishing of a Standby
Letter of Credit in form and substance, and issued by an issuer, satisfactory to
such Issuing Lender or the furnishing of cash collateral in amounts and pursuant
to arrangements satisfactory to such Issuing Lender) have been made with respect
to such outstanding Letters of Credit.
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Annex B-2
<PAGE>
ANNEX C
2.9 INDEMNIFYING LENDERS.
A. PURCHASE OF PARTICIPATIONS BY INDEMNIFYING LENDERS. Upon the execution
of this Agreement or an Assignment Agreement, as the case may be, (1) each UK
Indemnifying Lender shall be deemed to, and hereby agrees to, have irrevocably
purchased an Indemnity Participation (as defined below) from Administrative
Agent in the UK Revolving Loan Commitment of Administrative Agent, including
without limitation the UK Revolving Loans and the participations purchased by
Administrative Agent pursuant to subsection 3.1C in the Letters of Credit issued
by Administrative Agent for the benefit of Goss UK and any drawings thereunder,
(2) each French Indemnifying Lender shall be deemed to, and hereby agrees to,
have irrevocably purchased an Indemnity Participation (as defined below) from
Administrative Agent in the French Revolving Loan Commitment of Administrative
Agent, including without limitation the French Revolving Loans and the
participations purchased by Administrative Agent pursuant to subsection 3.1C in
the Letters of Credit issued by Administrative Agent for the benefit of Goss
France and any drawings thereunder, and (3) each Japanese Indemnifying Lender
shall be deemed to, and hereby agrees to, have irrevocably purchased a
participation (the "INDEMNITY PARTICIPATION") from Administrative Agent in the
Japanese Revolving Loan Commitment of Administrative Agent, including without
limitation the Japanese Revolving Loans and the participations purchased by
Administrative Agent pursuant to subsection 3.1C in the Letters of Credit issued
by the Administrative Agent and any drawings thereunder, in each case in a
proportionate amount based on such Indemnifying Lender's Indemnity Amount. Upon
the occurrence of a Triggering Event, each Indemnifying Lender, upon one
Business Day's notice from Administrative Agent, shall deliver to Administrative
Agent by wire transfer in immediately available funds its proportionate share
based on its Indemnity Amount of the aggregate unpaid principal amount of
Administrative Agent's UK Revolving Loans, French Revolving Loans or Japanese
Revolving Loans, as the case may be, and any accrued and unpaid interest thereon
and the aggregate unreimbursed amount of any payments made by Administrative
Agent pursuant to subsection 3.3C to the applicable Issuing Lender with respect
to any unreimbursed drawings on Letters of Credit issued by such Issuing Lender.
Each Indemnifying Lender's obligations under this subsection 2.9 shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (a) any set-off, counterclaim, recoupment,
defense or other right which Administrative Agent or any Lender may have against
Administrative Agent, Loan Party or other Person for any reason whatsoever; (b)
the occurrence or continuance of an Event of Default or a Potential Event of
Default; (c) any adverse change in the condition (financial or otherwise) of any
Loan Party; (d) any breach of this Agreement by any Loan Party, Administrative
Agent or any Lender; or (e) any other circumstance, happening, or event
whatsoever, whether or not similar to any of the foregoing; provided that the
obligations of each Indemnifying Lender are subject to the condition that at the
time such UK Revolving Loan, French Revolving Loan or Japanese Revolving Loan,
as the case may be, was made or such Letter of Credit was issued the duly
authorized officer of Administrative Agent responsible for the administration of
the credit relationship with Goss UK,
Annex C-1
<PAGE>
Goss France or Goss Japan, as the case may be, believed in good faith that
either (x) no Event of Default had occurred and was continuing or (y) any Event
of Default that had occurred and was continuing had been waived by Requisite
Lenders at the time such UK Revolving Loan, French Revolving Loan or Japanese
Revolving Loan, as the case may be, was made or such Letter of Credit was
issued.
B. PAYMENT OF INDEMNITY FEES. Administrative Agent shall promptly pay by
wire transfer of immediately available funds to each applicable Indemnifying
Lender, as an indemnity fee for the Indemnity Participation provided to
Administrative Agent by such Indemnifying Lender in this subsection 2.9, the
following amounts, in each case in proportion to such Indemnifying Lender's
Indemnity Amount: (i) with respect to the UK Revolving Loans, French Revolving
Loans or Japanese Revolving Loans, as the case may be, an amount equal to (x)
the excess of the interest received by Administrative Agent pursuant to
subsection 2.2C from Goss UK, from Goss France or Goss Japan, as the case may
be, over the Adjusted Offshore Rate on such UK Revolving Loans, French Revolving
Loans or Japanese Revolving Loans less (y) 0.125% per annum to be retained by
Administrative Agent as an Indemnity Participation fee; (ii) with respect to
Letters of Credit, (x) letter of credit fees received by Administrative Agent
pursuant to subsections 3.2(i)(b) and 3.2(ii)(b) from the applicable Issuing
Lender less (y) 0.125% per annum to be retained by Administrative Agent as an
Indemnity Participation fee; and (iii) commitment fees received by
Administrative Agent pursuant to subsection 2.3A from Administrative Agent;
provided that if any such indemnity fee is less than $10,000, Administrative
Agent shall not be required to so promptly pay such indemnity fee to an
Indemnifying Lender until the aggregate unpaid amount of indemnity fees
accumulates to an amount exceeding $10,000. The excess, if any, of the interest
payable to Administrative Agent on the UK Revolving Loans, the French Revolving
Loans or Japanese Revolving Loans, as the case may be, over the interest
distributable to an Indemnifying Lender under this subsection 2.9B in respect
thereof, and the excess, if any, of the letter of credit and commitment fees
payable to Administrative Agent over and in addition to the letter of credit and
commitment fees distributable to such Indemnifying Lender under this subsection
2.9B, shall be retained by Administrative Agent.
C. OTHER PAYMENTS. Provided that an Indemnifying Lender shall have made any
payments to Administrative Agent required by this subsection 2.9, including the
payments required to be made upon the occurrence of a Triggering Event pursuant
to subsection 2.9A, Administrative Agent shall promptly pay by wire transfer of
immediately available funds to such Indemnifying Lender any principal or other
payments thereafter recovered by Administrative Agent from Goss UK, Goss France
or Goss Japan, as the case may be, to the extent allocable to such Indemnifying
Lender's Indemnity Participation. If Administrative Agent shall pay any amount
to an Indemnifying Lender pursuant to this subsection 2.9 in the belief or
expectation that a related payment has been or will be received or collected and
such related payment is not received or collected by Administrative Agent, then
such Indemnifying Lender will promptly on demand by Administrative Agent return
such amount to Administrative Agent, together with interest thereon at such rate
as Administrative Agent shall determine to be customary between banks for
correction of errors. If Administrative Agent determines at any time that any
amount
Annex C-2
<PAGE>
received or collected by Administrative Agent pursuant to this Agreement is to
be returned to Goss UK, Goss France or Goss Japan, as the case may be, under
this Agreement or paid to any other Person or entity pursuant to any insolvency
law, any sharing clause in this Agreement, or otherwise, then, notwithstanding
any other provision of this Agreement, Administrative Agent shall not be
required to distribute any portion thereof to any Indemnifying Lender, and each
Indemnifying Lender will promptly on demand by Administrative Agent repay any
portion that Administrative Agent shall have distributed to such Indemnifying
Lender, together with interest thereon at such rate, if any, as Administrative
Agent shall pay to Goss UK, Goss France or Goss Japan, as the case may be, or
such other Person or entity with respect thereto. If any amounts returned by
Administrative Agent to Goss UK, Goss France or Goss Japan, as the case may be,
pursuant to this subsection 2.9 are later recouped by Administrative Agent,
Administrative Agent shall promptly pay to each Indemnifying Lender a
proportionate amount based on such Indemnifying Lender's Indemnity Amount.
D. INDEMNITY FOR COSTS AND EXPENSES. If Administrative Agent incurs any
costs or expenses (including, without limitation, in indemnifying Administrative
Agent pursuant to subsection 9.4) in connection with any effort to enforce or
protect Administrative Agent's or any Indemnifying Lender's rights or interests
with respect to this Agreement or the other Loan Documents, then, other than in
the case of Administrative Agent's gross negligence or willful misconduct, each
Indemnifying Lender will reimburse Administrative Agent on demand for each such
Indemnifying Lender's proportionate share based on such Indemnifying Lender's
Indemnity Amount of any portion of such costs or expenses which is not
reimbursed by or on behalf of Goss UK, Goss France or Goss Japan, as the case
may be. If Administrative Agent recovers any amounts for which Administrative
Agent has previously been reimbursed by an Indemnifying Lender hereunder,
Administrative Agent shall promptly distribute to such Indemnifying Lender such
Indemnifying Lender's proportionate share thereof based on such Indemnifying
Lender's Indemnity Amount.
E. CERTAIN TAX MATTERS. Each Indemnifying Lender agrees to deliver to
Administrative Agent from time to time upon request such certificates,
statements, documents, forms or other evidence, properly completed and executed
by such Indemnifying Lender, as may be required at any time in order to comply
with any applicable tax laws or regulations or to confirm or maintain in effect
such Indemnifying Lender's entitlement to exemption from or reduction of any
applicable withholding tax on any payments hereunder. Each Indemnifying Lender
hereby agrees to indemnify and hold harmless Administrative Agent from any
applicable taxes, penalties, interest and other expenses, costs and losses
incurred or payable by Administrative Agent as a result of either (i) such
Indemnifying Lender's failure to submit any statement, document, form or
certificate or other evidence that such Indemnifying Lender is required to
provide pursuant to this subsection or (ii) Administrative Agent's reliance on
any such statement, document, form or certificate or other evidence which such
Indemnifying Lender has provided to Administrative Agent pursuant to this
subsection.
F. INDEMNIFYING LENDER CONSENT. Notwithstanding any provision to the
contrary contained in this Agreement or the other Loan Documents and so long as
an
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Indemnifying Lender has not failed to make any payments required to be made by
such Indemnifying Lender under this subsection 2.9 or is not otherwise in
default under its obligations under this subsection 2.9, Administrative Agent
hereby agrees that, to the extent of but only to the extent of such Indemnifying
Lender's proportionate share based on its Indemnity Amount, Administrative Agent
will not agree to any amendment, modification, termination or waiver of any
provision of this Agreement or the other Loan Documents, or to any departure by
Goss UK, Goss France or Goss Japan, as the case may be, therefrom, in each case
related to the Indemnity Participation without the prior written consent of such
Indemnifying Lender. Nothing herein contained shall prevent Administrative Agent
from consenting to any amendment, modification, termination or waiver of any
provision of this Agreement or the other Loan Documents, or to any departure by
Goss UK, Goss France or Goss Japan, as the case may be, therefrom, to the extent
unrelated to the Indemnity Participation or to the extent that Administrative
Agent's interests or Pro Rata Share is not related to the Indemnity
Participation or the Indemnity Amount.
G. FAILURE TO MAKE REQUIRED PAYMENTS. In the event that any Person
obligated to make a payment to any other Person pursuant to this subsection 2.9
fails to make available to the Person entitled to receive such payment the
amount of such payment, the Person entitled to receive such payment shall be
entitled to recover such amount on demand from such other Person, together with
interest at the customary rate set by Administrative Agent for the correction of
errors among Lenders for three Business Days and thereafter at the sum of the
Base Rate plus 1.50% per annum.
H. ASSIGNMENT MATTERS. Administrative Agent may from time to time sell or
transfer to other Persons assignments or participations or other interests in
Administrative Agent's UK Revolving Loans and UK Revolving Loan Commitments,
French Revolving Loans and French Revolving Loan Commitments or Japanese
Revolving Loans and Japanese Revolving Loan Commitments, as the case may be, but
not in the portion thereof allocated to the Indemnity Participation hereunder.
An Indemnifying Lender's Indemnity Participation may not be sold, pledged,
assigned, or otherwise transferred (i) without Administrative Agent's prior
written consent; provided that this restriction shall not apply to any such
transfer to any of such Indemnifying Lender's Affiliates; or (ii) without a pro
rata assignment in accordance with subsection 10.1B of each Type of Revolving
Loan Commitment and Revolving Loan held by such Indemnifying Lender.
I. MISCELLANEOUS. In no event shall the Indemnity Participation be
construed as a loan or other extension of credit by an Indemnifying Lender to
Administrative Agent. In no event shall this Agreement be construed to require
an Indemnifying Lender to make any Loans or to otherwise extend any credit to
Goss UK, Goss France or Goss Japan, as the case may be, or to Administrative
Agent under this Agreement or under the other Loan Documents. In no event shall
this Agreement be construed to require an Indemnifying Lender to fund or pay to
Administrative Agent such Indemnifying Lender's Indemnity Amount except upon the
occurrence of a Triggering Event pursuant to subsection 2.9A. Each Indemnifying
Lender agrees that Administrative Agent may take legal action to enforce or
protect an Indemnifying Lender's or Administrative Agent's interests in respect
of this Agreement and the other Loan Documents.
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Annex C-5
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Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the 1st day of May, 1999, is made by and
between Goss Graphic Systems, Inc., a Delaware corporation having its principal
place of business in the State of Illinois (the "Company"), and James P. Sheehan
(the "Executive").
WHEREAS, the Company desires to retain the services of the
Executive, and the Executive is willing to render such services, in accordance
with the terms hereinafter set forth; and
WHEREAS, the Executive wishes to be employed by the Company; and
WHEREAS, the Board of Directors of the Company (the "Board") by
appropriate resolutions authorized or ratified the terms for employment of the
Executive as provided for in this Agreement; and
WHEREAS, this Agreement and the payments to be made hereunder have
been duly approved by the shareholders of the Company for purposes of Section
280G of the Code; and,
WHEREAS, the parties hereto desire to amend, modify and restate, to
the extent that the Company has assumed any obligations, under the previous
service of the Executive to the Company, prior to the effective date hereof;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the adequacy of which is hereby acknowledged, the Company and the
Executive agree as follows:
ARTICLE I
Definitions
"ACCRUED ANNUAL BASE SALARY" means that portion of the Executive's
Annual Base Salary which is accrued but unpaid as of the Date of Termination.
"ACCRUED ANNUAL BONUS" means the sum of (i) the amount of any Annual
Bonus earned with respect to the Fiscal Year ending prior to the Date of
Termination but which is unpaid as of the Date of Termination plus (ii) with
respect to the Fiscal Year during which the Date of Termination occurs, a pro
rata portion (based on a fraction the numerator of which is the number of days
which have elapsed in such Fiscal Year through the Date of Termination, and the
denominator of which is 365) of the Annual Bonus which the Executive would have
earned had the date of Termination been the last day of such Fiscal Year.
"AGREEMENT" means this Agreement, including the Addendum hereto.
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"ANNUAL BASE SALARY" has the meaning specified in Section 4.1 of
this Agreement.
"ANNUAL BONUS" has the meaning specified in Section 4.2 of this
Agreement.
"BOARD" has the meaning specified in the recitals to this Agreement.
"CAUSE" means (i) the Executive's willful failure to perform
assigned responsibilities and/or the duties of his employment in any material
respect, (ii) malfeasance, misfeasance or negligence in the performance of the
Executive's duties of employment in any material respect, (iii) the Executive's
commission of a felony under the laws of the United States or any state thereof
(whether or not in connection with his employment), (iv) the Executive's
material disclosure of Protected Information (as defined in Section 8.11(a))
respecting the Company's or any of its affiliates' or Subsidiaries' business to
any individual or entity which is not in the performance of the duties of his
employment, (v) the Executive's commission of an act or acts of sexual
harassment that would normally constitute grounds for termination under a formal
policy adopted by the Company, or (vi) any other act or omission by the
Executive (other than an act or omission resulting from the exercise by the
Executive of good faith business judgment) which is materially injurious to the
financial condition or the business reputation of the Company or any of its
affiliates.
Notwithstanding the foregoing, no act or omission by the Executive
described in clause (i) or (ii) above shall constitute Cause hereunder unless
the Company gives written notice thereof to the Executive, and the Executive
fails to remedy such act or omission within five (5) business days after
receiving such notice, (such period of five (5) business days to be defined as
the "Cure Period").
"CHANGE OF CONTROL" has the meaning described in the following
paragraphs (a) through (c):
(a) Prior to an initial public offering of the stock of
GGS Holdings, Inc. ("GGS"), the holding company for the Company, a "Change
of Control" shall be deemed to have occurred:
(i) Whenever Stonington Capital Appreciation 1994
Fund, L.P. (the "Fund") (together with all affiliates) owns less than
fifty-one percent (51%) of either (A) the then outstanding shares of common
stock of GGS (the "Outstanding GGS Common Stock") or (B) the combined voting
power of the then outstanding voting securities of GGS entitled to vote
generally in the election of directors (the "Outstanding GGS Voting
Securities"); or
(ii) Whenever GGS owns less than fifty-one
percent (51%) of either (A) the then outstanding shares of common stock of
the Company or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors.
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(b) After an initial public offering of the stock of GGS,
a "Change of Control" shall mean:
(i) The acquisition by any Person or group of
related Persons of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of twenty percent (20%) or more of either the Outstanding
GGS Common Stock or the Outstanding GGS Voting Securities; provided,
however, that for purposes of this subparagraph (i), the following
acquisitions shall not constitute a Change of Control: (A) any acquisition
directly from GGS, (B) any acquisition by GGS, or (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by GGS or
any corporation controlled by GGS; and provided further that no acquisition
shall constitute a Change of Control unless, as a result thereof, a Person
or group of related Persons has beneficial ownership of a larger percentage
of the Outstanding GGS Common Stock or the Outstanding GGS Voting Securities
than is then beneficially owned by the Fund and its affiliates; or
(ii) Individuals who, as of the date of the
Closing, constitute the board of directors of GGS (the "Incumbent Board")
cease for any reason to constitute at least a majority of the board of
directors of GGS; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the shareholders of GGS, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Incumbent Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of
the assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of
the Outstanding GGS Common Stock and Outstanding GGS Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, at least sixty percent (60%) of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their respective ownership, immediately prior to
such Business Combination, of the Outstanding GGS Common Stock and
Outstanding GGS Voting Securities; provided, however, that the provisions of
this paragraph (b) shall be applied, in connection with and after any such
Business Combination, as if all references to GGS (except in the definition
of, and references to, the Incumbent Board) were replaced by references to
the corporation resulting from such Business Combination and shall be
applied, with respect to any subsequent Business Combination, as if the
reference in this subparagraph (iii) to "at least sixty percent (60%)" were
replaced by a reference to "at least ninety-five percent (95%)"; or
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(iv) Approval by the shareholders of the Company
or of GGS of a complete liquidation or dissolution of the Company or of GGS,
respectively; provided, however, that a Change of Control shall not result
from approval by the shareholders of GGS of a dissolution of GGS for the
purpose of making a pro rata distribution of shares of the Company to the
shareholders of GGS; and provided further that, after such distribution, the
provisions of paragraph (a), above, this paragraph (b), and paragraph (c),
below, shall be applied as if all references to GGS (except in the
definition of, and references to, the Incumbent Board) were replaced by
references to the Company; or
(v) Any event as a result of which GGS owns less
than fifty-one percent (51%) of either (A) the then outstanding shares of
common stock of the Company or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors.
(c) If the Fund makes a pro rata distribution of shares
of common stock or other securities of GGS to individuals or other
entities who are partners in the Fund, then the continued holding of such
shares or other securities of GGS by those distributees shall be deemed,
for purposes of paragraphs (a) and (b), above, to be continued holding of
those shares or other securities by the Fund and its affiliates.
"CLOSING" means the closing of an acquisition of Goss Graphic
Systems, Inc. by an acquiring entity except as otherwise provided herein.
"CODE" means the United States Internal Revenue Code of 1986, as
amended from time to time.
"COMPANY" has the meaning specified in the recitals to this
Agreement.
"CONTRACT TERM" has the meaning specified in Section 3.1 of this
Agreement.
"DATE OF TERMINATION" means the date as of which the Executive's
employment with the Company is terminated by the Company or by the Executive for
any reason including, but not limited to, death or Disability.
"DISABILITY" means any medically determinable physical or mental
impairment, which shall have rendered the Executive unable to perform the duties
required under this Agreement for a continuous period of six (6) months. The
date of the determination of Disability is the date on which the Executive is
certified, following such six (6) month period by a physician reasonably
acceptable to the Company and the Executive, as having incurred a Disability.
"EXECUTIVE" has the meaning specified in the recitals to this
Agreement.
"FISCAL YEAR" means each period of twelve (12) months beginning
on January 1 and ending on the following December 31.
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"GOOD REASON" means the occurrence of any one of the following
events :
(a) Assignment to the Executive of any duties materially and
adversely inconsistent with the Executive's position as specified in
Article II hereof, or any other action by the Company which results in a
material and adverse change in the Executive's position, authority, duties
or responsibilities; or
(b) A demotional change in the Executive's title or the line of
authority through which the Executive is required to report it being
understood that the Executive reports directly to the Board; or
(c) A material failure by the Company to comply with Article IV
or Article V of this Agreement.
Notwithstanding the foregoing, no act or omission by the Company
shall constitute Good Reason hereunder unless (i) the Executive gives the
Company written notice thereof within two (2) months after he first knew or
should have known of such act or omission, and the Company fails to remedy such
act or omission within thirty (30) days after receiving such notice, or (ii)
such act or omission is part of a series of two (2) or more acts or omissions,
each of which constitutes Good Reason without regard to this proviso, and which
occur within a period of twelve (12) months or less.
Anything in this Agreement to the contrary notwithstanding,
termination of employment by the Executive for any reason during the three (3)
month period beginning one (1) month after a Change of Control which occurs at
any time during the Contract Term shall be deemed to be a termination of
employment for Good Reason for purposes of this Agreement.
"PERSON" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"PROHIBITED BUSINESS" has the meaning specified in Section 8.12
of this Agreement.
"PROTECTED INFORMATION" has the meaning specified in Section 8.11
of this Agreement.
"STOCK OPTIONS" has the meaning specified in Addendum 1 to this
Agreement.
"STOCKHOLDERS AGREEMENT" means that certain agreement dated
October 15, 1996 by and among GGS Holdings, Inc., the stockholders and the
holders of options or restricted stock under the Management Stock Incentive Plan
(the "Management Stock Incentive Plan"), Merrill Lynch KECALP L.P. 1994 and
Stonington Capital Appreciation Fund, L.P.
"SUBSIDIARY" means, with respect to any Person, (a) any
corporation of which an
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aggregate of more than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, stock of any other class
or classes of such corporation, shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%).
"TERMINATION OF EMPLOYMENT WITHOUT CAUSE" means a termination of
the Executive's employment by the Company for any reason other than Cause.
ARTICLE II
Duties
2.1 EMPLOYMENT. This Agreement amends, modifies and restates, to
the extent that the Company has any obligations under the terms of any service
to the Company by the Executive prior to the effective date of this Agreement
and any such terms or obligations of the Company are hereby superseded by the
provisions hereof, including the provisions set forth in Addendum 1 attached
hereto and made a part hereof as if fully rewritten.
2.2 DUTIES. The Company hereby employs the Executive to serve as
Chairman, President and Chief Executive Officer of the Company during the
Contract Term with overall charge and responsibility for the business and
affairs of the Company and to perform such duties consistent with such position
as the Executive shall reasonably be directed to perform by the Board of
Directors of the Company or as may be specified in the Company's by-laws (if
applicable), and the Executive hereby accepts such employment. During the
Contract Term, and excluding any periods of vacation, sick leave or disability
to which the Executive is entitled, the Executive agrees to devote the
Executive's full business time and attention to the business affairs of the
Company.
2.3 OTHER ACTIVITIES. During the Contract Term, it shall not be a
violation of this Agreement for the Executive to (a) serve on corporate,
civic or charitable boards or committees, (b) deliver lectures or fulfill
speaking engagements, or (c) manage personal investments, so long as such
activities are consistent with the policies of the Company and do not
interfere with the performance of the Executive's duties in accordance with
this Agreement.
ARTICLE III
Term of Agreement
3.1 TERM. The initial term of this Agreement shall commence on May
1, 1999 and terminate on April 30, 2001. This initial term, however, shall be
automatically extended without further action of either party for successive
additional two (2) year periods, unless written notice of either party's
intention not to extend has been given to the other party hereto at least three
(3) months prior to the expiration of the then effective term (the initial term
or
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such longer period for which the term of the Executive's employment shall
have been so extended is hereinafter referred to as the "Contract Term").
ARTICLE IV
Compensation
4.1 BASE SALARY. While the Executive is employed by the Company
during the Contract Term, the Company shall pay or cause to be paid to the
Executive in cash, in installments not less frequently than monthly, an annual
base salary ("Annual Base Salary") at the rate set forth in Addendum 1. The
Company shall review the Executive's Annual Base Salary no less frequently than
annually and may from time to time increase or decrease Executive's Annual Base
Salary, provided that it shall not be reduced to an annual rate of less than the
amount set forth in Addendum 1. The term Annual Base Salary as used in this
Agreement shall refer to the Annual Base Salary as so increased or decreased.
4.2 ANNUAL BONUS. While the Executive is employed by the Company
during the Contract Term, the Company shall pay or cause to be paid to the
Executive an annual cash bonus ("Annual Bonus") in accordance with the terms of
a bonus plan for senior executives of the Company, as adopted by the Board, as
amended from time to time.
ARTICLE V
Other Benefits
5.1 INCENTIVE, SAVINGS AND RETIREMENT PLANS. The Executive shall be
entitled to participate while the Executive is employed by the Company during
the Contract Term in all incentives (including long-term incentives), savings
and retirement plans, practices, policies and programs applicable to other
senior executives of the Company.
5.2 WELFARE BENEFITS. While the Executive is employed by the
Company during the Contract Term, the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and shall receive all
benefits under all welfare benefit plans, practices, policies and programs
provided by the Company (as amended or changed from time to time) and applicable
to other senior executives of the Company.
5.3 FRINGE BENEFITS. While the Executive is employed by the Company
during the Contract Term, the Executive shall be entitled to all fringe benefits
applicable to other senior executives of the Company.
5.4 REIMBURSEMENT OF BUSINESS EXPENSES. The Executive shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred while the Executive is employed by the Company during the Contract
Term, upon the Company's receipt of required accountings therefor.
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5.5 VACATION. While the Executive is employed by the Company during
the Contract Term, the Executive shall be entitled to paid vacation time in
accordance with the plans, practices, policies, and programs applicable to other
senior executives of the Company.
ARTICLE VI
Termination of Employment
6.1 TERMINATION OF EMPLOYMENT FOR CAUSE, OTHER THAN FOR GOOD
REASON, DEATH, DISABILITY OR RETIREMENT. If, before the end of the Contract
Term, the Company terminates Executive's employment for Cause, the Executive
terminates his employment other than for Good Reason or the Executive's
employment terminates due to death, Disability or Retirement, the Company shall
pay to the Executive, the beneficiaries designated in writing by the Executive,
or the Executive's estate, as the case may be, within thirty (30) days after the
Date of Termination an amount which is equal to the Executive's Accrued Annual
Base Salary. In addition, the Company will pay the Executive's Accrued Annual
Bonus at the time payments are made to other participants in accordance with the
provisions of the plan. The Executive shall have no further right to receive any
Accrued Annual Bonus, unaccrued Annual Bonus or other compensation after such
termination or resignation of employment with respect to the year in which such
termination or resignation occurs or later years or to accrue from and after the
Date of Termination any further benefits under any other plan or arrangement. If
the Company terminates the Executive's employment for Cause, it shall provide
the Executive with not less than five (5) business days' advance written notice
of termination, including a statement of the Date of Termination and the
specific detailed basis for such termination. In this connection, as provided
for in the definition of "Cause" contained in Article I hereof, the Company
shall have the right to terminate the Executive's employment for Cause if the
notice and cure provisions in said definition have first been complied with;
provided, that the foregoing notice period shall be concurrent with the Cure
Period, if any.
6.2 TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT CAUSE OR FOR
GOOD REASON. If, before the end of the Contract Term, there is either: (a) a
Termination of Employment Without Cause; or, (b) a termination of employment by
the Executive for Good Reason, the Executive shall receive promptly after the
Date of Termination an amount equal to the sum of the Executive's Accrued Annual
Base Salary that would have been payable to the Executive if his employment had
continued for the period from the Date of Termination until the second
anniversary of the Date of Termination. The Company will also pay the portion of
the Executive's Accrued Annual Bonus at the time payments are made to other
participants in accordance with the provisions of the plan. In addition, for a
period of two (2) years after the Date of Termination, the Company shall
continue to provide benefits to the Executive and/or the Executive's family in a
form that would have been provided to them in accordance with the plans,
practices, policies and programs referred to in Section 5.2 of this Agreement;
provided, however, that such benefits may be discontinued by the Company earlier
in the event that, and to the extent that, the Executive becomes entitled to
comparable benefits from a subsequent employer.
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6.3 OTHER TERMINATION BENEFITS. In addition to any amounts or
benefits payable upon termination of employment hereunder and except as
otherwise provided herein, the Executive shall be entitled to any payments or
benefits explicitly provided under the terms of any plan, policy or program of
the Company or as otherwise required by applicable law.
ARTICLE VII
Representations and Warranties of the Executive
To induce the Company to enter into this Agreement, the Executive
makes the following representations and warranties to the Company, each and all
of which shall be true as of the date of execution and delivery of this
Agreement and shall survive the execution and delivery of this Agreement:
7.1 POWER. LEGAL COMPETENCE. ENFORCEABLE OBLIGATIONS. The Executive
is a bona fide resident of the State of New Jersey (with temporary residence in
Illinois), is over 2l years of age, and has the power and is legally competent
to execute, deliver and perform this Agreement and all documents and instruments
to be delivered by the Executive hereunder. This Agreement constitutes a legal,
valid and binding obligation of the Executive, enforceable against him in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally or by
general principles of equity.
7.2 INVESTMENT KNOWLEDGE AND EXPERIENCE. The Executive has
sufficient knowledge and experience in financial, business and tax matters to be
capable of evaluating the risks and merits inherent in an investment in and/or
employment with the Company and of making informed decisions with respect
thereto.
7.3 ADEQUATE MEANS. The Executive, at the present time, has
adequate means of providing for his current needs and personal contingencies,
including the payment of income tax liabilities.
7.4 TRANSFER OF SHARES. Any Stock Options the Executive may obtain
during the period of his employment shall be for his own account and shall
not be subject to resale, transfer or distribution unless such shares are
registered under the Securities Act of 1933, as amended, or an exemption from
such registration is available.
ARTICLE VIII
Miscellaneous
8.1 BENEFITS. The benefits payable under this Agreement to
Executive constitute a legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms. This Agreement constitutes
a legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally or by
general principles of equity.
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8.2 SEVERABILITY. If all or any part of this Agreement is declared
by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any portion of this
Agreement not declared to be unlawful or invalid. Any paragraph or part of a
paragraph so declared to be unlawful or invalid shall, if possible, be construed
in a manner which will give effect to the terms of such paragraph or part of a
paragraph to the fullest extent possible while remaining lawful and valid.
8.3 AMENDMENT AND WAIVER. This Agreement shall not be altered,
amended or modified except by written instrument executed by the Company and
Executive. A waiver of any term, covenant, agreement or condition contained in
this Agreement shall not be deemed a waiver of any other term, covenant,
agreement or condition, and any waiver of any default as to any such term,
covenant, agreement or condition shall not be deemed a waiver of any later
default as to such term or as to any other term, covenant, agreement or
condition.
8.4 NOTICES. All notices and other communications hereunder shall
be in writing and delivered by hand, by facsimile transmission, by first class
registered or certified mail, return receipt requested, postage prepaid, or by
reputable commercial delivery service, addressed as follows:
If to the Company:
Goss Graphic Systems, Inc.
700 Oakmont Lane
Westmont, IL 60559
Attention: Chairman
If to the Executive:
James P. Sheehan
74 Beverly Drive
Bernardsville, NJ 07924
Either party may from time to time designate a new address by notice given in
accordance with this section. Notice and communications shall be effective when
delivered by hand or commercial delivery service, when received by facsimile
transmission, or three (3) business days after being mailed as set forth above.
8.5 COUNTERPART ORIGINALS. This Agreement may be executed in
several counterparts each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
8.6 ENTIRE AGREEMENT. ENFORCEABLE OBLIGATIONS. This Agreement,
together with the Management Stock Incentive Plan and the agreement or
agreements pursuant to which options have been or may be granted to the
Executive under the Management Stock Incentive Plan, and agreements ancillary to
these agreements form the entire agreement between the parties hereto with
respect to any severance payments and with respect to the subject matter of this
Agreement.
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8.7 EFFECT ON OTHER AGREEMENTS. This Agreement shall supersede all
prior agreements, promises and representations, whether in writing or otherwise,
regarding the Executive's employment with the Company, including severance or
other payments contingent upon termination of such employment.
8.8 APPLICABLE LAW. The provisions of this Agreement shall be
interpreted and construed in accordance with the laws of the State of Illinois,
without regard to its choice of law principles.
8.9 SURVIVAL OF CERTAIN RIGHTS AND OBLIGATIONS. The Executive's
rights under Article VI hereof, and his obligations under Sections 8.11, 8.12
and 8.13 hereof, shall survive the termination of the Executive's employment
and/or the termination of this Agreement.
8.10 TRADE SECRETS. CONFIDENTIAL AND PROPRIETARY BUSINESS
INFORMATION. (a) The Company has advised the Executive and the Executive
acknowledges that it is the policy of the Company to maintain as secret and
confidential all Protected Information (as defined below), and that Protected
Information has been and will be developed at substantial cost and effort to the
Company. "Protected Information" means trade secrets and confidential and
proprietary business information of the Company, including, but not limited to,
such information regarding customers (including potential customers), sources of
supply, processes, methods, plans, apparatus, specifications, materials, pricing
information, intellectual property (including applications and rights in
discoveries, inventions or patents), internal memoranda, marketing plans,
contracts, finances, personnel, research and internal policies, other than any
information which has entered the public domain (unless such information entered
the public domain through the efforts of or on account of the Executive).
(b) The Executive acknowledges that the Executive will acquire
Protected Information with respect to the Company and its successors in
interest, which information is a valuable, special and unique asset of the
Company's business and operations, and that disclosure of such Protected
Information would cause irreparable damage to the Company.
(c) The Executive shall not, directly or indirectly, divulge,
furnish or willfully make accessible to any person, firm, corporation,
association or other entity (otherwise than as may be required in the regular
course of the Executive's employment or by law) nor use in any manner, either
during (other than as may be required in the regular course of the
Executive's employment or by law) or after termination of employment by the
Company, any Protected Information, or cause any such information of the
Company to enter the public domain.
8.11 NON-COMPETITION. (a) The Executive agrees that the Executive
shall not during the Executive's employment with the Company, and, if the
Executive terminates employment during the Contract Term other than as a result
of a Change of Control and for Good Reason, or if the Company terminates the
Executive's employment during the Contract Term for Cause, thereafter for two
(2) years, directly or indirectly, in any capacity, engage or participate in, or
become employed by or render advisory or consulting or other services in
connection with, or make any
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financial investment in, whether in the form of equity or debt, or own any
interest, directly or indirectly in any Prohibited Business as defined in
Section 8.12(c).
(b) The Executive agrees that the Executive shall not, during the
Executive's employment with the Company, and, if the Executive terminates
employment during the Contract Term without Good Reason or if the Company
terminates the Executive's employment during the Contract Term for Cause,
thereafter for two (2) years, make any financial investment, whether in the
form of equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 8.12 shall, however, restrict
the Executive from making any investment in any company whose stock is
listed on an American securities exchange or traded in the over-the-counter
market and has sales in excess of $100 million; provided that (i) such
investment does not give the Executive the right or ability to control or
influence the policy decisions of any Prohibited Business, and (ii) such
investment does not create a conflict of interest between the Executive's
duties hereunder and the Executive's interest in such investment.
(c) A "Prohibited Business" shall mean any business that competes
with the Company in the design, development, engineering, manufacture,
remanufacture, refurbishment, sale, resale, installation or service of all
or any portion of printing press systems or components for newspaper, insert
or commercial printing or other graphic arts.
8.12 UNDERTAKING REGARDING EMPLOYEES. From the effective date
hereof until two (2) years after the Date of Termination, the Executive shall
not, directly or indirectly, except with the permission in writing of the
Company, (a) induce or encourage any employee of the Company or of any successor
in interest to leave employment with the Company or any successor in interest;
or (b) employ, hire, solicit or cause to be employed, hired or solicited for
employment (other than by the Company or any successor in interest), or
establish a business with or encourage others to hire, any person who within one
(1) year prior thereto was, to the knowledge of the Executive, employed by the
Company or any successor in interest; provided, however, that the Executive will
not be prohibited from hiring or employing (or causing to be hired or employed)
any person whose termination of employment with the Company or any successor in
interest was not directly or indirectly induced, encouraged or solicited by the
Executive.
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IN WITNESS WHEREOF, the parties have executed this Agreement on
this ____ day of ______________ , 1999.
GOSS GRAPHIC SYSTEMS, INC.
-----------------------------
Name: Jack E. Merryman
Title Senior Vice President,
General Counsel & Secretary
Executive
-----------------------------
James P. Sheehan
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ADDENDUM
PAGE 1 OF 2
This Addendum, made effective May 1, 1999, is attached to and incorporated into
that certain Employment Agreement ("Agreement") also dated May 1, 1999 between
Goss Graphic Systems, Inc. ("Company") and James P. Sheehan ("Executive") as if
fully rewritten therein.
This Addendum sets forth certain additional terms, conditions and understandings
between the Company and Executive relative to his employment with the Company.
SALARY
Executive's Annual Base Salary shall be $600,000, payable at a monthly rate of
$50,000.
STOCK OPTIONS
(a) Executive will be eligible for stock options in accordance with a stock
option plan to be adopted by the Company, as follows. Executive will be granted,
as soon as practicable after the date hereof, Stock Options (the "Initial Stock
Options") with respect to a number of common shares equal to five percent (5%)
of the number of fully diluted shares of the Company issued and outstanding on
the date of grant. The exercise price of the Initial Stock Options shall be $.01
per share and the Initial Stock Options shall become exercisable at the rate of
fifty percent (50%) on April 30, 1999 and fifty percent (50%) on September 30,
1999. Once exercisable, the Initial Stock Options will remain exercisable by
Executive (or, following his death, by his estate and/or heirs) until the fifth
anniversary of the date of grant; provided, however, in the event Executive's
employment terminates pursuant to the provisions of Section 6.2 of the
Agreement, all Initial Stock Options which have been issued prior to said
termination of employment shall become immediately exercisable.
(b) In the event that a Dilution Event (as defined below) occurs after the date
of the grant of the Initial Options and before a Change of Control or an initial
public offering of the stock of GGS, but while Executive remains employed
pursuant to this Agreement, then Executive shall be granted additional Stock
Options (the "Additional Stock Options") with respect to a number of shares
representing 5 percent of the sum of the number of common shares involved in the
Dilution Event plus the number of shares subject to such Additional Stock
Options. Any Additional Stock Options shall have a per-share exercise price
equal to the then fair market value of a common share, and shall be immediately
exercisable and remain exercisable by Executive (or, following his death, by his
estate and/or heirs) until the fifth anniversary of the date of grant. For these
purposes, a "Dilution Event" means: (i) an issuance of new common shares by the
Company except pursuant to (A) a stock split, stock dividend, merger or other
transactions with respect to which the Initial Stock Options are adjusted to
preserve their value or (B) a transaction or series of related transactions
following which the number of shares remaining outstanding is not greater than
the number outstanding before such transaction or transactions; and (ii) a grant
to other employees of the Company of options with respect to common shares in
excess of the number of common shares available pursuant to GGS Holdings, Inc.
Management Stock Incentive Plan, effective October 15, 1996, as in effect on the
date of this Agreement.
<PAGE>
ADDENDUM
PAGE 2 OF 2
INCENTIVE COMPENSATION AWARD
Executive will be eligible to participate in the Company's Annual Bonus Plan
(currently denominated the Incentive Compensation Plan") as approved by the
Board. Executive will be eligible for an award under the 1999 Incentive
Compensation Plan (for officers at positions at the level of Executive Vice
President and above) in accordance with the award criteria and formulae set
forth therein. Award eligibility for subsequent years may be affected by other
criteria and formulae as approved for each plan year.
SIGN-ON AWARD
Upon signing of this Agreement, Executive will be paid the sum of $250,000.
EMPLOYEE BENEFITS
The Company provides an executive "open" vacation plan which includes a common
week's vacation (summer shut-down) in late July.
The Company will observe 14 paid holidays in calendar 1999.
Executive will be eligible to participate in the Company's "Retirement Savings
Plus" 401(k) plan, as well as health and welfare programs. Executive may also
participate in the Goss 401(k) Restorative Plan.
EXECUTIVE PERQUISITES
While the Executive is employed by the Company during the Contract Term,
Executive is eligible to be reimbursed by the Company for reasonable fees for
legal, financial, tax or estate planning assistance in an amount not to exceed
$10,000 per annum, and Executive shall be eligible to participate in the
Company's annual executive physical program.
COMPANY VEHICLE
Executive is eligible to participate in the Company's vehicle program. The
Company reserves the right to amend its current policy at any time and may elect
to provide a monthly stipend to participants.
HOUSING & COMMUTING EXPENSES
The Company will provide living accommodations for Executive during the Contract
Term at the Elm Creek Apartment, Elmhurst, IL complex or a comparable
accommodation of Executive's choice.
Executive will be eligible for reimbursement of economy class airfare to commute
home during the Contract Term on a weekly basis, as business requirements allow.
<PAGE>
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the 1st day of February, 1999, is made
by and between Goss Graphic Systems, Inc., a Delaware corporation having its
principal place of business in the State of Illinois (the "Company"), and
_______________ (the "Executive").
WHEREAS, the Company desires to retain the services of the
Executive, and the Executive is willing to render such services, in accordance
with the terms hereinafter set forth; and
WHEREAS, the Executive wishes to continue to be employed by the
Company; and
WHEREAS, the Board of Directors of the Company (the "Board") by
appropriate resolutions has authorized the terms for continued employment of the
Executive as provided for in this Agreement; and
WHEREAS, the parties hereto desire to amend, modify and restate, to
the extent that the Company has assumed any obligations, under the offer of
employment letter agreement between the Executive and the Company, dated as of
_____________;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the adequacy of which is hereby acknowledged, the Company and the
Executive agree as follows:
ARTICLE I
Definitions
"ACCRUED ANNUAL BASE SALARY" means that portion of the Executive's
Annual Base Salary which is accrued but unpaid as of the Date of Termination.
"ACCRUED ANNUAL BONUS" means the sum of (i) the amount of any Annual
Bonus earned with respect to the Fiscal Year ending prior to the Date of
Termination but which is unpaid as of the Date of Termination plus (ii) with
respect to the Fiscal Year during which the Date of Termination occurs, a pro
rata portion (based on a fraction the numerator of which is the number of days
which have elapsed in such Fiscal Year through the Date of Termination, and the
denominator of which is 365) of the Annual Bonus which the Executive would have
earned had the date of Termination been the last day of such Fiscal Year.
"ANNUAL BASE SALARY" has the meaning specified in Section 4.1 of
this Agreement.
"ANNUAL BONUS" has the meaning specified in Section 4.2 of this
Agreement.
"BOARD" has the meaning specified in the recitals to this Agreement.
<PAGE>
"CAUSE" means (i) the Executive's willful failure to perform
assigned responsibilities and/or the duties of his employment in any material
respect, (ii) malfeasance, misfeasance or negligence in the performance of the
Executive's duties of employment in any material respect, (iii) the Executive's
commission of a felony under the laws of the United States or any state thereof
(whether or not in connection with his employment), (iv) the Executive's
material disclosure of Protected Information (as defined in Section 8.11(a))
respecting the Company's or any of its affiliates' or Subsidiaries' business to
any individual or entity which is not in the performance of the duties of his
employment, (v) the Executive's commission of an act or acts of sexual
harassment that would normally constitute grounds for termination under a formal
policy adopted by the Company, or (vi) any other act or omission by the
Executive (other than an act or omission resulting from the exercise by the
Executive of good faith business judgment) which is materially injurious to the
financial condition or the business reputation of the Company or any of its
affiliates.
Notwithstanding the foregoing, no act or omission by the Executive
described in clause (i) or (ii) above shall constitute Cause hereunder unless
the Company gives written notice thereof to the Executive, and the Executive
fails to remedy such act or omission within five (5) business days after
receiving such notice, (such period of five (5) business days to be defined as
the "Cure Period").
"Change of Control" has the meaning described in the following
paragraphs (a) through (c):
(a) Prior to an initial public offering of the stock of
GGS Holdings, Inc. ("GGS"), the holding company for the Company, a "Change
of Control" shall be deemed to have occurred:
(i) Whenever Stonington Capital Appreciation 1994
Fund, L.P. (the "Fund") (together with all affiliates) owns less than
fifty-one percent (51%) of either (A) the then outstanding shares of common
stock of GGS (the "Outstanding GGS Common Stock") or (B) the combined voting
power of the then outstanding voting securities of GGS entitled to vote
generally in the election of directors (the "Outstanding GGS Voting
Securities"); or
(ii) Whenever GGS owns less than fifty-one
percent (51%) of either (A) the then outstanding shares of common stock of
the Company or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors.
(b) After an initial public offering of the stock of GGS,
a "Change of Control" shall mean:
(i) The acquisition by any Person or group of
related Persons of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of twenty percent (20%) or more of either the Outstanding
GGS Common Stock or the Outstanding GGS Voting Securities; provided,
however, that for purposes of this subparagraph (i), the following
acquisitions shall not constitute a Change of Control: (A) any acquisition
directly from GGS, (B) any acquisition by GGS, or (C) any acquisition
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by any employee benefit plan (or related trust) sponsored or maintained by
GGS or any corporation controlled by GGS; and provided further that no
acquisition shall constitute a Change of Control unless, as a result
thereof, a Person or group of related Persons has beneficial ownership of a
larger percentage of the Outstanding GGS Common Stock or the Outstanding GGS
Voting Securities than is then beneficially owned by the Fund and its
affiliates; or
(ii) Individuals who, as of the date of the
Closing, constitute the board of directors of GGS (the "Incumbent Board")
cease for any reason to constitute at least a majority of the board of
directors of GGS; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the shareholders of GGS, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Incumbent Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of
the assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of
the Outstanding GGS Common Stock and Outstanding GGS Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, at least sixty percent (60%) of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their respective ownership, immediately prior to
such Business Combination, of the Outstanding GGS Common Stock and
Outstanding GGS Voting Securities; provided, however, that the provisions of
this paragraph (b) shall be applied, in connection with and after any such
Business Combination, as if all references to GGS (except in the definition
of, and references to, the Incumbent Board) were replaced by references to
the corporation resulting from such Business Combination and shall be
applied, with respect to any subsequent Business Combination, as if the
reference in this subparagraph (iii) to "at least sixty percent (60%)" were
replaced by a reference to "at least ninety-five percent (95%)"; or
(iv) Approval by the shareholders of the Company
or of GGS of a complete liquidation or dissolution of the Company or of GGS,
respectively; provided, however, that a Change of Control shall not result
from approval by the shareholders of GGS of a dissolution of GGS for the
purpose of making a pro rata distribution of shares of the Company to the
shareholders of GGS; and provided further that, after such distribution, the
provisions of paragraph (a), above, this paragraph (b), and paragraph (c),
below, shall be applied as if all references to GGS (except in the
definition of, and references to, the Incumbent Board) were replaced by
references to the Company; or
(v) Any event as a result of which GGS owns less
than fifty-one percent (51%) of either (A) the then outstanding shares of
common stock of the Company or (B) the
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combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors.
(c) If the Fund makes a pro rata distribution of shares
of common stock or other securities of GGS to individuals or other
entities who are partners in the Fund, then the continued holding of such
shares or other securities of GGS by those distributees shall be deemed,
for purposes of paragraphs (a) and (b), above, to be continued holding of
those shares or other securities by the Fund and its affiliates.
"CLOSING" means the closing of an acquisition of Goss Graphic
Systems, Inc. by an acquiring entity except as otherwise provided herein.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMPANY" has the meaning specified in the recitals to this
Agreement.
"CONTRACT TERM" has the meaning specified in Section 3.1 of this
Agreement.
"DATE OF TERMINATION" means the date as of which the Executive's
employment with the Company is terminated by the Company or by the Executive for
any reason including, but not limited to, death or Disability.
"DISABILITY" means any medically determinable physical or mental
impairment, which shall have rendered the Executive unable to perform the duties
required under this Agreement for a continuous period of six (6) months. The
date of the determination of Disability is the date on which the Executive is
certified, following such six (6)-month period by a physician reasonably
acceptable to the Company and the Executive, as having incurred a Disability.
"EXECUTIVE" has the meaning specified in the recitals to this
Agreement.
"FISCAL YEAR" means each period of twelve (12) months beginning on
January 1 and ending on the following December 31.
"GOOD REASON" means the occurrence of any one of the following
events after a Change of Control:
(a) Assignment to the Executive of any duties materially and
adversely inconsistent with the Executive's position as specified in
Article II hereof, or any other action by the Company which results in a
material and adverse change in the Executive's position, authority, duties
or responsibilities; or
(b) A demotional change in the Executive's title or the line of
authority through which the Executive is required to report; or
(c) Failure by the Company to obtain, in accordance with Section
8.1, below, the written agreement of any successor in interest to the
business of the Company or assignee of the Company to assume and perform
the obligations of the Company under this Agreement; or
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(d) A material failure by the Company to comply with Article IV
or Article V of this Agreement.
Notwithstanding the foregoing, no act or omission by the Company
shall constitute Good Reason hereunder unless (i) the Executive gives the
Company written notice thereof within two (2) months after he first knew or
should have known of such act or omission, and the Company fails to remedy such
act or omission within thirty (30) days after receiving such notice, or (ii)
such act or omission is part of a series of two (2) or more acts or omissions,
each of which constitutes Good Reason without regard to this proviso, and which
occur within a period of twelve (12) months or less.
"PERSON" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"PROHIBITED BUSINESS" has the meaning specified in Section 8.12
of this Agreement.
"PROTECTED INFORMATION" has the meaning specified in Section 8.11
of this Agreement.
"STOCK OPTIONS" has the meaning specified in Addendum 1 to this
Agreement.
"STOCKHOLDERS AGREEMENT" means that certain agreement dated
October 15, 1996 by and among GGS Holdings, Inc., the stockholders and the
holders of options or restricted stock under the Management Stock Incentive Plan
(the "Management Stock Incentive Plan"), Merrill Lynch KECALP L.P. 1994 and
Stonington Capital Appreciation Fund, L.P.
"SUBSIDIARY" means, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether, at the
time, stock of any other class or classes of such corporation, shall have or
might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned legally or beneficially by such Person
and/or one or more Subsidiaries of such Person, and (b) any partnership in which
such Person and/or one or more Subsidiaries of such Person shall have an
interest (whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%).
"TERMINATION OF EMPIOYMENT WITHOUT CAUSE" means a termination of
the Executive's employment by the Company for any reason other than Cause.
ARTICLE II
Duties
2.1 EMPLOYMENT. This Agreement amends, modifies and restates, to
the extent that the Company has any obligations under the offer of employment
letter between the Executive and the Company, dated as of ______________ (the
"Prior Letter"), and the Prior Letter , to the extent that the Company has any
obligations thereunder, is hereby superseded by the provisions
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hereof, including the provisions set forth in Addendum 1 attached hereto and
made a part hereof as if fully rewritten.
2.2 DUTIES. The Company hereby employs the Executive to serve as
Executive Vice President, ______________ of the Company during the Contract Term
with overall charge and responsibility for the _____________ affairs of the
Company and to perform such duties consistent with such position as the
Executive shall reasonably be directed to perform or as may be specified in the
Company's by-laws (if applicable), and the Executive hereby accepts such
employment. During the Contract Term, and excluding any periods of vacation,
sick leave or disability to which the Executive is entitled, the Executive
agrees to devote the Executive's full business time and attention to the
business affairs of the Company. The Company reserves the right to assign
additional responsibilities to, change responsibilities of or reassign the
Executive at any time during the Contract Term consistent with the terms of this
Agreement.
2.3 OTHER ACTIVITIES. During the Contract Term, it shall not be a
violation of this Agreement for the Executive to (a) serve on corporate, civic
or charitable boards or committees, (b) deliver lectures or fulfill speaking
engagements, or (c) manage personal investments, so long as such activities are
consistent with the policies of the Company and do not interfere with the
performance of the Executive's duties in accordance with this Agreement.
ARTICLE III
Term of Agreement
3.1 TERM. The initial term of this Agreement shall commence on
February 1, 1999 and terminate on January 31, 2001. This initial term, however,
shall be automatically extended without further action of either party for
successive additional two (2) year periods, unless written notice of either
party's intention not to extend has been given to the other party hereto at
least three (3) months prior to the expiration of the then effective term (the
initial term or such longer period for which the term of the Executive's
employment shall have been so extended is hereinafter referred to as the
"Contract Term").
ARTICLE IV
Compensation
4.1 BASE SALARY. While the Executive is employed by the Company
during the Contract Term, the Company shall pay or cause to be paid to the
Executive in cash, in installments not less frequently than monthly, an annual
base salary ("Annual Base Salary") at the rate set forth in Addendum 1. The
Company shall review the Executive's Annual Base Salary no less frequently than
annually and may from time to time increase or decrease Executive's Annual Base
Salary, provided that it shall not be reduced to an annual rate of less than the
amount set forth in Addendum 1. The term Annual Base Salary as used in this
Agreement shall refer to the Annual Base Salary as so increased or decreased.
4.2 ANNUAL BONUS. While the Executive is employed by the Company
during the Contract Term, the Company shall pay or cause to be paid to the
Executive an annual cash bonus ("Annual Bonus") in accordance with the terms of
a bonus plan for senior executives of the Company, as adopted by the Board, as
amended from time to time.
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ARTICLE V
Other Benefits
5.1 INCENTIVE, SAVINGS AND RETIREMENT PLANS. The Executive shall
be entitled to participate while the Executive is employed by the Company during
the Contract Term in all incentives (including long-term incentives), savings
and retirement plans, practices, policies and programs applicable to other
senior executives of the Company.
5.2 WELFARE BENEFITS. While the Executive is employed by the
Company during the Contract Term, the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and shall receive all
benefits under all welfare benefit plans, practices, policies and programs
provided by the Company (as amended or changed from time to time) and applicable
to other senior executives of the Company.
5.3 FRINGE BENEFITS. While the Executive is employed by the
Company during the Contract Term, the Executive shall be entitled to all fringe
benefits applicable to other senior executives of the Company.
5.4 REIMBURSEMENT OF BUSINESS EXPENSES. The Executive shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred while the Executive is employed by the Company during the Contract
Term, upon the Company's receipt of required accountings therefor.
5.5 VACATION. While the Executive is employed by the Company
during the Contract Term, the Executive shall be entitled to paid vacation time
in accordance with the plans, practices, policies, and programs applicable to
other senior executives of the Company.
ARTICLE VI
Termination of Employment
6.1 TERMINATION OF EMPIOYMENT FOR CAUSE, OTHER THAN FOR GOOD
REASON, DEATH, DISABILITY OR RETIREMENT. If, before the end of the Contract
Term, the Company terminates Executive's employment for Cause, the Executive
terminates his employment other than for Good Reason or the Executive's
employment terminates due to death, Disability or Retirement, the Company shall
pay to the Executive, the beneficiaries designated in writing by the Executive,
or the Executive's estate, as the case may be, within thirty (30) days after the
Date of Termination an amount which is equal to the Executive's Accrued Annual
Base Salary. In addition, the Company will pay the Executive's Accrued Annual
Bonus at the time payments are made to other participants in accordance with the
provisions of the plan. The Executive shall have no further right to receive any
Accrued Annual Bonus, unaccrued Annual Bonus or other compensation after such
termination or resignation of employment with respect to the year in which such
termination or resignation occurs or later years or to accrue from and after the
Date of Termination any further benefits under any other plan or arrangement. If
the Company terminates the Executive's employment for Cause, it shall provide
the Executive with not less than five (5) business days' advance written notice
of termination, including a statement of the Date of Termination and the
specific detailed basis for such termination. In this connection, as provided
for in the definition of "Cause" contained in Article I hereof, the Company
shall have the right to terminate the Executive's employment for Cause if the
notice and cure provisions in said
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definition have first been complied with; provided, that the foregoing notice
period shall be concurrent with the cure period, if any.
6.2 TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT CAUSE OR FOR
GOOD REASON. If, before the end of the Contract Term, there is either: (a) a
Termination of Employment Without Cause; or, (b) a termination of employment by
the Executive for Good Reason, the Executive shall receive promptly after the
Date of Termination an amount equal to the sum of the Executive's Accrued Annual
Base Salary that would have been payable to the Executive if his employment had
continued for the period from the Date of Termination until the second
anniversary of the Date of Termination. The Company will also pay the portion of
the Executive's Accrued Annual Bonus at the time payments are made to other
participants in accordance with the provisions of the plan. In addition, for a
period of two (2) years after the Date of Termination, the Company shall
continue to provide benefits to the Executive and/or the Executive's family in a
form that would have been provided to them in accordance with the plans,
practices, policies and programs referred to in Section 5.2 of this Agreement;
provided, however, that such benefits may be discontinued by the Company earlier
in the event that, and to the extent that, the Executive becomes entitled to
comparable benefits from a subsequent employer.
6.3 OTHER TERMINATION BENEFITS. In addition to any amounts or
benefits payable upon termination of employment hereunder and except as
otherwise provided herein, the Executive shall be entitled to any payments or
benefits explicitly provided under the terms of any plan, policy or program of
the Company or as otherwise required by applicable law.
ARTICLE VII
Representations and Warranties of the Executive
To induce the Company to enter into this Agreement, the Executive
makes the following representations and warranties to the Company, each and all
of which shall be true as of the date of execution and delivery of this
Agreement and shall survive the execution and delivery of this Agreement:
7.1 POWER. LEGAL COMPETENCE. ENFORCEABLE OBLIGATIONS. The
Executive is a bona fide resident of the State of Illinois, is over 2l years of
age, and has the power and is legally competent to execute, deliver and perform
this Agreement and all documents and instruments to be delivered by the
Executive hereunder. This Agreement constitutes a legal, valid and binding
obligation of the Executive, enforceable against him in accordance with its
terms, except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally or by general principles of
equity.
7.2 INVESTMENT KNOWLEDGE AND EXPERIENCE. The Executive has
sufficient knowledge and experience in financial, business and tax matters to be
capable of evaluating the risks and merits inherent in an investment in and/or
employment with the Company and of making informed decisions with respect
thereto.
8
<PAGE>
7.3 ADEQUATE MEANS. The Executive, at the present time, has
adequate means of providing for his current needs and personal contingencies,
including the payment of income tax liabilities.
7.4 TRANSFER OF SHARES. Any Stock Options the Executive may
obtain during the period of his employment shall be for his own account and
shall not be subject to resale, transfer or distribution unless such shares are
registered under the Securities Act of 1933, as amended, or an exemption from
such registration is available..
ARTICLE VIII
Miscellaneous
8.1 ASSIGNMENT. SUCCESSORS. The Company may freely assign its
respective rights and obligations under this Agreement to a successor to the
Company's business, including without limitation a purchaser of all or
substantially all the assets of the Company's business, without the prior
written consent of the Executive, provided that such successor assumes in
writing all of the Company's obligations hereunder. This Agreement shall be
binding upon and inure to the benefit of the Executive and the Executive's
estate and the Company and any assignee of or successor to the Company.
8.2 BENEFITS. The benefits payable under this Agreement to
Executive constitute a legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms. This Agreement constitutes
a legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally or by
general principles of equity.
8.3 SEVERABILITY. If all or any part of this Agreement is
declared by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any portion of this
Agreement not declared to be unlawful or invalid. Any paragraph or part of a
paragraph so declared to be unlawful or invalid shall, if possible, be construed
in a manner which will give effect to the terms of such paragraph or part of a
paragraph to the fullest extent possible while remaining lawful and valid.
8.4 AMENDMENT AND WAIVER. This Agreement shall not be altered,
amended or modified except by written instrument executed by the Company and
Executive. A waiver of any term, covenant, agreement or condition contained in
this Agreement shall not be deemed a waiver of any other term, covenant,
agreement or condition, and any waiver of any default as to any such term,
covenant, agreement or condition shall not be deemed a waiver of any later
default as to such term or as to any other term, covenant, agreement or
condition.
8.5 NOTICES. All notices and other communications hereunder shall
be in writing and delivered by hand, by facsimile transmission, by first class
registered or certified mail, return receipt requested, postage prepaid, or by
reputable commercial delivery service, addressed as follows:
9
<PAGE>
If to the Company:
Goss Graphic Systems, Inc.
700 Oakmont Lane
Westmont, IL 60559
Attention: Chairman
If to the Executive:
Either party may from time to time designate a new address by notice given in
accordance with this section. Notice and communications shall be effective when
delivered by hand or commercial delivery service, when received by facsimile
transmission, or three (3) business days after being mailed as set forth above.
8.6 COUNTERPART ORIGINALS. This Agreement may be executed in
several counterparts each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
8.7 ENTIRE AGREEMENT. ENFORCEABLE OBLIGATIONS. This Agreement,
together with the Management Stock Incentive Plan and the agreement or
agreements pursuant to which options have been or may be granted to the
Executive under the Management Stock Incentive Plan, and agreements ancillary to
these agreements form the entire agreement between the parties hereto with
respect to any severance payments and with respect to the subject matter of this
Agreement. Without limiting the generality of the foregoing, this Agreement
supersedes the Prior Letter and the Prior Letter is void and of no further
effect from and after February 1, 1999.
8.8 EFFECT ON OTHER AGREEMENTS. This Agreement shall supersede
all prior agreements, promises and representations, whether in writing or
otherwise, regarding the Executive's employment with the Company, including
severance or other payments contingent upon termination of such employment.
8.9 APPLICABLE LAW. The provisions of this Agreement shall be
interpreted and construed in accordance with the laws of the State of Illinois,
without regard to its choice of law principles.
8.10 SURVIVAL OF CERTAIN RIGHTS AND OBLIGATIONS. The Executive's
rights under Article VI hereof, and his obligations under Sections 8.11, 8.12
and 8.13 hereof, shall survive the termination of the Executive's employment
and/or the termination of this Agreement.
8.11 TRADE SECRETS. CONFIDENTIAL AND PROPRIETARY BUSINESS
INFORMATION.
(a) The Company has advised the Executive and the Executive
acknowledges that it is the policy of the Company to maintain as secret and
confidential all Protected Information (as defined below), and that Protected
Information has been and will be developed at substantial cost and effort to
the Company. "Protected Information" means trade secrets and confidential and
proprietary business information of the Company, including, but not limited
to, such information regarding customers (including potential customers),
sources of supply, processes, methods, plans, apparatus, specifications,
materials, pricing information, intellectual property (including applications
and rights in discoveries, inventions or patents), internal memoranda,
marketing plans, contracts, finances, personnel, research and internal
policies, other than any information
10
<PAGE>
which has entered the public domain (unless such information entered the
public domain through the efforts of or on account of the Executive).
(b) The Executive acknowledges that the Executive will acquire
Protected Information with respect to the Company and its successors in
interest, which information is a valuable, special and unique asset of the
Company's business and operations, and that disclosure of such Protected
Information would cause irreparable damage to the Company.
(c) The Executive shall not, directly or indirectly, divulge,
furnish or willfully make accessible to any person, firm, corporation,
association or other entity (otherwise than as may be required in the regular
course of the Executive's employment or by law) nor use in any manner, either
during (other than as may be required in the regular course of the
Executive's employment or by law) or after termination of employment by the
Company, any Protected Information, or cause any such information of the
Company to enter the public domain.
8.12 NON-COMPETITION.
(a) The Executive agrees that the Executive shall not during the
Executive's employment with the Company, and, if the Executive terminates
employment during the Contract Term other than for Good Reason, or if the
Company terminates the Executive's employment during the Contract Term for
Cause, thereafter for two (2) years, directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory or
consulting or other services in connection with, or make any financial
investment in, whether in the form of equity or debt, or own any interest,
directly or indirectly in any Prohibited Business as defined in Section
8.12(c).
(b) The Executive agrees that the Executive shall not, during the
Executive's employment with the Company, and, if the Executive terminates
employment during the Contract Term without Good Reason or if the Company
terminates the Executive's employment during the Contract Term for Cause,
thereafter for two (2) years, make any financial investment, whether in the
form of equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 8.12 shall, however, restrict
the Executive from making any investment in any company whose stock is
listed on an American securities exchange or traded in the over-the-counter
market and has sales in excess of $100 million; provided that (i) such
investment does not give the Executive the right or ability to control or
influence the policy decisions of any Prohibited Business, and (ii) such
investment does not create a conflict of interest between the Executive's
duties hereunder and the Executive's interest in such investment.
(c) A "Prohibited Business" shall mean any business that competes
with the Company in the design, development, engineering, manufacture,
remanufacture, refurbishment, sale, resale, installation or service of all
or any portion of printing press systems or components for newspaper, insert
or commercial printing or other graphic arts.
8.13 UNDERTAKING REGARDING EMPLOYEES. From the effective date
hereof until two (2) years after the Date of Termination, the Executive shall
not, directly or indirectly, except with the permission in writing of the
Company, (a) induce or encourage any employee of the Company or of any successor
in interest to leave employment with the Company or any successor in interest;
or (b) employ, hire, solicit or cause to be employed, hired or solicited for
11
<PAGE>
employment (other than by the Company or any successor in interest), or
establish a business with or encourage others to hire, any person who within one
(1) year prior thereto was, to the knowledge of the Executive, employed by the
Company or any successor in interest; provided, however, that the Executive will
not be prohibited from hiring or employing (or causing to be hired or employed)
any person whose termination of employment with the Company or any successor in
interest was not directly or indirectly induced, encouraged or solicited by the
Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement on
this ____ day of ______________ , 1999.
GOSS GRAPHIC SYSTEMS, INC.
_______________________________
Name:
Title:_________________________
Executive
_______________________________
12
<PAGE>
Exhibit 10.3
GOSS HOLDINGS, INC.
FORM 10-K FOR YEAR ENDED DECEMBER 31, 1999
EXHIBIT 10.3 - PRINCIPAL TERMS OF EMPLOYMENT FOR CERTAIN
EXECUTIVE OFFICERS
Filed as Exhibit 10.2 to the Company's Form 10-K for fiscal 1999 is the form of
an employment contract that has been executed between Goss Graphic Systems, Inc.
and each of the executive officers whose compensation is reported in Part III,
Item 11 other than Mr. Sheehan (the "Named Executive Officers"). Included in
this Exhibit 10.3 are the principal terms of employment for each of the Named
Executive Officers as reflected in the Addendums to their individual contracts.
<TABLE>
<CAPTION>
--------------------------------- ------------------------- -------------------- --------------------------
EFFECTIVE DATE OF CONTRACT MINIMUM ANNUAL
--------------------------------- ------------------------- -------------------- --------------------------
OFFICER AGREEMENT TERM BASE SALARY
--------------------------------- ------------------------- -------------------- --------------------------
<S> <C> <C> <C>
Alex G. Brnilovich February 1, 1999 2 years $300,000
--------------------------------- ------------------------- -------------------- --------------------------
Joseph P. Gaynor III February 1, 1999 2 years $300,000
--------------------------------- ------------------------- -------------------- --------------------------
Richard J. Sutis February 1, 1999 2 years $200,000
--------------------------------- ------------------------- -------------------- --------------------------
Randall P. Thomas February 1, 1999 2 years 151,500 (1)
--------------------------------- ------------------------- -------------------- --------------------------
</TABLE>
(1) In British Pounds Sterling
STOCK OPTIONS:
All of Named Executive Officers are eligible for stock option grants in
accordance with a plan to be adopted by the Company.
INCENTIVE COMPENSATION:
All of the Named Executive Officers are eligible to participate in the Company's
Annual Bonus Plan as approved by the Board of Directors. In addition, Mr.
Brnilovich is entitled to receive an amount of $205,000 as compensation for the
forfeiture of his anticipated 1998 bonus from a prior employer. $153,750 of this
amount was paid in December 1998 and $51,250 will be paid by March 31, 2000.
SIGN-ON AWARD:
Mr. Brnilovich received a sign-on award of $288,000, payable in installments of
$188,000 in December 1998 and $100,000 by December 31, 1999.
FRINGE BENEFITS:
All of the Named Executive Officers are eligible to participate in the Company's
automobile program, in which the use of an automobile is provided at Company
expense.
Messrs. Brnilovich, Gaynor, and Sutis are eligible to participate in the
Company's 401(k) Restorative Plan. Mr. Thomas is eligible to participate in the
Goss UK Executive Pension Plan, and, in the event of a retirement by Mr. Thomas
prior to age 60, under certain conditions, he will be entitled to receive an
undiscounted pension.
<PAGE>
Messrs. Brnilovich, Gaynor and Sutis are eligible for reimbursement of
reasonable fees for personal legal, financial, tax or estate planning in an
amount not to exceed $2,500 per annum and are also eligible to participate in
the Company's annual executive physical examination program. Mr. Thomas is
eligible for reimbursement of the costs of a membership at a health club.
OTHER BENEFITS:
In the event that Mr. Brnilovich's employment is terminated for reasons other
than: (1) voluntary resignation for other than Good Reason; (2) termination by
the Company for Cause; (3) death; (4) disabilty; or (5) retirement, he is
entitled to receive a payment equal to that portion of the $51,250 incentive
compensation payment and the $100,000 sign-on award referred to above which are
unpaid at the date of such termination. In addition, in the event that Mr.
Brnilovich elects to leave the Company due to the non-occurrence of certain
events which are specified in his agreement, he will be paid a lump sum payment
equivalent to one year's annual base salary and the portion of any annual bonus
which has been accrued at that time.
Mr. Brnilovich was given an 18 month period in which to relocate from his
residence in Virginia and is entitled to reimbursement of temporary housing
costs and economy class airfare for travel between his Virginia residence and
his work location in Illinois during this period.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF GOSS HOLDINGS, INC. FOR THE YEAR ENDED DECEMBER 31,
1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERNCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 29
<SECURITIES> 1
<RECEIVABLES> 176
<ALLOWANCES> 42
<INVENTORY> 152
<CURRENT-ASSETS> 324
<PP&E> 208
<DEPRECIATION> 67
<TOTAL-ASSETS> 784
<CURRENT-LIABILITIES> 527
<BONDS> 307
0
0
<COMMON> 0
<OTHER-SE> 77
<TOTAL-LIABILITY-AND-EQUITY> 784
<SALES> 608
<TOTAL-REVENUES> 608
<CGS> 610
<TOTAL-COSTS> 796
<OTHER-EXPENSES> 2
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44
<INCOME-PRETAX> (234)
<INCOME-TAX> 4
<INCOME-CONTINUING> (238)
<DISCONTINUED> 0
<EXTRAORDINARY> 108
<CHANGES> 0
<NET-INCOME> (130)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
