<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 1996
REGISTRATION NO. 333- .
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PRINTPACK, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
GEORGIA 2673 58-0673779
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. employer
incorporation or organization) Classification Code Number) identification number)
</TABLE>
4335 WENDELL DRIVE, S.W.
ATLANTA, GEORGIA 30336
(404) 691-5830
(Address, including zip code, and telephone number, including area code, of the
Company's principal executive offices)
---------------------
R. MICHAEL HEMBREE
VICE PRESIDENT, FINANCE AND ADMINISTRATION
PRINTPACK, INC.
4335 WENDELL DRIVE, S.W.
ATLANTA, GEORGIA 30336
(404) 691-5830
(Name, address, including zip code and telephone number, including area code, of
agent for service)
Copy to:
RALPH F. MACDONALD, III, ESQ.
ALSTON & BIRD
ONE ATLANTIC CENTER
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309-3424
(404) 881-7000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: Upon
commencement of the Exchange Offer referred to herein.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
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If this form is filed to register additional Securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1993, please check the
following box. / /
---------------------
If this form is a post-effective amendment filed pursuant to Rule 462(a)
under the Securities Act, please check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering. / /
---------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED
TITLE OF EACH CLASS OF AMOUNT PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER NOTE(1) OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
9 7/8% Series B Senior Notes
due 2004................... $100,000,000 100% $100,000,000 $30,303
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10 5/8% Series B Senior
Subordinated Notes due
2006....................... $200,000,000 100% $200,000,000 $60,606
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Total.............. $300,000,000 100% $300,000,000 $90,909
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</TABLE>
(1) Estimated solely for purposes of calculating registration fee pursuant to
Rule 457(f), based upon the book value (aggregate outstanding principal
amount) of such securities.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION OR THE "SEC"). THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE
TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 8, 1996
PROSPECTUS
(LOGO)PRINTPACK INC.
OFFER TO EXCHANGE ITS
9 7/8% SENIOR NOTES DUE 2004, SERIES B
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OUTSTANDING
9 7/8% SENIOR NOTES DUE 2004, SERIES A
AND
10 5/8% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OUTSTANDING
10 5/8% SENIOR SUBORDINATED NOTES DUE 2006, SERIES A
---------------------
EACH EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON ,
1996, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (THE "EXPIRATION
DATE").
Printpack, Inc., a Georgia corporation (the "Company"), hereby offers (the
"Exchange Offer"), upon the terms and subject to the conditions set forth in
this Prospectus (the "Prospectus") and the accompanying Letters of Transmittal
(the "Letters of Transmittal"), to exchange up to $100,000,000 aggregate
principal amount of its 9 7/8% Series B Senior Notes due 2004 (the "Exchange
Senior Notes") and $200,000,000 aggregate principal amount of its 10 5/8% Series
B Senior Subordinated Notes due 2006 (the "Exchange Senior Subordinated Notes"
and, collectively with the Exchange Senior Notes, the "Exchange Notes") for
equal principal amounts of its outstanding 9 7/8% Series A Senior Notes due 2004
(the "Senior Notes") and 10 5/8% Series A Senior Subordinated Notes due 2006
(the "Senior Subordinated Notes" and, collectively with the Senior Notes, the
"Notes"), respectively. The Exchange Notes are substantially identical
(including principal amount, interest rate, maturity and redemption rights) to
the Notes for which they may be exchanged pursuant to this offer, except that
(i) the offering and sale of the Exchange Notes will have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and (ii) holders
of Exchange Notes will not be entitled to certain rights of holders under a
Registration Rights Agreement of the Company dated as of August 22, 1996 (the
"Registration Rights Agreement"). The Senior Notes have been, and the Exchange
Senior Notes will be, issued under an Indenture dated as of August 22, 1996 (the
"Senior Note Indenture"), between the Company and Fleet National Bank, as
trustee (the "Senior Note Trustee"). The Senior Subordinated Notes have been,
and the Exchange Senior Subordinated Notes will be, issued under an Indenture
dated as of August 22, 1996 (the "Senior Subordinated Note Indenture" and,
collectively with the Senior Note Indenture, the "Indentures"), between the
Company and Fleet National Bank, as trustee (the "Senior Subordinated Note
Trustee" and, collectively with its capacity as the Senior Note Trustee, the
"Trustee"). The Company will not receive any proceeds from this Exchange Offer;
however, pursuant to the Registration Rights Agreement, the Company will bear
certain offering expenses. See "Description of Exchange Notes -- Registration
Rights; Liquidated Damages."
The Exchange Notes will bear interest at the same rate and on the same terms
as the Notes. Consequently, interest on the Exchange Notes will be payable
semi-annually in arrears on February 15 and August 15 of each year, commencing
February 15, 1997. The Exchange Senior Notes will mature on August 15, 2004, and
may be redeemed at the option of the Company, in whole or in part, at any time
on or after August 15, 2000. The Exchange Senior Subordinated Notes will mature
on August 15, 2006, and may be redeemed at the option of the Company, in whole
or in part, at any time on or after August 15, 2001. See "Description of
Exchange Notes."
The Exchange Senior Notes will be general unsecured obligations of the
Company ranking senior to all subordinated Indebtedness (as defined herein) of
the Company, including the Exchange Senior Subordinated Notes, and pari passu
with all existing and future senior Indebtedness of the Company, including
borrowings under the New Credit Agreement. However, borrowings under the New
Credit Agreement are secured by Liens (as defined herein) on substantially all
of the assets of the Company and will, therefore, effectively rank senior to the
Exchange Senior Notes. As of June 30, 1996, after giving pro forma effect to
Transactions (as defined herein) approximately $210.4 million principal amount
of outstanding Indebtedness of the Company will, by its terms, be subordinated
to the Exchange Senior Notes. The Exchange Senior Subordinated Notes are be
general unsecured obligations of the Company and will be subordinated in right
of payment to Senior Debt (as defined herein). As of June 30, 1996, after giving
pro forma effect to the Transactions (as defined herein), $346.7 million of
Senior Debt would have been outstanding, $246.7 million of which would have been
secured Indebtedness under the New Credit Agreement. The Indentures (as defined
herein) will permit the Company and its subsidiaries to incur additional
Indebtedness subject to certain limitations. See "Risk Factors -- Effective
Subordination of Exchange Senior Notes" and "Description of Exchange
Notes -- Certain Covenants." (Continued on inside front cover)
The Company will accept for exchange any and all Notes validly tendered by
eligible holders and not withdrawn prior to 5:00 P.M. New York City time on
, 1996, unless extended by the Company in its sole discretion (the
"Expiration Date"). Tenders of Notes may be withdrawn at any time prior to the
Expiration Date. The Exchange Offer is subject to certain customary conditions.
The Notes may be tendered only in integral multiples of $1,000. See "The
Exchange Offer."
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY INVESTORS WITH RESPECT TO THE NOTES AND THE
EXCHANGE NOTES. ON A PRO FORMA COMBINED BASIS FOR ITS LATEST FISCAL YEAR ENDED
JUNE 29, 1996, THE COMPANY'S EARNINGS WERE INADEQUATE TO COVER ITS FIXED CHARGES
BY APPROXIMATELY $9.1 MILLION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1996.
<PAGE> 3
(Cover page continued)
The Notes are not listed on any securities exchange and are not traded on
the National Association of Securities Dealers Automated Quotation System, Inc.
("Nasdaq"). The Notes are traded through the National Association of Securities
Dealers, Inc.'s ("NASD") PORTAL trading system under the symbol "PRTKNP04" for
the Senior Notes and "PRTKNP06" for the Senior Subordinated Notes. The Company
does not intend to list the Exchange Notes on any national securities exchange
or to seek admission thereof to trading on Nasdaq. Donaldson, Lufkin & Jenrette
Securities Corporation has advised the Company that it has made a market in the
Notes, and that it may make a market in the Notes and in the Exchange Notes;
however, it is not obligated to do so and any market-making activity may be
discontinued at any time. As a result, there is no assurance that an active
public market will develop or continue for the Exchange Notes, and that the
market, if any, that develops for its Exchange Notes will be similar to the
limited market that currently exists for the Notes. See "Risk Factors -- Absence
of Public Market for the Exchange Notes."
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EXPLANATORY NOTE
This Registration Statement covers $100,000,000 aggregate principal amount
of 9 7/8% Series B Senior Notes due 2004 (the "Exchange Senior Notes") and
$200,000,000 aggregate principal amount of 10 5/8% Series B Senior Subordinated
Notes due 2006 (the "Exchange Senior Subordinated Notes" and, collectively with
the Exchange Senior Notes, the "Exchange Notes") of Printpack, Inc. (the
"Company") to be offered in exchange for equal principal amounts of the
Company's outstanding 9 7/8% Series A Senior Notes due 2004 (the "Senior Notes")
and the Company's outstanding 10 5/8% Series A Senior Subordinated Notes due
2006 (the "Senior Subordinated Notes" and, collectively with the Senior Notes,
the "Notes"), respectively (the "Exchange Offer"). This Registration Statement
is being filed to satisfy certain requirements of a Registration Rights
Agreement dated as of August 22, 1996 between the Company and Donaldson, Lufkin
& Jenrette Securities Corporation, as the initial purchaser (the "Initial
Purchaser") of the Notes (the "Registration Rights Agreement").
Based on interpretations by the staff of the Securities and Exchange
Commission (the "SEC" or the "Commission") set forth in no-action letters issued
to unrelated third parties, the Company believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange for Notes may be offered for resale,
resold and otherwise transferred by any holder thereof (other than any such
holder which is a broker-dealer that holds Notes acquired for its own account as
a result of market-making or other trading activities or any holder which is an
"affiliate" of the Company within the meaning of rule 405 under the Securities
Act of 1933, as amended (the "Securities Act")) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such holder's
business and such holder has no arrangement or understanding with any person to
participate in the distribution of such Exchange Notes.
The Issuer hereby notifies each holder of Notes that any broker-dealer that
holds Notes acquired for its own account as a result of market-making activities
or other trading activities and who receives Exchange Notes pursuant to the
Exchange Offer may be a statutory underwriter, and must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
the Exchange Notes. Any broker-dealer that holds Notes acquired for its own
account as a result of market-making or other trading activities, acknowledges
and agrees as a term of the Exchange Offer, that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
Exchange Notes received pursuant to the Exchange Offer. However, by so doing,
the broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. Such broker-dealer will also be deemed to
represent and warrant to the Company that it is not participating in, and has no
intent to participate in, any distribution of Exchange Notes, and has not
entered into any arrangement or understanding with any person to distribute the
Exchange Notes.
In the event that any holder of Notes is prohibited by law or any policy of
the Commission from participating in the Exchange Offer or any holder may not
resell the Exchange Notes without delivering a
i
<PAGE> 4
prospectus and the Prospectus contained in this Registration Statement is
inappropriate or unavailable for such resales by such holder or if such holder
is a broker-dealer and holds Notes acquired directly from the Company or one of
its affiliates, and such holder satisfies certain other requirements, the
Company has agreed, pursuant to the Registration Rights Agreement, to file a
registration statement in respect of such Exchange Notes and Notes pursuant to
Rule 415 under the Securities Act. See "Prospectus Summary -- The Exchange
Offer;" "The Exchange Offer" and "Plan of Distribution."
Any Notes not tendered and accepted in the Exchange Offer will remain
outstanding. To the extent any Notes are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered and unregistered Notes could be
adversely affected. Following consummation of the Exchange Offer, the holders of
Notes will continue to be subject to the existing restrictions upon transfer
thereof and the Company will have fulfilled one of its obligations under the
Registration Rights Agreement. Holders of Notes who do not tender their Notes
generally will not have any further registration rights under the Registration
Rights Agreement or otherwise. See "The Exchange Offer -- Consequences Of
Failure To Exchange."
The Company expects that similar to the Notes, and except as specifically
requested by a hold on the Letter of Transmittal, the Exchange Notes will be
issued only in the form of a Global Note (as defined herein), which will be
deposited with, or on behalf of, The Depository Trust Company (the "Depository")
and registered in its name or in the name of the Depository's nominee, Cede &
Co. Beneficial interests in the Global Note representing the Exchange Notes will
be shown on, and transfers thereof will be effected through, records maintained
by the Depository and its participants. After the initial issuance of the Global
Note, Exchange Notes in certificated form may be issued in exchange for the
Global Note on the terms and conditions set forth in the Indentures. See
"Description of Exchange Notes -- Book-Entry, Delivery and Form."
The Company is not currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a
result of the offering of the Exchange Notes, the Company will become subject to
the informational requirements of the Exchange Act. So long as the Company is
subject to the periodic reporting requirements of the Exchange Act, it is
required to furnish the information required to be filed with the Commission to
the Trustee and the holders of the Notes and the Exchange Notes. The Company has
agreed that, even if it is not required under the Exchange Act to furnish such
information to the Commission, it will nonetheless continue to furnish
information that would be required to be furnished by the Company by Section 13
of the Exchange Act to the Trustee and the holders of the Notes or Exchange
Notes as if it were subject to such periodic reporting requirements. "See
"Available Information."
In addition, the Company has agreed that, for so long as any of the Notes
remain outstanding, it will make available to any prospective purchaser of the
Notes or beneficial owner of the Notes in connection with any sale thereof the
information required by Rule 144A(d)(4) under the Securities Act, until such
time as the Company has either exchanged the Notes for the Exchange Notes or
until such time as the holders thereof have disposed of such Notes pursuant to
an effective registration statement filed by the Company.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission a
registration statement on Form S-1 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act with respect to
the securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto, as permitted by the rules and regulations of the Commission.
For further information with respect to the Company, the Notes and the Exchange
Notes reference is hereby made to the Registration Statement, including the
exhibits and schedules filed or incorporated as a part thereof. Statements
contained herein concerning the provisions of any document are not necessarily
complete and in each instance reference is made to the copy of the document
filed as an exhibit or schedule to the Registration Statement. Each such
statement is qualified in its entirety by reference to the copy of the
applicable documents filed with the Commission. In addition, after effectiveness
of the Registration Statement, the Company will file periodic reports and other
information with the Commission under the Exchange Act, relating to the
Company's business, financial statements and other
ii
<PAGE> 5
matters. The Registration Statement, including the exhibits and schedules
thereto, and the periodic reports and other information filed in connection
therewith, may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: Seven World Trade
Center, New York, New York 10048 and Northwest Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. In addition, the Commission
maintains a site on the World Wide Web at http://www.sec.gov that contains
reports, information statements and other information regarding Printpack, Inc.
and other registrants that file electronically with the Commission.
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed under the captions "Prospectus Summary;"
"Risk Factors;" "Summary Unaudited Pro Forma Condensed Combined Financial Data"
(including EBITDA and EBITDA before certain charges); "Unaudited Pro Forma
Condensed Combined Statement of Operations" (including EBITDA and EBITDA before
certain charges); "The Flexible Packaging Group of James River Corporation
Overview of Results of Operations;" "Printpack Inc. Management's Discussion and
Analysis of Financial Condition and Results of Operations;" "Business" and
elsewhere in this Prospectus may constitute forwardlooking statements for
purposes of the Securities Act and the Exchange Act, and as such may involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially
different from future results, performance or achievements expressed or implied
by such forward-looking statements. Important factors that could cause the
actual results, performance or achievements of the Company to differ materially
from the Company's expectations are disclosed in this Prospectus ("Cautionary
Statements"), including, without limitation, those statements made in
conjunction with the forward-looking statements included under "Risk Factors"
and otherwise herein. All written or oral forward-looking statements
attributable to the Company are expressly qualified in their entirety by the
Cautionary Statements.
iii
<PAGE> 6
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by, and
should be read in conjunction with the more detailed information and Financial
Statements, and the notes thereto contained elsewhere in this Prospectus. As
used herein, "Printpack" or the "Company" refers to the Company and its
subsidiaries unless the context otherwise requires. The Company's fiscal year
ends on the last Saturday in June, and references to particular fiscal years of
the Company refer to the 12 months ended on the last Saturday of June of the
year indicated. See the Financial Statements and Notes thereto.
THE COMPANY
Printpack is one of the largest domestic manufacturers and converters of
flexible packaging products used by leading salted snacks, confectionery,
cookies/crackers, cereal, beverage and other food and consumer product
companies. Management estimates, based in part upon trade and Flexible Packaging
Association ("FPA") data as of 1995, that, prior to the Acquisition (as defined
herein), the Company had the leading market share in several major end use
categories of flexible packaging, including salted snack foods (approximately
30% market share), which includes packaging for such products as Lays(R) and
Ruffles(R) potato chips; confectionery products (approximately 30% market
share), which includes packaging for such products as Reese's(R) and
Hershey's(R) candy bars; and cookies/crackers (approximately 17% market share),
which includes packaging for such products as Fig Newtons(R) and Famous Amos(R)
cookies. The Company's customer base, prior to the Acquisition included
nationally recognized, brand-name food companies such as Frito-Lay, General
Mills, Hershey, Mars, Nabisco, Nestle, Quaker Oats and Ralston.
Printpack, founded in 1956, is headquartered in Atlanta, Georgia and is
owned and managed by the founding family together with several long-term members
of management. The Company manufactures a wide variety of high value-added
flexible packaging products, including laminates made of various layers of
plastic film, aluminum foil, metallized films, paper and specialized coatings,
as well as cast and blown monolayer and co-extruded films. Printpack's sales and
EBITDA (as defined herein and before certain charges) for fiscal year 1996 were
$442.9 million and $60.0 million, respectively. Over the last five fiscal years
ending June 1996, the Company has experienced compound annual growth of sales
and EBITDA before certain charges of 5.2% and 8.9%, respectively, exclusively
through internal growth.
Printpack management estimates, based in part upon data prepared by the FPA
and other trade and industry information, that the U.S. end use markets for the
types of flexible packaging products produced by the Company (the "flexible
packaging industry") had annual sales of approximately $7.5 billion in 1995 and
has one of the highest historical growth rates in the packaging industry,
generally. According to this data, the eight largest flexible packaging
companies accounted for approximately 50% of total 1995 sales in the flexible
packaging industry, with the balance shared by several hundred other
competitors. Management believes recent industry growth has been and will
continue to be driven principally by (i) the shift from rigid containers
(paperboard, glass and plastic) to lower cost and lighter weight flexible
packaging, (ii) changing demographic trends which have increased the demand for
more convenient forms of packaging, including single servings and packaging that
extends product shelf life, (iii) the growth in several major end use market
segments (such as snack foods), (iv) the growth of low-fat and non-fat foods
which require more complex packaging barriers, (v) concerns over waste and
resource reduction, and (vi) increasing demands for specialized packaging with
enhanced barrier properties and distinctive graphics.
On August 22, 1996, Printpack closed the transactions contemplated in an
asset purchase agreement dated as of April 10, 1996, as amended (the
"Acquisition Agreement") with James River and acquired substantially all of the
assets of JR Flexible. JR Flexible was also one of the largest domestic
manufacturers and converters of flexible packaging products to leading food and
consumer products companies, as well as a major supplier of high performance
films to other converters. The Acquisition has further increased Printpack's
leading position in the flexible packaging industry, and as a result, the
Company has total annual combined sales of approximately $900 million, which is
approximately 12% of total 1995 industry sales.
1
<PAGE> 7
JR Flexible, headquartered in Milford, Ohio, had leading market shares in
various flexible packaging end use markets, including bakery, cookies/crackers,
cereal, ream wrap (wrapping for reams of office paper), tissue/towel overwrap,
coffee serving packs and dentifrice (plastic laminate materials for tooth paste
tubes and other personal care products). JR Flexible manufactured many of the
same product lines and materials as those manufactured by Printpack. JR
Flexible's customer base also included many of the same brand name food
companies as Printpack (General Mills, Nabisco, Nestle and Quaker Oats), as well
as other major consumer products companies, such as Flowers, Kellogg, Kraft and
James River. The Acquisition is expected to broaden Printpack's sales to certain
existing customers, as well as provide new customer relationships and products.
In recent years, JR Flexible has been an underperforming business; however, in
late 1995, James River and JR Flexible management began various profitability
improvement measures, including shedding certain lower margin businesses,
reducing waste and related costs, improving product mixes and production
processes and negotiating more favorable long-term raw materials contracts,
especially for resins. As a result of these initiatives, JR Flexible's unaudited
EBITDA for the 26 weeks ended June 30, 1996 was $15.9 million, compared to $3.8
million for the same period in 1995. JR Flexible's unaudited sales and EBITDA
before certain charges for the latest 12 months ended June 30, 1996 were $467.0
million and $21.8 million, respectively.
The Company's principal executive offices are located at 4335 Wendell
Drive, S.W., Atlanta, Georgia 30336, and its telephone number is (404) 691-5830.
BUSINESS STRATEGY
Printpack focuses its sales and marketing efforts, technical development
initiatives, and manufacturing capabilities on targeted end use markets for
flexible packaging, with the goals of achieving critical mass and leading market
shares. Printpack has achieved leadership positions in these markets by (i)
making customer service its first priority, (ii) achieving economies of scale
and manufacturing efficiencies to remain a low cost producer, (iii) investing in
state-of-the-art equipment, and technological and production innovation, and
(iv) providing high value-added flexible packaging structures and enhanced
graphics. By focusing its equipment and facilities on specific market segments
and product structures, the Company has been able to provide high quality
products and service and realize production efficiencies. The Company leverages
its strong customer relationships, market leadership and economies of scale to
earn additional business from existing customers and to attract new customers.
Printpack has developed mutually beneficial relationships with large food and
consumer product companies and has benefited from the expanding market shares of
such customers. The Company expects to continue this strategy.
REASONS FOR THE ACQUISITION
Printpack's management believes that the JR Flexible Acquisition is a
significant strategic opportunity, consistent with the Company's long-term
business strategy. The combination of Printpack (approximately 6% market share)
and JR Flexible (approximately 6% market share) has created one of the largest
U.S. companies focused on film-based flexible packaging products, with combined
sales of approximately 12% of the industry's $7.5 billion of total 1995 sales.
The Acquisition increases Printpack's leadership in several end use categories,
extends its product lines with existing and new customers, helps diversify its
customer base and creates significant opportunities for cost savings and
economies of scale.
INDUSTRY LEADERSHIP
Printpack management believes that as a result of the Acquisition, it has
increased its leading share of the estimated $1.2 billion market for flexible
packaging sales to the snack food industry to approximately 30%. Printpack also
expects to increase its already leading shares of flexible packaging sales for
each of the salted snack, confectionery and cookies/crackers segments. Printpack
also believes it obtained JR Flexible's leading market shares in several other
end use segments of flexible packaging products, including ream wrap,
dentifrice, tissue/towel overwrap and bread bags.
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<PAGE> 8
EXTENSION OF PRODUCT LINES AND CUSTOMERS
Management believes that the Acquisition provides Printpack with a wider
range of flexible packaging capabilities and further diversification of its
product offerings, enabling Printpack to better serve customers. The Acquisition
is expected to increase Printpack's business with various existing major
customers, including General Mills, Mars, Nabisco, Nestle, Quaker Oats and
Ralston. In addition, Printpack's new customers include Flowers, Kellogg, Kraft
and James River.
COST SAVINGS AND ECONOMIES OF SCALE
The Acquisition is expected to produce significant cost savings through the
elimination of redundant corporate overhead and the reduction of personnel at JR
Flexible's headquarters and plants. Printpack management expects to realize
significant cost savings through the consolidation and rationalization of JR
Flexible's manufacturing operations with Printpack's manufacturing facilities,
including the conversion of JR Flexible's plants to Printpack's production
strategy. Printpack has announced the closing of two former JR Flexible plants,
one in San Leandro, California and one in Dayton, Ohio, which closures presently
are expected to be completed by the end of the Company's fiscal year 1997. In
addition, after the Acquisition, Printpack is now one of the largest domestic
purchasers of certain key materials used for flexible packaging manufacturing
such as extrusion grade resin, oriented polypropylene ("OPP") film and other
types of plastic film, paper and foil, and its enhanced purchasing power is
expected to result in greater cost savings and technical development support
from its key raw materials suppliers. See "Printpack, Inc. Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."
THE ACQUISITION, FINANCING AND RELATED TRANSACTIONS
THE ACQUISITION AND RELATED FINANCING
The Company acquired JR Flexible for approximately $372.5 million
(including the repayment of approximately $2.4 million of JR Flexible
indebtedness on revenue bonds), subject to certain adjustments based upon, among
other things, an audited closing date balance sheet that has not yet been
completed. The initial offering of the Notes (the "Offering"), the refinancing
pursuant to the New Credit Agreement and the transactions contemplated in the
Acquisition Agreement were completed contemporaneously on August 22, 1996. The
Acquisition, the Offering and the New Credit Agreement are referred to
collectively herein as the "Transactions."
The First National Bank of Chicago ("First Chicago"), together with a
syndicate of lenders, has provided the Company with the New Credit Facilities,
including a revolving credit facility (the "Revolving Credit Facility") of $155
million reduced pro rata by sales of accounts receivable pursuant to the
Receivables Securitization Facility (as defined below) and a term loan (the
"Term Loan") of $170 million. At Closing, the entire amount of the Term Loan and
approximately $53.3 million of the Revolving Credit Facility was funded. A
portion of the borrowings under the New Credit Facilities, together with the net
proceeds to the Company from the Offering of the Notes, were applied against the
purchase price of JR Flexible. Approximately $171.2 million of the New Credit
Facilities were used at Closing to repay existing credit facilities and to pay
prepayment penalties, fees and expenses associated with the Transactions.
Approximately $51.7 million remained available under the New Credit Facilities
for general corporate purposes, including working capital. See "Description of
Certain Indebtedness" and "Receivables Securitization Facility."
In addition, the Company entered into an asset-backed accounts receivable
financing arrangement through a new special purpose, bankruptcy remote
subsidiary of the Company, "Flexible Funding Corp." ("Receivables Funding"), a
Delaware corporation. Receivables Funding has acquired and will continue to
acquire accounts receivable generated by the Company, and sell them to Falcon
Asset Securitization Corporation ("Falcon"), an asset-backed commercial paper
conduit issuer sponsored by First Chicago, and to First Chicago and other
investors. The receivables securitization facility (the "Receivables
Securitization Facility") was established in an amount of up to approximately
$50 million and, at the Closing, Printpack
3
<PAGE> 9
received approximately $23 million of proceeds from the initial sale of
receivables under the Receivables Securitization Facility. See "Receivables
Securitization Facility."
SOURCES AND USES OF PROCEEDS
Presented below are the sources and uses of funds in connection with the
Acquisition and the other Transactions:
<TABLE>
<CAPTION>
SOURCES OF FUNDS AMOUNT
------------------------------------------------------------------- ----------------------
(DOLLARS IN MILLIONS)
<S> <C>
New Credit Agreement:
Revolving Credit Facility........................................ $ 53.3
Term Loan........................................................ 170.0
Receivables Securitization Facility................................ 23.0
9 7/8% Senior Notes due 2004....................................... 100.0
10 5/8% Senior Subordinated Notes due 2006......................... 200.0
------
Total Sources of Funds................................... $546.3
======
<CAPTION>
USES OF FUNDS
-------------
<S> <C>
JR Flexible purchase price......................................... $372.5
Repay existing Printpack debt...................................... 146.8
Estimated prepayment penalties, fees and transaction expenses...... 24.4
Working Capital.................................................... 2.6
------
Total Uses of Funds...................................... $546.3
======
</TABLE>
THE REORGANIZATION
The Company was reorganized to facilitate the Acquisition and its
financing. Previously, the Company was owned and operated together with
Printpack Enterprises, Inc. ("Enterprises"), a Georgia corporation that had
elected to be taxed as a Subchapter S corporation under the Internal Revenue
Code of 1986, as amended (the "Code"). Printpack and Enterprises were affiliated
by common ownership and management. Following the Company's 1996 fiscal year,
Printpack and Enterprises were reorganized into a holding company structure (the
"Reorganization"). Printpack Holdings, Inc. ("Holdings"), a new Delaware
corporation, was formed, and Enterprises contributed substantially all its
assets and liabilities to Printpack. Following the Reorganization, Enterprises
owns approximately 100% of the Company and Holdings owns approximately 97% of
Enterprises. The remaining minority interests are held by members of the Love
family and certain members of the Company's senior management who were not
eligible to participate in the Reorganization.
Prior to the Reorganization, Printpack and Enterprises jointly owned
approximately 95% of certain separately chartered flexible packaging operations
("Printpack Europe") located in the United Kingdom ("U.K."). Following the
Reorganization, Holdings and Enterprises became holding companies that jointly
own Printpack Europe, which will be operated separately from the Company, except
as permitted under the Indentures. See "Description of Exchange Notes."
The Company has acquired all of JR Flexible's business and will conduct all
North American operations previously carried on by the Company, Enterprises and
JR Flexible, including the operations of various wholly-owned Mexican
subsidiaries of the Company and JR Flexible. The Company also owns 100% of
Printpack Illinois, Inc. ("Printpack Illinois"), which has been formed to own
and operate Printpack's Elgin, Illinois plant, and the Company's patents,
trademarks, trade secrets, knowhow and other intellectual property. See
"Business -- Patents and Trademarks."
UNITED KINGDOM AFFILIATES
Printpack Europe began with the purchase of a separate U.K. company from a
management and investor group in 1993, which previously had acquired such
operations in a management buyout. In 1994, Printpack
4
<PAGE> 10
Europe acquired another U.K. flexible packaging company to become a larger
competitor in the U.K. and Continental Europe. The U.K. operations were combined
in an effort to assimilate and expand Printpack's European operations, which
created one of the three largest flexible packaging companies in the U.K.
After Printpack's purchases, Printpack Europe continued to be operated
independently by its management, which was responsible for Printpack Europe's
policies, operations and day-to-day management, including financial controls. In
1996, it became apparent to the Company that Printpack Europe management was not
timely and appropriately recognizing expenses and rebates, and was capitalizing
certain expenses, leading to the recognition of approximately $32.5 million of
special charges in May 1996, of which approximately $10 million related to
fiscal year 1995. As a result of these special charges and increased raw
material costs and competition, Printpack Europe had net losses in fiscal years
1995 and 1996. In May 1996, certain former senior managers of Printpack Europe
were terminated, and Mr. James J. Greco, a long-time senior Company manager, was
sent to the U.K. to manage this unit. Improvements in financial controls and
reports also have been made at Printpack Europe. Former credit agreements in
existence prior to the effective time of the Acquisition pertaining to
approximately $146.7 million of Company debt outstanding at June 29, 1996
contained various covenants related to the Company and Printpack Europe that
were not amended to reflect the Reorganization. The Company and Printpack Europe
obtained waivers of certain provisions of such former credit agreements through
August 31, 1996. These credit agreements were terminated as a result of the
Transactions consummated on August 22, 1996. Following the Acquisition and the
issuance of the Notes, the Company has agreed not to merge, consolidate or
otherwise acquire Printpack Europe's operations as a subsidiary of the Company,
except as permitted under the Indentures. See "Risk Factors -- Foreign
Operations;" "Printpack, Inc. Management's Discussion and Analysis of Financial
Condition and Results of Operations;" "Description of Exchange
Notes -- Transaction with Affiliates;" and "Management;" and Note 5 to the
Printpack Financial Statements.
5
<PAGE> 11
THE EXCHANGE OFFER
Securities Offered......... $100,000,000 aggregate principal amount of 9 7/8%
Exchange Senior Notes due August 15, 2004.
$200,000,000 aggregate principal amount of 10 5/8%
Exchange Senior Subordinated Notes due August 15,
2006.
The Exchange Offer......... $1,000 principal amount of the Exchange Senior
Notes in exchange for each $1,000 principal
amount of Senior Notes and $1,000 principal
amount of the Exchange Senior Subordinated Notes
in exchange for each $1,000 principal amount of
Senior Subordinated Notes. As of the date hereof,
all of the aggregate principal amount of Senior
Notes and Senior Subordinated Notes are
outstanding. The Company will issue the Exchange
Notes to eligible holders on or promptly after
the Expiration Date of the Exchange Offer.
Based on interpretations by the staff of the SEC
set forth in no-action letters issued to third
parties, the Company believes that Exchange Notes
issued pursuant to the Exchange Offer in exchange
for Notes may be offered for resale, resold and
otherwise transferred by any holder thereof
(other than any holder which is a broker-dealer
that holds Notes acquired for its own account as
a result of market-making or other trading
activities, or any such holder which is an
"affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act,
provided that such Exchange Notes are acquired in
the ordinary course of such holder's business and
that such holder does not intend to participate
and has no arrangement or understanding with any
person to participate in a distribution of such
Exchange Notes.
Each broker-dealer that receives Exchange Notes for
its own account pursuant to the Exchange Offer
may be a statutory underwriter and must
acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange
Notes. The Letters of Transmittal state that by
so acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be
used for 180 days after the Expiration Date by a
broker-dealer in connection with resales of
Exchange Notes received in exchange for Notes
where such Notes were acquired by such
broker-dealer as a result of market-making
activities or other trading activities. The
Company has agreed that for a period of 180 days
after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use
in connection with any such resale. See "Plan of
Distribution."
Any holder who is an affiliate of the Company, and
any person who intends to, or is participating in
a distribution of the Exchange Notes, will not be
able to rely on the position of the staff of the
SEC enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan
Stanley & Co., Inc. (available June 5, 1991), and
Shearman & Sterling (available July 2, 1993) or
similar no-action letters and, in the absence of
an exemption therefrom, must comply with the
registration and prospectus delivery requirements
of the
6
<PAGE> 12
Securities Act in connection with the resale of
the Exchange Notes. Failure to comply with such
requirements in such instance may result in such
holder incurring liability under the Securities
Act for which the holder will not be indemnified
by the Company.
Expiration Date............ 5:00 p.m., Eastern Time, on , 1996,
unless the Exchange Offer is extended by the
Company in its sole discretion, in which case the
term "Expiration Date" means the latest date and
time to which the Exchange Offer is extended.
Interest on the Exchange
Notes and the Notes...... The Exchange Notes will bear interest from August
15, 1996, the date of issuance of the Notes that
are tendered in exchange for the Exchange Notes
(or the most recent Interest Payment Date (as
defined herein) to which interest on such Notes
has been paid). Accordingly, holders of Notes
that are accepted for exchange will not receive
interest on the Notes that is accrued but unpaid
at the time of tender, but such interest will be
payable on the Exchange Notes issued therefor on
the first Interest Payment Date after the
Expiration Date.
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain customary
conditions, which may be waived, to the extent
permitted by law, by the Company. See "The
Exchange Offer -- Conditions" and "-- Procedures
for Tendering."
Procedures for Tendering
Notes.................... Each eligible holder of Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with the
Notes and any other required documentation to the
Exchange Agent (as defined herein) at the address
set forth in the Letter of Transmittal. The blue
Letter of Transmittal should be used to tender
Senior Notes and the yellow Letter of Transmittal
should be used to tender Senior Subordinated
Notes. By executing the Letter of Transmittal,
each holder will represent to the Company that,
among other things, the holder or the person
receiving such Exchange Notes, whether or not
such person is the holder, is acquiring the
Exchange Notes in the ordinary course of business
and that neither the holder nor any such other
person has any arrangement or understanding with
any person to participate in the distribution of
such Exchange Notes, that neither the holder nor
any such person is an "affiliate" (as defined
under Rule 405 of the Securities Act) of the
Company, and if such holder is a broker-dealer
that holds the Notes as a result of market-making
or other trading activities, it will deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resales of
the Exchange Notes. In lieu of physical delivery
of the certificates representing Notes, tendering
holders may transfer Notes pursuant to the
procedure for book-entry transfer as set forth
under "The Exchange Offer -- Procedures for
Tendering."
7
<PAGE> 13
Special Procedures for
Beneficial Owners........ Any beneficial owner whose Notes are held in
book-entry form or are registered in the name of
a broker, dealer, commercial bank, trust company
or other nominee and who wishes to exchange such
Notes for the Exchange Notes should contact such
registered holder promptly and instruct such
registered holder to tender the Notes for
exchange on such beneficial owner's behalf. See
"The Exchange Offer -- Procedures for Tendering."
Guaranteed Delivery
Procedures............... Holders of Notes who wish to tender their Notes and
whose Notes are not immediately available or who
cannot deliver their Notes, the Letter of
Transmittal or any other documents required by
the Letter of Transmittal to the Exchange Agent
(or comply with the procedures for book-entry
transfer) prior to the Expiration Date must
tender their Notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures."
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 5:00
P.M., Eastern Time, on the Expiration Date
pursuant to the procedures described under "The
Exchange Offer -- Withdrawals of Tenders."
Acceptance of Notes and
Delivery of Exchange
Notes.................... The Company will accept for exchange any and all
Notes that are properly tendered in the Exchange
Offer, and not withdrawn, prior to 5:00 P.M.,
Eastern Time, on the Expiration Date. The
Exchange Notes issued pursuant to the Exchange
Offer will be delivered on the earliest
practicable date following the Expiration Date.
See "The Exchange Offer -- Terms of the Exchange
Offer."
Federal Income Tax
Consequences............. The issuance of the Exchange Notes to holders of
the Notes pursuant to the terms set forth in this
Prospectus will not constitute an exchange for
federal income tax purposes. Consequently, no
gain or loss would be recognized by holders of
the Notes upon receipt of the Exchange Notes. See
"The Exchange Offer -- Certain Federal Income Tax
Consequences of the Exchange Offer."
Effect on holders of the
Notes.................... As a result of the making of this Exchange Offer,
the Company will have fulfilled certain of its
obligations under the Registration Rights
Agreement, and holders of Notes who do not tender
their Notes will generally not have any further
registration rights under the Registration Rights
Agreement or otherwise. Such holders will
continue to hold the untendered Notes and will be
entitled to all the rights and subject to all the
limitations, including, without limitation,
transfer restrictions, applicable thereto under
the Indentures, except to the extent such rights
or limitations, by their terms, terminate or
cease to have further effectiveness as a result
of the Exchange Offer. Accordingly, if any Notes
are tendered and accepted in the Exchange Offer,
the trading market, if any, for the untendered
Notes could be adversely affected.
Exchange Agent............. Fleet National Bank is serving as exchange agent
(the "Exchange Agent") with respect to the Senior
Notes and the Senior Subordinated Notes.
8
<PAGE> 14
SUMMARY OF TERMS OF EXCHANGE NOTES
The form and terms of the Exchange Notes are substantially identical as the
form and terms of the Notes which they replace except that (i) the Exchange
Notes have been registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof and (ii) the holders of Exchange
Notes generally will not be entitled to further registration rights under the
Registration Rights Agreement which rights generally will be satisfied when the
Exchange Offer is consummated. The Exchange Notes will evidence the same
indebtedness as the Notes which they replace and will be issued under, and be
entitled to the benefits of the Indentures. See "Description of Exchange Notes."
Maturity........................ The Exchange Senior Notes will mature on
August 15, 2004 and the Exchange Senior
Subordinated Notes will mature on August
15, 2006.
Interest........................ Interest on the Exchange Senior Notes will
accrue at the rate of 9 7/8% per annum,
payable semi-annually in arrears on
February 15 and August 15 of each year,
commencing on February 15, 1997. Interest
on the Exchange Senior Subordinated Notes
will accrue at the rate of 10 5/8% per
annum, payable semiannually in arrears on
February 15 and August 15 of each year,
commencing on February 15, 1997.
Optional Redemption............. The Exchange Senior Notes may be redeemed at
the option of the Company, in whole or in
part, at any time on or after August 15,
2000, at the redemption prices set forth
herein, plus accrued and unpaid interest
and Liquidated Damages (as defined herein),
if any, thereon to the applicable
redemption date.
In addition, in the event of an Initial
Public Offering (as defined herein) by the
Company on or before August 15, 1999, the
Company may use the proceeds from such
Initial Public Offering to redeem up to 25%
of the aggregate principal amount of
Exchange Senior Notes originally issued at
a redemption price equal to 108 7/8% of the
principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if
any, thereon to the date of redemption;
provided, however, that at least $75.0
million in aggregate principal amount of
Exchange Senior Notes remains outstanding
following such redemption and, provided
further, that such redemption occurs within
60 days of the closing of such Initial
Public Offering.
The Exchange Senior Subordinated Notes may be
redeemed at the option of the Company, in
whole or in part, at any time on or after
August 15, 2001, at the redemption prices
set forth herein, plus accrued and unpaid
interest and Liquidated Damages, if any,
thereon to the applicable redemption date.
In addition, in the event of an Initial
Public Offering of the Company on or before
August 15, 1999, the Company may use the
proceeds from such Initial Public Offering
to redeem up to 35% of the aggregate
principal amount of Exchange Senior
Subordinated Notes originally issued at a
redemption price equal to 109 5/8% of the
principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if
any,
9
<PAGE> 15
thereon to the date of redemption;
provided, however, that at least $100.0
million in aggregate principal amount of
Exchange Senior Subordinated Notes remains
outstanding following such redemption and,
provided further, that such redemption
occurs within 60 days of the closing of
such Initial Public Offering.
Mandatory Redemption............ The Company will not be required to make any
mandatory redemption or sinking fund
payments with respect to the Exchange
Notes.
Change of Control............... Upon the occurrence of a Change of Control
(as defined herein), each holder of
Exchange Notes will have the right to
require the Company to purchase all or any
part (equal to $1,000 or an integral
multiple thereof) of such holder's Notes at
a price in cash equal to 101% of the
aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of
purchase. See, however, "Risk
Factors -- Possible Inability to Repurchase
Exchange Notes upon a Change of Control."
Ranking......................... The Exchange Senior Notes will be general
unsecured obligations of the Company,
ranking senior to all subordinated
Indebtedness of the Company, including the
Exchange Senior Subordinated Notes, and
pari passu with all existing and future
senior Indebtedness of the Company,
including borrowings under the New Credit
Agreement. However, borrowings under the
New Credit Agreement will be secured by
Liens on substantially all of the assets of
the Company and will, therefore,
effectively rank senior to the Exchange
Senior Notes.
The Exchange Senior Subordinated Notes will
be general unsecured obligations of the
Company and will be subordinated in right
of payment to Senior Debt. As of June 30,
1996, after giving pro forma effect to the
Transactions, there would have been
approximately $346.7 million of Senior Debt
outstanding, $246.7 million of which would
have been secured Indebtedness under the
New Credit Agreement. See "Risk
Factors -- Subordination of Exchange Senior
Subordinated Notes" and "-- Effective
Subordination of Exchange Senior Notes."
Certain Covenants............... The Indentures contain certain covenants
that, among other things, limit the ability
of the Company and its subsidiaries to
incur additional Indebtedness, to issue
preferred stock, pay dividends or make
other distributions, repurchase Equity
Interests (as defined herein) or
subordinated Indebtedness, engage in sale
and leaseback transactions, create certain
liens, enter into certain transactions with
affiliates, sell assets of the Company or
its subsidiaries, issue or sell Equity
Interests of the Company's subsidiaries or
enter into certain mergers and
consolidations. In addition, under certain
circumstances, the Company will be required
to offer to purchase Notes at a price equal
to 100% of the principal amount thereof,
plus
10
<PAGE> 16
accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of
purchase, with the proceeds of certain
Asset Sales (as defined herein). See
"Description of Exchange Notes."
Exchange Offer; Registration
Rights........................ If (i) the Exchange Offer is not permitted by
applicable law or (ii) any holder of
Transfer Restricted Securities (as defined
herein) notifies the Company that (A) it is
prohibited by law or Commission policy from
participating in the Exchange Offer, (B)
that it may not resell the Exchange Notes
acquired by it in the Exchange Offer to the
public without delivering a prospectus and
the Prospectus is not appropriate or
available for such resales or (C) that it
is a broker-dealer and holds Notes acquired
directly from the Company or an affiliate
of the Company, and such holders timely
notify the Company of such facts, the
Company will be required to provide a shelf
registration statement (the "Shelf
Registration Statement") to cover resales
of the Notes by the holders thereof. If the
Company fails to satisfy these registration
obligations, it will be required to pay
liquidated damages ("Liquidated Damages")
to such holders of Notes under certain
circumstances. See "The Exchange
Offer -- Registration Rights and Effect of
Exchange Offer."
11
<PAGE> 17
PRINTPACK, INC. AND SUBSIDIARIES
THE FLEXIBLE PACKAGING GROUP OF JAMES RIVER CORPORATION
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following table presents summary unaudited pro forma condensed combined
financial information derived from the Unaudited Pro Forma Condensed Combined
Financial Statements included elsewhere in this Prospectus. The summary pro
forma condensed combined financial information gives effect to the Transactions
as if they had occurred as of July 1, 1995 for purposes of the pro forma
condensed combined statements of operations data and other financial data, and
as of June 30, 1996 for purposes of the pro forma combined balance sheet data.
The Unaudited Pro Forma Condensed Combined Financial Statements do not
purport to present the actual financial position or results of operations of the
Company or JR Flexible had the Transactions and events assumed therein in fact
occurred on the dates specified, nor are they necessarily indicative of the
results of the operations that may be achieved in the future. The Unaudited Pro
Forma Condensed Combined Financial Statements are based on certain assumptions
and adjustments described in the notes to the Unaudited Pro Forma Condensed
Combined Financial Statements and should be read in conjunction therewith and
with the historical financial statements of the Company, the historical combined
financial statements of The Flexible Packaging Group of James River Corporation
("JR Flexible Combined Financial Statements"), and the related notes thereto;
"The Flexible Packaging Group of James River Corporation Overview of Financial
Results of Operations" and the "Printpack, Inc. Management's Discussion and
Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------------------- COMBINED
PRINTPACK JR FLEXIBLE LATEST 12
LATEST 12 LATEST 12 MONTHS ENDED
MONTHS ENDED MONTHS ENDED JUNE 30,
JUNE 29, 1996(1) JUNE 30, 1996(2) 1996
---------------- ---------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................................... $442,931 $467,023 $909,954
Gross margin........................................ 79,840 33,465 111,189
Selling, administrative and research and development
expenses.......................................... 44,581 37,799 57,965
Restructuring charges............................... -- 894 894
Severance expense................................... 7,870 1,200 9,070
Write-off of equity investment...................... 200 -- 200
Income (loss) from operations....................... 27,189 (6,428) 43,060
Interest expense(3)(4).............................. 10,814 244 52,337
Net income (loss)................................... 13,236 (3,893) (8,776)
OTHER FINANCIAL DATA:
EBITDA(3)(5)........................................ 52,033 20,310(6) 96,758
EBITDA before certain charges(3)(7)................. 59,993 21,844 106,922
Capital expenditures................................ 25,786 29,454 55,240
Depreciation and amortization....................... 24,903 26,178 53,197
RATIOS:
Ratio of EBITDA to interest expense(3)(5)........... 1.8x
Ratio of EBITDA before certain charges to interest
expense(7)........................................ 2.0x
Ratio of total debt to EBITDA before certain
charges(7)........................................ 5.2x
Ratio of earnings to fixed charges(3)(8)............ 2.2x (9) 0.8x(10)
</TABLE>
12
<PAGE> 18
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------------------- COMBINED
PRINTPACK JR FLEXIBLE LATEST 12
LATEST 12 LATEST 12 MONTHS ENDED
MONTHS ENDED MONTHS ENDED JUNE 30,
JUNE 29, 1996(1) JUNE 30, 1996(2) 1996
---------------- ---------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................................... $ 9,086 $ 57,021 $109,477
Total assets........................................ 231,269 346,119 673,037
Total debt.......................................... 157,138 2,392 557,038
Shareholders' equity................................ 13,460 247,249 12,160
</TABLE>
- ---------------
(1) Results of operations are for the 53 weeks ended June 29, 1996.
(2) Results of operations are for the 53 weeks ended June 30, 1996.
(3) Interest expense, EBITDA and the ratio of earnings to fixed charges for JR
Flexible are not necessarily indicative of JR Flexible on a stand-alone
basis. See Note 2 to the JR Flexible Combined Financial Statements.
(4) Pro forma interest expense has been calculated based upon various assumed
interest rates on the Notes and under the New Credit Agreement.
(5) EBITDA represents net income (loss) before interest expense, taxes,
depreciation and amortization, but after deduction for restructuring
charges, severance expense and write-off of equity investments. While
EBITDA should not be construed as a substitute for operating income or a
better indicator of liquidity than cash flows from operating activities,
which are determined in accordance with generally accepted accounting
principles, it is included herein to provide additional information with
respect to the ability of the Company to meet its future debt service,
capital expenditures and working capital requirements. EBITDA is not
necessarily a measure of the Company's ability to fund its cash needs.
EBITDA is included herein because management believes that certain
investors may find it to be useful in measuring the ability to service
debt.
(6) This includes resin price decreases beginning March 1, 1996, the shedding
by JR Flexible of certain low margin business, reduction in waste and cost
reduction efforts. See "The Flexible Packaging Group of James River
Corporation -- Overview of Results of Operations."
(7) Pro forma combined EBITDA before certain charges, which adds back
restructuring charges, severance expense and write-off of equity
investment, would have been $106.9 million, and is provided, in part,
because similar measures are included in the terms of the Indentures and
the New Credit Agreement. Printpack management estimates that additional
savings (not reflected in the pro forma combined statements of operations
or other pro forma data) aggregating approximately $22.8 million can be
achieved as a result of the following:
(A) $7.8 million in anticipated additional savings as a result of the
voluntary retirement program completed by Printpack in fiscal 1996 in
which approximately 160 employees participated and which savings are not
reflected in the Printpack Financial Statements. Total annual savings
are expected to be $9.0 million.
(B) $5.8 million in anticipated additional savings as a result of below
market raw material contracts acquired by Printpack in conjunction with
the Acquisition based on current 1996 volumes, and which savings are not
reflected in the JR Flexible Combined Financial Statements or in the
Printpack Financial Statements. Total annual savings are expected to be
$7.6 million. See "Risk Factors -- Exposure to Fluctuations in Raw
Material Prices."
(C) $9.2 million in anticipated annual savings estimated as a result of the
reduction of approximately 150 JR Flexible salaried plant personnel
expected to occur shortly after the Closing of the Acquisition.
If the above items had occurred at the beginning of Printpack's fiscal
1996, Printpack management estimates that the Company's pro forma combined
EBITDA before certain charges would have been approximately $129,700.
Accordingly, the pro forma ratio of EBITDA before certain charges to
interest expense would have been approximately 2.5x and the ratio of total
debt to EBITDA before certain charges would have been approximately 4.3x.
13
<PAGE> 19
See "Printpack, Inc. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Certain Expenses and Effects of the
Acquisition," for a discussion of certain of these costs savings and
certain charges related to the Acquisition.
(8) The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. For this purpose, "earnings" include operating income (loss)
before income taxes, extraordinary items and cumulative effect of
accounting change plus fixed charges. Fixed charges include interest,
whether expensed or capitalized, amortization of debt expense and discount
or premium relating to any indebtedness, whether expensed or capitalized
and the portion of rental expense that is representative of the interest
factor in these rentals.
(9) For the latest 12 months ended June 30, 1996, the earnings of JR Flexible
were insufficient to cover fixed charges.
(10) Earnings were approximately $9.1 million less than fixed charges on a pro
forma combined basis for the 12 months ended June 30, 1996.
14
<PAGE> 20
PRINTPACK, INC. AND SUBSIDIARIES
THE FLEXIBLE PACKAGING GROUP OF JAMES RIVER CORPORATION
SUMMARY HISTORICAL FINANCIAL DATA
The summary historical financial data presented in the table below have been
derived from the Printpack Financial Statements and the related notes thereto
and the JR Flexible Combined Financial Statements and the related notes thereto
included elsewhere in this Prospectus and should be read in conjunction
therewith. JR Flexible's historical financial data for the six months ended June
25, 1995 and June 30, 1996 are unaudited, but have been prepared on the same
basis as the audited financial statements and, in the opinion of James River
management, include all adjustments, consisting only of normal recurring
entries, necessary for the fair presentation of such statements. See "The
Flexible Packaging Group of James River Corporation Overview of Results of
Operations" and "Printpack, Inc. Management's Discussion and Analysis of
Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE(1)
----------------------------------------------------
PRINTPACK 1992 1993 1994 1995 1996
- -------------------------------------------------------------------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................................................... $361,106 $378,207 $407,272 $454,645 $442,931
Gross margin........................................................ 62,777 65,294 76,927 84,015 79,840
Selling, administrative and research and development expenses....... 38,952 41,319 43,467 49,796 44,581
Restructuring charges............................................... -- -- 4,000 626 --
Severance expense................................................... 880 -- 7,870
Write-off of equity investment...................................... -- -- -- 4,673 200
Income from operations.............................................. 23,825 23,975 28,580 28,920 27,189
Interest expense.................................................... 8,291 8,795 9,505 9,943 10,814
Net income.......................................................... 12,521 16,788 17,110 16,824 13,236
OTHER FINANCIAL DATA:
EBITDA.............................................................. 42,255 45,688 51,735 50,186 52,033
Capital expenditures................................................ 24,214 35,363 23,870 34,800 25,786
Depreciation and amortization....................................... 21,443 20,105 20,581 22,555 24,903
Ratio of earnings to fixed charges(4)(5)............................ 2.2x 2.7x 3.0x 2.6x 2.2x
BALANCE SHEET DATA:
Working capital..................................................... 37,727 9,424 34,110 22,982 9,086
Total assets........................................................ 226,367 202,828 229,168 230,385 231,269
Total debt.......................................................... 96,753 97,436 118,075 122,609 157,138
Shareholders' equity................................................ 81,313 53,905 41,987 32,305 13,460
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER(2) JUNE(3)
------------------------------ -------------------
JR FLEXIBLE 1993 1994 1995 1995 1996
- -------------------------------------------------------------------- -------- -------- -------- -------- --------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................................................... $475,052 $464,517 $486,694 $243,103 $223,432
Gross margin........................................................ 53,632 44,874 26,030 12,108 19,543
Selling, administrative and research and development expenses....... 37,280 37,181 40,304 19,919 17,414
Restructuring charges............................................... -- -- 894 -- --
Severance expense................................................... -- -- 1,200 -- --
Income (loss) from operations....................................... 16,352 7,693 (16,368) (7,811) 2,129
Interest expense(4)................................................. 228 229 245 120 119
Net income (loss)................................................... 16,866 4,687 (10,081) (4,933) 1,255
OTHER FINANCIAL DATA:
EBITDA(4)........................................................... 37,573 30,203 8,260 3,837 15,887
Capital expenditures................................................ 14,307 32,634 49,430 29,800 9,824
Depreciation and amortization....................................... 20,479 21,907 24,125 11,400 13,453
Ratio of earnings to fixed charges(4)(5)............................ 15.6x 8.4x (6) (6) 5.0x
<CAPTION>
BALANCE SHEET DATA: AS OF JUNE 30, 1996
--------
<S> <C> <C> <C>
Working capital..................................................... 69,276 55,937 57,021
Total assets........................................................ 347,971 350,566 346,119
Total debt.......................................................... 2,392 2,392 2,392
Shareholders' equity................................................ 241,141 249,484 247,249
</TABLE>
- ---------------
(1) The Company's fiscal year ends on the last Saturday of June.
(2) Results of operations are for the 52 weeks ended December 26, 1993 and
December 25, 1994 and the 53 weeks ended December 31, 1995.
(3) Results of operations are for the 26 weeks ended June 25, 1995 and June 30,
1996.
(4) Interest expense, EBITDA and the ratio of earnings to fixed charges for JR
Flexible are not necessarily indicative of JR Flexible on a stand-alone
operating basis. See Note 2 to the JR Flexible Combined Financial Statements.
(5) The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. For this purpose, "earnings" include operating income (loss)
before income taxes, extraordinary items and cumulative effect of accounting
change plus fixed charges. Fixed charges include interest, whether expensed
or capitalized, amortization of debt expense and discount or premium relating
to any indebtedness, whether expensed or capitalized and the portion of
rental expense that is representative of the interest factor in these
rentals.
(6) Earnings in these periods were insufficient to cover fixed charges.
15
<PAGE> 21
RISK FACTORS
The following risk factors in addition to the other information included or
incorporated by reference in this Prospectus should be carefully considered in
connection with the Exchange Offer and an investment in the Exchange Notes.
CERTAIN FINANCING CONSIDERATIONS; SIGNIFICANT LEVERAGE
In addition to the initial sale of the Notes, the Company entered into the
New Credit Agreement with First Chicago, as agent, and certain other lenders
selected by First Chicago Capital Markets, Inc. ("FCCM"), which provides the
Company senior secured borrowings of up to $325 million. These New Credit
Facilities include a Term Loan of approximately $170 million and a Revolving
Credit Facility of approximately $155 million, subject to reductions by sales of
accounts receivable pursuant to the Receivables Securitization Facility. The
proceeds of the Notes and a portion of the New Credit Facilities were used to
pay for the Acquisition of JR Flexible. Approximately $146.8 million of the
credit available under the New Credit Facilities was used to repay certain
existing Indebtedness of the Company, and the remaining available balance after
permanent reduction of $50.0 million for the Receivable Securitization Facility
of approximately $51.7 will continue to be used for general corporate purposes,
including working capital. See "Description of Certain Indebtedness -- New
Credit Agreement" and "Receivables Securitization Facility".
Upon the closing (the "Closing") of the Transactions, the Company became
highly leveraged. At June 30, 1996, after giving pro forma effect to the
Transactions, the Company's total long-term debt and shareholder's equity would
have been $554.0 million and $12.2 million, respectively, resulting in a
debt-to-equity ratio of approximately 45.4 to 1. On a pro forma basis, after
giving effect to the Transactions, for fiscal 1996, the Company's earnings to
fixed charges were inadequate to cover its fixed charges by approximately $9.1
million, and the ratio of earnings to fixed charges was 0.8x. Printpack's
leverage could have important consequences to holders of the Exchange Notes,
including, without limitation, the following: (i) the Company's future ability
to obtain additional financing or attractive terms for working capital, capital
expenditures and general corporate purposes may be reduced; (ii) a substantial
portion of the Company's consolidated cash flow from operations must be
dedicated to servicing Company Indebtedness; (iii) the covenants and other
restrictions contained in the Indentures, the New Credit Agreement and otherwise
limit the Company's ability to borrow additional funds or dispose of assets;
(iv) because of debt service requirements, funds available for capital
expenditures will be limited; (v) Indebtedness under the New Credit Agreement
will bear variable interest rates, which, except to the extent hedged through
interest rate protection instruments, will increase the Company's interest
expense if interest rates rise; and (vi) the Company's leverage may make it more
vulnerable to future economic downturns and may limit its ability to withstand
competitive pressures. See "Capitalization;" "Unaudited Pro Forma Condensed
Combined Financial Statements;" "Printpack, Inc. Management's Discussion and
Analysis of Financial Condition and Results of Operations;" and
"Business -- Industry."
Based upon current levels of operations, anticipated improvements in the
former JR Flexible operations and certain cost savings measures, the Company
believes that its cash flows from operations, borrowings under the New Credit
Agreement, sales of accounts receivable under the Receivables Securitization
Facility and other sources of liquidity, will be adequate to meet the Company's
anticipated requirements for working capital, capital expenditures, interest
payments and scheduled principal payments for the foreseeable future. There can
be no assurance, however, that the Company's business will continue to generate
cash flows from operations at or above current levels or that anticipated
improvements in operations and cost savings will be realized. If the Company is
unable to generate sufficient cash flows from operations in the future, it may
be required to refinance all or a portion of its existing debt or to obtain
additional financing. There can be no assurance that any such refinancing would
be possible or that any additional financing could be obtained on terms that are
favorable or acceptable to the Company. See "Printpack, Inc. Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business -- Industry."
16
<PAGE> 22
RESTRICTIVE COVENANTS
The Indentures contain covenants that, among other things, limit the
ability of the Company and its Subsidiaries (as defined herein) to incur
additional Indebtedness, sell assets, or enter into certain mergers and
consolidations. The New Credit Agreement also contains restrictive covenants
that are generally more restrictive than those contained in the Indentures. The
New Credit Agreement and the Senior Note Indenture prohibit the Company from
prepaying its subordinated Indebtedness (including the Senior Subordinated
Notes). The New Credit Agreement further requires the Company to maintain
specified financial ratios and satisfy certain financial tests. The Company's
ability to meet those financial ratios and financial tests can be affected by
events beyond its control, and there can be no assurance that the Company will
meet those ratios and tests. A breach of any of the covenants under the New
Credit Agreement or the Indentures could result in a default under the New
Credit Agreement and/or the Indentures. If an event of default occurs under the
New Credit Agreement, the lenders could elect to declare all amounts outstanding
thereunder, together with accrued interest, to be immediately due and payable.
If the Company is unable to repay those amounts, the lenders could proceed
against the collateral granted to them to secure that Indebtedness.
Substantially all the assets of the Company are pledged as collateral security
under the New Credit Agreement. See "Description of Exchange Notes" and
"Description of Certain Indebtedness -- The New Credit Agreement."
SUBORDINATION OF EXCHANGE SENIOR SUBORDINATED NOTES
The Exchange Senior Subordinated Notes will be general unsecured
obligations of the Company, subordinated in right of payment to all Senior Debt,
which, on a pro forma basis, after giving effect to the Transactions, would have
been $346.7 million on June 30, 1996. Upon payment or distribution of the
Company's assets in a total or partial liquidation, dissolution, reorganization
or similar proceeding of the Company, the holders of the Senior Debt will be
entitled to receive payment in full before the holders of the Exchange Senior
Subordinated Notes are entitled to receive payment thereon. In addition, if any
non-payment default occurs that would permit acceleration of any Designated
Senior Debt (as defined herein), the holders of such Designated Senior Debt may
issue a payment blockage notice prohibiting the Company from making any such
payment in respect of the Exchange Senior Subordinated Notes for up to 179 days
commencing not less than 360 days after a prior payment blockage notice, if any.
The Senior Subordinated Note Indenture provides that the Company may not incur
any additional Indebtedness that is both subordinate in right of payment to any
Senior Debt and senior in right of payment to the Exchange Senior Subordinated
Notes. Additional Senior Debt may be incurred by the Company from time to time
subject to certain restrictions. See "Description of Exchange
Notes -- Subordination of Senior Subordinated Notes."
EFFECTIVE SUBORDINATION OF EXCHANGE SENIOR NOTES
The Exchange Senior Notes will be general unsecured obligations of the
Company ranking senior to all subordinated Indebtedness of the Company,
including the Exchange Senior Subordinated Notes. However, since Indebtedness
under the New Credit Agreement is secured by Liens on substantially all Company
assets, the Company's borrowings under the New Credit Agreement will effectively
rank senior to the Exchange Senior Notes.
FOREIGN OPERATIONS
Prior to the Reorganization, Printpack's operations were conducted
principally in North America and its foreign operations were conducted primarily
through separately chartered affiliates in the U.K. and Mexico. Following the
Reorganization, ownership of Printpack Europe is held by Holdings and
Enterprises, and the Company has no interest therein. As a result of the
Acquisition, Printpack has acquired three Mexican subsidiaries of JR Flexible,
which it plans to combine with its existing Mexican subsidiaries. See
"Prospectus Summary -- The Acquisition, Financing and Related Transactions" and
"Description of Exchange Notes -- Transactions with Affiliates."
Printpack management currently believes that Printpack Europe, which was
separately managed by its U.K. managers, certain of whom have since been
terminated, lost approximately $37.1 million on an
17
<PAGE> 23
unaudited pretax basis for its 1996 fiscal year. These losses resulted from
increased raw material costs and intense price competition in the U.K., as well
as prior Printpack Europe management's failure to properly recognize expenses as
incurred. In December 1994, the Mexican peso was devalued with severe adverse
effects on the Mexican economy and the operations of various multinational
businesses conducted in that country. Sales to the Company's principal Mexican
customer, Sabritas, a Frito-Lay affiliate, declined from $16 million in the
Company's fiscal year ended June 24, 1995 to negligible amounts in the first
half of fiscal 1996. Mexican sales by Printpack rebounded along with the Mexican
economy in the second half of fiscal 1996 to approximately $5 million
(approximately 1% of total Company's sales for fiscal 1996). Sales to Sabritas
are expected to increase, but the timing and amount of such increase, if any,
cannot be predicted, and no assurance can be given as to whether future economic
changes in Mexico will adversely affect the Company. See "Prospectus
Summary -- United Kingdom Affiliates."
POSSIBLE INABILITY TO REPURCHASE EXCHANGE NOTES UPON A CHANGE OF CONTROL
The terms of the New Credit Agreement prohibit the Company from
repurchasing the Exchange Notes upon the occurrence of a Change of Control (as
defined in the Indentures). In addition, since the Company's obligations to
repurchase the Exchange Senior Subordinated Notes upon a Change of Control will
be subordinated to the Company's obligations to repurchase the Exchange Senior
Notes and to repay or repurchase other Senior Debt, in the event of a Change of
Control, no payments may be made with respect to the Exchange Senior
Subordinated Notes until all of the Company's obligations with respect to the
Exchange Senior Notes and such other Senior Debt have been satisfied in full.
Accordingly, the Company may not be able to satisfy its obligations to
repurchase the Exchange Notes unless the Company is able to refinance or obtain
waivers with respect to the New Credit Agreement and certain other Indebtedness,
including, in the case of Exchange Senior Subordinated Notes, the Exchange
Senior Notes. There can be no assurance that the Company will have the financial
resources to repurchase the Exchange Notes in the event of a Change of Control,
particularly if such Change of Control requires the Company to refinance, or
results in the acceleration of, other Indebtedness. See "Description of Exchange
Notes -- Repurchase at the Option of holders."
The Change of Control provisions of the Indentures may not, in all
instances, obligate the Company to repurchase Exchange Notes at the option of
the holder thereof in the event the Company incurs additional leverage through
certain types of recapitalizations, leveraged buy-outs or similar transactions
that could increase the Indebtedness of the Company and/or decrease the value of
the Exchange Notes.
INTEGRATION OF JR FLEXIBLE
The Acquisition substantially increased the Company's assets and
operations. Assets increased approximately 184%, and Printpack estimates that
its sales will approximately double, and the number of employees rose
approximately 125% upon the Closing of the Acquisition. JR Flexible has 10
manufacturing facilities, six of which will continue to have collective
bargaining agreements with their employees after the Acquisition. James River
initiatives to reduce JR Flexible's costs only began in late 1995. There can be
no assurance that sales attributable to JR Flexible's business will not decline
or that the Company will be able to successfully integrate JR Flexible's
business or realize expected cost savings from the combination.
In addition, the Acquisition of JR Flexible and its assimilation into
Printpack will require significant management time and effort to eliminate
redundancies, excess overhead and staff. Certain of these measures include
reorganizing the JR Flexible sales and technical staffs, consolidating certain
JR Flexible plants over the next six to 12 months into existing Printpack
facilities, and reorganizing JR Flexible's manufacturing facilities to operate
more like the Company's plants. Additional staff related to management
information systems and accounting controls will be needed to manage the
expanded operations. Both the timing and realization of cost savings and
business synergies could be affected by numerous factors beyond the Company's
control, including, without limitation, changes in product structures, changes
in customers as a result of acquisitions and divestitures, demographic changes,
changes in customer products and packaging demands, new technology, and raw
materials price changes, and no assurance is given that the Company will achieve
by any particular time, the cost savings and synergies it seeks in the
Acquisition. The Company may
18
<PAGE> 24
lose some sales, at least temporarily, from the closing of certain JR Flexible
plants and the reorganization and consolidation of JR Flexible's operations.
Printpack has announced the closing of two former JR Flexible plants, one in San
Leandro, California, and one in Dayton, Ohio, which closures presently are
expected to be completed by the end of the Company's fiscal year 1997.
CUSTOMER RELATIONSHIPS
The Company is dependent upon a limited number of large customers with
substantial purchasing power for a majority of its sales, and many of such
customers are reducing their number of suppliers. The top 10 customers accounted
for approximately 62% of the Company's total sales in fiscal 1996. Frito-Lay
accounted for approximately 25% of the Company's total sales in fiscal year
1996, and an estimated 13% after giving pro forma effect to the Acquisition. The
end user market for flexible packaging has been consolidating with the larger
end users gaining market share and realizing the highest growth rates. Other end
users have exited the market. For example, in early 1996, Anheuser-Busch
discontinued its Eagle salted snack products. Eagle was the Company's third
largest customer in 1995, and accounted for $25 million and $21 million,
respectively, of Printpack's total sales in fiscal years 1995 and 1996. United
Biscuit recently sold its Keebler brand salted snack and cookie/cracker
operations to different groups, and the Company believes it has lost some
revenue as a result of these changes at this customer. The loss of one or more
major customers, or a material reduction in the sales to such customers would
have a material adverse effect on the Company's results of operations, EBITDA
and cash flows and on its ability to service its Indebtedness. As is customary
in the industry, the Company annually establishes volume estimates with most of
its customers, but generally has no long-term contracts with its customers, and
substantially all such relationships can be terminated on short notice by such
customers. See "Printpack Inc. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Operations" and
"Business -- Customers."
EXPOSURE TO FLUCTUATIONS IN RAW MATERIAL PRICES
Printpack and JR Flexible use large quantities of various raw materials,
including resins and films in the manufacture of their products. While the
Company historically has been able to pass through increases in the costs of
resins and other raw materials to end users, large, abrupt increases in the
price of raw materials could adversely affect the Company's operating margins,
although such adverse effects historically have been only temporary. The Company
has acquired from James River five two-year resin supply contracts which provide
for substantial discounts on resin prices and should result in estimated cost
savings of approximately $7.6 million annually based on current 1996 volumes.
These contracts, which are terminable upon 30 days' notice by either party, may
reduce risks related to resin prices. There is no assurance that a significant
increase in resin or other raw material prices, or a cancellation of one or more
favorable resin supply contracts, would not have an adverse effect on the
Company's business, results of operations and debt service capabilities. See
"Printpack, Inc. Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- Manufacturing Process."
ENVIRONMENTAL MATTERS
The Company and JR Flexible's operations are subject to federal, state and
local environmental laws and regulations that impose limitations on the
discharge of pollutants into the air and water and establish standards for the
treatment, storage and disposal of solid and hazardous wastes. The Company has
made and expects to continue to make additional capital expenditures in response
to changing compliance standards and environmental technology. Furthermore,
unknown contamination of sites currently or formerly owned or operated by the
Company or JR Flexible (including contamination caused by prior owners and
operators of such sites) and off-site disposal of hazardous substances and
wastes may give rise to additional compliance costs. The Company does not have
insurance coverage for environmental liabilities and does not anticipate
obtaining such coverage in the future, although James River has agreed to
indemnify the Company with respect to certain off-site environmental liabilities
related to JR Flexible's operations. There can be no assurance that the Company
will not incur liabilities for environmental matters in the future, including
those
19
<PAGE> 25
resulting from changes in environmental regulations, that may be material to the
Company's results of operations or financial condition. See
"Business -- Environmental Matters and Governmental Regulation."
SEASONALITY
Certain of the end uses for certain of Printpack's products, and, to a
lesser extent, JR Flexible's products, are seasonal. Demand in many snack food
and soft drink markets is generally higher in the spring and summer. As a
result, Company sales and profits are generally higher in the Company's fourth
quarter (ending the last Saturday in June) than in any other quarter during its
fiscal year. See "Printpack, Inc. Management's Discussion and Analysis of
Financial Condition and Results of Operations."
COMPETITION
The markets in which the Company operates are highly competitive on the
basis of price, service, quality and innovation in product structures and
graphics. In addition to several hundred smaller competitors, the Company faces
strong competition from various large flexible packaging companies, including
Bemis, American National Can (a division of Pechiney), Reynolds Metals, Cryovac
(a subsidiary of W.R. Grace), Sonoco Products and Huntsman Packaging (a division
of Huntsman Chemical), which have significantly greater financial, personnel and
other resources than the Company. Although both the Company and JR Flexible have
broad product lines and are continually developing their product structures,
from time to time customers may determine to use alternative product structures
not offered by the Company, with a corresponding reduction in existing and
potential revenues from these customers. See "Business."
ABSENCE OF PUBLIC MARKET FOR THE EXCHANGE NOTES
The Notes are currently owned by a relatively small number of beneficial
owners. The Notes have not been registered under the Securities Act and will
continue to be subject to restrictions on transferability to the extent that
they are not exchanged for the Exchange Notes. The Exchange Notes will
constitute a new issue of securities with no established trading market.
Although the Exchange Notes will generally be permitted to be resold or
otherwise transferred by holders who are not affiliates of the Company without
compliance with the registration requirements under the Securities Act, the
Company does not intend to list the Exchange Notes on any national securities
exchange or for trading on Nasdaq. The Notes are traded through NASD's PORTAL
trading system under the symbol "PRTKNP04" for the Senior Notes and "PRTKNP06"
for the Senior Subordinated Notes. The Company does not intend to list the
Exchange Notes on any national securities exchange or to seek admission thereof
to trading on Nasdaq. Donaldson, Lufkin & Jenrette Securities Corporation has
advised the Company that it has made a market in the Notes, and that it may make
a market in the Notes and the Exchange Notes; however, it is not obligated to do
so and any market-making activity with respect to the Notes and the Exchange
Notes may be discontinued at any time without notice. In addition, such
market-making activity will be subject to the limits imposed by the Securities
Act and the Exchange Act. Accordingly, there is no assurance that an active
public or other market will develop or continue for the Exchange Notes, and it
is expected that the market, if any, that develops for the Exchange Notes will
be similar to the limited market that currently exists for the Notes.
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Notes in exchange for Notes pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
properly completed and duly executed Letters of Transmittal and all other
required documents from holders eligible to participate in the Exchange Offer.
Therefore, holders of the Notes desiring to tender such Notes in exchange for
Exchange Notes should allow sufficient time to ensure timely delivery. The
Company is under no duty to give notification of defects or irregularities with
respect to the tenders of Notes for exchange. Notes that are not tendered or are
tendered but not accepted will, following the consummation of the Exchange
Offer, continue to be subject to the existing restrictions upon transfer thereof
and, upon consummation of the Exchange Offer, the registration rights under the
Registration Rights Agreement generally will terminate. In addition, any holder
of Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received
20
<PAGE> 26
restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale. Each broker-dealer that receives Exchange Notes for
its own account in exchange for Notes, where such Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. To the extent that Notes are tendered
and accepted in the Exchange Offer, the trading market for untendered and
tendered but unaccepted Notes could be adversely affected. See "The Exchange
Offer."
USE OF PROCEEDS
The Company will not receive any proceeds from the issuance of the Exchange
Notes pursuant to the Exchange Offer. The net proceeds to Printpack from the
sale of the Notes were approximately $289.0 million (after deducting estimated
expenses and commissions), all of which was applied to the purchase price for JR
Flexible. See "Prospectus Summary -- The Acquisition, Financing and Related
Transactions;" "Capitalization;" "Printpack, Inc. Management's Discussion and
Analysis of Financial Condition and Results of Operations;" and Note 5 to the
Company's Financial Statements.
21
<PAGE> 27
CAPITALIZATION
(UNAUDITED)
The following table sets forth the capitalization of Printpack and JR
Flexible at June 30, 1996, and of Printpack as adjusted to give pro forma effect
to the consummation of the (i) Acquisition and (ii) Offering and the New Credit
Agreement and the application of the proceeds therefrom as described under "Use
of Proceeds." The information in the table below is qualified in its entirety
by, and should be read in conjunction with, the Printpack Financial Statements
and the JR Flexible Combined Financial Statements and the related notes included
elsewhere herein.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
------------------------------------
HISTORICAL HISTORICAL PRO FORMA
PRINTPACK JR FLEXIBLE COMBINED
---------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt and notes payable............ $ 36,129 $ -- $ --
Long-term debt, excluding current maturities
Existing credit facility..................................... 10,000 -- --
Existing notes payable....................................... 100,625 -- --
New Credit Agreement and Receivables Securitization
Facility(1)............................................... -- -- 246,654
9 7/8% Senior Notes due 2004................................. -- -- 100,000
10 5/8% Senior Subordinated Notes due 2006................... -- -- 200,000
Existing subordinated notes(2)............................... 10,384 -- 10,384
Other debt................................................... -- 2,392 --
-------- -------- --------
Total long-term debt................................. 121,009 2,392 554,038
Total shareholders' equity........................... 13,460 247,249 12,160(3)
-------- -------- --------
Total capitalization................................. $ 170,598 $ 249,641 $ 566,198
======== ======== ========
</TABLE>
- ---------------
(1) For purposes hereof, the Company has shown the proceeds received from the
Receivables Securitization Facility as "debt" but intends to treat these as
proceeds from the sale of receivables rather than as a financing. For a
description of the New Credit Agreement and the Receivables Securitization
Facility, see "Description of Certain Indebtedness -- New Credit Agreement
and "Receivables Securitization Facility."
(2) For a description of the existing subordinated notes, see "Description of
Certain Indebtedness -- Shareholder Notes."
(3) Total shareholders' equity has been reduced by the $1.3 million expense of
early extinguishment of debt. All of JR Flexible's equity will be
eliminated as a result of the Acquisition being accounted for under the
purchase method of accounting.
22
<PAGE> 28
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The Unaudited Pro Forma Condensed Combined Statements of Operations for the
12 months ended June 30, 1996 present the pro forma combined results of
operations of the Company and JR Flexible as if the Transactions had occurred on
July 1, 1995. The Unaudited Pro Forma Condensed Combined Financial Statements do
not purport to present the actual financial position or results of operations of
the Company had the Transactions and events assumed therein in fact occurred on
the dates specified, nor are they necessarily indicative of the results of
operations that may be achieved in the future. The Unaudited Pro Forma Condensed
Combined Balance Sheet at June 30, 1996 presents the pro forma combined
financial position of the Company and JR Flexible as if the Transactions had
occurred on that date. Pro forma adjustments are applied to the historical
consolidated financial statements of the Company to account for the
Transactions. The Acquisition has been accounted for using the purchase method
of accounting. Under purchase accounting, the total purchase cost has been
allocated to the assets acquired and the liabilities assumed based on their
relative fair values. Printpack management is obtaining final appraisals of JR
Flexible's assets and liabilities. The allocation noted above is subject to
change based upon receipt of such final appraisals. Additional adjustments to
Printpack's Acquisition balance sheet will be made to reflect reserves to be
established after Closing for other cost reduction measures by Printpack with
respect to former JR Flexible operations, and to reflect additional matters that
are subject to continuing negotiations between the Company and James River. See
"Prospectus Summary -- The Company" and "Printpack, Inc. Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Certain
Expenses and Effects of the Acquisition."
The data for JR Flexible for the 26 weeks ended June 30, 1995 and 1996 are
derived from the unaudited JR Flexible Combined Financial Statements included
elsewhere herein, which in the opinion of James River management, include all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation of the results of operations for such interim periods. The results
of operations of JR Flexible for the 26 weeks ended June 30, 1996 are not
necessarily indicative of results that may be expected for 1996, nor are the pro
forma amounts and ratios necessarily indicative of results of operations or
combined financial position that would have resulted had the Transactions been
consummated at the beginning of the period indicated.
The Unaudited Pro Forma Condensed Combined Financial Statements also are
based on certain assumptions and adjustments described in the notes to the
Unaudited Pro Forma Condensed Combined Financial Statements, contain certain
forward-looking statements and should be read in conjunction therewith and with
"Prospectus Summary -- The Acquisition, Financing and Related Transactions" and
"-- Special Cautionary Notice Regarding Forward-Looking Statements;" "Summary
Unaudited Pro Forma Condensed Combined Financial Data;" "Summary Historical
Financial Data;" "Capitalization;" "Risk Factors;" "The Flexible Packaging Group
of James River Corporation Overview of Results of Operations;" "Printpack, Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations;" and the Printpack Financial Statements and the JR Flexible Combined
Financial Statements and the related notes thereto included elsewhere in this
Prospectus.
23
<PAGE> 29
PRINTPACK, INC. AND SUBSIDIARIES
THE FLEXIBLE PACKAGING GROUP OF JAMES RIVER CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1996
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
PRINTPACK(1) JR FLEXIBLE(2) ADJUSTMENTS COMBINED
------------ -------------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash...................................... $ 242 $ -- $ 3,000(3) $ 3,242
Accounts receivable....................... 35,742 30,303 -- 66,045
Inventory................................. 34,831 56,429 12,475(3) 103,735
Prepaids and other current assets......... 13,892 6,086 (3,934)(4) 16,044
-------- -------- --------- --------
Total current assets............ 84,707 92,818 11,541 189,066
Property, plant and equipment, net........ 137,628 228,681 43,328(3) 409,637
Other assets.............................. 8,317 12,225 -- 20,542
Intangibles............................... 617 12,395 40,780(3) 53,792
-------- -------- --------- --------
Total assets.................... $231,269 $346,119 $ 95,649 $ 673,037
======== ======== ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities............................. 33,506 35,797 -- 69,303
Accrued severance......................... 5,986 -- 4,300(5) 10,286
Current portion of long-term debt......... 36,129 -- (36,129)(6) --
-------- -------- --------- --------
Total current liabilities....... 75,621 35,797 (31,829) 79,589
Other long-term liabilities............... 21,179 20,046 (16,975)(4) 24,250
Deferred taxes............................ -- 40,635 (40,635)(4) --
LONG-TERM DEBT:
Existing credit facility.................. 10,000 -- (10,000)(6) --
Existing notes payable.................... 100,625 -- (100,625)(6) --
New Credit Agreement and Receivables
Securitization Facility................. -- -- 246,654(7) 246,654
9 7/8% Senior Notes due 2004.............. -- -- 100,000(7) 100,000
10 5/8% Senior Subordinated Notes due
2006.................................... -- -- 200,000(7) 200,000
Existing Subordinated Notes............... 10,384 -- -- 10,384
Other debt................................ -- 2,392 (2,392)(4) --
-------- -------- --------- --------
Total long-term debt............ 121,009 2,392 433,637 557,038
Total shareholders' equity...... 13,460 247,249 (247,249)(4)
(1,300)(8) 12,160
Total liabilities and
shareholders' equity.......... $231,269 $346,119 $ 95,649 $ 673,037
======== ======== ========= ========
</TABLE>
- ---------------
(1) Represents the financial position at June 29, 1996.
(2) Represents the financial position at June 30, 1996.
24
<PAGE> 30
(3) Represents the excess purchase price over net assets acquired which will be
allocated among inventory, net property, plant and equipment, and
intangible assets based upon appraisals plus $3.0 million of cash proceeds
of the financing of the Transactions. The total purchase price for the
Acquisition consists of:
<TABLE>
<S> <C>
Cash paid for JR Flexible..................................... $372.5 million
Liabilities assumed........................................... 43.2 million
Transaction costs............................................. 23.1 million
---------------
$438.8 million
===============
</TABLE>
The foregoing preliminary purchase price allocation is based on available
information and certain assumptions the Company considers reasonable. The
final purchase price allocation will be based upon a final determination of
the fair values of the net assets acquired at the date of the Acquisition
as determined by valuation. The final purchase price allocation may differ
significantly from the preliminary allocation. Additional adjustments to
Printpack's balance sheet will be made to reflect reserves to be
established after Closing for cost reduction measures by Printpack with
respect to former JR Flexible operations. See "Prospectus Summary -- The
Company" and "Printpack, Inc. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Certain Expenses and
Effects of the Acquisition."
(4) Elimination of liabilities not assumed or assets not acquired in the
Acquisition and the elimination of JR Flexible's equity balance.
(5) Represents an assumed liability related to costs of involuntary termination
of certain Milford employees by JR Flexible and the planned termination of
certain other JR Flexible employees by Printpack.
(6) Represents elimination of existing indebtedness outstanding at June 30,
1996.
(7) Represents the gross proceeds received from the New Credit Facility, the
Notes and the Receivable Securitization Facility. See "Capitalization,
footnote (1)."
(8) Represents a decrease to shareholders' equity due to the incurrence of a
$1.3 million expense on early extinguishment of indebtedness.
[The remainder of this page left blank intentionally]
25
<PAGE> 31
PRINTPACK, INC. AND SUBSIDIARIES
THE FLEXIBLE PACKAGING GROUP OF JAMES RIVER CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE 12 MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL JR PRO FORMA PRO FORMA
PRINTPACK(1) FLEXIBLE(2) ADJUSTMENTS COMBINED
--------- ----------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales.................................. $ 442,931 $ 467,023 $ -- $ 909,954
Cost of goods sold......................... 363,091 433,558 2,116(3) 798,765
-------- -------- ------- --------
Gross margin............................... 79,840 33,465 (2,116) 111,189
Selling, administrative and research and
development expenses..................... 44,581 37,799 (24,415)(4) 57,965
Restructuring charges...................... -- 894 894
Severance expense.......................... 7,870 1,200 9,070
Write-off of equity investment............. 200 -- 200
Income (loss) from operations.............. 27,189 (6,428) 43,060
Interest expense........................... 10,814 244 (9,916)(5) 52,337
51,195(6)
Net income (loss)(7)....................... $ 13,236 $ (3,893) $ 1,390(8) $ (8,776)
OTHER FINANCIAL DATA:
EBITDA(9).................................. 52,033 20,310(10) 96,758
EBITDA before certain charges(11).......... 59,993 21,844 106,922
Adjusted EBITDA as a % of net sales(11).... 14.2%
Capital expenditures....................... 25,786 29,454 55,240
Depreciation and amortization.............. 24,903 26,178 2,116(3) 53,197
RATIOS:
Ratio of EBITDA to interest expense(9)..... 1.8x
Ratio of EBITDA before certain charges to
interest expense(11)..................... 2.0x
Ratio of total debt to EBITDA before
certain
charges(11).............................. 5.2x
Ratio of earnings to fixed charges(12)..... 2.2x (13) 0.8x(14)
</TABLE>
- ---------------
(1) Results of operations are for the 53 weeks ended June 29, 1996.
(2) Results of operations are for the 53 weeks ended June 30, 1996.
(3) Depreciation of new fair value basis in property and equipment using an
estimated useful life of 31 years for buildings and site improvements; a
useful life of eight years for machinery and equipment; and amortization of
intangibles acquired using a 15 year life.
(4) Reflects estimated cost savings of $17.1 million as a result of the
elimination of duplicative Milford headquarters, pilot plant, as well as
redundant salesforce and technical personnel, which sales and technical
personnel reductions have been initiated by James River pursuant to the
Acquisition Agreement. Also reflects estimated cost savings of $7.3 million
as a result of the elimination of JR Flexible corporate overhead.
(5) Eliminates interest expense on existing indebtedness which will be repaid
as part of the Transactions.
26
<PAGE> 32
(6) Reflects changes to interest expense and amortization of debt issuance
costs as a result of the Acquisition:
<TABLE>
<S> <C>
Interest on borrowings under New Credit Facility assuming an
interest rate of 7.0%......................................... $17,056,000
Interest on borrowings under Senior Notes assuming an interest
rate of 9 7/8%................................................ 9,875,000
Interest on borrowings under Senior Subordinated Notes assuming
an interest rate of 10 5/8%................................... 21,250,000
Amortization of debt issuance costs on New Credit Facility and
Notes......................................................... 3,014,000
-----------
Total................................................. $51,195,000
===========
</TABLE>
(7) Note that the pro forma results do not reflect a nonrecurring charge of
approximately $1.3 million for early extinguishment of the existing
indebtedness.
(8) Eliminates historical income tax provision. Due to a pro forma net loss, no
pro forma income tax provision will be presumed.
(9) EBITDA represents net income (loss) before interest expense, taxes,
depreciation and amortization, but after deductions for restructuring
charges, severance expense and write-off of equity investment. While EBITDA
should not be construed as a substitute for operating income or a better
indicator of liquidity than cash flows from operating activities, which are
determined in accordance with generally accepted accounting principles, it
is included herein to provide additional information with respect to the
ability of the Company to meet its future debt service, capital
expenditures and working capital requirements. EBITDA is not necessarily a
measure of the Company's ability to fund its cash needs. EBITDA is included
herein because Company management believes that certain investors may find
it to be useful in measuring the Company's ability to service debt.
(10) This includes resin price decreases beginning March 1, 1996, the shedding
by JR Flexible of certain low margin business, reductions in waste and cost
reduction efforts. See "The Flexible Packaging Group of James River
Corporation -- Overview of Results of Operations."
(11) Pro forma combined EBITDA before certain charges, which adds back
restructuring charges, severance expense and write-off of equity
investment, would have been $106.9 million, and is provided, in part,
because similar measures are included in the terms of the Indentures and
the New Credit Agreement. Printpack management estimates that additional
savings (not reflected in the pro forma combined statements of operations
or other pro forma data) aggregating approximately $22.8 million can be
achieved as a result of the following:
(A)$7.8 million in anticipated additional savings as a result of the
voluntary retirement program completed by Printpack in fiscal 1996 in
which approximately 160 employees participated which savings are not
reflected in the Printpack Financial Statements; total annual savings
are expected to be $9.0 million.
(B)$5.8 million in anticipated additional savings as a result of favorable
raw material contracts acquired by Printpack in conjunction with the
Acquisition based on current 1996 volumes, which savings are not
reflected in the JR Flexible Combined Financial Statements or in the
Printpack Financial Statements; total annual savings are expected to be
$7.6 million. See "Risk Factors -- Exposure to Fluctuations in Raw
Material Prices."
(C)$9.2 million in anticipated annual savings estimated as a result of the
reduction of approximately 150 JR Flexible salaried plant personnel
expected to occur shortly after the Closing of the Acquisition.
If the above items had occurred at the beginning of Printpack's fiscal
1996, Printpack management estimates that the Company's pro forma
combined EBITDA before certain charges would have been approximately
$129,700. Accordingly, the pro forma ratio of EBITDA before certain
charges to interest expense would have been approximately 2.5x and the
ratio of total debt to EBITDA before certain charges would have been
approximately 4.3x.
27
<PAGE> 33
See "Printpack, Inc. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Certain Expenses and Effects of the
Acquisition" for a discussion of certain of these cost savings and certain
charges related to the Acquisition.
(12) The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. For this purpose, "earnings" include operating income (loss)
before income taxes, extraordinary items and cumulative effect of
accounting change plus fixed charges. Fixed charges include interest,
whether expensed or capitalized, amortization of debt expense and discount
or premium relating to any indebtedness, whether expensed or capitalized
and the portion of rental expense that is representative of the interest
factor in these rentals.
(13) Earnings in this period were insufficient to cover fixed charges.
(14) Earnings were approximately $9.1 million less than fixed charges on a pro
forma combined basis for the 12 months ended June 30, 1996.
28
<PAGE> 34
PRINTPACK, INC. AND SUBSIDIARIES
SELECTED HISTORICAL FINANCIAL DATA
The selected historical financial data of Printpack set forth below have
been derived from (i) the Company's audited combined financial statements as of
and for the year ended June 27, 1992 and (ii) the Company's audited financial
statements as of and for the years ended June 26, 1993, June 25, 1994, June 24,
1995 and June 29, 1996. The following selected financial data should be read in
conjunction with the Company's Financial Statements and related notes thereto
included elsewhere in this Prospectus and "Printpack Inc. Management's
Discussion and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE(1)
----------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................................... $361,106 $378,207 $407,272 $454,645 $442,931
Cost of goods sold.......................... 298,329 312,913 330,345 370,630 363,091
Gross margin................................ 62,777 65,294 76,927 84,015 79,840
Selling, administrative and research and
development expenses...................... 38,952 41,319 43,467 49,796 44,581
Restructuring charges....................... -- -- 4,000 626 --
Severance expense........................... -- -- 880 -- 7,870
Write-off of equity investment.............. -- -- -- 4,673 200
Income from operations...................... 23,825 23,975 28,580 28,920 27,189
Interest expense............................ 8,291 8,795 9,505 9,943 10,814
Other income (expense)...................... (469) 1,777 2,743 (779) 110
Amortization of intangible assets........... 2,544 169 169 169 169
Income before provision for income taxes.... 12,521 16,788 21,649 18,029 16,316
Provision for income taxes.................. -- -- 4,539 864 3,080
Income before cumulative effect of a change
in accounting principle................... 12,521 16,788 17,110 17,165 13,236
Net income.................................. 12,521 16,788 17,110 16,824 13,236
OTHER FINANCIAL DATA:
EBITDA...................................... 42,255 45,688 51,735 50,186 52,033
Capital expenditures........................ 24,214 35,363 23,870 34,800 25,786
Depreciation and amortization............... 21,443 20,105 20,581 22,555 24,903
Ratio of earnings to fixed charges(2)....... 2.2x 2.7x 3.0x 2.6x 2.2x
BALANCE SHEET DATA:
Working capital............................. 37,727 9,424 34,110 22,982 9,086
Total assets................................ 226,367 202,828 229,168 230,385 231,269
Total debt.................................. 96,753 97,436 118,075 122,609 157,138
Shareholders' equity........................ 81,313 53,905 41,987 32,305 13,460
</TABLE>
- ---------------
(1) The Company's fiscal year ends on the last Saturday of June.
(2) The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. For this purpose, "earnings" include operating income (loss)
before income taxes, extraordinary items and cumulative effect of an
accounting change plus fixed charges. Fixed charges include interest,
whether expensed or capitalized, amortization of debt expense and discount
or premium relating to any indebtedness, whether expensed or capitalized
and the portion of rental expense that is representative of the interest
factor in these rentals.
29
<PAGE> 35
THE FLEXIBLE PACKAGING GROUP OF JAMES RIVER CORPORATION
SELECTED HISTORICAL FINANCIAL DATA
The selected historical financial data of JR Flexible set forth below have
been derived from The Flexible Packaging Group of James River Corporation's (i)
audited combined financial statements as of and for the year ended December 26,
1993, (ii) audited combined financial statements as of and for the years ended
December 31, 1994 and 1995 and (iii) combined financial statements as of and for
the periods ended June 25, 1995 and June 30, 1996, which are unaudited, but
which have been prepared on the same basis as the audited financial statements
and, in the opinion of James River management, contain all adjustments,
consisting only of normal recurring adjustments, which in the opinion of James
River management are necessary for the fair presentation of such statements. The
following selected financial data should be read in conjunction with the JR
Flexible Combined Financial Statements and related notes thereto included
elsewhere in this Prospectus and "The Flexible Packaging Group of James River
Corporation Overview of Results of Operations."
JR FLEXIBLE
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
DECEMBER(1) JUNE(2)
------------------------------ -------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................................... $475,052 $464,517 $486,694 243,103 223,432
Cost of goods sold.......................... 421,420 419,643 460,664 230,995 203,889
Gross margin................................ 53,632 44,874 26,030 12,108 19,543
Selling, administrative and research and
development expenses...................... 37,280 37,181 40,304 19,919 17,414
Restructuring charges....................... -- -- 894 -- --
Severance expense........................... -- -- 1,200 -- --
Income (loss) from operations............... 16,352 7,693 (16,368) (7,811) 2,129
Interest expense(4)......................... 228 229 245 120 119
Other income (expense)...................... 742 603 503 248 305
Income (loss) before provision for income
taxes..................................... 16,866 8,067 (16,110) (7,683) 2,315
Provision (benefit) for income taxes........ 6,745 3,380 (6,029) (2,750) 1,060
Income (loss) before cumulative effect of a
change in accounting principle............ 10,121 4,687 (10,081) (4,933) 1,255
Net income (loss)........................... 10,121 4,687 (10,081) (4,933) 1,255
OTHER FINANCIAL DATA:
EBITDA(4)................................... 37,573 30,203 8,260 3,837 15,887
Capital expenditures........................ 14,307 32,634 49,430 29,800 9,824
Depreciation and amortization............... 24,079 21,907 24,125 11,400 13,453
Ratio of earnings to fixed charges(3)(4).... 15.6x 8.4x (5) (5) 5.0x
<CAPTION>
AS OF JUNE 30, 1996
-------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....................................... 69,276 55,937 57,021
Total assets.......................................... 347,971 350,566 346,119
Total debt............................................ 2,392 2,392 2,392
Shareholders' equity.................................. 241,141 249,484 247,249
</TABLE>
- ---------------
(1) Results of operations are for the 52 weeks ended December 26, 1993 and
December 25, 1994, and for the 53 weeks ended December 31, 1995.
(2) Results of operations are for the 26 weeks ended June 25, 1995 and June 30,
1996.
(3) The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. For this purpose, "earnings" include operating income (loss)
before income taxes, extraordinary items and cumulative effect of an
accounting change plus fixed charges. Fixed charges include interest,
whether expensed or capitalized, amortization of debt expense and discount
or premium relating to any indebtedness, whether
30
<PAGE> 36
expensed or capitalized and the portion of rental expense that is
representative of the interest factor in these rentals.
(4) Interest expense, EBITDA and ratio of earnings to fixed charges for JR
Flexible are not necessarily indicative of JR Flexible on a stand-alone
operating basis. See Note 2 to the JR Flexible Combined Financial
Statements.
(5) Earnings in these periods were insufficient to cover fixed charges.
31
<PAGE> 37
THE FLEXIBLE PACKAGING GROUP OF JAMES RIVER CORPORATION
OVERVIEW OF RESULTS OF OPERATIONS
JR Flexible's gross margin and selling, administrative and research and
development expenses (collectively, "Operating Expenses") are not comparable to
Printpack's due to differences in the way in which James River has categorized
certain expenses. For example, JR Flexible's cost of goods sold includes all
expenses for personnel located at plants, including customer service
representatives, controllers, human resource personnel, and data processing
employees, while these expenses are categorized as selling and administrative
expenses at Printpack, regardless of the location of such personnel.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 25, 1995
Net Sales
For the six month period ended June 30, 1996 ("Six Months 1996"), net sales
decreased $19.7 million (8.1)% to $223.4 million from $243.1 million for the six
month period ended June 25, 1995 ("Six Months 1995"). This decrease in net sales
resulted from proactive efforts by JR Flexible to shed low margin business which
tends to require a disproportionate level of fixed support costs. Concurrently,
JR Flexible has focused on penetrating new markets with higher value-added and
improved margin products. The decrease in net sales also reflects lower sales
prices due to the decline in average resin pricing in Six Months 1996 versus Six
Months 1995.
Gross Margin
Gross margin for Six Months 1996 increased $7.4 million (61.2%) to $19.5
million from $12.1 million for Six Months 1995. Gross margin as a percentage of
net sales for Six Months 1996 improved to 8.7% from 5.0% for Six Months 1995.
This improvement reflects a more favorable relationship of prevailing market
sales prices to raw material costs and more favorable resin contracts entered
into on March 1, 1996. In addition, gross margin was improved by reductions in
waste and the shedding of lower margin business.
Operating Expenses
Operating Expenses for Six Months 1996 decreased $2.5 million or 12.6% to
$17.4 million from $19.9 million for Six Months 1995. Operating Expenses as a
percentage of net sales decreased for Six Months 1996 to 7.8% from 8.2% for Six
Months 1995. Operating Expenses decreased due to a reduction in consulting fees
related to certain projects, headcount attrition at the Milford headquarters and
a focus on reducing discretionary expenses.
Operating Income
The lag in passing along resin price decreases, shedding of lower margin
business, improved production efficiencies and continued cost containment
resulted in operating income for Six Months 1996 of $2.1 million compared to a
loss of $7.8 million for Six Months 1995.
Fiscal Year 1995 Compared to Fiscal Year 1994
Net Sales
Net sales increased by 4.8% to $486.7 million for fiscal 1995 as compared
to $464.5 million for fiscal 1994. An increase in sales prices occurred
partially as a result of raw material cost increases being passed on to
customers. Increases in sales were offset slightly in 1995, as a result of
proactive efforts to shed low margin business late in that fiscal year.
Gross Margin
Gross margin for fiscal 1995 decreased $18.8 million or 42.0% to $26.0
million from $44.9 million for fiscal 1994. Gross margin as a percentage of net
sales for fiscal 1995 declined significantly to 5.3% from 9.7%
32
<PAGE> 38
for fiscal 1994. This decline resulted from the continued steep increases early
in the year in raw material costs (primarily resins). Although JR Flexible was
successful in passing along a portion of these increases to its customers, such
increases in sales prices were insufficient to offset the negative effects of
the increase in raw material costs. Costs of waste in fiscal 1995 were estimated
to be approximately 10% higher than fiscal 1994, but are currently being
addressed by JR Flexible through mix refinement and concentration of
manufacturing resources.
Operating Expenses
Operating Expenses for fiscal 1995 increased $3.1 million or 8.4% to $40.3
million from $37.2 million for fiscal 1994. Operating Expenses as a percentage
of net sales remained relatively flat at 8.3% for fiscal 1995 and at 8.0% for
fiscal 1994.
Operating Income
Income from operations decreased from $7.7 million in fiscal 1994 to a loss
of $16.4 million in fiscal 1995 as a result of the decline in gross margin, an
increase in Operating Expenses and $2.1 million of restructuring and severance
expenses.
33
<PAGE> 39
PRINTPACK, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following is a discussion and analysis of the results of operations and
financial condition of Printpack for periods prior to the completion of the
Transactions, and accordingly does not reflect the significant effects of such
Transactions on the Company. This discussion should be read in conjunction with
the audited financial statements of Printpack and the notes thereto included
elsewhere herein. The following also contains certain forward-looking statements
that involve risks and uncertainties, and the Company's results following the
Closing of the Transactions could differ materially from those discussed herein.
See "Prospectus Summary -- The Acquisition, Financing and Related Transactions"
and "-- Special Cautionary Notice Regarding Forward-Looking Statements;" "Risk
Factors;" and "Business."
CERTAIN EXPENSES AND EFFECTS OF THE ACQUISITION
During the four months ended June 29, 1996, Printpack conducted a voluntary
retirement and severance program at its corporate headquarters and manufacturing
facilities to reduce expenses. This program included approximately 160
employees, and resulted in a $7.9 million one-time severance charge. Management
estimates that payroll and associated expenses related to such employees will be
reduced by approximately $9.0 million annually, approximately $1.2 million of
which was realized in the last four months of fiscal 1996.
Following the Acquisition, Printpack plans substantial reductions in
operating expenses, which may result in charges in addition to those described
herein. In particular, Printpack management estimates that a significant portion
of savings will be derived from the following:
Resin Contracts
On March 1, 1996, JR Flexible began to benefit from five favorable resin
supply contracts which provide substantial discounts on resin purchases. These
contracts, which are terminable upon 30 days' notice by either party, are
expected, following the Acquisition, to save the combined Company an estimated
$7.6 million annually through their scheduled expiration in March 1998.
Headcount Reduction Program
As part of the Acquisition, Printpack expects to realize cost savings of
approximately $24.4 million from the elimination of certain expenses related to
JR Flexible's headquarters, which Printpack is not purchasing, the elimination
of redundant sales force and technical personnel and the elimination of certain
corporate overhead. The headcount reduction will result in a one-time
reimbursement of approximately $1.6 million to James River at the Closing of the
Acquisition. In addition, Printpack management plans to reduce the salaried
headcount at certain of JR Flexible's plants by approximately 150 employees
shortly after the Closing of the Transactions. This will reduce the excess
salaried staff at such plants, and eliminate duplicative staffing. However, a
few additional staff personnel will be added to implement Printpack's financial
systems and operating procedures. Management estimates that such headcount
reductions will reduce salary and employee benefit expenses by approximately
$9.2 million annually. Such reduction will result in a one-time severance
payment of approximately $2.7 million. See "Risk Factors -- Integration of JR
Flexible;" "-- Exposure to Fluctuation in Raw Material Prices" and "Unaudited
Pro Forma Condensed Combined Statements of Operations."
The following discussion is based on the historical financial capital
structure of the Company without regard to the effects of the Acquisition. The
Acquisition is being accounted for using the purchase method. As a result, the
Company expects to record expenses for depreciation and amortization that are in
excess of historical levels for the Company, as well as reserves for cost
reduction matters that will be adjustments to the Acquisition balance sheet. In
addition, the results of operations of the Company, as compared with historical
results, will be significantly affected by the substantial increase in the
Company's outstanding Indebtedness in connection with the financing of the
Acquisition, including interest charges on the Indebtedness incurred
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under the New Credit Agreement and the Notes and the costs associated with the
Receivables Securitization Facility. The New Credit Agreement and the Notes will
include various affirmative, negative and financial covenants with which the
Company must comply, including but not limited to, the maintenance of certain
financial ratios, and limitations on the incurrence of additional Indebtedness
and the payment of dividends.
RESULTS OF OPERATIONS
Fiscal Year 1996 Compared to Fiscal Year 1995
Net Sales
Net sales decreased $11.7 million (2.6%) to $442.9 million in fiscal 1996
from $454.6 million in fiscal 1995, despite sales to most customers increasing.
Part of this decrease is attributable to strong sales in fiscal 1995, and to
reduced sales in fiscal 1996 to three leading customers resulting from
circumstances unrelated to the Company. In February 1996, Anheuser-Busch
announced the closing of its Eagle Snacks division and the sale of most of its
fixed assets to Frito-Lay. Printpack had been the exclusive flexible packaging
supplier to Eagle Snacks, which was one of the Company's largest customers and
accounted for $21 million of sales in fiscal 1996, down from $25 million in
fiscal 1995. Although Eagle Snacks no longer exists, Printpack management
believes that Eagle Snacks' sales ultimately will be absorbed by the salted
snack industry's other participants, including Frito-Lay, one of Printpack's
largest customers. Keebler's salted snack foods were sold by United Biscuit, plc
in November 1995 to an investor group with a regional focus compared to
Keebler's national sales program. Although Printpack has continued to supply
packaging to Keebler's cookie/cracker business, the reduced scope of this salted
snack business negatively affected Printpack's fiscal 1996 sales. Finally,
Printpack experienced a decline of approximately 70% in its business with
Mexican customers, especially Sabritas, a Frito-Lay subsidiary, in fiscal 1996
versus fiscal 1995 due to the devaluation of the peso and the subsequent Mexican
recession. In addition, a decline in average raw materials prices in fiscal 1996
that was reflected in lower selling prices, also contributed to this decline in
dollar sales. See "Risk Factors -- Foreign Operations;" "-- Customer
Relationships" and "-- Exposure to Fluctuation in Raw Materials Prices."
Gross Margin
Gross margin in fiscal 1996 decreased $4.2 million (5.0%) to $79.8 million
from $84.0 million in fiscal 1995. Gross margin as a percentage of net sales in
fiscal 1996 decreased slightly to 18.0% compared to 18.5% in fiscal 1995. The
decreases in gross margin and gross margin as a percentage of net sales resulted
primarily from the underabsorption of manufacturing fixed costs and overhead
caused by the loss of business from Eagle Snacks, Keebler and Sabritas and the
underutilization of new capacity added in fiscal 1995 at the Rhinelander and
Grand Prairie plants, offset by approximately $6.0 million of reduced EVA Plan
(as defined herein) expense. See "-- Liquidity and Capital Resources" and
"Management -- Incentive and Deferred Compensation."
Operating Expenses
Operating Expenses in fiscal 1996 decreased $5.2 million (10.5%) to $44.6
million from $49.8 million in fiscal 1995. Operating Expenses as a percentage of
net sales decreased from 10.1% of net sales in fiscal 1996 compared to 11.0% in
fiscal 1995. These decreases were due primarily to $6.0 million of reductions in
EVA Plan expense, $1.2 million due to the partial year benefit resulting from
Printpack's headcount reduction program begun in March 1996 and $0.7 million of
reduced profit sharing expense, offset by normal pay increases.
Certain Charges
In fiscal 1996, the Company took a non-recurring charge of approximately
$7.8 million related to severance of approximately 160 employees located at its
manufacturing and corporate headquarters facilities. The Company also wrote-off
in fiscal 1996 approximately $0.2 million of investments in an unaffiliated
company. In fiscal 1995, the Company realized a non-recurring charge of
approximately $4.7 million related to
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the Company's debt guarantee on behalf of an unaffiliated company attempting to
develop and market new packaging technology, which guarantee subsequently was
terminated. There are no other guarantees related to this unaffiliated company.
In fiscal 1995, an additional charge of $0.6 million was recognized on the 1994
sale of the Company's Cincinnati, Ohio plant to Orflex, Ltd. a limited liability
partnership ("Orflex").
Operating Income
Income from operations decreased $1.7 million (6.0%) to $27.2 million in
fiscal 1996 from $28.9 million in fiscal 1995, primarily as a result of the
decrease in net sales, and the charges taken in fiscal 1996 and the other
changes described above.
Other Income and Expense
Interest expense in fiscal 1996 increased by $0.9 million to $10.8 million
compared to $9.9 million in fiscal 1995 due to a larger average amount of
indebtedness outstanding in fiscal 1996. The Company's undistributed loss in
Orflex increased from $(0.3) million in 1995 to $(1.1) million in 1996,
reflecting additional losses at that unit. Other expense of $0.5 million in
fiscal 1995 became income of $1.2 million in fiscal 1996, primarily as a result
of the Company receiving the proceeds of insurance when a former shareholder
died.
As a result of the foregoing, income before provision for income taxes
declined 9.5% from $18.0 million in fiscal 1995 to $16.3 million in fiscal 1996.
The provisions for income taxes increased 256.5% from $0.9 million in fiscal
1995 to $3.0 million in fiscal 1996 owing to a deferred credit in fiscal 1995
that related primarily to the fact that incentive compensation expenses are
recognized at different times for financial reporting and tax purposes. The
current portion of income tax expense decreased 49.2% from $5.9 million in
fiscal 1995 to $3.0 million in fiscal 1996 because of reduced income. Deferred
income taxes declined from $5.1 million in fiscal 1995 to $.1 million in fiscal
1996, primarily because of the deferred tax credit described above. See
"Management -- Executive Officer and Director Compensation" and Note 13 to the
Printpack Financial Statements.
Net income declined 21.3% between fiscal 1995 and 1996 from $16.8 million
to $13.2 million. If the Company had not elected Subchapter S status for federal
income taxes during fiscal 1995 and 1996, net income on a pro forma basis would
have been $9.8 million for fiscal 1996, approximately $1.4 million (12.6%) less
than the $11.2 million for fiscal 1995.
Fiscal Year 1995 Compared to Fiscal Year 1994
Net Sales
Net sales in fiscal 1995 increased $47.4 million (11.6%) to $454.6 million
from $407.3 million in fiscal 1994, reflecting continued growth from existing
and new customers as well as increases in raw material prices that were
reflected in higher selling prices. The Company's sales to Sabritas, a new
customer to Printpack in fiscal 1995, were $16 million, most of which was
realized prior to January 1995 and the devaluation of the Mexican peso. See
"Risk Factors -- Foreign Operations."
Gross Margin
Gross margin in fiscal 1995 increased $7.1 million (9.2%) to $84.0 million
from $76.9 million in fiscal 1994. Gross margin as a percentage of net sales in
fiscal 1995 decreased slightly to 18.5% compared to 18.9% in fiscal 1994.
Despite the positive effects of increased sales absorption of manufacturing
costs, the modest decline in gross margin as a percentage of net sales resulted
primarily from rapid raw material (primarily resin and film) price increases
that were not fully recovered by price increases. Raw material prices began
moving upward midway through fiscal 1994 and remained higher through fiscal 1995
due to shortages in raw material supplies. According to the FPA, unanticipated
shortages in substrates (film, paper or foil) placed pressure on industry
margins generally, and to an extent experienced only once before in the last 20
years. See "Risk Factors -- Exposure to Fluctuations in Raw Material Prices" and
"Business -- Manufacturing Process."
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Operating Expenses
Operating Expenses in fiscal 1995 increased $6.3 million (14.6%) to $49.8
from $43.5 million in fiscal 1994. This increase was due largely to
approximately $4.8 million of increases in incentive compensation, especially as
a result of expenses for the long-term portion of the EVA Plan being first
recognized in fiscal 1995. Operating Expenses as a percentage of sales remained
relatively steady at 11.0% of sales in fiscal 1995 compared to 10.7% in fiscal
1994, as a result of higher volumes and continued cost cutting efforts. See
"Management -- Executive Officer and Director Compensation."
Certain Charges
In fiscal 1994, the Company incurred restructuring and severance expenses
of approximately $0.9 million to reduce the work force at the Company's
Cincinnati, Ohio plant and $4.0 million in other plant closing costs related to
that plant. Subsequently, this plant was sold to Orflex, which is 49% owned by
Printpack. This sale resulted in $3.3 million of deferred gain, and in fiscal
1995 an additional charge of $0.6 million was recognized on this transaction.
Operating Income
Income from operations in fiscal 1995 increased $0.3 million to $28.9
million compared to $28.6 million in fiscal 1994. This was attributable to the
incremental profit on larger net sales offset by higher raw material costs and
other Operating Expenses.
Other Income and Expense
Interest expense in fiscal 1995 increased by $0.4 million to $9.9 million
compared to $9.5 million in fiscal 1994 due to higher average outstanding
indebtedness in fiscal 1995, offset in part by lower interest rates on variable
rate debt in fiscal 1995. Other income of $2.7 million in fiscal 1994 declined
$3.5 million to a loss of $0.8 million in fiscal 1995 because of the gain in
fiscal 1994 on the sale of an interest in Deluxe Engravings. See Note 4 to the
Printpack Financial Statements.
As a result of the foregoing, income before provision for income taxes
declined 16.7% from $21.6 million in fiscal 1994 to $18.0 million in fiscal
1995. The provisions for income taxes declined 80.1% from $4.5 million in fiscal
1994 to $0.9 million in fiscal 1995. Approximately $2.9 million of this decline
is attributable to the one-time effect of the Company dropping its election to
be taxed under Subchapter S of the Code.
In fiscal 1995, Printpack incurred a one-time, after-tax charge of $0.3
million resulting from the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 112, "Employers' Accounting for Postemployment Benefits."
See Note 12 to the Printpack Financial Statements.
Net income declined 1.7% between 1994 and 1995 from $17.1 million to $16.8
million. If the Company had not elected Subchapter S status for federal income
taxes during fiscal 1994 and 1995, net income on a pro forma basis would have
been $13.8 million for fiscal 1994, and would have declined approximately 18.8%
to $11.2 million in fiscal 1995.
RESEARCH AND DEVELOPMENT
The Company expenses its research and development ("R&D") costs as
incurred. Such expenditures were $5.2 million, $5.8 million and $5.5 million, in
fiscal 1996, 1995 and 1994, respectively. JR Flexible also expenses its R&D as
incurred and such expenses were $6.0 million in 1995 and $6.5 million in 1994.
See "Risk Factors -- Competition" and "Business -- Technological Innovation."
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operations were $17.7 million in fiscal 1996, $22.0 million
(55.4%) less than in the previous fiscal year. This reflected a number of items,
including decreases in inventories, increases in prepaid expenses and other
assets, $7.5 million reduction in dividends and income taxes payable, reduction
in bonuses
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payable and accounts payable. Cash flows from operations were $39.7 million in
fiscal 1995, $5.7 million (12.6%) less than in fiscal 1994. This reflected a
number of items, especially a $7.4 million decrease in deferred taxes, a $5.8
million increase in incentive compensation paid, the change in SFAS No. 112, and
changes in working capital components related to higher sales volumes.
In fiscal 1996, cash flows used in investing activities, principally
capital expenditures for new property, plant and equipment, decreased 19.5% to
$23.7 million. At the same time, proceeds from the disposition of property and
equipment decreased from $5.3 million to $0.8. Cash flows used in investing
activities, principally capital expenditures for new property, plant and
equipment, increased in fiscal 1995 25.2% to $29.5 million from $23.5 million in
fiscal 1994. These expenditures included significant investments in production
facilities. Significant projects included a new converting plant in Grand
Prairie ($19.9 million) and building renovations and a new press in Rhinelander
($11.0 million). At the same time, proceeds from the disposition of property and
equipment increased from $0.3 million to $5.3 million, primarily because of the
sale of the Cincinnati plant to Orflex.
Cash provided by financing activities in fiscal 1996 was $2.4 million,
compared to cash used in financing activities of $20.3 million one year earlier.
In fiscal 1995, cash used in financing activities increased 144.6% from $8.3
million to $20.3 million. These amounts reflect dividends paid of $32.1 million,
$26.5 million and $29.0 million, respectively, in fiscal 1996, 1995 and 1994,
primarily to fund Printpack Europe's acquisitions and operations and to
compensate Company shareholders for the personal taxes resulting from the
Company's Subchapter S election. In fiscal 1994, the Company borrowed an
additional $20.7 million, net of repayments of principal, but in fiscal 1995,
the Company's net borrowings after principal repayments were only $4.5 million,
which reflects the issuance of $10.4 million in subordinated notes to Company
shareholders to facilitate intergenerational transfers of Company stock among
the members of the Company's controlling family. In fiscal 1996, net borrowings
were $34.5 million, which additional borrowings were used to pay dividends
primarily to fund the operations of Printpack Europe. The Indentures and the New
Credit Agreement will restrict future contributions to Printpack Europe.
In light of the indebtedness to be incurred in connection with the
Acquisition, the Company determined to reduce its exposure to changes in
interest rates, which had fluctuated during early Summer 1996. The Company
entered into a $300 million notional principal amount interest rate swap with
Bank of America, Chicago, Illinois ("BAI"), which was settled based upon the
difference between the present value of 10 years of interest payments at the
10-year Treasury note yield on August 19, 1996 and 6.895%. As a result of
subsequent declines in interest rates, the Company settled this interest rate
swap with a cash payment to BAI on August 21, 1996 of $7.4 million. Such funds
were obtained from existing credit lines, and repaid with proceeds from the
Revolving Credit Facility.
Printpack management believed that Orflex needed additional cash to fund
its operations, and Printpack made an additional subordinated, demand loan to
Orflex of approximately $700,000 prior to the Closing of the Transactions.
Printpack management believes Orflex may have to seek additional funding from
other sources, which may or may not be obtainable. The Indentures and the New
Credit Agreement restrict further investments in, or loans to, Orflex by
Printpack following the Closing. See "-- Results of Operations -- Other Income
and Expenses;" "Description of Exchange Notes;" "Description of Certain
Indebtedness;" and Note 4 to the Printpack Financial Statements.
The Company's primary sources of liquidity have been cash flows from
operations and borrowings under existing bank credit facilities and private
placements of fixed rate, unsecured notes to insurance companies. The Company
has used borrowings under the bank credit facilities to meet seasonal
fluctuations in working capital requirements. These working capital requirements
generally peak during January through March when sales volumes generally are
lowest.
Cash and cash equivalents have declined over the last three years from
$13.8 million at the end of fiscal 1994 to $0.2 million at the end of fiscal
1996. During this same period, the Company's current ratio has decreased 1.57 to
1.12, as a result of a long-term loan in the principal amount of $25 million due
December 31, 1996 being included for the first time in current liabilities in
fiscal 1996. At the same time, Printpack was using cash to pay dividends to fund
Printpack Europe's acquisitions and operations. On June 29, 1996,
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Printpack had approximately $8.8 million available under bank lines of credit.
See "Prospectus Summary -- United Kingdom Affiliates;" "-- The Acquisition,
Financing and Related Transactions" and "Risk Factors -- Foreign Operations."
JR Flexible participates in James River's centralized cash management
system and, as such, its cash funding requirements have historically been met by
James River, and its cash and liquidity are not representative of its operation
on a stand-alone basis. See Note 2 to the JR Flexible Combined Financial
Statements.
Immediately following the Acquisition, the Company had approximately $54.3
million available under the New Credit Agreement for liquidity and working
capital, excluding $23.0 million under the Receivables Securitization Facility.
Printpack's capital expenditures in fiscal 1996, 1995 and 1994 were $25.8
million, $34.8 million, and $23.9 million, respectively, aggregating $84.5
million. Printpack management estimates maintenance capital expenditures of $10
million per year have been necessary, which are expected to increase to $17
million annually following the Acquisition.
During its last two fiscal years ended December 31, 1995, JR Flexible's
capital expenditures aggregated approximately $82.0 million ($49.4 million in
fiscal 1995 and $32.6 million in fiscal 1994). In the first six months of 1996,
JR Flexible's capital expenditures were approximately $9.8 million. Printpack's
management estimates JR Flexible's maintenance capital expenditures to be
approximately $7 million per year.
Following the Acquisition, the Company believes that its primary liquidity
needs will consist of capital expenditures, debt service and working capital.
Estimated capital expenditures for the combined entity are expected to be
approximately $45.0 million per year for each of the next three fiscal years.
These capital expenditures relate to productivity improvements and maintenance
expenditures.
Based upon current levels of operations, anticipated improvements in the JR
Flexible operations acquired in the Acquisition and certain cost saving
measures, the Company believes that cash flow from operations, borrowings under
the New Credit Agreement, sales of accounts receivable under Receivables
Securitization Facility and other sources of liquidity, will be adequate to meet
the Company's anticipated requirements for working capital, capital
expenditures, interest payments and scheduled principal payments for the
foreseeable future. There can be no assurance, however, that the Company's
business will continue to generate cash flows from operations at or above
current levels or that anticipated improvements in operations and cost savings
will be realized. See "Risk Factors," including, without limitation, "-- Certain
Financing Considerations; Significant Leverage" and "-- Integration of JR
Flexible."
EFFECTS OF INFLATION
Inflation has not had a significant effect on the Company's operations.
Increases in raw material costs to Printpack typically lag movements in the
markets for such materials. Thus, in a period of rising prices, the effects of
such increases are delayed several months and Printpack's ability to pass these
price increases to its customers also is subject to similar lags. See "Results
of Operations -- Fiscal Year 1995 Compared to Fiscal Year 1994;" "Risk
Factors -- Exposure to Fluctuations in Raw Material Prices;" and
"Business -- Manufacturing Process."
ACCOUNTS RECEIVABLE
Accounts receivable are generally collected within approximately 20 days.
Printpack and JR Flexible have historically experienced minimal chargeoffs (less
than $1 million per year on a combined basis or less than 0.1% of sales),
reflective of the high quality of each company's respective customer base.
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BUSINESS
GENERAL
Printpack is one of the largest domestic manufacturers and converters of
flexible packaging products for use by leading salted snacks, confectionery,
cookies/crackers, cereal, beverage and other food and consumer product
companies. The Company was founded in 1956 in Atlanta, Georgia and remains a
privately held corporation owned and managed by the founding family, together
with several long-term members of management. On April 10, 1996, Printpack
entered into the Acquisition Agreement with James River to acquire JR Flexible.
JR Flexible was also one of the largest domestic manufacturers and converters of
flexible packaging products to leading food and consumer products companies, as
well as a major supplier of high performance films to other flexible packaging
converters. The Acquisition has further increased Printpack's leading position
in the flexible packaging industry with total annual combined pro forma sales of
approximately $900 million and an estimated market share of approximately 12% of
total 1995 industry sales.
Management estimates, based in part upon trade and FPA data, that the
Company, prior to the Acquisition, had the leading market share in several major
end use categories, including salted snack foods (approximately 30% market
share), which includes packaging for such products as Lays and Ruffles potato
chips; confectionery products (approximately 30% market share), which includes
packaging for such products as Reese's and Hershey's candy bars; and
cookies/crackers (approximately 17% market share), which includes packaging for
such products as Fig Newtons and Famous Amos cookies. The Company's customer
base prior to the Acquisition, included nationally recognized, brand name food
companies, such as Frito-Lay, General Mills, Hershey, Mars, Nabisco, Nestle,
Quaker Oats and Ralston, many of which have been customers of the Company for
over 20 years.
The Company manufactures a wide variety of high value-added flexible
packaging products, including laminates made of various layers of plastic film,
aluminum foil, metallized films, paper and specialized coatings, as well as cast
and blown monolayer and co-extruded films. Printpack's sales and EBITDA before
certain charges for fiscal year 1996 were $442.9 million and $60.0 million,
respectively. Over the last five fiscal years ending June 1996, the Company has
experienced compound annual sales and growth of EBITDA before certain charges of
5.2% and 8.9%, respectively, exclusively through internal growth.
James River entered the flexible packaging business in 1986 in connection
with its acquisition of certain assets of Crown Zellerbach. Since then, James
River and JR Flexible acquired several flexible packaging plants from other
companies. JR Flexible was a leading supplier of flexible packaging for various
end uses, including bakery, cookies/crackers, cereal, ream wrap (wrapping for
reams of office paper), tissue/towel overwrap, coffee serving packs and
dentifrice (plastic laminate materials for toothpaste tubes and other personal
care products). JR Flexible manufactured many of the same product lines and
materials as those manufactured by Printpack. In addition, JR Flexible was
recognized as a leading film manufacturer with a good reputation for product
innovation. JR Flexible's customer base included many of the same brand name
food companies as Printpack's including General Mills, Nabisco, Nestle and
Quaker Oats, as well as other major consumer product companies such as Flowers,
Kellogg, Kraft and James River. The Acquisition therefore has broadened
Printpack's sales to certain existing customers, as well as provided new
customer relationships and products.
In recent years, JR Flexible was an underperforming business, and its sales
and earnings have declined. However, in late 1995, James River and JR Flexible
management began various profitability improvement measures, including shedding
certain lower margin businesses, reducing waste and related costs, improving
product and production mixes and negotiating favorable long-term raw materials
contracts, especially for resins. As a result of these initiatives, JR
Flexible's unaudited EBITDA for the 26 weeks ended June 30, 1996 was $15.9
million compared to $3.8 million for the same period in 1995. JR Flexible's
unaudited sales and EBITDA before certain charges for the 12 months ended June
30, 1996 were $467.0 million and $21.8 million, respectively. See Note 2 to the
JR Flexible Combined Financial Statements.
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INDUSTRY
Flexible packaging products are thin, pliable bags, pouches, labels or
wraps for food and other non-food consumer goods and related containers, which
are generally produced from single web and multi-web laminates of various types
of plastic, paper, film and foil. Flexible packaging products are manufactured
to provide a broad range of protection for packaged goods while also providing
packaging that is cost-effective, space-saving, lightweight, tamper evident,
convenient and disposable. Over the last several years, end users of flexible
packaging have increasingly sought better and cheaper packaging alternatives to
meet changing demographics and customer needs. Growing food categories such as
low-fat and non-fat foods require more sophisticated packaging structures to
improve freshness, shelf life and resealability. Packaging must have specific
barrier characteristics against light, moisture, gas (primarily oxygen) and
aroma consistent with the type of food packaged. In addition, packaging and
changes in packaging graphics, often for short-term promotions, increasingly are
used to attract customers and differentiate products at the point of sale. Major
end users in the food and other consumer product industries are generally
reducing the number of suppliers which places an emphasis on cultivating strong
customer relationships.
Management estimates, based upon FPA data and other industry and trade
information, that the flexible packaging industry had annual sales of
approximately $7.5 billion in 1995 and has grown faster than the packaging
industry generally over recent years. The eight largest flexible packaging
companies account for approximately 50% of total 1995 industry sales, with the
balance shared by several hundred other competitors. Printpack management
believes recent industry growth has been and will continue to be driven by (i)
the shift from rigid containers (paperboard, glass and plastic) to lower cost
and lighter weight flexible packaging, (ii) changing demographic trends which
have increased the demand for more convenient forms of packaging, including
single servings and packaging that extends product shelf life, (iii) the growth
in several major end use market segments (such as snack foods), (iv) the growth
of low-fat and non-fat foods which require more complex packaging barriers, (v)
concerns over waste and resource reduction, and (vi) increasing demands for
specialized packaging with enhanced barrier properties and distinctive graphics.
BUSINESS STRATEGY
Printpack focuses its sales and marketing efforts, technical development
initiatives, and manufacturing capabilities on targeted end use markets for
flexible packaging, with the goals of achieving critical mass and leading market
shares. Printpack has achieved leadership positions in these markets by (i)
making customer service its first priority, (ii) achieving economies of scale
and manufacturing efficiencies to remain a low cost producer, (iii) investing in
state-of-the-art equipment, and technological and production innovation, and
(iv) providing high value-added flexible packaging structures and enhanced
graphics. By focusing its equipment and facilities on specific market segments
and product structures, the Company has been able to provide high quality
products and service and realize production efficiencies. The Company leverages
its strong customer relationships, market leadership and economies of scale to
earn additional business from existing customers and to attract new customers.
Printpack has developed mutually beneficial relationships with large food and
consumer product companies and has benefited from the expanding market shares of
such customers. The Company expects to continue this strategy.
Customer Service
Over the last several years, flexible packaging customers have been
reducing the number of their flexible packaging suppliers. Customers have sought
to focus their relationships with suppliers that provide high quality products,
superior service and the ability to offer a broad range of flexible packaging
products at competitive costs. The Company is dedicated to working with
customers to provide products that meet their particular needs, and that can be
manufactured efficiently and cost effectively. Management believes that these
efforts have enabled the Company to build and maintain long-term customer
relationships, many of which have existed for over 20 years. Printpack's
dedication to superior customer service has been recognized by awards from its
customers, including Supplier of the Year awards from Kroger (1994), Frito-Lay
(1993 and 1994), Hershey (1992) and Keebler (1994 and 1995) and a Quality
Through Excellence for Customer Service award from Hershey (1992), and the
Spirit of Excellence award from Hormel (1993, 1994 and 1995).
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Printpack's product lines also meet a wide spectrum of flexible packaging
end uses, each of which has its own manufacturing and technical complexities. To
serve the wide range of end uses and users, Printpack is organized internally to
provide in-depth knowledge and customized services to each customer. This allows
the Company to offer individual market expertise and product focus, as well as a
broad range of flexible packaging alternatives for each end user. Field service
representatives, who are knowledgeable in both the Company's products and its
customers' equipment and processes, are often at customer sites to assist in the
use of Company products. Customer service is enhanced in various other ways as
well. For example, Printpack uses electronic data interchange techniques favored
by many of its larger customers to produce shorter order and product change
cycles for customers, and to reduce Company costs. The Acquisition provides
Printpack with a wider range of flexible packaging capabilities and further
diversification of its products offerings.
Economies of Scale and Low Cost Structure
The Company has focused its sales, marketing and technical efforts as well
as its operating assets on specific end user and product markets where it
believes it can achieve economies of scale and be a low cost producer. By
dedicating manufacturing plants to a limited number of products, Printpack is
able to effectively allocate the production of various product structures within
its manufacturing network to realize longer runs, improved quality, greater
product structure expertise and lower costs. This allows Printpack to better
plan production runs, shorten cycle times, reduce set-up costs and realize lower
labor costs. The Acquisition is expected to enhance these efficiencies and to
also produce significant cost savings through the elimination of redundant
corporate overhead and the reduction of personnel at JR Flexible's headquarters
and plants. Printpack management also expects to achieve significant cost
savings through the consolidation and rationalization of JR Flexible's
manufacturing operations with Printpack's manufacturing facilities and the
implementation of Printpack's production strategy at the JR Flexible facilities.
As a result of the Acquisition, Printpack has become one of the largest
domestic purchasers of certain key materials used for flexible packaging
manufacturing (such as extrusion grade resin, OPP and other types of packaging
film, paper and foil) and its enhanced purchasing power is expected to result in
greater cost savings and technical development support from its suppliers.
Technological Innovation
Throughout the development of the flexible packaging industry from simple
surface printed cellophane wrappers to high quality, multi-layer, printed,
laminated and co-extruded plastic packaging, Printpack has been focused
exclusively in flexible packaging and has anticipated end user demands through
continuing product and process innovation. New and more complex product
structures demand manufacturing processes that can produce high quality
packaging which can be changed to meet end user marketing programs, yet are
cost-effective. Printpack's manufacturing and technical resources give it
significant advantages in this area. The Company also works with equipment
manufacturers to design and build specific new processing capabilities. For
example, the Company installed the world's first eight color flexographic
process printing press and now is among the world's leaders in eight-color
process flexographic printing capabilities and experience. Printpack has
received a number of awards from industry groups and suppliers for technical
achievements, including among others the Association of Industrial Metallizers,
Coaters and Laminators ("AIMCAL") Package of the Year award (1996) -- Ritz Snack
Mix; AIMCAL Snack Foods Technical award (1995) -- Brock Mighty Morphin Power
Rangers; DuPont Award (1995) -- Ritz Snack Mix; FPA 1st Place Technical
Achievement/Wide Web Category (1994) -- Sabritos Dinos' Aros; FPA Top Packaging
Award (1994) -- Ben & Jerry's Peace Pop; FPA Top Packaging Award
(1993) -- Snyder's of Berlin Potato Chips Hologram Bag; Gold APEX Award
(Packaging Magazine) (1993) -- Pepperidge Farm Garlic Bread/ Ovenable Bag; Mobil
Gold Mummy Award (1992) -- Hershey's Reese One Cup; and FPA Top Packaging Award
(1992) -- Micro Mexicana Microwave Bacon Cracklins.
In maintaining its position as an industry leader in technology, Printpack
has invested in new techniques such as laser engraving, photo polymer and other
pre-press processes, and innovative and improved processes for coating,
laminating and metallizing. These new techniques have significantly reduced the
length of the product change cycle as well as the amount of waste produced.
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<PAGE> 48
With the addition of JR Flexible, the Company has acquired additional
strength in flexible packaging process technology, including technology related
to the co-extrusion of films. JR Flexible's outstanding reputation for product
innovation complements and enhances Printpack's expertise in manufacturing and
product development.
High Value-Added Products
Printpack believes that demand and innovation in the flexible packaging
industry are driven primarily by the larger packaged foods and consumer products
companies. Such users continually seek higher quality, lighter weight packaging
with more complex barrier properties (especially to accommodate low-fat and non-
fat products) and distinctive graphics. Flexible packaging must be compatible
with such customers' packaging machinery and production lines, and also must
maintain product integrity during shipment, extend a product's freshness and
shelf life and improve resealability consistent with each packaged product's
needs. To accomplish these objectives, flexible packaging must have specific
barrier characteristics against light, moisture, gas (primarily oxygen) and
aroma consistent with the type of food packaged. In addition, marketing and
promotional displays increasingly require high quality, multicolor printing and
packaging. Management believes that the Company's flexographic and rotogravure
processes are among the best in the industry producing high definition graphics
with photographic quality images on flexible substrates. From Printpack's
laser-etched printing plates and cylinders that produce higher quality products
to a new process that makes it economically attractive to add holographic images
to customers' packages, the Company is able to accommodate its customers'
desires for advanced graphics capabilities. The Company has sought to utilize
its technological, manufacturing and cost advantages to achieve leading
positions in high value-added packaging product structures. Printpack is also
one of the few flexible packaging manufacturers that produce high value-added
metallized films in-house, thereby capturing significant time and cost
advantages over competitors. See "Business -- Industry."
CUSTOMERS
Printpack provides its customers with a variety of flexible packaging
materials with a primary focus on packaging products for salted snack foods,
cookies/crackers, confectionery, cereal, beverages, rice, meats and bakery end
users. Printpack's top 10 customers prior to the Acquisition were Brach & Brock,
Constar, Frito-Lay, General Mills, Hershey, Keebler, Leaf, Mars, Nestle and
Quaker Oats, which accounted for approximately 62% of Printpack's total sales
for its latest fiscal year ended June 29, 1996. Frito-Lay is the largest U.S.
salted snack food company and is Printpack's largest customer and the only
customer accounting for more than 10% of Printpack's fiscal 1996 sales.
Printpack is one of Frito-Lay's two primary suppliers of flexible packaging
materials. Printpack has historically enjoyed close relationships with its
customers, cultivated over many years by emphasizing value-added services in
packaging design and engineering, consistency of service, reliability, and
competitive costs. See "Risk Factors -- Customer Relationships."
JR Flexible had strong market shares in sales of flexible packaging for
bakery, cookies/crackers, cereal, ream wrap and tissue/towel overwrap. JR
Flexible's top 10 customers prior to the Acquisition were Flowers, General
Mills, Georgia Pacific, James River, Kellogg, Kraft, Nabisco, Nestle, Quaker
Oats and Thatcher Tubes (a major supplier to Colgate Palmolive). General Mills
is one of the largest U.S. suppliers of cereal and bakery mixes and JR
Flexible's single largest customer. Likewise, JR Flexible was one of General
Mill's two largest suppliers of flexible packaging, principally for cereal and
bakery mixes.
MARKETS
The primary end use markets for Printpack's products are salted snacks,
cookies/crackers, and confectionery, bakery, and cereal products, which
collectively accounted for approximately 75% of the Company's fiscal 1996 sales.
Such products are expected to account for approximately 37% of pro forma
combined sales following the Acquisition. In addition to these markets, since
the Acquisition, Printpack has been providing flexible packaging for the meat
packaging, tissue/towel overwrap, ream wrap, dentifrice and beverage industries.
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<PAGE> 49
SALES, MARKETING AND DISTRIBUTION
Prior to the Acquisition, Printpack had 71 sales, technical support and
marketing associates in the U.S., and approximately 65 additional persons in
this area have been added as a result of the Acquisition. These associates
primarily work out of the seven sales offices located throughout the U.S. All
Printpack sales force personnel and customer service representatives undergo
extensive training programs before assuming account responsibilities.
Printpack's management believes that it is critical to the Company's success for
its sales and marketing associates to have in-depth knowledge of the various
characteristics and properties of a wide-range of the Company's packaging
structures. JR Flexible's sales force was, prior to the Acquisition, divided
among geographic territories and customer service representatives are generally
located near the Company's plant locations. The JR Flexible sales force is being
combined with Printpack's and will be organized along end user customers and
products.
The Company's technical service representatives visit customer locations
routinely to ensure that Printpack's packaging materials are running efficiently
on each customer's equipment. These customer service representatives are on call
24 hours a day. In order to accommodate a variety of customer preferences, the
Company distributes its products principally through customers' transportation
networks and third party carriers, although the Company does operate a small
fleet of trucks and trailers.
MANUFACTURING PROCESS
General
Printpack manufactures a wide variety of high value-added flexible
packaging products, including laminates made of various layers of plastic film,
aluminum foil, metallized films, paper and specialized coatings, as well as cast
and blown monolayer and co-extruded films. The flexible packaging produced by
Printpack and JR Flexible uses a range of raw materials. These raw materials
consist primarily of plastic resin, film, paper, foil and ink which typically
represent 50-60% of the sales price of the final products. Flexible packaging
manufacturers typically are able to pass increases in raw material costs on to
their customers, although the pass-through generally lags several months.
Significant and abrupt increases in raw material prices, particularly those on
low-density and linear low-density polyethylene and polypropylene, could have
adverse short-term effects on the Company's margins. As a result of the
Acquisition, the Company has obtained five favorable resin supply contracts
that, based upon recent volumes, are expected to save approximately $7.6 million
annually through February 28, 1998. These contracts are cancellable by either
party upon 30 days' prior notice. See "Risk Factors -- Exposure to Fluctuations
in Raw Material Prices."
Film Manufacturing
Both Printpack and JR Flexible use resin in their production of blown and
cast co-extruded films. These two basic processes yield films with differing
characteristics. Blown film -- produced by extruding resin through a circular
die and stretching the "bubble" with air pressure -- has advantages such as
higher barriers and toughness. The cast process -- which extrudes resin through
a horizontal die onto a chill roll -- yields a high quality film that usually
has better clarity and gauge (thickness) control. Both Printpack and JR Flexible
focus on and specialize in co-extrusion processes -- both blown and cast -- that
produce higher value-added, multi-layer film structures for specific customer
applications. Through this co-extrusion process, films can be manufactured with
a wide range of properties depending on the number of layers and combinations of
resins used.
Printing
Two major printing processes are used: flexography and rotogravure.
Historically, rotogravure printing, which uses engraved metal cylinders to print
precise images, has been capable of producing higher quality photographic-like
graphics on flexible substrates, but generally at higher costs than flexographic
printing. Over the last 10 years, however, the quality of flexographic process
printing, which uses printing plates made of rubber or photopolymer, has
improved to where, on many demanding applications, such print quality is almost
indistinguishable from those achieved with rotogravure printing. The
flexographic process has lower initial
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<PAGE> 50
costs to prepare the printing plates which speeds production and facilitates
lower initial cost changes in the packaging for short-term marketing promotions.
Printpack has been a leader in promoting these technological advancements in
flexographic printing, but still utilizes both flexography and rotogravure
printing processes.
Metallizing
Metallizing is a high value-added process by which substrates, such as OPP,
are vacuum coated with aluminum to increase barrier properties. Metallizing
flexible substrates has grown as end-use products, especially non-fat and lowfat
food products, require greater barriers against oxygen and water vapor.
Printpack management believes that Printpack is a leader in metallizing and is
one of the few domestic flexible packaging manufacturers to produce its own
metallized films in-house, thereby capturing significant time and cost
advantages over competitors.
Laminating and Coating
Extrusion (or co-extrusion) and adhesive processes are the principal
methods of laminating or coating flexible substrates. Extrusion lamination
combines substrates using molten resins as adhesives. Co-extrusion -- using more
than one resin simultaneously -- allows additional resin properties to be
cost-effectively added to the structure. Adhesive lamination uses various
chemical mixtures to combine layers. Generally speaking, extrusion lamination
creates a stiffer and less pliable structure than adhesive lamination.
Finishing
Finishing or "slitting" is the process of converting master rolls of
printed and/or laminated film into separate rolls that are generally one
impression wide and that have roll diameters specified by customers for use on
their machines. These converted rolls of film are loaded by the end users into
high-speed machinery that forms the package, inserts the contents and cuts and
seals the package in an automatic process. For certain end-use markets (such as
bread bags), JR Flexible performs bag making operations.
PROPERTIES
Printpack
Prior to the Acquisition, Printpack operated 11 manufacturing facilities in
the U.S., all of which are in modern condition and owned by the Company.
Printpack's facilities are located as follows: Atlanta, Georgia (2); Elgin
Illinois; Fredericksburg, Virginia; Grand Prairie, Texas (2); Hendersonville,
North Carolina; Prescott, Arizona; Rhinelander, Wisconsin and Villa Rica,
Georgia (2). Following the Closing, the Elgin, Illinois plant will be owned and
operated by a subsidiary, Printpack Illinois, for the benefit of the Company.
See "Prospectus Summary -- The Acquisition, Financing and Related Transactions"
and "-- Patents and Trademarks."
Printpack also operates seven sales and marketing offices, four of which
are leased and the balance of which are located at certain manufacturing
facilities. The locations include Atlanta, Georgia; Davis, California; Elgin,
Illinois; Grand Prairie, Texas; Oakdale, Minnesota; Springdale, Ohio; and
Wilmington, Delaware.
JR Flexible
JR Flexible operated 10 manufacturing facilities, all of which were
acquired by Printpack. JR Flexible's manufacturing facilities, all of which are
in modern condition, are located in Aguascalientes, Mexico; Dayton, Ohio;
Greensburg, Indiana; Jackson, Tennessee; New Castle, Delaware; Orange, Texas;
San Leandro, California; Shreveport, Louisiana; St. Louis, Missouri and
Williamsburg, Virginia. Except for the manufacturing facilities at Orange,
Texas; Williamsburg, Virginia, and Aguascalientes, Mexico, all of these
properties are now owned by the Company. The Company has announced the closing
of the San Leandro, California and Dayton, Ohio, plants, which employ 355
persons and which are expected to be closed by the end of the Company's fiscal
year 1997.
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Printpack did not buy JR Flexible's headquarters, and while it purchased JR
Flexible's pilot plant and analytical lab equipment at Milford, Ohio, it will
not continue to operate the plant or the office there. The pilot plant's
equipment and functions will be distributed among the other manufacturing
facilities.
EMPLOYEES
After the plants in San Leandro, California and Dayton, Ohio, are closed,
the Company will employ approximately 3,745 people. Printpack is currently a
party to a collective bargaining agreement with the Graphics Communications
International Union (the "GCIU"), which covers its employees at the Rhinelander,
Wisconsin plant. This union represents 132 employees and the current labor
agreement expires March 31, 1997. Under the terms of the Acquisition Agreement,
Printpack has assumed James River's collective bargaining agreements with the
GCIU at its Greensburg, Indiana plant and with the International Union of
Operating Engineers at its Orange, Texas plant. These unions represent
approximately 578 employees, and the current labor agreements expire on October
1, 1996 and September 15, 1997, respectively. Both of these labor contracts are
automatically renewed for one year periods, unless earlier terminated. Although
Printpack did not assume any other collective bargaining agreements, it has
agreed to negotiate in good faith with the nine union locals that currently
represent other JR Flexible employees under various collective bargaining
agreements at four JR Flexible plants. The Company believes that its employee
relationships with its employees prior to the Acquisition were generally
excellent and that JR Flexible's employee relationships were generally good.
PATENTS AND TRADEMARKS
Printpack and JR Flexible have a number of trademarks registered in the
U.S. and several foreign countries, including the Company's principal mark,
Printpack(R). Printpack and JR Flexible also have a number of patents and
pending patent applications in the U.S. and in several other countries. The
Company has transferred all its intellectual property, including that property
acquired from James River, to Printpack Illinois. Printpack Illinois licenses
such properties to the Company and its affiliates. Although Printpack's
management considers all such intellectual property to be valuable assets,
management believes that the loss or expiration of any patents or trademarks,
other than the Printpack trademark, would not have a material adverse effect on
the Company's operations. See "Prospectus Summary -- The Acquisition, Financing
and Related Transactions."
COMPETITION
The flexible packaging industry includes several hundred competitors.
Currently, FPA statistics and available trade and industry information indicate
that the eight largest flexible packaging companies account for almost 50% of
total industry sales in 1995, compared to approximately 35% in 1981. Printpack
is one of the largest manufacturers in the flexible packaging industry with an
estimated 6% of industry sales prior to the Acquisition, and, with the
consummation of the Acquisition of JR Flexible, Printpack expects that its share
has increased to approximately 12% of the industry's 1995 sales. Other sales
leaders in this industry include American National Can, Bemis, Bryce, Cryovac,
Huntsman Packaging, Reynolds Metals, and Sonoco Products, many of which are well
capitalized and maintain a strong market presence in the various markets in
which Printpack competes. Various of these competitors are substantially larger,
more diversified and have greater financial, personnel and marketing resources
than the Company, and therefore may have certain competitive advantages
vis-a-vis Printpack. See "Risk Factors -- Competition."
ENVIRONMENTAL MATTERS AND GOVERNMENT REGULATION
The past and present operations of the Company and JR Flexible, including
their ownership and operation of real properties, are subject to extensive and
changing federal, state and local laws and regulations pertaining to the
discharge of materials into the environment, the handling and disposition of
wastes or otherwise relating to the protection of the environment. Printpack
management believes that, except as set forth below, Printpack and JR Flexible
generally are in material compliance with applicable environmental laws and
regulations.
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In connection with the Transactions, the Company has conducted Phase I
environmental surveys on its and JR Flexible's principal properties located in
the United States. The following is based in part upon these surveys.
Both Printpack and JR Flexible utilize solvents, including acetates, in
their manufacturing processes, and such substances may be stored in underground
storage tanks ("USTs"). Printpack is voluntarily remediating at an estimated
cost of $76,000 over three years, releases of alcohols and acetates at its Grand
Prairie, Texas and Hendersonville, North Carolina plants. The Company's testing
indicates that no off-site contamination exists. The Company also has been
identified as a potentially responsible party ("PRP") at eight Superfund sites,
and estimates that it will have to expend approximately $90,000 for planned
environmental activities at two of these sites. At six of these Superfund sites,
Printpack is a de minimis contributor. It has entered into agreements to resolve
its potential liabilities at three sites, and Printpack does not expect to incur
any further liability with respect to such sites. The remaining three sites are
the subject of Remedial Investigation and Feasibility Studies ("RIFS"), which
are expected to be completed over the next three years, with any clean-up
projected to take another five years after completion of the RIFS.
JR Flexible has identified and is currently remediating soil and
groundwater contamination, principally from releases of alcohols and acetates at
various of its facilities, and is also engaged in asbestos removal, UST system
upgrades, the removal of contaminated soil, air emission assessment and noise
reduction at various sites. JR Flexible had accrued $1.5 million for these costs
as of December 31, 1995. It is estimated that it will take approximately five
years and approximately $1.5 million to complete these efforts, although no
assurance can be given that these measures will not take longer or cost more.
See Note 5 to the JR Flexible Combined Financial Statements.
The Acquisition Agreement provided that, with respect to environmental
conditions existing at Closing, Printpack would assume all on-site environmental
liability with respect to the sites being acquired from James River (including
migration, if any, from a JR Flexible site to other properties), but James River
would retain all off-site environmental liability (except such off-site
migration). In addition, to the extent that a claim is first made (or it first
becomes clear that a claim reasonably will be made) with respect to on-site
conditions within five years following Closing, James River will indemnify
Printpack for 50% or more of the cost thereof in excess of the amount accrued
for such liability on the Closing Date balance sheet, subject to adjustment
based upon the aggregate environmental liability and the proximity of the claim
date to Closing.
The Company cannot assure that it will not in the future incur liability
under environmental statutes and regulations with respect to contamination of
sites formerly or currently owned or operated by the Company (including
contamination caused by prior owners and operators of such sites), and/or the
off-site disposal of hazardous substances, except to the extent indemnified by
James River.
The Company and JR Flexible, like all flexible packaging manufacturers
which use plastic, are subject, in certain jurisdictions, to laws and
regulations designed to reduce solid wastes by requiring, among other things,
plastics to be degradable in landfills, minimum levels of recycled content,
various recycling requirements, disposal fees and limits on the use of plastic
products. In addition, various consumer and special interest groups have lobbied
from time to time for the implementation of additional environmental protection
measures. The Company does not believe that the legislation promulgated to date
and currently pending initiatives will have a material adverse effect on its
business. There can be no assurance that any future legislation or regulatory
efforts will not have a material adverse effect on the Company or its financial
condition and results of operations.
The United States Food and Drug Administration ("FDA") regulates the
material content of direct-contact food containers and packages, including
certain containers manufactured by the Company and JR Flexible. Both the Company
and JR Flexible use approved resins and other raw materials in the
direct-contact aspect of food product packaging. Company management believes
that both the Company and JR Flexible are in material compliance with all such
applicable FDA regulations.
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LEGAL PROCEEDINGS
Except for routine litigation incidental to the business of the Company and
JR Flexible, there are no pending legal proceedings to which the Company or any
of its subsidiaries or JR Flexible is a party or to which any of their property
is subject. The Company believes that the outcome of the proceedings to which it
or JR Flexible is currently a party will not have a material adverse effect upon
Printpack's financial condition.
[The remainder of this page left blank intentionally]
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Set forth below are the names, ages, positions and offices held (as the
date hereof) and a brief account of the business experience for each executive
officer and director of Printpack.
<TABLE>
<CAPTION>
AGE
NAME (AS OF JUNE 29, 1996) POSITION
- --------------------------------- --------------------- -----------------------------------------
<S> <C> <C>
Dennis M. Love................... 40 President, Chief Executive Officer and
Director(1)
James J. Greco................... 53 Vice President and General Manager,
National Accounts Division; Managing
Director, Printpack Europe, and
Director
Robert B. Paxton................. 63 Director, and retired as Executive Vice
President and General Manager,
Performance Packaging Division
effective July 1, 1996
G. David Peake................... 57 Executive Vice President and Director
James E. Love, III............... 39 Vice President, Business Development and
Director(1)
Nicklas D. Stucky................ 50 Vice President, Human Resources
R. Michael Hembree............... 47 Vice President, Finance and
Administration and Director
August Franchini, Jr............. 53 Vice President, Engineering
Leonard A. Segall................ 48 Vice President, Operations Support
Kenneth H. Burke................. 51 Vice President, Purchasing
Sidney A. Harris................. 45 Vice President, Quality Management
Neil Williams.................... 60 Secretary and Director
David M. Donovan................. 35 Treasurer and Assistant Secretary
Gay M. Love...................... 67 Director(1)
Carol Anne Love Jennison......... 37 Director(1)
C. Keith Love.................... 35 Plant Manager, Hendersonville, N.C.
Plant, and Director(1)
William J. Love.................. 34 Accounts Manager and Director(1)
William E. Lewis................. 52 General Manager, Performance Packaging
Division
John N. Stigler.................. 48 General Manager, Snack Foods Division
Edward F. Ploszaj................ 55 General Manager, Confectionery Division
Michael A. Fisher................ 50 General Manager, Labels Division
Frederick J. Crowe............... 47 Sales Manager, Performance Packaging
Division, and the designated General
Manager of the Diversified Packaging
Division upon completion of the
Acquisition
</TABLE>
- ---------------
(1) Dennis M. Love, James E. Love, III, Carol Anne Love Jennison, William J.
Love and C. Keith Love are all the children of Gay M. Love, who is the
controlling shareholder of the Company. See "Principal Shareholders."
Dennis M. Love -- President, Chief Executive Officer and Director. Mr.
Love became President and Chief Executive Officer of Printpack and a member of
its Board of Directors in February 1987. Mr. Love has been involved with the
Company since 1978, holding various positions in sales and marketing.
James J. Greco -- Vice President and General Manager, National Accounts
Division and Managing Director, Printpack Europe. Mr. Greco has been Vice
President and General Manager, National Accounts Division since April 1991 and
in such capacity has been responsible for serving the Frito-Lay account. He has
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<PAGE> 55
also served as Managing Director, Printpack Europe since May 1996. Prior to
holding these positions, Mr. Greco served as Director of Sales for 10 years and
has held various other sales positions since he joined the Company in 1971. Mr.
Greco was first elected a director in July 1996. See "Prospectus Summary -- The
Acquisition, Financing and Related Transactions -- United Kingdom Affiliates."
Robert B. Paxton -- Executive Vice President and General Manager,
Performance Packaging Division and Director. Mr. Paxton became Executive Vice
President and General Manager, Performance Packaging Division in December 1993
and a member of the Board of Directors in May 1989. From February 1978 to April
1991, he served the Company in various capacities, including Vice President,
Operations, Vice President, Manufacturing and as Plant Manager of the Company's
Atlanta plant. Mr. Paxton has retired effective July 1, 1996 as a Company
officer, but remains a director.
G. David Peake -- Executive Vice President and Director. Mr. Peake became
Executive Vice President of the Company in April 1991 and a member of its Board
of Directors in March 1987. Mr. Peake has been with the Company since 1967 and
has held various positions, including Vice President, Sales and Marketing, Vice
President, Southwest Operations and Regional Manager of the Southwest region.
Mr. Peake is expected to retire later in 1996, but has agreed to assist with the
Acquisition and the integration of JR Flexible.
James E. Love, III -- Vice President, Business Development and
Director. Mr. Love became Director of Strategic Planning at Printpack in July
1992, Vice President, Business Development in May 1996 and has been a member of
its Board of Directors since February 1987. He also currently serves as
President of Virtual Image Group, a Printpack development division, a position
which he has held since February 1994. Prior to joining Printpack, Mr. Love
worked in the Corporate Finance Department of The Robinson-Humphrey Company,
Inc., an investment banking firm, from 1983 to 1992.
Nicklas D. Stucky -- Vice President, Human Resources. Mr. Stucky became
Vice President of Human Resources in 1982. Prior to that, he served as Director
of Personnel from 1978 to 1982 and has held various other human resources
positions since he joined Printpack in 1973.
R. Michael Hembree -- Vice President, Finance and Administration. Mr.
Hembree joined the Company as Controller in 1980 and has served in this present
position since 1982. He was first elected a director in July 1996.
August Franchini, Jr. -- Vice President, Engineering. Mr. Franchini became
Vice President, Engineering in July 1989. Prior to becoming Vice President,
Engineering, Mr. Franchini served as the Company's Manager of Industrial
Engineering, as well as Plant Manager of the Company's Grand Prairie, Texas
plant.
Leonard A. Segall -- Vice President, Operations Support. Mr. Segall
assumed his present position in April 1991. He has been with the Company since
1971 and has held various positions, including Director of Manufacturing, East
Region and Plant Manager of the Company's Atlanta plant.
Sidney A. Harris -- Vice President, Quality Management. Mr. Harris has
held this position since April 1996. From July 1990 to April 1996, Mr. Harris
served the Company in various positions, including Training and Organizational
Development Manager, Human Resources Development Manager and Director of Human
Resources Development.
Kenneth H. Burke -- Vice President, Purchasing. Mr. Burke has served in
this position since April 1991, and previously was Director of Purchasing since
he joined the Company in June 1980.
Neil Williams -- Secretary and Director. Mr. Williams has served as a
Secretary of the Company and a member of its Board of Directors since 1977. Mr.
Williams is also a partner at the law firm of Alston & Bird, counsel to the
Company, and serves as a director of National Data Corporation, whose common
stock is registered under the Exchange Act. See "-- Related Party Transactions"
and "Certain Legal Matters."
David M. Donovan -- Treasurer and Assistant Secretary. In January 1994,
Mr. Donovan became Treasurer after previously serving as the Company's Snack
Foods Division Controller from April 1992 to January 1994 and its Financial
Analysis Manager from July 1990 to April 1992.
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<PAGE> 56
Gay M. Love -- Director. Ms. Love is the widow of the Company's founder,
and her primary occupation is Chairman of the Board of Enterprises. She was
first elected a director of the Company in July 1996, but has been a director
and Chairman of Enterprises since 1989.
Carol Anne Love Jennison -- Director. Ms. Jennison has served as a member
of the Board of Directors of the Company since March 1987.
C. Keith Love -- Plant Manager, Hendersonville, N.C. Plant, and
Director. Mr. Love has been a director since March 1987, and assumed his
current position in February 1996. He formerly served as a Shift Coordinator
from September 1991 to February 1996 and as a Systems Coordinator from May 1987
to September 1991.
William J. Love -- Accounts Manager and Director. Mr. Love has been a
director of Printpack since March 1987, and since July 1994 an Accounts Manager.
From July 1992 to July 1994, he served as a Sales Representative of the
Company's Snack Foods Division and for the two years prior to becoming a Sales
Representative, Mr. Love attended The Fuqua School of Business at Duke
University, where he received his M.B.A. in 1992.
William E. Lewis -- General Manager, Performance Packaging Division. Mr.
Lewis was appointed to this position in May 1996. Previously, he served as the
Company's General Manager, Snack Foods Division and Director of Sales, Marketing
and Technical Support for the Performance Packaging Division from September 1993
to May 1996 and as the Company's General Manager, Labels Division from April
1991 to September 1993. Prior to joining Printpack in connection with the
Company's acquisition of Daniels Packaging in 1989, Mr. Lewis served as Daniels'
National Sales Manager.
John N. Stigler -- General Manager, Snack Foods. Mr. Stigler became the
Company's General Manager, Snack Foods Division in January 1994. He joined
Printpack in 1976 as a Sales Representative and has held various positions,
including Sales Manager, Director of Midwest Sales and General Manager, Meats
and Processed Foods Division.
Edward F. Ploszaj -- General Manager, Confectionery Division. Mr. Ploszaj
became General Manager, Confectionery Division in April 1991. From 1989 to 1991,
Mr. Ploszaj was Director of Sales for the Confectionery Division. Prior to
joining Printpack in 1989 with the Company's acquisition of Daniels Packaging,
Mr. Ploszaj served as Daniels' Vice President of Sales and Marketing.
Michael A. Fisher -- General Manager, Labels Division. Mr. Fisher was
promoted to General Manager, Labels Division in October 1993. Previously, Mr.
Fisher served as the Company's Director of Development from March 1993 to
October 1993, its Director of Business Support from August 1992 to March 1993
and Managing Director, European Operations from August 1989 to August 1992.
Frederick J. Crowe -- Sales Manager, Performance Packaging Division. Mr.
Crowe has been with the Company in various capacities since 1989 and has served
in his current position since January 1994. He previously served as Plant
Manager, Grand Prairie, Texas from November 1992 to January 1994 and as Director
of Sales, National Accounts Division from August 1989 to November 1992. Upon the
Closing of the Transactions, Mr. Crowe will become General Manager, Diversified
Packaging Division.
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EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
Executive Officer Compensation
The following table presents certain summary information concerning
compensation paid or accrued by the Company for services rendered in all
capacities during fiscal year 1996, for the Company's Chief Executive Officer
and the Company's four most highly compensated executive officers other than the
Chief Executive Officer (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------- ALL OTHER
NAME AND PRINCIPAL POSITION(S) SALARY BONUS(1) COMPENSATION(2)
- ----------------------------------------------------------- -------- -------- ---------------
<S> <C> <C> <C>
Mr. Dennis M. Love......................................... $292,200 -- $ 4,699
President and Chief Executive Officer
Mr. Robert Paxton.......................................... 223,046 -- 4,767
Executive Vice President and General Manager,
Performance Packaging Division
Mr. G. David Peake......................................... 214,297 -- 4,783
Executive Vice President
Mr. James J. Greco......................................... 185,782 $35,954 4,685
Vice President and General Manager, National Accounts
Division and Managing Director, Printpack Europe
Mr. R. Michael Hembree..................................... 146,639 -- 3,635
Vice President, Finance and Administration
</TABLE>
- ---------------
(1) Consists of cash bonuses paid under the Economic Value Added Plan portion of
the Company's Incentive Compensation Plan (the "Incentive Plan"). Under the
Incentive Plan, the Company establishes annual targets for improvement over
the prior year's results. These targets are calculated and measured with
respect to economic value added ("EVA") standards, and participants earn
bonuses based on realization of EVA targets. Annually, participants'
bonuses are paid 75% in cash and 25% in performance shares. Bonuses for the
Named Executive Officers shown above, which were accrued in fiscal 1995 and
actually paid in fiscal 1996, were as follows: Mr. Love, $206,300; Mr.
Paxton, $123,335; Mr. Peake, $126,241; Mr. Greco, $177,538; and Mr.
Hembree, $82,364. See "-- Long-term Incentive Plan Awards in Fiscal Year
1996" and "-- Incentive and Deferred Compensation."
(2) Consists of Company contributions to the officer's account under the
Company's Savings and Profit Sharing Plan and to a life insurance policy
owned by each officer. The Company's Savings and Profit Sharing Plan is a
defined contribution employee benefit plan qualified under section 401(k)
of the Internal Revenue Code of 1986, as amended. Under this plan, the
Company matches up to 50% of the contributions made by each qualified
participant and contributes other fixed amounts for the benefit of each
qualified participant based upon a formula derived from years of service
and base compensation.
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<PAGE> 58
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL YEAR 1996(1)
<TABLE>
<CAPTION>
PERFORMANCE OR
NUMBER OF SHARES, OTHER PERIOD
UNITS OR UNTIL MATURATION
NAME OTHER RIGHTS OR PAYOUT
- --------------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
Mr. Dennis M. Love............................................. --
Mr. Robert Paxton.............................................. --
Mr. G. David Peake............................................. --
Mr. James J. Greco............................................. 330 June 30, 2000
Mr. R. Michael Hembree......................................... --
</TABLE>
- ---------------
(1) Units of phantom stock (performance shares) granted in fiscal year 1996
pursuant to the Performance Share Plan portion of the Incentive Plan. Each
year, 25% of the bonus, if any, is required to be reinvested in phantom
stock (performance shares), which shares rise or fall in value as the
overall equity value of the Company rises or falls. These performance
shares vest after four years and may be exercised and cash paid to the
participant at any time thereafter. There is no guarantee that these
performance shares will have any value at their vesting or redemption. No
shares of Company stock are actually issued pursuant to the Performance
Share Plan. Historically, bonuses including performance shares have been
accrued during each fiscal year, but not awarded until the subsequent
fiscal year. For fiscal year 1995, the Company issued $53,422 worth of
performance shares to Mr. Love; $35,174 to Mr. Paxton; $34,454 to Mr.
Peake; $45,735 to Mr. Greco; and $21,386 to Mr. Hembree. See "-- Incentive
and Deferred Compensation."
Director Compensation
The Company does not currently compensate its directors for their service
as such.
RELATED PARTY TRANSACTIONS
On December 29, 1986, the Company made a loan to Mr. Robert B. Paxton, a
long-time employee of the Company, for personal purposes. The loan is evidenced
by a demand note in the principal amount of $320,000 and bears interest at 6.1%
simple interest per year, and is expected to be cancelled in consideration of
other compensation owed to Mr. Paxton. On March 13, 1995, the Company obtained
approximately $10.4 million from the issuance of subordinated notes of the
Company's shareholders to reflect the federal income tax effects of the
Company's decision to discontinue its Subchapter S election. See Note 5 to the
Company's Financial Statements and "Description of Certain
Indebtedness -- Shareholder Notes."
Pursuant to an employment agreement between the Company and its founder, J.
Erskine Love, Jr. dated June 23, 1983, the Company agreed to make certain death
benefit payments to Mr. Love's wife, Gay M. Love. These payments, which began at
Mr. Love's death in 1987 and will continue for the rest of Ms. Love's life,
equaled $454,333 in 1996 and are adjusted each year based upon the Consumer
Price Index. See Note 6 to the Company's Financial Statements. For other
deferred compensation arrangements, see "-- Incentive and Deferred
Compensation."
Former credit agreements in existence prior to the effective time of the
Acquisition pertaining to approximately $146.7 million of Company debt
outstanding at June 29, 1996 contained various covenants related to the Company
and Printpack Europe that were not amended to reflect the Reorganization. The
Company and Printpack Europe obtained waivers for noncompliance of certain
provisions of such former credit agreements through August 31, 1996. These
credit agreements were terminated as a result of the Transactions consummated on
August 22, 1996. See Note 5 to the Printpack Financial Statements.
INCENTIVE AND DEFERRED COMPENSATION
Economic Value-Added and Performance Share Plans
The Company maintains a non-qualified, long-term incentive compensation
plan for its employees (the "Incentive Plan") which is designed to align the
short and long-term interests of its employees with its shareholders' interests.
Under the Incentive Plan, the Company establishes annual targets for improvement
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<PAGE> 59
over the prior year's results. These targets are calculated and measured with
respect to economic value added ("EVA") standards. Targets are established on a
Company-wide and a per-division basis for each of the Company's five U.S.
divisions.
The Incentive Plan includes two tiers of incentive-based compensation
linked to the Company's EVA. Although participation in the Incentive Plan is
generally limited to managers within the Company, the final determination of an
employee's eligibility to participate in the plan is made in the sole discretion
of a committee which consists of the Company's President and the Vice-Presidents
of Finance and Administration, and of Human Resources. Each year a participant's
bonus, if any, ("EVA Bonus") is allocated from a bonus pool composed of two
parts, a base award and an improvement award. The base award is calculated using
a business unit's target EVA and the individual participant's base salary. The
improvement award is based on the improvement of the unit's EVA from the
previous year. The first tier consists of 75% of the EVA Bonus which is paid in
cash to the participants as a short-term incentive.
The second tier of the plan (the "Performance Share Plan") is a phantom
stock plan, which acts as a long-term incentive. 25% of each participant's EVA
Bonus, if any, is reserved by the Company and invested in phantom stock called
"performance shares", the value of which rise or fall with the overall equity
value of the Company. There is no guarantee that these performance shares will
have any value when they vest or become payable. These performance shares vest
after four years and may be exercised by a participant at any time thereafter.
The maximum number of performance shares available under the Performance Share
Plan is equivalent to 15% of the Company's outstanding common stock. The percent
of the EVA Bonus that must be reinvested in performance shares may be reduced
pro rata if the 15% limit would be exceeded because of the full reinvestment.
The Company may call outstanding performance shares from participants as it
deems advisable.
Deferred Compensation Agreements
The Company maintains deferred compensation agreements (the "Deferred
Income Agreements") with certain of its retired key employees. These agreements
provide that Printpack will defer certain compensation and, upon such employee's
retirement, death or disability, will make certain payments to, or on behalf of,
the employee. In the case of retirement at age 60, or death or disability before
age 60, Printpack will pay the employee or his designated beneficiary $40,000
annually over a 15 year period. In the case of death or disability after age 60,
the payments will continue for the remainder of the 15 year period that began at
age 60. If an employee's employment is terminated, the employee engages in an
activity which the Company's board of directors deems harmful to the Company, or
the employee ceases to provide advice to the Company when reasonably requested,
Printpack is only obligated to pay, without interest, the total amount of the
compensation previously deferred by the employee. The only retired employees
currently a party to a Deferred Income Agreement are Robert B. Paxton and Edward
J. Hilbert, Jr.
The Company's founder agreed to pay Neil Williams or his beneficiary
$40,000 per year in deferred compensation beginning at age 65. Mr. Williams, the
Company's only director that is not a salaried employee of the Company or a
principal shareholder, has served as the Company's Secretary and as a director
since 1977.
The Company also maintains Family Security Agreements with certain of its
key employees (the "Family Security Agreements"). These agreements provide that
certain disability and death benefits will be paid to such employees or their
family members. In the case of the employee's death, his or her spouse will
receive annually for the rest of such spouse's life, 50% of the employee's total
cash compensation, including bonuses, for the last full year of employment. In
addition, Printpack will pay 10% of such total cash compensation to such spouse
for the oldest child of the employee under the age of 23 and 5% of such total
cash compensation for every other child under the age of 23, such payments to
continue until the respective children reach 23 years of age. In the event of
the employee's disability while an employee of Printpack, Printpack shall pay
the employee $40,000 annually for the employee's life. In addition to the other
death and disability payments, Printpack will pay $10,000 to each of the
employee's children under the age of 23 for each year they pursue a course of
higher education. If the employee voluntarily terminates his employment (except
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<PAGE> 60
upon retirement), engages in an activity which the Company's board of directors
deems harmful to the Company or the employee ceases to provide advice to the
Company when reasonably requested, all benefits under the Family Security
Agreement will be forfeited. If Printpack terminates the employee's employment,
there is a vesting schedule ranging from 50% at five years of employment to 100%
at more than 10 years. All payments to be made under a Family Security Agreement
are indexed to the All Urban Consumer's Cost of Living Index published by the
U.S. Government. The Company currently has Family Security Agreements with
Dennis M. Love, R. Michael Hembree, Nicklas D. Stucky and Thomas J. Dunn, Jr.,
all of whom are fully vested.
The Company believes that it has substantially funded these benefits
through insurance policies previously purchased. See "-- Executive Officers and
Directors" and "Certain Legal Matters."
PRINCIPAL SHAREHOLDERS
Enterprises owns approximately 100% of the Company and Holdings owns
approximately 97% of Enterprises. The principal shareholders of Holdings as of
this date included several members of the family of J. Erskine Love, Jr., the
Company's founder, and a limited partnership which is controlled by the Love
family. Certain of the principal shareholders of Holdings serve on the boards of
directors of the Company, Enterprises and Holdings and are involved in the
management of the Company. See "Prospectus Summary -- The Acquisition, Financing
and Related Transactions" and "Management."
THE EXCHANGE OFFER
REGISTRATION RIGHTS AND EFFECT OF EXCHANGE OFFER
The Notes were sold by the Company at the Closing to the Initial Purchaser
pursuant to the Purchase Agreement. Subsequently, the Initial Purchaser sold the
Notes to various qualified institutional buyers and accredited investors in
reliance upon Rule 144A and other available exemptions under the Securities Act.
As a condition to the Purchase Agreement, the Company and the Initial Purchaser
entered into the Registration Rights Agreement. Pursuant to the Registration
Rights Agreement, the Company agreed to file with the Commission a registration
statement under the Securities Act with respect to the Exchange Notes no later
than 60 days following the Closing Date, to use all reasonable commercial
efforts to cause such registration statement to become effective under the
Securities Act at the earliest possible time, but in no event later than 120
days after the Closing Date and, upon effectiveness of such registration
statement, to commence the Exchange Offer and offer to eligible holders of Notes
the opportunity to exchange their Notes for a like principal amount of Exchange
Notes.
Holders of Notes acquired directly from the Company, affiliates of the
Company and persons participating in, or having any arrangement or understanding
with any person to participate in a distribution of the Exchange Notes will be
ineligible, under Commission policy, to participate in the Exchange Offer, and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any secondary resale transaction of the Notes.
The Company agreed, pursuant to the Registration Rights Agreement, that if
notified by a holder of Transfer Restricted Securities (as defined below) within
20 business days of the Exchange Offer that such holder is prohibited by
applicable law or Commission policy from participating in the Exchange Offer, or
that such holder may not resell the Exchange Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus or that such holder
is a broker-dealer and holds Notes acquired directly from the Company or one of
its affiliates, it would file a shelf registration statement, pursuant to Rule
415 under the Securities Act, registering for resale any "Transfer Restricted
Securities," subject to the satisfaction by such holder of certain other
conditions. "Transfer Restricted Securities" means each of the Notes until the
earliest to occur of (a) the date on which such Note is exchanged in the
Exchange Offer and entitled to be resold to the public by the holder thereof
without complying with the prospectus delivery requirements of the Securities
Act, (b) the date on which the Note has been effectively registered under the
Securities Act and disposed of
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<PAGE> 61
in accordance with a Shelf Registration Statement or a Registration Statement
(as herein defined) and (c) the date on which such Note is sold pursuant to Rule
144 under the Securities Act or by a broker-dealer pursuant to the "Plan of
Distribution" section set forth herein. A copy of the Registration Rights
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part.
This Registration Statement covers the offer of the Exchange Notes pursuant
to the Exchange Offer made hereby and resales by broker-dealers that acquired
Notes for their own accounts as a result of market-making and other trading
activities. Such resales of Transfer Restricted Securities made in reliance upon
the registration thereof under the Securities Act may be made only pursuant to
the "Plan of Distribution" set forth in this Prospectus or other prospectus, if
any, filed as an amendment to the Registration Statement. To be eligible to
effect resales of Transfer Restricted Securities pursuant to registration of the
Notes for resale by holders ineligible to participate in the Exchange Offer, a
holder of Transfer Restricted Securities must (i) notify the Company within 20
business days of the Expiration Date of the Exchange Offer that it has
determined that it is not permitted by law or any policy of the Commission to
participate in the Exchange Offer made hereby or that such holder may not resell
the Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that this Prospectus is inappropriate or unavailable
for such resales by such holder or that such holder is a broker-dealer and holds
Notes acquired directly from the Company or one of its affiliates and (ii)
provide to the Company, within 20 business days following the Company's request
therefor, such information as the Company may reasonably request for use in
connection with the Registration Statement. In the event that any holders of
Transfer Restricted Securities comply with the foregoing requirements, and
supply any additional information reasonably requested by the Company within 20
business days following such request, the Company will file, as promptly as is
practicable, an amendment to the Registration Statement containing an
appropriate resale prospectus and will use its reasonable efforts to cause such
amendment to become effective under the Securities Act and to remain
continuously effective thereunder for a period of three years following the
Closing Date.
As a result of the filing of the Registration Statement within 60 days
following the Closing Date and the effectiveness thereof within 120 days
following the Closing Date, and assuming the effectiveness of an amendment (if
required) to provide a resale prospectus with respect to certain of the Transfer
Restricted Securities, as provided in the Registration Rights Agreement, the
Company shall have no obligation to pay any liquidated damages provided for in
the Registration Rights Agreement.
EXCEPT AS OTHERWISE PROVIDED HEREIN, FOLLOWING THE CONSUMMATION OF THE
EXCHANGE OFFER, ANY HOLDER OF NOTES NOT TENDERED AND EFFECTIVELY DELIVERED TO
THE EXCHANGE AGENT IN ACCORDANCE WITH THE EXCHANGE OFFER, AND WHO ARE NOT
ENTITLED TO RESELL THE SAME PURSUANT TO A RESALE PROSPECTUS, IF ANY, REQUIRED TO
BE FILED AS AN AMENDMENT TO THE REGISTRATION STATEMENT WILL HAVE NO FURTHER
EXCHANGE OR REGISTRATION RIGHTS AND SUCH NOTES WILL CONTINUE TO BE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER. See "-- Termination of Certain Rights,"
"-- Consequences of Failure to Exchange," and "-- Resale of Exchange Notes."
Accordingly, the ability of any such holder of Notes to resell its Notes could
be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Notes
validly tendered by eligible holders, and not withdrawn prior to 5:00 P.M.
Eastern Time on the Expiration Date. The Company will issue $1,000 principal
amount of Exchange Senior Notes in exchange for each $1,000 principal amount of
outstanding Senior Notes accepted in the Exchange Offer, and $1,000 principal
amount of Exchange Senior Subordinated Notes in exchange for each $1,000
principal amount of outstanding Senior Subordinated Notes accepted in the
Exchange Offer. Holders may tender some or all of their Notes pursuant to the
Exchange Offer. However, Notes may be tendered only in integral multiples of
$1,000.
The form and terms of the Exchange Notes are substantially identical to the
form and terms of the Notes except that (i) the Exchange Notes have been
registered under the Securities Act and hence will not bear
56
<PAGE> 62
legends restricting the transfer thereof and (ii) the holders of the Exchange
Notes generally will not be entitled to certain rights under the Registration
Rights Agreement, which rights generally will terminate upon consummation of the
Exchange Offer. The Exchange Notes will evidence the same indebtedness as the
Notes and will be entitled to the benefits of the Indentures.
Holders of Notes do not have any appraisal or dissenters' rights under the
Georgia Business Corporation Code or the Indentures in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the Indentures, the Registration Rights Agreement, and the applicable
requirements of the Exchange Act and the rules and regulations of the SEC
thereunder, including Rule 14e-1 thereunder.
The Company shall be deemed to have accepted validly tendered Notes when,
as and if the Company has given telephonic, facsimile or written notice thereof
to the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders for the purpose of receiving the Exchange Notes from the Company.
If any tendered Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
the certificates for any such unaccepted Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Notes pursuant to
the Exchange Offer. The Company will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the Exchange Offer.
See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 P.M., Eastern Time, on
, 1996, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
To extend the Exchange Offer, the Company will notify the Exchange Agent of
any extension by oral or written notice, followed by a public announcement
thereof no later than 9:00 A.M., Eastern Time, on the next business day after
the previously scheduled Expiration Date.
The Company reserves the right, in its reasonable judgment, (i) to delay
accepting any Notes, to extend the Exchange Offer or to terminate the Exchange
Offer if any of the conditions set forth below under "-- Conditions" shall not
have been satisfied, by giving telephonic, facsimile or written notice of such
delay, extension or termination to the Exchange Agent or (ii) to amend the terms
of the Exchange Offer in any manner. Any such delay in acceptance, extension or
termination, and any amendment will be followed as promptly as practicable by a
public announcement thereof. If the Exchange Offer is amended in a manner
determined by the Company to constitute a material change, the Company will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered holders.
If the Company does not consummate the Exchange Offer, or, in lieu thereof,
the Company does not file and cause to become effective a resale shelf
registration for the Notes within the time periods set forth herein, liquidated
damages will accrue and be payable on the Notes either temporarily or
permanently. See "Description of Exchange Notes -- Registration Rights;
Liquidated Damages."
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
The Exchange Senior Notes and the Exchange Senior Subordinated Notes will
bear interest from August 15, 1996, the date of issuance of the Notes that are
tendered in exchange for the Exchange Notes (or
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<PAGE> 63
the most recent Interest Payment Date to which interest on such Notes has been
paid). Accordingly, holders of Senior Notes or Senior Subordinated Notes that
are accepted for exchange will not receive interest that is accrued but unpaid
on those Notes at the time of tender, but such interest will be payable solely
with respect to the Exchange Senior Notes and Exchange Senior Subordinated
Notes, respectively, received in the Exchange Offer on the first Interest
Payment Date after the Expiration Date. Interest on the Exchange Notes will be
payable semiannually on each February 15 and August 15, commencing on February
15, 1997.
PROCEDURES FOR TENDERING
Only an eligible holder of Notes may tender such Notes in the Exchange
Offer. To tender in the Exchange Offer, a holder must complete, sign and date
the relevant Letter of Transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the Letter of Transmittal and mail or
otherwise deliver such Letter of Transmittal or such facsimile, together with
the Notes and any other required documents, to the Exchange Agent so as to be
received by the Exchange Agent at the address set forth below prior to 5:00
P.M., Eastern Time, on the Expiration Date. The blue Letter of Transmittal must
be used to tender Senior Notes and the yellow Letter of Transmittal must be used
to tender Senior Subordinated Notes. Delivery of the Notes may be made by
book-entry transfer in accordance with the procedures described below.
Confirmation of such book-entry transfer must be received by the Exchange Agent
prior to the Expiration Date. In addition, either (i) certificates for such
Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Notes, if such procedure is available, into
the Exchange Agent's account at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the holder must comply with the guaranteed delivery procedures described
below. To be tendered effectively, the Letter of Transmittal and all other
required documents must be received by the Exchange Agent and the address set
forth below under "-- Exchange Agent" prior to the Expiration Date.
By executing the Letter of Transmittal, each holder will make to the
Company the representation set forth below in the second paragraph under the
heading "-- Resale of Exchange Notes."
The tender by a holder and the acceptance thereof by the Company will
constitute an agreement between such holder and the Company upon the terms and
subject to the conditions set forth herein and in the Letter of Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE SOLE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee, including Notes held in
book-entry form and who wishes to tender should contact the registered holder
promptly, or in the case of book-entry Notes, DTC participant who holds such
Notes at DTC on behalf of the beneficial owner, and instruct such registered
holder to tender on such beneficial owner's behalf. See "Prospectus
Summary -- The Exchange Offer."
Signatures on the Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of a
registered national securities exchange or of the
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<PAGE> 64
National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States or an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act
(an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Notes listed therein, such Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered holder
as such registered holder's name appears on such Notes with the signature
thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Notes not properly tendered or any Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive, to the extent permitted by applicable law, any
defects, irregularities or conditions of tender as to particular Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Notes must be cured within such time as the Company
shall determine. Although the Company intends to notify holders of defects or
irregularities with respect to tenders of Notes, none of the Company, the
Exchange Agents nor any other person shall incur any liability for failure to
give such notification. Tenders of Notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any Notes
received by the Exchange Agents that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned by
the Exchange Agents to the tendering holders as soon as practicable following
the Expiration Date.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request promptly after the date of this
Prospectus to establish accounts with respect to the Notes at the Depository for
the purpose of facilitating the Exchange Offer, and subject to the establishment
thereof, any financial institution that is a participant in the Depository's
system may make book-entry delivery of the Notes by causing the Depository to
transfer such Notes into the relevant Exchange Agent's account with respect to
the Notes in accordance with the Depository's procedures for such transfer.
Although delivery of the Notes may be effected through book-entry transfer into
the Exchange Agent's account at the Depository, an appropriate Letter of
Transmittal properly completed and duly executed with any required signature
guarantee and all other required documents must in each case be transmitted to
and received or confirmed by the Exchange Agent at its address set forth below
on or prior to the Expiration Date, or, if the guaranteed delivery procedures
described below are complied with, within the time period provided under such
procedures. Delivery of documents to the Depository does not constitute delivery
to the Exchange Agent.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Notes and (i) whose Notes are not
immediately available, (ii) who cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the relevant Exchange Agent or
(iii) who cannot complete the procedures for book-entry transfer, prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the relevant Exchange Agent receives
from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile
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<PAGE> 65
transmission, mail or hand delivery) setting forth the name and address of
the holder, the certificate number(s) of such Notes and the principal
amount of Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof),
together with the certificates(s) representing the Notes (or a confirmation
of book-entry transfer of such Notes into the Exchange Agent's account at
the Depositary) and any other documents required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Notes in proper form for transfer (or a confirmation of book-entry transfer
of such Notes into the Exchange Agent's account at the Depository) and all
other documents required by the Letter of Transmittal, are received by the
relevant Exchange Agent within three New York Stock Exchange trading days
after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWALS OF TENDERS
Except as otherwise provided herein, tenders of Notes may be withdrawn at
any time prior to 5:00 P.M., Eastern Time, on the Expiration Date.
To withdraw a tender of Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at its
address set forth herein prior to 5:00 P.M., Eastern Time, on the Expiration
Date. Any such notice of withdrawal must (i) specify the name of the person
having deposited the Notes to be withdrawn (the "Depositor"), (ii) identify the
Notes to be withdrawn (including the certificate number(s) and principal amount
of such Notes, or, in the case of Notes transferred by book-entry transfer, the
name and number of the account at the Depository to be credited and the
Depository participant through which such Notes are held), (iii) be signed by
the holder in the same manner as the original signature on the Letter of
Transmittal by which such Notes were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
transfer agent and registrar with respect to the Notes register the transfer of
such Notes into the name of the person withdrawing the tender and (iv) specify
the name in which any such Notes are to be registered, if different from that of
the Depositor. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Notes so withdrawn
will be deemed not to have been validly tendered for purposes of the Exchange
Offer and no Exchange Notes will be issued with respect thereto unless the Notes
so withdrawn are validly and timely retendered. Any Notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Notes may be retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer including, without
limitation, the terms and conditions contained herein and in the Letter of
Transmittal, the Company shall not be required to accept for exchange, or to
exchange Exchange Notes for, any Notes, and may terminate or amend the Exchange
Offer as provided herein before the acceptance of such Notes, if:
(a) any law, statute, rule, regulation or interpretation by the staff
of the SEC is proposed, adopted or enacted, which, in the reasonable
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
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(b) any governmental approval has not been obtained, which approval
the Company shall, in its reasonable judgment, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable judgment that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Notes and
return all tendered Notes to the tendering holders, (ii) extend the Exchange
Offer and retain all Notes tendered prior to the expiration of the Exchange
Offer, subject, however, to the rights of holders to withdraw such Notes (see
"-- Withdrawals of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Notes which have
not been withdrawn. If such waiver constitutes a material change to the Exchange
Offer, the Company will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered holders.
TERMINATION OF CERTAIN RIGHTS
Holders of the Notes to whom this Exchange Offer is made have special
rights under the Registration Rights Agreement, certain of which will terminate
upon the consummation of the Exchange Offer. The Registration Rights Agreement
states that the Exchange Offer shall be deemed "consummated" upon the occurrence
of (i) the filing and effectiveness under the Securities Act of a registration
statement relating to the Exchange Notes to be issued in the Exchange Offer,
(ii) the maintenance of such registration statement continuously effective for a
period of not less than the minimum period required under applicable federal and
state securities laws (provided that shall such Exchange Offer remain open and
the registration statement relating thereto remain continuously effective, in
each case, for at least 20 business days), and (iii) the delivery by the Company
to the transfer agent and registrar under the Indenture of the Exchange Notes in
the same aggregate principal amount as the aggregate principal amount of the
Notes tendered by holders thereof pursuant to the Exchange Offer. Such special
rights which will terminate include (a) the right to require the Company to
comply with the following: (x) to file with the Commission a registration
statement under the Securities Act with respect to the Exchange Notes no later
than 60 days following the Closing Date, (y) to use its reasonable efforts to
cause such registration statement to become effective under the Securities Act
at the earliest possible time, but in no event later than 120 days after the
Closing Date, and (z) upon effectiveness of the registration statement, to
commence the Exchange Offer and offer to the holders of the Notes the
opportunity to exchange their Notes for a like principal amount of the Exchange
Notes and to consummate the Exchange Offer within 45 days thereafter; (b) the
right to payment of liquidated damages in the event of a breach by the Company
of any of their obligations set forth in the foregoing clauses (x), (y) or (z),
in an amount, during the first 90-day period immediately following the
occurrence, and during the continuance, of such a breach, equal to $0.05 per
week per $1,000 principal amount of Notes held by a holder to which transfer
restrictions are applicable, such amount to increase by an additional $0.05 per
week per $1,000 principal amount of such Notes for each subsequent 90-day period
until the breach is cured up to a maximum amount of liquidated damages of $0.50
per week per $1,000 principal amount of Transfer Restricted Securities.
The Registration Statement also registers for resale, pursuant to Rule 415
under the Securities Act, the Transfer Restricted Securities. Such resale of
Transfer Restricted Securities made in reliance upon the registration thereof
under the Securities Act may be made only pursuant to the "Plan of Distribution"
set forth in this Prospectus or a separate resale prospectus, if any, filed as
an amendment to the Registration Statement. To be eligible to effect resales of
Transfer Restricted Securities pursuant to such shelf registration, a holder of
Transfer Restricted Securities must (i) notify the Company in writing within 20
days of the Expiration Date that it has determined that it is not permitted by
law or any policy of the Commission to participate in the Exchange Offer made
hereby or that such holder may not resell the Exchange Notes acquired by it in
the Exchange Offer to the public without delivering a prospectus and that this
Prospectus is inappropriate or unavailable for such resales by such holder or
that such holder is a broker-dealer and holds Notes acquired directly from the
Company or one of its affiliates and (ii) provide to the Company, within 20
business days following the Company's request therefor, such information as the
Company may reasonably request for use in connection with the Registration
Statement. In the event that any holders of Transfer
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Restricted Securities comply with the foregoing requirements, and supply any
additional information reasonably requested by the Company within 20 business
days following such request, the Company will file, as promptly as practicable,
an amendment to this Registration Statement containing an appropriate resale
prospectus and will use its best efforts to cause such amendment to become
effective under the Securities Act and to remain continuously effective
thereunder for a period of three years following the Closing Date. In the event
that the Company fails to comply with its obligations in connection with resales
of Transfer Restricted Securities, it may be required to pay liquidated damages.
See "Description of Exchange Notes -- Registration Rights; Liquidated Damages."
EXCEPT AS OTHERWISE PROVIDED HEREIN, FOLLOWING THE CONSUMMATION OF THE
EXCHANGE OFFER, ANY HOLDERS OF NOTES NOT TENDERED THEREIN WHO ARE NOT ENTITLED
TO RESELL THE SAME PURSUANT TO A RESALE PROSPECTUS, IF ANY, REQUIRED TO BE FILED
AS A POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT WILL HAVE NO FURTHER
EXCHANGE OR REGISTRATION RIGHTS AND SUCH NOTES WILL CONTINUE TO BE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER. See "-- Registration Rights and Effect of
Exchange Offer."
EXCHANGE AGENT
Fleet National Bank will act as Exchange Agent for the Exchange Offer with
respect to the Senior Notes and the Senior Subordinated Notes (the "Exchange
Agent").
Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal for the Notes and requests for
copies of Notice of Guaranteed Delivery should be directed to the Exchange
Agent, addressed as follows:
By Registered or Certified Mail, Overnight Mail or Courier Service or
in Person by Hand:
Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust Department
By Facsimile: (860) 986-7920
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone, facsimile or in person by officers and
regular employees of the Company and its affiliates, who may be reimbursed their
reasonable expenses incurred in connection with such solicitation, but who will
not otherwise receive special compensation for such efforts.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or other
persons soliciting acceptance of the Exchange Offer. The Company, however, will
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith
and pay other registration expenses, including reasonable fees and expenses of
the Trustee, filing fees, blue sky fees and printing and distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of the Notes pursuant to the Exchange Offer. If, however, certificates
representing the Exchange Notes or the Notes for principal amounts not tendered
or accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of the Notes tendered, or if
tendered Notes are registered in the name of any person other than the person
signing the Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the exchange of the Notes pursuant to the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered holder
or any other person) will be payable by the tendering holder.
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ACCOUNTING TREATMENT
The Exchange Notes will be recorded by the Company at the same carrying
value as the Notes, which is the aggregate principal amount in the case of the
Senior Notes and the Senior Subordinated Notes. Accordingly, no gain or loss for
accounting purposes will be recognized in connection with the Exchange Offer.
The expenses of the Exchange Offer will be amortized over the remaining term of
the Exchange Notes.
RESALE OF EXCHANGE NOTES
Based on interpretations by the staff of the SEC set forth in no-action
letters issued to unaffiliated third parties, the Company believes that Exchange
Notes issued pursuant to the Exchange Offer in exchange for Notes may be offered
for resale, resold and otherwise transferred by any holder of such Exchange
Notes (other than any such holder which is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act, or as set forth below, is a
broker-dealer that holds Notes acquired for its own account as a result of
market-making or other trading activities) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such holder's
business and such holder does not intend to participate, and has no arrangement
or understanding with any person to participate, in the distribution of such
Exchange Notes. Any holder who tenders in the Exchange Offer with the intention
to participate, or for the purpose of participating, in a distribution of the
Exchange Notes may not rely on the position of the staff of the SEC enunciated
in Exxon Capital Holdings Corporation (available May 13, 1988); Morgan Stanley &
Co., Incorporated (available June 5, 1991) and Shearman & Sterling (available
July 2, 1993), or similar no-action letters, but rather must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. In addition, any such resale transaction
should be covered by an effective registration statement containing the selling
security holders information required by Item 507 of Regulation S-K of the
Securities Act. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Notes, where such Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes.
By tendering Notes in the Exchange Offer, each holder will represent to the
Company that, among other things, (i) the Exchange Notes to be acquired pursuant
to the Exchange Offer are being obtained in the ordinary course of business of
the person receiving such Exchange Notes, whether or not such person is a
holder, (ii) neither the holder nor any such other person has an arrangement or
understanding with any person to participate in a distribution of such Exchange
Notes and (iii) the holder and such other person acknowledge that if they
participate in the Exchange Offer for the purpose of distributing the Exchange
Notes (a) they must, in the absence of an exemption therefrom, comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the Exchange Notes and cannot rely on the
no-action letters referenced above and (b) failure to comply with such
requirements in such instance could result in such holder incurring liability
under the Securities Act for which such holder is not indemnified or otherwise
protected by the Company. Further, by tendering in the Exchange Offer, each
holder that may be deemed an "affiliate" (as defined under Rule 405 under the
Securities Act) of the Company will represent to the Company that such holder
understands and acknowledges that the Exchange Notes may not be offered for
resale, resold or otherwise transferred by that holder without registration
under the Securities Act or an exemption therefrom.
As set forth above, affiliates of the Company are not entitled to rely on
the foregoing interpretations of the staff of the SEC with respect to resales of
the Exchange Notes without compliance with the registration and prospectus
delivery requirements of the Securities Act. In connection with the Offering,
the Company entered into the Registration Rights Agreement pursuant to which the
Company agreed to file and maintain, subject to certain limitations, a
registration statement that would allow Donaldson, Lufkin & Jenrette Securities
Corporation to engage in market-making transactions with respect to the Notes or
the Exchange Notes. The Company has agreed to bear all registration expenses
incurred under such agreement, including printing and distribution expenses,
reasonable fees of counsel, blue sky fees and expenses, reasonable fees of
independent accountants in connection with the preparation of comfort letters,
and SEC and the NASD filing fees and expenses.
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CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, the Company will have
fulfilled one of its obligations under the Registration Rights Agreement, and
holders of Notes who do not tender their Notes generally will not have any
further registration rights under the Registration Rights Agreement or
otherwise. Accordingly, any holder of Notes that does not exchange that holder's
Notes for Exchange Notes will continue to hold unregistered Notes and will be
entitled to all the rights and limitations applicable thereto under the
Indentures, except to the extent that such rights or limitations, by their
terms, terminate or cease to have further effectiveness as a result of the
Exchange Offer. The failure to participate in the Exchange Offer may adversely
affect the ability of eligible holders to resell unregistered Notes in the
future.
The Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Notes may be
resold only (i) to the Company (upon redemption thereof or otherwise), (ii)
pursuant to an effective registration statement under the Securities Act, (iii)
so long as the Notes are eligible for resale pursuant to Rule 144A, to a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of Rule 144A, (iv)
outside the United States to a foreign person pursuant to the exemption from the
registration requirements of the Securities Act provided by Regulation S
thereunder, (v) pursuant to an exemption from registration under the Securities
Act provided by Rule 144 thereunder (if available) or (vi) to an institutional
accredited investor in a transaction exempt from the registration requirements
of the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States. See "Risk Factors -- Restrictions on
Transfer."
NO RECOMMENDATION; OTHER
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. holders of the Notes are urged to consult
their financial and tax advisors in making their own decision on what action to
take. The Company's Board of Directors makes no recommendation as to whether
holders should tender Notes pursuant to the Exchange Offer.
The Company may in the future seek to acquire unregistered Notes that are
not tendered in the Exchange Offer in open market, privately negotiated or other
transactions, through subsequent exchange offers or otherwise. The Company has
no present plans to acquire any Notes that are not tendered in the Exchange
Offer or to file a registration statement to permit resales of any untendered
Notes, except as and to the extent required by the Registration Rights
Agreement.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, (the "Code") applicable Treasury regulations,
judicial authority and administrative rulings and practice. There can be no
assurance that the Internal Revenue Service (the "IRS") will not take a contrary
view, and no ruling from the IRS has been or will be sought. Legislative,
judicial or administrative changes or interpretations may be forthcoming that
could alter or modify the statements and conditions set forth herein. Any such
changes or interpretations may or may not be retroactive and could affect the
tax consequences to holders. Certain holders of the Notes (including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign corporations and persons who are not citizens or residents of the United
States) may be subject to special rules not discussed below.
The issuance of the Exchange Notes to holders of the Notes pursuant to the
terms set forth in this Prospectus will not constitute an exchange for federal
income tax purposes. Consequently, no gain or loss would be recognized by
holders of the Notes upon receipt of the Exchange Notes, and ownership of the
Exchange Notes will be considered a continuation of ownership of the Notes. For
purposes of determining gain or loss upon the subsequent sale or exchange of the
Exchange Notes, a holder's basis in the Exchange Notes should be the same as
such holder's basis in the Notes exchanged therefor. A holder's holding period
for the Exchange Notes should include the holder's holding period for the Notes
exchanged therefor. The issue price, original issue discount inclusion and other
tax characteristics of the Exchange Notes should be identical
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to the issue price, original issue discount inclusion and other tax
characteristics of the Notes exchanged therefor.
Holders of Notes should consult their own tax advisors as to the particular
tax consequences of exchanging such holder's Notes for Exchange Notes, including
the applicability and effect of any state, local or foreign tax laws.
DESCRIPTION OF EXCHANGE NOTES
GENERAL
The Exchange Senior Notes will be issued by the Company pursuant to the
same Senior Note Indenture between the Company and the Senior Note Trustee,
under which the Senior Notes were issued. The Exchange Senior Subordinated Notes
will be issued by the Company pursuant to the same Senior Subordinated Note
Indenture between the Company and the Senior Subordinated Note Trustee under
which the Senior Subordinated Notes were issued.
The terms of the Notes include those stated in the Indentures, and in
addition, with respect to the Exchange Notes, those made part of the Indentures
by reference to the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). The Notes are subject to all such terms, and holders of Notes
are referred to the Indentures and the Trust Indenture Act for a statement
thereof. The following summary of certain provisions of the Indentures and the
Registration Rights Agreement does not purport to be complete and is qualified
in its entirety by reference to the actual agreements, which have been filed as
exhibits to the Registration Statement of which this Prospectus is a part. For
purposes of this "Description of Exchange Notes," references to "Notes," "Senior
Notes," and "Senior Subordinated Notes" also include and mean the Exchange
Notes, the Exchange Senior Notes and the Exchange Senior Subordinated Notes,
respectively, offered by this Exchange Offer. The definitions of certain terms
used in the following summary are set forth below under "-- Certain
Definitions."
RANKING
The Senior Notes are general unsecured obligations of the Company ranking
senior to all subordinated Indebtedness of the Company, including the Senior
Subordinated Notes, and pari passu with all existing and future senior
Indebtedness of the Company, including borrowings under the New Credit
Agreement. However, borrowings under the New Credit Agreement are secured by
Liens on substantially all of the assets of the Company and will, therefore,
effectively rank senior to the Senior Notes. See "Risk Factors -- Effective
Subordination of Senior Notes."
The Senior Subordinated Notes are general unsecured obligations of the
Company and are subordinated in right of payment to Senior Debt. As of June 30,
1996, calculated on a pro forma basis as if the Acquisition and the related
financing had occurred as of such date, there would have been approximately
$346.7 million of Senior Debt outstanding, $246.7 million of which would have
been secured Indebtedness under the New Credit Agreement.
Certain of the Company's operations are conducted through Subsidiaries,
none of which will guarantee the Company's obligations with respect to the
Notes. As a result, the Notes will effectively be subordinated to the creditors,
including trade creditors, of such Subsidiaries.
SUBORDINATION OF SENIOR SUBORDINATED NOTES
The payment of principal of, premium, if any, and interest on the Senior
Subordinated Notes, all Obligations of the Company under the Senior Subordinated
Note Indenture, the Purchase Agreement and the Registration Rights Agreement
(including, without limitation, Liquidated Damages, if any) and the payment of
any Claims are subordinated in right of payment, as set forth in the Senior
Subordinated Note Indenture, to the prior payment in full of all Senior Debt,
including, without limitation, the Senior Notes and borrowings
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under the New Credit Agreement, whether outstanding on the date of the Senior
Subordinated Note Indenture or thereafter incurred.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, or
in an assignment for the benefit of creditors or any marshaling of Company's
assets and liabilities, the holders of Senior Debt are entitled to receive
payment in full of all Obligations due or to become due in respect of such
Senior Debt (including interest after the commencement of any such proceeding at
the rates specified in the applicable Senior Debt, whether or not an allowable
claim) and to have all Obligations due in respect of letters of credit issued
pursuant to the New Credit Agreement fully collateralized before the holders of
Senior Subordinated Notes are entitled to receive any payment or distribution
with respect to the Senior Subordinated Notes or on account of any Claim; and
until all Obligations with respect to Senior Debt are paid in full, any payment
or distribution (including, without limitation, any payment or distribution that
may be payable or deliverable by reason of the payment of any other Indebtedness
of the Company being subordinated to the payment of the Senior Subordinated
Notes) to which the holders of Senior Subordinated Notes would be entitled are
made to the holders of Senior Debt, including the Senior Notes, (except that, in
either case, holders of Senior Subordinated Notes may receive (i) Permitted
Junior Securities and (ii) payments made from the trust described below under
"-- Legal Defeasance and Covenant Defeasance").
The Company also may not make any payment or distribution (including,
without limitation, any payment or distribution that may be payable or
deliverable by reason of the payment of any other Indebtedness of the Company
being subordinated to the payment of the Senior Subordinated Notes) upon or in
respect of the Senior Subordinated Notes (except as described above) if (i) a
default in the payment when due of the principal of, premium, if any, or
interest on Designated Senior Debt or any commitment or letter of credit fee,
letter of credit reimbursement obligation or Hedging Obligation, in each case,
constituting Designated Senior Debt occurs and is continuing or (ii) any other
default occurs and is continuing with respect to Designated Senior Debt that
permits, or would permit, with the passage of time or the giving of notice or
both, holders of Designated Senior Debt as to which such default relates to
accelerate its maturity and the trustee receives a notice of such default (a
"Payment Blockage Notice") from the Company or the holders of any Designated
Senior Debt. Payments on the Senior Subordinated Notes may and shall be resumed
(a) in the case of a payment default, upon the date on which such default is
cured or waived in accordance with the terms of such Designated Senior Debt and
(b) in the case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived in accordance with the terms of such
Designated Senior Debt or 179 days after the date on which the applicable
Payment Blockage Notice is received, unless the maturity of any Designated
Senior Debt has been accelerated. No new period of payment blockage may be
commenced unless and until (1) 360 days have elapsed since the effectiveness of
the immediately prior Payment Blockage Notice and (2) all scheduled payments of
principal, premium, if any, and interest on the Senior Subordinated Notes that
have come due have been paid in full. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Senior
Subordinated Note Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice.
The Senior Subordinated Note Indenture further requires that the Company
promptly notify the holders of Senior Debt, including the holders of Senior
Notes and the Representative under the New Credit Agreement, if payment of the
Senior Subordinated Notes is accelerated because of an Event of Default;
provided, however, that so long as any Designated Senior Debt is outstanding,
any such acceleration shall not become effective until the earlier of (i) the
day which is five Business Days after the receipt by Representatives of
Designated Senior Debt of written notice of acceleration or (ii) the date of
acceleration of any Designated Senior Debt.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency of the Company, holders of Senior Subordinated
Notes may recover less ratably than creditors of the Company who are holders of
Senior Debt or other creditors of the Company who are not subordinated to
holders of Senior Debt.
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"Claim" means any claim arising from rescission of the purchase or sale of
the Senior Subordinated Notes, for damages arising from the purchase or sale of
the Senior Subordinated Notes or for reimbursement or contribution on account of
such a claim.
"Designated Senior Debt" means (i) so long as any Senior Bank Debt is
outstanding, the Senior Bank Debt, (ii) thereafter, any other Senior Debt
permitted under the Senior Subordinated Note Indenture, the principal amount of
which is $25.0 million or more and that has been designated by the Company as
"Designated Senior Debt" and (iii) holders of at least 25% of the then
outstanding Senior Notes.
"Permitted Junior Securities" means equity securities or any subordinated
debt securities of the Company, or of any successor obligor (with respect to the
Senior Debt) that are subordinate to the Senior Debt that, in the case of any
such subordinated securities, (i) are subordinated in right of payment to all
Senior Debt and all securities issued in for Senior Debt that may at the time be
outstanding to at least the same extent as the Senior Subordinated Notes are
subordinated as provided in the Senior Subordinated Note Indenture and (ii) have
a Weighted Average Life to Maturity not less than the Senior Subordinated Notes.
"Senior Bank Debt" means the Indebtedness outstanding under the New Credit
Agreement (including, without limitation, Hedging Obligations owing to lenders
that are parties to the New Credit Agreement or to Affiliates of such lenders),
as such agreement may be restated, further amended, supplemented or otherwise
modified or replaced from time to time hereafter, together with any refunding or
replacement, in whole or in part, of such Indebtedness, to the extent that any
such Indebtedness was permitted by the Indentures to be incurred.
"Senior Debt" means (a) the Senior Notes, (b) the Senior Bank Debt, (c) all
additional Indebtedness and Attributable Debt that is permitted under the Senior
Subordinated Note Indenture that is not by its terms pari passu with or
subordinated to the Senior Subordinated Notes, (d) all Obligations of the
Company and its Subsidiaries with respect to the foregoing clauses (a), (b) and
(c), including post-petition interest and (e) all (including all subsequent)
renewals, extensions, amendments, refinancings, repurchases or redemptions,
modifications, replacements or refundings thereto (whether or not coincident
therewith), in whole or in part, that are permitted by the Indentures.
Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not
include (i) any Indebtedness of the Company to any of its Subsidiaries, (ii) any
trade payables or (iii) any Indebtedness incurred in violation of the Senior
Subordinated Note Indenture.
PRINCIPAL, MATURITY AND INTEREST
Senior Notes
The Senior Notes are general unsecured obligations of the Company, limited
in aggregate principal amount to $100.0 million, and will mature on August 15,
2004. Interest on the Senior Notes will accrue at the rate per annum set forth
on the cover page of this Prospectus and are payable semi-annually in arrears on
February 15 and August 15 of each year, commencing on February 15, 1997, to
holders of record on the immediately preceding February 1 and August 1,
respectively. Interest on the Senior Notes will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from the date
of original issuance.
Senior Subordinated Notes
The Senior Subordinated Notes are general unsecured obligations of the
Company, limited in aggregate principal amount to $200.0 million, and will
mature on August 15, 2006. Interest on the Senior Subordinated Notes are payable
semiannually in arrears on February 15 and August 15 of each year, commencing on
February 15, 1997, to holders of record on the immediately preceding February 1
and August 1, respectively. Interest on the Senior Subordinated Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance.
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General
Interest on the Notes are computed on the basis of a 360-day year
consisting of twelve 30-day months. Principal of, premium, if any, interest and
Liquidated Damages, if any, on the Notes are payable at the office or agency of
the Company maintained for such purpose within the City and State of New York
or, at the option of the Company, payment of interest, if any, may be made by
check mailed to the holders of the Notes at their respective addresses set forth
in the register of holders of Notes; provided that all payments with respect to
Global Notes (as defined below) and definitive notes the holders of which have
given wire transfer instructions to the Company at least 10 business days prior
to the applicable payment date are required to be made by wire transfer of
immediately available funds to the accounts specified by the holders thereof.
Until otherwise designated by the Company, the Company's office or agency in New
York are the office of the applicable Trustee maintained for such purpose. The
Notes are issued in minimum denominations of $1,000 and integral multiples
thereof.
OPTIONAL REDEMPTION
Senior Notes
Except as described below, the Senior Notes will not be redeemable at the
Company's option prior to August 15, 2000. Thereafter, the Senior Notes are
subject to redemption at the option of the Company at any time, in whole or in
part, upon not less than 30 nor more than 60 days' prior written notice, at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon
to the applicable redemption date, if redeemed during the twelve-month period
beginning on August 15 of each of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------------------------------------------------------------------ ----------
<S> <C>
2000.............................................................. 104.938%
2001.............................................................. 103.292%
2002.............................................................. 101.646%
2003 and thereafter............................................... 100.000%
</TABLE>
In the event of an Initial Public Offering of the Company within three
years from the Issue Date, the Company may use the proceeds from such Initial
Public Offering to redeem up to 25% of the aggregate principal amount of Senior
Notes originally issued at a redemption price equal to 108 7/8% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
to the date of redemption, provided, however, that at least $75.0 million in
aggregate principal amount of Senior Notes remains outstanding following such
redemption and, provided further, that such redemption occurs within 60 days of
the closing of such Initial Public Offering.
Senior Subordinated Notes
The Senior Subordinated Notes are not redeemable at the Company's option
prior to August 15, 2001. Thereafter, the Senior Subordinated Notes are subject
to redemption at the Option of the Company at any time, in whole or in part,
upon not less than 30 nor more than 60 days' prior written notice, at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest, including Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on August 15 of each of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------------------------------------------------------------------ ----------
<S> <C>
2001.............................................................. 105.313%
2002.............................................................. 103.542%
2003.............................................................. 101.771%
2004 and thereafter............................................... 100.000%
</TABLE>
In the event of an Initial Public Offering within three years from the
Issue Date, the Company may use the proceeds from such Initial Public Offering
to redeem up to 35% of the aggregate principal amount of
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<PAGE> 74
Senior Subordinated Notes originally issued at a redemption price equal to
109 5/8% of the principal amount thereof, plus accrued and unpaid Liquidated
Damages, if any, to the date of redemption, provided, however, that at least
$100.0 million in aggregate principal amount of Senior Subordinated Notes
remains outstanding following such redemption and, provided further, that such
redemption occurs within 60 days of the closing of such Initial Public Offering.
MANDATORY REDEMPTION
The Company will not be required to make any mandatory redemption or
sinking fund payments with respect to the Notes.
SELECTION AND NOTICE
If less than all of the Senior Notes or Senior Subordinated Notes, as the
case may be, are to be redeemed at any time, selection of such Notes for
redemption are made by the appropriate Trustee in compliance with the
requirements of the principal national securities if any, on which such Notes
are listed, or, if such Notes are not so listed, on a pro rata basis, by lot or
by such method as such Trustee shall deem fair and appropriate; provided that,
no Notes of $1,000 or less shall be redeemed in part. Except as provided above
with respect to a special mandatory redemption, notices of redemption shall be
mailed by first class mail at least 30 but not more than 60 days before the
redemption date to each holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof are issued in the name of the holder thereof upon cancellation
of the original Note. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Company will mail a notice to each holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes pursuant to the procedures required by the Indentures and described in
such notice. The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note are in a principal amount
of $1,000 or an integral multiple thereof. The Subordinated Note Indenture will
provide that, prior to complying with the provisions of this covenant, but in
any event within 90 days following a Change of Control, the Company will either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Senior Subordinated Notes required by this
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covenant. The Company will publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than the Principals or their Related Parties (as defined below), (ii)
the adoption of a plan relating to the liquidation or dissolution of the
Company, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 35%
of the voting stock of the Company or (iv) the first day on which a majority of
the members of the Board of Directors of the Company are not Continuing
Directors.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indentures or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Principals" means Dennis M. Love, James E. Love, III, Carol Anne Love
Jennison, William J. Love, Charles Keith Love, David M. Love and Gay Love.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
The Company will not be required to make a Change of Control Offer upon the
occurrence of a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in the Indentures applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
The Change of Control provisions described above are applicable whether or
not any other provisions of the Indentures are applicable. Except as described
above with respect to a Change of Control, the Indentures do not contain
provisions that permit the holders of the Notes to require the Company to
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the New Credit Agreement. Future Senior
Debt of the Company may contain prohibitions on the occurrence of certain events
that would constitute a Change of Control or require such Senior Debt to be
repurchased upon a Change of Control. Moreover, the exercise by the holders of
the Notes of their right to require the Company to repurchase the Notes could
cause a default under the terms of the agreements governing outstanding Senior
Debt, including specifically the Senior Note Indenture and the New Credit
Agreement, even if the Change of Control itself does not, due to the financial
effect of such repurchase on the Company. Finally, the Company's ability to pay
cash to the holders of Notes following the occurrence of a Change of Control may
be limited by the Company's then existing financial resources under the terms of
the agreements governing outstanding Senior Debt. There can be no assurance that
sufficient funds are available when necessary to make any required repurchases.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a holder of Notes to require the Company to
repurchase such Notes as a result of a sale, lease, transfer, conveyance or
other
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<PAGE> 76
disposition of less than all of the assets of the Company and its Subsidiaries
taken as a whole to another Person or group may be uncertain.
LIMITATION ON ASSET SALES
Asset Sales
The Indentures provide that the Company will not, and will not permit any
of its Subsidiaries to, engage in an Asset Sale unless (i) the Company (or the
Subsidiary, as the case may be) receives consideration at the time of such Asset
Sale at least equal to the fair market value (as determined by the Board of
Directors in good faith, whose determination shall be conclusive evidence
thereof and shall be evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least 80%
of the consideration therefor received by the Company or such Subsidiary is in
the form of cash; provided that the amount of (x) any liabilities (as shown on
the Company's or such Subsidiary's most recent balance sheet), of the Company or
any Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the applicable Notes or any guarantee thereof) that
are assumed by the transferee of any such assets pursuant to an agreement that
releases the Company or such Subsidiary from further liability and (y) any notes
or other obligations received by the Company or any such Subsidiary from such
transferee that are immediately converted by the Company or such Subsidiary into
cash (to the extent of the cash received), shall be deemed to be cash for
purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to permanently
reduce, repurchase, repay or redeem term Indebtedness under the New Credit
Agreement or any one or more successor or additional bank facilities, (b) to
permanently reduce or repay revolving Indebtedness (and to correspondingly
reduce commitments with respect thereto) under the New Credit Agreement or any
one or more successor or additional bank facilities, or (c) to the acquisition
of a controlling interest in another business, the making of a capital
expenditure or the acquisition of other long-term assets, in each case, in the
same or a similar line of business as the Company was engaged in on the date of
such Asset Sale or another line of business that is reasonably related thereto.
The Senior Subordinated Note Indenture also permits the Company to apply any
such Net Proceeds to the redemption or repurchase of Senior Notes pursuant to an
Asset Sale Offer as described below. Pending the final application of any such
Net Proceeds, the Company may temporarily reduce revolving Indebtedness under
the New Credit Agreement or any one or more successor or additional bank
facilities or otherwise invest such Net Proceeds in any manner that is not
prohibited by the Indentures. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph are
deemed to constitute "Excess Proceeds."
Each Indenture provides that, as soon as practical, but in no event later
than 10 business days, in the case of clause (i) below, and 45 business days, in
the case of clause (ii) below, after any date (each, an "Asset Sale Offer
Trigger Date") that the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company will (i) commence an offer to purchase the maximum
principal amount of Senior Notes and other Indebtedness of the Company that
ranks pari passu in right of payment with the Senior Notes (to the extent
required by the instrument governing such other Indebtedness), that may be
purchased out of the Excess Proceeds and (ii) to the extent that more than $10.0
million of Excess Proceeds remain following consummation of the offer to
purchase Senior Notes contemplated by the preceding clause (i), commence an
offer to purchase the maximum principal amount of Senior Subordinated Notes and
other Indebtedness of the Company that ranks pari passu in right of payment with
the Senior Subordinated Notes (to the extent required by the instrument
governing such other Indebtedness), that may be purchased out of the Excess
Proceeds (each, an "Asset Sale Offer"). Any Notes and other Pari Passu Debt to
be purchased pursuant to an Asset Sale Offer are purchased pro rata based on the
aggregate principal amount of Notes and such other Pari Passu Debt outstanding
and all Notes are purchased at an offer price in cash equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase (or if such Asset Sale Offer is with
respect to any discount or zero coupon securities prior to the date of their
full accretion, 100% of the accreted value thereof on the date of purchase).
Each Indenture provides that, to the extent that any Excess Proceeds
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<PAGE> 77
remain after completion of an Asset Sale Offer, the Company may use the
remaining amount for general corporate purposes and the amount of Excess
Proceeds shall be reset at zero. The Company's ability to repurchase Notes in
connection with an Asset Sale Offer are subject to the covenants contained in
the New Credit Agreement or any additional or successor bank facility. In
addition, any repurchase of Senior Subordinated Notes are subject to the
covenant in the Senior Note Indenture described below under the caption
"-- Certain Covenants -- Restricted Payments."
Each Indenture provides that, in connection with each Asset Sale Offer, the
Company will mail to each holder of Notes at such holder's registered address a
notice stating: (i) that an Asset Sale Trigger Date has occurred and that the
Company is offering to purchase the maximum principal amount of Notes that may
be purchased out of the Excess Proceeds, at an offer price in cash equal to 100%
of the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase which date of purchase (the "Asset Sale
Offer Purchase Date") are a Business Day specified in such notice that is not
earlier than 30 days nor later than 60 days from the date such notice is mailed,
(ii) the amount of accrued and unpaid interest, if any, as of the Asset Sale
Offer Purchase Date, (iii) that any Note not tendered will continue to accrue
interest (iv) that, unless the Company defaults in the payment of the purchase
price for the Notes payable pursuant to the Asset Sale Offer, any Notes accepted
for payment pursuant to the Asset Sale Offer will cease to accrue interest after
the Asset Sale Offer Purchase Date, (v) the procedures, consistent with the
Indentures, to be followed by holders of Notes in order to accept an Asset Sale
Offer or to withdraw such acceptance, and (vi) such other information as may be
required by the Indentures or applicable laws and regulations.
On the Asset Sale Offer Purchase Date, the Company will (i) accept for
payment the maximum principal amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer that can be purchased out of the Excess
Proceeds, (ii) deposit with the applicable Paying Agent the aggregate purchase
price of all Notes or portions thereof accepted for payment and any accrued and
unpaid interest and Liquidated Damages, if any, on such Notes as of the Asset
Sale Offer Purchase Date, and (iii) deliver or cause to be delivered to the
appropriate Trustee all Senior Notes or Senior Subordinated Notes, as the case
may be, tendered pursuant to the Asset Sale Offer. If less than all of the Notes
tendered pursuant to the Asset Sale Offer are accepted for payment by the
Company for any reason consistent with the Indentures, selection of the Notes to
be purchased by the Company shall be in compliance with the requirements of the
principal national securities if any, on which the Notes are listed or, if the
Notes are not so listed, among Notes of a particular series and Pari Passu Debt
on a pro rata basis; provided that Notes accepted for payment in part shall only
be purchased in integral multiples of $1,000. The appropriate Paying Agent shall
promptly mail to each holder of Notes or portions thereof accepted for payments
an amount equal to the purchase price for such Notes plus any accrued and unpaid
interest or Liquidated Damages, if any, thereon, and the appropriate Trustee
shall promptly authenticate and mail to such holder of Notes accepted for
payment in part a new Note equal in principal amount of any unpurchased portion
of the Notes, and any Note not accepted for payment in whole or in part shall be
promptly returned to the holder of such Note. The Company will announce the
results of the Asset Sale Offer to holders of the Notes on or as soon as
practicable after the Asset Sale Purchase Date.
The Company has agreed to 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 any Asset Sale Offer.
CERTAIN COVENANTS
Restricted Payments
The Indentures provide that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend
or make any other payment or distribution on account of the Company's Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving the Company) or to the direct or indirect
holders of the Company's Equity Interests in their capacity as such (other than
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of the Company); (ii) purchase, redeem or otherwise acquire or retire for
value any Equity Interests of the Company or any direct or indirect parent of
the Company; (iii) make any principal
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<PAGE> 78
payment on, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the applicable Notes, except at
final maturity; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
the covenant described above under caption "-- Incurrence of Indebtedness
and Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Subsidiaries after the date
of the Indentures (excluding Restricted Payments permitted by clauses (x)
and (y) of the next succeeding paragraph), is less than the sum of (i) 50%
of the Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the Issue Date to the end of the Company's most recently
ended fiscal quarter for which internal financial statements are available
at the time of such Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, less 100% of such deficit), plus (ii) 100% of
the aggregate net cash proceeds received by the Company from the issue or
sale since the Issue Date of Equity Interests of the Company or of debt
securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or convertible debt securities)
sold to a Subsidiary of the Company and other than Disqualified Stock or
debt securities that have been converted into Disqualified Stock), plus
(iii) to the extent that any Restricted Investment that was made after the
Issue Date is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (B) the initial
amount of such Restricted Investment, plus (iv) $10.0 million.
The foregoing provisions will not prohibit (v) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indentures; (w) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company in for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the Company) of
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement or other acquisition shall be excluded
from clause (c) (ii) of the preceding paragraph; (x) the defeasance, redemption
or repurchase of subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Debt or the substantially concurrent sale
(other than to a Subsidiary of the Company) of Equity Interests of the Company
(other than Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase, retirement or
other acquisition shall be excluded from clause (c)(ii) of the preceding
paragraph; (y) the payment of dividends to the Company's direct parent to pay
administrative expenses in an aggregate amount not to exceed $200,000 in any
12-month period; and (z) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company or any Subsidiary of
the Company held by any member of the Company's (or any of its Subsidiaries')
management pursuant to any management equity subscription agreement or stock
option agreement in effect as of the Issue Date or entered into after the Issue
Date with members of the management of any Person acquired after the Issue Date
in connection with the acquisition of such Person or the repurchase of Equity
Interests of the Company or any Subsidiary of the Company held by employees,
former employees, directors or former directors pursuant to the terms of
agreements (including employment agreements) approved by the Board of Directors;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $3.0 million in any
12-month period following the date of the Indentures or $10.0 million in the
aggregate since the date of the Indentures; and no Default or Event of Default
shall have occurred and be continuing immediately after such transaction.
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<PAGE> 79
The amount of all Restricted Payments (other than cash) shall be the fair
market value (as determined by the Board of Directors in good faith, whose
determination shall be conclusive evidence thereof and shall be evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) on the date of the Restricted Payment of the asset(s)
proposed to be transferred by the Company or such Subsidiary, as the case may
be, pursuant to the Restricted Payment. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant "Restricted
Payments" were computed, which calculations may be based upon the Company's
latest available financial statements.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indentures provide that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guaranty or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio
for the Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least 2.5 to 1, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.
The foregoing provisions will not apply to:
(i) the incurrence by the Company of term Indebtedness under the New
Credit Agreement or any one or more successor or additional bank facilities
and/or Attributable Debt in respect of sale and leaseback transactions the
net proceeds of which were applied to repay any such term Indebtedness in
an aggregate principal amount at any time outstanding not to exceed an
amount equal to $170.0 million less the aggregate amount of all repayments,
optional or mandatory, of the principal of any such term Indebtedness
(other than repayments that are immediately reborrowed and other than
repayments made with the proceeds of sale and leaseback transactions
pursuant to this clause (i)) that have been made since the Issue Date;
(ii) (a) the incurrence by the Company of revolving Indebtedness under
the New Credit Agreement (or any one or more successor or additional bank
facilities) and letters of credit (with letters of credit being deemed to
have a principal amount equal to the maximum potential liability of the
Company thereunder) and (b) the incurrence by the Receivables Subsidiary of
Non-Recourse Debt under the Receivables Facility; provided, however, that,
the aggregate principal amount at any time outstanding pursuant to
subclauses (a) and (b) of this clause (ii) (excluding intercompany
Indebtedness of the Receivables Subsidiary permitted by clause (viii)
below) shall not exceed an amount equal to $155.0 million less the
aggregate amount of all Net Proceeds of Asset Sales applied to permanently
reduce the commitments with respect to such revolving Indebtedness pursuant
to the covenant described above under the caption "-- Limitation on Asset
Sales -- Asset Sales;"
(iii) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(iv) the incurrence by the Company of Indebtedness represented by the
Senior Notes and the Senior Subordinated Notes;
(v) the incurrence by the Company of Indebtedness represented by
Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case, incurred for the purpose of financing all or any
part of the purchase price or cost of construction or improvement of
property, plant or equipment used in the business of the Company, in an
aggregate principal amount not to exceed $25.0 million at any time
outstanding;
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(vi) the incurrence by any of the Company's Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new
Subsidiary; provided that (1) such Indebtedness was incurred by the prior
owner of such assets or such Subsidiary prior to such acquisition and was
not incurred in connection with, or in contemplation of, such acquisition
or is in the nature of an earnout payment or holdback payment incurred by
one of the Company's Subsidiaries in connection with the acquisition of
assets or a new Subsidiary, (2) the principal amount (or accreted value, as
applicable) of such Indebtedness, together with any other outstanding
Indebtedness incurred pursuant to this clause (vi), does not exceed $10.0
million and (3) the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred would have been at least 2.5 to 1,
determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been
incurred at the beginning of such four-quarter period;
(vii) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Debt in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by the Indentures to be incurred;
(viii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Subsidiaries, and any intercompany Indebtedness arising in connection with
a Receivables Facility; provided, however, that (1) if the Company is the
obligor on such Indebtedness, such Indebtedness is expressly subordinate to
the payment in full of all Obligations with respect to the Notes and (2)(A)
any subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Company or a
Subsidiary and (B) any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Subsidiary thereof shall be
deemed, in each case, to constitute an incurrence of such Indebtedness by
the Company or such Subsidiary, as the case may be;
(ix) the incurrence by the Company of Hedging Obligations that are
incurred for the purpose of fixing or hedging interest rate risk with
respect to any floating rate Indebtedness that is permitted by the terms of
the Indentures to be outstanding or for the purpose of hedging against
currency rate fluctuations;
(x) Guarantees by the Company and its Subsidiaries of Indebtedness of
Subsidiaries, and Guarantees by Subsidiaries of Indebtedness of the
Company, that are, in each case, permitted to be incurred under this
covenant other than Indebtedness permitted to be incurred pursuant to
subclause (b) of clause (ii) above; and
(xi) the incurrence by the Company or any of its Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other clause of
this paragraph) in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding not to exceed $25.0 million.
Liens
The Indentures provide that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer
to exist any Lien securing Indebtedness on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens.
No Senior Subordinated Debt
The Senior Subordinated Note Indenture provides that the Company will not
incur any Indebtedness that is subordinate or junior in right of payment to any
Senior Debt and senior in any respect in right of payment to the Senior
Subordinated Notes.
Sale and Leaseback Transactions
The Indentures provide that the Company will not, and will not permit any
of its Subsidiaries to, enter into any sale and leaseback transaction; provided
that the Company or any of its Subsidiaries may enter into a
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sale and leaseback transaction if (i) the Company could have incurred
Indebtedness in an amount equal to the Attributable Debt relating to such sale
and leaseback transaction pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of the covenant described above under the caption
"-- Incurrence of Indebtedness and Issuance of Preferred Stock," (ii) the gross
cash proceeds of such sale and leaseback transaction are at least equal to the
fair market value (as determined in good faith by the Board of Directors and set
forth in an Officers' Certificate delivered to the Trustee) of the property that
is the subject of such sale and leaseback transaction and (iii) the transfer of
assets in such sale and leaseback transaction is permitted by, and the Company
applies the proceeds of such transaction in compliance with, the covenant
described above under the caption "-- Limitation on Asset Sales -- Asset Sales."
Payments or arrangements pursuant to a Tax Incentive Program shall not
constitute sale and leaseback transactions.
Limitations on Issuances of Guarantees of Indebtedness
The Indentures provide that the Company will not permit any of its
Subsidiaries, directly or indirectly, to Guarantee or pledge any assets to
secure the payment of any other Indebtedness of the Company unless such
Subsidiary simultaneously executes and delivers supplemental indentures to the
Indentures providing for the Guarantee of the payment of the Notes by such
Subsidiary, which Guarantee shall be senior to or pari passu with such
Subsidiary's Guarantee of or pledge to secure such other Indebtedness except
that the Senior Subordinated Note Indenture will permit such Guarantee to be
subordinated to any Guarantee of Senior Debt to the same extent that the Senior
Subordinated Notes are subordinated to Senior Debt. Notwithstanding the
foregoing, any such Guarantee by a Subsidiary of the Notes will provide by its
terms that it are automatically and unconditionally released and discharged upon
any sale, or transfer, to any Person not an Affiliate of the Company, of all of
the Company's stock in, or all or substantially all the assets of, such
Subsidiary, which sale, or transfer is made in compliance with the applicable
provisions of the Indentures. The form of such Guarantee are attached as an
exhibit to the Indentures.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indentures provide that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (1) on its Capital Stock
or (2) with respect to any other interest or participation in, or measured by,
its profits, or (b) pay any indebtedness owed to the Company or any of its
Subsidiaries, (ii) make loans or advances to the Company or any of its
Subsidiaries or (iii) transfer any of its properties or assets to the Company or
any of its Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the Issue Date,
(b) the New Credit Agreement as in effect as of the Issue Date and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, taken as a whole, no more restrictive with
respect to such dividend and other payment restrictions than those contained in
the New Credit Agreement as in effect on the Issue Date, (c) the Indentures and
the Notes, (d) applicable law, (e) any instrument governing Indebtedness of a
Subsidiary of the Company that was permitted by the terms of the Indentures to
be incurred, (f) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (h) Permitted Refinancing Debt provided
that the restrictions contained in the agreements governing such Permitted
Refinancing Debt are, taken as a whole, no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced, (i) an agreement
that has been entered into for the sale or disposition of all or substantially
all of the Equity Interests or property or assets of a Subsidiary of the Company
or (j) restrictions on the Receivables Subsidiary pursuant to the Receivables
Facility.
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Merger, Consolidation, or Sale of Assets
The Indentures provide that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the Notes and the Indentures pursuant to supplemental indentures
in a form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of the Company with or into a Wholly Owned Subsidiary of the
Company, the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under the caption "-- Incurrence
of Indebtedness and Issuance of Preferred Stock."
Transactions with Affiliates
The Indentures provide that the Company will not, and will not permit any
of its Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Subsidiary with an unrelated Person and (ii)
the Company delivers to the Trustee (a) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $1.0 million, a resolution of the Board of Directors
set forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors
and (b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million, an
opinion as to the fairness to the holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing; provided that (v) sales of Receivables to the
Receivables Subsidiary on arm's length terms, (w) any transaction in accordance
with the terms of any Existing Employment Agreement as the same are in effect on
the Issue Date and any employment agreement entered into by the Company or any
of its Subsidiaries in the ordinary course of business and consistent with the
past practice of the Company or such Subsidiary, (x) transactions between or
among the Company and/or its Controlled Subsidiaries, (y) transactions pursuant
to the Tax Allocation Agreement as in effect on the date of the Indentures and
(z) Restricted Payments and Permitted Investments that are permitted by the
provisions of the Indentures described above under the caption "-- Restricted
Payments," in each case, shall not be deemed Affiliate Transactions. In
addition, the Indentures provide that the Company will not, and will not permit
any of its Subsidiaries to, merge with or into, or purchase all or substantially
all of the assets of, any Affiliate, unless (i) such Affiliate had positive
Consolidated Cash Flow in each of its most recently ended two full fiscal years
and (ii) the Fixed Charge Coverage Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such transaction is entered into,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the transaction had been entered into at the
beginning of such four-quarter period, would have been higher than the actual
Fixed Charge Coverage Ratio for such four-quarter period.
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Limitation on Issuances and Sales of Capital Stock of Wholly Owned
Subsidiaries
The Indentures provide that the Company (i) will not, and will not permit
any Wholly Owned Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Subsidiary of the
Company to any Person (other than the Company or a Wholly Owned Subsidiary of
the Company), unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Capital Stock of such Wholly Owned Subsidiary and (b)
the cash Net Proceeds in excess of $1.0 million from such transfer, conveyance,
sale, lease or other disposition are applied in accordance with the covenant
described above under the caption "-- Limitation on Asset Sales -- Asset Sales,"
and (ii) will not permit any Wholly Owned Subsidiary of the Company to issue any
of its Equity Interests (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to the
Company or a Wholly Owned Subsidiary of the Company, unless (a) such issuance is
of all the Equity Interests of such Wholly Owned Subsidiary and (b) the cash Net
Proceeds in excess of $1.0 million from such issuance are applied in accordance
with the covenant described above under the caption "-- Limitation on Asset
Sales -- Asset Sales".
Payments for Consent
The Indentures provide that neither the Company nor any of its Subsidiaries
will, directly or indirectly,
pay or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any holder of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the Indentures or the
Notes unless such consideration is offered to be paid or is paid to all holders
of the Notes that consent, waive or agree to amend in the time frame set forth
in the solicitation documents relating to such consent, waiver or agreement.
Reports
The Indentures provide that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Notes are outstanding, beginning October 31, 1996, the Company will
furnish to the holders of Notes (i) all quarterly and annual financial
information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all current reports
that would be required to be filed with the Commission on Form 8-K if the
Company were required to file such reports. In addition, whether or not required
by the rules and regulations of the Commission, beginning October 31, 1996, the
Company will file a copy of all such information and reports with the Commission
for public availability (unless the Commission will not accept such a filing)
and make such information available to securities analysts and prospective
investors upon request. In addition, the Company has agreed that, for so long as
any Notes remain outstanding, it will furnish to the holders and to securities
analysts and prospective investors, upon their request, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indentures provide that each of the following constitutes an Event of
Default: (i) default for 30 days
in the payment when due of interest on, or Liquidated Damages with respect to,
the applicable Notes (whether or not prohibited by the subordination provisions
of the Senior Subordinated Note Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Senior Subordinated Note Indenture); (iii)
failure by the Company to comply with the provisions described under the
captions "-- Repurchase at the Option of Holders -- Change of Control," or
"-- Limitation on Asset Sales -- Asset Sales"; (iv) failure by the Company for
60 days after notice to comply with any of its other agreements in the
applicable Indenture or the applicable Notes; (v) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Subsidiaries) whether
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such Indebtedness or guarantee now exists, or is created after the date of the
Indentures, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10.0 million or more; (vi) failure by the Company or
any of its Subsidiaries to pay final judgments not covered by insurance
aggregating in excess of $10.0 million, which judgments are not paid,
discharged, bonded or stayed for a period of 60 days; (vii) except as permitted
by the Indentures, any Subsidiary Guarantee shall be held invalid or shall cease
to be in full force and effect, or any Person acting on behalf of any Guarantor
shall deny or disaffirm its obligations under its Subsidiary Guarantee; and
(viii) certain events of bankruptcy or insolvency with respect to the Company,
any Significant Subsidiary or any group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary.
If any Event of Default under either of the Indentures occurs and is
continuing, the Trustee or the holders of at least 25% in principal amount of
the then outstanding Notes issued under such Indenture may declare all such
Notes to be due and payable immediately; provided, however, that so long as any
Designated Senior Debt is outstanding, such declaration shall not become
effective until the earlier of (i) the day which is five Business Days after the
receipt by Representatives of Designated Senior Debt of written notice of
acceleration or (ii) the date of acceleration of any Designated Senior Debt.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture pursuant to which they were issued or the Notes except as provided
in such Indenture. Subject to certain limitations, holders of a majority in
principal amount of either series of Notes may direct the applicable Trustee in
its exercise of any trust or power. Each Trustee may withhold from holders of
the Notes notice of any continuing Default or Event of Default (except a Default
or Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the applicable Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. If an Event of Default
occurs under the Senior Note Indenture prior to August 15, 2000 or under the
Senior Subordinated Note Indenture prior to August 15, 2001, by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding the prohibition on redemption of the Notes prior
to such date, then the premium specified in the applicable Indenture shall also
become immediately due and payable to the extent permitted by law upon the
acceleration of the Notes.
The holders of a majority in aggregate principal amount of the applicable
series of Notes then outstanding by notice to the applicable Trustee may on
behalf of the holders of all of such Notes waive any existing Default or Event
of Default and its consequences under the applicable Indenture except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, such Notes.
The Company is required to deliver to the Trustees annually a statement
regarding compliance with the Indentures, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustees a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF PARTNERS, DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS
No direct or indirect 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 the Indentures or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each holder of Notes by accepting a
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Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Senior Notes or Senior
Subordinated Notes, as the case may be, ("Legal Defeasance") except for (i) the
rights of holders of outstanding Notes to receive payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments are
due from the trust referred to below, (ii) the Company's obligations with
respect to the Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payment and money for security payments held in trust and (iii) the
rights, powers, trusts, duties and immunities of the applicable Indenture. In
addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Senior Note Indenture or Senior Subordinated Note Indenture
("Covenant Defeasance"), as the case may be, and thereafter any omission to
comply with such obligations shall not constitute a Default or Event of Default
with respect to the Senior Notes or Senior Subordinated Notes, as the case may
be. In the event Covenant Defeasance occurs, certain events (not including
non-payment, bankruptcy, receivership, rehabilitation and insolvency events)
described under "Events of Default" will no longer constitute an Event of
Default with respect to the Senior Notes or Senior Subordinated Notes, as the
case may be.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the applicable Trustee, in trust, for
the benefit of the holders of the Senior Notes or Senior Subordinated Notes, as
the case may be, cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as are sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such outstanding Notes on the
stated maturity or on the applicable redemption date, as the case may be, and
the Company must specify whether such Notes are being defeased to maturity or to
a particular redemption date; (ii) in the case of Legal Defeasance, the Company
shall have delivered to the applicable Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of the applicable Indenture, there has
been a change in the applicable federal income tax law, in either case to the
effect that, and based thereon such opinion of counsel shall confirm that, the
holders of the outstanding Senior Notes or Senior Subordinated Notes, as the
case may be, will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and are subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred; (iii) in the case of
Covenant Defeasance, the Company shall have delivered to the applicable Trustee
an opinion of counsel in the United States reasonably acceptable to such Trustee
confirming that the holders of such outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Covenant
Defeasance and are subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day after the date
of deposit (or greater period of time in which any such deposit of trust funds
may remain subject to bankruptcy or insolvency laws insofar as those apply to
the deposit by the Company); (v) such Legal Defeasance or Covenant Defeasance
will not result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than the Indentures) to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound; (vi) the Company must have delivered to the
applicable Trustee an opinion of counsel to the effect that, as of the date of
such opinion, (A) the trust funds will not be subject to rights of holders of
Indebtedness other than the Senior Notes or Senior Subordinated Notes, as the
case may be, and (B) assuming no intervening bankruptcy of the Company between
the date of deposit and the 91st day following the deposit and assuming
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no holder of Notes is an insider of the Company, after the 91st day following
the deposit, the trust funds will not be subject to the effects of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally under any applicable United States or state law;
(vii) the Company must deliver to the applicable Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the holders of Notes over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and (viii) the Company must deliver to the applicable Trustee
an Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A holder may transfer or Notes in accordance with the provisions of the
applicable Indenture. The Registrar and the applicable Trustee may require a
holder, among other things, to furnish appropriate endorsements and transfer
documents and the Company may require a holder to pay any taxes and fees
required by law or permitted by such Indenture. The Company is not required to
transfer or Exchange any Note selected for redemption. Also, the Company is not
required to transfer or Exchange any Note for a period of 15 days before a
selection of Notes to be redeemed.
The registered holder of a Note are treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indentures or
the Senior Notes or Senior Subordinated Notes, as the case may be, may be
amended or supplemented with the consent of the holders of at least a majority
in principal amount of the applicable Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or offer for, Notes), and any existing default or compliance with any provision
of the Indentures or the Notes may be waived with the consent of the holders of
a majority in principal amount of the applicable Notes (including consents
obtained in connection with a purchase of, or tender offer or offer for, such
Notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting holder): (i) reduce the
principal amount of Notes whose holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of such Notes (other than
provisions relating to the covenants described above under the caption
"-- Repurchase at the Option of Holders"), (iii) reduce the rate of or change
the time for payment of interest on any Note, (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, interest or
Liquidated Damages, if any, on the Notes (except a rescission of acceleration of
the Notes by the holders of at least a majority in aggregate principal amount of
the Notes and a waiver of the payment default that resulted from such
acceleration), (v) make any Note payable in money other than that stated in the
Notes, (vi) make any change in the provisions of the Indentures relating to
waivers of past Defaults or the rights of holders of Notes to receive payments
of principal of, premium, if any, interest or Liquidated Damages, if any, on the
Notes, (vii) waive a redemption payment with respect to any Note (other than a
payment required by one of the covenants described above under the caption
"-- Repurchase at the Option of Holders") or (viii) make any change in the
foregoing amendment and waiver provisions. In addition, (i) any amendment to the
provisions of Article 10 of the Senior Subordinated Note Indenture (which relate
to subordination) will require the consent of the holders of at least 75% in
aggregate principal amount of the Senior Subordinated Notes then outstanding if
such amendment would adversely affect the rights of holders of any such Notes
and (ii) any amendment to the covenants in either of the Indentures described
under the captions "-- Repurchase at the Option of Holders" and "-- Limitation
on Asset Sales -- Asset Sales," including, in each case, the related
definitions, will require the consent of the holders of at least 75% in
aggregate principal amount of the Notes issued under such Indenture that are
then outstanding if such amendment would adversely affect the rights of holders
of any such Notes.
Notwithstanding the foregoing, without the consent of any holder of Notes,
the Company and the appropriate Trustee may amend or supplement the Senior Note
Indenture or the Senior Subordinated Note
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Indenture or the respective Notes, as the case may be, to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
obligations to holders of Notes in the case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
holders of Notes or that does not adversely affect the legal rights under the
applicable Indenture of any such holder, or to comply with requirements of the
Commission in order to effect or maintain the qualification of each Indenture
under the Trust Indenture Act.
CONCERNING THE TRUSTEES
The Indentures contain certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee is permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The holders of a majority in principal amount of the then outstanding
Senior Notes or Senior Subordinated Notes, as the case may be, will have the
right to direct the time, method and place of conducting any proceeding for
exercising any remedy available to the applicable Trustee, subject to certain
exceptions. The Indentures provide that in case an Event of Default shall occur
(which shall not be cured), the applicable Trustee is required, in the exercise
of its power, to use the degree of care of a prudent man in the conduct of his
own affairs. Subject to such provisions, Trustee are under any obligation to
exercise any of its rights or powers under the applicable Indenture at the
request of any holder of Notes, unless such holder shall have offered to the
applicable Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
All of the Notes to be resold as set forth herein will initially be issued
in the form of one or more Senior Global Notes and one or more Senior
Subordinated Global Notes (the "Global Notes"). Such Global Notes are deposited
on the date of the closing of the sale of the Senior Notes or Senior
Subordinated Notes, as the case may be, offered hereby (the "Closing Date")
with, or on behalf of, the Depository and registered in the name of Cede & Co.,
as nominee of the Depository (each such nominee being referred to herein as a
"Global Note Holder").
The Depository is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depository's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depository's
Participants include securities brokers and dealers (including the Initial
Purchaser), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depository's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depository's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depository only thorough the Depository's
Participants or the Depository's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depository (i) upon deposit of the Global Notes, the Depository will credit the
accounts of Participants designated by the Initial Purchasers with portions of
the principal amount of such Global Note and (ii) ownership of the Notes
evidenced by Global Note are shown on, and the transfer of ownership thereof are
effected only through, records maintained by the Depository (with respect to the
interests of the Depository's Participants), the Depository's Participants and
the Depository's Indirect Participants. Prospective purchasers are advised that
the laws of some states require that certain persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer Notes evidenced by the Global Notes are limited to such extent. For
certain other restrictions on the transferability of the Notes, see "Notice to
Investors."
So long as the Global Note holder is the registered owner of any Notes, the
Global Note holder are considered the sole holder under the applicable Indenture
of any Notes evidenced by the Global Note.
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Beneficial owners of Notes evidenced by Global Notes will not be considered the
owners or holders thereof under the Indentures for any purpose, including with
respect to the giving of any directions, instructions or approvals to the
Trustees thereunder. Neither the Company nor the Trustee will have any
responsibility or liability for any aspect of the records of the Depository or
for maintaining, supervising or reviewing any records of the Depository relating
to the Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Notes registered in the name of the Global
Note holder on the applicable record date are payable by the Trustees to or at
the direction of the Global Note holder in its capacity as the registered holder
under the Indentures. Under the terms of the Indentures, the Company and the
Trustees may treat the persons in whose names Notes, including the Global Notes,
are registered as the owners thereof for the purpose of receiving such payments.
Consequently, neither the Company nor either of the Trustees has or will have
any responsibility or liability for the payment of such amounts to beneficial
owners of Notes (including principal, premium, if any, interest and Liquidated
Damages, if any). The Company believes, however, that it is currently the policy
of the Depository to immediately credit the accounts of the relevant
Participants with such payments, in amounts proportionate to their respective
holdings of beneficial interests in the relevant security as shown on the
records of the Depository. Payments by the Depository's Participants and the
Depository's Indirect Participants to the beneficial owners of Notes are
governed by standing instructions and customary practice and are the
responsibility of the Depository's Participants or the Depository's Indirect
Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in a
Global Note may, upon request to the Trustee, exchange such beneficial interest
for the appropriate Notes in the form of Certificated Securities. Upon any such
issuance, such Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). All such certificated Notes would be subject to the
legend requirements described herein under "Notice to Investors." In addition,
if (i) the Company notifies the applicable Trustee in writing that the
Depository is no longer willing or able to act as a depositary with respect to
the Senior Notes or Senior Subordinated Notes, as the case may be, and the
Company is unable to locate a qualified successor within 90 days or (ii) the
Company, at its option, notifies the applicable Trustee in writing that it
elects to cause the issuance of Senior Notes or Senior Subordinated Notes, as
the case may be, in the form of Certificated Securities under the appropriate
Indenture, then, upon surrender by the Global Note holder of the applicable
Global Note, Senior Notes or Senior Subordinated Notes, as the case may be, in
such form are issued to each person that such Global Note holder and the
Depository identify as being the beneficial owner of the related Notes.
Neither the Company nor either of the Trustees are liable for any delay by
a Global Note holder or the Depository in identifying the beneficial owners of
Notes and the Company and the Trustees may conclusively rely on, and are
protected in relying on, instructions from the Global Note holders or the
Depository for all purposes.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchaser entered into the Registration Rights
Agreement as of the Closing Date. Pursuant to the Registration Rights Agreement,
the Company will agree to file with the Commission this Registration Statement
on the appropriate form under the Securities Act with respect to the Exchange
Senior Notes and Exchange Senior Subordinated Notes, as the case may be (the
"Exchange Offer Registration Statement"). Upon the effectiveness of such
Exchange Offer Registration Statement, the Company will offer to the holders of
Transfer Restricted Securities (as defined below) pursuant to the Exchange Offer
who are able to make certain representations the opportunity to exchange their
Transfer Restricted Securities for Exchange Notes. If (i) the Company is not
required to file an Exchange Offer Registration Statement or permitted to
consummate the Exchange Offer because the Exchange Offer is not permitted by
applicable law or Commission policy or (ii) any holder of Transfer Restricted
Securities notifies the Company on or prior to the 20th Business Day following
consummation of the Exchange Offer that (A) it is prohibited by law or
Commission policy from participating in the Exchange Offer or (B) it may not
resell
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the Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales or (C)
it is a broker-dealer and owns Notes acquired directly from the Company or an
affiliate of the Company, the Company will file with the Commission a Shelf
Registration Statement to cover resales of the Notes by the holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. The Company will use all
commercially reasonable efforts to cause the applicable registration statement
to be declared effective as promptly as possible by the Commission. For purposes
of the foregoing, "Transfer Restricted Securities" means each Note until (i) the
date on which such Note has been exchanged by a person other than a
broker-dealer for a Series B Note in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of a Note for an Exchange
Note, the date on which such Exchange Note is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Note has been effectively registered under the Act and
disposed of in accordance with the Shelf Registration Statement or (iv) the date
on which such Note is distributed to the public pursuant to Rule 144 under the
Act.
The Registration Rights Agreement will provide that (i) the Company will
file an Exchange Offer Registration Statement with the Commission on or prior to
60 days after the Closing Date, (ii) the Company will use all commercially
reasonable efforts to have the Exchange Offer Registration Statement declared
effective by the Commission on or prior to 120 days after the Closing Date,
(iii) unless the Offer would not be permitted by applicable law or Commission
policy, the Company will commence the Offer and use all commercially reasonable
efforts to issue on or prior to 45 business days after the date on which the
Exchange Offer Registration Statement was declared effective by the Commission,
Exchange Notes in exchange for all Notes tendered prior thereto in the Exchange
Offer and (iv) if obligated to file the Shelf Registration Statement, the
Company will use all commercially reasonable efforts to file the Shelf
Registration Statement with the Commission on or prior to 30 days after such
filing obligation arises and to cause the Shelf Registration to be declared
effective by the Commission on or prior to 60 days after such obligation arises.
If (a) the Company fails to file any of the Registration Statements required by
the Registration Rights Agreement on or before the date specified for such
filing, (b) any of such Registration Statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), or (c) the Company fails to Consummate the Offer
within 60 days of the Effectiveness Target Date with respect to the Exchange
Offer Registration Statement, or (d) the Shelf Registration Statement or the
Exchange Offer Registration Statement is declared effective but thereafter
ceases to be effective or usable in connection with resales of Transfer
Restricted Securities during the periods specified in the Registration Rights
Agreement (each such event referred to in clauses (a) through (d) above a
"Registration Default"), then the Company will pay Liquidated Damages to each
holder of Transfer Restricted Securities, with respect to the first 90-day
period immediately following the occurrence of such Registration Default in an
amount equal to $.05 per week per $1,000 principal amount of Notes constituting
Transfer Restricted Securities held by such holder. The amount of the additional
interest will increase by an additional $.05 per week per $1,000 principal
amount constituting Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal
amount of Notes constituting Transfer Restricted Securities. All accrued
additional interest are paid by the Company in cash on each Damages Payment Date
to the Global Note holder by wire transfer of immediately available funds or by
federal funds check and to holders of Certificated Securities by mailing checks
to their registered addresses. Following the cure of all Registration Defaults,
the accrual of Liquidated Damages will cease.
Holders of Notes are required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Offer and are required to deliver information to be used in
connection with the Shelf Registration Statement and to provide comments on the
Shelf Registration Statement within the time periods set forth in the
Registration Rights Agreement in order to have their Senior Notes included in
the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
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ADDITIONAL INFORMATION
The Company is not currently subject to the periodic reporting and other
informational requirements of the Exchange Act, but has agreed to file certain
such reports and information with the Commission so long as any Notes are
outstanding. Anyone who receives this Prospectus may obtain a copy of the
Indentures and the Registration Rights Agreement without charge by writing to
the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia 30336, Attn: Vice
President, Finance and Administration. See "Available Information."
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indentures. Reference
is made to the Indentures for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person, as amended.
"Acquisition" means the acquisition of assets of JR Flexible by the Company
pursuant to an Asset Purchase Agreement, dated as of April 10, 1996, between the
Company and James River.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback) other
than sales of inventory or obsolete or excess equipment or equipment that is no
longer usable, in each case, in the ordinary course of business consistent with
past practices (provided that the sale, lease, conveyance or other disposition
of all or substantially all of the assets of the Company and its Subsidiaries
taken as a whole are governed by the provisions of the Indentures described
above under the caption "-- Repurchase at the Option of holders -- Change of
Control" and/or the provisions described above under the caption "-- Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant), and (ii) the issue or sale by the Company or any of its Subsidiaries
of Equity Interests of any of the Company's Subsidiaries, in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $1.0 million or (b)
for net proceeds in excess of $1.0 million. Notwithstanding the foregoing: (i) a
transfer of assets by the Company to a Controlled Subsidiary or by a Controlled
Subsidiary to the Company or to another Controlled Subsidiary, (ii) an issuance
of Equity Interests by a Wholly Owned Subsidiary to the Company or to another
Wholly Owned Subsidiary, (iii) sales of Target Assets, (iv) a sale of
Receivables to or by the Receivables Subsidiary and (v) a Permitted Investment
or Restricted Payment that is permitted by the covenant described above under
the caption "-- Restricted Payments" will not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
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"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of twelve months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding twelve months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500.0 million and a Thompson Bank Watch
Rating of "B" or better, (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses (ii)
and (iii) above without regard to the maturities of such underlying securities
entered into with any financial institution meeting the qualifications specified
in clause (iii) above, (v) commercial paper having the highest rating obtainable
from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in
each case maturing within six months after the date of acquisition and (vi)
deposit accounts with domestic commercial banks.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale of such Person or any of its Subsidiaries (to the extent such losses
were deducted in computing such Consolidated Net Income), plus (ii) provision
for taxes based on income or profits of such Person and its Subsidiaries for
such period, to the extent that such provision for taxes was included in
computing such Consolidated Net Income, plus (iii) consolidated interest expense
of such Person and its Subsidiaries for such period, whether paid or accrued and
whether or not capitalized (including, without limitation, amortization of
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings or any Receivables
Facility, and net payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iv) depreciation, amortization (including amortization of goodwill
and other intangibles and transaction fees and expenses incurred by the Company
in connection with the Acquisition, the New Credit Agreement, any Receivables
Facility and the Notes and in connection with subsequent acquisitions and
financings) and other non-cash charges (excluding any such non-cash charge to
the extent that it represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period, to the extent that
such depreciation, amortization and other non-cash charges were deducted in
computing such Consolidated Net Income, plus (v) charges and expenses related to
the termination or modification of JR Flexible employee benefit plans in effect
on the date of the Indentures, to the extent that such charges and expenses were
deducted in computing such Consolidated Net Income, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in same proportion) that the Net
Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided
that (i) the Net Income (but not loss) of any Person that is not a Subsidiary or
that is
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accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash to the referent
Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, (iv) the cumulative effect of a change in accounting principles
shall be excluded, (v) any extraordinary items and any gains or losses in
connection with Asset Sales or reserves related thereto shall be excluded, (vi)
any charges or reserves taken for severance, plant closings, equipment
relocations and other charges related to the consolidation and rationalization
of JR Flexible initiated within 18 months of the date of the Indentures shall be
excluded and (vii) any charge taken for severance relating to the early
retirement program implemented in fiscal year 1996 shall be excluded.
"Controlled Subsidiary" of any Person means a Subsidiary of such Person
(which may include the Receivables Subsidiary) (i) 90% or more of the total
Equity Interests or other ownership interests of which (other than directors
qualifying shares) shall at the time be owned by such Person or by one or more
Controlled Subsidiaries of such Person and (ii) of which such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies, whether through the ownership of voting securities, by
agreement or otherwise.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Employment Agreements" means (a) the Deferred Income Agreements,
dated various dates prior to July 22, 1996, with each of Robert B. Paxton,
Edward J. Hilbert, Jr. and a Deferred Income Agreement dated as of July 11, 1996
with Neil Williams, (b) the Deferred Compensation Agreement, dated as of July 1,
1985, with Robert T. Meyer, (c) the Family Security Agreements with each of
Dennis M. Love, R. Michael Hembree, Thomas J. Dunn and Nicklas D. Stucky and (d)
the Amended and Restated Employment Agreement, dated June 23, 1983, by and
between the Company and J. Erskine Love, Jr.
"Existing Indebtedness" means up to $18.0 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the New Credit Agreement) in existence on the date of the
Indentures, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings or any
Receivables Facility, and net payments (if any) pursuant to Hedging Obligations)
and (ii) the consolidated interest expense of such Person and its Subsidiaries
that was capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Subsidiaries or secured by a Lien on assets of such Person or one of its
Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the
product of (a) all cash dividend payments (and non-cash dividend payments in the
case of
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a Person that is a Subsidiary) on any series of preferred stock of such Person,
times (b) a fraction, the numerator of which is one and the denominator of which
is one minus the then current combined federal, state and local statutory tax
rate of such Person, expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Subsidiaries following
the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"Indebtedness" means, for purposes of the Indenture, with respect to any
Person, any indebtedness of such Person, whether or not contingent, in respect
of borrowed money, including without limitation certificates of participation or
other interests in Receivables or any similar instruments and certificates
(other than any interests in the Receivables held by the Receivables
Subsidiary), or evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability upon
a balance sheet of such Person prepared in accordance with GAAP, as well as all
such indebtedness of others secured by a Lien on any asset of such Person
(whether or not such indebtedness is assumed by such Person) and, to the extent
not otherwise included, the Guarantee by such Person of any such indebtedness of
any other Person; provided, however, that Indebtedness shall not include any
servicing or guarantee of servicing obligations with respect to Receivables
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or any payments pursuant to a Tax Incentive Program. The amount of Indebtedness
evidenced by a certificate of participation or other interests in Receivables
and similar instruments or certificates are deemed to be the outstanding amount
of such certificate of participation or other interests.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
the Company for consideration consisting of common equity securities of the
Company shall not be deemed to be an Investment. If the Company or any
Subsidiary of the Company sells or otherwise disposes of any Equity Interests of
any direct or indirect Subsidiary of the Company such that, after giving effect
to any such sale or disposition, such Person is no longer a Subsidiary of the
Company, the Company shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the fair market value of the Equity
Interests of such Subsidiary not sold or disposed of.
"Issue Date" means August 22, 1996.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction), other
than liens and setoff rights with respect to deposit accounts.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale (including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and any other expenses incurred or to be
incurred as a result thereof (including, without limitation, severance,
relocation, lease termination and other similar expenses), taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness (other than term Indebtedness or revolving
Indebtedness under the New Credit Agreement or any one or more successor or
additional bank facilities) secured by a Lien on the asset or assets that were
the subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
"New Credit Agreement" means that certain Credit Agreement, dated as of
August 22, 1996, by and among the Company, the Lenders named therein and The
First National Bank of Chicago, as Agent, providing for term loans, revolving
credit borrowings and other financial accommodations, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced, in whole or in part, from time to time.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Subsidiaries (other than the Receivables Subsidiary) (a) provides
any credit support that would constitute
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Indebtedness or (b) is directly or indirectly liable (as a guarantor or
otherwise); and (ii) as to which the lenders have agreed or been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Subsidiaries (other than the Receivables Subsidiary);
provided that, notwithstanding the foregoing, the Company and any of its other
Subsidiaries that sell Receivables to the Receivables Subsidiary shall be
allowed to provide such representations, warranties, covenants and indemnities
as are customarily required in such transactions so long as no such
representations, warranties, covenants or indemnities constitute a Guarantee of
payment or recourse against credit losses.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Pari Passu Debt" means Indebtedness that ranks pari passu in right of
payment with the Senior Notes or Senior Subordinated Notes, as the case may be.
"Permitted Investments" means (a) any Investment in the Company or in a
Controlled Subsidiary of the Company; (b) any Investment in Cash Equivalents;
(c) any Investment by the Company or any Subsidiary of the Company in a Person,
if as a result of such Investment (i) such Person becomes a Controlled
Subsidiary of the Company or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Controlled Subsidiary of the
Company; provided, however, that if the Person in either of subclauses (i) and
(ii) of this clause (c) owns Equity Interests of the Company at the time of such
Investment by the Company or a Subsidiary, such Investment shall not be a
Permitted Investment; (d) any Restricted Investment made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with the covenant described above under the caption
"-- Limitation on Asset Sales -- Asset Sales;" (e) any Investment in trade
receivables or interests therein in the ordinary course of business; (f)
Investments received in settlement of trade receivables created in the ordinary
course of business and owing to the Company or any Subsidiary or in satisfaction
of any judgment with respect to any such trade receivable; and (g) other
Investments in any Person (other than a Person that is an Affiliate of the
Company on the Issue Date) having an aggregate fair market value (measured on
the date each such Investment was made and without giving effect to subsequent
changes in value), when taken together with all other Investments made pursuant
to this clause (g) that are at the time outstanding, not to exceed $25.0
million.
"Permitted Liens" means (i), for purposes of the Senior Note Indenture,
Liens on assets of the Company and its Subsidiaries, whether owned on the date
of the Senior Note Indenture or thereafter acquired, securing all Indebtedness
and other Obligations under the New Credit Agreement or any one or more
successor or additional bank facilities that were permitted by the terms of the
Senior Note Indenture to be incurred, and, for purposes of the Senior
Subordinated Note Indenture, Liens on assets of the Company and its
Subsidiaries, whether owned on the date of the Senior Subordinated Note
Indenture or thereafter acquired, securing any Senior Debt that was permitted by
the terms of the Senior Subordinated Note Indenture to be incurred; provided,
however, that, in the case of Liens granted by Subsidiaries, such Subsidiary
executes a Guaranty in compliance with the covenant described above under the
caption "Limitations on Issuances of Guarantees of Indebtedness."; (ii) Liens in
favor of the Company or a Subsidiary; (iii) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (iv)
Liens on assets of Subsidiaries to secure Indebtedness of Subsidiaries that was
permitted by the terms of the Indentures to be incurred; (v) Liens existing on
the date of the Indentures; (vi) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted, provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (vii) Liens to
secure Indebtedness permitted to be incurred pursuant to clauses (vi) or (vii)
of the second paragraph of the covenant described above under the caption
"-- Incurrence of Indebtedness and Issuance of Preferred Stock;" (viii) Liens to
secure Attributable Debt in respect of sale and leaseback transactions that were
permitted by the terms of the Indentures to be entered into; (ix) Liens on
assets of the Company to secure Hedging Obligations that were permitted to be
incurred pursuant to the covenant described above under the caption
"-- Incurrence of Indebtedness and Issuance of Preferred Stock;" (x) Liens on
Receivables to reflect sales of Receivables to and by the Receivables Subsidiary
pursuant to the
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Receivables Facility; (xi) Liens on assets of the Receivables Subsidiary; and
(xii) in addition to the foregoing, Liens on assets of the Company or any
Subsidiary of the Company with respect to Obligations that do not exceed $25.0
million at any one time outstanding.
"Permitted Refinancing Debt" means any Indebtedness of the Company or any
of its Subsidiaries issued in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund other Indebtedness
of the Company or any of its Subsidiaries (other than Indebtedness permitted to
be incurred pursuant to clauses (i) or (ii) of the second paragraph of the
covenant described above under the caption "-- Incurrence of Indebtedness and
Issuance of Preferred Stock"); provided that: (i) the principal amount (or
accreted value, if applicable) of such Permitted Refinancing Debt does not
exceed the principal amount (or accreted value, if applicable) of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of accrued interest and premium, if any, thereon and all
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Debt has a final maturity date later than the final maturity date
of, and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing Debt
has a final maturity date later than the final maturity date of, and is
subordinated in right of payment to, the Senior Notes on terms at least as
favorable to the holders of Senior Notes as those contained in the subordination
provisions governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Receivables" means, collectively, (a) the Indebtedness and other
obligations owed to the Company or any of its Subsidiaries (before giving effect
to any sale or transfer thereof pursuant to a Receivables Facility), whether
constituting an account, chattel paper, an instrument, a document or general
intangible, arising in connection with the sale of goods, insurance and/or
services by the Company or such Subsidiary, including, without limitation, the
obligation to pay any late fees, interest or other finance charges with respect
thereto (each of the foregoing, collectively, an "Account Receivable"), (b) all
of the Company's or such Subsidiary's interest in the goods (including returned
goods), if any, the sale of which gave rise to any Account Receivable, and all
insurance contracts with respect thereto, (c) all other security interests or
Liens and property subject thereto from time to time, if any, purporting to
secure payment of any Account Receivable, together with all financing statements
and security agreements describing any collateral securing such Account
Receivable, (d) all Guarantees, insurance and other agreements or arrangements
of whatever character from time to time supporting or securing payment of any
Account Receivable, (e) all contracts, invoices, books and records of any kind
related to any Account Receivable, (f) all cash collections in respect of, and
cash proceeds of, any of the foregoing and any and all lockboxes, lockbox
accounts, collection accounts, concentration accounts and similar accounts in or
into which such collections and cash proceeds are now or hereafter deposited,
collected or concentrated, and (g) all proceeds of any of the foregoing.
"Receivables Facility" means, with respect to any Person, any Receivables
securitization program pursuant to which such Person receives proceeds pursuant
to a pledge, sale or other encumbrance of its Receivables.
"Receivables Subsidiary" means Flexible Funding Corp., created primarily to
purchase or finance the receivables of the Company and/or its Subsidiaries
pursuant to a Receivables Facility, so long as it: (a) has no Indebtedness other
than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement
or understanding with the Company or any other Subsidiary of the Company unless
the terms of any such agreement, contract, arrangement or understanding are no
less favorable to the Company or such Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of the Company; (c) is
a Person with respect to which neither the Company nor any of its other
Subsidiaries has any direct obligation to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results other than to act as servicer of Receivables; (d) has not
Guaranteed or otherwise directly provided credit support for any Indebtedness of
the Company or any of its other Subsidiaries; and (e) has at least one director
on its board of directors that is not a director or executive officer of the
Company or any of
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its other Subsidiaries. Notwithstanding the foregoing and without otherwise
limiting Permitted Investments, the Company may make capital contributions in
the form of Receivables transferred to the Receivables Subsidiary for non-cash
consideration to the extent necessary or desirable to prevent a disruption of
purchases of Receivables or to avoid a default under the Receivables Facility.
If, at any time, such Receivables Subsidiary would fail to meet the foregoing
requirements as a Receivables Subsidiary (other than a failure to meet the
requirements set forth in clause (e) above as a result of the death or
resignation of a director, provided that such director is promptly replaced), it
shall thereafter cease to be a Receivables Subsidiary for purposes of the
Indentures and any Indebtedness of such Receivables Subsidiary shall be deemed
to be incurred by a Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under the covenant
described under the caption "-- Certain Covenants -- Incurrence of Indebtedness
and Issuance of Preferred Stock," the Company shall be in default of such
covenant).
"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Debt.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Target Assets" means any assets acquired from JR Flexible that are sold or
otherwise disposed of (other than pursuant to a Restricted Payment) for
aggregate consideration not to exceed $25.0 million.
"Tax Allocation Agreement" means that certain Tax Allocation Agreement,
dated as of the first day of the fiscal year of the parties thereto that began
after June 29, 1996, allocating tax liabilities and payments among the Company
and its Affiliates.
"Tax Incentive Program" means (i) the Payment in Lieu of Taxes Program
sponsored by the Industrial Revenue Board ("IDB") of the City of Jackson,
Tennessee pursuant to which JR Flexible (and after the Acquisition if approval
is granted by the IDB, the Company) (a) transfers to the IDB real property and
equipment associated with the Jackson, Tennessee operations in return for a
non-interest bearing promissory note from the IDB, which promissory note
represents the fair market value of the real property and equipment so
transferred, (b) JR Flexible or the Company, as applicable, pays a fee in lieu
of taxes to the IDB that is less than the taxes that it would otherwise pay if
it were not participating in such Payment in Lieu of Taxes Program and (c) the
IDB leases such real property and equipment back to JR Flexible or the Company,
as applicable, pursuant to a lease that has not interest component and (ii) any
other program sponsored by state or local governments, authorities or political
subdivisions that is materially similar to the Payment in Lieu of Taxes Program
and is equally beneficial from the holder's perspective.
"Total Assets" means, with respect to any Person as of any date, the total
consolidated assets of such Person and its Subsidiaries as of such date, as
reflected on the most recently available internal consolidated financial
statements of such Person prepared in accordance with GAAP.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-
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twelfth) that will elapse between such date and the making of such payment, by
(ii) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal United States federal income
tax consequences of ownership of the Exchange Notes and is not intended to be
tax advice to any person, nor is it binding upon the IRS. This summary is based
on the Code and existing and proposed Treasury Regulations, revenue rulings and
judicial decisions now in effect, all of which are subject to change at any time
by legislative, judicial or administrative action, and such changes may be
applied retroactively in a manner that could adversely affect holders of
Exchange Notes. This summary deals only with Exchange Notes held as capital
assets by a holder that is (i) a citizen or resident of the United States, (ii)
a domestic corporation or (iii) otherwise subject to United States federal
income taxation on a net income basis in respect of the Note (a "United States
Holder"), and does not purport to address all aspects of the possible federal
income tax consequences of ownership of Exchange Notes. In particular, and
without limiting the foregoing, this summary does not address tax consequences
of ownership of an Exchange Note that may be relevant to investors in special
tax situations, such as dealers in securities or currencies, tax-exempt persons,
certain financial institutions, life insurance companies, persons holding
Exchange Notes as part of a "straddle" (as defined in Section 1092 of the Code),
a "hedge" (as defined in Section 1256 of the Code), or a "conversion
transaction" (as defined in Section 1258 of the Code), persons whose "functional
currency" as defined in Section 985 of the Code is not United States dollars, or
foreign persons.
The Company has not sought and will not seek any rulings from the IRS with
respect to the positions of the Company discussed below. There can be no
assurance that the IRS will not take a different position concerning the tax
consequences of the purchase, ownership or disposition of the Exchange Notes or
that any such position would not be sustained.
Persons considering the purchase or the exchange of Exchange Notes should
consult their own tax advisors concerning United States federal income tax laws,
as well as the tax laws of any state, local or foreign jurisdictions, applicable
to their particular situations.
INTEREST PAYMENTS
Interest on an Exchange Note, other than interest that is not a payment of
"qualified stated interest" (as defined below under "Original Issue Discount"),
is taxable to a United States Holder as ordinary income at the time it is
received or accrued, depending on the United States Holder's method of
accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT
The Notes were issued with no original issue discount ("OID") because the
stated redemption price at maturity equaled the issue price of the Notes. The
"issue price" of the Notes is the first price at which a substantial number of
Notes were sold for money, excluding sales to underwriters, placement agents or
wholesalers. The "stated redemption price at maturity" is the sum of all
payments to be made on the Notes other than "qualified stated interest". The
term "qualified stated interest" means, generally, stated interest that is
unconditionally payable in cash or in property (other than debt instruments of
the issuer) at least annually at a single fixed rate or, subject to certain
conditions, based on one or more interest indices. Interest is payable at a
single fixed rate only if the rate appropriately takes into account the length
of the interval between payments.
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The OID regulations provide that options relating to a debt instrument may
impact whether an instrument has been issued with OID. In the event of a Change
of Control, the Company is required to offer to redeem all of the Exchange
Notes. The original issue discount regulations provide that the right of holders
of the Exchange Notes to require redemption of the Exchange Notes upon the
occurrence of a Change of Control will not affect the yield or maturity date of
the Exchange Notes unless, based on all the facts and circumstances as of the
issue date, it is more likely than not that a Change of Control giving rise to
the redemption will occur. The Company has no present intention of treating the
redemption provisions of the Exchange Notes as affecting the computation of the
yield to maturity of any Exchange Note.
The Company may redeem the Exchange Notes in certain circumstances,
pursuant to the terms of the Exchange Notes. Under the original issue discount
regulations, the Company is deemed to exercise or not exercise an option or
combination of options in a manner that minimizes the yield on the Exchange
Note. If such option is not in fact exercised when presumed to be exercised, the
Exchange Note would be treated solely for original issue discount purposes as if
it were reissued at that time for an amount equal to its adjusted issue price.
The Company does not expect these rules to affect the determination of the yield
to maturity of any Exchange Note.
AMORTIZABLE BOND PREMIUM
In general, if a holder purchases a debt instrument for an amount in excess
of its principal amount, the holder may elect to treat such excess as
"amortizable bond premium," in which case the amount required to be included in
the holder's income each year with respect to interest on the debt instrument is
reduced by the amount of amortizable bond premium allocable to such year based
on the debt instrument's yield to maturity. Any such election applies to all
debt instruments (other than debt instruments the interest on which is
excludable from gross income) held by the holder at the beginning of the first
taxable year to which the election applies or which are acquired thereafter by
the holder, and such election is irrevocable without the consent of the IRS.
MARKET DISCOUNT
In general, if a holder purchases a debt instrument at a market discount
(i.e., a discount other than at original issue), any gain recognized upon the
disposition of the debt instrument by the holder is taxable as ordinary interest
income, rather than as capital gain, to the extent such gain does not exceed the
accrued market discount on the debt instrument at the time of the disposition.
"Market discount" generally means the excess, if any, of a debt instrument's
stated redemption price at maturity over the price paid by the holder therefor,
subject to a de minimis exception. A holder who acquires a debt instrument at a
market discount also may be required to defer the deduction of a portion of the
amount of interest that the holder paid or accrued during the taxable year on
indebtedness incurred or maintained to purchase or carry the debt instrument.
Any principal payment on a debt instrument acquired by a holder at a market
discount is included in gross income as ordinary income (generally, as interest
income) to the extent that it does not exceed the accrued market discount at the
time of such payment. The amount of the accrued market discount for purposes of
determining the tax treatment of subsequent payments on, or dispositions of, the
debt instrument is reduced by the amounts so treated as ordinary income.
A holder of a debt instrument acquired at a market discount may elect to
include market discount in gross income, for federal income tax purposes, as
such market discount accrues, either on a straight-line basis or on a constant
interest rate basis. This current inclusion election, once made, applies to all
market discount obligations acquired on or after the first day of the first
taxable year to which the election applies, and may not be revoked without the
consent of the IRS. If a holder makes such an election, the foregoing rules
regarding the recognition of ordinary interest income on sales and other
dispositions and the receipt of principal payments with respect to such debt
instruments, and regarding the deferral of interest deductions on indebtedness
incurred or maintained to purchase or carry such debt instruments, do not apply.
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PURCHASE, SALE AND RETIREMENT
A United States Holder's tax basis in an Exchange Note is its cost (or, if
applicable, the tax basis of the Note exchanged for the Exchange Note),
increased by the amount of any original issue discount included in the United
States Holder's income with respect to the Exchange Note and reduced by the
amount of any interest payments on the Exchange Note that are not payments of
qualified stated interest. A United States Holder will generally recognize gain
or loss on the sale or retirement of an Exchange Note equal to the difference
between the amount realized on the sale or retirement of the Exchange Note and
the tax basis of the Exchange Note. Except to the extent described above under
"Original Issue Discount" and "Market Discount," and except to the extent
attributable to accrued but unpaid interest, gain or loss recognized on the sale
or retirement of an Exchange Note is capital gain or loss, provided the Exchange
Note was a capital asset in the hands of the United States Holder, and is
long-term capital gain or loss if the Exchange Note was held for more than one
year.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding and information reporting requirements apply to certain
persons with respect to certain payments of principal, premium and interest on
an obligation, to certain payments of proceeds from the sale or redemption of an
obligation, and to the accrual of original issue discount with respect to
non-corporate United States Holders. Either the Company, a broker, or in certain
circumstances the Company's agent or its paying agent, is required to withhold
from any payment that is subject to backup withholding a tax equal to 31% of
such payment, if the United States Holder fails to furnish an accurate taxpayer
identification number, to certify that such United States Holder is exempt from
backup withholding, or to report all interest and dividends required to be shown
on its federal income tax returns or otherwise comply with the applicable
requirements of the backup withholding rules. The amount of original issue
discount required to be reported by the Company may not be equal to the amount
of original issue discount required to be reported as taxable income by a United
States Holder. Certain exempt recipients are not subject to the backup
withholding and information reporting requirements. All corporations are
considered exempt recipients with respect to payments of interest of the type
that are made on the Exchange Notes.
LIQUIDATED DAMAGES
The Company intends to take the position that the Liquidated Damages, if
any, described above under "Description of Notes -- Registration Rights;
Liquidated Damages" are taxable to the United States Holder as ordinary income
in accordance with the United States Holder's method of accounting for federal
income tax purposes. The IRS may take a different position, however, which could
affect the timing of both a United States Holder's income and the Company's
deduction with respect to the Liquidated Damages, if any.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH PURCHASER OF
EXCHANGE NOTES SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC
TAX CONSEQUENCES TO IT OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
EXCHANGE NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS.
DESCRIPTION OF CERTAIN INDEBTEDNESS
NEW CREDIT AGREEMENT
Concurrently with the Offering, the Company entered into the New Credit
Agreement with a syndicate of banks and other financial institutions which
included the $155 million Revolving Credit Facility and the $170 million Term
Loan Facility. However, the credit available under the revolving portion of the
New Credit Agreement has been reduced to $105.0 million as a result of the
Company's utilization under the Receivables Securitization Facility. This
information relating to the New Credit Agreement is qualified in its entirety by
reference to the complete text of the documents entered into in connection
therewith, copies of which have
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been filed as exhibits to this Registration Statement of which this is a part,
and are available from the Commission. See "Available Information."
The proceeds of the New Credit Agreement were used, in part, to finance the
Acquisition, to pay various costs associated with the Transactions, to refinance
most of the Company's existing indebtedness and, in the case of the Revolving
Credit Facility, for general working capital purposes. In this connection, the
Revolving Credit Facility contains a sublimit of approximately $10 million for
commercial and standby letters of credit. The entire amount of the Term Loan and
approximately $53.3 million of the Revolving Credit Facility were funded
simultaneously with the consummation of the Acquisition. The Revolving Credit
Facility under the New Credit Agreement also included a $10.0 million swing line
subfacility from SunTrust Bank, Atlanta, Georgia to fund daily cash flow
fluctuations and cash management needs.
The maturity for each of the revolving and term portions of the New Credit
Agreement is six years from the Closing and all amounts outstanding thereunder
are due on such date. The Term Loan will amortize in equal quarterly
installments beginning with the end of the third quarter of fiscal 1997 (the
first quarter of calendar 1997), as follows:
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZATION IN
FISCAL YEARS ENDED JUNE EQUAL QUARTERLY INSTALLMENTS
------------------------------------------------------ ----------------------------
(MILLIONS OF DOLLARS)
<S> <C>
1997.................................................. $ 8.0
1998.................................................. 16.0
1999.................................................. 24.0
2000.................................................. 32.0
2001.................................................. 40.0
2002.................................................. 50.0
</TABLE>
The remaining outstanding balance of $50.0 million are due upon the sixth
anniversary of Closing.
The New Credit Agreement requires mandatory prepayments of the Term Loan
from the net cash proceeds received by the Company in connection with any
offering of debt or equity securities (other than in connection with certain
permitted refinancing indebtedness, acquisitions or restricted payments) or in
connection with any material sales of assets outside the ordinary course of
business or pursuant to the Receivables Facility. Further, the Company are
required to prepay the Term Loan in an amount equal to 50% of the Company's
Excess Cash Flow (as defined in the New Credit Agreement) for each fiscal year.
All such mandatory prepayments shall be applied pro rata to the reduction of the
remaining scheduled amortization payments. After the prepayment in full of the
Term Loan, all such mandatory prepayments shall be applied as permanent
reductions to the Revolving Credit Facility.
Outstanding borrowings under the New Credit Agreement bear interest at a
rate per annum equal to, at the Company's option: (i) First Chicago's variable
base rate or (ii) the London Interbank Offered Rate for one, two, three or six
months as selected by the Company, plus a margin based on a pricing matrix
ranging between 0.50% to 1.50%, based upon the Company's then current Total Debt
to EBITDA ratio. The Company are permitted to enter into interest rate swap and
other interest rate protection arrangements to hedge against interest rate
risks.
Loans outstanding under the New Credit Facilities are secured by a
first-priority security interest in, and liens upon, substantially all of the
Company's tangible and intangible assets including all inventory, equipment,
real property, capital stock of subsidiaries, contract rights and general
intangibles. Subsidiaries of the Company may be required to guaranty the New
Credit Agreement as they are incorporated or acquired and grant liens in its
assets to secure such guaranty, in which case the Indentures are amended to add
such Subsidiaries' guaranties of the Notes. The Company's accounts receivable,
to the extent not sold pursuant to the Receivables Securitization Facility, also
secure the Company's obligations under the New Credit Facilities. Further,
Holdings and Enterprises have guaranteed the obligations of the Company under
the New Credit Agreement, and Enterprises has pledged all of the capital stock
of the Company owned by it as further collateral.
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The New Credit Agreement includes customary financial and other covenants
including, among other things: (i) Total Debt to EBITDA ratio; (ii) fixed charge
coverage ratio; (iii) limitations on Indebtedness and guaranties; (iv)
limitations on liens; (v) limitations on dividends and stock redemptions; (vi)
limitations on prepayments of Indebtedness other than the New Credit Agreement
(including optional or mandatory redemptions of the Notes); (vii) limitations on
asset sales; (viii) limitations on capital expenditures; (ix) limitations on
acquisitions and other investments; and (x) limitations on transactions with
affiliates.
The events of default include, among others: (i) failure of the Company to
make any payment of principal of, interest on, or any other amount owing in
respect of any obligation under the New Credit Agreement when due and payable;
(ii) breach of representations or warranties; (iii) breach of other covenants or
agreements contained in the New Credit Agreement; (iv) cross-default with
respect to other Indebtedness of the Company (except under the Receivables
Securitization Facility) or of any subsidiary in excess of $5 million or early
termination of the Receivables Securitization Facility; (v) the filing by or
against the Company or of any subsidiary of a petition for bankruptcy under the
Bankruptcy Code of 1978, as amended or other applicable bankruptcy law or the
appointment of a receiver for the business or assets of the Company or any
guarantor or other similar bankruptcy events; (vi) certain ERISA defaults; (vii)
the occurrence of one or more material judgments; (viii) a change in control of
the Company.
SHAREHOLDER NOTES
The Company currently has approximately $10.4 million of subordinated notes
(the "Shareholder Notes") outstanding under a Note Purchase Agreement dated as
of March 13, 1995 with certain of the Company's shareholders (the "Shareholder
Note Purchase Agreement"). These notes bear interest at 11.00% per annum and
mature on May 4, 2014. The Shareholder Notes are subordinated to the New Credit
Agreement, the Senior Notes and the Senior Subordinated Notes. The Company is
required to make a prepayment, without premium, of $3,422,000 on the Shareholder
Notes on May 25, 2005.
The events of default under the Shareholder Note Purchase Agreement
include, among others: (i) default in the payment of principal on any
Shareholder Note when the same becomes due and payable, whether at maturity,
upon acceleration, or otherwise; (ii) default in the payment of interest on any
Shareholder Note when the same becomes due and payable and such default
continues for a period of five business days; (iii) default in any material
respect in the due and punctual performance of or compliance with any other
covenant, condition or agreement to be performed or observed by the Company
under any provision of the Shareholder Note Purchase Agreement, and any such
default continues unremedied for 30 days; (iv) any representation, warranty,
certification or statement of the Company, made or contained in the Shareholder
Note Purchase Agreement, or in any agreement, instrument, certificate, statement
or other writing furnished in connection therewith or pursuant thereto, shall
prove to have been false or inaccurate in any material respect on the date as of
which such representation was made; (v) the holder, trustee or agent of any
Indebtedness of the Company or any of its affiliates shall, in respect of any of
its Indebtedness (excluding the Shareholder Notes) in an amount, individually or
in the aggregate, exceeding $10 million causes the maturity of such Indebtedness
to be accelerated or otherwise to become due and payable prior to its stated
maturity, or to take any action to realize upon any assets or property of the
Company or any of its affiliates under any agreement or instrument evidencing or
securing such Indebtedness; (vi) a final judgment or judgments entered by a
court or courts of competent jurisdiction for the payment of money in excess of
$3 million in the aggregate is rendered against the Company or any of its
affiliates and shall remain in force undischarged and unstayed for a period of
more than 45 days; (vii) the Company becomes insolvent or bankrupt, is generally
not paying its debts as they become due or makes an assignment for the benefit
of creditors, or the Company causes or suffers an order for relief to be entered
with respect to it under applicable federal bankruptcy law or applies for or
consents to the appointment of a custodian, trustee or receiver for the Company
or for the major part of the property of Company; and (viii) a custodian,
trustee or receiver is appointed for the Company or for the major part of the
property of the Company and is not discharged within 60 days after such
appointment.
97
<PAGE> 103
RECEIVABLES SECURITIZATION FACILITY
The following is a summary of certain terms and conditions of the
Receivables Securitization Facility. This summary does not purport to be a
complete description of the Receivables Securitization Facility and is qualified
in its entirety by the actual documents entered into in connection therewith and
included as exhibits to the Registration Statement. See "Available Information."
First Chicago has provided indirectly through Falcon the Company the
Receivables Securitization Facility of $23.0 million initially for the
securitization of certain trade accounts receivable (the "Receivables")
originated by the Company or its predecessors, including JR Flexible. The
Company or Receivables Funding will act as the initial servicer for the
Receivables. Further, as the Company's receivables pool grows, the Receivables
Securitization Facility may grow concomitantly, and the Revolving Credit
Facilities are reduced pro rata. See "Description of Notes."
Pursuant to the Receivables Securitization Facility, the Company may sell
the Receivables to Receivables Funding, a new, wholly-owned, bankruptcy-remote,
special purpose finance subsidiary of the Company, in transactions intended to
be a true sale for bankruptcy law purposes. Receivables Funding, in turn, may
transfer undivided interests in the Receivables to Falcon on an uncommitted
basis, and in the event Falcon does not purchase such Receivables ("Receivable
Interests"), to First Chicago and other institutional investors, if any,
pursuant to the Receivables Securitization Facility. The Receivables
Securitization Facility permits draws and repayments on a revolving basis for
five years following Closing or such earlier time as certain events occur (the
"Amortization Commencement Date"). Assets sold pursuant to this Facility will
represent the right to receive collections from (i) the Receivables, (ii) all
rights of the Company or Receivables Funding in goods, the sale of which gave
rise to the Receivables, (iii) all collateral, guarantees, insurance and other
arrangements supporting the Receivables, (iv) all rights and interest of
Receivables Funding under a receivables sales agreement with the Company, (v)
lock-boxes and bank accounts of the Company or Receivables Funding in which
proceeds of any of the foregoing are held, and (vi) all collections and other
proceeds of the assets described above.
The rate of interest on the Receivables Securitization Facility are the
LIBOR rate for interest periods of one, two or three months (adjusted for
required deposit reserves, if any) plus 0.50% or First Chicago's corporate base
rate. A commitment fee on the unused portion of the facility at a rate of 0.40%
per annum are payable quarterly by the Company, accruing from the Closing. All
collections attributable to the assets transferred are set aside and applied
monthly commencing on the Amortization Commencement Date to repay Falcon's
and/or First Chicago's investments in the Receivable Interests in full.
The Receivables Securitization Facility contains covenants, representations
and warranties customary for such facilities. Financial covenants are not
included in the documentation relating to the Receivables Securitization
Facility and the Facility does not have any cross defaults or cross
collateralization with respect to any other obligations of the Company under the
New Credit Facility or the Notes.
PLAN OF DISTRIBUTION
Each broker-dealer that is eligible to participate in the Exchange Offer,
and which receives Exchange Notes for its own account pursuant to the Exchange
Offer must acknowledge that it may be a statutory underwriter under the
Securities Act, and that it will deliver a prospectus in connection with any
resale of such Exchange Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by such a broker-dealer in
connection with the resales of Exchange Notes received in exchange for the Notes
where such Notes were acquired for the broker-dealer's own account as a result
of market-making activities or other trading activities. The Company has agreed
that for a period of 180 days after the date on which the Registration Statement
is declared effective, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer that requests such documents in the Letter of
Transmittal for use in connection with any such resale.
This Prospectus may not be used for resales of Exchange Notes by any
affiliate of the Company, or any person with respect to Notes that were acquired
directly from the Company, any person that is participating or
98
<PAGE> 104
intends to participate in a distribution of the Exchange Notes, or any person
that has any understanding or arrangement to participate in a distribution of
Exchange Notes.
The Company will not receive any proceeds from any resale of Exchange Notes
by broker-dealers or any other persons. Exchange Notes received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were received
by it for its own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such Exchange Notes may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of Exchange Notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus with respect to the Exchange Notes,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
The Company has agreed to pay all expenses incident to the Company's
performance of, or compliance with, the Registration Rights Agreement and will
indemnify the holders (including any broker-dealers) and certain parties related
to the holders against certain liabilities, including liabilities under the
Securities Act.
CERTAIN LEGAL MATTERS
Certain legal matters in connection with the issuance of the Exchange Notes
are passed upon for the Company by Alston & Bird, Atlanta, Georgia. Neil
Williams, the managing partner of Alston & Bird, is a Printpack director. See
"Management."
INDEPENDENT ACCOUNTANTS
The financial statements of Printpack, Inc. as of June 29, 1996 and June
24, 1995 and for each of the three years in the period ended June 29, 1996, and
the combined financial statements of The Flexible Packaging Group of James River
Corporation as of December 31, 1995 and December 25, 1994 and for each of the
three years in the period ended December 31, 1995 included in this Prospectus
have been so included in reliance on the reports of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
99
<PAGE> 105
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRINTPACK, INC.
Report of Independent Accountants................................................... F-2
Balance Sheets as of June 24, 1995 and June 29, 1996................................ F-3
Statements of Income for the Three Years Ended June 29, 1996........................ F-4
Statement of Changes in Parent's Equity Investment for the Three Years Ended
June 29, 1996.................................................................... F-5
Statements of Cash Flow for the Three Years Ended June 29, 1996..................... F-6
Notes to Financial Statements....................................................... F-7
THE FLEXIBLE PACKAGING GROUP OF JAMES RIVER CORPORATION
Report of Independent Accountants................................................... F-21
Combined Balance Sheets as of December 25, 1994 and December 31, 1995............... F-22
Combined Statements of Operations for the Three Years Ended December 31, 1995....... F-23
Combined Statements of Changes in James River's Investment for the Three Years Ended
December 31, 1995................................................................ F-24
Combined Statements of Cash Flows for the Three Years Ended December 31, 1995....... F-25
Notes to Combined Financial Statements.............................................. F-26
Combined Balance Sheet as of June 30, 1996 (unaudited).............................. F-36
Combined Statement of Operations for the 26 Weeks Ended June 25, 1995 and June 30,
1996 (unaudited)................................................................. F-37
Combined Statement of Changes in James River's Investment for the 26 Weeks Ended
June 25, 1995 and June 30, 1996 (unaudited)...................................... F-38
Combined Statement of Cash Flows for the 26 Weeks Ended June 25, 1995 and June 30,
1996 (unaudited)................................................................. F-39
Notes to Combined Financial Statements (unaudited).................................. F-40
</TABLE>
F-1
<PAGE> 106
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Printpack, Inc.
In our opinion, the accompanying balance sheets and the related statements
of income, of changes in Printpack Holdings, Inc. (Parent) equity investment and
of cash flows present fairly, in all material respects, the financial position
of Printpack, Inc. (the Company), as described in Note 1 to the financial
statements, at June 24, 1995 and June 29, 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
June 29, 1996 in conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 13, the Company changed its method of accounting for
income taxes effective June 27, 1993. In addition, as discussed in Note 12, the
Company changed its method of accounting for postemployment benefits effective
June 25, 1994.
Price Waterhouse LLP
Atlanta, Georgia
July 26, 1996, except as to Note 17,
which is as of August 22, 1996
F-2
<PAGE> 107
PRINTPACK, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 24, JUNE 29,
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.............................................. $ 3,748 $ 242
Trade accounts receivable, less allowance for doubtful accounts
of $228 and $286.................................................... 35,836 35,742
Inventories............................................................ 31,992 34,831
Prepaid expenses and other current assets.............................. 9,056 10,348
Note receivable from an affiliated company............................. -- 1,700
Deferred income taxes.................................................. -- 1,844
-------- --------
Total current assets........................................... 80,632 84,707
Property, plant and equipment, net....................................... 137,935 137,628
Intangibles, less accumulated amortization of $1,132 and $1,301.......... 786 617
Other assets............................................................. 8,111 7,570
Deferred income taxes.................................................... 2,921 747
-------- --------
$230,385 $231,269
======== ========
LIABILITIES AND PARENT'S EQUITY INVESTMENT
Current liabilities
Accounts payable and accrued expenses.................................. $ 32,643 $ 26,539
Accrued severance costs................................................ -- 5,986
Accrued salaries, wages, benefits and bonuses.......................... 11,349 6,967
Dividends and income taxes payable..................................... 7,470 --
Current maturities of long-term debt................................... 5,975 30,625
Short-term borrowings under lines of credit............................ -- 5,504
Deferred income taxes.................................................. 213 --
-------- --------
Total current liabilities...................................... 57,650 75,621
-------- --------
Long-term debt......................................................... 106,250 110,625
Subordinated debt...................................................... 10,384 10,384
Other long-term liabilities............................................ 23,796 21,179
-------- --------
Total liabilities.............................................. 198,080 217,809
-------- --------
Parent's equity investment............................................. 32,305 13,460
-------- --------
Commitments and contingencies............................................ -- --
-------- --------
$230,385 $231,269
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 108
PRINTPACK, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
---------------------------------
JUNE 25, JUNE 24, JUNE 29,
1994 1995 1996
--------- --------- ---------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C>
Net sales..................................................... $ 407,272 $ 454,645 $ 442,931
Cost of goods sold............................................ 330,345 370,630 363,091
--------- --------- ---------
Gross margin.................................................. 76,927 84,015 79,840
Selling, administrative and research and development
expenses.................................................... 43,467 49,796 44,581
Restructuring charges......................................... 4,000 626 --
Severance expense............................................. 880 -- 7,870
Write-off of equity investment................................ -- 4,673 200
--------- --------- ---------
Income from operations...................................... 28,580 28,920 27,189
Other income (expense)
Interest expense............................................ (9,505) (9,943) (10,814)
Undistributed loss of affiliate............................. -- (316) (1,111)
Other, net.................................................. 2,743 (463) 1,221
Amortization of intangible assets........................... (169) (169) (169)
--------- --------- ---------
Income before provision for income taxes...................... 21,649 18,029 16,316
--------- --------- ---------
Provision for income taxes
Effect of electing C corporation status..................... (2,865) -- --
Current..................................................... (2,173) (5,938) (2,963)
Deferred.................................................... 499 5,074 (117)
--------- --------- ---------
(4,539) (864) (3,080)
--------- --------- ---------
Income before cumulative effect of a change in accounting
principle................................................... 17,110 17,165 13,236
Cumulative effect of a change in accounting principle......... -- (341) --
--------- --------- ---------
Net income.................................................... $ 17,110 $ 16,824 $ 13,236
======== ======== ========
Net income per common share................................... $ 4.06 $ 3.99 $ 3.14
Weighted average number of shares outstanding used in
calculation of net income per common share.................. 4,218,560 4,218,560 4,218,560
Unaudited pro forma data (Note 18)
Income before income taxes.................................. $ 21,649 $ 18,029 $ 16,316
Pro forma provision for income taxes........................ 7,886 6,858 6,555
--------- --------- ---------
Pro forma net income................................ $ 13,763 $ 11,171 $ 9,761
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 109
PRINTPACK, INC.
STATEMENT OF CHANGES IN PARENT'S EQUITY INVESTMENT
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Balance at June 26, 1993....................................................... $ 53,905
Net income..................................................................... 17,110
Dividends to Parent............................................................ (29,028)
--------------
Balance at June 25, 1994....................................................... 41,987
Net income..................................................................... 16,824
Dividends to Parent............................................................ (26,506)
--------------
Balance at June 24, 1995....................................................... 32,305
Net income..................................................................... 13,236
Dividends to Parent............................................................ (32,081)
--------------
Balance at June 29, 1996....................................................... $ 13,460
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 110
PRINTPACK, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
------------------------------
JUNE 25, JUNE 24, JUNE 29,
1994 1995 1996
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating activities
Net income................................................... $ 17,110 $ 16,824 $ 13,236
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation.............................................. 20,412 22,386 24,734
Amortization of intangible assets......................... 169 169 169
Amortization of deferred gain............................. -- -- (323)
Undistributed loss of affiliate........................... -- 316 1,111
Deferred income taxes..................................... 2,367 (5,074) 117
Postretirement and postemployment benefits................ 1,593 2,390 (250)
Incentive compensation.................................... -- 5,785 (2,044)
Gain on life insurance benefits........................... -- -- (1,143)
Other..................................................... 294 (284) 588
Changes in operating assets and liabilities
Decrease in short-term investments...................... 234 -- --
(Increase) decrease in accounts receivable.............. (6,652) (900) 94
(Increase) decrease in inventories...................... (959) 3,835 (2,839)
Increase in prepaid expenses and other assets........... (2,942) (188) (3,734)
Increase (decrease) in accounts payable, accrued
expenses, and dividends payable...................... 12,617 (2,043) (17,956)
Increase in accrued severance costs..................... -- -- 5,986
Increase (decrease) in other long-term liabilities...... 1,186 (3,484) --
-------- -------- --------
Total adjustments.................................... 28,319 22,908 4,510
-------- -------- --------
Net cash provided by operating activities............ 45,429 39,732 17,746
-------- -------- --------
Investing activities
Purchases of property, plant and equipment................... (23,870) (34,800) (25,786)
Proceeds from sale of property, plant and equipment.......... 348 5,341 750
Insurance proceeds received.................................. -- -- 1,336
-------- -------- --------
Net cash used in investing activities................ (23,522) (29,459) (23,700)
-------- -------- --------
Financing activities
Principal payments on long-term debt......................... (27,725) (5,850) (5,975)
Proceeds from issuance of long-term debt..................... 60,000 -- --
Proceeds from issuance of subordinated debt.................. -- 10,384 --
Net (payments) proceeds on lines of credit and revolving
credit facility........................................... (11,635) -- 40,504
Dividends paid............................................... (29,028) (26,506) (32,081)
Other........................................................ 85 1,669 --
-------- -------- --------
Net cash (used in) provided by financing
activities......................................... (8,303) (20,303) 2,448
-------- -------- --------
Increase (decrease) in cash and cash equivalents............... 13,604 (10,030) (3,506)
Cash and cash equivalents, beginning of year................... 174 13,778 3,748
-------- -------- --------
Cash and cash equivalents, end of year......................... $ 13,778 $ 3,748 $ 242
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 111
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 24, 1995 AND JUNE 29, 1996
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Printpack, Inc. ("Printpack") and Printpack Enterprises, Inc.
("Enterprises") are affiliated by common ownership and management. The
accompanying balance sheets have been presented to include, at their historical
cost, the assets and liabilities of the North American operations of Printpack
and Enterprises. The statements of income and cash flows were derived from the
accounting records of Printpack and Enterprises (the "Company") and include the
revenue, expenses and cash flows attributable to both of the Companies'
historical North American operations.
As part of the acquisition (the "Acquisition") of The Flexible Packaging
Group of James River Corporation of Virginia ("JR Flexible") (see Note 17) and
to facilitate the financing of the Acquisition, Printpack and Enterprises plan
to reorganize into a holding company (the "Reorganization") effective July 1996.
In the Reorganization, Printpack Holdings, Inc. ("Holdings"), a Delaware
corporation, will be formed and will acquire approximately 97% of the
outstanding common stock of Enterprises, which in turn will own approximately
100% of the outstanding stock of Printpack. Printpack will acquire JR Flexible's
business and will conduct all North American operations of the enterprise.
Holdings and Enterprises will be non-operating holding companies that also will
control flexible packaging operations conducted through several separately
chartered United Kingdom affiliates.
The Company manufactures flexible packaging material primarily for the food
and beverage industries throughout North America.
INTERCOMPANY TRANSACTIONS
The accompanying financial statements include the accounts of the Company.
All significant intercompany transactions and balances have been eliminated.
FISCAL YEAR
The Company's fiscal year ends on the last Saturday in June. The Company's
fiscal year included 52, 52 and 53 weeks during the years ended June 25, 1994,
June 24, 1995 and June 29, 1996.
RECLASSIFICATION
Certain prior year amounts have been reclassified to conform with the
current year presentation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist principally of highly liquid, short-term
investments with original maturities of three months or less and are recorded at
cost which approximates market value.
INVENTORIES
Inventories are stated at the lower of cost or current market value. Cost
is determined using the last-in, first-out (LIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated
depreciation and amortization, which is provided using accelerated and
straight-line methods over the estimated useful lives of the assets which range
from three to thirty-five years. Major renewals and improvements are
capitalized, while maintenance and repairs are expensed when incurred. The cost
and accumulated depreciation of property, plant and equipment sold or retired
are relieved from the accounts, and resulting gains or losses are reflected in
income.
F-7
<PAGE> 112
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
INCOME TAXES
The Company has historically been included in a consolidated Federal income
tax return and a combined/unitary state income tax return. Income taxes
reflected in the accompanying statements of operations represent the Company's
share of the consolidated tax provision which approximates the tax effect which
would have been recognized had a separate income tax return been filed.
In February 1994, Printpack revoked its S corporation election thereby
changing to C corporation status. With the election of C corporation status,
Printpack became subject to federal and state income taxes and was required to
adopt Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes". This approach requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recognized in the financial statements or tax returns. Using the enacted tax
rates in effect for the year in which the differences are expected to reverse,
deferred tax liabilities and assets are determined based on the differences
between the financial reporting basis and the income tax basis of assets and
liabilities.
Enterprises is presented as an S corporation having elected S corporation
status in 1989. Under the provisions of the Internal Revenue Code, S
corporations are not subject to federal income tax because taxable income or
loss inures to its shareholders. Accordingly, a provision for federal income
taxes has not been recorded for Enterprises. State income taxes have been
provided for certain states which do not recognize S corporation status. See
Note 18 for unaudited pro forma income tax information.
INTANGIBLE ASSETS
Intangible assets resulting from business acquisitions principally consist
of the excess of the acquisition cost over the fair value of the net assets of
businesses acquired (goodwill). Goodwill is amortized on a straight-line basis
over 20 years. Other intangible assets are amortized on a straight-line basis
over their estimated useful lives. As of June 24, 1995 and June 29, 1996,
management believes that goodwill has not been impaired.
REVENUE
Revenue is recognized at the time of shipment. Sales to one customer
approximated 25%, 28% and 25% of total sales during 1994, 1995 and 1996,
respectively.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade accounts receivable.
The Company extends credit to its customers based on an evaluation of the
customer's financial condition, generally without requiring collateral. Exposure
to losses on receivables is principally dependent on each customer's financial
condition. The Company monitors its exposure for credit losses and maintains
allowances for such losses.
RESEARCH AND DEVELOPMENT COSTS
The Company expenses all research and development costs when incurred.
Research and development costs expensed during the years ended June 25, 1994,
June 24, 1995, and June 29, 1996, were approximately $5,500,000, $5,800,000 and
$5,200,000, respectively.
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
F-8
<PAGE> 113
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
2. INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw materials...................................................... $18,310 $16,883
Work-in-process.................................................... 4,715 6,769
Finished goods..................................................... 22,752 27,220
------- -------
45,777 50,872
Reduction to state inventories at last-in, first-out cost (LIFO)... 13,785 16,041
------- -------
Total inventories........................................ $31,992 $34,831
======= =======
</TABLE>
During fiscal 1995 and 1996, certain inventory quantities were reduced.
These reductions resulted in a liquidation of LIFO inventory quantities carried
at lower costs prevailing in prior years as compared with the cost of 1995 and
1996 purchases, the effect of which decreased cost of goods sold and increased
income from operations by approximately $1,800,000 and $500,000, respectively.
No significant quantity reductions occurred during fiscal 1994.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized as follows:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Land........................................................... $ 5,037 $ 3,814
Buildings...................................................... 52,571 57,734
Machinery and equipment........................................ 201,187 226,647
Leasehold improvements......................................... 1,309 1,439
Construction in progress....................................... 14,533 8,436
--------- ---------
274,637 298,070
Less accumulated depreciation and amortization................. (136,702) (160,442)
--------- ---------
$ 137,935 $ 137,628
========= =========
</TABLE>
4. INVESTMENT IN JOINT VENTURES
Effective January 1995, the Company entered into an agreement with Orchem,
Inc., to form a joint venture, Orflex Ltd. ("Orflex"), an Ohio limited liability
partnership. Under the terms of the joint venture agreement, the Company
contributed its Cincinnati plant to the joint venture. For its contribution, the
Company received a 49% limited partnership interest in the joint venture and
$5,300,000 in cash. As part of the joint venture agreement, the Company has
guaranteed the debt of the joint venture, which debt totals approximately
$5,700,000 at June 29, 1996. This debt is subject to repayment requirements
through a final maturity date of January 2005. The Company believes the
likelihood of loss as a result of this debt guarantee is remote based upon the
present and forecasted financial condition of Orflex. The Orflex transaction was
accounted for as a sale of assets to the extent of third-party ownership in the
joint venture during 1995. As a result, the Company recorded a deferred gain of
approximately $3,300,000 which will be recognized under the
F-9
<PAGE> 114
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
instalment method as Orflex makes principal payments on the debt. During 1996,
the Company recognized approximately $323,000 of this deferred gain as a result
of principal payments made by Orflex.
The Company's investment in Orflex is accounted for using the equity method
and is stated at cost plus the Company's share of undistributed earnings from
the joint venture. The carrying amount of the investment, which approximated
$1,388,000 and $277,000 at June 24, 1995 and June 29, 1996, respectively, is
included within other long-term assets on the accompanying Balance Sheets.
The Company procures for resale to its customers certain finished goods
inventories from Orflex. During 1995 and 1996, purchases from Orflex totaled
approximately $3,235,000 and $2,482,000, respectively. Pursuant to a note
arrangement which became effective during January 1996, the Company has extended
certain working capital loans to Orflex. Such loans, which bear interest at the
rate of LIBOR plus 2%, are payable upon demand by the Company at any time after
December 31, 1996. Outstanding draws related to such loans, including accrued
interest, total approximately $1,700,000 at June 29, 1996.
During 1994, the Company sold its general partnership interest (50%) in
Deluxe Engraving to an unaffiliated company for approximately $5,100,000. As a
result of the transaction, the Company realized a gain of approximately
$3,400,000.
F-10
<PAGE> 115
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. LONG-TERM DEBT, SUBORDINATED DEBT AND LINES OF CREDIT
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
6.47% unsecured senior notes payable to insurance companies in
annual instalments of $4,727,272, beginning in December 1998
(final instalment due in December 2008), interest payable
semi-annually; proceeds used to retire debt, and finance
various capital projects....................................... $ 52,000 $ 52,000
5.30% unsecured senior note payable to insurance company, entire
principal payable on December 9, 1997, interest payable
semi-annually; proceeds used to retire debt and finance various
capital projects............................................... 8,000 8,000
7.75% unsecured note payable to bank with interest payable
quarterly, entire principal payable on December 31, 1996;
proceeds financed various capital projects..................... 25,000 25,000
9.35% unsecured senior notes payable to insurance companies in
annual instalments of $2,500,000 beginning in January 1993
(final instalment due in January 2002), interest payable
semi-annually; proceeds financed acquisition activities in
1989........................................................... 17,500 15,000
9.90% unsecured senior notes payable to insurance companies in
annual instalments of $3,125,000, plus interest, beginning in
January 1991 (final instalment due in January 1998); proceeds
financed various capital expansion projects.................... 9,375 6,250
9.25% Industrial Revenue Bonds payable in annual instalments of
$225,000, plus interest, through December 1994 (final
instalment of $350,000 due in December 1995), secured by land
and building at the Fredericksburg, Virginia facility; proceeds
financed certain equipment and the construction of the plant at
Fredericksburg................................................. 350 --
6.50% revolving credit facility with a bank due in November
1997........................................................... -- 35,000
-------- --------
112,225 141,250
Less current portion............................................. (5,975) (30,625)
-------- --------
$106,250 $110,625
======== ========
</TABLE>
Aggregate principal maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------------------------------------- 1996
--------------
(IN THOUSANDS)
<S> <C>
1997........................................................... $ 30,625
1998........................................................... 48,625
1999........................................................... 9,700
2000........................................................... 9,700
2001........................................................... 8,700
2002 and thereafter............................................ 33,900
--------------
$141,250
===========
</TABLE>
The agreements related to $146,754 of Company debt outstanding as of June
29, 1996 require that the Company together with its affiliates in the United
Kingdom, among other things, maintain specified levels of working capital;
restrict the payment of dividends, redemption of stock and incurrence of certain
debt; restrict
F-11
<PAGE> 116
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
investments; and limit the amount of pledged assets and advances and loans to
employees. The Company and its affiliates in the United Kingdom obtained waivers
of certain covenants due to noncompliance for the year ended June 24, 1995 and
for all financial and other relevant covenants due to noncompliance for the year
ended June 29, 1996. The waivers, effective through August 31, 1996, are
expected to enable the Company to complete the Acquisition of JR Flexible from
James River Corporation of Virginia ("James River") as described in Notes 1 and
17. Management expects to obtain replacement financing in conjunction with the
Acquisition.
The Company capitalized interest of approximately $414,000, $579,000 and
$887,000 in 1994, 1995 and 1996, respectively, relating to additions of plant
and equipment.
Total cash paid during the year for interest, net of amounts capitalized,
was $10,088,000, $9,255,000 and $10,172,000 during 1994, 1995 and 1996,
respectively.
In February 1995, the Company issued $10,384,000 of subordinated notes
payable to the Parent's shareholders bearing interest at 11%, payable annually,
and maturing in May 2014. The subordinated notes require an instalment of
$3,422,000 due in May 2005.
At June 29, 1996, the Company had lines of credit with various banks
providing for borrowings of up to $14,300,000 bearing interest at the lower of
the banks' prime rate or a negotiated rate.
At June 29, 1996, the Company had current borrowings of $5,504,000 under
these agreements. There were no amounts outstanding under the lines of credit at
June 24, 1995.
6. DEFERRED COMPENSATION
Pursuant to the terms of a deferred compensation agreement, the Company is
obligated to pay the former chief executive's beneficiary certain monthly
amounts over the remainder of the beneficiary's life. At June 24, 1995 and June
29, 1996, approximately $4,641,000 and $4,075,000, respectively, has been
accrued under this agreement. Interest expense on this obligation approximated
$483,000, $469,000 and $412,000 during 1994, 1995 and 1996, respectively.
The Company is obligated under deferred compensation agreements to make
monthly payments in varying amounts to certain former officers through June
2011. At June 24, 1995 and June 29, 1996, the Company had accrued approximately
$349,000 and $780,000, respectively, relating to these agreements. For the years
ended June 25, 1994, June 24, 1995 and June 29, 1996, interest expense related
to these agreements approximated $47,000, $41,000 and $66,000, respectively.
Future minimum annual payments required by these agreements are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR 1996
--------------------------------------------------------------- --------------
(IN THOUSANDS)
<S> <C>
1997........................................................... $ 594
1998........................................................... 621
1999........................................................... 592
2000........................................................... 608
2001........................................................... 554
2002 and thereafter............................................ 5,381
--------------
Future minimum payments........................................ 8,350
Less amounts representing interest at 8% to 12%................ (4,243)
--------------
Total obligation..................................... $ 4,107
===========
</TABLE>
F-12
<PAGE> 117
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. SUPPLEMENTAL BALANCE SHEET INFORMATION
PREPAID EXPENSES AND OTHER CURRENT ASSETS
<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Vendor rebates receivable.................................................. $ 4,105 $ 4,365
Prepaid insurance.......................................................... 2,962 3,101
Other items................................................................ 1,989 2,882
------- -------
$ 9,056 $10,348
======= =======
</TABLE>
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<S> <C> <C>
Trade accounts payable..................................................... $19,271 $18,065
Accrued loss on debt guarantee............................................. 4,673 --
Other items................................................................ 8,699 8,474
------- -------
$32,643 $26,539
======= =======
</TABLE>
8. EQUITY TRANSACTIONS WITH PARENT
During 1994, 1995 and 1996 the Company declared dividends approximating
$29,028,000, $26,506,000 and $32,081,000, respectively. Approximately $5,082,000
and $6,126,000 of the dividends declared in 1994 and 1995 were for estimated S
corporation tax payments required by the shareholders. Proceeds from special
distributions for 1995 of $10,384,000 were loaned to the Company by certain of
the Parent's shareholders under subordinated notes payable described in Note 5.
As of June 24, 1995, dividends recorded as accrued liabilities for estimated tax
payments of approximately $4,932,000 were declared but unpaid.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
CASH AND CASH EQUIVALENTS
The carrying amounts approximate fair value because of the short maturity
of those instruments.
NOTE RECEIVABLE
The carrying amount for the note receivable approximates its fair value
based upon the approximate interest rates at which similar loans would be made.
LONG-TERM DEBT
The carrying amounts of floating rate long-term debt are assumed to
approximate their fair values. The fair value of the Company's fixed rate
long-term debt is estimated via a discounted cash-flow analysis based upon the
incremental borrowing rates currently available to the Company for loans of a
similar nature.
F-13
<PAGE> 118
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The estimated fair values of the Company's financial instruments are as
follows:
<TABLE>
<CAPTION>
1995 1996
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash and cash equivalents................. $ 3,748 $ 3,748 $ 242 $ 242
Note receivable........................... -- -- 1,700 1,700
Long-term debt............................ (112,225) (110,168) (141,250) (139,660)
Subordinated debt......................... (10,384) (11,515) (10,384) (12,710)
</TABLE>
10. EMPLOYEE BENEFITS
The Company maintains a qualified profit sharing plan for participating
eligible employees ("associates"). The plan provides for annual contributions
based upon net income. Profit sharing expense approximated $3,002,000,
$2,364,000 and $1,673,000 in 1994, 1995 and 1996, respectively.
Under the terms of the Company's EVA Incentive Compensation Plan (the "EVA
Plan") for key associates, approximately $6,242,000 and $2,800,000, has been
reflected as a liability at June 24, 1995 and June 29, 1996, respectively.
Approximately $5,704,000, $6,309,000 and $2,850,000 has been recorded as expense
relative to the EVA Plan during 1994, 1995 and 1996, respectively. Under the
terms of the EVA Plan, incentive compensation is derived and is allocated to
specific business units based upon economic-value-added, as defined within the
plan agreement.
Under the terms of the Company's Performance Share Incentive Compensation
Plan (the " Performance Plan") for key associates, approximately $10,992,000 and
$9,056,000 has been reflected as a liability at June 24, 1995 and June 29, 1996,
respectively. Approximately $8,982,000 and $476,000 has been recorded as expense
relative to the Performance Plan during 1995 and 1996, respectively. Under the
Performance Plan, associates defer twenty-five percent of their annual cash
bonus into a performance share, the value of which is based upon a formula as
defined in the plan agreement. Associates' performance shares must be held at
least four years before they are eligible for redemption but may be held until
the associate retires.
11. POSTRETIREMENT BENEFITS
During 1992, the Company elected to provide group health and life insurance
benefits to retired associates. Under the terms of this plan, the Company
reimburses qualified retired associates varying percentages of health care costs
and premium costs of life insurance depending upon a retired associate's length
of service, with a minimum of 10 years required for plan eligibility.
Effective June 27, 1993, the Company changed its method of accounting for
postretirement health care and life insurance benefits to the accrual method of
accounting for postretirement benefits other than pensions pursuant to SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions".
The Company elected to delay recognition of the accumulated liability, measured
as of June 27, 1993, over 20 years which requires a charge of approximately
$400,000 annually until the net transition obligation is fully recognized.
Previously, such costs were expensed as paid. The Company does not prefund
postretirement benefits.
During fiscal 1996, the Company adopted amendments to certain
postretirement group health and life insurance plans. The major amendments
included the elimination of benefits for active associates retiring after
December 31, 1996. These amendments resulted in a net curtailment gain of
$2,207,000 and immediate recognition of the related previously unrecognized
transition obligation and unrecognized net gain.
F-14
<PAGE> 119
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the funded status of the postretirement
benefits (other than pension plans), reconciled to the accrued postretirement
benefit cost recognized in the Company's balance sheet:
<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation......................
Retiree benefit obligation....................................... $(2,557) $(1,918)
Fully eligible active associates' benefit obligation............. (696) (406)
Other active associates' benefit obligation...................... (6,247) (27)
------- -------
Total benefit obligation................................. (9,500) (2,351)
Unrecognized net gain.............................................. (300) --
Unrecognized net transition obligation............................. 6,800 --
------- -------
Accrued postretirement benefit cost................................ $(3,000) $(2,351)
======= =======
</TABLE>
Net periodic postretirement benefit cost included the following components:
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost for benefits earned............................ $ 550 $ 500 $ 503
Interest cost on projected benefit obligation............... 640 700 695
Amortization of transition obligation....................... 403 400 400
Amortization of unrecognized net gain....................... -- -- (33)
------ ------ -------
Net cost.................................................. $1,593 $1,600 $ 1,565
====== ====== =======
Curtailment event
Immediate recognition of transition obligation............ $ -- $ 500 $ 6,362
Curtailment gain.......................................... -- (700) (9,006)
Immediate recognition of experience loss.................. -- -- 437
------ ------ -------
Net curtailment................................... $ -- $ (200) $(2,207)
====== ====== =======
Effect of 1% increase in the trend rates
Accumulated postretirement benefit obligation increase.... $1,812 $ 216
====== =======
Service cost plus interest cost increase.................. $ 262 $ 17
====== =======
</TABLE>
The following table summarizes the principal financial assumptions used in
determining the actuarial present value of the accumulated postretirement
benefit obligation:
<TABLE>
<S> <C>
Discount rate........................................................ 8.00%
Medical costs trend rate
- Initial.......................................................... 5.00%
- Ultimate......................................................... 5.00%
</TABLE>
12. POSTEMPLOYMENT BENEFITS
The Company adopted SFAS No. 112, "Employers' Accounting for Postemployment
Benefits" ("SFAS 112") as of the beginning of fiscal 1995. SFAS 112 recognizes
the future cost of providing employment benefits on an accrual basis over the
active service life of the employee. A one-time charge related to the adoption
of SFAS 112 of approximately $588,000 (approximately $341,000 net of federal
income tax) was recognized as the cumulative effect of a change in accounting
principle in fiscal 1995. The Company utilizes the services of an enrolled
actuary to calculate the expense, which relates primarily to workers'
compensation benefits. Prior to 1995, postemployment costs were expensed as
paid.
F-15
<PAGE> 120
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
13. INCOME TAXES
In February 1992, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 mandates the
liability method for computing deferred income taxes. Printpack adopted SFAS 109
during the year ended June 25, 1994. The charge to adopt SFAS 109 as a result of
the change in Printpack's federal income tax status to a C corporation was
$2,865,000, which is reflected in the 1994 statement of Income.
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------
1994 1995 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current tax provision
Federal.................................................... $1,797 $4,600 $2,426
State...................................................... 376 1,338 537
Deferred tax provision
Federal.................................................... (448) (4,650) 104
State...................................................... (51) (424) 13
------ ------ ------
1,674 864 3,080
Cumulative effect of electing C corporation status........... 2,865 -- --
------ ------ ------
$4,539 $ 864 $3,080
====== ====== ======
</TABLE>
The differences between total tax expense and the amount determined by
applying the federal statutory tax rate to income before income taxes result
from the following:
<TABLE>
<CAPTION>
YEAR ENDED
---------------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Taxes at federal statutory rate................................. 35.0% 35.0% 35.0%
S corporation income not subject to corporate level taxation.... (27.7) (32.6) (17.9)
Tax credits..................................................... (.6) -- --
State income taxes, net of federal income tax benefit........... 2.0 4.8 3.1
Other........................................................... (1.0) (2.4) (1.3)
----- ----- -----
7.7% 4.8% 18.9%
===== ===== =====
</TABLE>
F-16
<PAGE> 121
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
----------------
1995 1996
------- ------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts................................... $ 90 $ 113
Accrued incentive compensation.................................... 4,464 3,597
Write-off of equity investment.................................... 1,846 79
Accrued postretirement and postemployment benefits................ 1,185 929
Accrued separation expenses....................................... -- 2,202
Deferred compensation............................................. 1,994 1,925
Other accrued liabilities......................................... 916 1,072
Other............................................................. 230 77
------- ------
Total deferred tax assets................................. $10,725 $9,994
======= ======
Deferred tax liabilities:
Excess of book over tax basis of property, plant and equipment.... $ 6,565 $5,783
Fees and taxes.................................................... 447 600
Voluntary Employee Benefit Association contribution............... 615 627
Other............................................................. 390 393
------- ------
Total deferred tax liabilities............................ 8,017 7,403
------- ------
Net deferred tax asset.................................... $ 2,708 $2,591
======= ======
</TABLE>
Income taxes paid during the years ended June 25, 1994, June 24, 1995 and
June 29, 1996 totaled approximately $1,040,000, $5,994,000 and $2,403,000,
respectively.
14. COMMITMENTS AND CONTINGENCIES
The Company leases certain office facilities and transportation equipment
under non-cancelable operating leases expiring on various dates through 2000.
Future minimum annual rentals required by these operating leases are as follows:
<TABLE>
<CAPTION>
MINIMUM
ANNUAL RENTALS
1996
--------------
(IN THOUSANDS)
<S> <C>
1997........................................................ $ 656
1998........................................................ 644
1999........................................................ 358
2000........................................................ 95
-------
$1,753
===========
</TABLE>
Rental expense under operating leases approximated $1,966,000, $1,742,000
and $1,719,000 during 1994, 1995 and 1996, respectively.
At June 24, 1995 and June 29, 1996, commitments relating to future
acquisitions of property, plant and equipment approximated $22,751,000 and
$10,385,000, respectively.
F-17
<PAGE> 122
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Company is subject to legal proceedings and other claims which arise in
the ordinary course of business. In the opinion of management, the outcome of
these actions will not materially affect the financial position or results of
operations of the Company.
15. WRITE-OFF OF EQUITY INVESTMENT
During fiscal 1995, the Company recorded a charge of approximately
$4,673,000 related to the Company's debt guarantee to a bank on behalf of an
unaffiliated company attempting to develop and market new packaging technology,
which guarantee has been terminated subsequently. There are no other guarantees
related to this unaffiliated company.
16. RESTRUCTURING CHARGES
During 1996, the Company recorded charges of approximately $7,870,000 in
severance charges for announced reductions in work force. Severance charges were
primarily related to the termination of approximately 160 employees located at
manufacturing and corporate facilities. The Company has made severance payments
of $1,884,000 during 1996.
During 1994, the Company recorded charges of approximately $4,880,000 which
included severance payments for announced reductions in work force of
approximately $880,000 and related expenditures of approximately $4,000,000
associated with the closing of its Cincinnati, Ohio plant (Note 4). Severance
charges represent the costs related to the termination of approximately 50
employees in various functions located at the Cincinnati manufacturing facility.
An additional $626,000 in related plant closing expenses were incurred and
expended in 1995.
17. SUBSEQUENT EVENTS
In April 1996, the Company entered into an agreement with James River
Corporation of Virginia to purchase certain assets and assume certain
liabilities of JR Flexible (the "Acquisition"), which agreement was consummated
on August 22, 1996 for a preliminary purchase price of approximately $372.5
million. This Acquisition and the repayment of the majority of the Company's
debt outstanding was financed by the issuance of $100,000,000 of Senior Notes,
$200,000,000 of Senior Subordinated Notes, a new term loan of $170,000,000 and a
draw of $53,300,000 on a $105,000,000 new revolving credit facility. At the
closing of these transactions on August 22, 1996, the revolving credit facility
was reduced permanently by the Receivables Securitization Facility of up to
$50,000,000 to its present level of $105,000,000. Pursuant to the new
Receivables Securitization Facility, $23,000,000 of proceeds from the initial
sale of receivables were received by the Company on August 22, 1996. The final
purchase price for the Acquisition is subject to adjustment based upon an audit
of the closing statement of assets purchased and liabilities assumed, and the
final negotiation of the values of certain items.
On June 28, 1996, the Company entered into an amended interest rate lock
agreement with a bank to manage its interest rate exposure on anticipated
borrowings to be incurred in connection with the Acquisition described above and
in Note 1. This amended agreement, whose termination became effective August 19,
1996, designated the Company and the bank as fixed and floating rate payers,
respectively, on a notional principal amount of $300 million. As a result of
subsequent declines in interest rates, the Company, on August 19, 1996 paid
approximately $7.4 million on the settlement of this agreement, which cost will
be deferred and amortized to interest expense over the life of the related debt.
The fair value of the lock agreement was approximately $2.6 million,
unfavorable, as of June 29, 1996. The Company has only limited involvement with
derivative instruments and does not use them for trading purposes. There were no
premiums paid or received in connection with this agreement.
Subsequent to year end, the Company advanced an additional $700,000 to
Orflex on its working capital loan (see Note 4 where discussed).
F-18
<PAGE> 123
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
18. UNAUDITED PRO FORMA INFORMATION
INCOME TAXES
The Company has calculated the pro forma provision for income taxes under
SFAS 109 as if Printpack and Printpack Enterprises had been subject to federal
and state income taxes throughout the periods presented.
The pro forma provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------
1994 1995 1996
------ ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current tax provision
Federal................................................... $7,035 $10,236 $5,247
State..................................................... 509 1,419 764
Deferred tax provision
Federal................................................... 307 (4,405) 481
State..................................................... 35 (392) 63
------ ------- ------
Total pro forma provision......................... $7,886 $ 6,858 $6,555
====== ======= ======
</TABLE>
The differences between total pro forma tax expense and the amount
determined by applying the federal statutory tax rate to income before income
taxes result from the following:
<TABLE>
<CAPTION>
YEAR ENDED
------------------
1994 1995 1996
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Taxes at federal statutory rate.................................... 35.0% 35.0% 35.0%
State income taxes, net of federal income tax benefit.............. 4.0 4.4 4.5
Tax credits........................................................ (.6) -- --
Other.............................................................. (2.0) (1.4) .7
---- ---- ----
36.4% 38.0% 40.2%
==== ==== ====
</TABLE>
F-19
<PAGE> 124
PRINTPACK, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Significant components of the Company's pro forma deferred tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
-----------------
1995 1996
------- -------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts.................................. $ 90 $ 113
Accrued incentive compensation................................... 4,545 3,597
Write-off of equity investment................................... 1,846 79
Accrued postretirement and postemployment benefits............... 1,185 929
Accrued separation expenses...................................... -- 2,202
Deferred compensation............................................ 1,994 1,925
Other accrued liabilities........................................ 1,554 1,271
Excess of book over tax basis of intangibles..................... 35 36
Other............................................................ 150 77
------- -------
Total deferred tax assets................................ $11,399 $10,229
======= =======
Deferred tax liabilities:
Excess of book over tax basis of property, plant and equipment... $10,554 $ 9,852
Fees and taxes................................................... 556 697
Voluntary Employee Benefit Association contribution.............. 615 627
Other............................................................ 470 393
------- -------
Total deferred tax liabilities........................... 12,195 11,569
------- -------
Net deferred tax liability............................... $ 796 $ 1,340
======= =======
</TABLE>
F-20
<PAGE> 125
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
James River Corporation of Virginia
In our opinion, the accompanying combined balance sheet and the related
combined statements of operations, of changes in James River's Investment and of
cash flows present fairly, in all material respects, the financial position of
the Flexible Packaging Group of James River Corporation as described in Note 1
to the combined financial statements, at December 25, 1994 and December 31,
1995, and the results of their operations and their cash flows for each of the
three fiscal years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Atlanta, Georgia
August 22, 1996
F-21
<PAGE> 126
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 31,
1994 1995
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets
Accounts receivable, less allowance for doubtful accounts of $639
and
$426............................................................ $ 33,979 $ 31,116
Inventories........................................................ 71,515 56,054
Prepaid expenses and other current assets.......................... 2,413 1,503
Deferred income taxes.............................................. 2,877 3,938
------------ ------------
Total current assets....................................... 110,784 92,611
------------ ------------
Net property, plant and equipment.................................... 210,942 232,420
Other assets......................................................... 13,227 12,932
Intangible assets.................................................... 13,018 12,603
------------ ------------
Total assets............................................... $347,971 $350,566
========== ==========
LIABILITIES AND EQUITY
Current liabilities
Accounts payable................................................... $ 24,481 $ 16,919
Accrued liabilities................................................ 17,027 19,755
------------ ------------
Total current liabilities.................................. 41,508 36,674
------------ ------------
Long-term debt....................................................... 2,392 2,392
Deferred income taxes................................................ 43,194 42,326
Accrued postretirement benefits other than pensions.................. 16,493 16,567
Other long-term liabilities.......................................... 3,243 3,123
------------ ------------
Total liabilities.......................................... 106,830 101,082
------------ ------------
James River's investment............................................. 241,141 249,484
------------ ------------
Commitments and contingencies........................................ -- --
------------ ------------
Total liabilities and equity............................... $347,971 $350,566
========== ==========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
F-22
<PAGE> 127
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
52 WEEKS 52 WEEKS 53 WEEKS
ENDED ENDED ENDED
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales................................................. $475,052 $464,517 $486,694
Cost of goods sold........................................ 421,420 419,643 460,664
-------- -------- --------
Gross margin.............................................. 53,632 44,874 26,030
Selling and administrative expenses....................... 37,280 37,181 40,304
Restructuring charges..................................... -- -- 2,094
-------- -------- --------
Income (loss) from operations................... 16,352 7,693 (16,368)
Interest expense.......................................... 228 229 245
Other income, net......................................... 742 603 503
-------- -------- --------
Income (loss) before income taxes............... 16,866 8,067 (16,110)
Income tax expense (benefit).............................. 6,745 3,380 (6,029)
-------- -------- --------
Net income (loss)......................................... $ 10,121 $ 4,687 $(10,081)
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
F-23
<PAGE> 128
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
COMBINED STATEMENTS OF CHANGES IN JAMES RIVER'S INVESTMENT
<TABLE>
<CAPTION>
52 WEEKS 52 WEEKS 53 WEEKS
ENDED ENDED ENDED
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
James River's investment
Balance, beginning of year.......................... $234,539 $226,850 $241,141
Net income (loss)................................... 10,121 4,687 (10,081)
Change in equity component of minimum pension
liability........................................ 516 (403) (116)
Capital infusion, net............................... (18,326) 10,007 18,540
------------ ------------ ------------
Balance, end of year................................ $226,850 $241,141 $249,484
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
F-24
<PAGE> 129
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
52 WEEKS 52 WEEKS 53 WEEKS
ENDED ENDED ENDED
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating activities
Net income (loss)....................................... $ 10,121 $ 4,687 $(10,081)
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization expense................ 20,479 21,907 24,125
Deferred income tax provision (benefit).............. 357 (2,314) (1,855)
Loss on sale of fixed assets......................... 295 269 3,617
Retirement benefit funding (in excess of) less than
expense............................................ (545) 2,578 (468)
Change in current assets and liabilities
(Increase) decrease in accounts receivable........... (5,824) (1,765) 2,863
Decrease (increase) in inventories................... 4,211 (6,839) 15,461
Decrease (increase) in prepaid expenses and other
current assets..................................... 588 (175) 910
Increase (decrease) in accounts payable.............. 2,183 5,215 (7,562)
Increase (decrease) in accrued liabilities........... 1,018 (1,713) 2,728
Other, net.............................................. (290) 416 669
------------ ------------ ------------
Net cash provided by operating activities....... 32,593 22,266 30,407
------------ ------------ ------------
Investing activities
Expenditures for property, plant and equipment.......... (14,307) (32,634) (49,430)
Other, net.............................................. 40 361 483
------------ ------------ ------------
Net cash used for investing activities.......... (14,267) (32,273) (48,947)
------------ ------------ ------------
Financing activities
James River's capital (withdrawal) infusion, net........ (18,326) 10,007 18,540
------------ ------------ ------------
Cash provided by financing activities........... (18,326) 10,007 18,540
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents.......... -- -- --
Cash and cash equivalents, beginning of year.............. -- -- --
------------ ------------ ------------
Cash and cash equivalents, end of year.......... $ -- $ -- $ --
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
F-25
<PAGE> 130
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
1. ORGANIZATION AND OPERATIONS
The accompanying combined financial statements of the Flexible Packaging
Group ("JR Flexible") include the historical assets, liabilities and operating
results of certain operations of James River Corporation of Virginia's ("James
River") Flexible Packaging Business. JR Flexible primarily consists of the
assets, liabilities and operations of four lamination and coating plants,
located in St. Louis, Missouri, Dayton, Ohio, Shreveport, Louisiana, and San
Leandro, California; five film and converting plants, located in New Castle,
Delaware, Orange, Texas, Greensburg, Indiana, Jackson, Tennessee, and
Aguascalientes, Mexico; and a rigid plastics container plant in Williamsburg,
Virginia. Certain pilot plant equipment from James River's technology center in
Milford, Ohio is also included.
The accompanying combined financial statements have been prepared on a
historical basis. The financial information in these combined financial
statements is not necessarily indicative of results that would have occurred if
JR Flexible had been a separate stand-alone entity during the periods presented
or of future results of JR Flexible.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The more significant accounting policies followed by JR Flexible are
summarized below:
BASIS OF PRESENTATION AND PRINCIPLES OF COMBINATION
The combined financial statements have been prepared as if JR Flexible had
operated as an independent stand-alone entity for the periods presented, except
JR Flexible generally has not had significant borrowings, and there has been no
allocation of James River's consolidated borrowings, and related interest
expense, except for interest capitalized as a component of properties. JR
Flexible has engaged in various transactions with James River and its affiliates
that are characteristic of a group of companies under common control, including
the purchase and sale of product from other James River facilities. Throughout
the period covered by these combined financial statements, JR Flexible
participated in James River's centralized cash management system and, as such,
its cash funding requirements were met by James River. JR Flexible's operational
transactions result in amounts receivable from and payable to James River which
fluctuate over time and are not settled through cash transfers. Accordingly,
such receivable and payable amounts are presented net in the combined balance
sheet as James River's investment and as capital infusion, net in the combined
statements of changes in James River's investment, and the combined statements
of cash flows. Significant intercompany balances and transactions within JR
Flexible have been eliminated. Sales to James River were approximately 7.7%,
8.7% and 9.4% of combined sales in 1993, 1994 and 1995, respectively. JR
Flexible's fiscal year includes the 52 or 53 weeks ending on the last Sunday in
December. The years ended December 26, 1993, December 25, 1994, and December 31,
1995, included 52 weeks, 52 weeks and 53 weeks, respectively.
JR Flexible was charged by James River for direct costs and expenses
associated with its operations which were included in selling and administrative
expenses. James River's other administrative costs not directly attributable to
JR Flexible ("corporate overhead allocation"), which historically have not been
allocated by James River, have been allocated to JR Flexible based on JR
Flexible's relative contribution to consolidated James River net sales.
Management believes that such methods of allocation are reasonable and reflect a
reasonable estimate of the level of expenses that might have been incurred had
JR Flexible operated on a stand-alone basis. JR Flexible's corporate overhead
allocation, which is also included in selling and administrative expenses in the
statements of operations, consists of $4.8 million, $5.6 million and $5.9
million of such indirect costs for 1993, 1994 and 1995, respectively.
F-26
<PAGE> 131
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
USE OF ESTIMATES
Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
affect amounts reported therein. Actual results could differ from those
estimates.
INVENTORIES
Inventories are stated at the lower of cost or market and include the cost
of materials, labor and manufacturing overhead. The last-in, first-out cost flow
assumption is used for valuing substantially all inventories, other than stores
and supplies, which are valued using average cost assumptions.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost, less accumulated
depreciation, including related delivery and installation costs and interest
incurred on significant capital projects during their construction periods.
Expenditures for improvements which increase asset values or extend useful lives
are capitalized. Maintenance and repair costs are expensed as incurred. For
financial reporting purposes, depreciation is computed using the straight-line
method over the estimated useful lives of the respective assets, which range
from 15 to 45 years for buildings and 5 to 20 years for machinery and equipment.
For income tax purposes, depreciation is calculated using accelerated methods.
INTANGIBLE ASSETS
The excess of the purchase price over the fair value of identifiable net
assets of acquired companies is allocated to goodwill and amortized over 40
years. Goodwill is presented net of accumulated amortization of $3.9 million and
$4.3 million as of December 25, 1994, and December 31, 1995, respectively. The
recoverability of goodwill has been evaluated to determine whether goodwill is
fully recoverable from the projected undiscounted cash flows of the assets and
businesses to which the goodwill relates. Management believes that goodwill is
not significantly impaired as of December 25, 1994 and December 31, 1995.
RESEARCH AND DEVELOPMENT
Research and development expenditures are expensed as incurred. Direct and
readily identifiable indirect research and development costs totaled $6.4
million in 1993, $6.5 million in 1994 and $6.0 million in 1995.
INTEREST EXPENSE
The interest expense reflected in the combined statements of operations
primarily represents interest expense on industrial revenue bonds, which are
currently obligations of James River and which will be assumed by JR Flexible.
These obligations have been included in the accompanying combined balance sheet.
The interest expense reflected in the combined statements of operations and the
amount of debt reflected in the accompanying combined balance sheets are not
intended to reflect interest expense that JR Flexible may have incurred and the
amount of debt which would have been outstanding had JR Flexible been a
stand-alone company. As discussed below under "James River's Investment,"
transactions with James River are treated as if settled immediately through
James River's investment. As a result, there were no advances from James River
outstanding in the accompanying combined balance sheets which required the
recognition of interest expense.
F-27
<PAGE> 132
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
INCOME TAXES
JR Flexible has historically been included in the consolidated federal
income tax return and the combined/unitary state income tax returns of James
River. Income taxes reflected in the accompanying combined financial statements
represent JR Flexible's share of James River's income tax provision which
approximates the tax effect which would have been recognized had JR Flexible
filed separate income tax returns.
Income taxes currently payable have been treated as if settled immediately
through James River's investment. The current deferred asset and the noncurrent
deferred liability have been determined on a stand-alone basis. Because JR
Flexible is included in the James River consolidated federal income tax return,
net operating loss carryforwards, investment and other tax credit carryforwards,
if any, were utilized by James River. Accordingly, JR Flexible has no reportable
net operating loss or tax credit carryforwards on a stand-alone basis.
EMPLOYEE BENEFIT PLANS
Certain key employees and officers who are assigned to JR Flexible are
participants in the James River stock option plan, stock appreciation rights
plan, and deferred stock plan. Under the stock option plan, options were granted
to purchase the common stock of James River ("JR Common") at exercise prices
equal to the fair market value of such stock as of the date of grant and have
terms of ten years. Under the stock appreciation rights plan, stock appreciation
rights ("SARs") were granted with terms of ten years. Upon exercise, holders of
SARs are paid cash or at the option of James River, JR Common in an amount equal
to the appreciation in market value of such stock between the grant date and the
exercise date. Under the deferred stock plan, hypothetical shares of JR Common
("Units") were awarded; the value of each Unit on the award is equal to the
current market value of a share of JR Common. Benefits are paid in cash and JR
Common as vested or, at the option of the holder, over varying periods after
retirement. Compensation expense allocated from James River for these plans was
not material for any of the years presented.
James River, and as a result JR Flexible, has a defined contribution 401(k)
stock plan which is available to substantially all domestic employees. The plan
is funded with contributions by participants and the participant's employer.
Expenses allocated from James River for this plan totaled $1.3 million in 1993,
$1.7 million in 1994 and $1.8 million in 1995.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject JR Flexible to
concentrations of credit risk consist principally of trade accounts receivable.
JR Flexible extends credit to its customers based on an evaluation of the
customer's financial condition, generally without requiring collateral. Exposure
to losses on receivables is principally dependent on each customer's financial
condition. JR Flexible monitors its exposure for credit losses and maintains
allowances for such losses.
JAMES RIVER'S INVESTMENT
James River's investment reflects the historical activity between JR
Flexible and James River and JR Flexible's cumulative results of operations.
Transactions with James River are reflected as though they were settled
immediately as an addition to or reduction of James River's investment and there
are no amounts due to or from James River at the end of any period.
F-28
<PAGE> 133
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
3. INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw materials...................................................... $24,603 $18,190
Finished goods and work in process................................. 46,251 40,634
Stores and supplies................................................ 5,839 6,184
------- -------
76,693 65,008
Reduction to state certain inventories at last-in, first-out
cost............................................................. (5,178) (8,954)
------- -------
Total inventories........................................ $71,515 $56,054
======= =======
</TABLE>
In 1995, certain inventory quantities were reduced, resulting in
liquidations of last-in, first-out inventory quantities carried at lower costs
prevailing in prior years. The effect was to decrease the net loss by $1.1
million.
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows:
<TABLE>
<CAPTION>
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Land and improvements.......................................... $ 7,472 $ 7,597
Buildings...................................................... 62,234 64,744
Machinery and equipment........................................ 377,371 397,975
Construction in progress....................................... 25,389 26,140
-------- --------
472,466 496,456
Accumulated depreciation....................................... 261,524 264,036
-------- --------
Net property, plant and equipment.................... $210,942 $232,420
======== ========
</TABLE>
5. RESTRUCTURING CHARGES
During 1995, JR Flexible recorded a $2.1 million charge which included
severance charges for announced reductions in the work force of $1.2 million and
fixed asset write-offs of $.9 million. The $1.2 million charge relates to
approximately 35 employees in various functions. JR Flexible has made severance
payments of $.3 million to terminated employees for whom severance costs have
been accrued since the beginning of 1995. JR Flexible anticipates that all
remaining severance payments will be disbursed during 1996.
F-29
<PAGE> 134
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES
Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
1993 1994 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current
Federal............................................. $ 5,347 $ 4,754 $(3,478)
State............................................... 985 878 (624)
Foreign............................................. 56 62 (72)
------- ------- -------
Total current income tax expense
(benefit)................................. 6,388 5,694 (4,174)
------- ------- -------
Deferred
Federal............................................. 302 (1,957) (1,569)
State............................................... 55 (357) (286)
------- ------- -------
Total deferred income tax benefit........... 357 (2,314) (1,855)
------- ------- -------
Income tax expense (benefit)................ $ 6,745 $ 3,380 $(6,029)
======= ======= =======
</TABLE>
Because JR Flexible is included with James River in the filing of a
consolidated federal income tax return and a combined/unitary state income tax
return, cash payments for income taxes for JR Flexible on a stand-alone basis
are not determinable.
Principal reasons for the difference between the federal statutory income
tax rate on the income (loss) before income taxes and JR Flexible's effective
income tax rate are as follows:
<TABLE>
<CAPTION>
PERCENT OF PRETAX INCOME
(LOSS)
------------------------
1993 1994 1995
---- ----- -----
<S> <C> <C> <C>
Federal statutory income tax rate............................ 35.0% 35.0% (35.0)%
State income taxes, net of federal income tax effect......... 4.0 4.2 (3.7)
Nondeductible items.......................................... 0.8 1.7 1.0
Other items, net............................................. 0.2 1.0 0.3
---- ----- -----
Effective income tax rate.......................... 40.0% 41.9% (37.4)%
==== ===== =====
</TABLE>
The income tax effects of temporary differences that give rise to the net
deferred tax liability are as follows:
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Excess of book over tax basis of property, plant and equipment... $ 45,800 $ 44,800
Pension benefits................................................. 4,041 4,116
Other items...................................................... 1,751 1,462
-------- --------
Total deferred tax liabilities......................... 51,592 50,378
-------- --------
Postretirement benefits other than pensions...................... (6,726) (6,695)
Accrued liabilities.............................................. (4,549) (5,295)
-------- --------
Total deferred tax assets.............................. (11,275) (11,990)
-------- --------
Net deferred tax liability............................. $ 40,317 $ 38,388
======== ========
</TABLE>
F-30
<PAGE> 135
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
7. PENSION PLANS
James River sponsors contributory and noncontributory pension plans and
also participates in multi-employer retirement plans which provide defined
benefits to employees covered under collective bargaining agreements; such plans
also cover substantially all employees who are assigned to JR Flexible. Benefits
under the plans for hourly employees are primarily based on stated benefits per
year of credited service. Benefits for salaried employees are primarily related
to compensation and years of credited service. Contributions are made to the
plans sufficient to meet the minimum funding requirements of applicable laws and
regulations plus additional amounts, if any, as management, in consultation with
its actuaries, deems to be appropriate. Contributions to the multi-employer plan
are generally based on negotiated labor contracts. Plan assets consist
principally of equity securities and corporate and government obligations.
Components of pension cost information presented for salaried and hourly
plans were derived from actuarial calculations of these components of the James
River plans. All amounts applicable to hourly plans, for which operations were
included in JR Flexible, were assigned to JR Flexible. The actuarial present
value of benefit obligations for active salaried employees employed by JR
Flexible and the related components of pension cost were allocated to JR
Flexible. Plan assets were allocated to JR Flexible based upon the same
methodology used to allocate the present value of benefit obligations.
The components of JR Flexible's net pension cost allocated from the James
River pension plans are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost............................................. $ 1,384 $ 1,722 $ 1,330
Interest accrued on projected benefit obligation......... 3,360 4,182 4,051
Net investment (income) loss on plan assets
Actual................................................. (6,296) (669) (11,234)
Deferral of difference between actual and expected
investment income................................... 1,963 (4,500) 6,299
Net amortization......................................... 514 857 365
Contributions to multi-employer pension plans............ 298 385 311
------- ------- --------
Net pension cost............................... $ 1,223 $ 1,977 $ 1,122
======= ======= ========
</TABLE>
Net amortization included amortization of the net transition assets, net
experience gains and losses, and prior service costs over 15 to 20 years.
The actuarial assumptions used in determining net pension costs are as
follows:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate...................................................... 8.0% 7.4% 8.6%
Assumed rate of increase in compensation levels.................... 5.5% 5.5% 5.0%
Expected long-term rate of return on plan assets................... 10.5% 10.0% 10.0%
</TABLE>
As of December 31, 1995, benefit obligations were determined using a
discount rate of 7.5% and an assumed rate of increase in compensation levels of
5.0%. The effect of the changes in these assumptions was an increase in the
projected benefit obligation of $6.1 million.
F-31
<PAGE> 136
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the funded status of JR Flexible's allocated
balances for the James River pension plans as of December 25, 1994, and December
31, 1995:
<TABLE>
<CAPTION>
1994 1995
------------------------- -------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of
Vested benefits....................... $42,957 $ 1,542 $51,985 $ 2,105
Nonvested benefits.................... 1,418 311 1,759 303
----------- ----------- ----------- -----------
Accumulated benefit
obligation.................. 44,375 1,853 53,744 2,408
Effect of projected future salary
increases.......................... 1,558 10 1,851 13
----------- ----------- ----------- -----------
Projected benefit
obligation.................. 45,933 1,863 55,595 2,421
Plan assets at fair value............. 54,848 1,703 65,265 2,090
----------- ----------- ----------- -----------
Plan assets in excess of (less than)
projected benefit obligation....... 8,915 (160) 9,670 (331)
Unrecognized net loss (gain).......... 741 763 (248) 887
Unrecognized prior service cost....... 1,249 238 1,849 217
Unrecognized net transition asset..... (676) -- (583) --
Minimum pension liability............. -- (917) -- (1,091)
----------- ----------- ----------- -----------
Net pension asset
(liability)................. $10,229 $ (76) $10,688 $ (318)
========= ========= ========= =========
</TABLE>
Other assets included net noncurrent pension assets of $11.1 million as of
December 25, 1994, and $11.5 million as of December 31, 1995, exclusive of the
additional minimum pension liabilities. As of December 25, 1994, and December
31, 1995, $.9 million and $1.1 million of additional minimum pension liabilities
for underfunded plans were included in other long-term liabilities, offset by an
intangible asset of $.2 million and $.2 million, and a charge of $.4 million and
$.5 million to James River's investment, net of deferred taxes of $.3 million
and $.4 million, respectively.
8. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
James River provides certain medical and life insurance benefits to
eligible retired employees, which include personnel assigned to JR Flexible.
Salaried employees hired before January 1, 1993, generally become eligible for
retiree medical benefits after reaching age 55 with 15 years of service or after
reaching age 65. Under the salaried plan, post-age 65 eligible retirees are
reimbursed for a portion of the cost of premiums of Medicare supplement
insurance policies, based upon vested years of service. Post-age 65 salaried
retirees are also reimbursed for certain prescription drug costs, less
deductibles. Pre-age 65 eligible retirees are paid a stated percentage of
covered medical expenses, less deductibles. Salaried employees hired after
January 1, 1993, are not eligible for retiree medical benefits. Benefits,
eligibility and cost-sharing provisions for hourly employees vary by location
and collective bargaining unit. All of James River's, and as a result, JR
Flexible's retiree medical plans are unfunded.
F-32
<PAGE> 137
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The components of JR Flexible's net periodic postretirement benefit cost
allocated from the James River plans for the years ended December 26, 1993,
December 25, 1994 and December 31, 1995, are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost............................................... $ 577 $ 506 $ 572
Interest cost on accumulated postretirement benefit
obligation............................................... 1,138 1,094 1,354
Net amortization........................................... (88) (171) (174)
------ ------ ------
Net periodic postretirement benefit cost......... $1,627 $1,429 $1,752
====== ====== ======
</TABLE>
Net amortization included amortization of prior service costs and gains and
net experience gains and losses over 15 years. The discount rate used in
determining the net periodic postretirement benefit cost was 8.5% for 1993, 7.5%
for 1994 and 8.5% for 1995. The discount rate used in determining the
accumulated postretirement benefit obligation ("APBO") was 7.4% as of December
31, 1995. The net effect of the decrease in the discount rate and health care
cost trend rate was a decrease in the accumulated benefit obligation of $1.2
million.
Unrecognized net gain or loss, APBO and postretirement benefit costs for
active employees assigned to, and the retirees associated with, JR Flexible were
allocated to JR Flexible based upon actuarially calculated values.
Summary information on James River's plans allocated to JR Flexible for the
years ended December 25, 1994, and December 31, 1995, is as follows:
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation
Retirees....................................................... $ 5,764 $ 5,006
Fully eligible active participants............................. 3,602 2,326
Other active participants...................................... 6,432 7,277
------- -------
Total accumulated postretirement benefit obligation.... 15,798 14,609
Unrecognized net (loss) gain................................... (594) 691
Unrecognized prior service gain................................ 2,086 1,911
------- -------
Accrued postretirement benefit obligation...................... $17,290 $17,211
======= =======
</TABLE>
As of December 25, 1994, and December 31, 1995, JR Flexible has included
$.7 million and $.6 million, respectively, of accrued postretirement benefit
costs in accrued liabilities, representing the estimated current portion of this
liability.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 9% in 1995, declining by .5% per year
through 2003 and .25% thereafter through 2005 to an ultimate rate of 5%. If the
health care cost trend rate assumptions were increased by 1%, the accumulated
postretirement benefit obligation as of December 31, 1995, would have increased
by $1.4 million. The effect of this change on the sum of the service cost and
interest cost components of net periodic postretirement benefit cost for 1995
would have been an increase of $.2 million.
F-33
<PAGE> 138
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
9. SUPPLEMENTAL BALANCE SHEET INFORMATION
ACCRUED LIABILITIES
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accrued vacation and payroll............................................... $ 6,009 $ 7,112
Accrued benefits........................................................... 2,770 2,780
Accrued severance.......................................................... -- 887
Workers' compensation accrual.............................................. 3,743 4,229
Accrued taxes, other than income taxes..................................... 718 1,165
Other...................................................................... 3,787 3,582
------- -------
Total accrued liabilities........................................ $17,027 $19,755
======= =======
</TABLE>
10. INDEBTEDNESS
<TABLE>
<CAPTION>
1994 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
5.6% revenue bond, payable in 1997........................................... $ 779 $ 779
6.4% revenue bond, payable in 2001........................................... 799 799
6.7% revenue bond, payable in 2004........................................... 814 814
------ ------
Total long-term debt............................................... $2,392 $2,392
====== ======
</TABLE>
Interest paid was $187,000 in 1993, 1994 and 1995. Minimum principal
payments in the next five years include $1,000,000 in 1997.
11. COMMITMENTS AND CONTINGENCIES
LEASES
JR Flexible is a party to operating lease agreements and has participated
with James River in lease agreements for certain facilities, vehicles and
equipment over varying periods. None of the agreements contain unusual renewal
or purchase options. As of December 31, 1995, future minimum rental payments
under noncancelable operating leases are as follows:
<TABLE>
<CAPTION>
MINIMUM
RENTALS
--------------
(IN THOUSANDS)
<S> <C>
1996........................................................ $ 793
1997........................................................ 588
1998........................................................ 610
1999........................................................ 614
2000........................................................ 102
Later years................................................. --
-------
Total future minimum rentals...................... $2,707
===========
</TABLE>
Rent expense totaled $2.8 million in 1993, $2.6 million in 1994 and $2.8
million in 1995. Capital leases are not material.
F-34
<PAGE> 139
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
LITIGATION AND ENVIRONMENTAL MATTERS
JR Flexible is subject to legal proceedings and other claims which arise in
the ordinary course of business. In the opinion of management, the outcome of
these actions will not materially affect the financial position of JR Flexible.
In addition, JR Flexible has been identified as a potentially responsible
party, along with others, at certain U.S. Environmental Protection Agency
designated superfund sites and is involved in remedial investigations and
actions under federal and state laws. It is JR Flexible's policy to accrue
remediation costs when it is probable that such costs will be incurred and when
they can be reasonably estimated. Included in JR Flexible's other long-term
liabilities were environmental liabilities, including remediation costs,
totaling $1.8 million and $1.5 million as of December 25, 1994, and December 31,
1995, respectively. JR Flexible periodically reviews the status of all
significant existing or potential environmental issues and adjusts its accruals
as necessary. The accruals do not reflect any possible future insurance
recoveries. Estimates of costs for future remediation are imprecise due to,
among other things, the identification of presently unknown remediation sites
and the allocation of costs among potentially responsible parties. JR Flexible
believes that its share of the costs of cleanup for its current remediation
sites will not have a materially adverse impact on its combined financial
position.
12. SUBSEQUENT EVENTS
Subsequent to December 31, 1995, James River entered into an agreement with
Printpack, Inc. to sell certain assets and transfer certain liabilities of JR
Flexible, which agreement was consummated on August 22, 1996. The purchase price
of approximately $372.5 million is subject to adjustment based upon an audit of
the closing statement of assets purchased and liabilities assumed.
F-35
<PAGE> 140
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
COMBINED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30,
1996
--------------
(IN THOUSANDS)
<S> <C>
ASSETS
Current assets
Accounts receivable, less allowance for doubtful accounts of $364............ $ 30,303
Inventories.................................................................. 56,429
Prepaid expenses and other current assets.................................... 2,152
Deferred income taxes........................................................ 3,934
--------------
Total current assets................................................. 92,818
Net property, plant and equipment.............................................. 228,681
Other assets................................................................... 12,225
Intangible assets.............................................................. 12,395
--------------
Total assets......................................................... $346,119
===========
LIABILITIES AND EQUITY
Current liabilities
Accounts payable............................................................. $ 17,877
Accrued liabilities.......................................................... 17,920
--------------
Total current liabilities............................................ 35,797
Long-term debt................................................................. 2,392
Deferred income taxes.......................................................... 40,635
Accrued postretirement benefits other than pensions............................ 16,975
Other long-term liabilities.................................................... 3,071
--------------
Total liabilities.................................................... 98,870
--------------
James River's investment....................................................... 247,249
--------------
Commitments and contingencies.................................................. --
--------------
Total liabilities and equity......................................... $346,119
===========
</TABLE>
The accompanying notes are an integral part of the unaudited combined financial
statements.
F-36
<PAGE> 141
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
26 WEEKS
ENDED JUNE 26 WEEKS ENDED
25, 1995 JUNE 30, 1996
------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Net sales......................................................... $ 243,103 $223,432
Cost of goods sold................................................ 230,995 203,889
------------- --------------
Gross margin...................................................... 12,108 19,543
Selling, administrative and research and development expenses..... 19,919 17,414
------------- --------------
Income from operations.......................................... (7,811) 2,129
Interest expense.................................................. 120 119
Other income, net................................................. 248 305
------------- --------------
Income (loss) before income taxes............................... (7,683) 2,315
Income tax (benefit) expense...................................... (2,750) 1,060
------------- --------------
Net income (loss)................................................. $ (4,933) $ 1,255
========== ===========
</TABLE>
The accompanying notes are an integral part of the unaudited combined financial
statements.
F-37
<PAGE> 142
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
COMBINED STATEMENT OF CHANGES IN JAMES RIVER'S INVESTMENT
(UNAUDITED)
<TABLE>
<CAPTION>
26 WEEKS 26 WEEKS
ENDED ENDED
JUNE 25, JUNE 30,
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
James River's investment
Balance, beginning of period........................................... $241,141 $249,484
Net income (loss)...................................................... (4,933) 1,255
Capital infusion (withdrawal), net..................................... 24,420 (3,490)
-------- --------
Balance, end of period................................................. $260,628 $247,249
======== ========
</TABLE>
The accompanying notes are an integral part of the unaudited combined financial
statements.
F-38
<PAGE> 143
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
26 WEEKS 26 WEEKS
ENDED ENDED
JUNE 25, JUNE 30,
1995 1996
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Operating activities
Net (loss) income................................................ $ (4,933) $ 1,255
Adjustments to reconcile net income (loss) to net cash provided
by operating activities
Depreciation and amortization expense......................... 11,400 13,453
Deferred income tax benefit................................... (927) (1,490)
Loss on sale of fixed assets.................................. 292 213
Retirement benefit funding (in excess of) less than expense... (149) 969
Change in current assets and liabilities
Decrease in accounts receivable............................. 1,148 813
Decrease (increase) in inventories.......................... 330 (375)
Decrease (increase) in other current assets................. 562 (649)
(Decrease) increase in accounts payable..................... (1,388) 958
Decrease in accrued liabilities............................. (1,005) (1,835)
Other, net.................................................. (128) (270)
-------------- --------------
Net cash provided by operating activities................ 5,202 13,042
-------------- --------------
Investing activities
Expenditures for property, plant and equipment................ (29,800) (9,824)
Cash received on sale of fixed assets......................... 178 272
-------------- --------------
Net cash used for investing activities................... (29,622) (9,552)
-------------- --------------
Financing activities
James River's capital infusion (withdrawal), net................. 24,420 (3,490)
-------------- --------------
Cash used for financing activities............................ 24,420 (3,490)
-------------- --------------
Increase (decrease) in cash and cash equivalents................... -- --
Cash and cash equivalents, beginning of period..................... -- --
-------------- --------------
Cash and cash equivalents, end of period...................... $ -- $ --
=========== ===========
</TABLE>
The accompanying notes are an integral part of the unaudited combined financial
statements.
F-39
<PAGE> 144
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
JUNE 30, 1996
1. BASIS OF PRESENTATION
The accompanying unaudited combined interim financial statements of The
Flexible Packaging Group of the James River Corporation ("JR Flexible") include
the historical assets, liabilities and operating results of certain operations
of James River Corporation of Virginia's ("James River") Flexible Packaging
Business. The accompanying combined interim financial statements have been
prepared by JR Flexible and are presented on a combined basis in accordance with
the accounting policies stated in the December 25, 1994, and December 31, 1995,
combined financial statements and should be read in conjunction with the Notes
to Combined Financial Statements appearing therein. In the opinion of James
River, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation have been included in the accompanying
combined interim financial statements. The accompanying combined interim
financial statements as of June 25, 1995 and June 30, 1996, are based in part on
approximations and have not been audited by independent accountants. JR
Flexible's corporate overhead allocation, which is included in selling and
administrative expenses in the statement of operations, consists of $2.7 million
and $3.4 million of indirect costs at June 25, 1995 and June 30, 1996,
respectively. These costs have been allocated to JR Flexible based on JR
Flexible's relative contribution to consolidated James River net sales. The
results of operations for the six-month period ended June 30, 1996, are not
necessarily indicative of the results to be expected for the full year.
2. RESTRUCTURING CHARGES
During 1996, JR Flexible made severance payments of approximately $.7
million to terminated employees for whom severance costs were accrued since the
beginning of 1995.
3. INCOME TAXES
JR Flexible's effective income tax rate was 45.7% for the 26 weeks ended
June 30, 1996, compared to 37.4% for the 53 weeks ended December 31, 1995, and
35.8% for the 26 weeks ended June 25, 1995, compared to 41.9% for the 52 weeks
ended December 25, 1994. The increase in the effective tax rate for the 26 weeks
ended June 30, 1996 from the prior year was primarily due to the relative
amounts of non-tax deductible differences on a pretax loss in 1995 and pretax
income in 1996.
4. INVENTORIES
Inventories are stated at the lower of cost or market and include the cost
of materials, labor and manufacturing overhead. The last-in, first-out cost flow
assumption is used for valuing substantially all inventories, other than stores
and supplies, which are valued using average cost assumptions.
Inventories are summarized as follows:
<TABLE>
<CAPTION>
JUNE 30,
1996
--------------
(IN THOUSANDS)
<S> <C>
Raw materials.......................................................... $ 16,884
Finished goods and work-in-process..................................... 39,968
Stores and supplies.................................................... 6,596
--------------
63,448
Reduction to state certain inventories at last-in, first-out cost...... (7,019)
--------------
Total inventories............................................ $ 56,429
===========
</TABLE>
F-40
<PAGE> 145
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
5. CONTINGENCIES
JR Flexible is subject to legal proceedings and other claims which arise in
the ordinary course of business. In the opinion of management, the outcome of
these actions will not materially affect the combined financial position or
results of operations of JR Flexible.
In addition, JR Flexible has been identified as a potentially responsible
party, along with others, at various U.S. Environmental Protection Agency
designated superfund sites and is involved in remedial investigations and
actions under federal and state laws. It is JR Flexible's policy to accrue
remediation costs when it is probable that such costs will be incurred and when
they can be reasonably estimated. Included in JR Flexible's other long-term
liabilities were environmental liabilities, including remediation costs,
totaling $1.5 million as of June 30, 1996. JR Flexible periodically reviews the
status of all significant existing or potential environmental issues and adjusts
its accruals as necessary. The accruals do not reflect any possible future
insurance recoveries. Estimates of costs for future remediation are imprecise
due to, among other things, the identification of presently unknown remediation
sites and the allocation of costs among potentially responsible parties. JR
Flexible believes that its share of the costs of cleanup for its current
remediation sites will not have a materially adverse impact on its combined
financial position or results of operations.
6. SALE OF NET ASSETS
In April 1996, James River entered into an agreement with Printpack, Inc.
to sell certain assets and transfer certain liabilities of JR Flexible, which
agreement was consummated on August 22, 1996.
F-41
<PAGE> 146
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON
IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Explanatory Note...................... i
Available Information................. ii
Special Cautionary Notice Regarding
Forward-Looking Statement........... iii
Prospectus Summary.................... 1
Risk Factors.......................... 16
Use of Proceeds....................... 21
Capitalization........................ 22
Unaudited Pro Forma Condensed Combined
Financial Statements................ 24
Selected Historical Financial Data.... 29
The Flexible Packaging Group of James
River Corporation -- Overview of
Results of Operations............... 32
Printpack, Inc. Management's
Discussion and Analysis of Financial
Condition and Results of
Operations.......................... 34
Business.............................. 40
Management............................ 49
Principal Shareholders................ 55
The Exchange Offer.................... 55
Description of Exchange Notes......... 65
Certain Federal Income Tax
Considerations...................... 93
Description of Certain Indebtedness... 95
Receivables Securitization Facility... 98
Plan of Distribution.................. 98
Certain Legal Matters................. 99
Independent Accountants............... 99
Index to Financial Statements......... F-1
</TABLE>
UNTIL 199 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS OR AS REQUIRED BY THE TERMS OF THE EXCHANGE OFFER.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
(LOGO)PRINTPACK INC.
OFFER TO EXCHANGE
$100,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF
9 7/8% SENIOR NOTES
DUE 2004, SERIES B
FOR ALL $100,000,000 IN
AGGREGATE OUTSTANDING
PRINCIPAL AMOUNT
OF
9 7/8% SENIOR NOTES
DUE 2004, SERIES A
AND
$200,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF
10 5/8% SENIOR NOTES
DUE 2006, SERIES B
FOR ALL $200,000,000 IN
AGGREGATE OUTSTANDING
PRINCIPAL AMOUNT
OF
10 5/8% SENIOR NOTES
DUE 2006, SERIES A
--------------------
PROSPECTUS
--------------------
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 147
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All amounts are estimates except the SEC registration fee.*
<TABLE>
<S> <C>
SEC Registration Fee............................................................. $ 90,909
Accounting fees and expenses..................................................... 850,000
Legal fees and expenses.......................................................... 300,000
Printing and engraving expenses.................................................. 130,000
Blue Sky fees and expenses....................................................... 15,000
Trustee, Exchange Agent, Transfer Agent and Registrar fees and expenses.......... 10,000
Miscellaneous.................................................................... 1,060,000
----------
Total.................................................................. $2,455,909
==========
</TABLE>
- ---------------
* Includes amounts incurred in connection with the original issuance of the
Notes.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Four of the Company's Restated Articles of Incorporation provide
that a director of the Company shall not be liable to the Company or its
shareholders for monetary damages for any action taken, or any failure to take
any action, as a director, except liability: (a) for any appropriation, in
violation of his duties, of any business opportunity of the corporation, (b) for
acts or omissions which involve intentional misconduct or a knowing violation of
law, (c) of the types of liability set forth in Section 14-2-832 of the Georgia
Business Corporation Code (the "Code"), or (d) for any transaction from which
the director received an improper personal benefit.
Article Nine of the Company's Bylaws provides that the Company shall
indemnify an individual who is a party to a proceeding because he or she is or
was against liability incurred in the proceeding if: (i) such individual
conducted himself or herself in good faith; and (ii) such individual reasonably
believed: (a) in the case of conduct in his or her official capacity, that such
conduct was in the best interests of the Company; (b) in all other cases, that
such conduct was at least not opposed to the best interests of the Company; and
(c) in the case of any criminal proceeding, that the individual had no
reasonable cause to believe such conduct was unlawful; further, if any person is
entitled under any provision of Article Nine to indemnification by the Company
for some portion of liability incurred by him or her, but not the total amount
thereof, the Company shall indemnify such person for the portion of such
liability to which he or she is entitled; further, the Company shall indemnify a
director or officer who was wholly successful, on the merits or otherwise, in
the defense of any proceeding to which he or she was a party because he or she
was a director or officer of the Company against reasonable expenses incurred by
the director or officer in connection with the proceeding; provided, however,
that the Company may not indemnify a director or officer under Article Nine: (i)
in connection with a proceeding by or in the right of the Company, except for
reasonable expenses, penalties, fines (including an excise tax assessed with
respect to an employee benefit plan) and amounts paid in settlement incurred in
connection with the proceeding if it is determined that the director or officer
has met the relevant standard of conduct described above; or (ii) in connection
with any proceeding with respect to conduct for which he or she was adjudged
liable on the basis that personal benefit was improperly received by him or her,
whether or not involving action in his or her official capacity. The Bylaws also
provide that notwithstanding any other provision of Article Nine, no person
shall be entitled to indemnification or advance for expenses thereunder with
respect to any proceeding or claim brought or made by him or her against the
Company, other than a proceeding or claim seeking or defending such person's
right to indemnification or advancement of expense.
Article Nine of the Company's Bylaws further provides that the Company
shall, before final disposition of a proceeding, advance funds to pay for or
reimburse the reasonable expenses incurred by a director or officer
II-1
<PAGE> 148
who is a party to a proceeding because he or she is a director or officer if he
or she delivers to the Company: (i) a written affirmation of his or her good
faith belief that he or she has met the relevant standard of conduct described
above and that his or her conduct does not constitute behavior of the kind
described in Article Nine or that the proceeding involves conduct for which such
person's liability has been eliminated under the Company's articles of
incorporation; and (ii) his or her written undertaking to repay any funds
advanced if it is ultimately determined that he or she is not entitled to
indemnification under Article Nine or the Code.
Under Article Nine of the Company's Bylaws, a director or officer who is a
party to a proceeding because he or she is a director or officer may apply for
indemnification or advance for expenses to the court conducting the proceeding
or to another court of competent jurisdiction and that such court's review shall
be a de novo review. After receipt of an application and after giving any notice
it considers necessary, the court shall: (i) order indemnification or advance
for expenses if it determines that the director or officer is entitled to
indemnification or advance for expenses; or (ii) order indemnification or
advance for expenses if it determines, in view of all the relevant
circumstances, that it is fair and reasonable to indemnify the director or
officer, or to advance expenses to the director or officer, even if the director
or officer has not met the relevant standard of conduct, failed to comply with
the requirements for advance of expenses, or was adjudged liable in a proceeding
referred to above (in which case any court-ordered indemnification need not be
limited to reasonable expenses incurred by the indemnitee but may include
expenses, penalties, fines, judgments, amounts paid in settlement and any other
amounts ordered by the court to be indemnified). If the court determines that
the director or officer is entitled to indemnification or advance for expenses,
the Company shall pay the director's or officer's reasonable expenses to obtain
court-ordered indemnification or advance for expenses.
Under Article Nine of the Company's Bylaws, regardless of whether a
proposed indemnitee has met the relevant standard of conduct, the Company shall
not indemnify a director or officer under Article Nine for any liability
incurred in a proceeding in which the director or officer is adjudged liable to
the Company or is subjected to injunctive relief in favor of the Company: (i)
for any appropriation, in violation of his or her duties, of any business
opportunity of the Company; (ii) for acts or omissions which involve intentional
misconduct or a knowing violation of law; (ii) for the types of liability set
forth in Section 14-2-832 of the Code; or (iv) for any transaction from which he
or she received an improper personal benefit.
Article Nine of the Company's Bylaws further states that it is the intent
of the Company to indemnify and advance expenses to its directors and officers
at least to the full extent that a Georgia business corporation may, without
shareholder approval, indemnify or advance expenses to its directors under the
Code. To the extent that the Code is hereafter amended to permit a Georgia
business corporation, without the need for shareholder approval, to provide to
its directors greater rights to indemnification or advances for expenses than
those specifically set forth hereinabove, Article Nine shall be deemed amended
to require such greater indemnification or more liberal advances for expenses to
the Company's directors and officers, in each case consistent with the Code as
so amended from time to time. No amendment, modification or rescission of
Article Nine, or any provision hereof, the effect of which would diminish the
rights to indemnification or advancement of expenses as set forth herein shall
be effective as to any person with respect to any action taken or omitted by
such person prior to such amendment, modification or rescission.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On August 27, 1996, the Company issued and sold to the Initial Purchaser
$100 million aggregate principal amount of 9 7/8% Senior Notes due 2004 and $200
million aggregate principal amount of 10 5/8% Senior Subordinated Notes due
2006. These sales were exempt from registration under Section 4(2) of the
Securities Act. The Initial Purchaser offered those securities for resale in
transactions not requiring registration under the Securities Act to persons they
reasonably believed to be "Qualified Institutional Buyers" as defined in Rule
144A under the Securities Act or institutional "Accredited Investors" as defined
in subparagraph (a)(1), (2), (3) or (7) of Commission Rule 501 under the
Securities Act. The aggregate price to investors for those securities was $300.0
million and the Initial Purchaser received $8.75 million in discount and
commissions.
II-2
<PAGE> 149
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed as a part of this Registration
Statement:
<TABLE>
<C> <C> <S>
2.1 -- Asset Purchase Agreement, dated as of April 10, 1996, by and between James
River Corporation of Virginia and Printpack, Inc., as amended.
2.2 -- Reorganization Agreement dated as of July 1, 1996 by and among Printpack
Holdings, Inc., Printpack, Inc., Printpack Enterprises, Inc. and Printpack
Illinois, Inc.
3.1 -- Restated Articles of Incorporation of Printpack, Inc.
3.2 -- Bylaws of Printpack, Inc.
4.1 -- Indenture, dated August 22, 1996, between Printpack, Inc. and Fleet National
Bank, as Trustee relating to the 9 7/8% Senior Notes due 2004.
4.2 -- Indenture, dated August 22, 1996, between Printpack, Inc. and Fleet National
Bank, as Trustee relating to the 10 5/8% Senior Subordinated Notes due 2006.
5 -- Legal opinion and consent of Alston & Bird.
10.1 -- Credit Agreement, dated as of August 22, 1996, by and among Printpack, Inc.,
the lenders a party thereto and First National Bank of Chicago, as
Contractual Representative.
10.2 -- Note Purchase Agreement, dated as of March 13, 1995 by and among Printpack,
Inc. and certain shareholders of Printpack, Inc., as amended.
10.3 -- Printpack, Inc. Savings and Profit Sharing Plan, as amended.
10.4 -- Printpack, Inc. Incentive Compensation Plan.
10.5 -- Guarantee dated as of January 5, 1995 made by Printpack, Inc. in favor of
PNC Bank, Ohio, National Association, as amended.
10.6 -- Registration Rights Agreement dated as of August 22, 1996 by and between
Printpack, Inc. and Donaldson, Lufkin & Jenrette Securities Corporation.
10.7 -- Receivables Sale Agreement dated as of August 22,1996 by and between
Printpack, Inc. and Flexible Funding Corp.
10.8 -- Receivables Purchase Agreement dated as of August 22, 1996 by and among
Flexible Funding Corp. as Seller, Falcon Asset Securitization Corporation
and the financial institutions party hereto as Investors and The First
National Bank of Chicago, as Agent.
10.9 -- Intercreditor Agreement, dated August 22, 1996, by and between The First
National Bank of Chicago, as Contractual Representative and The First
National Bank of Chicago, as Agent
11 -- Computation of Net Income per Common Share.
12 -- Computation of Ratio of Earnings to Fixed Charges -- Printpack, Inc.
21 -- List of Subsidiaries.
23.1 -- Consent of Price Waterhouse LLP -- Printpack, Inc.
23.2 -- Consent of Price Waterhouse LLP -- JR Flexible.
23.3 -- Consent of Alston & Bird (included in the opinion filed as Exhibit 5).
24 -- Power of Attorney (included on pages II-6 and II-7).
25 -- Statement of Eligibility of Fleet National Bank, as Trustee on Form T-1 in
connection with the Exchange Senior Notes and Exchange Senior Subordinated
Notes.
27 -- Financial Data Schedule. (For SEC purposes only.)
99.1 -- Contribution Agreement dated as of January 5, 1995 by and between Printpack,
Inc. and Orflex Ltd.
99.2 -- Lease dated September 11, 1980 by and between Gulf Oil Corporation and Crown
Zellerbach Corporation relating to the Orange, Texas Plant (the rights and
obligations of the lessee under the foregoing Lease have been assigned
ultimately to Printpack, Inc.).
</TABLE>
II-3
<PAGE> 150
<TABLE>
<C> <C> <S>
99.3 -- Ground Lease dated September 11, 1980 by and between Gulf Oil Corporation
and Crown Zellerbach Corporation relating to the Orange, Texas Plant (the
rights and obligations of the lessee under the foregoing Lease have been
assigned ultimately to Printpack, Inc.).
99.4 -- Ground Lease Agreement Amendment dated January 1, 1981 by and between Gulf
Oil Corporation and Crown Zellerbach Corporation relating to the Orange,
Texas Plant (the rights and obligations of the lessee under the foregoing
Lease have been assigned ultimately to Printpack, Inc.).
99.5 -- Ground Lease dated September 9, 1985 by and between Chevron Chemical Company
and Crown Zellerbach Corporation relating to the Orange, Texas Plant (the
rights and obligations of the lessee under the foregoing Lease have been
assigned ultimately to Printpack, Inc.).
99.6 -- Lease dated July 25, 1990 by and between The Lawson Group, LTD. and Shell
Oil Company relating to the Williamsburg, Virginia Plant (the rights and
obligations of the lessee under the foregoing Lease have been assigned
ultimately to Printpack, Inc.).
99.7 -- Note Purchase Agreement, dated as of August 15, 1996, by and between
Printpack, Inc. and Donaldson, Lufkin & Jenrette Securities Corporation
relating to the 9 7/8% Senior Notes due 2004 and the 10 7/8% Senior
Subordinated Notes due 2006.
99.8 -- Deferred Income Agreement dated December 17, 1984 with Edward Hilbert, Jr.
99.9 -- Deferred Income Agreement dated December 17, 1984 with Robert B. Paxton.
99.10 -- Deferred Compensation Agreement dated July 10, 1996 with Neil Williams.
99.11 -- Family Security Agreement dated April 4, 1986 with Dennis M. Love.
99.12 -- Family Security Agreement dated February 24, 1986 with R. Michael Hembree.
99.13 -- Family Security Agreement dated February 24, 1986 with Thomas J. Dunn, Jr.
99.14 -- Family Security Agreement dated February 24, 1986 with Nicklas D. Stucky.
99.15 -- Amended and Restated Employment Agreement dated June 23, 1983 with J.
Erskine Love, Jr.
</TABLE>
(b) The following Financial Statement Schedules of Printpack, Inc. and JR
Flexible are included in this Registration Statement:
Schedule II -- Valuation and qualifying accounts for Printpack, Inc.
for the fiscal years ended June 25, 1994, June 24, 1995 and June 29, 1996
and for JR Flexible for the fiscal years ended December 26, 1993, December
25, 1994 and December 31, 1995.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
II-4
<PAGE> 151
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
2. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person of the registrant in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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<PAGE> 152
SIGNATURES
Pursuant to the requirements of the Securities Act , the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on October 1, 1996.
PRINTPACK, INC.
By: /s/ DENNIS M. LOVE
------------------------------------
Dennis M. Love
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Dennis M. Love and R. Michael Hembree and each of
them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on October 1, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------
<S> <C>
/s/ DENNIS M. LOVE President and Chief
- --------------------------------------------- Executive Officer and
Dennis M. Love Director
(Principal Executive
Officer)
/s/ R. MICHAEL HEMBREE Vice President, Finance and
- --------------------------------------------- Administration and
R. Michael Hembree Director
(Principal Financial and
Accounting Officer)
/s/ JAMES J. GRECO Director
- ---------------------------------------------
James J. Greco
/s/ CAROL ANNE LOVE JENNISON Director
- ---------------------------------------------
Carol Anne Love Jennison
/s/ C. KEITH LOVE Director
- ---------------------------------------------
C. Keith Love
</TABLE>
II-6
<PAGE> 153
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------
<S> <C>
/s/ GAY M. LOVE Director
- ---------------------------------------------
Gay M. Love
/s/ JAMES E. LOVE, III Director
- ---------------------------------------------
James E. Love, III
/s/ WILLIAM J. LOVE Director
- ---------------------------------------------
William J. Love
/s/ ROBERT B. PAXTON Director
- ---------------------------------------------
Robert B. Paxton
/s/ G. DAVID PEAKE Director
- ---------------------------------------------
G. David Peake
/s/ NEIL WILLIAMS Director
- ---------------------------------------------
Neil Williams
</TABLE>
II-7
<PAGE> 154
EXHIBIT INDEX
<TABLE>
<S> <C>
2.1 Asset Purchase Agreement, dated as of April 10, 1996, by and between James
River Corporation of Virginia and Printpack, Inc., as amended.
2.2 Reorganization Agreement dated as of July 1, 1996 by and among Printpack
Holdings, Inc., Printpack, Inc., Printpack Enterprises, Inc. and Printpack
Illinois, Inc.
3.1 Restated Articles of Incorporation of Printpack, Inc.
3.2 Bylaws of Printpack, Inc.
4.1 Indenture, dated August 22, 1996, between Printpack, Inc. and Fleet National
Bank, as Trustee relating to the 9-7/8% Senior Notes due 2004.
4.2 Indenture, dated August 22, 1996, between Printpack, Inc. and Fleet National
Bank, as Trustee relating to the 10-5/8% Senior Subordinated Notes due 2006.
5 Legal opinion and consent of Alston & Bird.
10.1 Credit Agreement, dated as of August 22, 1996, by and among Printpack, Inc.,
the lenders a party thereto and First National Bank of Chicago, as
Contractual Representative.
10.2 Note Purchase Agreement, dated as of March 13, 1995 by and among Printpack,
Inc. and certain shareholders of Printpack, Inc., as amended.
10.3 Printpack, Inc. Savings and Profit Sharing Plan, as amended.
10.4 Printpack, Inc. Incentive Compensation Plan.
10.5 Guarantee dated as of January 5, 1995 made by Printpack, Inc. in favor of
PNC Bank, Ohio, National Association, as amended.
10.6 Registration Rights Agreement dated as of August 22, 1996 by and between
Printpack, Inc. and Donaldson, Lufkin & Jenrette Securities Corporation.
10.7 Receivables Sale Agreement dated as of August 22, 1996 by and between
Printpack, Inc. and Flexible Funding Corp.
10.8 Receivables Purchase Agreement dated as of August 22, 1996 by and among
Flexible Funding Corp. as Seller, Falcon Asset Securitization Corporation
and the financial institutions party hereto as Investors and The First
National Bank of Chicago, as Agent.
10.9 Intercreditor Agreement, dated August 22, 1996, by and between The First
National Bank of Chicago, as Contractual Representative and The First
National Bank of Chicago, as Agent
11 Computation of Net Income per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges -- Printpack, Inc.
21 List of Subsidiaries.
23.1 Consent of Price Waterhouse LLP -- Printpack, Inc.
23.2 Consent of Price Waterhouse LLP -- JR Flexible.
23.3 Consent of Alston & Bird (included in the opinion filed as Exhibit 5).
</TABLE>
<PAGE> 155
<TABLE>
<S> <C>
24 Power of Attorney (included on pages II-6 and II-7).
25 Statement of Eligibility of Fleet National Bank, as Trustee on Form T-1 in
connection with the Exchange Senior Notes and Exchange Senior Subordinated
Notes.
27 Financial Data Schedule. (For SEC purposes only.)
99.1 Contribution Agreement dated as of January 5, 1995 by and between Printpack,
Inc. and Orflex Ltd.
99.2 Lease dated September 11, 1980 by and between Gulf Oil Corporation and Crown
Zellerbach Corporation relating to the Orange, Texas Plant (the rights and
obligations of the lessee under the foregoing Lease have been assigned
ultimately to Printpack, Inc.).
99.3 Ground Lease dated September 11, 1980 by and between Gulf Oil Corporation
and Crown Zellerbach Corporation relating to the Orange, Texas Plant (the
rights and obligations of the lessee under the foregoing Lease have been
assigned ultimately to Printpack, Inc.).
99.4 Ground Lease Agreement Amendment dated January 1, 1981 by and between Gulf
Oil Corporation and Crown Zellerbach Corporation relating to the Orange,
Texas Plant (the rights and obligations of the lessee under the foregoing
Lease have been assigned ultimately to Printpack, Inc.).
99.5 Ground Lease dated September 9, 1985 by and between Chevron Chemical Company
and Crown Zellerbach Corporation relating to the Orange, Texas Plant (the
rights and obligations of the lessee under the foregoing Lease have been
assigned ultimately to Printpack, Inc.).
99.6 Lease dated July 25, 1990 by and between The Lawson Group, LTD. and Shell
Oil Company relating to the Williamsburg, Virginia Plant (the rights and
obligations of the lessee under the foregoing Lease have been assigned
ultimately to Printpack, Inc.).
99.7 Note Purchase Agreement, dated as of August 15, 1996, by and between
Printpack, Inc. and Donaldson, Lufkin & Jenrette Securities Corporation
relating to the 9-7/8% Senior Notes due 2004 and the 10-7/8% Senior
Subordinated Notes due 2006.
99.8 Deferred Income Agreement dated December 17, 1984 with Edward Hilbert, Jr.
99.9 Deferred Income Agreement dated December 17, 1984 with Robert B. Paxton.
99.10 Deferred Compensation Agreement dated July 10, 1996 with Neil Williams.
99.11 Family Security Agreement dated April 4, 1986 with Dennis M. Love.
99.12 Family Security Agreement dated February 24, 1986 with R. Michael Hembree.
99.13 Family Security Agreement dated February 24, 1986 with Thomas J. Dunn, Jr.
99.14 Family Security Agreement dated February 24, 1986 with Nicklas D. Stucky.
99.15 Amended and Restated Employment Agreement dated June 23, 1983 with J.
Erskine Love, Jr.
</TABLE>
SCHEDULE INDEX
II Valuation and Qualifying Accounts for Printpack, Inc. for the
fiscal years ended June 25, 1994, June 24, 1995 and June 28, 1996 and
for JR Flexible for the fiscal years ended December 26, 1993, December
25, 1994 and December 31, 1995.
<PAGE> 1
Exhibit 2.1
Asset Purchase Agreement, dated as of April 10, 1996, by and between James
River Corporation of Virginia and Printpack, Inc., as amended.
<PAGE> 2
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
JAMES RIVER CORPORATION OF VIRGINIA
AND
PRINTPACK, INC.
Dated as of April 10, 1996
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I DEFINITIONS 1
1.1 Definitions 1
ARTICLE II PURCHASE AND SALE OF ASSETS 7
2.1 Purchase and Sale 7
2.2 Excluded Assets 8
2.3 Assumed Liabilities 9
2.4 Actions by Persons within the JR Group 11
ARTICLE III PURCHASE PRICE, WORKING CAPITAL ADJUSTMENT 11
3.1 Purchase Price 11
3.2 Balance Sheet Adjustment 11
3.3 Additional Payments 14
ARTICLE IV RELATED AGREEMENTS 15
4.1 Related Agreements 15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF JAMES RIVER 16
5.1 Organization; Qualification 16
5.2 Organization of Stock Companies; Ownership and Validity of
Shares 16
5.3 Authority Relative to this Agreement and the Related Agreements 16
5.4 Consents and Approvals 17
5.5 Non-Contravention 17
5.6 Compliance with Laws 18
5.7 Environmental Matters 18
5.8 Licenses and Permits 18
5.9 Financial Statements 19
5.10 Litigation 19
5.11 Title to Properties. 20
5.12 Leases 20
5.13 Intellectual Property 21
5.14 Listed Contracts 21
5.15 Labor Matters 21
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
5.16 Employee Benefit Plans 22
5.17 Conduct of Business and Management of Assets since Date of
December Balance Sheet 24
5.18 Finders 25
5.19 Sufficiency of Assets 25
5.20 Condition of Assets 25
5.21 Copies of Documents 25
5.22 Undisclosed Liabilities 25
5.23 Employment and Consulting Agreements 25
5.24 Absence of Proceedings 26
5.25 Accounts Receivable 26
5.26 Taxes 26
5.27 Insurance 26
5.28 Customers 27
5.29 Accuracy of Provided Materials 27
5.30 Completeness of Schedule 1.1 27
5.31 Economics of Related Agreements 27
5.32 Matters Relating to Title Commitment 28
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER 28
6.1 Organization; Qualification 28
6.2 Authority Relative to this Agreement and the Related Agreements 28
6.3 Non-Contravention 28
6.4 Consents and Approvals 29
6.5 Litigation 29
ARTICLE VII ADDITIONAL AGREEMENTS 29
7.1 Conduct of Business and Management of Assets 29
7.2 Forbearances by James River 29
7.3 Mail Received After Closing 31
7.4 Retention of Books and Records 31
7.5 Expenses 32
7.6 Confidentiality 32
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C>
7.7 Public Announcements 32
7.8 Efforts to Consummate 33
7.9 Further Assurances 33
7.10 Use of James River Name 33
7.11 Assignment of Contracts, Rights, etc. 34
7.12 No Solicitation of Employees. 34
7.13 Negotiations with Others 35
7.14 HSR Filings 35
7.15 Transfer Taxes and Recording Fees 35
7.16 Title Matters 35
7.17 Mexican Financing 37
7.18 Jackson IDB 37
7.19 James River IDBs 38
7.20 James River California Sub 38
7.21 Section 338(h)(10) Election 39
7.22 Tax Matters 39
7.23 Mexican Revolving Loan 40
7.24 Access to Assets and Business Employees 40
7.25 San Leandro Property 40
ARTICLE VIII BUSINESS EMPLOYEE AND EMPLOYEE BENEFIT MATTERS 41
8.1 Business Employees 41
8.2 Salaried Business Employee Employment and Employee Benefits 41
8.3 Hourly Business Employee Employment and Employee Benefits 42
8.4 Severance Benefits 42
8.5 Assumption of Liabilities 43
8.6 Collective Bargaining Agreements and Multiemployer Plans 43
8.7 Pension Plans for Hourly Business Employees 45
8.8 Pension Plan for Salaried Business Employees 45
8.9 401(k) Plan 45
8.10 Worker's Compensation 46
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C> <C>
8.11 Welfare Benefit Plans 46
8.12 Vacation Pay 47
8.13 Administration 47
ARTICLE IX CONDITIONS TO OBLIGATIONS OF BUYER 47
9.1 Representations and Warranties 47
9.2 Performance of this Agreement 47
9.3 Proceedings 47
9.4 Consents and Approvals 48
9.5 Injunction, Litigation, etc. 48
9.6 Legislation 48
9.7 Opinion of Counsel for James River 48
9.8 Casualty Loss 48
9.9 Material Adverse Change 48
9.10 Related Agreements 48
ARTICLE X CONDITIONS TO OBLIGATIONS OF JAMES RIVER 49
10.1 Representations and Warranties 49
10.2 Performance of this Agreement 49
10.3 Proceedings 49
10.4 Consents and Approvals 49
10.5 Injunction, Litigation, etc. 49
10.6 Legislation 49
10.7 Opinion of Counsel for Buyer 49
10.8 Related Agreements 49
ARTICLE XI DELIVERIES, ETC., IN CONNECTION WITH CLOSING 50
11.1 Time and Place of Closing 50
11.2 Deliveries by James River 50
11.3 Deliveries by Buyer 51
11.4 Deliveries of Related Agreements 51
ARTICLE XII INDEMNIFICATION 52
12.1 Indemnification by James River 52
12.2 Indemnification by Buyer 52
</TABLE>
iv
<PAGE> 7
<TABLE>
<S> <C> <C>
12.3 Survival Date 52
12.4 James River Indemnification for Certain Environmental Matters 53
12.5 Definition of Loss 54
12.6 Third Party Claims 55
12.7 Subrogation Rights; No Duplication 56
ARTICLE XIII TERMINATION, AMENDMENT AND WAIVER 56
13.1 Termination 56
13.2 Effect of Termination 57
13.3 Amendment 57
13.4 Extension; Waiver 57
ARTICLE XIV GENERAL PROVISIONS 58
14.1 Notices 58
14.2 Interpretation 59
14.3 Counterparts 59
14.4 Miscellaneous 59
</TABLE>
v
<PAGE> 8
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of April 9,
1996, is made between JAMES RIVER CORPORATION OF VIRGINIA, a Virginia
corporation ("James River"), and PRINTPACK, INC., a Georgia corporation
("Buyer").
RECITAL
James River desires to sell, or cause its Subsidiaries to sell, the
assets and stock described herein and Buyer desires to purchase such assets and
stock, for the consideration hereinafter set forth, including the assumption of
certain liabilities.
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties, and agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms have the
following meanings:
"Affiliate," with respect to any party, means a party, person or entity
that, directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such party, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" has the meaning set forth in the introductory paragraph
hereof.
"Allocation Schedule" has the meaning set forth in Section 7.22(c).
"Assets" has the meaning set forth in Section 2.1.
"Assumed Liabilities" has the meaning set forth in Section.
"Authority" means any national, federal, state or local governmental,
judicial or regulatory agency or authority within or outside the United States.
"Business" means (i) the business customarily operated by the flexible
packaging business of James River with respect to the products manufactured at
the Plant Sites, and (ii) the business customarily operated by the Stock
Companies.
"Business Employees" has the meaning set forth in Section 8.1.
1
<PAGE> 9
"Business Intellectual Property" has the meaning set forth in Section.
"Buyer" has the meaning set forth in the introductory paragraph hereof.
"Buyer's 401(k) Plan" has the meaning set forth in Section 8.9(a).
"California Assets" has the meaning set forth in Section 7.20.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act codified at 42 U.S.C. ss. 9601 et seq. (including the amendments
made by the Superfund Amendments and Reauthorization Act of 1986).
"Closing" has the meaning set forth in Section 11.1.
"Closing Date Balance Sheet" has the meaning set forth in Section
3.2(a).
"Closing Net Asset Value" has the meaning set forth in Section 3.2(c).
"Confidential Information" has the meaning set forth in Section .
"December Balance Sheet" means the unaudited balance sheet for the
Business for the fiscal year ended December 31, 1995, previously delivered by
James River to Buyer.
"Disputed Items" has the meaning set forth in Section 3.2(d).
"Employee Plans" has the meaning set forth in Section .
"Environmental Condition" means any condition existing at any Plant
Site that relates to (i) the emission, discharge, disposal, release or
threatened release of any Hazardous Substance into the environment, (ii) the
treatment, storage, recycling or other handling of any Hazardous Substance, or
(iii) the presence of any Hazardous Substance, including, but not limited to,
asbestos, in any building, structure or workplace or on any of the Real
Property or Leased Premises.
"Environmental Laws" means Environmental Statutes and any common law
governing the contamination, pollution or protection of the environment or
allocating liabilities in respect thereof.
"Environmental Statutes" means federal statutes and regulations
promulgated thereunder intended to provide protection for public health and the
environment, including, without limitation, the Clean Air Act, the Clean Water
Act, CERCLA, the Solid Waste Disposal Act (including the Resource Conservation
and Recovery Act), the Toxic Substances Control Act, their state statutory and
regulatory counterparts and other substantially similar foreign statutes and
regulations.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any member of a controlled group of
corporations, any member of a group of trades or businesses under common
control, or any member of an affiliated service
2
<PAGE> 10
group with James River within the meaning of Section 414(b), (c), (m), or (o)
of the Internal Revenue Code, or Section 4001(a)(14) of ERISA.
"Excluded Assets" has the meaning set forth in Section .
"Excluded Liabilities" has the meaning set forth in Section 2.3(b).
"Excluded Retiree Liabilities" means any liabilities or obligations of
any Person within the JR Group with respect to retiree medical or life insurance
benefits payable to any Business Employee or their beneficiaries or dependents,
regardless when the same arose, excluding, however, any such liabilities or
obligations arising under collective bargaining agreements to be assumed
pursuant to Section 8.6.
"Filed Business Intellectual Property" means trade names, trademarks
and service marks, together with the associated goodwill, letters patent,
copyrights, design registrations and inventor certificates as well as
applications, registrations, and certificates for any of the foregoing or any
other intellectual property which is used exclusively in, or applicable
exclusively to, the Business and embodied in a form which is filed or
registered with any Authority.
"Final Closing Audited Balance Sheet" has the meaning set forth in
Sections 3.2(d) and (f).
"Final Closing Net Asset Value" has the meaning set forth in Section
3.2(f).
"GAAP" means generally accepted accounting principles.
"Hazardous Substance" means (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance or toxic substance (as those
terms are defined by any applicable Environmental Laws) and (ii) any chemicals,
pollutants, contaminants, or Oil.
"Hourly Business Employees" has the meaning set forth in Section 8.1.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, 15 U.S.C.A. ss. 18(a), as amended, and all regulations promulgated
thereunder.
"Indemnitee" has the meaning set forth in Section 12.3.
"Indemnitor" has the meaning set forth in Section 12.3.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Inventory" has the meaning set forth in Section .
"Jackson IDB" means the financial transaction with the Industrial
Development Board of the City of Jackson, Tennessee pursuant to the Master
Industrial Development Lease Agreement dated as of December 18, 1990 and related
agreements.
"James River" has the meaning set forth in the introductory paragraph
hereof.
"James River California Sub" has the meaning set forth in Section 7.20.
"James River Corporate Designations" has the meaning set forth in
Section .
3
<PAGE> 11
"James River IDBs" means (i) the Industrial Development Revenue Bonds
of the Delaware Department of Community Affairs and Economic Development (Crown
Zellerbach Corporation) Series A (New Castle, Delaware); (ii) City of Hazelwood,
Missouri Industrial Development Revenue Bonds, Series A (Crown Zellerbach
Corporation); and (iii) City of Greensburg, Indiana Industrial Development
Revenue Bonds (Crown Zellerbach Corporation) Series A.
"JR Group" means James River and all of its Subsidiaries.
"Knowledge of James River" means the actual knowledge of those
officers and employees of James River listed on Schedule 1.1.
"Lessee Lease" and "Lessee Leases" have the respective meanings set
forth in Section .
"Leased Assets" means any real property, improvements, equipment or
other assets leased to a Person within the JR Group and used solely in
connection with the Business.
"Leased Premises" means that real property leased by James River or
any of its Subsidiaries, as lessee, and listed on Schedule 1.1-A.
"Legal Action" has the meaning set forth in Section .
"Lessor Lease" and "Lessor Leases" have the meaning set forth in
Section 5.12.
"Listed Contract" has the meaning set forth in Section .
"Losses" has the meaning set forth in Section .
"LTIC" has the meaning set forth in Section 5.32.
"Major Leases" has the meaning set forth in Section 5.12(b).
"Mexican Financing" means the capitalization between James River
International Holdings, Ltd. ("JRIH") and James River de Mexico S.A. de C.V.
("JRMex") pursuant to the Advance of Funds Agreement dated as of March 29, 1995
between JRIH and JRMex in the stated amount of $1,007,689.
"Mexican Revolving Loan" means the revolving loan by James River to
JRMex pursuant to the Revolving Note made by JRMex to James River dated January
9, 1996 for a principal amount of up to $1,500,000.
"Net Asset Value" means, with respect to any balance sheet, the value
of the assets reflected therein, less the value of the liabilities reflected
therein.
"Non-Filed Business Intellectual Property" means unpatented technology,
inventions, trade secrets, processes, know-how, designs and formulae and
unfiled trade names, trademarks and service marks, together with the associated
goodwill, unregistered copyrights and other industrial or intellectual property
which is used exclusively in, or applicable exclusively to, the Business and
not filed or registered with an Authority.
4
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"Oil" means petroleum and petroleum products, including crude oil and
any fraction thereof.
"P&LS" has the meaning set forth in Section 5.9.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Exceptions" means (i) statutory liens for current taxes or
assessments not yet due and payable or being contested in good faith; (ii)
exceptions that would be shown by surveys or personal inspection of such
property that do not individually or in the aggregate materially affect the
value or current use of the particular property involved; (iii) terms and
conditions of any Lessor Leases; (iv) the current zoning and subdivision laws
and regulations applicable to any Real Property; (v) such liens, imperfections
in title, charges, easements, restrictions, encumbrances or other matters which
do not, individually or in the aggregate, adversely and materially, affect the
Assets, the value or the use to which they are currently put, or the Business,
each taken as a whole; (vi) such other liens, imperfections in title, charges,
easements, restrictions, encumbrances and other matters of a similar nature
which have been agreed to in writing by Buyer and (vii) liens or charges
securing indebtedness to be assumed hereunder by Buyer or contemplated
hereunder to become the obligation of the Buyer.
"Person" means an individual, partnership (general or limited),
corporation, association or other form of business organization (whether or not
regarded as a legal entity under applicable law), trust, estate or any other
entity.
"Plant Sites" means those portions of the Real Property and Leased
Premises locations listed on Schedule 1.1-B.
"Proposed Closing Audited Balance Sheet" has the meaning set forth in
Section 3.2(c).
"Purchase Price" has the meaning set forth in Section 3.1.
"Real Property" has the meaning set forth in Section 2.1(a).
"Related Agreements" has the meaning set forth in Section .
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment.
"Remedial Actions" means actions required under Environmental Laws to
clean up or to contain or otherwise to ameliorate or remedy any Environmental
Condition, including but not limited to preventing a Release or threatened
Release and performing studies, investigations and monitoring.
"Representative" has the meaning set forth in Section .
"Salaried Business Employees" has the meaning set forth in Section 8.1.
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"Section 338(h)(10) Election" means an election for federal income tax
purposes described in Section 338(h)(10) of the Internal Revenue Code with
respect to the stock purchase of the James River California Sub described in
this Agreement, including any elections required under Section 338(g) of the
Internal Revenue Code that are required to be made under applicable law when
making the Section 338(h)(10) Election.
"Section 338 Forms" means all returns, documents, statements, and other
forms that are required to be submitted to any federal, state, county or other
governmental authority in connection with the Section 338(h)(10) Election,
including (i) U.S. Internal Revenue Service Form 8023-A (together with any
schedules or attachments thereto that are required pursuant to Treasury
Regulations, including Section 1.338(h)(10)-1), and (ii) any comparable or
similar state, local or other governmental submissions.
"Stock" means all of the issued and outstanding shares in the capital
stock of the Stock Companies.
"Stock Companies" means James River California Sub (if formed pursuant
to Section 7.20), James River Packaging de Mexico, S.A. de C.V., Servicios James
River de Mexico, S.A. de C.V., and James River de Mexico, S.A. de C.V. and any
Subsidiaries thereof.
"Stock Company Assets" means at any time, any assets then owned by the
Stock Companies.
"StockPlus Plan" has the meaning set forth in Section .
"Subsidiary", when used with respect to any Person, means any
corporation or other business entity, whether or not incorporated, of which
such Person holds, directly or indirectly, more than 50% of the securities or
interests having, by their terms, ordinary voting power to elect members of the
Board of Directors, or other persons performing similar functions with respect
to such entity.
"Tech Center" means James River's business and technical center located
at Milford, Ohio.
"Title Commitment" has the meaning set forth in Section 7.16.
"Title Defect" has the meaning set forth in Section 7.16.
"Title Package" has the meaning set forth in Section 7.16.
"Transfer Fees" has the meaning set forth in Section 7.15.
"Underlying Assets" means the Assets, the Leased Premises and the
Stock Company Assets.
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ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE. James River agrees to sell, or cause its
Subsidiaries to sell, to Buyer and Buyer agrees to purchase from James River or
its designated Subsidiaries at Closing all of the right, title and interest of
James River or any Person within the JR Group in and to the following assets,
properties and rights other than the Excluded Assets and the Stock Company
Assets (collectively, the "Assets"):
(a) the real property listed in Schedule 2.1(a) together with
the buildings, fixtures and other improvements located thereon and the
appurtenances thereto (the "Real Property");
(b) the machinery, equipment, furniture, vehicles, tools,
supplies and other tangible personal property (other than the tangible personal
property and fixtures described in other clauses of this Section ) which (i) is
ordinarily located on the Real Property or the Leased Premises, (ii) is listed
on the attached Schedule 2.1(b) without an adjacent check mark, or (iii) is
located at the Tech Center, but not listed on Schedule 2.1(b), and relates
primarily to the Business;
(c) the raw materials, work-in-process, finished goods, stores,
supplies and spare parts which are located at the Plant Sites or are in transit
thereto or which are located elsewhere and relate solely to the Business (the
"Inventory");
(d) except to the extent specified in Schedule 5.13, the Filed
Business Intellectual Property listed in Schedule 5.13, the Non-Filed Business
Intellectual Property, and licenses to Filed Business Intellectual Property and
Non-Filed Business Intellectual Property listed in Schedule 5.13, used
exclusively in, or applicable exclusively to, the Business (such Filed Business
Intellectual Property, such Non-Filed Business Intellectual Property, and such
licenses thereto, collectively, the "Business Intellectual Property");
(e) all of the rights of every Person within the JR Group under
the Listed Contracts, the Lessee Leases and all other contracts and commitments
to the extent the same relate to the Business if the obligations thereunder of
every Person within the JR Group, to the extent they relate to the Business,
are assumed by Buyer except for Lessee Leases retained by a Person within the
JR Group pursuant to the Offices Sharing Agreement;
(f) to the extent assignable, all federal, state, local and
foreign governmental licenses, permits, approvals and authorizations held by
any Person within the JR Group to the extent the same relate to the Business;
(g) all of the Stock;
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(h) all accounts receivable and notes receivable arising
from the Business, including receivables from Business Employees;
(i) all property records, production records, engineering
records, purchasing and sales records, personnel and payroll records for
Business Employees, accounting records, customer and vendor lists and other
records and files (including, but not limited to, any such records maintained
in connection with any computer system, but subject to the provisions of any
applicable Related Agreement) used exclusively in the Business; a co-ownership
interest in any of the foregoing assets which are used only in part in the
Business, but only to the extent of such use; and copies of the information
relating to the Business contained in the computer files referred to in Section
2.2(d), but only to the extent such information relates to the Business;
provided, however, that the transfer of the assets and properties referred to
in this Section 2.1(i) that do not constitute indicia of title, may, at the
option of James River, consist of transfer of true, correct and complete copies
thereof;
(j) subject to the provisions of Section 7.10, all purchase
orders, forms, labels, stationery, shipping materials, catalogues, brochures,
art work, photographs and advertising materials which relate solely to the
Business or which are located at any Plant Site;
(k) those categories of prepaid expenses and deferred
charges created in the ordinary course of the Business which are listed on
Schedule 2.1(k);
(l) the rights, as of Closing, of all Persons within the
JR Group, other than the Stock Companies, under the Mexican Revolving Loan and
the Mexican Financing; and
(m) all rights, choses in action and claims, known or
unknown, matured or unmatured, accrued or contingent, against third parties
arising solely out of the Business or the ownership or operation of the Assets.
2.2 EXCLUDED ASSETS. The following assets (the "Excluded Assets")
to the extent that, but for this sentence, they would constitute Assets, shall
not be included in the Assets:
(a) all cash and cash equivalents, including cash on hand
or in bank accounts, certificates of deposit, commercial paper and securities,
except petty cash funds located at the Plant Sites or the Leased Premises;
(b) all prepaid expenses and deferred charges other than
those listed in Schedule 2.1(k);
(c) the real property, improvements, equipment and all
other assets to be leased from a member of the JR Group pursuant to any
Related Agreement, and any Leased Assets;
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(d) all computer files which contain any records or lists
relating to any business of the JR Group other than the Business;
(e) the excluded technology listed in Schedule 2.2(e);
(f) all assets listed in Schedule 2.2(f);
(g) all prepaid insurance premiums; and
(h) the machinery, equipment, furniture, vehicles, tools,
supplies and other tangible personal property which is listed on the attached
Schedule 2.1(b) with an adjacent check mark.
2.3 ASSUMED LIABILITIES. (a) Except to the extent set forth in
Section 2.3(b), Buyer shall assume, at the Closing, all liabilities and
obligations of any Person within the JR Group to the extent such liabilities
and obligations relate to the Business or to the Assets or the Stock
(collectively, the "Assumed Liabilities"), including, without limitation, the
following:
(i) the current liabilities related to the
Business or the Assets, including, but not limited to, all accounts
and trade payables, all liabilities and all obligations accruable as a
current liability on James River's financial statements at Closing to
the extent such payables, liabilities and obligations are related to
the Business, the Assets or the Stock;
(ii) all liabilities and obligations of any Person
within the JR Group to deliver goods or services to customers of the
Business arising from orders placed in the normal course of business
of the Business;
(iii) all liabilities and obligations of any Person
within the JR Group under any contract, commitment, license, permit,
approval, authorization or other agreement or arrangement constituting
part of the Assets;
(iv) all liabilities and obligations of any Person
within the JR Group existing at Closing and relating to Business
Employees and employee benefits to the extent set forth in Article VIII;
(v) subject to any right to reimbursement by James
River to the extent specifically set forth in Section 12.4 below, all
liabilities and obligations under Environmental Laws of any Person
within the JR Group, including, without limitation, any obligation to
conduct or to pay for any Remedial Action for any Environmental
Condition or any obligation to correct or to pay a penalty for failure
to comply with Environmental Statutes, to the extent that such
condition or failure exists on, or is specifically related to, any Real
Property, or real property constituting Leased Premises at the Plant
Sites, and
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including, without limitation, those liabilities listed on Schedule,
to the extent such liabilities or obligations relate to the Business or
Underlying Assets;
(vi) all other long-term liabilities or obligations
in respect of which an amount is reflected in the balance sheet
included in the December Balance Sheet;
(vii) all other liabilities described on Schedule
2.3(a)(vii);
(viii) to the extent Buyer is entitled to, and elects
to, assume the same pursuant to Sections 7.17, 7.18 and 7.19,
respectively, the obligations of any Person within the JR Group under
the Mexican Financing, the Jackson IDB and the James River IDBs; and
(ix) the obligations of any Person within the JR
Group (other than the Stock Companies) under the Mexican Revolving Loan.
(b) Notwithstanding the provisions of Section 2.3(a), all
of the following liabilities and obligations (the "Excluded Liabilities") shall
be excluded from the Assumed Liabilities:
(i) liabilities for federal, state and local
income and franchise taxes and any other taxes incurred by any Persons,
other than Stock Companies, within the JR Group in the conduct of the
Business or with respect to the Assets or the Stock before Closing,
except as is otherwiseprovided in this Agreement;
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(ii) all liabilities and obligations relating to
any employee or any employee benefits which are not to be assumed by
Buyer pursuant to Article VIII;
(iii) all liabilities or obligations to the extent
relating to the acquisition, ownership or use of any of the Excluded
Assets;
(iv) any liabilities listed on Schedule 2.3(b)(iv);
(v) all liabilities or obligations arising under
Environmental Laws in connection with facts, events, conditions,
actions or omissions existing on or occurring prior to Closing at
locations other than the Plant Sites or the Leased Premises, excluding
from the liabilities described in this Section 2.3(b)(v), however,
liabilities arising under Environmental Laws with respect to hazardous
substances, contaminants, pollutants or petroleum products leaching or
physically migrating from Plant Sites to adjacent or nearby properties;
(vi) any Excluded Retiree Liabilities; and
(vii) any liability with respect to the litigation
and threatened litigation disclosed on Schedule 5.16.
2.4 ACTIONS BY PERSONS WITHIN THE JR GROUP. James River shall ensure
that each Person within the JR Group takes all actions necessary to be taken by
such Person in order to fulfill James River's obligations hereunder.
ARTICLE III
PURCHASE PRICE, WORKING CAPITAL ADJUSTMENT
3.1 PURCHASE PRICE. The consideration to be paid for the Assets
(the "Purchase Price") shall be $365,000,000.00, in cash, subject to adjustment
as provided in Section 3.2, together with any reimbursements of costs and
expenses payments required to be made pursuant to Sections 7.18 or 7.19.
3.2 BALANCE SHEET ADJUSTMENT. (a) At least five days prior to
Closing, James River shall prepare and deliver to Buyer a balance sheet (the
"Closing Date Balance Sheet") of the Business, which shall reflect James River's
estimate of the amount of the Closing Net Asset Value, as defined below, at
Closing and which shall be prepared in accordance with GAAP except as otherwise
set forth in the comments accompanying the December Balance Sheet applied on a
basis consistent with the basis on which the December Balance Sheet was
prepared.
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(b) If the total Closing Net Asset Value shown on the Closing
Date Balance Sheet is greater than $299,219,124 (the "Opening Net Asset
Value"), the Purchase Price shall be adjusted upward, dollar for dollar, for
the amount of the difference between the Opening Net Asset Value and the
Closing Net Asset Value. If the total Closing Net Asset Value shown on the
Closing Date Balance Sheet is less than the Opening Net Asset Value, the
Purchase Price shall be adjusted downward, dollar for dollar for the amount of
the difference.
(c) Immediately after the Closing, Buyer shall cause its
independent public accounting firm (for purposes of this Section 3.2 an
"accounting firm") to review those Assets and Assumed Liabilities, including an
observation of the physical count of Inventory, for the purpose of preparing
schedules (the "Proposed Closing Audited Balance Sheet") setting forth such
accounting firm's calculation as of the end of the last shift on the day next
preceding the date of the Closing, of the Closing Net Asset Value. "Closing Net
Asset Value" shall equal Assets less Assumed Liabilities as of the end of the
last shift on the day next preceding the date of the Closing. James River shall
have the option of having its accounting firm participate in or observe the
physical count of Inventory and any other procedure used by Buyer's accounting
firm in computing the Proposed Closing Audited Balance Sheet. The Proposed
Closing Audited Balance Sheet shall be prepared in accordance with GAAP except
as otherwise set forth in the comments accompanying the December Balance Sheet
applied on a basis consistent with the preparation of the December Balance
Sheet. As promptly as practicable, but no later than 60 days after Closing,
Buyer's accounting firm shall cause copies of the Proposed Closing Audited
Balance Sheet to be delivered to James River. James River and its accounting
firm shall have, for a period of fifteen days thereafter, access to the working
papers of, and shall consult with, Buyer's accounting firm. All items the
amounts of which are not objected to or questioned by James River in the
Proposed Closing Audited Balance Sheet by the expiration of such 15-day period
shall be deemed agreed upon by the parties and shall be deemed conclusive for
purposes of preparing the Final Closing Audited Balance Sheet, as defined
herein, and the calculation of Closing Net Asset Value.
(d) As promptly as practicable, but no later than 15 days
after the expiration of the 15-day period referred to in (c) above, the parties
shall attempt to resolve any items on the Proposed Closing Audited Balance
Sheet as to which the parties differ (the "Disputed Items"). If during such
15-day period the parties are able to resolve all Disputed Items, the balance
sheet so agreed upon shall be the "Final Closing Audited Balance Sheet."
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(e) If during such 15-day period any such Disputed Items
cannot be resolved, (i) those items to the extent of the amounts agreed upon by
the parties shall be deemed agreed upon, shall no longer constitute Disputed
Items and shall be conclusive for purposes of preparing the Final Closing
Audited Balance Sheet and calculation of the Closing Net Asset Value and (ii)
the respective accounting firms of each of James River and Buyer shall promptly
thereafter but in no event more than 10 days thereafter cause an accounting
firm of internationally recognized standing reasonably satisfactory to them
promptly to review this Agreement and the remaining Disputed Items for purposes
of resolving the remaining Disputed Items and calculating the Closing Net Asset
Value. In making such calculation, such accounting firm shall make a
determination only of Disputed Items not resolved by the parties and in the
case of all other items shall use the amounts which are agreed upon by the
parties. Such accounting firm shall deliver to James River and to Buyer, as
promptly as practicable, a report setting forth its resolution of the remaining
Disputed Items and its calculation of Closing Net Asset Value. Such report
shall be final and binding upon the parties hereto. The cost of such review and
report shall be borne by the party against whom the disagreement is in large
part resolved or, if the resolution does not substantially favor either party,
such costs shall be borne equally by James River and Buyer. In all events, such
accounting firm will determine the assessment of such costs. Each party agrees
to direct its auditors not to select, and will not accept, an accounting firm
to review Disputed Items pursuant to this Section 3.2(e) if, at the time of
selection, either Buyer or James River or their respective Affiliates
contemplates retaining such accounting firm, within one year after such date,
for any substantial engagement having a purpose other than the performance of
services pursuant to this Section 3.2(e).
(f) The Closing Net Asset Value agreed to by the parties or
as calculated by the accounting firm as set forth in Section 3.2(e) above, as
the case may be, shall be the "Final Closing Net Asset Value;" and the Proposed
Closing Audited Balance Sheet, adjusted to reflect the Final Closing Net Asset
Value, shall be the "Final Closing Audited Balance Sheet" which shall be
conclusive for all purposes of this Agreement. Without limiting the generality
of the foregoing, the Final Closing Audited Balance Sheet shall be conclusive
as to the valuation and amount of all items so valued therein.
(g) If the Final Closing Net Asset Value is greater than the
amount of Closing Net Asset Value shown in the Closing Date Balance Sheet,
Buyer shall promptly pay to (or as directed by) James River, in the manner and
with interest as provided in Section 3.2(h), the amount of the difference. If
the Final Net Asset Value is less than the amount of Closing Net Asset Value
shown in the Closing Date Balance Sheet, James
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River shall promptly pay to (or as directed by) Buyer, in the manner and with
interest as provided in Section 3.2(h), the amount of the difference. Any such
payment pursuant to this Section 3.2(g) shall be made at a mutually convenient
time and place (i) within 5 business days after Buyer and James River agree
upon the Final Closing Net Asset Value pursuant to Section 3.2(d) or (ii) if
Disputed Items are referred to a firm of independent accountants pursuant to
Section 3.2(e), then within 10 business days after the delivery of the report
of such firm referred to in Section 3.2(e).
(h) Any payments pursuant to this Section 3.2(h) shall be
made by causing such payments to be credited in immediately available funds to
the account of Buyer or of James River, as the case may be, as may be
designated by the party receiving payment. The amount of any payment to be made
pursuant to this Section 3.2(h) shall bear interest from and including the date
of Closing to but excluding the date of payment at a rate per annum equal to 5
percent. Such interest shall be payable at the same time as the payment to
which it relates and shall be calculated daily on the basis of a year of 365
days and the actual number of days for which interest is due.
3.3 ADDITIONAL PAYMENTS. (a) If any Underlying Asset or the Business
shall suffer any damage, destruction or loss after the date hereof, but before
the date of Closing, and such Asset or the Business and the related casualty
are covered by any insurance policy maintained by any Person within the JR
Group: (i) James River shall pay to Buyer, as soon as practicable after receipt
by James River, in cash, the amount by which the proceeds from such policy in
respect of such damage, destruction or loss exceed the sum of (A) any amount
recorded on the Final Closing Audited Balance Sheet as a liability with respect
to repair, restoration or replacement related to such damage, destruction or
loss; (B) the amount by which the Assets included in the Final Closing Audited
Balance Sheet shall have been reduced from the Assets shown on the December
Balance Sheet by reason of such damage, destruction or loss, and (C) any amount
paid by any Person within the JR Group after the date hereof in cash for the
repair, restoration or replacement of the damaged or destroyed asset; and (ii)
James River (A) shall allow Buyer, at its sole cost and expense, to pursue any
claim under such policy in respect to such damage, destruction or loss or (B)
shall pursue, upon reasonable written request of Buyer and at Buyer's sole cost
and expense, any such claim on behalf, and for the benefit, of Buyer.
(b) All proceeds of insurance which are applicable to insured
claims of third parties included in the Assumed Liabilities and are received by
any Person within the JR Group after Closing shall (i) be used to discharge, in
whole or in part, the applicable Assumed Liabilities, (ii) be paid to Buyer if,
and to the extent that, such Assumed Liabilities have been discharged by Buyer
or Buyer has made a reimbursement to James
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River in respect of such claim or (iii) be retained by James River if, and to
the extent that, such Assumed Liabilities have been discharged by any Person
within the JR Group and Buyer has not made a reimbursement to James River in
respect of such claim. James River shall use its reasonable best efforts to
pursue the collection of such insured claims.
ARTICLE IV
RELATED AGREEMENTS
4.1 RELATED AGREEMENTS. In connection with the consummation of the
transactions contemplated hereby, James River (or the Subsidiary of James River
named therein) and Buyer shall enter into each of the following agreements
(collectively, the "Related Agreements") at or before the Closing:
(a) a Wrap Supply Agreement in substantially the form
attached hereto as Exhibit A;
(b) an Ink Supply Agreement containing the terms set forth
in Exhibit B attached hereto unless, at Closing, the New Sun Agreement, as
defined on Exhibit B attached hereto, has been executed and delivered by James
River, in which case, the New Sun Agreement shall be transferred to, and
assumed by, Buyer at Closing;
(c) a Cast Film Supply Agreement in substantially the form
attached hereto as Exhibit C;
(d) an Office Sharing Agreement in substantially the form
attached hereto as Exhibit D;
(e) a Transition Services Agreement in substantially the
form attached hereto as Exhibit E;
(f) a License Agreement in substantially the form attached
hereto as Exhibit F;
(g) a Ream Wrap Supply Agreement in substantially the form
attached hereto as Exhibit G;
(h) a JR Parent Roll Agreement in substantially the form
attached hereto as Exhibit H;
(i) a Buyer Non-Competition Agreement in substantially the
form attached hereto as Exhibit I; and
(j) a James River Non-Competition Agreement in
substantially the form attached hereto as Exhibit J.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF JAMES RIVER
James River represents and warrants to Buyer that as of the date hereof
and as of the date of Closing:
5.1 ORGANIZATION; QUALIFICATION. James River is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and has corporate power and authority to own all of
its properties and assets and to carry on its business as it is now being
conducted. James River and each member of the JR Group engaged in the Business
are duly qualified and in good standing to do business in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary except in those
jurisdictions where the failure to be duly qualified and in good standing would
not have a material adverse effect on the Assets and the Business, taken as a
whole.
5.2 ORGANIZATION OF STOCK COMPANIES; OWNERSHIP AND VALIDITY OF
SHARES.
(a) Each of the Stock Companies is a corporation duly
organized and validly existing under the laws of Mexico or with respect to the
James River California Sub, the State of California, and has corporate power and
authority to own all of its properties and assets and to carry on its business
as it is now being conducted.
(b) The ownership of all of the outstanding Stock (except
with respect to the James River California Sub) is as set forth on Schedule
5.2(b), the Stock is free and clear of all liens, charges, pledges, security
interests or other encumbrances, and all of such capital stock is duly
authorized, validly issued, fully paid and non-assessable, and was not issued
in violation of any preemptive rights. Except that the Stock of the James River
California Sub, if such subsidiary is formed, will be issued to James River or a
Subsidiary of James River, and except as is otherwise set forth on Schedule
5.2(b), none of the Stock Companies has made any commitment to issue or sell
any shares of its capital stock or any securities or obligations convertible or
exchangeable therefor, or given any person any right to acquire from the Stock
Companies any shares of its capital stock, and no such securities or
obligations are outstanding. Except for the Mexican Financing, none of the
Stock is subject to any agreement or other obligation regarding the transfer of
voting of such stock.
5.3 AUTHORITY RELATIVE TO THIS AGREEMENT AND THE RELATED AGREEMENTS.
Each Person within the JR Group has the corporate power and authority to
execute and
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deliver each agreement or other document to be executed by it in
connection with the transactions contemplated by this Agreement and to
consummate the transactions contemplated on its part thereby. The execution and
delivery by each Person within the JR Group of each agreement or other document
to be executed by it in connection with the transactions contemplated by this
Agreement, and the consummation by it of any transactions contemplated on its
part hereby and thereby, have been duly authorized by such Person's Board of
Directors and no other corporate proceedings on the part of such Person are
necessary with respect thereto except for the taking of any required action by
any wholly-owned Subsidiary of James River, the taking of which will be ensured
by James River before the Closing. This Agreement constitutes, and each
agreement or other document to be executed by a Person within the JR Group in
connection with the transactions contemplated by this Agreement (when executed
and delivered by James River or that other Person within the JR Group) will
constitute, valid and binding obligations of James River and/or such other
Person within the JR Group, as the case may be, enforceable in accordance with
their terms.
5.4 CONSENTS AND APPROVALS. Except as set forth in Schedule 5.4,
there is no requirement applicable to any Person within the JR Group to make any
filing with, or to obtain any permit, authorization, consent or approval from,
any third party (including any public body) as a condition to the consummation
of the transactions contemplated by this Agreement.
5.5 NON-CONTRAVENTION. The execution and delivery by each Person
within the JR Group of this Agreement and the other agreements and documents to
be executed in connection with the transactions contemplated by this Agreement
and the consummation of the transactions contemplated thereby will not, (i)
violate or result in a breach of any provision of the Articles of Incorporation
or Bylaws of James River or such other Person within the JR Group, as the case
may be, (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement, lease or other instrument
or obligation to which James River or such other Person within the JR Group, as
the case may be, is a party or by which James River or other member of the JR
Group, as the case may be, or any of the Assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been or shall be obtained by James River
before the Closing or the obtaining of which has been or shall be waived by
Buyer before the Closing and which would not have an adverse effect on the
Assets or the Business, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to any Person within the JR Group or any
of the
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Assets or the Business (other than any applicable "bulk sales" laws),
excluding from the foregoing clause (iii) such violations that would not have a
material adverse effect on the Assets, in the aggregate, located at any Plant
Site or the business conducted with respect to products of any Plant Site.
5.6 COMPLIANCE WITH LAWS. Except as set forth in Schedules 5.6, 5.7
and 5.8, all Persons within the JR Group have operated the Business in
substantial compliance with all laws, regulations, policies, guidelines,
orders, judgments or decrees of any Authority applicable to, or having
jurisdiction over, Persons within the JR Group, the Assets or the Business. To
the Knowledge of James River, no Person within the JR Group has received from
any governmental authority any notice of any failure to so comply, and no
Person within the JR Group is currently subject to any sanction for such
noncompliance.
5.7 ENVIRONMENTAL MATTERS. Except as described on Schedule 5.7,
Persons within the JR Group have obtained all federal, state and local permits,
licenses and other authorizations which are required under applicable
Environmental Statutes other than licenses, permits, and other authorizations,
the failure to obtain which, individually or in the aggregate, would not have a
material adverse effect on the ownership or operation of the Assets, in the
aggregate, located at any Plant Site, or the conduct of the business conducted
with respect to the products of any Plant Site. Except as described in on
Schedule 5.7, the Assets and the Business are in substantial compliance with
all terms and conditions of such permits, licenses and authorizations, and are
also in substantial compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables of any Environmental Statute. Except as described on Schedule 5.7,
neither James River nor any of its Subsidiaries has received notice from any
Authority or Person of any failure of the Assets or the Business to comply in
any material respect with, or of any material liability or any potential
liability under, any Environmental Statute, except for any such Statute the
failure to comply with which could reasonably be expected to affect, materially
and adversely, the ownership or operation of the Assets, in the aggregate,
located at any Plant Site, or the conduct of the business conducted with
respect to the products of any Plant Site, nor, to the Knowledge of James
River, are there any facts or circumstances reasonably likely to result in such
condition.
5.8 LICENSES AND PERMITS. Schedule 5.8 contains a complete and
correct list of all material federal, state and local permits and licenses that
any Person within the JR Group is required to obtain that are related to the
Business or the ownership or operation of the Assets. Except as set forth on
Schedule 5.8, all of such permits and licenses have been obtained and are
currently in full force and effect. Except as set forth in Schedule 5.8, no
Person within the JR Group has violated the terms or conditions of any such
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license or permit, no notice of a violation of any such license or permit has
been received by any Person within the JR Group or recorded or published, and
no proceeding is pending or threatened, to revoke, prevent the renewal of, or
limit any such license or permit.
5.9 FINANCIAL STATEMENTS. (a) James River has previously furnished
Buyer with the December Balance Sheet, a copy of which is set forth in Schedule
5.9(a). Such unaudited balance sheet has been prepared in conformity with GAAP,
except as otherwise set forth in the comments accompanying such balance sheet,
applied on a basis consistent with James River's historical accounting policies
and procedures with respect to the Business used in the preparation of its
audited financial statements except that inventory balances reflect a
revaluation of the reserves for obsolete and slow moving inventory.
(b) James River has previously furnished Buyer with unaudited
profit and loss statements for the Business for the fiscal years ended December
26, 1993, December 25, 1994 and December 31, 1995, copies of which are attached
as Schedule 5.9(b) (the "P&LS"). Such unaudited P&LS have been prepared in
conformity with GAPP, except that historical selling, general and
administrative costs have been restated to reflect proforma spending based on
assumed changes in the business operations, non-operating charges related to
restructure reserves (i.e. severance, fixed assets) have been excluded, and
footnotes have not been provided with the P&LS, applied on a basis consistent
with James River's historical accounting policies and procedures with respect
to the Business used in the preparation of its audited financial statements.
5.10 LITIGATION. (a) Except as set forth in Schedule 5.10, there are
no actions, suits, claims, investigations or proceedings (legal,
administrative or arbitrative) pending or, to the Knowledge of James River,
threatened against any Person within the JR Group, whether at law or in equity
and whether civil or criminal in nature, before any federal, state, municipal,
foreign country's or other court, arbitrator, governmental department,
commission, agency or instrumentality, nor are there any judgments, decrees or
orders of any such court, arbitrator, governmental department, commission,
agency or instrumentality outstanding against any Person within the JR Group
which have, or, if adversely determined, could reasonably be expected to have,
a material adverse effect on any significant product or group of products of
the Business, any Asset which is material to the conduct of any material
portion of the Business, or otherwise materially and adversely affect any
material portion of the Assets or the Business.
(b) Except as set forth on Schedule 5.10, to the Knowledge of
James River there are no actions, suits, claims, investigations or proceedings
(legal, administrative or arbitrative) that are reasonably likely to be
asserted that, if adversely
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determined, would reasonably be expected to have a material adverse effect on
any significant product or group of products of the Business, any Asset which is
material to the conduct of any material portion of the Business, or would
otherwise materially and adversely affect any material portion of the Assets or
the Business.
5.11 TITLE TO PROPERTIES. (a) Except as set forth in Schedule 5.11
and except for Permitted Exceptions, James River or another Person of the JR
Group has good and marketable fee simple title to the Real Property.
(b) Except as set forth in Schedules 5.6, 5.7, 5.8, 5.11 or
5.12 to the Knowledge of James River (i) there are no violations of federal,
state or local laws, ordinances, rules or regulations with respect to the use
and occupancy of any of the Plant Sites which would have a material adverse
effect on the ability of the Buyer to operate such Plant Site in substantially
the same manner as such Plant Site has been historically operated, and (ii) all
governmental permits, licenses and certificates required for the occupancy and
use of such Plant Sites in substantially the same manner as such Plant Sites
have been historically operated have been issued and are in good standing.
(c) James River or another member of the JR Group has good
title to all tangible personal property that is included in the Assets and will
convey title to such personal property to Buyer upon consummation of the
transactions contemplated by this Agreement.
5.12 LEASES. (a) Schedule 5.12 is a list that contains an entry for
all leases, agreements and commitments to lease (each, a "Lessee Lease" and,
collectively, the "Lessee Leases") under which any Person within the JR Group
is the lessee, and all leases, agreements and commitments to lease (each a
"Lessor Lease" and, collectively, the "Lessor Leases"), under which any Person
within the JR Group is the lessor that relate, in each case, principally to the
Business and to either real or personal property, other than leases of personal
property which may be cancelled without material penalty upon not more than 60
days' notice or which require the payment of not more than $10,000 per month.
Except as set forth in Schedule 5.12, there is not, with respect to any of the
Lessee Leases or the Lessor Leases, any existing material default or event of
default on the part of any Person within the JR Group or, to the Knowledge of
James River, any existing material default or event of default on the part of
any other party to the Lessee Leases or the Lessor Leases.
(b) Except as set forth in Schedule 5.12, there is not, with
respect to either of the two plant sites which are the subject of the Orange,
Texas leases and the Williamsburg, Virginia lease (the "Major Leases"), any
mortgage, deed of trust or similar instrument securing indebtedness
constituting a lien on either such Plant Sites which has
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not been subordinated to such lease and with respect to which an appropriate
non-disturbance and attornment agreement has not been given. Except as set forth
in Schedule 5.12, no payments are required by any Person within the JR Group to
maintain the Major Leases other than as provided therein, all of such payments
that have come due have been made, no person has made any claim with respect to
the Major Leases that would materially interfere with the use of the premises by
the tenant in the conduct of its Business, and no consent is required for the
assignment of the Major Leases to Buyer.
5.13 INTELLECTUAL PROPERTY. Schedule 5.13 sets forth a complete and
correct list of the Filed Business Intellectual Property that is used
exclusively in, or applicable exclusively to, the Business. Except as set forth
in Schedule 5.13, James River or another member of the JR Group owns the Filed
Business Intellectual Property and such Filed Business Intellectual Property is
subsisting on the record of the applicable Authority on the date hereof. Except
as set forth on Schedule 5.13, there are no licenses of Business Intellectual
Property to third parties. Except as set forth in Schedule 5.13, there is no
claim, suit, action or proceeding pending or, to the Knowledge of James River,
threatened against any Person within the JR Group asserting that its use of any
Business Intellectual Property infringes upon the rights of any third parties.
Except as set forth on Schedule 5.13, to the Knowledge of James River, there
are no third parties infringing upon the Business Intellectual Property.
5.14 LISTED CONTRACTS. Schedule 5.14 contains a complete and correct
list of every contract, agreement or commitment of the any Person within the JR
Group, other than Lessee Leases and the Lessor Leases (each, a "Listed
Contract"):
(a) which provides for aggregate future payments by the
Business of more than $250,000.00, except for purchase orders or sales orders
arising in the ordinary and usual course of business, in which case such
contract, agreement or commitment is listed only if any party thereto is
obligated to make payments during the term thereof which will exceed
$1,000,000.00 in the aggregate; or
(b) which provides for the sale or other disposition, after the
date hereof and other than in the ordinary course of business, of any of the
Assets. Except as set forth in Schedule 5.14, all of the Listed Contracts are
in full force and effect and there has not occurred, with respect to any Listed
Contract, any material default or event of default on the part of any Person
within the JR Group or, to the Knowledge of any Person within the JR Group, any
other party thereto.
5.15 LABOR MATTERS. Schedule 5.15 sets forth a complete and correct
list of every collective bargaining agreement covering Business Employees.
James River has
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provided Buyer with true, complete and correct copies of each of such collective
bargaining agreements and all amendments and modifications thereto.
(a) Except as set forth on Schedule 5.15, and except for
grievances that have not ripened into arbitration or litigation, to the
Knowledge of James River, there are no material controversies, disagreements or
disputes pending between James River or any other member of the JR Group and
any of their respective employees.
(b) Except as set forth on Schedule 5.15, during the last three
years immediately preceding the date of this Agreement, with respect to the
Business Employees there have been no labor strikes or general employment
disputes at any of the Plant Sites.
(c) Except as set forth on Schedule 5.15, there have within the
past three years immediately preceding the date of this Agreement occurred no
events that have legally required any Person of the JR Group to hold a union
election with respect to any Plant Site.
(d) Except as set forth on Schedule 5.15, there have within the
past three years immediately preceding the date of this Agreement been no
unfair labor practice charges filed with the National Labor Relations Board
against any Person of the JR Group related to the Business or the Assets.
5.16 Employee Benefit Plans. (a) Schedule 5.16 lists all of the
employee benefit plans and programs, including, without limitation: (i) all
retirement, savings and other pension plans; (ii) all health, severance,
insurance, disability and other employee welfare plans; and (iii) all
employment, incentive, vacation and other similar plans, that are maintained by
James River or any Person within the JR Group with respect to Business
Employees or to which James River or any Person within the JR Group contribute
on behalf of the employees of the Business (collectively, the "Employee
Plans").
(b) To the Knowledge of James River, the Employee Plans that
are maintained by James River or a member of the JR Group are in compliance in
all material respects with applicable laws and regulations, and James River and
any Person within the JR Group have administered the Employee Plans in
accordance with applicable laws and regulations in all material respects.
(c) No lien exists under Section 4068 of ERISA with respect to
any assets of James River or of any ERISA Affiliate.
(d) James River has made available to Buyer copies of all
Employee Plans and, where applicable, summary plan descriptions and annual
reports filed within the last three years pursuant to ERISA or the Internal
Revenue Code with respect to the Employee Plans.
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(e) To the Knowledge of James River, neither James River nor
any Person within the JR Group has engaged in any prohibited transactions, as
defined in Section 4975 of the Internal Revenue Code, with respect to any
Employee Plan that is a pension plan as defined in Section 3(2) of ERISA. No
defined benefit pension plan (as defined in 3(35) of ERISA) maintained or
contributed to by James River or an ERISA Affiliate or any trust established
thereunder that is subject to Section 302 of ERISA and Section 412 of the
Internal Revenue Code has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Internal Revenue Code),
whether or not waived; and all contributions required to be made with respect
thereto on or prior to Closing have been timely made. No lien exists under
Section 412(n) of the Internal Revenue Code with respect to any assets of James
River or of any ERISA Affiliate.
(f) With respect to the James River Corporation of Virginia
StockPlus Investment Plan (the "StockPlus Plan"), except as disclosed on
Schedule 5.16: (i) the "knowledge" condition set forth in Section 5.16(b) of
this Agreement shall not apply; (ii) the Internal Revenue Service has
determined the StockPlus Plan to be qualified under the Tax Reform Act of 1986
and related laws ("TRA86"), or an application for such determination letter
under TRA86 was filed on a timely basis, and nothing has occurred from the date
of such letter or such filing that could reasonably be expected to affect the
qualified status of the StockPlus Plan; (iii) there are no pending or
threatened or anticipated actions, suits or claims by or on behalf of the
StockPlus Plan, by any employee or beneficiary covered under the StockPlus
Plan, or otherwise involving the StockPlus Plan (other than routine claims for
benefits); (iv) there are no pending or threatened audits or investigations
with respect to the StockPlus Plan; (v) there is no matter pending before any
governmental agency with respect to the StockPlus Plan, other than pending
requests for determination letters under clause (ii) above; (vi) James River or
a member of the JR Group has made full and timely payment of all amounts which
are required under the terms of the StockPlus Plan and in accordance with
applicable laws which are required to be paid as a contribution to such Plan;
(vii) neither James River nor any member of the JR Group nor the StockPlus Plan
itself nor any trustee or administrator of the StockPlus Plan who is an
employee or officer of James River or of any Person within the JR Group, nor,
to the Knowledge of James River, any trustee or administrator of the StockPlus
Plan who is not an employee or officer of James River or the JR Group, has
engaged in a transaction in connection with James River, or any member of the
JR Group, or the StockPlus Plan or its trust, or any trustee or administrator
thereof, or any party dealing with the StockPlus or its trust, which could
result in a civil penalty assessed pursuant to Sections 409 or 502(i)
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of ERISA or a tax imposed pursuant to Section 4975 of the Code; and (viii) James
River, the members of the JR Group, and any fiduciary (as defined in Section
3(21) of ERISA) with respect to the StockPlus Plan who is an employee or officer
of James River or the JR Group, and, to the Knowledge of James River, any
fiduciary who is not an employee or officer of James River or the JR Group, have
complied in all material respects with Section 404 of ERISA with respect to the
StockPlus Plan.
5.17 CONDUCT OF BUSINESS AND MANAGEMENT OF ASSETS SINCE DATE OF
DECEMBER BALANCE SHEET. (a) Between the date of the December Balance Sheet and
the date hereof, Persons within the JR Group have conducted the Business, and
have managed the Assets only in the usual, regular and ordinary manner
consistent with past practice.
(b) Between the date of the December Balance Sheet and the
date hereof, with respect to the Business and the Assets, no Person within the
JR Group has:
(i) made capital expenditures which in the
aggregate have exceeded the budgeted depreciation;
(ii) made a disposition of assets in excess of $1
million, other than inventory in the ordinary course of business;
(iii) made loans or advances to, or investments in,
other parties in excess of $500,000 in the aggregate;
(iv) entered into employment, severance,
compensation or similar agreements with Business Employees, except for
incentive programs that by their terms expire at or before Closing;
(v) made increases in compensation or benefits
payable to Business Employees other than in the ordinary course of
business; or
(vi) suffered or incurred any significant damage,
destruction of property or other loss, whether or not insured.
(c) Between the date of the December Balance Sheet and the
date hereof, with respect to the Business and the Assets, the Persons
within the JR Group have:
(i) maintained their books and records in
accordance with past accounting practices;
(ii) maintained the same level and types of
insurance as previously maintained; and
(iii) used commercially reasonable efforts to
preserve the Business and the Assets.
Between the Date of the December Balance Sheet and the date hereof, with
respect to the Business and the Assets, there has not occurred any other
material adverse change in the Assets or Business taken as a whole.
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5.18 FINDERS. Except for Merrill Lynch, Pierce, Fenner & Smith
Incorporated, no broker, finder or investment banker is entitled to any fee or
commission from James River for services rendered on behalf of James River in
connection with the transactions contemplated by this Agreement.
5.19 SUFFICIENCY OF ASSETS. The Assets, and the rights granted to Buyer
under certain Related Agreements, include all of the assets and rights
necessary to conduct the Business in substantially the same manner as it is
presently being conducted. The financial results of the Business reflected on
the P&LS were produced by the Assets, except as the Assets may have undergone
additions and deletions in the ordinary course of business since the periods
covered by the P&LS. Except for the Excluded Assets located at the Tech Center
that are included in the December Balance Sheet, but will not be reflected in
the Closing Net Asset Value, the December Balance Sheet does not reflect, and
the Closing Net Asset Value will not reflect, any assets other than the Assets.
The December Balance Sheet does not reflect any liabilities other than Assumed
Liabilities.
5.20 CONDITION OF ASSETS. The condition of the Assets at each Plant
Site, taken in the aggregate and excepting normal wear and tear, is sufficient
to operate the portion of the Business conducted at such Plant Site in a manner
generally resulting in production and efficiency levels at least equal to
historical levels attained at such Plant Site.
5.21 COPIES OF DOCUMENTS. James River has provided or will, prior to
Closing, provide to Buyer true, complete and accurate copies of all documents
and instruments listed on any of the Schedules to this Agreement.
5.22 UNDISCLOSED LIABILITIES. Except for obligations under contracts or
leases not required to be reflected on a balance sheet of the Business prepared
in accordance with GAAP applied consistently with James River's accounting
policies as reflected in its audited financial statements, and with the
accounting policies of the Business, no Person within the JR Group has any
material liabilities or obligations (secured or unsecured, whether accrued,
absolute, direct, indirect, contingent or otherwise, and whether due or to
become due) that are included in the Assumed Liabilities other than any such
liabilities or obligations which (i) were fully accrued or reserved against in
the December Balance Sheet in accordance with GAAP, except as otherwise set
forth therein, or (ii) have been incurred since the date of the December
Balance Sheet in the ordinary course of business and do not individually or in
the aggregate have a material adverse effect on the Business or the Assets
taken as a whole.
5.23 EMPLOYMENT AND CONSULTING AGREEMENTS. Schedule 5.23 contains a
true and correct list of all employment and consulting contracts with an
original term in excess of 60 days, providing for compensation on a yearly
basis in excess of $250,000,
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and not otherwise listed on Schedule 5.14 to which any Person within the JR
Group is a party in connection with the Business. Except as set forth on
Schedule 5.23, each of such contracts is in full force and effect and there has
not occurred, with respect to any such contract, any material default or event
of default on the part of any Person within the JR Group or, to the Knowledge of
James River, any other party to such contracts. Except as set forth on Schedule
5.4 and 5.23, no consent of any Person is required for the assignment of any of
such contracts to Buyer.
5.24 ABSENCE OF PROCEEDINGS. No portion of any Plant Site is subject to
any proceeding for its sale, condemnation, expropriation or taking (by eminent
domain or otherwise) by any Authority nor to the Knowledge of James River has
any such sale, condemnation, expropriation or taking been proposed or
threatened.
5.25 ACCOUNTS RECEIVABLE. All accounts receivable shown on the December
Balance Sheet represent, and all accounts receivable that will be reflected in
the Closing Net Asset Value will be, sales actually made or services actually
performed in the ordinary course of business on arm's-length terms. In the
aggregate, no material portion of the currently outstanding accounts receivable
shown on the December Balance Sheet is currently subject to material disputes
as to payment, defenses, counterclaims, or rights of setoff other than for
which adequate reserves have been established.
5.26 TAXES. No Person within the JR Group has failed to file a return
with respect to any federal, state or local income or franchise tax or any
other type of tax, or failed to pay any such tax, so as to cause Buyer, as the
purchaser of the Assets, to become liable for such taxes or to cause a lien to
exist or arise against the Assets with respect to taxes.
5.27 INSURANCE. All of the Assets and the operations of the Business of
an insurable nature and of a character usually insured by companies of similar
size to James River and in similar businesses are insured by a Person within
the JR Group in such amounts and against such losses, casualties or risks as is
(i) usual in such companies and for such assets, operations and businesses,
(ii) required by any law applicable to any Person within the JR Group, or (iii)
required by any contract to which a Person within the JR Group is a party. All
such policies are in full force and effect and enforceable in accordance with
their terms. No Person within the JR Group is now in material default under the
provisions of any such policy, including, without limitation, for failure to
make timely payment of all premiums due thereon. No Person within the JR Group
has been refused, or denied renewal of, any insurance coverage with respect to
the Business or the ownership or operation of the Assets which coverage would
be customary in accordance with good industry practice.
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5.28 CUSTOMERS. (a) Schedule 5.28 sets forth: (i) a list of the forty
largest customers of the Business, determined by dollar volume of gross sales
for the most recently ended fiscal year (the "Large Customers"), and the dollar
volume of sales to each such customer during the most recently ended fiscal
year, and (ii) a list of the brokers and distributors of the Business that
accounted for at least $1,000,000 in sales by the Business during the most
recently ended fiscal year (the "Large Brokers"), and the dollar volume of the
sales of the Business to or through each Large Broker during the most recently
ended fiscal year. Except as described on Schedule 5.28, no Person within the
JR Group has received notice or has actual knowledge that any Large Customer or
Large Broker has terminated or intends to terminate its existing relationship
with any Person within the JR Group, to terminate a substantial portion of the
outstanding orders with any Person in the JR Group or materially to diminish
the amount of business conducted with James River.
5.29 ACCURACY OF PROVIDED MATERIALS.
(a) The employee data by location and category attached as
Schedule 5.29(a) is true and correct in all material respects as of the date
shown therein.
(b) The information regarding the major items of equipment
included in the Assets and attached as Schedule 5.29(b) is true and correct in
all material respects. All such items of equipment are reflected in the
December Balance Sheet and none have been disposed of since the date of the
December Balance Sheet.
Based on actual 1995 volume purchases of resin and assuming that James
River's purchases in 1995 of such volume were at prevailing market prices,
James River reasonably believes that the purchase of the same volume in 1996 at
contract prices under the contracts listed in Schedule 5.14, will provide
annualized cost savings to the Business in the hands of Buyer of at least
$5,000,000 when compared to such volumes purchased at prevailing market prices.
5.30 COMPLETENESS OF SCHEDULE 1.1. James River represents and
warrants that the list of officers and employees on Schedule 1.1 includes the
managers of each of the plants included in the Assets and that such persons are
reasonably expected by James River to have knowledge concerning all significant
matters which are the subject of the representations and warranties hereunder
which are stated to be "to the Knowledge of James River."
5.31 ECONOMICS OF RELATED AGREEMENTS. Each of the Wrap Supply
Agreement, Cast Film Supply Agreement, Ream Wrap Supply Agreement, Ink Supply
Agreement and JR Parent Roll Agreement contain economic terms that, with
respect to each such agreement, are, in the aggregate, substantially equivalent
to the economic terms
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of the intercompany sales within the JR Group during 1995 of the products
covered by such agreement, which sales are reflected in the P&LS.
5.32 MATTERS RELATING TO TITLE COMMITMENT. In obtaining the Title
Commitment, James River has not offered or provided to Lawyers Title Insurance
Corporation ("LTIC") additional compensation or inducement for the purpose of
causing LTIC to insure over otherwise valid title objections.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants the following to James River as of the
date hereof:
6.1 ORGANIZATION; QUALIFICATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Georgia and
has the corporate power and authority to own all of its properties and assets
and to carry on its business as it is now being conducted and as is contemplated
to be carried on hereunder. Buyer is duly qualified and in good standing to do
business in each jurisdiction in which the property owned, leased or operated by
it or the nature of the Business makes such qualification necessary except in
those jurisdictions where the failure to be duly qualified and in good standing
would not have a material adverse effect on Buyer or the Assets and the
Business, taken as a whole.
6.2 AUTHORITY RELATIVE TO THIS AGREEMENT AND THE RELATED AGREEMENTS.
Buyer has the corporate power and authority to execute and deliver this
Agreement and the Related Agreements to which it is contemplated to be a party
and to consummate the transactions contemplated on its part hereby and thereby.
The execution and delivery by Buyer of this Agreement and the Related
Agreements to which it is a party and the consummation by Buyer of the
transactions contemplated on its part hereby and thereby, have been duly
authorized by its Board of Directors and no other corporate proceedings on its
part are necessary with respect thereto. This Agreement constitutes, and any
Related Agreement to which Buyer is a party when executed and delivered by it
will constitute, its valid and binding obligations, enforceable in accordance
with their terms.
6.3 NON-CONTRAVENTION. The execution and delivery by Buyer of this
Agreement does not, and its execution and delivery of any Related Agreements to
which Buyer is a party and the consummation of the transactions contemplated
hereby and thereby will not (i) violate or result in a breach of any provision
of Buyer's Articles of Incorporation or Bylaws, (ii) result in a default (or
give rise to any right of termination,
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cancellation or acceleration) under the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement, lease or other instrument
or obligation to which Buyer is a party or by which Buyer may be bound, except
for such defaults (or rights of termination, cancellation or acceleration) as to
which requisite waivers or consents have been or shall be obtained by Buyer
before the Closing or the obtaining of which has been or shall be waived by
James River before the Closing or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Buyer (other than any
applicable "bulk sales" laws).
6.4 CONSENTS AND APPROVALS. Except as set forth in Schedule 6.4,
there is no requirement applicable to Buyer to make any filing with, or to
obtain any permit, authorization, consent or approval from, any public body as
a condition to the lawful consummation of the transactions contemplated by this
Agreement.
6.5 LITIGATION. Except as set forth in Schedule 6.5, there are no
actions, suits, claims, investigations or proceedings (legal, administrative or
arbitrative) pending or threatened against Buyer, whether at law or in equity
and whether civil or criminal in nature before any federal, state, municipal or
other court, arbitrator, governmental department commission, agency or
instrumentality, nor are there any judgments, decrees or orders of any such
court, arbitrator, governmental department, commission, agency or
instrumentality outstanding against Buyer which have, or, if adversely
determined, could reasonably be expected to have, a material adverse effect on
Buyer, or which seeks specifically to prevent, restrict or delay the
consummation of the transaction as contemplated hereby or the fulfillment of
any of the conditions of this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 CONDUCT OF BUSINESS AND MANAGEMENT OF ASSETS. (a) After the date
hereof and until the Closing, any Person within the JR Group (i) shall conduct
the Business only in the usual, regular and ordinary manner consistent with
past practice; and (ii) shall use reasonable efforts to preserve intact the
present business organization and operations of the Business, to keep available
the services of its employees and to preserve its relationships with licensors,
suppliers, dealers, customers and others having business relationships with the
Business.
7.2 FORBEARANCES BY JAMES River. Except as specifically
contemplated by this Agreement:
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(a) James River shall not, and shall cause each Person
within the JR Group, from the date hereof until the Closing, without the written
consent of Buyer, not to:
(i) sell, dispose of, transfer or encumber any of
the Underlying Assets except in the ordinary and usual course of
business (except for any transfers made to the James River California
Sub in accordance with this Agreement);
(ii) make, or cause to be made, any dividend or
distribution relating to the Stock;
(iii) make any capital expenditures, series of capital
expenditures or commitments for capital expenditures related to the
Business except in the ordinary and usual course of business;
(iv) make any significant acquisition or
disposition of Assets other than in the ordinary course of business;
(v) amend, modify or cancel any Listed Contract,
Lessee Lease or Lessor Lease except in accordance with its terms;
(vi) make, with respect to the Business, any loans
or advances to, or investments in any Person other than in the
ordinary course of business;
(vii) enter into any employment, severance,
compensation or similar agreements with any Business Employee or
otherwise with respect to the Business;
(viii) increase the compensation of, or benefits
payable to, Business Employees other than in the ordinary course of
business;
(ix) incur any material obligations or liabilities
of any nature that would be required to be assumed hereunder by Buyer
other than items incurred in the regular and ordinary course of the
Business, consistent with past practice, or change the assumptions
underlying or the methods of calculating any bad debt, contingency, or
other reserve relating to the Business, other than in the ordinary
course of the Business consistent with past practice;
(x) permit, allow, or suffer any Assets to be
subjected to any mortgage, pledge, lien, encumbrance, restriction, or
charge of any kind, other than Permitted Encumbrances;
(xi) cancel any debts or waive any claims or rights
in excess of $10,000.00 individually or $100,000.00 in the aggregate
that constitute Assets, except to the extent such waiver or
cancellation results in a corresponding adjustment to the Purchase
Price pursuant to Article 3;
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(xii) dispose of or permit to lapse any right to the
use of any Business Intellectual Property or dispose of or disclose to
any person not authorized to have such information any Non Filed
Business Intellectual Property;
(xiii) incur any long term indebtedness that would be
required hereunder to be assumed by Buyer;
(xiv) enter into any collective bargaining or labor
agreement (oral and legally binding or written) with respect to the
Business;
(xv) make (except to the extent previously obligated
to do so) or agree to make any charitable contributions or incur or
agree to incur any non-business expenses in excess of $10,000 in the
aggregate, in each case in the name of the Business;
(xvi) make a significant change in the amount or
types of insurance maintained with respect to the Assets and the
Business; or
(xvii) agree, so as to legally bind Buyer whether in
writing or otherwise, to take any of the actions set forth in this
Section 7.2 and not otherwise permitted by this Agreement.
7.3 MAIL RECEIVED AFTER CLOSING. Following the Closing, Buyer may
receive and open all mail addressed to any Person within the JR Group and may
deal with the contents thereof in its discretion to the extent that such mail
and the contents thereof relate to the Business. Buyer shall deliver or cause
to be delivered to James River, promptly after receipt by Buyer, all mail,
including, without limitation, payments of accounts or claims receivable,
addressed to any Person within the JR Group which does not relate to the
Business.
7.4 RETENTION OF BOOKS AND RECORDS. Buyer will retain and maintain,
in an organized and retrievable manner, all documents and records pertaining to
the periods before the Closing in accordance with James River's Record
Management Policy dated September 1, 1992 as it may from time to time be
amended, including requesting authorization from James River's Corporate Tax
Services Department prior to destruction of any items requiring such approval.
Buyer will retain and maintain all machinesensible records, such as computer
tapes, disks, diskettes, etc., which are considered books and records within
the meaning of Internal Revenue Code Section 6001, in accordance with Internal
Revenue Procedure 91-59 or such amending or superseding guidance as issued by
the Internal Revenue Service. Buyer will make available such documents and
records, machine sensible records, computer time, and assistance from Buyer's
personnel as may be reasonably requested by James River in order to
expeditiously comply with all pertinent
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requests from the Internal Revenue Service and state taxing authorities which
relate to periods prior to the Closing.
7.5 EXPENSES. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
7.6 CONFIDENTIALITY. Buyer shall hold, and shall cause its
respective officers, directors, employees, representatives, consultants and
advisors (each, a "Representative"), to hold, and James River shall hold, and
shall cause its respective Representatives and the Representatives of any Person
within the JR Group to hold, in strict confidence, unless compelled to disclose
by judicial or administrative process or by other requirements of law, all
documents and information obtained by such parties, respectively, in connection
with the transactions contemplated hereby or otherwise obtained hereunder
("Confidential Information", which term shall, after Closing, with respect to
James River's obligations hereunder, include documents and information
constituting Assets) except to the extent that such Confidential Information has
been or to have become (i) generally available to the public other than as a
result of disclosure by any party hereunder or a Representative of a party
hereunder if such source is not bound by a confidentiality agreement prohibiting
such disclosure or is not entitled to the protection offered hereby, (ii) made
available to the public on a nonconfidential basis from a source other than a
Representative of a party entitled to the protection offered hereby, or (iii)
known to the party receiving such Confidential Information before the date of
disclosure of such Confidential Information to such party. However, nothing
contained in this Section 7.6 shall preclude the disclosure of Confidential
Information, on the condition that it remain confidential, to auditors,
attorneys, lenders, financial advisors and other consultants and advisors in
connection with the performance of their duties in preparation for the
consummation of the transactions contemplated hereby nor shall it prevent
Buyer's disclosure after Closing of any document or information constituting an
Asset. Buyer acknowledges that following Closing, it may (subject to limitations
set forth in this Agreement) employ some or all of the persons listed on
Schedule 7.6, each of whom, prior to the Closing, had access to or were exposed
to technology relating to the products or processes listed opposite such
person's name on Schedule 7.6. Buyer agrees that it and its Affiliates will not
utilize the services of any such person in any manner in connection with
research relating to, or the development or improvement of, the type of product
or process listed opposite such person's name on Schedule 7.6.
7.7 PUBLIC ANNOUNCEMENTS. The parties shall consult with each other
before issuing any press releases or otherwise making any public statements
with respect to this
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Agreement and the transactions contemplated hereby and, subject to any
applicable disclosure requirements, shall not issue any such press release or
make any such public statement without providing reasonable notice to the other
parties hereto of the intent to do so.
7.8 EFFORTS TO CONSUMMATE. Subject to the terms and conditions of
this Agreement, each of the parties hereto shall use its reasonable best efforts
to take, or to cause to be taken, all action and to do, or to cause to be done,
all things necessary, proper or advisable to consummate, as promptly as
practicable, the transactions contemplated hereby, including, but not limited
to, the satisfaction of the conditions listed in Articles IX or X that are
within the control of such party and the obtaining of all consents, waivers,
authorizations, orders and approvals of third parties, whether private or
governmental, required of it by this Agreement. Each party shall cooperate fully
with the other parties hereto in assisting such parties to comply with this
Section . However, except as specifically provided herein, no party shall be
required to initiate any litigation, to make any payment or incur any economic
burden in connection with the obtaining of any consent, waiver, authorization,
order or approval.
7.9 FURTHER ASSURANCES. (a) Subject to the provisions of Section
7.11, James River shall use its reasonable best efforts to implement the
provisions of this Agreement, and, for such purpose, at the request of Buyer,
will, at or after the Closing, promptly execute and deliver, or cause to be so
executed and delivered, such documents to Buyer and take such further action as
Buyer may deem reasonably necessary or desirable to facilitate or better
evidence the consummation of the transactions contemplated hereby.
(b) Buyer shall use its reasonable best efforts to implement
the provisions of this Agreement, and, for such purpose, at the request of
James River, will, at or after the Closing, promptly execute and deliver, or
cause to be so executed and delivered, such documents to James River and take
such further action as James River may deem reasonably necessary or desirable
to facilitate or better evidence the consummation of the transactions
contemplated hereby.
7.10 USE OF JAMES RIVER NAME. As soon as practicable after the
Closing, Buyer (i) shall remove all names, logos or marks which include the
words "James River" or the letters "JR" ("James River Corporate Designations")
from, or render the same illegible on, all Underlying Assets on which such
Designations are imprinted or legible or (ii) shall discontinue use of any asset
described in clause (i) bearing James River Corporate Designations.
Notwithstanding the foregoing, Buyer shall be permitted to use the James River
Corporate Designations with respect to Inventory constituting finished goods on
which a James River Corporate Designation is imprinted or affixed at the Closing
until
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such Inventory is sold. After such Inventory has been sold Buyer shall have no
rights to use the James River Corporate Designations. Buyer undertakes to use
reasonable best efforts to sell such Inventory within 12 months after the
Closing. At the end of such period referred to in the preceding sentence (or
upon completion of the removal, rendering illegible or discontinuance of the
James River Corporate Designations and variations thereof described above,
whichever occurs sooner), an executive officer of Buyer shall notify James River
that (i) all such Inventory has been sold or destroyed; or (ii) such removal,
rendering illegible or discontinuance has been completed. Except as expressly
permitted by this Section 7.10, neither Buyer nor any of its respective
Affiliates shall use the James River Corporate Designations or any similar mark
or name.
7.11 ASSIGNMENT OF CONTRACTS, RIGHTS, ETC. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement shall not
constitute an agreement to assign the right, title or interest of any Person
within the JR Group in, to or under any contract, license, lease, commitment,
sales order, purchase order or other agreement or any claim or right of any
benefit arising thereunder or resulting therefrom if any attempted assignment
thereof, without the consent of a third party thereto, would constitute a
breach thereof or in any way adversely affect the rights of any Person within
the JR Group thereunder. James River shall use its reasonable best efforts to
obtain, and Buyer agrees to cooperate with James River in its efforts to
obtain, any required third party consent to the assignment or transfer thereof
to Buyer. If such consent is not obtained, James River and Buyer shall
cooperate in any reasonable arrangements designed to provide Buyer with the
benefits thereunder, including enforcement for the benefit of Buyer of any and
all rights of any Person within the JR Group against such third party arising
out of the cancellation by such third party or otherwise. Notwithstanding the
foregoing, the obligations of any Person within the JR Group under this Section
7.11 shall not include any obligation to make any payment or to incur any
economic burden.
7.12 NO SOLICITATION OF EMPLOYEES. (a) For a period of one year after
the Closing, neither party nor any Representative of such party shall, in any
manner, directly or indirectly, (i) solicit any employee of the other party or
any Affiliate of the other party to terminate his or her employment with such
party or its Affiliate, or (ii) otherwise recruit or encourage any such
employee to become an employee of, or a consultant to, the party bound hereby.
(b) As promptly as practicable after the Closing, Buyer shall
use its best efforts to advise the appropriate Subsidiaries and Representatives
of Buyer (including the department heads and human resources personnel) of its
obligations set forth in this Section 7.12.
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(c) Notwithstanding clauses (a) and (b) of this Section 7.12,
no party hereto shall be restricted from soliciting for employment any employee
of any other party hereto who has left the employment of such other party other
than as a result of the breach of this Section 7.12 by any party hereto.
7.13 NEGOTIATIONS WITH OTHERS. Until Closing or the earlier
termination or expiration of this Agreement, James River will not, directly or
indirectly, without the written consent of Buyer, initiate discussions or engage
in negotiations concerning, or discuss, with any Person other than Buyer, any
proposal regarding the acquisition, other than in the ordinary course of
business, of all or part of the Assets.
7.14 HSR FILINGS. James River and Buyer will each file, or cause to
be filed, within 15 days of the date hereof, with the United States Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice, pursuant to the HSR Act, Notification and Report Forms with respect to
the transactions contemplated by this Agreement and respond as promptly as is
practicable to all inquiries received from other agencies for additional
information or documentation. Each party will bear the cost of any filing
required to be made by such party under the HSR Act, including the cost of
responding to second requests for information.
7.15 TRANSFER TAXES AND RECORDING FEES. All sales, use, transfer
taxes and other non-income taxes and any fees (including deed recordation fees,
filing fees, if any) incurred in connection with this Agreement and the
transactions contemplated hereby (the "Transfer Fees") will be borne equally by
James River and Buyer. At James River's direction, Buyer will file all
necessary tax returns and other documents required to be filed with respect to
all such Transfer Fees. James River will cooperate with Buyer to the extent
reasonably necessary to enable Buyer to make such filings and join in the
execution of any tax returns or other documents as may be required in order for
Buyer to comply with the provisions of this Section.
7.16 TITLE MATTERS. (a) James River has caused or, as soon as
practicable after the execution and delivery of this Agreement, James River
shall cause, to be issued one or more title commitments (whether one or more,
the "Title Commitment") for policies of owner's title insurance with respect to
the Real Property (the "Real Property Title Commitment") and policies of
leasehold title insurance with respect to the Major Leases (the "Major Leases
Title Commitment"). At Buyer's request, Closing may be postponed until the date
that is 45 days after the later of the date hereof or the date of James River's
delivery to Buyer of the Real Property Title Commitment together with copies of
all recorded documents listed as title exceptions in the Real Property Title
Commitment (collectively, the "Real Property Title Package"). Within 15 days of
the later of the date
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hereof or the date of James River's delivery to Buyer of the Real Property Title
Package, Buyer shall notify James River of any title matter reflected in the
Real Property Title Commitment that constitutes a breach of the representation
set forth in Section 5.11 (any such title matter being a "Title Defect").
(b) At Buyer's request, Closing may be postponed until the
date that is 45 days after James River's delivery to Buyer of the Major Leases
Title Commitment, together with copies of all recorded documents listed as title
exceptions in the Major Leases Title Commitment (collectively, the "Major
Leases Title Package"). Within 15 days of James River's delivery to Buyer of
the Major Leases Title Package, Buyer shall notify James River of any title
matter reflected in the Major Leases Title Commitment that constitutes a breach
of the representation set forth in Section 5.11 (any such title matter being a
"Title Defect").
(c) Within 15 days of receiving notice from Buyer of any Title
Defect, James River shall notify Buyer, with respect to each such Title Defect,
whether James River has elected to (i) cure such matter or otherwise cause the
same to be deleted from, or insured over in, the Title Commitment, (ii) pay to
Buyer the amount by which the value of the Real Property is diminished as a
result of the existence of such Title Defect at Closing (or as soon thereafter
as the amount can be established, the parties hereby agreeing to enter into an
appropriate agreement at Closing relating to the establishment of such amount
by reference to the conclusion of qualified real estate appraisers if James
River elects to make such payment in respect of any Title Defect and the
parties cannot agree by Closing as to the amount of such diminution in value);
or (iii) take no action with respect to such Title Defect; provided James River
shall be required to remove any lien which is not a Permitted Encumbrance
securing a monetary obligation which can be removed by the payment of money the
amount of which is ascertainable from the face of the document or which has
been determined in writing from the holder of such obligation. If Buyer does
not deliver written notice of its objections to any Title Defect within the
time specified above for such notice, Buyer shall be deemed to have waived all
rights it may have against James River (including the right to refuse to
consummate the transactions called for in this Agreement or the right otherwise
to claim breach of the representation set forth in Section 5.11) with respect
to such Title Defect. If James River fails to respond, within the time set
forth above, to any objection to Title Defects timely delivered by Buyer as set
forth above, James River shall be deemed to have elected to respond as set
forth in subsection (ii) above with respect to such Title Defect. If James
River elects to respond as set forth in (iii) above with respect to one or more
Title Defects, Buyer may terminate this Agreement by delivering notice of its
election to do so
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within seven days of James River's delivery of its notice to Buyer that James
River has elected to take no action with respect to the Title Defect(s) at
issue. If Buyer does not deliver written notice of its election to terminate
this Agreement within the time specified above for such notice, Buyer shall be
deemed to have waived all rights it may have against James River with respect to
Title Defects disclosed in the Title Commitment (including the right to refuse
to consummate the transactions called for in this Agreement or the right
otherwise to claim breach of the representations set forth in Section 5.11 or
breach of this Section). James River shall have no obligation to procure or pay
premiums for any title insurance; Buyer shall purchase any title insurance it
requires in connection with the transactions contemplated hereby.
7.17 MEXICAN FINANCING. (a) Buyer shall have the option to either (i)
keep in place the Mexican Financing, or (ii) require James River to convert the
Mexican Financing to equity prior to or at Closing. Buyer shall give James
River written notice at least twenty business days prior to Closing of its
election pursuant to the preceding sentence.
(b) If Buyer makes the election in paragraph (a)(i) above, it
shall ensure that James River and its Affiliates (other than the Stock
Companies) are released from any liability or obligation with respect thereto
prior to or at Closing and the interests of all Persons (other than the Stock
Companies) within the JR Group in and to the obligations of JRMex under the
Mexican Financing shall be deemed included within the Assets at Closing and the
liabilities and obligations of any Person within the JR Group (other than the
Stock Companies) with respect to the Mexican Financing shall be deemed included
in Assumed Liabilities. If Buyer makes no election or makes the election in
paragraph (a)(ii) above, then James River shall cause the conversion of the
Mexican Financing to equity prior to or at Closing, and such equity shall be
included within the Assets.
7.18 JACKSON IDB. (a) Subject to the provisions of Subsections (b),
(c) and (d) below, Buyer shall either (i) assume the Jackson IDB; or (ii)
require James River to cause the termination of the Jackson IDB. Buyer shall
give James River written notice at least twenty business days prior to Closing
of its election pursuant to the preceding sentence.
(b) If Buyer makes the election in paragraph (a)(i) above,
James River's rights with respect to the Jackson IDB shall be deemed included
within the Assets, and James River's liabilities with respect to the Jackson
IDB shall be deemed included within the Assumed Liabilities, Buyer shall ensure
that James River and its Affiliates are released from all liability and
obligation with respect to the Jackson IDB prior to or at Closing and no Person
within the JR Group shall have any further liability with respect thereto.
(c) If Buyer makes no election in a timely fashion; makes the
election set forth in paragraph (a)(i) above, but fails to fulfill its
obligations under paragraph (b)
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above; or makes the election in paragraph (a)(ii) above, James River shall prior
to or at Closing, exercise its purchase option under the Jackson IDB and cause
the reconveyance to James River or its Subsidiary of the real property currently
leased by James River's Subsidiary secured by the Jackson IDB, which shall
become an Asset transferred to Buyer. In addition, Buyer agrees to pay all
transaction costs and expenses incurred by James River in connection with its
exercise of the purchase option.
7.19 JAMES RIVER IDBS. (a) Subject to the provisions of subsections
(b) and (c) below, Buyer shall, with respect to each of the James River IDBs,
either (i) assume one or more of the James River IDBs; or (ii) require James
River to cause the repayment in full of such James River IDB. Buyer shall give
James River written notice at least 45 days prior to Closing of its election
pursuant to the preceding sentence.
(b) If Buyer makes the election in paragraph (a)(i) above for
any of the James River IDBs, such James River IDB shall be deemed included
within the Assumed Liabilities, Buyer shall ensure that James River and its
Affiliates are released from all liability and obligation with respect to such
James River IDB prior to or at Closing and no Person within the JR Group shall
have any further liability with respect thereto.
(c) If Buyer makes no election; makes the election set forth
in paragraph (a)(i) above, but fails to perform its obligations under paragraph
(b) above; or makes the election in paragraph (a)(ii) above for any of the
James River IDBs, the liability with respect to such James River IDB shall be
omitted from the Final Closing Audited Balance Sheet, Buyer shall repay to
James River at Closing all transaction costs and expenses in connection with
the repayment of such James River IDB to the extent not reflected in the Final
Closing Audited Balance Sheet, (but not the repayment of principal or other
amounts that would have to be reflected as a liability on the Final Closing
Audited Balance Sheet), and such James River IDB shall not be included within
the Assumed Liabilities.
7.20 JAMES RIVER CALIFORNIA SUB. Prior to Closing, James River may,
at its sole discretion, directly or indirectly, establish a newly-formed
wholly-owned Subsidiary (the "James River California Sub") and contribute to
the James River California Sub any or all of the tangible personal property
owned by James River and used exclusively in connection with the Business and
located in the State of California (the "California Assets"). James River shall
not transfer to the James River California Sub, or permit the James River
California Sub to incur or assume, any liabilities except for liabilities that
would be Assumed Liabilities hereunder had the James River California Sub not
been created. If James River determines to establish the James River California
Sub under this
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Section, James River shall cause the contribution of the California Assets to
the James River California Sub immediately prior to Closing.
7.21 SECTION 338(H)(10) ELECTION. The provisions of this Section
shall only apply if James River determines to form the James River California
Sub.
(a) Buyer and James River agree to make timely, effective and
irrevocable Section 338(h)(10) Elections with respect to the James River
California Sub as set forth in this Agreement, as well as any Section
338(h)(10) Elections (or corresponding or similar elections) for state or local
purposes, and to file such elections in accordance with applicable regulations.
The provisions of this Agreement shall apply to any such elections that Buyer
makes for state or local tax purposes.
(b) James River shall file a consolidated federal income tax
return with the James River California Sub for the tax year beginning on
January 1, 1996 and ending on and including the date of Closing. James River is
eligible to make an election under Section 338(h)(10) of the Internal Revenue
Code (and any comparable election under state or local tax law) with respect to
the James River California Sub. Buyer and James River shall make or cause to be
made the Section 338(h)(10) Elections (and any comparable election under state
or local tax law) and shall take no position contrary thereto unless required
to do so pursuant to a final determination by any taxing authority or judicial
proceeding.
(c) James River shall be responsible for preparing and filing
all Section 338 Forms in accordance with the terms of this Agreement. James
River shall furnish copies of the Section 338 Forms to Buyer for Buyer's
approval at least 25 business days before the date such Section 338 Forms are
required to be filed. Buyer shall execute and deliver to James River such
documents or forms as James River reasonably request to complete the Section
338 Forms, properly and in a timely fashion.
(d) Buyer and James River agree that the deemed sale price of
the Assets determined in accordance with Treasury Regulation Section
1.338(h)(10)-1(f) will be determined within 120 days after Closing or such
other time period as determined pursuant to Section 7.22(c) and the parties
will file the forms required under the Internal Revenue Code and the
regulations thereunder in a manner substantially consistent with the allocation
of values pursuant to such Section.
7.22 TAX MATTERS. (a) Any agreement between James River and the
Stock Companies regarding the allocation or payment of taxes or amounts in
lieu of taxes shall be deemed terminated at and as of the Closing.
(b) Buyer will be responsible for the preparation and filing of
all federal, state and local franchise, property, payroll, and other non-income
tax returns, and
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all income tax returns of the Stock Companies (other than the James River
California Sub), arising with respect to the operation of the Business and the
ownership of the Assets and the Stock Companies (other than the James River
California Sub), for all periods as to which such tax returns are due after the
date of Closing. Buyer will make all payments required with respect to any such
tax returns.
(c) James River and Buyer shall cooperate in the preparation of
a joint schedule (the "Allocation Schedule"), allocating the Purchase Price
(including, for purposes of this Section, any other consideration paid by Buyer
and any Assumed Liabilities), among the Assets. James River and Buyer each
agrees to file Internal Revenue Service Form 8594 and any required attachments
thereto, together with all federal, state, local, and foreign tax returns, in
accordance with the Allocation Schedule. James River and Buyer each agrees to
provide the other promptly with any other information required to complete the
Allocation Schedule. If, however, James River and Buyer are unable to complete
such schedule within 120 days following the Closing, or by such later date as
agreed to in writing by the parties, each of James River and Buyer may file
Form 8594, and any federal, state, local, and foreign tax returns, allocating
the Purchase Price in the manner each believes appropriate, provided such
allocation is reasonable and in accordance with Section 1060 of the Internal
Revenue Code and the regulations thereunder.
7.23 MEXICAN REVOLVING LOAN. At Closing, Buyer shall assume all
rights, interests, liabilities and obligations of any Person within the JR
Group (other than the Stock Companies) with respect to the Mexican Revolving
Loan.
7.24 ACCESS TO ASSETS AND BUSINESS EMPLOYEES. From the date hereof
until Closing or the earlier termination or expiration of this Agreement, James
River shall provide Buyer, Buyer's accountants, representatives, and
prospective lenders, with reasonable opportunities to further investigate the
Underlying Assets and interview Business Employees during normal business hours
upon reasonable prior notice from Buyer, for purposes, including the
preparation of audited financial statements of the Business and lenders' due
diligence, provided that no such investigations or interviews shall
unreasonably interfere with the operation of the Business or James River's
other business.
7.25 SAN LEANDRO PROPERTY. James River will grant at Closing to
Buyer a perpetual non-exclusive easement for ingress and egress to the San
Leandro Plant Site approximately over the road leading to the gate as currently
used across the 1.8 acre tract listed as an Excluded Asset pursuant to Schedule
2.2, the terms of which shall be reasonably satisfactory to Buyer.
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ARTICLE VIII
BUSINESS EMPLOYEE AND EMPLOYEE BENEFIT MATTERS
8.1 BUSINESS EMPLOYEES. For purposes of this Article VIII,
"Business Employees" are hereby defined as follows:
(a) all persons employed by James River or any of its
Affiliates in the Business immediately before Closing;
(b) all employees of James River or any of its Affiliates
who are absent from work with the Business on account of sickness or leave of
absence at Closing and who are reasonably expected to return to active
employment within 90 days following the date such employee was first absent
from employment, or for whom an obligation to rehire exists under a collective
bargaining agreement assumed by the Buyer (as described in Section 8.6(a)); and
(c) all employees of James River or any of its Affiliates
who are not employed in the Business immediately before the Closing but who,
in the ordinary course of business, or if not in the ordinary course of
business, with the consent of Buyer and subject to any restrictions on
solicitation of employees specified herein or in the Related Agreements,
become employees of Buyer at or before the Closing or who become employees of
Buyer within 60 days after the Closing.
After the Closing, James River shall not be responsible for wages,
salaries and other employee benefits for Business Employees for service of such
Business Employees with the Buyer after the Closing. For purposes of this
Article VIII, all persons described above who have been or will be compensated
on an hourly basis or who have been or are subject to a collective bargaining
agreement shall be referred to as "Hourly Business Employees," and all persons
described above who have been or will be compensated on a salaried basis shall
be referred to as "Salaried Business Employees." Before the Closing, James
River will provide Buyer with a preliminary list of Business Employees, and
James River and Buyer will agree on a final list of Business Employees within
90 days after the Closing.
8.2 SALARIED BUSINESS EMPLOYEE EMPLOYMENT AND EMPLOYEE BENEFITS. (a)
Buyer shall offer employment, effective at Closing (or, in the case of any
Salaried Business Employee specified in Section 8.1(c), effective as of the
date of hiring), to each of the Salaried Business Employees described in
Sections 8.1(a), 8.1(b) and 8.1(c) at compensation rates that are initially
equal to those provided by James River and its Affiliates immediately before
the Closing.
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(b) Buyer shall treat service of each Salaried Business
Employee with James River, its Affiliates and its predecessor companies before
the Closing as if such service had been with Buyer for purposes of determining
eligibility to participate, eligibility for benefits, benefit calculations,
benefit forms and vesting under Buyer's employee benefit plans (within the
meaning of Section 3(3) of ERISA) other than Buyer's retiree medical plan and
Buyer's retiree group life insurance plan.
8.3 HOURLY BUSINESS EMPLOYEE EMPLOYMENT AND EMPLOYEE BENEFITS. (a)
Buyer shall offer employment, effective at Closing (or, in the case of any
Hourly Business Employee specified in Section 8.1(c), effective as of the date
of hiring), to each of the Hourly Business Employees described in Sections
8.1(a), 8.1(b) and 8.1(c) at compensation rates that initially are the same as
those provided by James River and its Affiliates immediately before the
Closing.
(b) Buyer shall provide to Hourly Business Employees who are
covered under the Assumed Collective Bargaining Agreements (as hereinafter
defined) in effect as of the date of Closing and set forth on Schedule 8.6(a),
such compensation and benefits as are from time to time required by such
collective bargaining agreements.
(c) Buyer shall treat service of each Hourly Business Employee
with James River, its Affiliates and predecessor companies before the Closing
as if such service had been with Buyer for purposes of determining eligibility
to participate, eligibility for benefits, benefit calculations, benefit forms
and vesting under Buyer's employee benefit plans (within the meaning of Section
3(3) of ERISA) other than Buyer's retiree medical plan and Buyer's retiree
group life insurance plan.
8.4 SEVERANCE BENEFITS. (a) As of Closing, Buyer shall establish a
severance plan or amend an existing severance plan (the "Buyer's Severance
Plan") which shall provide fifteen weeks of severance benefits to any Business
Employee who is terminated by Buyer at any time during the twelve-month period
ending on the first anniversary of the Closing. Buyer shall maintain the
Buyer's Severance Plan for the twelve-month period ending on the first
anniversary of the Closing. In the case of a Salaried Business Employee,
severance benefits under Buyer's Severance Plan shall be computed based on the
greater of (i) the Salaried Business Employee's weekly salary as of the date on
which he was hired by Buyer, or (ii) his weekly salary immediately preceding
his termination of employment. In the case of an Hourly Business Employee,
benefits under the Buyer's Severance Plan shall be computed based on the
greater of (i) the Hourly Business Employee's regular weekly compensation as of
the date on which he was hired by Buyer, or (ii) his regular weekly
compensation immediately preceding his termination of employment.
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(b) If James River or any Person within the JR Group is
required to pay severance benefits or similar payments to a Business Employee
as a result of the Business Employee's failure to accept employment with the
Buyer where the employment offered by Buyer requires relocation within the
meaning of James River's applicable salary or other compensation continuation
plan or, as a result of the Buyer's failure to offer employment to such
Business Employee in accordance with the requirements of Section 8.2 or 8.3 (as
applicable), Buyer shall reimburse James River for up to fifteen times the
weekly salary or regular weekly compensation of such Business Employee
immediately prior to Closing of the severance benefits or similar payments that
are payable to such Business Employee and if such Business Employee is hired by
Buyer during the twelve-month period ending on the first anniversary of the
Closing, Buyer shall reimburse James River for the entire amount of the
severance benefits or similar payments that are payable by James River to such
Business Employee. Buyer shall make such reimbursement within 10 days of
receipt of notice of payment by James River.
8.5 ASSUMPTION OF LIABILITIES. Except as specifically provided
otherwise in this Article VIII and Section 2.3(b), at Closing, Buyer shall
assume all employee-related liabilities and obligations that are payable at or
after the Closing with respect to Business Employees and their beneficiaries
and dependents, without regard to when such liabilities and obligations arose;
provided, however, that Buyer, except as specifically provided otherwise to
this Article VIII, shall not assume any liabilities or obligations that are
payable prior to, at or after Closing with respect to any Employee Plan
identified in Section 5.16(a) or with respect to any employee benefit plans
that are maintained by James River or its Affiliates.
8.6 COLLECTIVE BARGAINING AGREEMENTS AND MULTIEMPLOYER PLANS. (a) At
Closing, Buyer shall adopt and assume the collective bargaining agreements
listed on Schedule 8.6(a) (the "Assumed Collective Bargaining Agreements"). At
and after the Closing, any obligations that may be payable under the Assumed
Collective Bargaining Agreements, with respect to Hourly Business Employees,
regardless of whether such obligations relate to services performed before or
after the Closing, shall be the sole responsibility of Buyer.
(b) The Buyer shall bargain in good faith with respect to
Hourly Business Employees who are covered at Closing under the collective
bargaining agreements listed on Schedule 8.6(b) (the "Unassumed Collective
Bargaining Agreements").
(c) With respect to each multiemployer plan (as defined in
Section 4001(a)(3) of ERISA) that is listed on Schedule 8.6(c) and that covers
Hourly Business
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Employees covered under an Unassumed Collective Bargaining Agreement, James
River and Buyer agree as follows, in accordance with the provisions of Section
4204 of ERISA:
(i) Buyer hereby assumes, effective at Closing,
the obligation of James River and its Affiliates to contribute to each such
multiemployer plan for such Hourly Business Employees.
(ii) Buyer shall provide to each such multiemployer
plan the bond or escrow amount described in Section 4204(a)(1)(B) of ERISA,
unless the bond or escrow amount is waived by the PBGC.
(iii) The parties agree that, unless the PBGC waives
the requirements of Section 4204(a)(1)(C) of ERISA, if Buyer withdraws from any
such multiemployer plan in a withdrawal described in Section 4204(a)(1)(C) of
ERISA with respect to the Business during the first five plan years beginning
after Closing and does not pay its liability to the multiemployer plan on
account of such withdrawal, James River shall be secondarily liable to the
multiemployer plan for any withdrawal liability that James River or its
Affiliates would have had to the plan with respect to the Hourly Business
Employees in the absence of Section 4204(a) of ERISA, to the extent required by
Section 4204 of ERISA. Notwithstanding the provisions of the preceding sentence
and Section 4204 of ERISA, it is hereby expressly agreed that if James River or
an Affiliate incurs any secondary withdrawal liability under the preceding
sentence, Buyer shall indemnify James River and its Affiliates and hold them
harmless from any and all Losses incurred by James or its Affiliate by reason
of such secondary liability, except as provided in Section 8.6(e).
(d) As soon as is practicable after Closing, James River and
Buyer shall request from the PBGC an exemption from the requirements of Section
4204(a)(1)(B) and 4204(a)(1)(C) of ERISA.
(e) With respect to all multiemployer plans listed in Schedule
8.6(c) for which a withdrawal liability under Title IV of ERISA is incurred
with respect to the Hourly Business Employees before Buyer becomes formally a
party to or otherwise formally becomes bound by a collective bargaining
agreement between Buyer and the Hourly Business Employees covered by such
multiemployer plan requiring Buyer to contribute to such multiemployer plan,
James River and Buyer each shall be liable for 50 percent of the total amount
of such withdrawal liability up to $2,000,000 of withdrawal liability
(collectively for all such multiemployer plans) and James River shall be liable
for 100 percent of such withdrawal liability in excess of $2,000,000
(collectively for all such multiemployer plans). With respect to any
multiemployer plan listed in Schedule 8.6(c)
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for which a withdrawal liability under Title IV of ERISA is incurred with
respect to the Hourly Business Employees after Buyer becomes formally a party to
or otherwise formally becomes bound by a collective bargaining agreement between
Buyer and the Hourly Business Employees covered by such multiemployer plan that
requires Buyer to contribute to such multiemployer plan, Buyer shall be liable
for the total amount of such withdrawal liability. To the extent that either
party shall make a payment of withdrawal liability in excess of its liability
under the provisions of this Section 8.6(e), the responsible party shall make
reimbursement to the paying party within 10 days of receipt of notice of payment
of such withdrawal liability.
8.7 PENSION PLANS FOR HOURLY BUSINESS EMPLOYEES. Buyer shall not
assume any of James River's rights and obligations with respect to each plan
listed on Schedule 8.7(a).
8.8 PENSION PLAN FOR SALARIED BUSINESS EMPLOYEES. Buyer shall not
assume any of James River's rights and obligations with respect to the James
River Corporation of Virginia Retirement Plan for Salaried and Other
Non-Bargaining Unit Employees.
8.9 401(K) PLAN. (a) As soon as practicable before the Closing,
Buyer shall establish a defined contribution plan and trust (or amend an
existing defined contribution plan) for Business Employees, which shall be
generally comparable to James River's StockPlus Plan (as defined below) and
shall be qualified under Sections 401 and 501 of the Internal Revenue Code and
which shall provide for salary reduction contributions pursuant to Section
401(k) of the Internal Revenue Code ("Buyer's 401(k) Plan"). Buyer's 401(k) Plan
shall provide that each Business Employee shall be given credit under Buyer's
401(k) Plan, for purposes of determining eligibility to participate, eligibility
for benefits, benefit calculations, benefit forms and vesting, for the
Employee's service with James River, its Affiliates and its predecessor
companies, to the extent that James River's StockPlus Plan (as defined below)
gave credit for such service. If the Buyer amends one or more existing defined
contribution plans, the Buyer shall ensure that all "section 411(d)(6) protected
benefits" (as defined in Treasury Regulation 1.411(d)-4) provided by the James
River StockPlus Plan are preserved in the amended existing defined contribution
plan. Business Employees shall not accrue additional benefits after the Closing
under defined contribution plans maintained by James River or its Affiliates.
(b) Assets of the James River Corporation of Virginia StockPlus
Investment Plan (the "StockPlus Plan") equal to the account balances of the
Business Employees under the StockPlus Plan shall be transferred to Buyer's
401(k) Plan as soon as practicable after the Closing. If practicable, the
transfer shall be made as of the last day of the first calendar quarter ending
after the Closing. The transfer shall be made in cash.
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Any outstanding plan loans to Business Employees shall be transferred with the
underlying accounts. The account balances of the Business Employees shall be
valued as of the date on which the transfer is made. The account balances of
Business Employees in the StockPlus Plan shall share in the earnings,
appreciation and depreciation of the investment funds in which the accounts are
invested for the period between the Closing and the date on which the transfer
is made.
(c) Any benefits that are payable to Business Employees from
the StockPlus Plan after the Closing and before assets are transferred shall be
paid from the StockPlus Plan in the ordinary course. The amount to be
transferred to Buyer's 401(k) Plan shall be reduced by the amount of such
payments.
(d) The account balances to be credited under Buyer's 401(k)
Plan for Business Employees shall not be less than the account balances of the
Business Employees under the StockPlus Plan as of the date on which the
transfer is made. Effective on the date of the transfer of StockPlus Plan
assets, (i) Buyer's 401(k) Plan shall assume all liabilities in connection with
the account balances of Business Employees under the StockPlus Plan, and (ii)
James River, its Affiliates and the StockPlus Plan shall have no further
liability with respect to the account balances of Business Employees. James
River and its Affiliates shall have no liability with respect to Buyer's 401(k)
Plan.
(e) Buyer shall request that the Internal Revenue Service issue
a favorable determination letter with respect to the qualification under
Sections 401 and 501 of the Internal Revenue Code of Buyer's 401(k) Plan and
the related trust. Buyer shall make such changes to Buyer's 401(k) Plan as may
be required by the Internal Revenue Service in order for the Internal Revenue
Service to issue a favorable determination letter. Buyer shall provide James
River with a copy of the determination letter received from the Internal
Revenue Service with respect to Buyer's 401(k) Plan as soon as the
determination letter is received.
8.10 WORKER'S COMPENSATION. At Closing, Buyer shall assume liability
for all claims under worker's compensation laws that are payable at or after
the Closing with respect to Business Employees, without regard to when the
liabilities arose.
8.11 WELFARE BENEFIT PLANS. (a) Buyer shall provide Business
Employees with credit during the current plan year under Buyer's health
benefit plans for payments made by Business Employees under James River's
health benefit plans for purposes of determining deductibles and out-of-pocket
expenses under Buyer's health benefit plans.
(b) Buyer shall not impose on Business Employees pre-existing
condition provisions, proof of insurability requirements, or any similar
conditions or requirements that would delay commencement of Business Employees'
participation in, or
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limit Business Employees' level of coverage under, any of Buyer's welfare
benefit plans (within the meaning of Section 3(1) of ERISA).
(c) Buyer shall be responsible for health care continuation
obligations under Section 4980B of the Internal Revenue Code and Section 601
through 608 of ERISA ("COBRA") for those Business Employees identified in
Section 8.1(a), 8.1(b), and 8.1(c) who actually become employees of Buyer.
James River shall remain responsible for health care continuation obligations
under COBRA for all other Business Employees.
8.12 VACATION PAY. Buyer shall assume liability for all unpaid
vacation pay banked or accrued by Business Employees prior to the Closing.
After the Closing, James River shall have no liability for vacation pay for
Business Employees.
8.13 ADMINISTRATION. James River shall provide Buyer with transition
services to administer the various Buyer plans, as provided in the Transition
Services Agreement referred to in Section 4.1. Buyer and James River shall each
make its appropriate employees and data regarding employee benefit coverage
available to the other at such reasonable times as may be necessary for the
proper administration by the other of any and all matters relating to employee
benefits and worker's compensation claims affecting its employees.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject, to the extent not waived, to the satisfaction
of each of the following conditions before or at the Closing:
9.1 REPRESENTATIONS AND WARRANTIES. Except for changes contemplated
by this Agreement, the representations and warranties of James River contained
in this Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing, subject to changes made to the
Schedules attached hereto as permitted by this Agreement.
9.2 PERFORMANCE OF THIS AGREEMENT. James River shall have performed
all obligations and complied with all conditions required by this Agreement to
be performed or complied with by it before or at the Closing, to the extent not
waived.
9.3 PROCEEDINGS. All corporate and other proceedings to be taken by
James River in connection with the transactions contemplated hereby shall have
been completed, all such proceedings and all documents incident thereto shall
be reasonably satisfactory in
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substance and form to Buyer and Buyer shall have received all such counterpart
originals or certified or other copies of such documents as Buyer may
reasonably request.
9.4 CONSENTS AND APPROVALS. All consents, authorizations, orders or
approvals of any Authority, consents of third parties necessary to assign to
Buyer the Listed Contracts and Lessee Leases on Schedule 9.4, and subject to
the provisions of Section 7.11, all consents, authorizations, orders or
approvals of other individuals or business entities which James River is
required to obtain in order for James River to be able to transfer the Assets
to Buyer and for Buyer to conduct the Business as it is presently conducted
shall have been obtained by James River and Buyer and all waiting periods
specified by law with respect thereto shall have passed.
9.5 INJUNCTION, LITIGATION, ETC. No order of any court or
administrative agency shall be in effect which restrains or prohibits the
consummation of the transactions contemplated hereby, and there shall not have
been threatened, nor shall there be pending, any action or proceeding by or
before any Authority which is likely to prohibit, delay or successfully
challenge the validity of any of the transactions contemplated by this
Agreement.
9.6 LEGISLATION. No statute, rule or regulation shall have been
enacted which prohibits or restricts the consummation of the transactions
contemplated hereby.
9.7 OPINION OF COUNSEL FOR JAMES RIVER. Buyer shall have received an
opinion from McGuire, Woods, Battle & Boothe, L.L.P., in form and substance
reasonably satisfactory to Buyer and its counsel.
9.8 CASUALTY LOSS. There shall not have occurred since the date of
this Agreement with respect to a Plant Site a casualty loss that is reasonably
expected to result in the loss of revenues of the Business, taken as a whole,
of $10,000,000 or more per year.
9.9 MATERIAL ADVERSE CHANGE. There shall not have occurred since
December 31, 1995, any event which has caused or which could reasonably be
expected to cause in the future a material adverse change in the Assets or the
Business.
9.10 RELATED AGREEMENTS. Each Person of the JR Group shall have
executed and delivered each of the Related Agreements to which it is a party.
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ARTICLE X
CONDITIONS TO OBLIGATIONS OF JAMES RIVER
The obligations of James River to consummate the transactions
contemplated by this Agreement shall be subject, to the extent not waived, to
the satisfaction of each of the following conditions before or at Closing:
10.1 REPRESENTATIONS AND WARRANTIES. Except for changes contemplated
by this Agreement, the representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement, and as of the Closing, subject to changes made to the Schedules
attached hereto as permitted by this Agreement.
10.2 PERFORMANCE OF THIS AGREEMENT. Buyer shall have performed all
obligations and complied with all conditions required by this Agreement to be
performed or complied with by it before or at the Closing, to the extent not
waived.
10.3 PROCEEDINGS. All corporate and other proceedings to be taken by
Buyer in connection with the transactions contemplated hereby shall have been
completed, all such proceedings and all documents incident thereto shall be
reasonably satisfactory in substance and form to James River, and James River
shall have received all such counterpart originals or other copies of such
documents as James River may reasonably request.
10.4 CONSENTS AND APPROVALS. All consents, authorizations, orders or
approvals of any Authority and of individuals or business entities which Buyer
is required to obtain in order to consummate the transactions contemplated by
this Agreement shall have been obtained by Buyer and all waiting periods
specified by law with respect thereto shall have passed.
10.5 INJUNCTION, LITIGATION, ETC. No order of any court or
administrative agency shall be in effect which restrains or prohibits the
consummation of the transactions contemplated hereby or which would limit or
affect James River's right to transfer the Assets to Buyer or Buyer's ability
to consummate the transactions contemplated hereunder and there shall not have
been threatened, nor shall there be pending, any action or proceeding by or
before any Authority which is likely to prohibit, delay or successfully
challenge the validity of any of the transactions contemplated by this
Agreement.
10.6 LEGISLATION. No statute, rule or regulation shall have been
enacted which prohibits or restricts the consummation of the transactions
contemplated hereby.
10.7 OPINION OF COUNSEL FOR BUYER. James River shall have received an
opinion in form and substance reasonably satisfactory to James River and its
counsel.
10.8 RELATED AGREEMENTS. Buyer shall have executed and delivered
each of the Related Agreements to which it is to be a named party.
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ARTICLE XI
DELIVERIES, ETC., IN CONNECTION WITH CLOSING
11.1 TIME AND PLACE OF CLOSING. The closing (the "Closing") shall
occur on July 10, 1996 at the offices of McGuire, Woods, Battle & Boothe,
L.L.P. in Richmond, Virginia or at the request of either party, such other
date and place as the parties shall agree. If the Closing takes place, the
Closing and all of the transactions contemplated by this Agreement shall be
deemed to have occurred simultaneously and become effective as of 12:01 a.m.
on the date of Closing.
11.2 DELIVERIES BY JAMES RIVER. At or before the Closing, James
River shall deliver to Buyer, as applicable, the following:
(a) duly executed deeds (which shall provide a warranty against
grantor's acts and the claims of all persons claiming by, through or under the
grantor) from the applicable member of the JR Group in recordable form which
convey to Buyer title to the Real Property, subject to Permitted Exceptions and
subject to the exceptions and exclusions contained in the Title Commitment as
of the Closing, other than any Title Defect which James River has elected to
cure or otherwise delete pursuant to Section 7.16(c)(i). Seller will provide to
LTIC (i) customary good standing certificates and corporate authorizations,
(ii) owner's affidavits acceptable to LTIC to remove any exception for (A)
mechanics' or materialmens' liens and (B) rights of parties in possession, and
(iii) a gap indemnity acceptable to LTIC for insuring over the "gap" (i.e. the
time period since the effective date of the title company's last checkdown of
title);
(b) a bill of sale in the form attached hereto as Exhibit "K"
and such other document or documents (suitable for filing, registration or
recording, if applicable) as are necessary to transfer to Buyer the Assets
other than the Real Property, which transfer documents shall be without
recourse and shall contain no representations or warranties;
(c) evidence that all of the proceedings contemplated by
Section 9.3 have been completed;
(d) copies of any consents obtained as contemplated by
Section 9.4;
(e) certificates from the State Corporation Commission of
Virginia evidencing the good standing of James River in the Commonwealth of
Virginia as of a recent date;
(f) certificates from the secretary of state of (i) each state
in which any of the Real Property or Leased Premises is located and (ii) the
state of incorporation of the
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Person of the JR Group conveying such Real Property or Leased Premises, with
respect to the good standing of the Person of the JR Group conveying such Real
Property or Leased Premises;
(g) customary assurances with respect to the corporate
existence of the Stock Companies;
(h) the certificates representing all of the issued and
outstanding shares of common stock of the Stock Companies, duly registered in
the name of Buyer or duly endorsed or with stock powers attached thereto duly
signed for transfer;
(i) each of the Related Agreements executed by the Person
of the JR Group that is a party thereto;
(j) the opinion of counsel required by Section 9.7; and
(k) such additional documents as Buyer may reasonably
request.
11.3 Deliveries by Buyer. At or before the Closing, Buyer shall
deliver to James River, as applicable, the following:
(a) the Purchase Price as adjusted pursuant to Section
3.2(b);
(b) the payments, if any, pursuant to Sections 7.18 and
7.19;
(c) the duly executed assumption of the Assumed Liabilities
in the form of the Instrument of Assumption of Liabilities attached hereto as
Exhibit "L";
(d) evidence that all of the proceedings contemplated by
Section 10.3 have been completed;
(e) copies of any consents obtained as contemplated by
Section 10.4;
(f) certificates from the Secretary of State of the State
of Georgia as to the good standing of Buyer in Georgia as of the most recent
date obtainable;
(g) each of the Related Agreements duly executed by the Buyer;
(h) the opinion of counsel required by Section 10.7; and
(i) such additional documents as James River may reasonably
request.
11.4 DELIVERIES OF RELATED AGREEMENTS. At or before the Closing, each
of the parties to each Related Agreement shall deliver an executed copy of such
Agreement to the other parties thereto.
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ARTICLE XII
INDEMNIFICATION
12.1 INDEMNIFICATION BY JAMES RIVER. (a) Subject to the limitations
contained in this Article XII, James River shall indemnify and hold Buyer
harmless against all Losses arising out of:
(i) any breach of a representation or warranty
made by James River in this Agreement, other than the representations and
warranties contained in Section 5.11(a), which representations and warranties
shall not survive Closing and shall be merged into the deeds delivered by James
River at Closing;
(ii) the breach of any agreement of James River
contained in this Agreement (but not the Related Agreements, each of which
shall stand on its own); or
(iii) any liability or obligation of any Person
within the JR Group relating to the Business, or the Assets, and not expressly
assumed by Buyer pursuant to this Agreement;
(b) Notwithstanding the foregoing, in the case of Losses
incurred as a result of the events described in Section 12.1(a)(i), James River
shall not be liable for indemnification hereunder unless and until the
aggregate amount of such Losses exceeds $4,500,000 and thereafter its liability
for such Losses shall be limited to the amount thereof in excess of $4,500,000.
12.2 INDEMNIFICATION BY BUYER. (a) Subject to the limitations
contained in this Article XII, Buyer shall indemnify and hold James River
harmless against all Losses arising out of:
(i) any breach of a representation or warranty
made by Buyer in this Agreement;
(ii) the breach of any agreement of Buyer contained
in this Agreement (but not the Related Agreements, each of which shall stand
on its own); or
(iii) any Assumed Liability or the failure by Buyer
to discharge any Assumed Liability.
(b) Notwithstanding the foregoing, in the case of Losses
incurred as a result of the events described in Section 12.2(a)(i), Buyer shall
not be liable for indemnification hereunder unless and until the aggregate
amount of such Losses exceeds $4,500,000, and thereafter its liability for such
Losses shall be limited to the amount thereof in excess of $4,500,000.
12.3 SURVIVAL DATE. (a) The indemnification obligations of each party
(the "Indemnitor") obligated to provide indemnification to the other (the
"Indemnitee") under Section 12.1(a)(i) or Section 12.2(a)(i) shall lapse and
become of no further force and
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effect with respect to all claims not made by Indemnitee's delivery to the
Indemnitor of written notice containing details reasonably sufficient to
disclose to Indemnitor the nature and scope of the claim by 12:01 a.m. on
January 1, 1998; provided, however, that (i) claims with respect to the
representations and warranties contained in Section 5.11(c), such claim shall
have been made on or prior to the third anniversary date of this Agreement;
(ii) with respect to the representations and warranties related to tax matters
and contained in Section 5.26, such claim shall have been made prior to the
running of the applicable statutes of limitations; and (iii) with respect to
the representations and warranties related to environmental matters and
contained in Section 5.7, such claim shall have been made on or prior to the
fifth anniversary date of this Agreement. Notwithstanding anything contained
herein to the contrary, no indemnified party shall be entitled to
indemnification with respect to any claim under Section 12.1(a)(i) or
12.2(a)(i), if such indemnified party has actual knowledge prior to Closing of
any circumstance constituting a breach or failure of any such representation or
warranty resulting in such claim.
(b) Any indemnification obligations arising under Section
12.1(a)(ii) or Section 12.2(a)(ii) shall lapse and become of no further force
and effect with respect to all claims not made by Indemnitee's delivery of
written notice containing details reasonably sufficient to disclose to
Indemnitor the nature and scope of the claim on or prior to the third
anniversary date of this Agreement.
12.4 JAMES RIVER INDEMNIFICATION FOR CERTAIN ENVIRONMENTAL MATTERS.
Any Loss to the extent attributable to conditions existing at or acts or
omissions on or before the Closing with respect to any Environmental Condition
of any Plant Site (including Losses arising as a result of any contamination or
pollution of property near a Plant Site that results from contamination or
pollution of a Plant Site), that, as of Closing, constitutes a violation of, or
otherwise gives rise to any liability under, any Environmental Law, but
excluding any such Loss to the extent arising from any change in law after the
Closing, is an "Environmental Loss." The date that a requirement of remediation
or other action, or a claim for damages, penalties, fines or other similar
costs or expenses or for equitable relief is first made by an Authority, or
demanded by a potential plaintiff with respect to any such Environmental
Condition, or the earlier date on which Buyer shall reasonably determine that
any such requirement or claim is reasonably likely at any time with respect to
such Environmental Condition, or with respect to matters disclosed on Schedule
5.7, the date of Closing, is the "Environmental Accrual Date" with respect to
such Environmental Condition. Notwithstanding any provision of this Agreement
to the contrary, (i) Buyer shall not be entitled to any indemnification or
reimbursement from
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James River with respect to any Environmental Loss except to the extent that
such Environmental Loss arises out of an Environmental Condition having an
Environmental Accrual Date before the fifth anniversary of Closing and such
Environmental Losses, in the aggregate, exceed the amount reflected as a
reserve or an accrual in respect of environmental remediation, monitoring, or
investigation costs and expenses on the Final Audited Closing Balance Sheet
(the "Environmental Reserve"); (ii) James River shall indemnify Buyer for
Environmental Losses arising from items having an Environmental Accrual Date
before the fifth anniversary of Closing in an amount equal to 75% of the excess
of (A) the lesser of the amount of such Environmental Losses and the amount of
$3,000,000, over (B) the amount of the Environmental Reserve; (iii) James River
shall indemnify Buyer for Environmental Losses arising from items having an
Environmental Accrual Date before the fifth anniversary of Closing in an amount
equal to 50% of the excess of (C) the lesser of the amount of such
Environmental Losses and the amount of $10,000,000, over (D) the amount of
$3,000,000; and (iv) James River shall indemnify Buyer for Environmental Losses
arising from items having an Environmental Accrual Date before the fifth
anniversary of Closing in an amount equal to (E) the excess of the amount of
such Environmental Losses over the amount of $10,000,000, multiplied by (F) the
Applicable Fraction, as defined below relating to any event or condition giving
rise to the Environmental Loss in effect as of the date Buyer first becomes
entitled to indemnification hereunder from James River with respect to such
event or condition. The "Applicable Fraction" shall be 90% for the period
between Closing and the first anniversary of Closing, 80% for events or
conditions with an Environmental Accrual Date during the period between the
first anniversary of Closing and the second anniversary of Closing, 70% for
events or conditions with an Environmental Accrual Date during the period
between the second anniversary of Closing and the third anniversary of Closing,
60% for events or conditions with an Environmental Accrual Date during the
period between the third anniversary of Closing and the fourth anniversary of
Closing, and 50% for events or conditions with an Environmental Accrual Date
during the period between the fourth anniversary of Closing and the fifth
anniversary of Closing. The limitations of Section 12.1(b) shall not apply to
any indemnification obligation of James River arising under this Section 12.4,
and any indemnification obligation arising under this Section 12.4 shall be
excluded for all purposes, including the aggregation of Losses, from the
operation of Section 12.1(b).
12.5 DEFINITION OF LOSS. For purposes of this Article XII and Article
VIII, "Losses" shall mean losses, damages, penalties and expenses incurred by
an Indemnitee entitled to indemnification hereunder as a result of a matter
giving rise to a claim for
54
<PAGE> 62
indemnification hereunder, including, without limitation, reasonable expenses
of investigation and reasonable attorneys' fees and expenses incurred in
connection with any action, suit or proceeding ("Legal Action") instituted
against the Indemnitee determined, net of the:
(a) tax savings realized by the Indemnitee in respect of
such matter net of any tax consequences of the indemnity payment;
(b) insurance proceeds to which the Indemnitee is entitled
in respect of such matter; and
(c) indemnity payments to which the Indemnitee is entitled
from parties other than the indemnifying party hereunder in respect of such
matter.
Notwithstanding any provision of this Article XII, any damages
to the extent attributable to a failure to mitigate damages shall not
constitute Losses.
12.6 THIRD PARTY CLAIMS. (a) Each of the parties must follow the
procedures set forth in the following paragraphs of this Section 12.6 in order
to be entitled to indemnification with respect to claims resulting from the
assertion of liability by persons or entities not parties to this Agreement,
including claims by any Authority for penalties, fines and assessments.
(b) The party seeking indemnification shall give prompt
written notice to the party from whom indemnification is sought of any
assertion of liability by a third party which might give rise to a claim by
the indemnified party against the indemnifying party based on the indemnity
agreements contained in this Agreement, stating the nature and basis of the
assertion and the amount thereof, to the extent known.
(c) In the event that any Legal Action is brought against an
indemnified party with respect to which the indemnifying party may have
liability under an indemnity agreement contained in this Agreement, the Legal
Action shall, upon the written agreement of the indemnifying party that it is
obligated to indemnify under such an indemnity agreement, be defended by the
indemnifying party and such defense shall include all appeals or reviews which
counsel for the indemnifying party shall deem appropriate. In any such Legal
Action the indemnified party shall have the right to be represented by advisory
counsel and accountants, at its own expense, and the indemnifying party shall
keep the indemnified party fully informed as to such proceeding at all stages
thereof, whether or not the indemnified party is represented by its own
counsel.
(d) Until the indemnifying party shall have assumed the
defense of any Legal Action, or if the indemnified and indemnifying parties are
both named parties in such Legal Action and the indemnified party shall have
reasonably concluded that there may be defenses available to it that are
materially different from or in addition to the defenses
55
<PAGE> 63
available to the indemnifying party (in which case the indemnifying party shall
not be entitled to assume the defense of such Legal Action, but shall remain
responsible for its obligation as an indemnitor), all legal and other
reasonable expenses incurred by the indemnified party as a result of such Legal
Action shall be borne by the indemnifying party. In such event, the indemnified
party shall make available to the indemnifying party and its attorneys and
accountants, for review and copying, its books and records relating to such
Legal Action and the parties shall render to each other such assistance as may
reasonably be requested to facilitate the proper and adequate defense of any
such Legal Action.
(e) The indemnifying party shall not make any settlement of
any claim without the written consent of the indemnified party, which consent
shall not be unreasonably withheld. Without limiting the generality of the
foregoing, it shall not be deemed unreasonable to withhold consent to a
settlement involving injunctive or other equitable relief against the
indemnified party or its assets, employees, business or methods of doing
business.
(f) The indemnifying party shall be relieved of its obligation
to indemnify the indemnified party to the extent that any failure to give or
delay in giving timely notice as required by this Section 12.6 prejudices the
indemnifying party.
12.7 SUBROGATION RIGHTS; NO DUPLICATION. (a) Any Indemnitor required
to make a payment under this Article XII shall be subrogated, to the extent of
such payment, to the rights of the entity to which such payment has been made
for reimbursement or indemnification against third parties relating to the
claim on which such payment has been based.
(b) Notwithstanding anything in this Article XII to the
contrary, the obligations of each Indemnitor and its Affiliates pursuant to
this Article XII shall be without duplication as between entities to which such
Indemnitor and its Affiliates are required to make payments.
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
13.1 TERMINATION. (a) This Agreement may be terminated at any
time before the Closing.
(i) by mutual written consent of the parties hereto;
56
<PAGE> 64
(ii) by either James River on the one hand, or
Buyer on the other, if there has been a material breach on the part of
the other of a representation, warranty or agreement contained herein,
or in any writing delivered pursuant to the provisions of this
Agreement, which remains uncured; provided, however, that no breach of
representation or warranty shall form the basis of a right to terminate
this Agreement if the party to whom such representation or warranty was
made or its officers, directors or representatives had notice of the
existence of such breach on or before the date of this Agreement;
(iii) by James River or Buyer if the Closing has not
occurred by August 9, 1996, 11:59 p.m. Richmond time; or
(iv) by Buyer pursuant to Section 13.3 below.
13.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 13.1, this Agreement shall become wholly void and of no
further force and effect and there shall be no further liability or obligation
on the part of any party hereto except to pay such expenses as are required of
it and to comply with the confidentiality provisions of Section , and no such
termination shall relieve either party of any liability to the other for any
breach of this Agreement prior to the date of termination.
13.3 AMENDMENT. This Agreement may be amended at any time only by
writing executed by each of the parties hereto. Notwithstanding the foregoing,
James River may unilaterally amend any of the Schedules attached hereto by
giving Buyer written notice thereof, which notice shall refer specifically to
this Section, at any time, but in no event later than five business days prior
to Closing. If Buyer does not approve of any such Schedule amendment, then
Buyer may terminate this Agreement by delivering to James River written notice
of its election to do so within five business days from the date Buyer receives
the notice from James River as provided in this Section, or if such Schedule
amendment is made within five business days prior to Closing, then Buyer may
terminate this Agreement prior to Closing. If Buyer does not terminate this
Agreement within the time specified in this Section, then Buyer shall be deemed
to have accepted each applicable Schedule amendment and waived all rights Buyer
may have against James River (including the rights to claim any breach of any
representation or warranty in this Agreement or to terminate this Agreement)
with respect to all matters that shall have been cured by the Schedule
Amendment. All representations and warranties which are true and correct as
modified shall be deemed true and correct as of the date of this Agreement for
the purposes of Section 9.1 and Section 10.1.
13.4 EXTENSION; WAIVER. At any time before the Closing, any party to
this Agreement which is entitled to the benefits thereof may (i) extend the
time for the
57
<PAGE> 65
performance of any of the obligations of another party hereto, (ii) waive any
misrepresentation (including an omission) or breach of a representation or
warranty of another party hereto, whether contained herein or in any exhibit,
schedule or document delivered pursuant hereto, or (iii) waive compliance of
another party hereto with any of the agreements or conditions contained herein.
Any such extension or waiver shall be valid if set forth in a written
instrument signed by the party or parties giving the extension or waiver.
ARTICLE XIV
GENERAL PROVISIONS
14.1 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing (including telefax or similar writing)
and shall be given,
(a) if to James River, to:
James River Corporation of Virginia
120 Tredegar Street
Richmond, Virginia 23219
Attention: Stephen E. Hare
Telefax: (804) 649-4317
with copies to:
James River Corporation of Virginia
120 Tredegar Street
Richmond, Virginia 23219
Attention: Clifford A. Cutchins IV, Esquire
Telefax: (804) 649-4317
and:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
901 E. Cary Street
Richmond, Virginia 23219
Attention: Marshall H. Earl, Jr., Esquire
Telefax: (804) 775-1061
(b) if to Buyer, to:
Printpack, Inc.
4335 Wendell Drive S.W.
58
<PAGE> 66
Atlanta, Georgia 30336-1622
Attention: Dennis M. Love, President
Telefax: __________________
with a copy to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: William H. Avery, Esquire
Telefax: (404) 881-7777
or (c) in either case, to such other person or to such other address or telefax
number as the party to whom notice is to be given may have furnished the other
parties in writing by like notice. If mailed, any such communication shall be
deemed to have been given on the third business day following the day on which
the communication is posted by registered or certified mail (return receipt
requested). If given by any other means it shall be deemed to have been given
when delivered to the address specified in this Section 14.1.
14.2 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement. Unless the context otherwise requires, terms (including defined
terms) used in the plural include the singular, and vice versa.
14.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.4 MISCELLANEOUS. This Agreement (i) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof; (ii) is not intended to and shall not confer upon any person,
association or entity, other than the parties hereto, any rights or remedies
with respect to the subject matter or any provision hereof; (iii) shall not be
assigned by operation of law or otherwise; and (iv) shall be governed in all
respects by the laws of the Commonwealth of Virginia without regard to its laws
or regulations relating to choice of law.
59
<PAGE> 67
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed by their duly authorized officers.
JAMES RIVER CORPORATION OF
VIRGINIA
By: /s/
----------------------------
Title: Senior Vice President,
Corporate Finance, Chief
Financial Officer
PRINTPACK, INC.
By: /s/
----------------------------
Title: President
60
<PAGE> 1
Exhibit 2.2
Reorganization Agreement dated as of July 1, 1996 by and among Printpack
Holdings, Inc., Printpack, Inc., Printpack Enterprises, Inc. and Printpack
Illinois, Inc.
<PAGE> 2
<TABLE>
<S> <C> <C>
ARTICLE 1 THE REORGANIZATION 2
1.1 Transfer of Equity Interests in U.K. 2
1.2 Transfer of Printpack Stock to Enterprises 2
1.3 Transfer of Intellectual Property and Empaques Equity
Interest to IHC 2
1.4 Transfer of North American Assets to Printpack 2
1.5 Assumption of Liabilities 2
1.6 Issuance of Enterprises Stock 3
1.7 Transfer of Printpack Intellectual Property and Illinois Assets 3
ARTICLE 2 ADDITIONAL AGREEMENTS 3
2.1 Intercorporate Services Agreement 3
2.2 Tax Allocation Agreement 3
2.3 License Agreement(s) 3
2.4 Transfer Taxes; Other Costs 3
2.5 Resale Restrictions 3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF HOLDINGS 4
3.1 Organization, Power and Authority 5
3.2 Consents and Approvals; No Conflict or Violation 5
3.3 Capital Stock 5
3.4 Governmental Proceedings or Litigation 5
3.5 Investment Intent 5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ENTERPRISES 6
4.1 Organization, Power and Authority 6
4.2 Consent and Approvals; No Conflict or Violation 6
4.3 Capital Stock 6
4.4 North American Assets 6
4.5 Enterprises' Intellectual Property 7
4.6 Title to Empaques Shares 7
4.7 Governmental Proceedings or Litigation 7
4.8 Investment Intent 7
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PRINTPACK 7
5.1 Organization, Power and Authority 7
5.2 Consents and Approvals; No Conflict or Violation 8
5.3 Capital Stock 8
5.4 Title to U.K. Entities Equity Interests 8
5.5 U.K. Entities Receivable 8
5.6 Printpack Intellectual Property; Illinois Assets 8
5.7 Governmental Proceedings or Litigation 9
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF IHC 9
6.1 Organization, Power and Authority 9
6.2 Consents and Approvals; No Conflict or Violation 9
6.3 Capital Stock 9
6.4 Governmental Proceedings or Litigation 9
6.5 Investment Intent 10
ARTICLE 7 CLOSING; CONDITIONS TO CLOSING 10
7.1 Time of Closing 10
7.2 Conditions to Closing 10
7.3 Transactions and Documents at Closing 11
ARTICLE 8 MISCELLANEOUS 12
8.1 Survival 12
8.2 Further Assurances 12
8.3 Amendment and Modification 13
8.4 Waiver of Compliance; Consents 13
8.5 Binding Effect; No Third Party Beneficiaries 13
8.6 Notices 13
8.7 Governing Law 13
8.8 Entire Agreement 13
8.9 Multiple Counterparts 13
8.10 Invalidity, Inconsistency or Conflict 13
8.11 Captions and References 14
8.12 Specific Performance 14
8.13 Assignment of Contracts, Rights, Etc. 14
</TABLE>
<PAGE> 3
REORGANIZATION AGREEMENT
THIS REORGANIZATION AGREEMENT (this "Agreement") is made and entered
into by and among PRINTPACK HOLDINGS, INC., a Delaware corporation
("Holdings"); PRINTPACK, INC., a Georgia corporation ("Printpack"); PRINTPACK
ENTERPRISES, INC., a Georgia corporation ("Enterprises"); and PRINTPACK
ILLINOIS, INC., an Illinois corporation ("IHC") to have effect from the
beginning of the parties' fiscal year 1997.
RECITALS:
Holdings owns approximately 99.7 percent of the outstanding common
stock of Printpack and approximately 90.8 percent of the outstanding common
stock of Enterprises. Printpack owns all of the outstanding common stock of
IHC.
The Boards of Directors of Holdings, Printpack, Enterprises and IHC
deem it advisable and in the best interests of Holdings, Printpack, Enterprises
and IHC and their respective shareholders and stockholders to undertake, among
other things, the following: (i) Printpack will distribute to Holdings
Printpack's interests (both the equity interest and the intercompany account
receivable) in the U.K. Entities (as hereinafter defined); (ii) Holdings will
transfer, convey and contribute to Enterprises all of the shares of Printpack
common stock held by Holdings as contemplated by ss.351 of the Internal Revenue
Code of 1986, as amended (the "Code"); (iii) Enterprises will issue additional
shares of its common stock to Holdings; (iv) Enterprises will transfer, convey
and contribute to IHC, as contemplated by ss. 351 of the Code, all of
Enterprises' intellectual property and Enterprises' one (1) percent equity
interest in Empaques Printpack De Mexico, S.A. De C.V., a Mexican corporation
("Empaques"); (v) Enterprises will transfer, convey and contribute to
Printpack, as contemplated by ss. 351 of the Code, all of Enterprises' North
American Assets (as hereinafter defined); (vi) Printpack will assume all of the
liabilities of Enterprises associated with the North American Assets and the
Enterprises Intellectual Property and issue to Enterprises additional shares of
Printpack's common stock; and (vii) Printpack will transfer, convey and
contribute to IHC, as contemplated by ss. 351 of the Code, Printpack's
intellectual property and the real estate constituting Printpack's Elgin,
Illinois plant and all tangible personal property located at or used in
connection with the operation of such plant.
The parties wish to provide for certain additional matters as described
herein; and
The transactions and additional matters described in this Agreement are
subject to receipt of required consents and approvals and the satisfaction of
certain other conditions, all as described in this Agreement.;
NOW, THEREFORE, in consideration of the foregoing and the mutual
warranties, representations, covenants and agreements set forth herein and
contained in
<PAGE> 4
any agreement or other document executed in connection with this Agreement, the
parties agree as follows:
ARTICLE 1
THE REORGANIZATION
1.1 TRANSFER OF EQUITY INTEREST IN U.K. Entities and Receivable from
U.K. Entities. Subject to the terms and conditions hereof, at Closing (as
hereinafter defined), Printpack agrees to distribute and convey to Holdings,
and Holdings agrees to acquire from Printpack, all right, title and interest of
Printpack in and to: (a) all of the issued and outstanding share capital of
Printpack Holdings, Ltd., organized under the laws of the United Kingdom
("PHL"), and Printpack Europe, Ltd., organized under the laws of the United
Kingdom ("PEL") (PHL and PEL are sometimes referred to collectively as the
"U.K. Entities") owned and held of record by Printpack, which has an estimated
fair value of zero; and (b) all amounts owed to Printpack by the U.K. Entities,
which amounts are reflected on the books and records of Printpack as
intercompany receivables and which have an aggregate face amount equal to
approximately $56,500,000 and an estimated fair value of zero (the "U.K.
Receivables").
1.2 TRANSFER OF PRINTPACK STOCK TO ENTERPRISES. Subject to the terms
and conditions hereof, at Closing, Holdings agrees to assign, transfer, convey,
deliver and contribute to Enterprises as contemplated by ss.351 of the Code,
and Enterprises agrees to acquire from Holdings, all right, title and interest
of Holdings in and to the 3,018,982 shares of the common stock of Printpack
(the "Printpack Common Stock") owned and held of record by Holdings.
1.3 TRANSFER OF INTELLECTUAL PROPERTY AND EMPAQUES EQUITY INTEREST
TO IHC. Subject to the terms and conditions hereof, at Closing, Enterprises
agrees to assign, transfer, convey, deliver and contribute to IHC as
contemplated by ss.351 of the Code, and IHC agrees to acquire from Enterprises:
(i) all right, title and interest of Enterprises in and to all trademarks (both
registered and unregistered), patents, inventions covered by patent
applications, copyrighted works, trade secrets, know-how, confidential
information and other intellectual property owned by Enterprises (collectively,
the "Enterprises Intellectual Property"); and (ii) all right, title and
interest of Enterprises in and to the outstanding equity capital of Empaques
owned and held of record by Enterprises.
1.4 TRANSFER OF NORTH AMERICAN ASSETS TO PRINTPACK. Subject to the
terms and conditions hereof, at Closing, Enterprises agrees to assign,
transfer, convey, deliver and contribute to Printpack as contemplated by ss.351
of the Code, and Printpack agrees to acquire from Enterprises, all right, title
and interest of Enterprises in and to the operating assets of Enterprises
located in the United States, other than the Enterprises Intellectual Property,
(collectively, the "North American Assets").
1.5 ASSUMPTION OF LIABILITIES; Issuance of Printpack Stock. In part
consideration of the transfers and conveyances contemplated hereinabove, at
Closing,
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<PAGE> 5
Printpack agrees to: (a) assume and timely pay all liabilities and perform all
obligations of Enterprises associated with the North American Assets and the
Enterprises Intellectual Property (the "Assumed Liabilities"); and (b) issue to
Enterprises 1,189,850 shares of Printpack common stock.
1.6 ISSUANCE OF ENTERPRISES STOCK. In part consideration of the
transfers and conveyances contemplated hereinabove, at Closing, Enterprises
agrees to issue to Holdings 7,975,499 shares of the no par value per share
common stock of Enterprises (the "Enterprises Common Stock").
1.7 TRANSFER OF PRINTPACK INTELLECTUAL PROPERTY AND ILLINOIS ASSETS.
Subject to the terms and conditions hereof, at Closing, Printpack agrees to
assign, transfer, convey, deliver and contribute to IHC as contemplated by
ss.351 of the Code, and IHC agrees to acquire from Printpack, all right, title
and interest of Printpack in and to all: (i) trademarks (both registered and
unregistered), patents, inventions covered by patent applications, copyrighted
works, trade secrets, know-how, confidential information and other intellectual
property owned by Printpack (collectively, the "Printpack Intellectual
Property"); (ii) the real property constituting Printpack's Elgin, Illinois
plant, together with all tangible personal property and intangible property
located at such plant or used in connection therewith (collectively, the
"Illinois Assets").
ARTICLE 2
ADDITIONAL AGREEMENTS
2.1 INTERCORPORATE SERVICES AGREEMENT. At Closing, Printpack and
IHC shall enter into an Intercorporate Services Agreement in substantially the
form attached hereto as Exhibit 2.1 (the "Services Agreement").
2.2 TAX ALLOCATION AGREEMENT. At Closing, Holdings, Enterprises,
Printpack and IHC shall enter into a Tax Allocation Agreement in substantially
the form attached hereto as Exhibit 2.2 (the "Tax Allocation Agreement").
2.3 LICENSE AGREEMENT(S). At Closing, Printpack, Holdings,
Enterprises, Empaques, Printpack Receivables Funding Corp. and IHC shall enter
into license agreements in substantially the respective forms attached hereto
as Exhibit 2.3 (the "License Agreements").
2.4 TRANSFER TAXES; OTHER COSTS. Printpack shall be responsible
for any documentary transfer taxes and any sales, use or other taxes, other
than income taxes based on a party's income, imposed by reason of the
transactions contemplated hereunder.
2.5 RESALE RESTRICTIONS; Stock Legends. It is understood and
acknowledged that the shares of Printpack common stock and Enterprises common
stock to be issued or conveyed hereunder will not be registered under the
Securities Act of 1933, as amended (the "1933 Act"), the Georgia Securities Act
of 1973, as amended, or the securities or
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<PAGE> 6
blue sky laws of any other state, but will be issued in reliance upon certain
exemptions from registration thereunder, that the statutory basis for such
exemption is dependent upon each party's undertaking to acquire such shares for
purposes of investment only and without the intent of participating directly or
indirectly in a distribution thereof, and that by reason of the exemptions to
be relied upon in connection with their issuance, such shares will not be
freely transferable, any proposed sale or other disposition of such shares may
be prohibited, and any resales or other dispositions will in any event be
subject to significant restrictions. Accordingly, each party acquiring shares
hereunder agrees that it will not dispose of any of any shares so acquired
unless such disposition does not violate the 1933 Act and any applicable state
securities or blue sky laws or regulations, or such shares have been validly
registered under the 1933 Act and any and all applicable state securities or
blue sky laws. Each certificate for shares of Printpack common stock or
Enterprises common stock issued or conveyed hereunder shall bear a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("FEDERAL ACT"), THE
GEORGIA SECURITIES ACT OF 1973, AS AMENDED ("GEORGIA ACT") OR ANY OTHER
STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES HAVE BEEN ISSUED IN
RELIANCE UPON EXEMPTIONS PROVIDED UNDER THE FEDERAL ACT AND UPON THE
EXEMPTION PROVIDED BY SECTION 10-5-9(13) OF THE GEORGIA ACT. THESE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
OFFERED FOR SALE, HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF
(I) AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE SHARES
UNDER THE GEORGIA ACT, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT THE TRANSACTION BY WHICH SUCH SHARES WILL BE OFFERED
FOR SALE, HYPOTHECATED, SOLD OR TRANSFERRED IS EXEMPT UNDER THE GEORGIA
ACT OR IS OTHERWISE IN COMPLIANCE WITH THE GEORGIA ACT, AND (II) AN
EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE SHARES UNDER THE
FEDERAL ACT AND ANY OTHER APPLICABLE STATE LAW, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Holdings hereby represents and warrants as follows:
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<PAGE> 7
3.1 ORGANIZATION, POWER AND AUTHORITY. Holdings is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Holdings has all necessary corporate power and authority and
has taken all requisite corporate action necessary to enter into this
Agreement, consummate the transactions contemplated hereby and perform its
obligations hereunder. This Agreement has been duly executed by Holdings and
constitutes the legal, valid and binding obligation of Holdings, enforceable
against Holdings in accordance with its terms (except to the extent that
enforcement is affected by laws pertaining to bankruptcy, reorganization,
insolvency, and creditors' rights and by the availability of injunctive relief,
specific performance, and other equitable remedies).
3.2 CONSENTS AND APPROVALS; NO CONFLICT OR VIOLATION. No consent,
approval or authorization of, or registration, declaration or filing with, any
governmental or regulatory authority, or any other person or entity, is
required to be made or obtained by Holdings in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
result in: (i) a violation of or a conflict with any provision of the
Certificate of Incorporation or the Bylaws of Holdings; (ii) a breach of, or a
default under, any term or provision of any contract, agreement, indebtedness,
lease, commitment, license, franchise, permit, authorization or concession to
which Holdings is a party; or (iii) a violation by Holdings of any statute,
rule, regulation, ordinance, code, order, judgment, writ, injunction, decree or
award applicable to it.
3.3 CAPITAL STOCK. The shares of Printpack Common Stock to be
conveyed to Enterprises by Holdings hereunder have been duly authorized and
validly issued and are fully paid and nonassessable. Holdings has, and shall
convey to Enterprises, good and marketable title to the shares of Printpack
Common Stock, free and clear of all claims, liens, restrictions, security
interests or encumbrances of any kind (other than restrictions on transfer of
such shares under applicable securities laws).
3.4 GOVERNMENTAL PROCEEDINGS OR LITIGATION. No action by any
governmental authority has been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby.
3.5 INVESTMENT INTENT. With respect to the shares of Enterprises
common stock to be issued to Holdings as contemplated in Section 1.6 above,
and the outstanding shares of the U.K. Entities to be transferred to Holdings as
contemplated in Section 1.1 above, Holdings represents and warrants that it is
the sole party in interest in its participation in this Agreement and is
acquiring such shares of Enterprises common stock and such outstanding shares
of the U.K. Entities solely for investment for its own account, with no present
agreement, understanding, intent or arrangement to subdivide, sell, assign, or
transfer any part or all of such shares, or any interest therein, to any other
person.
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<PAGE> 8
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ENTERPRISES
Enterprises hereby represents and warrants as follows:
4.1 ORGANIZATION, POWER AND AUTHORITY. Enterprises is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia. Enterprises has all necessary corporate power and authority
and has taken all requisite corporate action necessary to enter into this
Agreement, consummate the transactions contemplated hereby and perform its
obligations hereunder. This Agreement has been duly executed by Enterprises and
is a legal, valid and binding obligation of Enterprises, enforceable against
Enterprises in accordance with its terms (except to the extent that enforcement
is affected by laws pertaining to bankruptcy, reorganization, insolvency, and
creditors' rights and by the availability of injunctive relief, specific
performance, and other equitable remedies).
4.2 CONSENTS AND APPROVALS; NO CONFLICT OR VIOLATION. Except as
specified in Exhibit 4.2 hereto, no consent, approval or authorization of, or
registration, declaration or filing with, any governmental or regulatory
authority, or any other person or entity, is required to be made or obtained by
Enterprises in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby. Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in: (i) a violation of or a
conflict with any provision of the Amended and Restated Articles of
Incorporation or the Bylaws of Enterprises; (ii) a breach of, or a default
under, any term or provision of any contract, agreement, indebtedness, lease,
commitment, license, franchise, permit, authorization or concession to which
Enterprises is a party; or (iii) a violation by Enterprises of any statute,
rule, regulation, ordinance, code, order, judgment, writ, injunction, decree or
award applicable to it.
4.3 CAPITAL STOCK. The authorized capital stock of Enterprises
consists of 15,000,000 shares of common stock, without par value. All of the
shares of Enterprises common stock to be issued to Holdings hereunder have
been and will be, upon issuance, duly authorized, validly issued, fully paid
and non assessable.
4.4 NORTH AMERICAN ASSETS. Enterprises has, and will convey to
Printpack, good and marketable title to the North American Assets, free and
clear of all claims, liens, restrictions, security interests or encumbrances of
any kind, except for those that do not, individually or in the aggregate,
materially adversely affect the use of the North American Assets in the
business of Enterprises and will not so affect the use of the North American
Assets in the business of Printpack. All of the North American Assets are
transferred "as is" and "where is" without warranty of any kind except for the
warranty of title contained in this Section 4.4.
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<PAGE> 9
4.5 ENTERPRISES' INTELLECTUAL PROPERTY. Enterprises has, and will
convey to IHC, good and marketable title to the Enterprises Intellectual
Property, free and clear of all claims, liens, restrictions, security interests
or encumbrances of any kind, except for those that do not, individually or in
the aggregate, materially adversely affect the use of the Enterprises
Intellectual Property in the business of Enterprises and will not so affect the
use of the Enterprises Intellectual Property in the business of IHC. All of the
Enterprises Intellectual Property is transferred "as is" and "where is" without
warranty of any kind except for the warranty of title contained in this Section
4.5.
4.6 TITLE TO EMPAQUES SHARES. The equity capital of Empaques to be
conveyed to IHC by Enterprises hereunder has been duly authorized and validly
issued and is fully paid and nonassessable. Enterprises has, and shall convey
to Printpack, good and marketable title to the Empaques equity capital], free
and clear of all claims, liens, restrictions, security interests or
encumbrances of any kind (other than restrictions on transfer of such shares
under applicable securities laws).
4.7 GOVERNMENTAL PROCEEDINGS OR LITIGATION. No action by any
governmental authority has been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby.
4.8 INVESTMENT INTENT. With respect to the shares of Printpack
Common Stock to be transferred to Enterprises as contemplated in Section 1.2
above and the shares of Printpack common stock to be issued to Enterprises as
contemplated in Section 1.5 above, Enterprises represents and warrants that it
is the sole party in interest in its participation in this Agreement and is
acquiring the shares of Printpack common stock solely for investment for its
own account, with no present agreement, understanding, intent or arrangement to
subdivide, sell, assign, or transfer any part or all of such shares, or any
interest therein, to any other person.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PRINTPACK
Printpack hereby represents and warrants as follows:
5.1 ORGANIZATION, POWER AND AUTHORITY. Printpack is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia. Printpack has all necessary corporate power and authority and
has taken all requisite corporate action necessary to enter into this
Agreement, to consummate the transactions contemplated hereby and to perform
its obligations hereunder. This Agreement has been duly executed by Printpack
and is a legal, valid and binding obligation of Printpack, enforceable against
Printpack in accordance with its terms (except to the extent that enforcement
is affected by laws pertaining to bankruptcy, reorganization, insolvency, and
creditors' rights and by the availability of injunctive relief, specific
performance, and other equitable remedies).
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<PAGE> 10
5.2 CONSENTS AND APPROVALS; NO CONFLICT OR VIOLATION. Except as
provided in Exhibit 5.2 hereto, no consent, approval or authorization of, or
registration, declaration or filing with, any governmental or regulatory
authority, or any other person or entity, is required to be made or obtained by
Printpack in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby. Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in: (i) a violation of or a
conflict with any provision of the Amended and Restated Articles of
Incorporation or the Bylaws of Printpack; (ii) a breach of, or a default under,
any term or provision of any contract, agreement, indebtedness, lease,
commitment, license, franchise, permit, authorization or concession to which
Printpack is a party; or (iii) a violation by Printpack of any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction, decree or award
applicable to it.
5.3 CAPITAL STOCK. The authorized capital stock of Printpack
consists of 15,000,000 shares of common stock, $5.00 par value per share. All
of the shares of Printpack common stock to be issued to Enterprises have been
and will be, upon issuance, duly authorized, validly issued, fully paid and non
assessable.
5.4 TITLE TO U.K. ENTITIES EQUITY INTERESTS. Printpack is the
registered and beneficial owner of share capital representing a 30.96% equity
interest in PHL and a 5% equity interest in PEL. Printpack has, and shall
convey to Enterprises at Closing, good and marketable title to such share
capital], free and clear of all claims, liens, restrictions, security interests
or encumbrances of any kind (other than restrictions on transfer of such shares
under applicable securities laws).
5.5 U.K. ENTITIES RECEIVABLE. The U.K. Receivables are valid
obligations of the U.K. Entities and are not subject to any offset or
counterclaim. Printpack has, and shall convey to Holdings at Closing, good and
marketable title to the U.K. Receivables, free and clear of all claims, liens,
restrictions, security interests or other encumbrances of any kind. Except for
the warranty of title contained in this Section 5.5, Printpack makes no
warranty with respect to the U.K. Receivables and the U.K. Receivables were
conveyed "as is" and "where is."
5.6 PRINTPACK INTELLECTUAL PROPERTY; ILLINOIS ASSETS. Printpack
owns or holds a valid leasehold or license interest in and to, and will convey
(or cause to be conveyed) the same to IHC hereunder, in and to the Printpack
Intellectual Property and the Illinois Assets, free and clear of all liens,
restrictions, security interests or encumbrances of any kind, except for such
encumbrances as do not, individually or in the aggregate, materially and
adversely affect the use of the Printpack Intellectual Property and the
Illinois Assets by Printpack or that will, following such conveyance,
materially and adversely affect the use of the Printpack Intangible Property or
the Illinois Assets by IHC.
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<PAGE> 11
5.7 GOVERNMENTAL PROCEEDINGS OR LITIGATION. No action by any
governmental authority has been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF IHC
IHC hereby represents and warrants as follows:
6.1 ORGANIZATION, POWER AND AUTHORITY. IHC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois. IHC has all necessary corporate power and authority and has taken all
requisite corporate action necessary to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its obligations
hereunder. This Agreement has been duly executed by IHC and is a legal, valid
and binding obligation of IHC, enforceable against IHC in accordance with its
terms (except to the extent that enforcement is affected by laws pertaining to
bankruptcy, reorganization, insolvency, and creditors' rights and by the
availability of injunctive relief, specific performance, and other equitable
remedies).
6.2 CONSENTS AND APPROVALS; NO CONFLICT OR VIOLATION. No consent,
approval or authorization of, or registration, declaration or filing with, any
governmental or regulatory authority, or any other person or entity, is
required to be made or obtained by IHC in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
result in: (i) a violation of or a conflict with any provision of the Articles
of Incorporation or the Bylaws of IHC; (ii) a breach of, or a default under,
any term or provision of any contract, agreement, indebtedness, lease,
commitment, license, franchise, permit, authorization or concession to which
IHC is a party; or (iii) a violation by IHC of any statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or award applicable
to it.
6.3 CAPITAL STOCK. The authorized capital stock of IHC consists of
ten thousand (10,000) shares of common stock, no par value per share, of which,
as of the date of this Agreement and, as of the date of Closing and following
the consummation of the transactions contemplated hereby, one thousand (1,000)
shares will be issued and outstanding. All of the shares of IHC common stock
outstanding have been and will be, upon issuance, duly authorized, validly
issued, fully paid and non assessable.
6.4 GOVERNMENTAL PROCEEDINGS OR LITIGATION. No action by any
governmental authority has been instituted or threatened which questions the
validity or legality of the transactions contemplated hereby.
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<PAGE> 12
6.5 INVESTMENT INTENT. With respect to the equity interest in Empaques
to be acquired from Printpack as contemplated in Section 1.3 above, IHC
represents and warrants that it is the sole party in interest in its
participation in this Agreement and is acquiring the equity interest in
Empaques solely for investment for its own account, with no present agreement,
understanding, intent or arrangement to subdivide, sell, assign, or transfer
any part or all of such shares, or any interest therein, to any other person.
ARTICLE 7
CLOSING; CONDITIONS TO CLOSING
7.1 TIME OF CLOSING. The closing of the transactions contemplated
hereby (the "Closing") will be held at such time and place as the parties shall
agree promptly following the date on which all of the conditions precedent
specified in this Agreement have been (or can be at Closing) satisfied or
waived by the party or parties permitted to do so. The parties agree that each
of the transactions contemplated by this Agreement is intended to be effective
as of the beginning of each of the parties' fiscal year 1997 and that,
regardless of the date of execution of the instruments and other documents
giving effect to the transactions contemplated hereby, such transactions shall
have effect as of the first day of such fiscal year and as among the parties
hereto the Closing shall be deemed to have occurred as of the first day of such
fiscal year.
7.2 CONDITIONS TO CLOSING. The obligations of the parties to consummate
the transactions contemplated hereby are subject to the satisfaction or waiver,
on or prior to the Closing, of each of the following conditions:
(a) Governmental Consents and Approvals. All approvals and
authorizations of, filings and registrations with, and notifications
to, all federal, state and foreign governmental authorities required
for the consummation of the transactions contemplated hereby shall have
been duly obtained or made and shall be in full force and effect. All
waiting periods required by law shall have expired or been waived by
the appropriate governmental authorities.
(b) Other Consents. All consents and approvals as required
for the consummation of the transactions contemplated hereby shall have
been duly obtained and shall be in full force and effect.
(c) Corporate Action. The Board of Directors and, where
appropriate, shareholders of each of the parties shall have taken all
corporate action necessary to effectuate the transactions contemplated
hereby, and shall have furnished certified copies of the resolutions
duly adopted by such Boards of Directors and shareholders evidencing
the same.
(d) Representations and Warranties. The representations and
warranties of the parties set forth in this Agreement shall be true and
correct in all
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<PAGE> 13
material respects as of the date of Closing with the same effect as
though all such representations and warranties had been made
thereon.
(e) No Injunction; Permissible Transactions. None of the
parties shall be prohibited by any order, ruling, consent decree,
judgment or injunction of a court or regulatory agency of competent
jurisdiction from consummating the transactions contemplated by this
Agreement, and consummation of the transactions contemplated hereby
shall be legally permissible pursuant to applicable law.
7.3 TRANSACTIONS AND DOCUMENTS AT CLOSING.
At the Closing:
(a) All North America Assets consisting of real estate owned by
Enterprises will be transferred and conveyed to Printpack by
appropriate deeds; such deeds will be recorded and the required filing
fees and transfer taxes paid;
(b) The real estate constituting Printpack's Elgin, Illinois
plant will be transferred and conveyed by Printpack to IHC by
appropriate deeds, such deeds will be recorded and the required filing
fees and transfer taxes paid;
(c) All intellectual property of Printpack and Enterprises will
be transferred to IHC and appropriate instruments prepared and executed
for recording in the U.S. Patent and Trademark Office and other
appropriate governmental offices with respect to patents and
trademarks;
(d) All North America Assets consisting of tangible personal
property or intangible personal property (other than intellectual
property) owned by Enterprises will be transferred and conveyed to
Printpack by means of a blanket bill of sale, with appropriate resale
certificates or other required documentation;
(e) All North American Assets consisting of real or personal
property leases will be assigned and transferred to Printpack together
with all required lessor and landlord consents and approvals;
(f) All North American Assets consisting of contracts to which
Enterprises is a party will be assigned and transferred to Printpack
together with all required third party consents and approvals.
(g) Existing collective bargaining agreements, if any, to which
Enterprises is a party will be assigned to Printpack, with appropriate
negotiation with the applicable unions;
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<PAGE> 14
(h) All licenses of intellectual property rights from third
parties to Enterprises or Printpack will be assigned and transferred to
IHC, together with all required licensor consents and approvals;
(i) To the extent assignable, any governmental licenses or
permits held by Enterprises and relating to the North American Assets
will be assigned or transferred to Printpack or IHC, as appropriate;
(j) Printpack and/or IHC will undertake to obtain new licenses,
permits, registrations and identification numbers, to the extent that
these cannot be transferred from Enterprises or Printpack, including,
without limitation:
(i) state qualifications to transact business as a
foreign corporation in each state other than in the
state of incorporation;
(ii) sales tax numbers and other tax identification
numbers;
(iii) business licenses; and
(iv) state and federal environmental permits and licenses.
(k) Existing insurance coverage held by Enterprises with
respect to the North American Assets (including but not limited to
casualty insurance for assets transferred, liability insurance of
various types, and obligations for coverage related to unemployment and
workers' compensation) will be transferred to Printpack and existing
insurance coverage held by Printpack with respect to the Illinois
assets (including but not limited to casualty insurance for assets
transferred, liability insurance of various types, and obligations for
coverage related to unemployment and worker's compensation) will be
transferred to IHC, or appropriate new insurance coverage obtained by
Printpack and/or IHC.
ARTICLE 8
MISCELLANEOUS
8.1 SURVIVAL. The covenants, agreements, representations and warranties
of the parties hereto contained herein or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall survive the
consummation of the transactions contemplated hereby.
8.2 FURTHER ASSURANCES. Both before and after the Closing, each party
will cooperate in good faith with the other and will take all appropriate
action and execute any documents, instruments or conveyances of any kind which
may be reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder.
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<PAGE> 15
8.3 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement of the parties hereto.
8.4 WAIVER OF COMPLIANCE; CONSENTS. Any failure of a party to comply
with any obligation, covenant, agreement or condition herein may be waived by
the other party; provided, however, that any such waiver may be made only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
8.5 BINDING EFFECT; NO THIRD PARTY BENEFICIARIES. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any person other than the parties, any successors and
permitted assigns any rights, remedy or claim under or by reason of this
Agreement or any provision herein contained.
8.6 NOTICES. All notices or other communications to any party to this
Agreement required or permitted hereunder shall be in writing and shall be
deemed to have been duly given or made (i) five days after the date when
deposited, postage prepaid in the United States mail, by registered or
certified mail (return receipt requested) or (ii) when delivered if delivered
by hand or by facsimile (with receipt acknowledged) to a party hereto at the
address set forth below such party's signature on the signature page to this
Agreement (or at such other address for a party as shall be specified by like
notice).
8.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Georgia (without regard to its
conflicts of law doctrines).
8.8 ENTIRE AGREEMENT. This Agreement, together with all exhibits and
schedules and other documents and instruments referred to herein, embodies the
entire agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties.
8.9 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 INVALIDITY, INCONSISTENCY OR CONFLICT. In the event that any one
or more of the provisions contained in this Agreement or in any other
instrument referred to herein, shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, then to the maximum extent permitted
by law, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument. In the event of
any inconsistency or conflict between any provision of this Agreement and any
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<PAGE> 16
provision of any other agreement, document or instrument referred to herein,
the provision of this Agreement shall govern.
8.11 CAPTIONS AND REFERENCES. The captions or headings of the Articles
and Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
8.12 SPECIFIC PERFORMANCE. Each of the parties acknowledges that money
damages would not be a sufficient remedy for any breach of this Agreement and
that irreparable harm would result if this Agreement were not specifically
enforced. Therefore, the rights and obligations of the parties under this
Agreement shall be enforceable by a decree of specific performance issued by
any court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. A party's right to specific
performance shall be in addition to all other legal or equitable remedies
available to such party.
8.13 ASSIGNMENT OF CONTRACTS, RIGHTS, ETC. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement shall not
constitute an agreement by any party hereto to assign any of its right, title
or interest in or to any contract, license, lease, commitment, sales order,
purchase order or other agreement or any claim or right of any benefit arising
thereunder or resulting therefrom if the attempted assignment thereof, without
the consent of a third party thereto, would constitute a breach thereof or in
any way adversely affect the rights of any party hereto. Each party hereto
shall use its reasonable efforts to obtain, and to cooperate with the other
parties hereto in obtaining, any required third party consent to the assignment
or transfer of any such right, title or interest as contemplated by this
Agreement. If such consent is not obtained, the parties hereto shall cooperate
in any reasonable arrangements designed to provide the intended transferee with
the benefits thereunder, including enforcement for the benefit of such intended
transferee of any and all rights of any other party hereto against such third
party arising out of the cancellation by such third party or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed on their respective behalf by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
[Signatures Appear on the Following Pages]
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<PAGE> 17
PRINTPACK HOLDINGS, INC.
By: /s/
------------------------------------------
Its:
-------------------------------------
Address: 4335 Wendell Drive, SW
Atlanta, Georgia 30336
Attention: President
Telecopier: (404) 696-4868
PRINTPACK, INC.
By: /s/
------------------------------------------
Its:
-------------------------------------
Address: 4335 Wendell Drive, SW
Atlanta, Georgia 30336
Attention: President
Telecopier: (404) 696-4868
PRINTPACK ENTERPRISES, INC.
By: /s/
-----------------------------------------
Its:
-------------------------------------
Address: 4335 Wendell Drive, SW
Atlanta, Georgia 30336
Attention: President
Telecopier: (847) 888-5993
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<PAGE> 18
PRINTPACK ILLINOIS, INC.
By: /s/
--------------------------------------
Its:
------------------------------
Address: 1400 Abbott Drive
Elgin, Illinois 60123
Attention: President
Telecopier: (847) 888-5993
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<PAGE> 19
<TABLE>
<CAPTION>
Exhibit Description
- ------- -------------
<S> <C>
2.1 Form of Services Agreement
2.2 Form of Tax AllocationAgreement
2.3 Forms of License Agreements
4.2 Consents Required by Enterprises
5.2 Consents Required by Printpack
</TABLE>
<PAGE> 20
EXHIBIT 4.2
Consents Required by Enterprises
1. Consents of Lenders
2. Consents of Landlords under Leases
3. Consents of Other Parties to Contracts to be Assigned
4. Consents of Licenses Under Intellectual Property Licenses
<PAGE> 21
EXHIBIT 5.2
Consents Required by Printpack
1. Consents of Lenders
2. Consents of Landlords Under Leases
3. Consents of Other Parties to Contracts to be Assigned
4. Consents of Licensors Under Intellectual Property Licenses.
<PAGE> 1
Exhibit 3.1
Restated Articles of Incorporation of Printpack, Inc.
<PAGE> 2
ARTICLES OF RESTATEMENT OF THE
ARTICLES OF INCORPORATION
OF PRINTPACK, INC.
1.
The name of the corporation is Printpack, Inc.
2.
The text of the restated articles of incorporation of the
corporation is as follows:
ARTICLE ONE
Name
The name of the Corporation is:
"Printpack, Inc."
ARTICLE TWO
Authorized Capital Stock
The corporation is authorized to issue Fifteen Million
(15,000,000) shares of stock, designated as "Common Stock." The holders of
shares of Common Stock shall have unlimited voting rights and shall be entitled
to receive, in proportion to the number of shares of Common Stock held, the net
assets of the corporation upon dissolution.
ARTICLE THREE
Actions of Shareholders Without Meetings
Any action that is required or permitted to be taken at a
meeting of the shareholders may be taken without a meeting if the action is
taken by persons who would be entitled to vote at a meeting shares having
voting power to cast not less than the minimum number (or numbers, in the case
of voting groups) of votes that would be necessary to authorize or take such
action at a meeting at which all shareholders entitled
<PAGE> 3
2.
to vote were present and voted. The action must be evidenced by one or more
written consents describing the action taken, signed by shareholders entitled
to take action without a meeting and delivered to the corporation for inclusion
in the minutes or filing with the corporate records.
ARTICLE FOUR
Director Exculpation
4.1 A director of the corporation shall not be liable to the
corporation or its shareholders for monetary damages for any action taken, or
any failure to take any action, as a director, except liability: (A) for any
appropriation, in violation of his duties, of any business opportunity of the
corporation, (B) for acts or omissions which involve intentional misconduct or
a knowing violation of law, (C) of the types of liability set forth in Section
14-2-832 of the Georgia Business Corporation Code, or (D) for any transaction
from which the director received an improper personal benefit.
4.2 Any repeal or modification of the provisions of this Article by the
shareholders of the corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
corporation with respect to any act or omission occurring prior to the
effective date of such repeal or modification.
4.3 If the Georgia Business Corporation Code is hereafter amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of the director of the corporation, in addition to the
limitation on liability provided herein, shall be limited to the fullest extent
permitted by the Georgia Business Corporation Code, as so amended.
4.4 In the event that any of the provisions of this Article (including
any provision within a single sentence) is held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, the remaining
provisions are severable and shall remain enforceable to the fullest extent
permitted by law.
<PAGE> 4
3.
These Articles of Restatement contain amendments to the corporation's
articles of incorporation requiring shareholder approval. Each of the
amendments to the corporation's articles of incorporation contained in these
Articles of Restatement were adopted by the directors of the corporation on
July __, 1996. The amendments were duly approved by the shareholders of the
corporation in accordance with the provisions of Section 14-2-1003 of the
Georgia Business Corporation Code.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Restatement.
/s/ Dennis M. Love
------------------------------
Dennis M. Love
President of Printpack, Inc.
<PAGE> 1
Exhibit 3.2
Bylaws of Printpack, Inc.
<PAGE> 2
PRINTPACK, INC.
BYLAWS
ADOPTED AUGUST 12, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE ONE - OFFICES AND AGENT
Section 1.1 Registered Office and Agent 1
Section 1.2 Other Offices 1
ARTICLE TWO - SHAREHOLDERS' MEETINGS
Section 2.1 Place of Meetings 1
Section 2.2 Annual Meetings 1
Section 2.3 Special Meetings 1
Section 2.4 Notice of Meetings 1
Section 2.5 Voting Group 2
Section 2.6 Quorum 2
Section 2.7 Vote Required for Action 2
Section 2.8 Voting of Shares 2
Section 2.9 Proxies 2
Section 2.10 Presiding Officer 3
Section 2.11 Adjournments 3
Section 2.12 Action of Shareholders Without a Meeting 3
ARTICLE THREE - THE BOARD OF DIRECTORS
Section 3.1 General Powers 3
Section 3.2 Number, Election and Term of Office 4
Section 3.3 Removal 4
Section 3.4 Vacancies 4
Section 3.5 Compensation 4
ARTICLE FOUR - MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1 Regular Meetings 5
Section 4.2 Special Meetings 5
Section 4.3 Place of Meetings 5
Section 4.4 Notice of Meetings 5
Section 4.5 Quorum 5
</TABLE>
<PAGE> 3
TABLE OF CONTENTS (continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 4.6 Vote Required for Action 5
Section 4.7 Participation by Conference Telephone 6
Section 4.8 Action by Directors Without a Meeting 6
Section 4.9 Adjournments 6
Section 4.10 Committees of the Board of Directors 6
ARTICLE FIVE - MANNER OF NOTICE AND WAIVER AS TO
SHAREHOLDERS AND DIRECTORS
Section 5.1 Procedure 6
Section 5.2 Waiver 7
ARTICLE SIX - OFFICERS
Section 6.1 Number 8
Section 6.2 Election and Term 8
Section 6.3 Compensation 8
Section 6.4 Chairman of the Board 8
Section 6.5 President 8
Section 6.6 Vice Presidents 9
Section 6.7 Secretary 9
Section 6.8 Treasurer 9
Section 6.9 Bonds 9
ARTICLE SEVEN - DISTRIBUTIONS AND SHARE DIVIDENDS
Section 7.1 Authorization or Declaration 9
Section 7.2 Record Date With Regard to Distributions
and Share Dividends 9
ARTICLE EIGHT - SHARES
Section 8.1 Authorization and Issuance of Shares 10
Section 8.2 Share Certificates 10
Section 8.3 Rights of Corporation with Respect
to Registered Owners 10
Section 8.4 Transfers of Shares 10
Section 8.5 Duty of Corporation to Register Transfer 10
Section 8.6 Lost, Stolen or Destroyed Certificates 11
Section 8.7 Fixing of Record Date With Regard to
Shareholder Action 11
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS (continued)
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE NINE - INDEMNIFICATION
Section 9.1 Definitions 11
Section 9.2 Basic Indemnification Arrangement 13
Section 9.3 Advances for Expenses 14
Section 9.4 Court-Ordered Indemnification and
Advances for Expenses 15
Section 9.5 Authorization of and Determination of
Entitlement to Indemnification 16
Section 9.6 Indemnification of Employees and Agents 17
Section 9.7 Limits on Indemnification 17
Section 9.8 Liability Insurance 18
Section 9.9 Witness Fees 18
Section 9.10 Report to Shareholders 18
Section 9.11 Security for Indemnification Obligations 18
Section 9.12 No Duplication of Payments 18
Section 9.13 Subrogation 18
Section 9.14 Contract Rights 18
Section 9.15 Specific Performance 19
Section 9.16 Non-exclusivity, Etc. 19
Section 9.17 Amendments 19
Section 9.18 Severability 19
ARTICLE TEN - MISCELLANEOUS
Section 10.1 Inspection of Books and Records 19
Section 10.2 Fiscal Year 20
Section 10.3 Corporate Seal 20
Section 10.4 Annual Financial Statements 20
Section 10.5 Conflict With Articles of Incorporation 20
ARTICLE ELEVEN - AMENDMENTS
Section 11.1 Power to Amend Bylaws 20
</TABLE>
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<PAGE> 5
ARTICLE ONE
Offices and Agent
Section 1.1 Registered Office and Agent. The corporation shall
maintain a registered office in the State of Georgia and shall have a
registered agent whose business office is identical to the registered office.
Section 1.2 Other Offices. In addition to its registered
office, the corporation may have offices at any other place or places, within
or without the State of Georgia, as the Board of Directors may from time to
time select or as the business of the corporation may require or make
desirable.
ARTICLE TWO
Shareholders' Meetings
Section 2.1 Place of Meetings. Meetings of shareholders may be
held at any place within or without the State of Georgia as set forth in the
notice thereof or in the event of a meeting held pursuant to waiver of notice,
as set forth in the waiver, or if no place is so specified, at the principal
office of the corporation.
Section 2.2 Annual Meetings. The annual meeting of shareholders
shall be held on a day to be determined by the Board of Directors for the
purpose of electing directors and transacting any and all business that may
properly come before the meeting.
Section 2.3 Special Meetings. Special meetings of shareholders
or a special meeting in lieu of the annual meeting of shareholders may be
called at any time by the Board of Directors, the Chairman of the Board or the
President. Special meetings of shareholders or a special meeting in lieu of the
annual meeting of shareholders shall be called by the corporation upon the
written request of the holders of twenty-five percent (25%) of all the votes
entitled to be cast on the issue or issues proposed to be considered at the
proposed special meeting.
Section 2.4 Notice of Meetings. Unless waived as contemplated
in Section 5.2, a notice of each meeting of shareholders stating the date, time
and place of the meeting shall be given not less than ten (10) days nor more
than sixty (60) days before the date thereof, by or at the direction of the
Chairman of the Board, the President, the Secretary, or the officer or persons
calling the meeting, to each shareholder entitled to vote at that meeting. In
the case of an annual meeting, the notice need not state the purpose or
purposes of the meeting unless the articles of incorporation or the Georgia
Business Corporation Code (the "Code") requires the purpose or purposes to be
stated in the notice of the meeting. In the case of a special meeting,
including a special meeting in lieu of an annual meeting, the notice of meeting
shall state the purpose or purposes for which the meeting is called.
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Section 2.5 Voting Group. Voting group means all shares of one
or more classes or series that are entitled to vote and be counted together
collectively on a matter at a meeting of shareholders. All shares entitled to
vote generally on the matter are for that purpose a single voting group.
Section 2.6 Quorum. With respect to shares entitled to vote as
a separate voting group on a matter at a meeting of shareholders, the presence,
in person or by proxy, of a majority of the votes entitled to be cast on the
matter by the voting group shall constitute a quorum of that voting group for
action on that matter unless the articles of incorporation or the Code provides
otherwise. Once a share is represented for any purpose at a meeting, other than
solely to object to holding the meeting or to transacting business at the
meeting, it is deemed present for quorum purposes for the remainder of the
meeting and for any adjournment of the meeting unless a new record date is or
must be set for the adjourned meeting pursuant to Section 8.7 of these bylaws.
Section 2.7 Vote Required for Action. If a quorum exists,
action on a matter (other than the election of directors) by a voting group is
approved if the votes cast within the voting group favoring the action exceed
the votes cast opposing the action, unless the articles of incorporation,
provisions of these bylaws validly adopted by the shareholders, or the Code
requires a greater number of affirmative votes. If the articles of
incorporation or the Code provide for voting by two or more voting groups on a
matter, action on that matter is taken only when voted upon by each of those
voting groups counted separately. Action may be taken by one voting group on a
matter even though no action is taken by another voting group entitled to vote
on the matter. With regard to the election of directors, unless otherwise
provided in the articles of incorporation, if a quorum exists, action on the
election of directors is taken by a plurality of the votes cast by the shares
entitled to vote in the election.
Section 2.8 Voting of Shares. Unless the articles of
incorporation or the Code provides otherwise, each outstanding share having
voting rights shall be entitled to one vote on each matter submitted to a vote
at a meeting of shareholders. Voting on all matters shall be by voice vote or
by show of hands unless any qualified voter, prior to the voting on any matter,
demands vote by ballot, in which case each ballot shall state the name of the
shareholder voting and the number of shares voted by him, and if the ballot be
cast by proxy, it shall also state the name of the proxy.
Section 2.9 Proxies. A shareholder entitled to vote pursuant to
Section 2.8 may vote in person or by proxy pursuant to an appointment of proxy
executed in writing by the shareholder or by his attorney-in-fact. An
appointment of proxy shall be valid for only one meeting to be specified
therein, and any adjournments of such meeting, but shall not be valid for more
than eleven months unless expressly provided therein. Appointments of proxy
shall be dated and filed with the records of the meeting to which they relate.
If the validity of any appointment of proxy is questioned, it must be submitted
to the secretary of the meeting of shareholders for examination or to a proxy
officer or
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committee appointed by the person presiding at the meeting. The secretary of
the meeting or, if appointed, the proxy officer or committee, shall determine
the validity or invalidity of any appointment of proxy submitted and reference
by the secretary in the minutes of the meeting to the regularity of an
appointment of proxy shall be received as prima facie evidence of the facts
stated for the purpose of establishing the presence of a quorum at the meeting
and for all other purposes.
Section 2.10 Presiding Officer. The Chairman of the Board, or
in his absence, the President shall serve as the chairman of every meeting of
shareholders unless another person is elected by shareholders to serve as
chairman at the meeting. The chairman shall appoint any persons he deems
required to assist with the meeting.
Section 2.11 Adjournments. Whether or not a quorum is present
to organize a meeting, any meeting of shareholders (including an adjourned
meeting) may be adjourned by the holders of a majority of the voting shares
represented at the meeting to reconvene at a specific time and place, but no
later than 120 days after the date fixed for the original meeting unless the
requirements of the Code concerning the selection of a new record date have
been met. At any reconvened meeting within that time period, any business may
be transacted that could have been transacted at the meeting that was
adjourned. If notice of the adjourned meeting was properly given, it shall not
be necessary to give any notice of the reconvened meeting or of the business to
be transacted, if the date, time and place of the reconvened meeting are
announced at the meeting that was adjourned and before adjournment; provided,
however, that if a new record date is or must be fixed, notice of the
reconvened meeting must be given to persons who are shareholders as of the new
record date.
Section 2.12 Action of Shareholders Without a Meeting. Action
required or permitted to be taken at a meeting of shareholders may be taken
without a meeting if the action is taken by all shareholders entitled to vote
on the action or, if so provided in the articles of incorporation, by persons
who would be entitled to vote at a meeting shares having voting power to cast
not less than the minimum number (or numbers, in the case of voting by groups)
of votes that would be necessary to authorize or take the action at a meeting
at which all shareholders entitled to vote were present and voted. The action
must be evidenced by one or more written consents describing the action taken,
signed by shareholders entitled to take action without a meeting and delivered
to the corporation for inclusion in the minutes or filing with the corporate
records. The corporation shall give written notice of actions taken as required
by the Code.
ARTICLE THREE
The Board of Directors
Section 3.1 General Powers. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, the Board of Directors. In
addition to the powers and authority
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expressly conferred upon it by these bylaws, the Board of Directors may
exercise all powers of the corporation and do all lawful acts and things that
are not by law, by any legal agreement among shareholders, by the articles of
incorporation or by these bylaws directed or required to be exercised or done
by the shareholders.
Section 3.2 Number, Election and Term of Office. The number of
directors of the corporation shall not be less than three (3) nor more than ten
(10), the precise number to be fixed by resolution of shareholders or of the
Board of Directors from time to time. Except as provided in Section 3.4, the
directors shall be elected by the vote of shareholders as set forth in Section
2.7 at each annual meeting of shareholders or special meeting in lieu of the
annual meeting. Except in case of death, written resignation, retirement,
disqualification or removal, each director shall serve until the next
succeeding annual meeting and thereafter until his successor is elected and
qualifies or until the number of directors is decreased.
Section 3.3 Removal. One or more directors may be removed from
office with or without cause by shareholders by a majority of the votes
entitled to be cast. If the director was elected by a voting group, only
shareholders of that voting group may participate in the vote to remove him.
Removal action may be taken at any meeting of shareholders with respect to
which the notice stated that the purpose, or one of the purposes, of the
meeting is removal of the director, and a removed director's successor may be
elected at the same meeting.
Section 3.4 Vacancies. A vacancy occurring in the Board of
Directors, other than by reason of an increase in the number of directors,
shall be filled for the unexpired term by the first to take action of (a)
shareholders or (b) the Board of Directors, and if the directors remaining in
office constitute fewer than a quorum of the Board of Directors, they may fill
the vacancy by the affirmative vote of a majority of all directors remaining in
office. If the vacant office was held by a director elected by a voting group,
only the holders of shares of that voting group or the remaining directors
elected by that voting group are entitled to vote to fill the vacancy. A
vacancy occurring in the Board of Directors by reason of an increase in the
number of directors shall be filled in like manner as any other vacancy, but if
filled by action of the Board of Directors shall only be for a term of office
continuing until the next election of directors by shareholders and until the
election and qualification of a successor.
Section 3.5 Compensation. Unless the articles of incorporation
provide otherwise, the Board of Directors may determine from time to time the
compensation, if any, directors may receive for their services as directors. A
director may also serve the corporation in a capacity other than that of
director and receive compensation, as determined by the Board of Directors, for
services rendered in any other capacity.
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ARTICLE FOUR
Meetings of the Board of Directors
Section 4.1 Regular Meetings. Regular meetings of the Board of
Directors shall be held immediately after the annual meeting of shareholders or
a special meeting in lieu of the annual meeting. In addition, the Board of
Directors may schedule other meetings to occur at regular intervals throughout
the year.
Section 4.2 Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of the Board or
the President or by any two directors in office at that time.
Section 4.3 Place of Meetings. Directors may hold their
meetings at any place within or without the State of Georgia as the Board of
Directors may from time to time establish for regular meetings or as set forth
in the notice of special meetings or, in the event of a meeting held pursuant
to waiver of notice, as set forth in the waiver.
Section 4.4 Notice of Meetings. No notice shall be required for
any regularly scheduled meeting of the directors. Unless waived as contemplated
in Section 5.2, each director shall be given at least one day's notice (as set
forth in Section 5.1) of each special meeting stating the date, time and place
of the meeting.
Section 4.5 Quorum. Unless a greater number is required by the
articles of incorporation, these bylaws, or the Code, a quorum of the Board of
Directors consists of a majority of the total number of directors that has been
prescribed by resolution of shareholders or of the Board of Directors pursuant
to Section 3.2.
Section 4.6 Vote Required for Action.
(a) If a quorum is present when a vote is taken, the
affirmative vote of a majority of directors present is the act of the Board of
Directors unless the Code, the articles of incorporation or these bylaws
require the vote of a greater number of directors.
(b) A director who is present at a meeting of the Board of
Directors or a committee of the Board of Directors when corporate action is
taken is deemed to have assented to the action taken unless:
(i) he objects at the beginning of the meeting (or promptly
upon his arrival) to holding it or transacting business at the meeting;
(ii) his dissent or abstention from the action taken is
entered in the minutes of the meeting; or
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(iii) he delivers written notice of his dissent or abstention
to the presiding officer of the meeting before its adjournment or to
the corporation immediately after adjournment of the meeting.
The right of dissent or abstention is not available to a director who votes in
favor of the action taken.
Section 4.7 Participation by Conference Telephone. Any or all
directors may participate in a meeting of the Board of Directors or of a
committee of the Board of Directors through the use of any means of
communication by which all directors participating may simultaneously hear each
other during the meeting.
Section 4.8 Action by Directors Without a Meeting. Unless the
articles of incorporation or these bylaws provide otherwise, any action
required or permitted to be taken at any meeting of the Board of Directors or
any action that may be taken at a meeting of a committee of the Board of
Directors may be taken without a meeting if the action is taken by all the
members of the Board of Directors (or of the committee as the case may be). The
action must be evidenced by one or more written consents describing the action
taken, signed by each director (or each director serving on the committee, as
the case may be), and delivered to the corporation for inclusion in the minutes
or filing with the corporate records.
Section 4.9 Adjournments. Whether or not a quorum is present to
organize a meeting, any meeting of directors (including an adjourned meeting)
may be adjourned by a majority of the directors present, to reconvene at a
specific time and place. At any reconvened meeting any business may be
transacted that could have been transacted at the meeting that was adjourned.
If notice of the adjourned meeting was properly given, it shall not be
necessary to give any notice of the reconvened meeting or of the business to be
transacted, if the date, time and place of the reconvened meeting are announced
at the meeting that was adjourned.
Section 4.10 Committees of the Board of Directors. The Board of
Directors by resolution may designate from among its members an executive
committee and one or more other committees, each consisting of one or more
directors all of whom serve at the pleasure of the Board of Directors. Except
as limited by the Code, each committee shall have the authority set forth in
the resolution establishing the committee. The provisions of this Article Four
as to the Board of Directors and its deliberations shall be applicable to any
committee of the Board of Directors.
ARTICLE FIVE
Manner of Notice and Waiver as to Shareholders and Directors
Section 5.1 Procedure. Whenever these bylaws require notice to
be given to any shareholder or director, the notice shall be given in
accordance with this Section
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5.1. Notice under these bylaws shall be in writing unless oral notice is
reasonable under the circumstances. Any notice to directors may be written or
oral. Notice may be communicated in person; by telephone, telegraph, teletype,
or other form of wire or wireless communication; or by mail or private carrier.
If these forms of personal notice are impracticable, notice may be communicated
by a newspaper of general circulation in the area where published, or by radio,
television or other form of public broadcast communication. Written notice to
the shareholders, if in a comprehensible form, is effective when mailed, if
mailed with first-class postage prepaid and correctly addressed to the
shareholder's address shown in the corporation's current record of
shareholders. Except as provided above, written notice, if in a comprehensible
form, is effective at the earliest of the following:
(i) when received or when delivered, properly addressed,
to the addressee's last known principal place of business or residence;
(ii) five days after its deposit in the mail, as evidenced
by the postmark, if mailed with first-class postage prepaid and
correctly addressed; or
(iii) on the date shown on the return receipt, if sent by
registered or certified mail, return receipt requested, and the receipt
is signed by or on behalf of the addressee.
Oral notice is effective when communicated if communicated in a comprehensible
manner.
In calculating time periods for notice, when a period of time measured in days,
weeks, months, years or other measurement of time is prescribed for the
exercise of any privilege or the discharge of any duty, the first day shall not
be counted but the last day shall be counted.
Section 5.2 Waiver.
(a) A shareholder may waive any notice before or after the date
and time stated in the notice. Except as provided below in (b), the waiver must
be in writing, be signed by the shareholder entitled to the notice, and be
delivered to the corporation for inclusion in the minutes or filing with the
corporate records.
(b) A shareholder's attendance at a meeting (i) waives
objection to lack of notice or defective notice of the meeting, unless the
shareholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting; and (ii) waives objection to consideration
of a particular matter at the meeting that is not within the purpose or
purposes described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.
(c) Unless required by the Code, neither the business
transacted nor the purpose of the meeting need be specified in the waiver.
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(d) A director may waive any notice before or after the date
and time stated in the notice. Except as provided below in (e), the waiver must
be in writing, signed by the director entitled to the notice, and delivered to
the corporation for inclusion in the minutes or filing with the corporate
records.
(e) A director's attendance at or participation in a meeting
waives any required notice to him of the meeting unless the director at the
beginning of the meeting (or promptly upon his arrival) objects to holding the
meeting or transacting business at the meeting and does not thereafter vote for
or assent to action taken at the meeting.
ARTICLE SIX
Officers
Section 6.1 Number. The officers of the corporation shall
consist of a President and a Secretary and any other officers as may be
appointed by the Board of Directors or appointed by a duly appointed officer
pursuant to this Article Six. The Board of Directors shall from time to time
create and establish the duties of the other officers. Any two or more offices
may be held by the same person.
Section 6.2 Election and Term. All officers shall be appointed
by the Board of Directors or by a duly appointed officer pursuant to this
Article Six and shall serve at the pleasure of the Board of Directors or the
appointing officers as the case may be. All officers, however appointed, may be
removed with or without cause by the Board of Directors and any officer or
assistant officer appointed by an authorized officer may be removed at any time
with or without cause by any officer having authority to appoint such officer
or assistant officer.
Section 6.3 Compensation. The compensation of all officers of
the corporation appointed by the Board of Directors shall be fixed by the
Board of Directors.
Section 6.4 Chairman of the Board. The Chairman of the Board of
Directors, if one shall have been elected, shall call to order meetings of the
shareholders, the Board of Directors and the Executive Committee and shall act
as chairman of such meetings. The Chairman of the Board shall perform such
other duties as the directors may direct from time to time.
Section 6.5 President. The President shall be the chief
executive officer of the corporation and shall have general supervision of the
business of the corporation. He shall see that all orders and resolutions of
the Board of Directors are carried into effect. If there is no Chairman of the
Board currently in office, the President shall also perform the duties of the
Chairman of the Board. The President shall perform such other duties as may
from time to time be delegated to him by the Board of Directors.
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Section 6.6 Vice Presidents. In the absence or disability of
the President, or at the direction of the President, the Vice President, if
any, shall perform the duties and exercise the powers of the President. If the
corporation has more than one Vice President the one designated by the Board of
Directors shall act in lieu of the President. Vice Presidents shall perform
whatever duties and have whatever powers the Board of Directors may from time
to time assign.
Section 6.7 Secretary. The Secretary shall be responsible for
preparing minutes of the acts and proceedings of all meetings of shareholders
and of the Board of Directors and any committees thereof. He shall have
authority to give all notices required by law or these bylaws. He shall be
responsible for the custody of the corporate books, records, contracts and
other documents. The Secretary may affix the corporate seal to any lawfully
executed documents and shall sign any instruments as may require his signature.
The Secretary shall authenticate records of the corporation. The Secretary
shall perform whatever additional duties and have whatever additional powers
the Board of Directors may from time to time assign him. In the absence or
disability of the Secretary or at the direction of the President, any assistant
secretary may perform the duties and exercise the powers of the Secretary.
Section 6.8 Treasurer. The Treasurer shall be responsible for
the custody of all funds and securities belonging to the corporation and for
the receipt, deposit or disbursement of funds and securities under the
direction of the Board of Directors. The Treasurer shall cause to be maintained
full and true accounts of all receipts and disbursements and shall make reports
of the same to the Board of Directors and the President upon request. The
Treasurer shall perform all duties as may be assigned to him from time to time
by the Board of Directors.
Section 6.9 Bonds. The Board of Directors by resolution may
require any or all of the officers, agents or employees of the corporation to
give bonds to the corporation, with sufficient surety or sureties, conditioned
on the faithful performance of the duties of their respective offices or
positions, and to comply with any other conditions as from time to time may be
required by the Board of Directors.
ARTICLE SEVEN
Distributions and Share Dividends
Section 7.1 Authorization or Declaration. Unless the articles
of incorporation provide otherwise, the Board of Directors from time to time in
its discretion may authorize or declare distributions or share dividends in
accordance with the Code.
Section 7.2 Record Date With Regard to Distributions and Share
Dividends. For the purpose of determining shareholders entitled to a
distribution (other than one involving a purchase, redemption or other
reacquisition of the corporation's shares) or a share dividend, the Board of
Directors may fix a date as the record date. If no
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record date is fixed by the Board of Directors, the record date shall be
determined in accordance with the provisions of the Code.
ARTICLE EIGHT
Shares
Section 8.1 Authorization and Issuance of Shares. In accordance
with the Code, the Board of Directors may authorize shares of any class or
series provided for in the articles of incorporation to be issued for any
consideration valid under the provisions of the Code. To the extent provided in
the articles of incorporation, the Board of Directors shall determine the
preferences, limitations, and relative rights of the shares.
Section 8.2 Share Certificates. The interest of each
shareholder in the corporation shall be evidenced by a certificate or
certificates representing shares of the corporation which shall be in such form
as the Board of Directors from time to time may adopt. Share certificates shall
be numbered consecutively, shall be in registered form, shall indicate the date
of issuance, the name of the corporation and that it is organized under the
laws of the State of Georgia, the name of the shareholder, and the number and
class of shares and the designation of the series, if any, represented by the
certificate. Each certificate shall be signed by any one of the Chairman of the
Board, the President, a Vice President, the Secretary or the Treasurer. The
corporate seal need not be affixed.
Section 8.3 Rights of Corporation With Respect to Registered
Owners. Prior to due presentation for transfer of registration of its shares,
the corporation may treat the registered owner of the shares as the person
exclusively entitled to vote the shares, to receive any share dividend or
distribution with respect to the shares, and for all other purposes; and the
corporation shall not be bound to recognize any equitable or other claim to or
interest in the shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by law.
Section 8.4 Transfers of Shares. Transfers of shares shall be
made upon the transfer books of the corporation, kept at the office of the
transfer agent designated to transfer the shares, only upon direction of the
person named in the certificate or by an attorney lawfully constituted in
writing; and before a new certificate is issued, the old certificate shall be
surrendered for cancellation or, in the case of a certificate alleged to have
been lost, stolen or destroyed, the requirements of Section 8.6 of these bylaws
shall have been met.
Section 8.5 Duty of Corporation to Register Transfer.
Notwithstanding any of the provisions of Section 8.4 of these bylaws, the
corporation is under a duty to register the transfer of its shares only if:
(i) the certificate is endorsed by the appropriate person
or persons;
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(ii) reasonable assurance is given that the endorsement or
affidavit is genuine and effective;
(iii) the corporation either has no duty to inquire into
adverse claims or
has discharged that duty;
(iv) the requirements of any applicable law relating to the
collection of taxes have been met; and
(v) the transfer in fact is rightful or is to a bona fide
purchaser.
Section 8.6 Lost, Stolen or Destroyed Certificates. Any person
claiming a share certificate to be lost, stolen or destroyed shall make an
affidavit or affirmation of the fact in the manner required by the Board of
Directors and, if the Board of Directors requires, shall give the corporation a
bond of indemnity in form and amount, and with one or more sureties
satisfactory to the Board of Directors, as the Board of Directors may require,
whereupon an appropriate new certificate may be issued in lieu of the one
alleged to have been lost, stolen or destroyed.
Section 8.7 Fixing of Record Date With Regard to Shareholder
Action. For the purpose of determining shareholders entitled to notice of a
shareholders' meeting, to demand a special meeting, to vote or to take any
other action, the Board of Directors may fix a future date as the record date,
which date shall be not more than seventy (70) days prior to the date on which
the particular action, requiring a determination of shareholders, is to be
taken. A determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless
the Board of Directors fixes a new record date, which it must do if the meeting
is adjourned to a date more than 120 days after the date fixed for the original
meeting. If no record date is fixed by the Board of Directors, the record date
shall be determined in accordance with the provisions of the Code.
ARTICLE NINE
Indemnification
Section 9.1 Definitions. As used in this Article, the term:
(a) "Change in Control" shall have occurred if, during any
period of two consecutive years, individuals who at the beginning of such
period constitute the board of directors of the corporation cease for any
reason to constitute at least a majority thereof, unless the election of each
new director was approved in advance by a vote of at least a majority of the
directors then still in office who were directors at the beginning of the
period.
(b) "Code" means the Georgia Business Corporation Code.
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(c) "Corporation" includes any domestic or foreign predecessor
entity of the corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(d) "Director" or "officer" means an individual who is or was a
director or board-elected officer, respectively, of the corporation or who,
while a director or officer of the corporation, is or was serving at the
corporation's request as a director, officer, partner, trustee, employee, or
agent of another domestic or foreign corporation, partnership, joint venture,
trust, employee benefit plan, or other entity. A director or officer is
considered to be serving an employee benefit plan at the corporation's request
if his or her duties to the corporation also impose duties on, or otherwise
involve services by, the director or officer to the plan or to participants in
or beneficiaries of the plan. "Director" or "officer" includes, unless the
context otherwise requires, the estate or personal representative of a director
or officer.
(e) "Disinterested director" or "disinterested officer" means a
director or officer, respectively who at the time of a vote or selection
referred to in subsection 9.5(b) or 9.5(c) is not:
A party to the proceeding; or
An individual who is a party to a proceeding having a familial,
financial, professional, or employment relationship with the person
whose indemnification or advance for expenses is the subject of the
decision being made with respect to the proceeding, which relationship
would, in the circumstances, reasonably be expected to exert an
influence on the director's or officer's judgment when voting on the
decision being made.
(f) "Expenses" includes counsel fees.
(g) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable expenses incurred with respect to a
proceeding.
(h) "Official capacity" means:
(1) When used with respect to a director, the
office of director in the corporation; and
(2) When used with respect to an officer, the
office in the corporation held by the officer.
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Official capacity does not include service for any other domestic or foreign
corporation or any partnership, joint venture, trust, employee benefit plan, or
other entity.
(i) "Party" includes an individual who was, is, or is
threatened to be made a named defendant or respondent in a proceeding.
(j) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative or investigative and whether formal or informal.
(k) "Reviewing Party" shall mean the person or persons making
the entitlement determination pursuant to Section 9.5 of this Article, and
shall not include a court making any determination under this Article or
otherwise.
Section 9.2 Basic Indemnification Arrangement.
(a) Except as provided in subsections 9.2(d), 9.2(e) or Section
9.7(a) below, the corporation shall indemnify an individual who is a party to a
proceeding because he or she is or was a director or officer against liability
incurred in the proceeding if:
(1) Such individual conducted himself or herself in
good faith; and
(2) Such individual reasonably believed:
(A) In the case of conduct in his or her official
capacity, that such conduct was in the best interests of the
corporation;
(B) In all other cases, that such conduct was at
least not opposed to the best interests of the corporation; and
(C) In the case of any criminal proceeding, that
the individual had no reasonable cause to believe such conduct was
unlawful.
(b) A director's or officer's conduct with respect to an
employee benefit plan for a purpose he or she believed in good faith to be in
the interests of the participants in and beneficiaries of the plan is conduct
that satisfies the requirement of subsection 9.2(a)(2)(B) above.
(c) The termination of a proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its equivalent
is not, of itself, determinative that the director or officer did not meet the
standard of conduct described in subsection 9.2(a).
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(d) The corporation may not indemnify a director or
officer under this Article:
(1) In connection with a proceeding by or in the right
of the corporation, except for reasonable expenses, penalties, fines
(including an excise tax assessed with respect to an employee benefit
plan) and amounts paid in settlement incurred in connection with the
proceeding if it is determined that the director or officer has met
the relevant standard of conduct under subsection 9.2(a); or
(2) In connection with any proceeding with respect to
conduct for which he or she was adjudged liable on the basis that
personal benefit was improperly received by him or her, whether or not
involving action in his or her official capacity.
(e) Notwithstanding any other provision of this Article, no
person shall be entitled to indemnification or advance for expenses hereunder
with respect to any proceeding or claim brought or made by him or her against
the corporation, other than a proceeding or claim seeking or defending such
person's right to indemnification or advancement of expense pursuant to Section
9.4 hereof or otherwise.
(f) If any person is entitled under any provision of this
Article to indemnification by the corporation for some portion of liability
incurred by him or her, but not the total amount thereof, the corporation shall
indemnify such person for the portion of such liability to which he or she is
entitled.
(g) The corporation shall indemnify a director or officer who
was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he or she was a party because he or she was a director or
officer of the corporation against reasonable expenses incurred by the director
or officer in connection with the proceeding.
Section 9.3 Advances for Expenses.
(a) The corporation shall, before final disposition of a
proceeding, advance funds to pay for or reimburse the reasonable expenses
incurred by a director or officer who is a party to a proceeding because he or
she is a director or officer if he or she delivers to the corporation:
(1) A written affirmation of his or her good faith
belief that he or she has met the relevant standard of conduct
described in subsection 9.2(a) above and that his or her conduct does
not constitute behavior of the kind described in subsection 9.7(b)
below or that the proceeding involves conduct for which such person's
liability has been eliminated under the corporation's articles of
incorporation; and
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<PAGE> 19
(2) His or her written undertaking (meeting the
qualifications set forth below in subsection 9.3(b)) to repay any
funds advanced if it is ultimately determined that he or she is not
entitled to indemnification under this Article or the Code.
(b) The undertaking required by subsection 9.3(a)(2) above must
be an unlimited general obligation of the proposed indemnitee but need not be
secured and shall be accepted without reference to the financial ability of the
proposed indemnitee to make repayment. If a director or officer seeks to
enforce his or her rights to indemnification in a court pursuant to Section 9.4
below, such undertaking to repay shall not be applicable or enforceable unless
and until there is a final court determination that he or she is not entitled
to indemnification, as to which all rights of appeal have been exhausted or
have expired.
Section 9.4 Court-Ordered Indemnification and Advances for
Expenses.
(a) A director or officer who is a party to a proceeding
because he or she is a director or officer may apply for indemnification or
advance for expenses to the court conducting the proceeding or to another court
of competent jurisdiction. For purposes of this Article, the corporation hereby
consents to personal jurisdiction and venue in any court in which is pending a
proceeding to which a director or officer is a party. Regardless of any
determination by the Reviewing Party that the proposed indemnitee is not
entitled to indemnification or as to the reasonableness of expenses, and
regardless of any failure by the Reviewing Party to make a determination as to
such entitlement or the reasonableness of expenses, such court's review shall
be a de novo review. After receipt of an application and after giving any
notice it considers necessary, the court shall:
(1) Order indemnification or advance for expenses
if it determines that the director or officer is entitled to
indemnification or advance for expenses; or
(2) Order indemnification or advance for expenses if it
determines, in view of all the relevant circumstances, that it is fair
and reasonable to indemnify the director or officer, or to advance
expenses to the director or officer, even if the director or officer
has not met the relevant standard of conduct, failed to comply with
the requirements for advance of expenses, or was adjudged liable in a
proceeding referred to in subsection 9.2(d) above (in which case any
court-ordered indemnification need not be limited to reasonable
expenses incurred by the indemnitee but may include expenses,
penalties, fines, judgments, amounts paid in settlement and any other
amounts ordered by the court to be indemnified).
(b) If the court determines that the director or officer is
entitled to indemnification or advance for expenses, the corporation shall pay
the director's or
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<PAGE> 20
officer's reasonable expenses to obtain court-ordered indemnification or
advance for expenses.
Section 9.5 Authorization of and Determination of Entitlement
to Indemnification.
(a) The corporation acknowledges that indemnification of a
director or officer under Section 9.2 has been pre-authorized by the
corporation as permitted by Section 14-2-859(a) of the Code. Nevertheless, the
corporation shall not indemnify a director or officer under Section 9.2 unless
a determination has been made for the specific proceeding that indemnification
of the director or officer is permissible in the circumstances because he or
she has met the relevant standard of conduct set forth in subsection 9.2(a);
provided, however, that no entitlement decision need be made prior to the
advance of expenses and that, regardless of the result or absence of any such
determination, the corporation shall make any indemnification mandated by
Section 9.2(g) above.
(b) The determination referred to in subsection 9.5(a) above
shall be made as follows (unless a Change in Control shall have occurred after
the director or officer first began serving as a director or officer, in which
case the proposed indemnitee director or officer shall be entitled to designate
that the determination shall be made by special legal counsel selected by him
or her):
(1) If there are two or more disinterested directors,
by the board of directors of the corporation by a majority vote of all
disinterested directors (a majority of whom shall for such purpose
constitute a quorum) or by a majority of the members of a committee of
two or more disinterested directors appointed by such a vote;
(2) By special legal counsel:
(A) Selected in the manner prescribed in
paragraph (1) of this subsection 9.5(b); or
(B) If there are fewer than two disinterested
directors, selected by the board of directors (in which
selection directors who do not qualify as disinterested
directors may participate); or
(3) By the shareholders, but shares owned by or
voted under the control of a director or officer who at the time does
not qualify as a disinterested director or disinterested officer may
not be voted on the determination.
(c) As acknowledged above, the corporation has pre-authorized
the indemnification of directors and officers hereunder, subject to a
determination for a
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<PAGE> 21
specific proceeding that the director or officer met the relevant standard of
conduct under subsection 9.2(a). Consequently, no further decision need or
shall be made on a case-by-case basis as to the authorization of the
corporation's indemnification of directors or officers hereunder. Nevertheless,
except as set forth in subsection 9.5(d) below, evaluation as to reasonableness
of expenses of a director or officer for a specific proceeding shall be made in
the same manner as the determination that indemnification is permissible, as
described in subsection 9.5(b) above, except that if there are fewer than two
disinterested directors or if the determination is made by special legal
counsel, evaluation as to reasonableness of expenses shall be made by those
entitled under subsection 9.5(b)(2)(B) to select special legal counsel.
(d) Notwithstanding the requirement under subsection 9.5(c)
that the Reviewing Party evaluate the reasonableness of expenses claimed by the
proposed indemnitee, any expenses claimed by the proposed indemnitee shall be
deemed reasonable if the Reviewing Party fails to make the evaluation required
by subsection 9.5(c) within sixty (60) days following the proposed indemnitee's
written request for indemnification or advance for expenses.
Section 9.6 Indemnification of Employees and Agents. The
corporation may, subject to authorization in the specific case, indemnify and
advance expenses under this Article to an employee or agent of the corporation
who is not a director or officer to the same extent as to a director or
officer, or to any lesser extent (or greater extent if permitted by law)
determined by the board of directors, in each case consistent with public
policy.
Section 9.7 Limits on Indemnification.
(a) Regardless of whether a proposed indemnitee has met the
relevant standard of conduct set forth in subsection 9.2(a), the corporation
shall not indemnify a director or officer under this Article for any liability
incurred in a proceeding in which the director or officer is adjudged liable to
the corporation or is subjected to injunctive relief in favor of the
corporation:
(1) For any appropriation, in violation of his or her
duties, of any business opportunity of the corporation;
(2) For acts or omissions which involve intentional
misconduct or a knowing violation of law;
(3) For the types of liability set forth in Section
14-2-832 of the code; or
(4) For any transaction from which he or she received
an improper personal benefit.
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<PAGE> 22
Section 9.8 Liability Insurance. The corporation may purchase
and maintain insurance on behalf of an individual who is a director, officer,
employee or agent of the corporation or who, while a director, officer,
employee or agent of the corporation, serves at the corporation's request as a
director, officer, partner, trustee, employee or agent of another domestic or
foreign corporation, partnership, joint venture, trust, employee benefit plan,
or other entity against liability asserted against or incurred by him or her in
that capacity or arising from his or her status as a director, officer,
employee, or agent, whether or not the corporation would have power to
indemnify or advance expenses to him or her against the same liability under
this Article or the Code.
Section 9.9 Witness Fees. Nothing in this Article shall limit
the corporation's power to pay or reimburse expenses incurred by a person in
connection with his or her appearance as a witness in a proceeding at a time
when he or she is not a party.
Section 9.10 Report to Shareholders. To the extent and in the
manner required by the Code from time to time, if the corporation indemnifies
or advances expenses to a director or officer in connection with a proceeding
by or in the right of the corporation, the corporation shall report the
indemnification or advance to the shareholders.
Section 9.11 Security for Indemnification Obligations. The
corporation may at any time and in any manner, at the discretion of the board
of directors, secure the corporation's obligations to indemnify or advance
expenses to a person pursuant to this Article.
Section 9.12 No Duplication of Payments. The corporation shall
not be liable under this Article to make any payment to a person hereunder to
the extent such person has otherwise actually received payment (under any
insurance policy, agreement or otherwise) of the amounts otherwise payable
hereunder.
Section 9.13 Subrogation. In the event of payment under this
Article, the corporation shall be subrogated to the extent of such payment to
all of the rights of recovery of the indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the corporation
effectively to bring suit to enforce such rights.
Section 9.14 Contract Rights. The right to indemnification and
advancement of expenses conferred hereunder to directors and officers shall be
a contract right and shall not be affected adversely to any director or officer
by any amendment of these bylaws with respect to any action or inaction
occurring prior to such amendment; provided, however, that this provision shall
not confer upon any indemnitee or potential indemnitee (in his or her capacity
as such) the right to consent or object to any subsequent amendment of these
bylaws.
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<PAGE> 23
Section 9.15 Specific Performance. In any proceeding brought by
or on behalf of an officer or director to specifically enforce the provisions
of this Article, the corporation hereby waives the claim or defense therein
that the plaintiff or claimant has an adequate remedy at law, and the
corporation shall not urge in any such proceeding the claim or defense that
such remedy at law exists. The provisions of this Section 9.15, however, shall
not prevent the officer or director from seeking a remedy at law in connection
with any breach of the provisions of this Article.
Section 9.16 Non-exclusivity, Etc. The rights of a director or
officer hereunder shall be in addition to any other rights with respect to
indemnification, advancement of expenses or otherwise that he or she may have
under contract or the Georgia Business Corporation Code or otherwise.
Section 9.17 Amendments. It is the intent of the corporation to
indemnify and advance expenses to its directors and officers at least to the
full extent that a Georgia business corporation may, without shareholder
approval, indemnify or advance expenses to its directors under the Georgia
Business Corporation Code, as amended from time to time. To the extent that the
Georgia Business Corporation Code is hereafter amended to permit a Georgia
business corporation, without the need for shareholder approval, to provide to
its directors greater rights to indemnification or advances for expenses than
those specifically set forth hereinabove, this Article shall be deemed amended
to require such greater indemnification or more liberal advances for expenses
to the corporation's directors and officers, in each case consistent with the
Georgia Business Corporation Code as so amended from time to time. No
amendment, modification or rescission of this Article, or any provision hereof,
the effect of which would diminish the rights to indemnification or advancement
of expenses as set forth herein shall be effective as to any person with
respect to any action taken or omitted by such person prior to such amendment,
modification or rescission.
Section 9.18 Severability. To the extent that the provisions of
this Article are held to be inconsistent with the provisions of Part 5 of
Article 8 of the Georgia Business Corporation Code, such provisions of such
Code shall govern. In the event that any of the provisions of this Article
(including any provision within a single section, subsection, division or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions of this Article shall remain
enforceable to the fullest extent permitted by law.
ARTICLE TEN
Miscellaneous
Section 10.1 Inspection of Books and Records. The Board of
Directors shall have power to determine which accounts, books and records of
the corporation shall be opened to the inspection of shareholders, except those
as may by law specifically be made open to inspection, and shall have power to
fix reasonable rules and regulations not
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<PAGE> 24
in conflict with the applicable law for the inspection of accounts, books and
records which by law or by determination of the Board of Directors shall be
open to inspection. Without the prior approval of the Board of Directors in
their discretion, the right of inspection set forth in Section 14-2-1602(c) of
the Code shall not be available to any shareholder owning two (2%) percent or
less of the shares outstanding.
Section 10.2 Fiscal Year. The Board of Directors is authorized
to fix the fiscal year of the corporation and to change the same from time to
time as it deems appropriate.
Section 10.3 Corporate Seal. If the Board of Directors
determines that there should be a corporate seal for the corporation, it shall
be in the form as the Board of Directors may from time to time determine.
Section 10.4 Annual Financial Statements. In accordance with
the Code, the corporation shall prepare and provide to shareholders such
financial statements as may be required by the Code.
Section 10.5 Conflict With Articles of Incorporation. In the
event that any provision of these bylaws conflicts with any provision of the
articles of incorporation, the articles of incorporation shall govern.
ARTICLE ELEVEN
Amendments
Section 11.1 Power to Amend Bylaws. The Board of Directors
shall have power to alter, amend or repeal these bylaws or adopt new bylaws,
but any bylaws adopted by the Board of Directors may be altered, amended or
repealed, and new bylaws adopted, by the shareholders. The shareholders may
prescribe by expressing in the action they take in adopting or amending any
bylaw or bylaws that the bylaw or bylaws so adopted or amended shall not be
altered, amended or repealed by the Board of Directors.
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<PAGE> 1
EXHIBIT 4.1
Indenture, dated August 22, 1996, between Printpack, Inc. and Fleet National
Bank relating to the 9-7/8% Senior Notes due 2004.
<PAGE> 2
EXECUTION COPY
________________
PRINTPACK, INC.
the Company
_________________
SERIES A AND SERIES B
9-7/8% SENIOR NOTES DUE 2004
_________________
INDENTURE
Dated as of August 22, 1996
_________________
FLEET NATIONAL BANK
________________________
As Trustee
<PAGE> 3
CROSS-REFERENCE TABLE*
<TABLE>
<S> <C>
Trust Indenture
Act Section Indenture Section
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.10
(c) N.A.
311 (a) 7.11
(b) 7.11
(c) N.A.
312 (a) 2.05
(b) 10.03
(c) 10.03
313 (a) 7.06
(b)(1) N.A.
(b)(2) 7.06;7.07
(c) 7.06;10.02
(d) 7.06
314 (a) 4.03;4.04
(b) N.A.
(c)(1) 10.04
(c)(2) 10.04
(c)(3) N.A.
(d) N.A.
(e) 10.05
(f) N.A.
315 (a) N.A.
(b) N.A.
(c) N.A.
(d) N.A.
(e) 6.11
316 (a)(last sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) N.A.
(a)(2) N.A.
(b) 6.07
(c) N.A.
317 (a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318 (a) N.A.
(b) N.A.
(c) 10.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 4
INDENTURE dated as of August 22, 1996 between PRINTPACK, INC.,
a Georgia corporation (the "Company") and Fleet National Bank, as trustee (the
"Trustee").
The Company and the Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the holders (the "Holders")
of the 9-7/8% Series A Senior Notes due 2004 of the Company (the "Series A
Notes") and the 9-7/8% Series B Senior Notes due 2004 of the Company (the
"Series B Notes" and, together with the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Acquisition" means the acquisition of assets of JR Flexible by
the Company pursuant to an Asset Purchase Agreement, dated as of April 10,
1996, between the Company and James River, as amended.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.
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<PAGE> 5
"Agent" means any Registrar, Paying Agent or co-registrar or
any successor thereto.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback) other than sales of inventory or obsolete or excess equipment or
equipment that is no longer useable, in each case, in the ordinary course of
business consistent with past practices (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of
the Company and its Subsidiaries taken as a whole shall be governed by the
provisions of Section 4.16 and/or Section 5.01 hereof and not by the provisions
of Section 4.10 hereof), and (ii) the issue or sale by the Company or any of
its Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in
the case of either clause (i) or (ii), whether in a single transaction or a
series of related transactions (a) that have a fair market value in excess of
$1.0 million or (b) for net proceeds in excess of $1.0 million. Notwithstanding
the foregoing: (i) a transfer of assets by the Company to a Controlled
Subsidiary or by a Controlled Subsidiary to the Company or to another
Controlled Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned
Subsidiary to the Company or to another Wholly Owned Subsidiary, (iii) sales of
Target Assets, (iv) a sale of Receivables to or by the Receivables Subsidiary
and (v) a Permitted Investment or Restricted Payment that is permitted by the
provisions of Section 4.07 hereof shall not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Beneficial Owner" (including, with correlative meanings,
"Beneficially Owned" and "Beneficial Ownership") means, with respect to any
Capital Stock, a "person," as such term is used in Section 13(d)(3) of the
Exchange Act, that is a "beneficial owner," as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act, of such Capital Stock.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a balance sheet
in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
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<PAGE> 6
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of twelve months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding twelve months and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500.0 million
and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above without regard to the maturities of
such underlying securities entered into with any financial institution meeting
the qualifications specified in clause (iii) above, (v) commercial paper having
the highest rating obtainable from Moody's Investors Service, Inc. or Standard
& Poor's Corporation and in each case maturing within six months after the date
of acquisition, and (vi) deposit accounts with domestic commercial banks.
"Certificated Securities" means Notes that are in the form of
the Notes attached hereto as Exhibit A, that do not include the information
called for by footnotes 1 and 3 thereof.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Principals or their Related
Parties (as defined below), (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than the
Principals and their Related Parties, becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 35% of the voting stock of the Company or (iv) the
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors.
"Commission" means the Securities and Exchange Commission.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period plus (i)
an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale of such Person or any of its Subsidiaries (to the
extent such losses were deducted in computing such Consolidated Net Income),
plus (ii) provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (iii) consolidated
interest expense of such Person and its Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including,
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<PAGE> 7
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings or any Receivables Facility, and net payments (if any)
pursuant to Hedging Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles and
transaction fees and expenses incurred by the Company in connection with the
Acquisition, the New Credit Agreement, any Receivables Facility and the Notes
and in connection with subsequent acquisitions and financings) and other
non-cash charges (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of such
Person and its Subsidiaries for such period, to the extent that such
depreciation, amortization and other non-cash charges were deducted in
computing such Consolidated Net Income, plus (v) charges and expenses related
to the termination or modification of JR Flexible employee benefit plans in
effect on the date of this Indenture, to the extent that such charges and
expenses were deducted in computing such Consolidated Net Income, in each case,
on a consolidated basis and determined in accordance with GAAP. Notwithstanding
the foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of
the referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in same proportion) that the Net
Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for
any period, the aggregate of the Net Income of such Person and its Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net
Income of any Subsidiary shall be excluded to the extent that the declaration
or payment of dividends or similar distributions by that Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change
in accounting principles shall be excluded, (v) any extraordinary items and any
gains or losses in connection with Asset Sales or reserves related thereto
shall be excluded, (vi) any charges or reserves taken for severance, plant
closings, equipment relocations and other charges related to the consolidation
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<PAGE> 8
and rationalization of JR Flexible initiated within 18 months of the date of
this Indenture shall be excluded and (vii) any charge taken for severance
relating to the early retirement program implemented in fiscal year 1996 shall
be excluded.
"Continuing Directors" means, as of any date of determination,
any member of the board of directors of the Company who (i) was a member of
such board of directors on the date of this Indenture or (ii) was nominated for
election or elected to such board of directors with the approval of a majority
of the Continuing Directors who were members of such board of directors at the
time of such nomination or election.
"Controlled Subsidiary" of any Person means a Subsidiary of
such Person (which may include the Receivables Subsidiary) (i) 90% or more of
the total Equity Interests or other ownership interests of which (other than
directors qualifying shares) shall at the time be owned by such Person or by
one or more Controlled Subsidiaries of such Person and (ii) of which such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management or policies, whether through the ownership of
voting securities, by agreement or otherwise.
"Corporate Trust Office of the Trustee" shall be at the address
of the Trustee specified in Section 10.02 of this Indenture or such other
address as to which the Trustee gives notice to the Company.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, until a successor shall
have been appointed and become such pursuant to the applicable provision of
this Indenture and, thereafter, "Depositary" shall mean or include such
successor.
"Designated Senior Debt" means (i) so long as any Senior Bank
Debt is outstanding, the Senior Bank Debt, (ii) thereafter, any other Senior
Debt permitted under the Senior Subordinated Note Indenture, the principal
amount of which is $25.0 million or more and that has been designated by the
Company as "Designated Senior Debt" and (iii) holders of at least 25% of the
then outstanding Notes.
"Disqualified Stock" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof, in whole or in part, on or prior to the
date that is 91 days after the date on which the Notes mature.
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<PAGE> 9
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means the offer that may be made by the
Company pursuant to the Registration Rights Agreement to issue Series B Notes
in exchange for Series A Notes.
"Existing Employment Agreements" means (a) the Deferred Income
Agreements, dated as of December 17, 1984, with each of Robert B. Paxton,
Edward J. Hilbert, Jr. and a Deferred Income Agreement dated as of July 11,
1996 with Neil Williams, (b) the Deferred Compensation Agreement, dated as of
July 1, 1985, with Robert T. Meyer, (c) the Family Security Agreements with
each of Dennis M. Love, R. Michael Hembree, Thomas J. Dunn and Nicklas D.
Stucky and (d) the Amended and Restated Employment Agreement, dated June 23,
1983, by and between the Company and J. Erskine Love, Jr.
"Existing Indebtedness" means up to $18.0 million in aggregate
principal amount of Indebtedness of the Company and its Subsidiaries (other
than Indebtedness under the New Credit Agreement) in existence on the date of
this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any
period, the sum of (i) the consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings or any Receivables Facility, and net payments (if any)
pursuant to Hedging Obligations) and (ii) the consolidated interest expense of
such Person and its Subsidiaries that was capitalized during such period, and
(iii) any interest expense on Indebtedness of another Person that is Guaranteed
by such Person or one of its Subsidiaries or secured by a Lien on assets of
such Person or one of its Subsidiaries (whether or not such Guarantee or Lien
is called upon) and (iv) the product of (a) all cash dividend payments (and
non-cash dividend payments in the case of a Person that is a Subsidiary) on any
series of preferred stock of such Person, times (b) a fraction, the numerator
of which is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such Person, expressed
as a decimal, in each case, on a consolidated basis and in accordance with
GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Subsidiaries incurs, assumes, Guarantees or redeems
any Indebtedness (other than revolving credit borrowings) or issues preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on which the event for
which the
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<PAGE> 10
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation
Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect to such incurrence, assumption, Guarantee or redemption of
Indebtedness, or such issuance or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to
have occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated without
giving effect to clause (iii) of the proviso set forth in the definition of
Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, and
(iii) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges shall not be obligations of the
referent Person or any of its Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"Global Note" means a Note that contains the paragraph referred
to in footnote 1 and the additional schedule referred to in footnote 3 to the
form of the Note attached hereto as Exhibit A.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of
which guarantee or obligations the full faith and credit of the United States
is pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates.
"Holder" means a Person in whose name a Note is registered.
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<PAGE> 11
"Indebtedness" means, for purposes of the Indenture, with
respect to any Person, any indebtedness of such Person, whether or not
contingent, in respect of borrowed money, including without limitation
certificates of participation in Receivables or any similar instruments and
certificates (or other than any interests in the Receivables held by the
Receivables Subsidiary), or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, as well as all such indebtedness of others secured by a
Lien on any asset of such Person (whether or not such indebtedness is assumed
by such Person) and, to the extent not otherwise included, the Guarantee by
such Person of any such indebtedness of any other Person; provided, however,
that Indebtedness shall not include any servicing or guarantee of servicing
obligations with respect to Receivables or any payments pursuant to a Tax
Incentive Program. The amount of Indebtedness evidenced by a certificate of
participation or other interests in Receivables and similar instruments or
certificates will be deemed to be the outstanding amount of such certificate of
participation or other interests.
"Indenture" means this Indenture, as amended, modified or
supplemented from time to time.
"Initial Public Offering" means an underwritten public offering
of common Capital Stock of the Company registered under Securities Act (other
than a public offering registered on Form S-8 under the Securities Act).
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP; provided that an acquisition of assets, Equity Interests or other
securities by the Company for consideration consisting of common equity
securities of the Company shall not be deemed to be an Investment. If the
Company or any Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Subsidiary of the Company such that,
after giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of.
"Issue Date" means August 22, 1996.
"James River" means James River Corporation of Virginia, a
Virginia corporation.
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<PAGE> 12
"JR Flexible" means the Flexible Packaging Group of James River.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or in the city in which the
principal corporate trust office of the Trustee or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that
place on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction), other than liens and setoff rights with respect to deposit
accounts.
"Liquidated Damages" means all liquidated damages owed pursuant
to Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions)
or (b) the disposition of any securities by such Person or any of its
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not
loss), together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any other expenses
incurred or to be incurred as a result thereof (including, without limitation,
severance, relocation, lease termination and other similar expenses), taxes
paid or payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements), amounts required
to be applied to the repayment of Indebtedness (other than term Indebtedness or
revolving Indebtedness under the New Credit Agreement or any one or more
successor or additional bank facilities) secured by a Lien on the asset or
assets that were the subject of such Asset Sale and any reserve for adjustment
in respect of the sale price of such asset or assets established in accordance
with GAAP.
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<PAGE> 13
"New Credit Agreement" means that certain Credit Agreement,
dated as of August 22, 1996, by and among the Company, the Lenders named
therein and The First National Bank of Chicago, as Agent, providing for term
loans, revolving credit borrowings and other financial accommodations,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced, in whole or in part, from
time to time.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Subsidiaries (other than the Receivables Subsidiary)
(a) provides any credit support that would constitute Indebtedness or (b) is
directly or indirectly liable (as a guarantor or otherwise); and (ii) as to
which the lenders have agreed or been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its
Subsidiaries (other than the Receivables Subsidiary); provided that,
notwithstanding the foregoing, the Company and any of its other Subsidiaries
that sell Receivables to the Receivables Subsidiary shall be allowed to provide
such representations, warranties, covenants and indemnities as are customarily
required in such transactions so long as no such representations, warranties,
covenants or indemnities constitute a Guarantee of payment or recourse against
credit losses.
"Note Custodian" means the Trustee, as custodian with respect
to the Notes in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chief
Executive Officer, the President, the Vice President * Finance and
Administration, the Vice President * Business Development, the Treasurer, any
Assistant Treasurer, the Controller or the Secretary.
"Officers' Certificate" means a certificate signed on behalf of
a Person by two Officers of such Person, one of whom must be the principal
executive officer, the principal financial officer or the principal accounting
officer of such Person, that meets the requirements of Section 10.05 hereof.
"Opinion of Counsel" means a written opinion in form and
substance satisfactory to, and from legal counsel who is reasonably acceptable
to the Trustee that meets the requirements of Section 10.05 hereof. Such
counsel may be an employee of or counsel to the Company, any Subsidiary of the
Company or the Trustee.
"Pari Passu Debt" means Indebtedness that ranks pari passu in
right of payment with the Notes or the Senior Subordinated Notes, as the case
may be.
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<PAGE> 14
"Permitted Investments" means (a) any Investment in the Company
or in a Controlled Subsidiary of the Company; (b) any Investment in Cash
Equivalents; (c) any Investment by the Company or any Subsidiary of the Company
in a Person, if as a result of such Investment (i) such Person becomes a
Controlled Subsidiary of the Company or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Controlled
Subsidiary of the Company; provided, however, that if the Person in either of
subclauses (i) and (ii) of this clause (c) owns Equity Interests of the Company
at the time of such Investment by the Company or a Subsidiary, such Investment
shall not be a Permitted Investment; (d) any Restricted Investment made as a
result of the receipt of non-cash consideration from an Asset Sale that was
made pursuant to and in compliance with the provisions of Section 4.10 hereof;
(e) any Investment in trade receivables or interests therein in the ordinary
course of business; (f) Investments received in settlement of trade receivables
created in the ordinary course of business and owing to the Company or any
Subsidiary or in satisfaction of any judgment with respect to any such trade
receivable; and (g) other Investments in any Person (other than a Person that
is an Affiliate of the Company on the Issue Date) having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (g) that are at the time
outstanding, not to exceed $25.0 million.
"Permitted Liens" means (i), Liens on assets of the Company and
its Subsidiaries, whether owned on the date of this Indenture or thereafter
acquired, securing all Indebtedness and other Obligations under the New Credit
Agreement or any one or more successor or additional bank facilities that are
permitted by the terms of this Indenture to be incurred; provided, however,
that in the case of Liens granted by Subsidiaries, each such Subsidiary shall
execute a Guarantee in compliance with Section 4.14 hereof; (ii) Liens in favor
of the Company or a Subsidiary; (iii) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (iv)
Liens on assets of Subsidiaries to secure Indebtedness of Subsidiaries that is
permitted by the terms of this Indenture to be incurred; (v) Liens existing on
the date of this Indenture; (vi) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted, provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (vii) Liens to
secure Indebtedness permitted to be incurred pursuant to clauses (vi) or (vii)
of the second paragraph of 4.09 hereof; (viii) Liens to secure Attributable
Debt in respect of sale and leaseback transactions that were permitted by the
terms of this Indenture to be entered into; (ix) Liens on assets of the Company
to secure Hedging Obligations that were permitted to be incurred pursuant to
the provisions of Section 4.09 hereof; (x) Liens on Receivables to reflect
sales of Receivables to and by the Receivables Subsidiary pursuant to the
Receivables Facility; (xi) Liens on assets of the Receivables Subsidiary; and
(xii) in addition to the foregoing, Liens on assets of the Company or any
Subsidiary of the Company with respect to Obligations that do not exceed $25.0
million at any one time outstanding.
"Permitted Refinancing Debt" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance,
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<PAGE> 15
renew, replace, defease or refund other Indebtedness of the Company or any of
its Subsidiaries (other than Indebtedness permitted to be incurred pursuant to
clauses (i) or (ii) of the second paragraph of Section 4.09; provided that: (i)
the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Debt does not exceed the principal amount (or accreted value, if
applicable) of the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of accrued interest and premium thereon,
if any, reasonable expenses incurred in connection therewith); (ii) such
Permitted Refinancing Debt has a final maturity date later than the final
maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Debt has a final maturity date later than the final maturity date
of, and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of the Notes as those contained in the subordination
provisions governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either
by the Company or by the Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, limited liability company,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Principals" means Dennis M. Love, James E. Love, III, Carol
Anne Love Jennison, William J. Love, Charles Keith Love, David M. Love and Gay
Love.
"Receivables" means, collectively, (a) the Indebtedness and
other obligations owed to the Company or any of its Subsidiaries (before giving
effect to any sale or transfer thereof pursuant to a Receivables Facility),
whether constituting an account, chattel paper, an instrument, a document or
general intangible, arising in connection with the sale of goods, insurance
and/or services by the Company or such Subsidiary, including, without
limitation, the obligation to pay any late fees, interest or other finance
charges with respect thereto (each of the foregoing, collectively, an "Account
Receivable"), (b) all of the Company's or such Subsidiary's interest in the
goods (including returned goods), if any, the sale of which gave rise to any
Account Receivable, and all insurance contracts with respect thereto, (c) all
other security interests or Liens and property subject thereto from time to
time, if any, purporting to secure payment of any Account Receivable, together
with all financing statements and security agreements describing any collateral
securing such Account Receivable, (d) all Guarantees, insurance and other
agreements or arrangements of whatever character from time to time supporting
or securing payment of any Account Receivable, (e) all contracts, invoices,
books and records of any kind related to any Account Receivable, (f) all cash
collections in respect of, and cash proceeds of, any of the foregoing and any
and all lockboxes, lockbox accounts, collection accounts, concentration
accounts and similar accounts in or into which such collections and cash
proceeds are now or hereafter deposited, collected or concentrated, and (g) all
proceeds of any of the foregoing.
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<PAGE> 16
"Receivables Facility" means, with respect to any Person, any
Receivables securitization program pursuant to which such Person receives
proceeds pursuant to a pledge, sale or other encumbrance of its Receivables.
"Receivables Subsidiary" means Flexible Funding Corp., created
primarily to purchase or finance the receivables of the Company and/or its
Subsidiaries pursuant to a Receivables Facility, so long as it: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any other Subsidiary
of the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Subsidiary than
those that might be obtained at the time from Persons who are not Affiliates of
the Company; (c) is a Person with respect to which neither the Company nor any
of its other Subsidiaries has any direct obligation to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results other than to act as servicer of
Receivables; (d) has not Guaranteed or otherwise directly provided credit
support for any Indebtedness of the Company or any of its other Subsidiaries;
and (e) has at least one director on its board of directors that is not a
director or executive officer of the Company or any of its other Subsidiaries.
Notwithstanding the foregoing and without otherwise limiting Permitted
Investments, the Company may make capital contributions in the form of
Receivables transferred to the Receivables Subsidiary for non-cash
consideration to the extent necessary or desirable to prevent a disruption of
purchases of Receivables or to avoid a default under the Receivables Facility.
If, at any time, such Receivables Subsidiary would fail to meet the foregoing
requirements as a Receivables Subsidiary (other than a failure to meet the
requirements set forth in clause (e) above as a result of the death or
resignation of a director, provided that such director is promptly replaced),
it shall thereafter cease to be a Receivables Subsidiary for purposes of the
Indentures and any Indebtedness of such Receivables Subsidiary shall be deemed
to be incurred by a Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under Section 4.09
hereof, the Company shall be in default of such covenant).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 22, 1996, by and among the Company and the other
parties named on the signature pages thereto, as such agreement may be amended,
modified or supplemented from time to time.
"Related Party" with respect to any Principal means (A) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (B) any
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (A).
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Debt.
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<PAGE> 17
"Responsible Officer," when used with respect to the Trustee,
means any officer within the corporate trust administration department of the
Trustee (or any successor group of the Trustee) or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers, and also means, with respect to a particular
corporate trust matter, any other employee to whom such matter is referred
because of his knowledge of, and familiarity with, the particular subject.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Bank Debt" means the Indebtedness outstanding under the
New Credit Agreement (including, without limitation, Hedging Obligations owing
to lenders that are parties to the New Credit Agreement or to Affiliates of
such lenders), as such agreement may be restated, further amended, supplemented
or otherwise modified or replaced from time to time hereafter, together with
any refunding or replacement, in whole or in part, of such Indebtedness, to the
extent that any such Indebtedness was permitted by this Indenture to be
incurred.
"Senior Debt" means (a) the Notes, (b) the Senior Bank Debt,
(c) all additional Indebtedness and Attributable Debt that is permitted under
the Senior Subordinated Note Indenture that is not by its terms pari passu with
or subordinated to the Senior Subordinated Notes, (d) all Obligations of the
Company and its Subsidiaries with respect to the foregoing clauses (a), (b) and
(c), including post-petition interest and (e) all (including all subsequent)
renewals, extensions, amendments, refinancings, repurchases or redemptions,
modifications, replacements or refundings thereto (whether or not coincident
therewith), in whole or in part, that are permitted by this Indenture.
Notwithstanding anything to the contrary in the foregoing, Senior Debt shall
not include (i) any Indebtedness of the Company to any of its Subsidiaries,
(ii) any trade payables or (iii) any Indebtedness incurred in violation of the
Senior Subordinated Note Indenture.
"Senior Subordinated Note" means 10-5/8% Series A Senior
Subordinated Notes due 2006 and 10-5/8% Series B Senior Subordinated Notes due
2006 issued pursuant to the Senior Subordinated Note Indenture.
"Senior Subordinated Note Indenture" means the Senior
Subordinated Note Indenture, dated August 22, 1996, between the Company and the
Trustee.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
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<PAGE> 18
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or the managing general partner of which is such Person or a Subsidiary
of such Person or (b) the only general partners of which are such Person or of
one or more Subsidiaries of such Person (or any combination thereof).
"Target Assets" means any assets acquired from JR Flexible that
are sold or otherwise disposed of (other than pursuant to a Restricted Payment)
for aggregate consideration not to exceed $25.0 million.
"Tax Allocation Agreement" means that certain Tax Allocation
Agreement, dated as of the first day of the fiscal year of the parties thereto
that began after June 29, 1996, allocating tax liabilities and payments among
the Company and its Affiliates.
"Tax Incentive Program" means (i) the Payment in Lieu of Taxes
Program sponsored by the Industrial Development Board ("IDB") of the City of
Jackson, Tennessee pursuant to which JR Flexible (and after the Acquisition if
approval is granted by the IDB, the Company) (a) transfers to the IDB real
property and equipment associated with the Jackson, Tennessee operations in
return for a non-interest bearing promissory note from the IDB, which
promissory note represents the fair market value of the real property and
equipment so transferred, (b) JR Flexible or the Company, as applicable, pays a
fee in lieu of taxes to the IDB that is less than the taxes that it would
otherwise pay if it were not participating in such Payment in Lieu of Taxes
Program and (c) the IDB leases such real property and equipment back to JR
Flexible or the Company, as applicable, pursuant to a lease that has no
interest component and (ii) any other program sponsored by state or local
governments, authorities or political subdivisions that is materially similar
to the Payment in Lieu of Taxes Program and is equally beneficial from the
Holders' perspective.
"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, except as provided by Section 9.03 hereof.
"Total Assets" means, with respect to any Person as of any
date, the total consolidated assets of such Person and its Subsidiaries as of
such date, as reflected on the most recently available internal consolidated
financial statements of such Person prepared in accordance with GAAP.
"Transfer Restricted Securities" means securities that bear or
are required to bear the legend set forth in Section 2.06 hereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
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"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned
by such Person or by one or more Wholly Owned Subsidiaries of such Person and
one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction"............................ 4.11
"Asset Sale Offer"................................. 3.09
"Asset Sale Offer Purchase Date.................... 4.10
"Asset Sale Offer Trigger Date..................... 4.10
"Calculation Date"................................. 1.01
"Change of Control Offer".......................... 4.16
"Change of Control Payment"........................ 4.16
"Change of Control Payment Date"................... 4.16
"Covenant Defeasance".............................. 8.03
"DTC".............................................. 2.03
"Event of Default"................................. 6.01
"Excess Proceeds".................................. 4.10
"incur"............................................ 4.09
"Legal Defeasance"................................. 8.02
"Offer Amount"..................................... 3.09
"Offer Period"..................................... 3.09
"Paying Agent"..................................... 2.03
"Payment Default".................................. 6.01
"Purchase Date".................................... 3.09
"Registrar"........................................ 2.03
"Restricted Payments".............................. 4.07
</TABLE>
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.
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The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligors" on the Notes means the Company and any successor
obligors upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement or successor sections or
rules adopted by the Commission from time to time.
ARTICLE 2
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 part of this Indenture. The
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Notes may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject or usage. Each Note
shall be dated the date of its authentication. The Notes shall be issued
initially in denominations of $1,000 and integral multiples thereof.
Notes issued in global form shall be substantially in the form
of Exhibit A attached hereto (including the text referred to in footnote 1 and
the additional schedule referred to in footnote 3 thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A attached hereto
(but without including the text referred to in footnote 1 and the additional
schedule referred to in footnote 3 thereto). Each Global Note shall represent
such of the outstanding Notes as shall be specified therein and each shall
provide that it shall represent the aggregate amount of outstanding Notes from
time to time endorsed thereon and that the aggregate amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers of the Company shall sign the Notes by manual or
facsimile signature. The seal of the Company, if any, shall be reproduced on
the Notes and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture. The form of the Trustee's
certificate of authentication to be borne by the Notes shall be substantially
as set forth in Exhibit A attached hereto.
The Trustee shall, upon a written order of the Company signed
by two Officers of the Company directing the Trustee to authenticate the Notes
and certifying that all conditions precedent to the issuance of the Notes
contained herein have bee complied with, authenticate Notes for original issue
up to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or Affiliates of the Company.
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<PAGE> 22
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where Notes
may be presented for registration of transfer or for exchange ("Registrar") and
(ii) an office or agency where Notes may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent, Registrar or co-registrar without prior notice to any
Holder. The Company shall notify the Trustee in writing and the Trustee shall
notify the Holders of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent, 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.
Such agreement shall implement the provisions of this Indenture that relate to
such Agent. The Company shall notify the Trustee of the name and address of any
such Agent. If the Company fail to maintain a Registrar or Paying Agent, or
fail to give the foregoing notice, the Trustee shall act as such, and shall be
entitled to appropriate compensation in accordance with Section 7.07 hereof.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoint the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company will 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, interest and Liquidated Damages,
if any, on the Notes, and will promptly 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 and to account for any funds disbursed by it prior to such time.
Upon payment over to the Trustee, the Paying Agent (if other than the Company
or a Subsidiary) shall have no further liability for the money delivered to the
Trustee. If the Company or a Subsidiary acts as Paying Agent, such Person shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by such Person as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee shall serve as
Paying Agent.
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<PAGE> 23
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee, at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders,
including the aggregate principal amount of Notes held by each thereof, and the
Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Certificated Securities. When
Certificated Securities are presented by a Holder to the Registrar or a
co-registrar with a request:
(x) to register the transfer of the Certificated Securities;
or
(y) to exchange such Certificated Securities for an equal
principal amount of Certificated Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Certificated Securities presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing; and
(ii) in the case of a Certificated Security that is a
Transfer Restricted Security, such request shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for
registration in the name of such Holder,
without transfer, a certification to that
effect from such Holder (in substantially the
form of Exhibit B attached hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A
under the Securities Act or to an "Accredited
Investor" (as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) in
accordance with Regulation D under the
Securities Act, or pursuant to an exemption
from registration in
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accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective
registration statement under the Securities
Act, a certification to that effect from such
Holder (in substantially the form of Exhibit B
attached hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another
exemption from the registration requirements of
the Securities Act, a certificate to that
effect from such Holder (in substantially the
form of Exhibit B attached hereto) and an
Opinion of Counsel from such Holder or the
transferee reasonably acceptable to the Company
and to the Registrar to the effect that such
transfer is in compliance with the Securities
Act.
(b) Transfer of a Certificated Security for a Beneficial Interest in a
Global Note. A Certificated Security may not be exchanged for a beneficial
interest in a Global Note except upon satisfaction of the requirements set
forth below. Upon receipt by the Trustee of a Certificated Security, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(i) if such Certificated Security is a Transfer Restricted
Security, a certification from the Holder thereof (in substantially
the form of Exhibit B hereto) to the effect that such Certificated
Security is being transferred by such Holder either (x) to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities
Act or (y) based upon an Opinion of Counsel from such Holder or the
transferee reasonably acceptable to the Company, the Trustee and to
the Registrar, pursuant to another exemption from the registration
requirements of the Securities Act; and
(ii) whether or not such Certificated Security is a Transfer Restricted
Security, written instructions from the Holder thereof
directing the Trustee to make, or to direct the Note Custodian to
make, an endorsement on the Global Note to reflect an increase in
the aggregate principal amount of the Notes represented by the
Global Note,in which case the Trustee shall cancel such
Certificated Security in accordance with Section 2.11 hereof and
cause, or direct the Note Custodian to cause, in accordance with
the standing instructions and procedures existing between the
Depositary and the Note Custodian, the aggregate principal amount
of Notes represented by the Global Note to be increased
accordingly. If no Global Notes are then outstanding, the Company
shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall
authenticate, a new Global Note in the appropriate principal
amount.
(c) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depositary, in accordance with
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this Indenture and the procedures of the Depositary therefor, which shall
include restrictions on transfer comparable to those set forth herein to the
extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a
Certificated Security.
(i) Any Person having a beneficial interest in a Global Note
may upon request exchange such beneficial interest for a
Certificated Security. Upon receipt by the Trustee of written
instructions or such other form of instructions as is
customary for the Depositary, from the Depositary or its
nominee on behalf of any Person having a beneficial interest
in a Global Note, and, in the case of a Transfer Restricted
Security, the following additional information and documents
(all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to
the Person designatedby the Depositary as being the
beneficial owner, a certification to that effect from
such Person (in substantially the form of Exhibit B
attached hereto); or
(B) if such beneficial interest is being transferred to
(1) a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act or
(2) to an "Accredited Investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act)
in accordance with Regulation D under the Securities
Act, or pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit B attached hereto);
or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferor (in substantially the
form of Exhibit B attached hereto) and an Opinion of
Counsel from the transferee or transferor reasonably
acceptable to the Company, the Trustee and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
in which case the Trustee or the Note Custodian, at the
direction of the Trustee, shall, in accordance with the
standing instructions and procedures existing between the
Depositary and the Note Custodian, cause the aggregate
principal amount of Global Notes to be reduced accordingly
and, following such reduction, the Company shall execute and
the Trustee shall authenticate and deliver to the transferee,
a Certificated Security in the appropriate principal amount.
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(ii) Certificated Securities issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.06(d)
shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such
Certificated Securities to the Persons in whose names such
Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Certificated Securities in Absence of Depositary.
If at any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary
for the Global Notes and a successor Depositary for the
Global Notes is not appointed by the Company within 90 days
after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing it elects to cause the issuance of Certificated
Securities under this Indenture, then the Company shall
execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02
hereof, authenticate and deliver, Certificated Securities in
an aggregate principal amount equal to the principal amount
of the Global Notes in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Note certificate evidencing Global Notes and
Certificated Securities (and all Notes issued in exchange the
refor or substitution thereof) shall bear legends in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
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<PAGE> 27
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE U.S. TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS (i) A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A UNDER THE SECURITIES ACT or (ii) AN ACCREDITED
INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION D UNDER THE
SECURITIES ACT, (b) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY OR ITS
TRANSFER AGENT OR REGISTRAR SO REQUESTS), (2) TO THE COMPANY
OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE U.S. OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security
represented by a Global Note) pursuant to Rule 144 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is
a Certificated Security, the Registrar shall permit
the Holder thereof to exchange such Transfer Restricted
Security for a Certificated Security that does not bear
the legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted
Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted
Security shall not be required to bear the legend set
forth in (i) above, but shall continue to be subject to
the provisions of Section 2.06(c) hereof; provided,
however, that with respect to any request for an exchange
of a Transfer Restricted Security that is
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represented by a Global Note for a Certificated Security
that does not bear the legend set forth in (i) above,
which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the Registrar
that such request is being made pursuant to Rule 144
(such certification to be substantially in the form of
Exhibit B attached hereto).
(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Company shall issue and, upon receipt
of an authentication order in accordance with Section 2.02
hereof, the Trustee shall authenticate, Series B Notes in
exchange for Series A Notes accepted for exchange in the
Exchange Offer, which Series B Notes shall not bear the
legend set forth in (i) above, and the Registrar shall
rescind any restriction on the transfer of such Notes, in
each case unless the Holder of such Series A Notes is either
(A) a broker-dealer who purchased such Series A Notes
directly from the Company to resell pursuant to Rule 144A or
any other available exemption under the Securities Act, (B) a
Person participating in the distribution of the Series A
Notes or (C) a Person who is an affiliate (as defined in Rule
144) of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in Global Notes have been exchanged for
Certificated Securities, or are redeemed, repurchased or canceled, all Global
Notes shall be returned to or retained and canceled by the Trustee in
accordance with Section 2.11 hereof. At any time prior to such cancellation, if
any beneficial interest in a Global Note is exchanged for Certificated
Securities, or are redeemed, repurchased or canceled, the principal amount of
Notes represented by such Global Note shall be reduced accordingly and an
endorsement shall be made on such Global Note, by the Trustee or the Note
Custodian, at the direction of the Trustee, to reflect such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute
and the Trustee shall authenticate Certificated
Securities and Global Notes at the Registrar's
request.
(ii) No service charge shall be made to a
Holder for any registration of transfer or
exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax
or similar governmental charge payable in
connection therewith (other than any such
transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to
Sections 3.07, 4.10, 4.16 and 9.05 hereof).
(iii) The Registrar shall not be required to
register the transfer of or exchange any
Note selected for redemption in whole or in
part, except the unredeemed portion of any Note
being redeemed in part.
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(iv) All Certificated Securities and Global Notes
issued upon any registration of transfer or
exchange of Certificated Securities or Global
Notes shall be the valid obligations of the
Company, evidencing the same debt, and entitled
to the same benefits under this Indenture, as
the Certificated Security or Global Notes
surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of
or to exchange Notes during a period
beginning at the opening of business 15
days before the date on which a notice of
redemption is mailed under Section 3.03
hereof and ending at the close of business
on the date on which such notice is
mailed; or
(B) to register the transfer of or to exchange
any Note so selected for redemption in
whole or in part, except the unredeemed
portion of any Note being redeemed in
part; or
(C) to register the transfer of or to exchange
a Note between a record date and the next
succeeding interest payment date.
(vi) Prior to due presentment for the registration
of a transfer of any Note, the Trustee,
any Agent and the Company may deem and treat
the Person in whose name any Note is registered
as the absolute owner of such Note for the
purpose of receiving payment of principal of,
premium, if any, interest and Liquidated
Damages, if any, on such Note, and neither the
Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Certificated
Securities and Global Notes in accordance with
the provisions of Section 2.02 hereof.
(viii) Each Holder of a Note agrees to indemnify the
Trustee against any liability that may
result from the transfer, exchange or
assignment of such Holder's Note in violation
of any provision of this Indenture and/or
applicable United States federal or state
securities law.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, the Note
custodian, the Depositary or the Company and the Trustee receives evidence to
its satisfaction of the destruction, loss or theft of any Note, the Company
shall issue and the Trustee, upon the written order of the Company signed by
two Officers of the Company directing the Trustee to authenticate the Notes and
certifying that all conditions precedent to the issuance of the Notes contained
herein have been complied with, shall authenticate a replacement Note if the
Trustee's requirements for
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replacements of Notes are met. An indemnity bond must be supplied by the Holder
that is sufficient in the judgment of the Trustee and the Company to protect
the Company, the Trustee, any Agent and any authenticating agent from any loss
that any of them may suffer if a Note is replaced. The Company and the Trustee
may charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser; provided that the
aggregate principal amount of the Notes shall not increase by reason of this
Section 2.08 or Section 2.07 hereof.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
Subject to Section 2.09 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
If the Paying Agent (other than the Company, a Subsidiary or
any Affiliate thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company or by any Affiliate thereof shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Responsible Officer actually knows to be so owned shall be so
considered.
SECTION 2.10. TEMPORARY NOTES.
Until Certificated Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Notes upon a
written order of the Company signed by two
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Officers of the Company directing the Trustee to authenticate the Notes and
certifying that all conditions precedent to the issuance of the Notes contained
herein have been complied with. Temporary Notes shall be substantially in the
form of Certificated Securities but may have variations that the Company and
the Trustee consider appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate Certificated Securities in exchange
for temporary Notes. Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall return
canceled Notes to the Company. The Company may not issue new Notes to replace
Notes that the Company has redeemed or paid or that have been delivered to the
Trustee for cancellation.
SECTION 2.12. RECORD DATE.
The record date for purposes of determining the identity of
Holders of the Notes entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture shall be determined as
provided for in TIA ss. 316 (c).
SECTION 2.13. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, 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 and in
Section 4.01 hereof. The Company shall notify the Trustee in writing of the
amount of defaulted interest proposed to be paid on each Note and the date of
the proposed payment. The Company shall, with the consent of the Trustee, fix
or cause to be fixed each such special record date and payment date. At least
15 days before the special record date, the Company (or, upon the written
request of the Company, the Trustee in the name and at the expense of the
Company) shall mail or cause to be mailed to the Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
SECTION 2.14. CUSIP NUMBERS.
The Company in issuing the Notes may use CUSIP numbers (if then
generally in use), and, if so, the Trustee shall use CUSIP numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the
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correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers. The Company shall
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof and paragraph 5 of the Notes, it
shall furnish to the Trustee, at least 30 days but not more than 60 days before
a redemption date, an Officers' Certificate setting forth (i) the Section of
this Indenture pursuant to which the redemption shall occur, (ii) the
redemption date, (iii) the principal amount of Notes to be redeemed and (iv)
the redemption price.
If the Company is required to make an offer to redeem Notes
pursuant to the provisions of Section 3.09 or 4.16 hereof, it shall furnish to
the Trustee at least 30 days but not more than 60 days before a redemption
date, an Officers' Certificate setting forth (i) the Section of this Indenture
pursuant to which the redemption shall occur, (ii) the redemption date, (iii)
the maximum principal amount of Notes to be redeemed, (iv) the redemption price
and (v) further setting forth a statement to the effect that (a) the Company or
one of its Subsidiaries has effected an Asset Sale and the conditions set forth
in Section 4.10 have been satisfied or (b) a Change of Control has occurred and
the conditions set forth in Section 4.16 have been satisfied.
The Company shall also provide the Trustee with any additional
information that the Trustee reasonably requests in connection with any
redemption.
.SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time,
the Trustee shall select the Notes to be redeemed among the Holders in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee deems
fair and appropriate; provided that no Notes of $1,000 or less shall be
redeemed in part. In the event of partial redemption by lot, the particular
Notes to be redeemed shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption. The Company
shall promptly notify the Trustee in writing of the listing of the Notes on any
national securities exchange.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
them selected shall be in amounts of $1,000 or
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whole multiples of $1,000; except that if all Notes of a Holder are to be
redeemed, the entire outstanding amount of Notes held by such Holder, even if
not a multiple of $1,000, shall be redeemed. Except as provided in the
preceding sentence, provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
In the event the Company is required to make an offer to redeem
Notes pursuant to Sections 3.09 and 4.10 hereof and the amount of the Excess
Proceeds from the Asset Sale are not evenly divisible by $1,000, the Trustee
shall promptly refund to the Company any remaining Excess Proceeds.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed (including
CUSIP numbers) and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, 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 in
the name of the Holder thereof upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Notes.
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At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent immediately available
funds sufficient to pay the redemption price of and accrued interest and
Liquidated Damages 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 and Liquidated Damages on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal from the redemption
date until such principal is paid and, to the extent lawful, on any interest
not paid on such unpaid principal, in each case at the rate provided in the
Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company, a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) below of this Section
3.07, the Company shall not have the option to redeem the Notes prior to August
15, 2000. Thereafter, the Company shall have the option to redeem the Notes at
any time, in whole or in part, upon not less than 30 nor
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more than 60 days' prior written notice at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on August 15 of the
years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000.......................... 104.938%
2001.......................... 103.292%
2002.......................... 101.646%
2003 and thereafter........... 100.00%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this
Section 3.07, on or prior to August 22, 1999, the Company may redeem up to 25%
in aggregate principal amount of the Notes originally issued under this
Indenture at a redemption price of 108-7/8% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date, with the net proceeds of an Initial Public Offering; provided
that at least $75.0 million in aggregate principal amount of the Notes remain
outstanding following such redemption; and provided further, that such
redemption shall have occurred within 60 days of the closing of any such
Initial Public Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made,
to the extent applicable, pursuant to the provisions of Sections 3.01 through
3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.16 hereof, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company
shall be required to commence an offer to all Holders (an "Asset Sale Offer"),
it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the
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Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and
on or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and to each of the Holders,
with a copy to the Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders of Notes.
The notice, which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made
pursuant to this Section 3.09 and Section 4.10 hereof and the
length of time the Asset Sale Offer shall remain open;
(b) the Offer Amount, the purchase price and the
Purchase Date;
(c) that any Note not tendered or accepted for
payment shall continue to accrue interest;
(d) that, unless the Company defaults in making
such payment, any Note accepted for payment pursuant to the Asset
Sale Offer shall cease to accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased
pursuant to an Asset Sale Offer may only elect to have all of such
Note purchased and may not elect to have only a portion of such
Note purchased;
(f) that Holders electing to have a Note purchased
pursuant to any Asset Sale Offer shall be required to surrender
the Note, with the form titled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, or transfer by
book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the
notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw
their election if the Company, the Depositary or the Paying Agent,
as the case may be, receive, not later than the expiration of the
Offer Period, a facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of
Notes surrendered by Holders exceeds the Offer Amount, the Company
shall select the Notes to be purchased on a pro rata basis
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(with such adjustments as may be deemed appropriate by the
Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only
in part shall be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered (or transferred
by book-entry transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating
that such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than three Business Days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Notes tendered by
such Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Note, and the Trustee, upon written request from the
Company, shall authenticate and mail or deliver such new Note to such Holder,
in a principal amount equal to any unpurchased portion of the Note surrendered.
Any Note not so accepted shall be promptly mailed or delivered by the Company
to the Holder thereof. The Company shall publicly announce the results of the
Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, interest and Liquidated Damages, if any, on the Notes on the
dates and in the manner provided in the Notes. Principal of, premium, if any,
and interest and Liquidated Damages, if any, on the Notes shall be considered
paid on the date due if the Paying Agent, if other than the Company or a
Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal of, premium, if any, interest and Liquidated
Damages, if any, on the Notes then due. The Paying Agent shall return to the
Company, no later than five days following the date of payment, any money
(including accrued interest) that exceeds such amount of principal of, premium,
if any, interest and Liquidated Damages, if any, paid on the Notes.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at
the rate equal to 1% per annum in excess of the
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then applicable interest rate on the Notes to the extent lawful; they shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain within the City and State of New
York an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency within
the City and State of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee, located at 14 Wall Street, 8th Floor, New York, N.Y. 10005, as one
such office or agency of the Company in accordance with Section 2.03 hereof.
SECTION 4.03. REPORTS.
(a) whether or not required by the rules and regulations of the
Securities and Exchange Commission (the "Commission"), so long as any Notes are
outstanding, beginning October 31, 1996, the Company shall furnish to the
Holders of Notes (i) all quarterly and annual financial information that would
be required to be contained in a filing with the Commission on Forms 10- Q
(such Form 10-Q shall be filed within 45 days of the end of the applicable
fiscal quarter) and 10-K (such Form 10-K shall be filed within 90 days of the
end of the applicable fiscal year) if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports. In addition, whether or
not required by the rules and regulations of the Commission, beginning October
31, 1996, the Company shall file a copy of all such information and reports
with the Commission for public availability (unless the Commission will
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not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. The Company shall at all times
comply with TIA ss. 314(a).
(b) For so long as any Notes remain outstanding, the Company
shall furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.
(c) 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, including the Company's
compliance with any of the covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) 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 each has kept, observed, performed
and fulfilled its obligations under this Indenture, and further stating, as to
each such Officer signing such certificate, that, to the best of his or her
knowledge, each has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and is not in default in the performance
or observance of any of the terms, provisions and conditions of this Indenture
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action each is taking or proposes to take with respect thereto) and that, to
the best of his or her knowledge, no event has occurred and remains in
existence by reason of which payments on account of the principal of, premium,
if any, interest or Liquidated Damages, if any, on the Notes is prohibited or
if such event has occurred, a description of the event and what action each is
taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations
of the American Institute of Certified Public Accountants, the year-end
financial statements delivered pursuant to Section 4.03(a) above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation reasonably
satisfactory to the Trustee) that in making the examination necessary for
certification of such financial statements, nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article 4 or Article 5 hereof or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an
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Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or propose to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall, and shall cause each of its Subsidiaries to,
pay prior to delinquency all material taxes, assessments and governmental
levies, except such as are contested in good faith and by appropriate
proceedings.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any other payment or distribution on account of the Company's Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving the Company) or to the direct or indirect
holders of the Company's Equity Interests in their capacity as such (other than
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of the Company); (ii) purchase, redeem or otherwise acquire or retire
for value any Equity Interests of the Company or any direct or indirect parent
of the Company; (iii) make any principal payment on, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes, except at final maturity; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
(a) no Default or Event of Default shall have occurred and
be continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the applicable four-quarter
period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of the Section 4.09 hereof; and
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(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Subsidiaries
after the date of this Indenture (excluding Restricted Payments
permitted by clauses (x) and (y) of the next succeeding paragraph), is
less than the sum of (i) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing after the Issue Date
to the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, less 100% of such deficit), plus (ii) 100% of the
aggregate net cash proceeds received by the Company from the issue or
sale since the Issue Date of Equity Interests of the Company or of
debt securities of the Company that have been converted into such
Equity Interests (other than Equity Interests (or convertible debt
securities) sold to a Subsidiary of the Company and other than
Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (iii) to the extent that any Restricted
Investment that was made after the Issue Date is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (B) the initial amount of such
Restricted Investment, plus (iv) $10.0 million.
The foregoing provisions shall not prohibit:
(v) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(w) the redemption, repurchase, retirement or other acquisition
of any Equity Interests of the Company in exchange for, or out of the proceeds
of, the substantially concurrent sale (other than to a Subsidiary of the
Company) of other Equity Interests of the Company (other than any Disqualified
Stock); provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other acquisition
shall be excluded from clause (c) (ii) of the preceding paragraph;
(x) the defeasance, redemption or repurchase of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Debt or the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c) (ii) of the preceding paragraph;
(y) the payment of dividends to the Company's direct parent to
pay administrative expenses in an aggregate amount not to exceed $200,000 in
any 12-month period; and
(z) the repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Company or any Subsidiary
of the Company held by any member of the Company's (or any of its
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement in effect as of the Issue Date or entered
into
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after the Issue Date with members of the management of any Person acquired
after the Issue Date in connection with the acquisition of such Person or the
repurchase of Equity Interests of the Company or any Subsidiary of the Company
held by employees, former employees, directors or former directors pursuant to
the terms of agreements (including employment agreements) approved by the Board
of Directors; provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed $3.0 million in
any 12-month period following the date of this Indenture or $10.0 million in
the aggregate since the date of this Indenture; and no Default or Event of
Default shall have occurred and be continuing immediately after such
transaction.
The amount of all Restricted Payments (other than cash) shall be the
fair market value (as determined by the Board of Directors in good faith, whose
determination shall be conclusive evidence thereof and shall be evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) on the date of the Restricted Payment of the asset(s)
proposed to be transferred by the Company or such Subsidiary, as the case may
be, pursuant to the Restricted Payment. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant "Restricted
Payments" were computed, which calculations may be based upon the Company's
latest available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary to (i)(a) pay dividends or make any other distributions to the
Company or any of its Subsidiaries (1) on its Capital Stock or (2) with respect
to any other interest or participation in, or measured by, its profits, or (b)
pay any indebtedness owed to the Company or any of its Subsidiaries, (ii) make
loans or advances to the Company or any of its Subsidiaries or (iii) transfer
any of its properties or assets to the Company or any of its Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the Issue Date, (b) the New Credit
Agreement as in effect as of the Issue Date and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, taken as a whole, no more restrictive with respect to such
dividend and other payment restrictions than those contained in the New Credit
Agreement as in effect on the Issue Date, (c) this Indenture and the Notes, (d)
applicable law, (e) any instrument governing Indebtedness of a Subsidiary of
the Company that was permitted by the terms of this Indenture to be incurred,
(f) by reason of customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices, (g)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii) above
on the property so acquired, (h) Permitted Refinancing Debt provided that the
restrictions contained in the agreements governing such Permitted Refinancing
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Debt are, taken as a whole, no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced, (i) an agreement that
has been entered into for the sale or disposition of all or substantially all
of the Equity Interests or property or assets of a Subsidiary of the Company or
(j) restrictions on the Receivables Subsidiary pursuant to the Receivables
Facility.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK .
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guaranty
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and that the Company shall not issue any Disqualified Stock and shall not
permit any of its Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio
for the Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least 2.5 to 1, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.
The foregoing provisions shall not apply to:
(i) the incurrence by the Company of term Indebtedness under
the New Credit Agreement or any one or more successor or additional
bank facilities and/or Attributable Debt in respect of sale and
leaseback transactions the net proceeds of which were applied to repay
any such term Indebtedness in an aggregate principal amount at any
time outstanding not to exceed an amount equal to $170.0 million less
the aggregate amount of all repayments, optional or mandatory, of the
principal of any such term Indebtedness (other than repayments that
are immediately reborrowed and other than repayments made with the
proceeds of sale and leaseback transactions pursuant to this clause
(i)) that have been made since the Issue Date;
(ii) (a) the incurrence by the Company of revolving
Indebtedness under the New Credit Agreement (or any one or more
successor or additional bank facilities) and letters of credit (with
letters of credit being deemed to have a principal amount equal to the
maximum potential liability of the Company thereunder) and (b) the
incurrence by the Receivables Subsidiary of Non-Recourse Debt under
the Receivables Facility; provided, however, that, the aggregate
principal amount at any time outstanding pursuant to subclauses (a)
and (b) of this clause (ii) (excluding intercompany Indebtedness of
the Receivables Subsidiary permitted by clause (viii) below) shall not
exceed an amount equal to $155.0 million less the aggregate amount of
all Net Proceeds of Asset Sales applied to permanently reduce the
commitments with respect to such revolving Indebtedness pursuant to
the provisions of Section 4.10 hereof;
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(iii) the incurrence by the Company and its Subsidiaries of
the Existing Indebtedness;
(iv) the incurrence by the Company of Indebtedness
represented by the Notes and the Senior Subordinated Notes;
(v) the incurrence by the Company of Indebtedness represented by
Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case, incurred for the purpose of financing all or
any part of the purchase price or cost of construction or improvement of
property, plant or equipment used in the business of the Company, in an
aggregate principal amount not to exceed $25.0 million at any time
outstanding;
(vi) the incurrence by any of the Company's Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new
Subsidiary; provided that (1) such Indebtedness was incurred by the
prior owner of such assets or such Subsidiary prior to such acquisition
and was not incurred in connection with, or in contemplation of, such
acquisition or is in the nature of an earnout payment or holdback
payment incurred by one of the Company's Subsidiaries in connection with
the acquisition of assets or a new Subsidiary, (2) the principal amount
(or accreted value, as applicable) of such Indebtedness, together with
any other outstanding Indebtedness incurred pursuant to this clause
(vi), does not exceed $10.0 million and (3) the Fixed Charge Coverage
Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred
would have been at least 2.5 to 1, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred at the beginning of such
four-quarter period;
(vii) the incurrence by the Company or any of its Subsidiaries
of Permitted Refinancing Debt in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by this Indenture to be incurred;
(viii) the incurrence by the Company or any of its
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Subsidiaries, and any intercompany Indebtedness arising
in connection with a Receivables Facility; provided, however, that
(1) if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinate to the payment in full of all
Obligations with respect to the Notes and (2)(A) any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a
Subsidiary and (B) any sale or other transfer of any such Indebtedness
to a Person that is not either the Company or a Subsidiary thereof
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Subsidiary, as the case may be;
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(ix) the incurrence by the Company of Hedging Obligations that
are incurred for the purpose of fixing or hedging interest rate risk
with respect to any floating rate Indebtedness that is permitted by
the terms of this Indenture to be outstanding or for the purpose of
hedging against currency exchange rate fluctuations;
(x) Guarantees by the Company and its Subsidiaries of
Indebtedness of Subsidiaries, and Guarantees by Subsidiaries of
Indebtedness of the Company, which Indebtedness is, in each case,
permitted to be incurred under this covenant other than Indebtedness
permitted to be incurred pursuant to subclause (b) of clause (ii)
above; and
(xi) the incurrence by the Company or any of its Subsidiaries
of Indebtedness (in addition to Indebtedness permitted by any other
clause of this paragraph) in an aggregate principal amount (or
accreted value, as applicable) at any time outstanding not to exceed
$25.0 million.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its
Subsidiaries to, engage in an Asset Sale unless (i) the Company (or the
Subsidiary, as the case may be) receives consideration at the time of such
Asset Sale at least equal to the fair market value (as determined by the Board
of Directors in good faith, whose determination shall be conclusive evidence
thereof and shall be evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least 80%
of the consideration therefor received by the Company or such Subsidiary is in
the form of cash; provided that the amount of (x) any liabilities (as shown on
the Company's or such Subsidiary's most recent balance sheet), of the Company
or any Subsidiary (other than contingent liabilities and liabilities that are
by their terms subordinated to the Notes or any guarantee thereof) that are
assumed by the transferee of any such assets pursuant to an agreement that
releases the Company or such Subsidiary from further liability and (y) any
notes or other obligations received by the Company or any such Subsidiary from
such transferee that are immediately converted by the Company or such
Subsidiary into cash (to the extent of the cash received), shall be deemed to
be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option, (a) to
permanently reduce, repurchase, repay or redeem term Indebtedness under the New
Credit Agreement or any one or more successor or additional bank facilities,
(b) to permanently reduce or repay revolving Indebtedness (and to
correspondingly reduce commitments with respect thereto) under the New Credit
Agreement or any one or more successor or additional bank facilities, or (c) to
the acquisition of a controlling interest in another business, the making of a
capital expenditure or the acquisition of other long-term assets, in each case,
in the same or a similar line of business as the Company was engaged in on the
date of such Asset Sale or another line of business that is reasonably related
thereto. Pending the final application of any such Net Proceeds, the Company
may temporarily reduce
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revolving Indebtedness under the New Credit Agreement or any one or more
successor or additional bank facilities or otherwise invest such Net Proceeds
in any manner that is not prohibited by this Indenture. Any Net Proceeds from
Asset Sales that are not applied or invested as provided in the first sentence
of this paragraph shall be deemed to constitute "Excess Proceeds."
As soon as practical, but in no event later than 10 business days, in
the case of clause (i) below, and 45 business days, in the case of clause (ii)
below, after any date (each, an "Asset Sale Offer Trigger Date") that the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall
(i) commence an offer to purchase the maximum principal amount of Notes and
other Indebtedness of the Company that ranks pari passu in right of payment
with the Notes (to the extent required by the instrument governing such other
Indebtedness), that may be purchased out of the Excess Proceeds and (ii) to the
extent that more than $10.0 million of Excess Proceeds remain following
consummation of the offer to purchase Notes contemplated by the preceding
clause (i), commence an offer to purchase the maximum principal amount of
Senior Subordinated Notes and other Indebtedness of the Company that ranks pari
passu in right of payment with the Senior Subordinated Notes (to the extent
required by the instrument governing such other Indebtedness), that may be
purchased out of the Excess Proceeds (each, an "Asset Sale Offer"). Any Notes
and other Pari Passu Debt to be purchased pursuant to an Asset Sale Offer shall
be purchased pro rata based on the aggregate principal amount of Notes and such
other applicable Pari Passu Debt outstanding and all Notes shall be purchased
at an offer price in cash equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase (or if such Asset Sale Offer is with respect to any discount or zero
coupon securities prior to the date of their full accretion, 100% of the
accreted value thereof on the date of purchase). To the extent that any Excess
Proceeds remain after completion of an Asset Sale Offer, the Company may use
the remaining amount for general corporate purposes and the amount of Excess
Proceeds shall be reset at zero.
In connection with each Asset Sale Offer, the Company shall mail to the
Trustee and each Holder of Notes at such Holder's registered address a notice
stating: (i) that an Asset Sale Trigger Date has occurred and that the Company
is offering to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds, at an offer price in cash equal to 100%
of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase which date of purchase (the
"Asset Sale Offer Purchase Date") shall be a Business Day specified in such
notice that is not earlier than 30 days nor later than 60 days from the date
such notice is mailed, (ii) the amount of accrued and unpaid interest and
Liquidated Damages, if any, as of the Asset Sale Offer Purchase Date, (iii)
that any Note not tendered shall continue to accrue interest (iv) that, unless
the Company defaults in the payment of the purchase price for the Notes payable
pursuant to the Asset Sale Offer, any Notes accepted for payment pursuant to
the Asset Sale Offer shall cease to accrue interest after the Asset Sale Offer
Purchase Date, (v) the procedures, consistent with this Indenture, to be
followed by Holders of Notes in order to accept an Asset Sale Offer or to
withdraw such acceptance, and (vi) such other information as may be required by
this Indenture or applicable laws and regulations.
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On the Asset Sale Offer Purchase Date, the Company shall (i) accept for
payment the maximum principal amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer that can be purchased out of the Excess
Proceeds, (ii) deposit with the Paying Agent the aggregate purchase price of
all Notes or portions thereof accepted for payment and any accrued and unpaid
interest and Liquidated Damages, if any, on such Notes as of the Asset Sale
Offer Purchase Date, and (iii) deliver or cause to be delivered to the Trustee
all Notes tendered pursuant to the Asset Sale Offer. If less than all of the
Notes tendered pursuant to the Asset Sale Offer are accepted for payment by the
Company for any reason consistent with this Indenture, selection of the Notes
to be purchased by the Company shall be in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, among Notes of a particular series
and Pari Passu Debt on a pro rata basis; provided that Notes accepted for
payment in part shall only be purchased in integral multiples of $1,000. The
appropriate Paying Agent shall promptly mail to each Holder of Notes or
portions thereof accepted for payment an amount equal to the purchase price for
such Notes plus any accrued and unpaid interest and Liquidated Damages, if any,
thereon, and the Trustee shall promptly authenticate and mail to such Holder of
Notes accepted for payment in part a new Note equal in principal amount of any
unpurchased portion of the Notes, and any Note not accepted for payment in
whole or in part shall be promptly returned to the Holder of such Note. The
Company shall announce the results of the Asset Sale Offer to Holders of the
Notes on or as soon as practicable after the Asset Sale Purchase Date.
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 any Asset Sale Offer.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with an unrelated
Person and (ii) the Company delivers to the Trustee (a) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $1.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal
or investment banking firm of national standing; provided that (v) sales of
Receivables to the Receivables Subsidiary on arm's length terms, (w) any
transaction in accordance with the terms of
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any Existing Employment Agreement as the same are in effect on the Issue Date
and any employment agreement entered into by the Company or any of its
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Subsidiary, (x) transactions between or among
the Company and/or its Controlled Subsidiaries, (y) transactions pursuant to
the Tax Allocation Agreement as in effect on the date of this Indenture and (z)
Restricted Payments and Permitted Investments that are permitted by the
provisions of Section 4.07 hereof, in each case, shall not be deemed Affiliate
Transactions. In addition, the Company shall not, and shall not permit any of
its Subsidiaries to, merge with or into, or purchase all or substantially all
of the assets of, any Affiliate, unless (i) such Affiliate had positive
Consolidated Cash Flow in each of its most recently ended two full fiscal years
and (ii) the Fixed Charge Coverage Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such transaction is entered into,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the transaction had been entered into at the
beginning of such four-quarter period, would have been higher than the actual
Fixed Charge Coverage Ratio for such four-quarter period.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens.
SECTION 4.13. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any of its Subsidiaries may enter into a sale and leaseback
transaction if (i) the Company could have incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09 hereof (ii) the gross cash proceeds of such sale and
leaseback transaction are at least equal to the fair market value (as
determined in good faith by the Board of Directors and set forth in an
Officers' Certificate delivered to the Trustee) of the property that is the
subject of such sale and leaseback transaction and (iii) the transfer of assets
in such sale and leaseback transaction is permitted by, and the Company applies
the proceeds of such transaction in compliance with, the provisions of Section
4.10 hereof. Payments or arrangements pursuant to a Tax Incentive Program shall
not constitute sale and leaseback transactions.
SECTION 4.14. LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS.
The Company shall not permit any of its Subsidiaries, directly
or indirectly, to Guarantee or pledge any assets to secure the payment of any
other Indebtedness of the Company unless such Subsidiary simultaneously
executes and delivers supplemental indentures to this
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Indenture providing for the Guarantee of the payment of the Notes by such
Subsidiary, which Guarantee shall be unsecured, but otherwise shall be senior
to or pari passu with such Subsidiary's Guarantee of or pledge to secure such
other Indebtedness. Notwithstanding the foregoing, any such Guarantee by a
Subsidiary of the Notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon any sale,
exchange or transfer, to any Person not an Affiliate of the Company, of all of
the Company's stock in, or all or substantially all the assets of, such
Subsidiary, which sale, exchange or transfer is made in compliance with the
applicable provisions of this Indenture. The form of such Guarantee is attached
as an exhibit to this Indenture.
SECTION 4.15. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect its
existence as a corporation and the corporate, partnership or other existence of
each Subsidiary, in accordance with the respective organizational documents (as
the same may be amended from time to time) of the Company or each Subsidiary
thereof and the rights (charter and statutory), licenses and franchises of the
Company and each Subsidiary; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Notes.
SECTION 4.16. REPURCHASE AT THE OPTION OF HOLDERS - CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase (the "Change of Control Payment"). Within ten days following
any Change of Control, the Company shall mail a notice to the Trustee and each
Holder stating (1) that the Change of Control Offer is being made pursuant to
this Section 4.16 and that all Notes tendered shall be accepted for payment;
(2) the purchase price and purchase date, which shall be no later than 30
business days from the date such notice is mailed (the "Change of Control
Payment Date"); (3) that any Note not tendered shall continue to accrue
interest; (4) that, unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Payment Date; (5) that Holders electing to have any Notes purchased pursuant to
a Change of Control Offer shall be required to surrender the Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Change of Control
Payment Date; (6) that Holders shall be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control
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Payment Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Notes delivered for purchase, and a statement
that such Holder is withdrawing his election to have the Notes purchased; and
(7) that Holders whose Notes are being purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof. The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Company shall not be required to make a Change of Control Offer
upon the occurrence of a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control
Offer made by the Company and purchases all Notes validly tendered and not
withdrawn under such Change of Control Offer.
The Change of Control provisions described above shall be applicable
whether or not any other provisions of this Indenture are applicable. Except as
described above with respect to a Change of Control, this Indenture does not
contain provisions that permit the Holders of the Notes to require the Company
to repurchase or redeem the Notes in the event of a takeover, recapitalization
or similar transaction.
SECTION 4.17. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY
OWNED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly Owned
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise
dispose of any Capital Stock of any Wholly Owned Subsidiary of the Company to
any Person (other than the Company or a Wholly Owned Subsidiary of the
Company), unless (a) such transfer, conveyance, sale, lease or other
disposition
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is of all the Capital Stock of such Wholly Owned Subsidiary and (b) the cash
Net Proceeds in excess of $1.0 million from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with the provisions of
Section 4.10 hereof, and (ii) shall not permit any Wholly Owned Subsidiary of
the Company to issue any of its Equity Interests (other than, if necessary,
shares of its Capital Stock constituting directors' qualifying shares) to any
Person other than to the Company or a Wholly Owned Subsidiary of the Company,
unless (a) such issuance is of all the Equity Interests of such Wholly Owned
Subsidiary and (b) the cash Net Proceeds in excess of $1.0 million from such
issuance are applied in accordance with the provisions of Section 4.10 hereof.
SECTION 4.18. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether
or not the Company is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Notes and this Indenture pursuant to
supplemental indentures in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) except in the case of a merger of the Company with or into a Wholly Owned
Subsidiary of the Company, the Company or the entity or Person formed by or
surviving any such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made shall, at the time of such transaction and after giving
pro forma effect thereto as if such transaction had occurred at the beginning
of the applicable four-quarter period, be permitted to incur at least
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$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which such Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that, in the
case of any consolidation or merger, or any sale, assignment transfer, lease,
conveyance or other disposition of all or substantially all of the assets of
the Company, from and after the date of such event, the provisions of this
Indenture referring to the Company shall refer instead to the successor
corporation and not to the Company), and may exercise every right and power of
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein; provided, however, that the
predecessor shall not be relieved from the obligation to pay the principal of
and interest on the Notes, except in the case of a sale of all of the
predecessor's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT
An "Event of Default" occurs if:
(a) default which continues for 30 days in the payment when due
of interest on, or Liquidated Damages with respect to, the Notes ;
(b) default in payment when due of the principal of or premium,
if any, on the Notes;
(c) failure by the Company to comply with the provisions of
Section 4.10 or 4.16 hereof;
(d) failure by the Company for 60 days after notice to comply
with any of its other agreements in this Indenture or the Notes;
(e) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of this Indenture, which default
(i) is
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caused by a failure to pay principal of, premium, if any, or interest
on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $10.0 million or
more;
(f) (i) failure by the Company or any of its Subsidiaries to
pay final judgments not covered by insurance aggregating in excess of
$10.0 million, which judgments are not paid, discharged, bonded or
stayed for a period of 60 days or (ii) the Company, any Significant
Subsidiary or group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary generally is (or are) not paying
its (or their) debts as they become due;
(g) except as permitted by this Indenture, any Subsidiary
Guarantee shall be held invalid or shall cease to be in full force and
effect, or any Person acting on behalf of any Guarantor shall deny or
disaffirm its obligations under its Subsidiary Guarantee;
(h) the Company, any Significant Subsidiary or group of
Subsidiaries that, taken together, would constitute a Significant
Subsidiary, pursuant or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief
against it in an involuntary case;
(iii) consents to the appointment of a
custodian of it or for all or substantially all of its
property;
(iv) makes a general assignment for the benefit of
its creditors;
(v) admits in writing the failure generally to pay
debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company, any
Significant Subsidiary or group of Subsidiaries that,
taken together, would constitute a Significant
Subsidiary, in an involuntary case;
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(ii) appoints a custodian of the Company, any
Significant Subsidiary or group of Subsidiaries that,
taken together, would constitute a Significant
Subsidiary for all or substantially all of the property
of the Company or any of its Significant Subsidiary or
group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary;
(iii) orders the liquidation of the Company, any
Significant Subsidiary or group of Subsidiaries that,
taken together, would constitute a Significant
Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding
Notes issued under this Indenture may declare all such Notes to be due and
payable immediately; provided, however, that so long as any Designated Senior
Debt is outstanding, such declaration shall not become effective until the
earlier of (i) the day which is five Business Days after the receipt by
Representatives of Designated Senior Debt (other than the Notes) of written
notice of acceleration or (ii) the date of acceleration of any Designated
Senior Debt (other than the Notes). Notwithstanding the foregoing, in the case
of an Event of Default arising from an event specified in clause (h) or (i) of
Section 6.01 hereof with respect to the Company, any Significant Subsidiary or
any group of Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes shall become due and payable without further
action or notice. Holders of the Notes may not enforce this Indenture or the
Notes except as provided in this Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the Notes may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from Holders of
the Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest)
if it determines that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to the optional redemption provisions of this Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. If an Event of Default
occurs under this Indenture prior to August 15, 2000 by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding the prohibition on redemption of the Notes prior to
such date, then an additional premium shall also become and be immediately due
and payable to the extent permitted by law upon the acceleration of the Notes,
in an amount, for each of the years beginning on August 15 of the years set
forth below, as set forth below:
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<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1996 109.875%
1997 108.641%
1998 107.407%
1999 106.172%
</TABLE>
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal of,
premium, if any, interest and Liquidated Damages, if any, on, the Notes or to
enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may on behalf of the Holders of
all of such Notes waive any existing Default or Event of Default and its
consequences under this Indenture except a continuing Default or Event of
Default in the payment of principal of, premium, if any, interest and
Liquidated Damages, if any, of such Notes.
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SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee
a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal of, premium, if
any, interest and Liquidated Damages, if any, on the Note, on or after the
respective due dates expressed in the Note (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
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SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium, if any, interest and Liquidated Damages, if
any, remaining unpaid on the Notes and interest on overdue principal and, to
the extent lawful, interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
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SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Notes allowed in any judicial proceedings relative to
the Company (or any other obligor upon the Notes), their creditors or their
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Section
6.10, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
reasonable costs and expenses of collection actually incurred;
Second: to Holders for amounts due and unpaid on the Notes
for principal, premium, interest and Liquidated Damages, if any, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium, interest and Liquidated Damages,
if any, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
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SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit instituted by
the Trustee, any suit instituted by a Holder of a Note (whether pursuant to
Section 6.07 hereof or otherwise) or a suit instituted by Holders of more than
10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
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(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraphs (a), (b), (c), (e) and (g) of this Section 7.01 and to Section
7.02.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) Except with respect to Sections 4.01 and 4.04 hereof, the
Trustee shall have no duties to inquire as to the performance of the Company's
covenants in Article 4 hereof. In addition, the Trustee shall not be deemed to
have knowledge of any Default or Event of Default except (i) any Event of
Default occurring pursuant to Sections 6.01(a) or 6.01(b) hereof or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. Subject to Section 7.01(b)(ii) hereof, the Trustee need not investigate
any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel of its selection and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
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(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient
if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders unless such Holders shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense that might be incurred by it in compliance with such request or
direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue as trustee or resign. Any Agent may do
the same with like rights and duties. The Trustee is also subject to Sections
7.10 and 7.11 hereof.
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SECTION 7.04. TRUSTEE'S DISCLAIMER
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes,
it shall not be accountable for the Company's use of the proceeds from the
Notes or any money paid to the Company or upon the Company's direction under
any provision hereof, it shall not be responsible for the use or application of
any money received by any Paying Agent other than the Trustee, and it shall not
be responsible for any statement or recital herein or any statement in the
Notes or any other document furnished or issued in connection with the sale of
the Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to the Holders of the
Notes a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or Event of Default in payment of
principal of, or premium, interest or Liquidated Damages, if any, 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 of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each December 15 beginning with the
December 15 following the date of this Indenture, and for so long as Notes
remain outstanding, the Trustee shall mail to the Holders of the Notes a brief
report dated as of such reporting date that complies with TIA Section 313(a)
(but if no event described in TIA Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted).
The Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall
also transmit by mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders
of Notes shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Notes are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Company and the Trustee
for its acceptance of this Indenture and for its services hereunder. To the
extent permitted by law, the Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee promptly upon request for all reasonable disbursements,
advances, fees and expenses incurred or made by it in addition to the
compensation for its services. Such expenses
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shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify and hold harmless the Trustee
against any and all losses, liabilities, damages, claims or expenses including
taxes (other than taxes based on the income of the Trustee) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the reasonable costs and expenses
actually incurred of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall reasonably cooperate in the
defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal of,
premium, if any, interest and Liquidated Damages, if any, on particular Notes.
Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(h) or (i) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged
from the trust hereby created by so notifying the Company. The Holders of Notes
of a majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
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(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of 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 of a Note for at least six months fails to comply with Section
7.10, such Holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee; provided
that all sums owing to the Trustee hereunder have been paid and subject to the
Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
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SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100.0 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of the Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from their obligations with respect to all outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (i) and (ii) below, and to have satisfied all their
other obligations under such Notes and this Indenture (and the Trustee, on the
written demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (i) the
rights of Holders of outstanding Notes to receive payments in respect of the
principal of, premium, if any, interest and Liquidated Damages, if any, on such
Notes when such
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payments are due from the trust referred to in Section 8.04 hereof, (ii) the
Company's obligations with respect to the Notes under Article 2 and Section
4.02 hereof, (iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, and the Company's obligations in connection therewith and
(iv) this Article 8. Subject to compliance with this Article 8, the Company
may exercise its option under this Section 8.02 notwithstanding the prior
exercise of its option under Section 8.03.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.16, 4.17 and 4.18 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.01 hereof, but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(c) through 6.01(g) hereof shall no longer constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(i) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Notes cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as shall be sufficient, in the opinion of a nationally
recognized investment bank or firm of independent public accountants,
to pay the principal of, premium, if any, interest and Liquidated
Damages, if any, on such outstanding Notes on the stated maturity or on
the applicable redemption date, as the
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case may be, and the Company must specify whether such Notes are being
defeased to maturity or to a particular redemption date;
(ii) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the applicable Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the
date hereof, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
Notes shall not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and shall be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(iii) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the applicable Trustee an Opinion of
Counsel in the United States reasonably acceptable to such Trustee
confirming that the Holders of such outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Sections 6.01(h) or 6.01(i) hereof are concerned,
at any time in the period ending on the 91st day after the date of
deposit (or greater period of time in which any such deposit of trust
funds may remain subject to bankruptcy or insolvency laws insofar as
those apply to the deposit by the Company);
(v) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under any material
agreement or instrument (other than this Indenture) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound;
(vi) the Company must have delivered to the Trustee an Opinion of
Counsel to the effect that, as of the date of such opinion, (A) the
trust funds shall not be subject to rights of holders of Indebtedness
other than the Notes and (B) assuming no intervening bankruptcy of the
Company between the date of deposit and the 91st day following the
deposit and assuming no Holder of Notes is an insider of the Company,
after the 91st day following the deposit, the trust funds shall not be
subject to the effects of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally
under any applicable United States or state law;
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(vii) the Company must deliver to the applicable Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of Notes over the
other creditors of the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others; and
(viii) the Company must deliver to the applicable Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or
the Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal of, premium, if any, interest and
Liquidated Damages, if any, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(i) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
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SECTION 8.06. REPAYMENT TO THE COMPANY
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, or premium, interest
or Liquidated Damages, if any, on, any Note and remaining unclaimed for two
years after such principal, premium, interest or Liquidated Damages has become
due and payable shall be paid to the Company on their request or (if then held
by the Company) shall be discharged from such trust; and the Holder of such
Note shall thereafter look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
shall be repaid to the Company.
SECTION 8.07. REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the
Company makes any payment of principal of, or premium, interest or Liquidated
Damages, if any, on any Note following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
Notwithstanding Section 9.02 hereof, the Company and the Trustee may amend
or supplement this Indenture or the Notes, as applicable, without the consent
of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
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(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes in the case of a merger or consolidation pursuant to
Section 5.01 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights under this Indenture of any such Holder; or
(e) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
Upon the request of the Company accompanied by a resolution of the Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in
Section 9.06 hereof, the Trustee shall join with the Company in the execution
of any amended or supplemental Indenture authorized or permitted by the terms
of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture or the Notes, as applicable, with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes),
and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, or premium, interest or Liquidated Damages, if any, on, the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for Notes).
Upon the request of the Company accompanied by a resolution of the Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders as aforesaid, and upon receipt by the
Trustee of the documents described in Section 9.06 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental
Indenture unless such amended or supplemental Indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental Indenture.
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It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of each Note affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure
of the Company to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of
a majority in aggregate principal amount of the Notes then outstanding may
waive compliance in a particular instance by the Company with any provision of
this Indenture or the Notes. However, without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Note or alter the provisions with respect to the redemption of the Notes
(other than provisions described in Sections 4.10 and 4.16 hereof);
(c) reduce the rate of or change the time for payment of interest
on any Note;
(d) waive a Default or Event of Default in the payment of principal
of, premium, if any, interest or Liquidated Damages, if any, on the
Notes (except a rescission of acceleration of the Notes by the Holders
of at least a majority in aggregate principal amount of the Notes and a
waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes,
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest or Liquidated
Damages, if any, on the Notes,
(g) waive a redemption payment with respect to any Note (other than
a payment required by any of the provisions of Section 4.16 hereof) or
(h) make any change in the foregoing amendment and waiver
provisions.
In addition, any amendment to the provisions of Sections 4.10 and 4.16
hereof, including the related definitions, shall require the consent of the
Holders of at least 75% in aggregate principal amount of the Notes issued
hereunder that are then outstanding if such amendment would adversely affect
the rights of Holders of any of the Notes.
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SECTION 9.03. 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 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder 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 becomes effective in accordance with its terms and
thereafter binds every Holder.
The Company may fix a record date for determining which Holders must
consent to such amendment or waiver. If the Company fixes a record date, the
record date shall be fixed at (i) the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders
furnished to the Trustee prior to such solicitation pursuant to Section 2.05 or
(ii) such other date as the Company shall lawfully designate.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
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ARTICLE 10
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 10.02. NOTICES
Any notice or communication by the Company or the Trustee to the others is
duly given if in writing and delivered in person or mailed by first class mail
(registered or certified, return receipt requested), telecopier or overnight
air courier guaranteeing next day delivery, to the others' address:
If to the Company:
Printpack, Inc.
4335 Wendell Drive, S.W.
Atlanta, Georgia 30336
Telecopier No.: (404) 696-4868
Telephone No.: (404) 691-5830
Attention: R. Michael Hembree
With a copy to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Telecopier No.: (404) 881-7777
Telephone No.: (404) 881-7000
Attention: Ralph F. MacDonald III, Esq.
If to the Trustee:
Fleet National Bank
777 Main Street, 11th Floor
Hartford, Connecticut 06115
__________________
Telecopier No.: (860) 986-7920
Telephone No.: (860) 986-2064
Attention: Corporate Trust Department
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<PAGE> 74
The Company or the Trustee, by notice to the others, may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when 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, or by overnight air courier guaranteeing next day delivery to its address
shown on the register kept by the Registrar. Any notice or communication shall
also be so mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives
it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 10.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section
10.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
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SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.07. NO PERSONAL LIABILITY OF PARTNERS, DIRECTORS, OFFICERS,
EMPLOYEES, AND STOCKHOLDERS.
No direct or indirect 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 or their creation.
Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.
SECTION 10.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES.
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
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SECTION 10.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall bind
their successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 10.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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<PAGE> 77
SIGNATURES
Dated as of August 22, 1996 PRINTPACK, INC.
By: /s/
-----------------------------
Name:
Title:
Dated as of August 22, 1996 FLEET NATIONAL BANK
Trustee
By: /s/
------------------------------
Name:
Title:
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EXHIBIT A
(Face of Senior Note)
9-7/8% Senior Notes due 2004
CUSIP NO.:
$100,000,000
No. _-_
PRINTPACK, INC.
promises to pay to CEDE & CO.
or registered assigns,
the principal sum of One Hundred Million
Dollars ($100,000,000) on August 15, 2004.
Interest Payment Dates: February 15 and August 15.
Record Dates: February 1 and August 1.
Dated: August 22, 1996
PRINTPACK, INC.
By: /s/
---------------------------------------
Name: Dennis M. Love
(SEAL) Title: President and Chief
Executive Officer
By: /s/
---------------------------------------
Name: R. Michael Hembree
Title: Vice President -
Finance and Administration
This is one of the
Notes referred to in the
within-mentioned Indenture:
Fleet National Bank, (SEAL)
as Trustee
By: /s/
--------------------------
Authorized Signatory
A-1
<PAGE> 79
9-7/8% Senior Notes due 2004
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC") to the Company (as defined below) or their agent for registration
of transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.1
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED, (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT
OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE U.S. (i) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER
THE SECURITIES ACT or (ii) TO AN ACCREDITED INVESTOR (AS DEFINED
IN RULE 506(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) IN
ACCORDANCE WITH REGULATION D UNDER THE SECURITIES ACT, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON MEETING THE REQUIREMENTS OF RULE
904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
- ----------------
(1) To be included only if the Note is issued in Global form.
A-2
<PAGE> 80
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY OR ITS TRANSFER AGENT
OR REGISTRAR SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE U.S. OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.2
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
(Back of Senior Note)
1. INTEREST. The Notes will be limited in aggregate principal amount to
$100,000,000 and will mature on August 15, 2004. Printpack. Inc., a Georgia
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at the rate of 9-7/8% per annum from August 22, 1996 until
maturity (including any Liquidated Damages required to be paid pursuant to the
provisions of the Registration Rights Agreement). The Company will pay
interest semi-annually in arrears on February 15 and August 15 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day
(each an "Interest Payment Date"). Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of original issuance; provided that if there is no existing
Default in the payment of interest, and if this Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date, and; provided, further, that the first Interest Payment Date shall be
February 15, 1997. The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, from time to time on demand at a rate that is 1% per annum in
excess of the rate then in effect to the extent lawful. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
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 February 1 or August 1 immediately preceding the
Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section
2.13 of the Indenture with respect to defaulted interest. The Notes will be
payable as
- ---------------
(2) This legend should be included on teh Series A Notes and omitted from the
Series B Notes.
A-3
<PAGE> 81
to principal, premium, interest and Liquidated Damages, if any, at the office
or agency of the Company maintained for such purpose or, at the option of the
Company, payment of interest and Liquidated Damages, if any, may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders; provided that payment by wire transfer of immediately available funds
will be required with respect to principal of, and premium, interest and
Liquidated Damages (if any) on, all Global Notes and all other Notes the
Holders of which shall have provided appropriate wire transfer instructions to
the Company or the Paying Agent. Until otherwise designated by the Company,
the Company's office or agency will be the office of the Trustee maintained
for such purpose. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Fleet National Bank, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of August 22, 1996 (the "Indenture") among the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made a part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended
(15 U.S. Code Section Section 77aaa-77bbbb) (the "TIA"). The Notes are
subject to all such terms and Holders are referred to the Indenture and the TIA
for a statement of such terms. The Notes are general unsecured obligations of
the Company limited to $100,000,000 in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) below of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to August 15, 2000.
Thereafter, the Company shall have the option to redeem the Notes at any time,
in whole or in part, upon not less than 30 nor more than 60 days' prior written
notice at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on August 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000 ................. 104.938%
2001 ................. 103.292%
2002 ................. 101.646%
2003 and thereafter .. 100.00%
</TABLE>
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<PAGE> 82
(b) Notwithstanding the provisions of clause (a) of this Paragraph 5, on
or prior to August 22, 1999, the Company may redeem up to 25% in aggregate
principal amount of the Notes originally issued under this Indenture at a
redemption price of 108-7/8% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the redemption date,
with the net proceeds of an Initial Public Offering; provided that at least
$75.0 million in aggregate principal amount of the Notes remain outstanding
following such redemption; and provided further, that such redemption shall
have occurred within 60 days of the closing of any such Initial Public
Offering.
6. MANDATORY REDEMPTION.
Subject to Section 4.10 and Section 4.16 of the Indenture, the Company
shall not be required to make mandatory redemption or sinking fund payments
with respect to the Notes.
7. REPURCHASE AT THE OPTION OF HOLDERS.
(a) If there is a Change of Control, each Holder of Notes will have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes pursuant to the procedures required by the Indenture and described in
such notice. The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
(b) If the Company or a Subsidiary consummates any Asset Sales, as soon as
practical, but in no event later than 10 business days in the case of clause
(i) below, and 45 business days, in the case of clause (ii) below, after any
date that the aggregate amount of Excess Proceeds exceeds $10.0 million, the
Company shall (i) commence an Asset Sale Offer to purchase the maximum
principal amount of Notes and other Indebtedness of the Company that ranks pari
passu in right of payment with the Notes (to the extent required by the
instrument governing such other Indebtedness), that may be purchased out of the
Excess Proceeds and (ii) to the extent that more than $10.0 million of Excess
Proceeds remain following the offer to purchase Notes contemplated by the
preceding clause (i), commence an Asset Sale Offer to purchase the maximum
principal amount of Senior Subordinated Notes and other Indebtedness of the
Company that ranks pari passu in right of payment with the Senior Subordinated
Notes (to the extent required by the instrument governing such other
Indebtedness), that may be purchased out of the Excess Proceeds. Any Notes or
Senior Subordinated Notes, as applicable, and other Pari Passu Debt to be
purchased pursuant to an Asset Sale Offer shall be purchased pro rata based on
the aggregate
A-5
<PAGE> 83
principal amount of Notes, Senior Subordinated Notes and such other applicable
Pari Passu Debt outstanding and all Notes and Senior Subordinated Notes shall
be purchased at an offer price in cash equal to 100% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of purchase (or if such Asset Sale Offer is with respect to any
discount or zero coupon securities prior to the date of their full accretion,
100% of the accreted value thereof on the date of purchase). To the extent
that any Excess Proceeds remain after completion of an Asset Sale Offer, the
Company may use the remaining amount for general corporate purposes and the
amount of Excess Proceeds shall be reset at zero. Holders of Notes that are
the subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related Asset Sale Offer Purchase Date and may elect to
have such Notes purchased by completing the form titled "Option of Holder to
Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION.
Notice of redemption shall be mailed by first class mail at least 30 days
but not more than 60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. Notes may be redeemed
in part but only in whole multiples of $1,000, unless all of the Notes held by
a Holder are to be redeemed. On and after the redemption date, interest ceases
to accrue on Notes or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company need not exchange or register the transfer of any Note or portion
of a Note selected for redemption, except for the unredeemed portion of any
Note being redeemed in part. Also, the Company need not exchange or register
the transfer of any Notes for a period of 15 days before the date on which a
notice of redemption is mailed or during the period between a record date and
the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes), and any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium, if any, interest or Liquidated Damages,
if any, on the Notes, except a
A-6
<PAGE> 84
payment default resulting for an acceleration that has been rescinded) or
compliance with any provision of the Indenture or the Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consent obtained in connection with a purchase of
or tender offer or exchange for Notes). Without the consent of any Holder of a
Note, the Indenture or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of Certificated Notes, to provide for the assumption of
the Company's obligations to the Holders of the Notes in the case of a merger
or consolidation, to make any change that would provide any additional rights
or benefits to the Holders of the Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default which
continues for 30 days in the payment when due of interest on, or Liquidated
Damages with respect to, the Notes; (ii) default in payment when due of the
principal of or premium, if any, on the Notes; (iii) failure by the Company to
comply with the provisions of Section 4.10 or 4.16 of the Indenture; (iv)
failure by the Company for 60 days after notice to comply with any of its other
agreements in the Indenture or the Notes; (v) default under any mortgage,
indenture or instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness for money borrowed by the Company or
any of its Subsidiaries (or the payment of which is guaranteed by the Company
or any of its Subsidiaries) whether such Indebtedness or guarantee now exists,
or is created after the date of this Indenture, which default (A) is caused by
a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (B) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$10.0 million or more; (vi) failure by the Company or any of its Subsidiaries
to pay final judgments not covered by insurance aggregating in excess of $10.0
million, which judgments are not paid, discharged, bonded or stayed for a
period of 60 days; (vii) except as permitted by the Indenture, any Subsidiary
Guarantee shall be held invalid or shall cease to be in full force and effect,
or any Person acting on behalf of any Guarantor shall deny or disaffirm its
obligations under its Subsidiary Guarantee; and (viii) certain events of
bankruptcy or insolvency with respect to the Company, any Significant
Subsidiary or group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary. The Trustee must, within 90 days after the occurrence
of a Default or Event of Default, give to the Holders notice of all uncured
Defaults or Events of Default known to it; provided that, except in the case of
a Default or Event of Default in payment of any Note, the Trustee may withhold
such notice if a committee of its Responsible Officers in good faith determines
that the withholding of such notice is in the interest of the Holders. The
Company is required to furnish annually to the Trustee a certificate as to
their compliance with the terms of the Indenture.
A-7
<PAGE> 85
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee in its individual or any
other capacity may become the owner or pledgee of Notes and may otherwise deal
with the Company or any Affiliate of the Company, with the same rights it would
have if it were not Trustee.
14. NO RECOURSE AGAINST OTHERS. No direct or indirect 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 the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Notes by accepting a Note waives and releases
all such liability. The waiver and release are part of the consideration for
issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Commission that
such a waiver is against public policy.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Notes under the Indenture,
Holders of Transfer Restricted Securities (as defined in the Registration
Rights Agreement (as defined below)) shall have all the rights set forth in the
Registration Rights Agreement dated as of August 22, 1996 among the Company
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company have
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to the 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.
19. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.
A-8
<PAGE> 86
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Printpack, Inc.
4335 Wendell Drive, S.W.
Atlanta, Georgia 30336
Attention: R. Michael Hembree
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- -------------------------------------------------------------------------------
Date:
---------------
Your Signature:
-------------------------
(Sign exactly as your name appears on the face of this Note)
Signature
Guarantee*:
--------------------
- ----------------------
* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
A-9
<PAGE> 87
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.16 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.16
Subject to Section 3.02 of the Indenture, if you want to elect to have
only part of the Note purchased by the Company pursuant to Section 4.10 or
Section 4.16 of the Indenture, state the amount you elect to have purchased:
$
-------------
Date: Your Signature:
-------------------------------
(Sign exactly as your name appears on the Note)
Tax Identification No.:
-----------------------
Signature
Guarantee*:
-------------------
- -------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
A-10
<PAGE> 88
SCHEDULE OF EXCHANGES OF CERTIFICATED SECURITIES
The following exchanges of a part of this Global Note for Certificated
Securities have been made:(1)
<TABLE>
<CAPTION>
Principal Amount of
this Signature of
Amount of decrease Amount of increase Global Note authorized
in in following such signatory of
Principal Amount of Principal Amount of decrease (or Trustee or Note
Date of Exchange this Global Note this Global Note increase) Custodian
- ----------------- ---------------- ---------------- -------------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------
(1) To be included only if the Note is to be issued in Global form.
A-11
<PAGE> 89
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 9-7/8% Senior Notes due 2004 of Printpack, Inc.
This Certificate relates to $100,000,000 principal amount of Notes held in
* ________ book-entry or *_______ definitive form by ________________ (the
"Transferor").
The Transferor*:
[ ] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Note held by the Depositary a Note or Notes
in definitive, registered form of authorized denominations in an aggregate
principal amount equal to its beneficial interest in such Global Note (or the
portion thereof indicated above); or
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
[ ] Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section 2.06(d)(i)(A) of
the Indenture).
[ ] Such Note is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A or to an "Accredited Investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) in
accordance with Regulation D under the Securities Act (in satisfaction, to the
extent applicable, of Section 2.06(a)(ii)(B), Section 2.06(b)(i)(x) or Section
2.06(d)(i)(B) of the Indenture).
- -----------------
*Check applicable box.
B-1
<PAGE> 90
[ ] Such Note is being transferred in accordance with Rule 144 or Rule 904
under the Securities Act, or pursuant to an effective registration statement
under the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
[ ] Such Note is being transferred in reliance on and in compliance with an
exemption from the registration requirements of the Securities Act, other than
Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of Counsel to
the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.06(a)(ii)(C), Section 2.06(b)(i)(y) or Section 2.06(d)(i)(C) of the
Indenture).
---------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
------------------------------------
Date:
-----------------------------
- -----------------
*Check applicable box.
B-2
<PAGE> 91
EXHIBIT C
Form of Subsidiary Guarantee
THIS GUARANTEE (as the same may be amended, modified or supplemented from
time to time, this "Guarantee"), dated as of ____________, is made by
____________________________ (hereinafter referred to as the "Guarantor") in
favor of _____________________, as trustee under the Indenture hereinafter
described (the "Trustee") for the ratable benefit of the holders from time to
time (the "Holders") of the Senior Notes (as hereinafter defined).
All terms not otherwise defined herein shall have for the purposes hereof
the meanings set forth in the Indenture (as hereinafter defined) unless the
context otherwise requires.
Recitals
A. Printpack, Inc. (the "Company") is a party to that certain Indenture
dated August 22, 1996 (as amended, supplemented or otherwise modified from time
to time, the "Indenture") among the Company and the Trustee, pursuant to which
the Company issued $100.0 million principal amount of its 9-7/8% Senior Notes
due 2004 (including all Series A and Series B Senior Notes issued from time to
time pursuant to the Indenture, collectively, the "Senior Notes"); and
B. The Guarantor is a direct or indirect Subsidiary of the Company, and
will derive both direct and indirect economic benefit from the proceeds of the
Senior Notes and other financial accommodations made to the Company under the
Indenture.
C. The Indenture requires that the Guarantor execute and deliver this
Guaranty to guarantee the payment and performance by the Company of all of its
Obligations under the Indenture and the Senior Notes, including, in each case,
all reasonable costs of collection and enforcement thereof and interest thereon
which would be owing by the Company or such Guarantor but for the effect of the
Bankruptcy Code, 11 U.S.C. Section 101 et seq. (collectively, the "Guaranteed
Obligations").
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without
limitation, any loan or advance by renewal, refinancing or extension of the
Indenture or otherwise) heretofore, now or hereafter made to or for the benefit
of the Company pursuant to the Indenture or any other agreement, instrument or
document executed pursuant to or in connection therewith, and for other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the Guarantor and the Trustee agree as follows:
1. The Guarantee. The Guarantor hereby absolutely, unconditionally and
irrevocably guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the Guaranteed Obligations. This
Guarantee shall be unsecured, but otherwise shall
C-1
<PAGE> 92
be senior to or pari passu with all of the Guarantor's guarantees or pledges
to secure other Indebtedness of the Company. This Guarantee is a guarantee of
payment and not of collection. All payments made by the Guarantor under this
Guarantee shall be paid at the place and in the manner specified in the
Indenture and the Senior Notes.
2. Amendments, etc. with respect to the Guaranteed Obligations; Waiver of
Rights. The Guarantor shall remain obligated hereunder notwithstanding that
without any reservation of rights against the Guarantor and without notice to
or further assent by the Guarantor any demand for payment of any of the
Guaranteed Obligations made by the Trustee or the Holders may be rescinded by
them and any of the Guaranteed Obligations continued, and the Guaranteed
Obligations, or the liability of any other party upon or for any part thereof,
or guarantee therefor or right of offset with respect thereto, may, from time
to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Trustee or the
Holders, and the Indenture and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Trustee or the Holders may deem advisable from time to
time or as provided in the Indenture, and any guarantee or right of offset at
any time held by the Trustee for the payment of the Guaranteed Obligations may
be sold, exchanged, waived, surrendered or released.
3. Guarantee Absolute and Unconditional. The Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by the Trustee or the
Holders upon this Guarantee, the Guaranteed Obligations, and any of them shall
conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee; and all
dealings between the Company and the Guarantor, on the one hand, and the
Trustee and the Holders, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon this Guarantee. The
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Company or the Guarantor with respect
to the Guaranteed Obligations. The Guarantor understands and agrees that this
Guarantee shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity, regularity or
enforceability of the Indenture or any of the Senior Notes, any of the
Guaranteed Obligations or guarantee or right of offset with respect thereto at
any time or from time to time held by the Trustee or the Holders, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Company against the Trustee or the Holders, or (c) any other circumstances
whatsoever (with or without notice to or knowledge of the Company or such
Guarantor) which constitute, or might be construed to constitute, an equitable
or legal discharge of the Company for the Guaranteed Obligations, or of the
Guarantor under this Guarantee, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against the Guarantor, the Trustee
and/or the Holders may, but shall be under no obligation to, pursue such rights
and remedies as it or they may have against the Company or any other Person or
against any guarantee for the Guaranteed Obligations or any right of offset
with respect thereto, and any failure by the Trustee or the Holders to pursue
such other rights or remedies or to collect any payments from the Company or
any such other Person or to realize upon any such guarantee or to exercise any
such right of offset, or any release of the Company or any such other Person
or any such guarantee or
C-2
<PAGE> 93
right of offset, shall not relieve the Guarantor of any liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Trustee and/or the
Holders against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon
the Guarantor and its successors and assigns thereof, and shall inure to the
benefit of the Trustee, and its successors, indorsees, transferees and assigns,
and the Holders from time to time of the Senior Notes until all the Guaranteed
Obligations and the obligations of the Guarantor under this Guarantee shall
have been satisfied by payment in full, notwithstanding that from time to time
during the term of the Indenture the Company may be free from any Guaranteed
Obligations.
4. Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances. The Guarantor's obligations hereunder shall remain in full
force and effect until the Guaranteed Obligations shall have been paid in full.
If at any time any payment of any of the Guaranteed Obligations is rescinded
or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, the Guarantor's obligations
hereunder with respect to such payment shall be reinstated at such time as
though such payment had been due but not made at such time.
5. Waiver by the Guarantor. The Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken by any Person
against the Company or any other Person.
6. Subrogation. Notwithstanding any payments made by the Guarantor under
this Guarantee, the Guarantor shall not be entitled to be subrogated to any of
the rights of any other Guarantor, the Trustee or any Holder against the
Company until all amounts of principal of, premium, if any, and interest and
Liquidated Damages, if any, on the Senior Notes and all other amounts payable
by the Company under the Indenture and the Senior Notes and by the Guarantor
under its Guarantee have been paid in full. If any amount shall be paid to the
Guarantor on account of such subrogation rights at any time when all of the
Guaranteed Obligations shall not have been paid in full, such amount shall be
held by the Guarantor in trust for the Trustee segregated from other funds of
the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned
over to the Trustee in the exact form received by the Guarantor (duly indorsed
by the Guarantor to the Trustee, if required), to be applied against the
Guaranteed Obligations, whether matured or unmatured, at such time and in such
order as the Trustee may determine.
7. Stay of Acceleration. In the event that acceleration of the time for
payment of any of the Guaranteed Obligations is stayed upon insolvency,
bankruptcy or reorganization of the Company, all such amounts otherwise subject
to acceleration under the terms of the Indenture and the Senior Notes shall
nonetheless be payable by the Guarantor forthwith on demand by the Trustee.
8. Merger, Consolidation or Sale of Assets.
a. The Guarantor may not consolidate with or merge with or into (whether
or not the Guarantor is the surviving Person) another corporation, Person or
entity, whether or not affiliated with the Guarantor, unless (i) subject to the
provisions of Section 8(b), the Person formed by or
C-3
<PAGE> 94
surviving any such consolidation or merger (if other than the Guarantor)
assumes all the obligations of the Guarantor, pursuant to a supplemental
Guarantee in form and substance reasonably satisfactory to the Trustee, under
the Guarantee; (ii) immediately after giving effect to such transaction, no
Default or Event of Default exists; and (iii) the Company would be permitted by
virtue of the Company's pro forma Fixed Charge Coverage Ratio, immediately
after giving effect to such transaction, to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 4.09 of the Indenture; provided, however, that the foregoing will not
apply to the consolidation or merger of the Guarantor with and into the Company
or another Guarantor.
b. In the event of a sale or other disposition of all of the assets of the
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of the Guarantor, then the Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock of the Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all of the assets of the Guarantor) will be automatically and
unconditionally released and relieved of any obligations under this Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied in
accordance with Section 4.10 of the Indenture.
9. Miscellaneous.
a. Benefits of Guarantee; Successors and Assigns. Nothing in this
Guarantee, expressed or implied, shall give to any person, other than Trustee,
the Holders and their respective successors, transferees and assigns hereunder,
any benefit or any legal or equitable rights, remedy or claim under this
Guarantee. This Guarantee shall be binding upon the Guarantor, its successors
and assigns, and inure, together with the rights and remedies of Trustee
hereunder, to the benefit of Trustee, the Holders and their respective
successors, transferees and assigns. The Guarantor shall not, without the
prior written consent of Trustee, assign any rights, duties or obligations
under this Guarantee.
b. Notices. All notices, demands and other communications hereunder
shall be given and shall be effective in accordance with the Indenture, except
that notices to the Guarantor shall be given to its address set forth on the
signature page hereof, or to such other address as the Guarantor may specify in
writing from time to time to the Trustee.
c. Amendments. Neither this Guarantee nor any provision hereof may be
amended, modified, waived, discharged or terminated other than pursuant to the
provisions of the Indenture.
d. No Personal Liability of Directors, Officers, Employees, Partners and
Stockholders. No past, present or future director, officer, employee,
incorporator, partner or stockholder of the Guarantor, as such, shall have any
liability for any obligations of the Guarantor under this Guarantee or for any
claim based on, in respect of, or by reason of, this Guarantee. Each Holder by
accepting a Note has waived and released all such liability. The waiver and
release are part of the consideration for issuance of this Guarantee.
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<PAGE> 95
e. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS GUARANTEE.
f. No Adverse Interpretation of Other Agreements. This Guarantee may not
be used to interpret any other guarantee, indenture, loan or debt agreement of
the Company, the Guarantor or their respective Subsidiaries or of any other
Person. Any such guarantee, indenture, loan or debt agreement may not be used
to interpret this Guarantee.
g. Successors. All agreements of the Guarantor in this Guarantee shall
bind its successors. All agreements of the Trustee in this Guarantee shall
bind its successors.
h. Severability. In case any provision in this Guarantee 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.
i. Counterpart Originals. The parties may sign any number of copies of
this Guarantee. Each signed copy shall be an original, but all of them
together represent the same agreement.
j. Headings, etc.
The headings of the sections of this Guarantee have been inserted for
convenience of reference only, are not to be considered a part of this
Guarantee and shall in no way modify or restrict any of the terms or provisions
hereof.
IN WITNESS WHEREOF, the undersigned Guarantor has caused this instrument
to be duly executed and delivered to the Trustee as of the date first above
written.
[GUARANTOR]
[Address]
By:
-----------------------------
Name:
Title:
Trustee
By:
-----------------------------
Name:
Title:
C-5
<PAGE> 1
EXHIBIT 4.2
Indenture, dated August 22, 1996, between Printpack, Inc. and Fleet National
Bank relating to the 10-5/8% Senior Subordinated Notes due 2006.
<PAGE> 2
EXECUTION COPY
________________
PRINTPACK, INC.
the Company
_________________
SERIES A AND SERIES B
10-5/8% SENIOR SUBORDINATED NOTES DUE 2006
_________________
INDENTURE
Dated as of August 22, 1996
_________________
FLEET NATIONAL BANK
________________________
As Trustee
_________________
<PAGE> 3
CROSS REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1).......................................... 7.10
(a)(2).......................................... 7.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A.
(a)(5).......................................... 7.10
(b)............................................. 7.10
(c)............................................. N.A.
311 (a)............................................. 7.11
(b)............................................. 7.11
(c)............................................. N.A.
312 (a)............................................. 2.05
(b)............................................. 10.03
(c)............................................. 10.03
313 (a)............................................. 7.06
(b)(1).......................................... N.A.
(b)(2).......................................... 7.06;7.07
(c)............................................. 7.06;10.0
(d)............................................. 7.06
314 (a)............................................. 4.03;4.04
(b)............................................. N.A.
(c)(1).......................................... 10.04
(c)(2).......................................... 10.04
(c)(3).......................................... N.A.
(d)............................................. N.A.
(e)............................................. 10.05
(f)............................................. N.A.
315 (a)............................................. N.A.
(b)............................................. N.A.
(c)............................................. N.A.
(d)............................................. N.A.
(e)............................................. 6.11
316 (a)(last sentence).............................. 2.09
(a)(1)(A)....................................... 6.05
(a)(1)(B)....................................... N.A.
(a)(2).......................................... N.A.
(b)............................................. 6.07
(c)............................................. N.A.
317 (a)(1).......................................... 6.08
(a)(2).......................................... 6.09
(b)............................................. 2.04
318 (a)............................................. N.A.
(b)............................................. N.A.
(c)............................................. 10.01
*This Cross Reference Table is not part of the Indenture.
<PAGE> 4
INDENTURE dated as of August 22, 1996 between PRINTPACK, INC., a Georgia
corporation (the "Company") and Fleet National Bank, as trustee (the
"Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the holders (the "Holders") of the
10-5/8% Series A Senior Subordinated Notes due 2006 of the Company (the "Series
A Notes") and the 10-5/8% Series B Senior Subordinated Notes due 2006 of the
Company (the "Series B Notes" and, together with the Series A Notes, the
"Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Acquisition" means the acquisition of assets of JR Flexible by the
Company pursuant to an Asset Purchase Agreement, dated as of April 10, 1996,
between the Company and James River, as amended.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
<PAGE> 5
"Agent" means any Registrar, Paying Agent or co-registrar or any successor
thereto.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback)
other than sales of inventory or obsolete or excess equipment or equipment that
is no longer useable, in each case, in the ordinary course of business
consistent with past practices (provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole shall be governed by the provisions of
Section 4.16 and/or Section 5.01 hereof and not by the provisions of Section
4.10 hereof), and (ii) the issue or sale by the Company or any of its
Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in the
case of either clause (i) or (ii), whether in a single transaction or a series
of related transactions (a) that have a fair market value in excess of $1.0
million or (b) for net proceeds in excess of $1.0 million. Notwithstanding the
foregoing: (i) a transfer of assets by the Company to a Controlled Subsidiary
or by a Controlled Subsidiary to the Company or to another Controlled
Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned Subsidiary
to the Company or to another Wholly Owned Subsidiary, (iii) sales of Target
Assets, (iv) a sale of Receivables to or by the Receivables Subsidiary and (v)
a Permitted Investment or Restricted Payment that is permitted by the
provisions of Section 4.07 hereof shall not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Beneficial Owner" (including, with correlative meanings, "Beneficially
Owned" and "Beneficial Ownership") means, with respect to any Capital Stock, a
"person," as such term is used in Section 13(d)(3) of the Exchange Act, that is
a "beneficial owner," as such term is defined in Rule 13d-3 and Rule 13d-5
under the Exchange Act, of such Capital Stock.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership
2
<PAGE> 6
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of twelve months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding twelve
months and overnight bank deposits, in each case with any domestic commercial
bank having capital and surplus in excess of $500.0 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in
clauses (ii) and (iii) above without regard to the maturities of such
underlying securities entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within six months after the date
of acquisition, and (vi) deposit accounts with domestic commercial banks.
"Certificated Securities" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for by
footnotes 1 and 3 thereof.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than the Principals or their Related Parties (as defined below),
(ii) the adoption of a plan relating to the liquidation or dissolution of the
Company, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than
35% of the voting stock of the Company or (iv) the first day on which a
majority of the members of the Board of Directors of the Company are not
Continuing Directors.
"Claim" means any claim arising from rescission of the purchase or sale of
the Notes, for damages arising from the purchase or sale of the Notes or for
reimbursement or contribution on account of such a claim.
"Commission" means the Securities and Exchange Commission.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with
an Asset Sale of such Person or any of its Subsidiaries (to the extent such
losses were deducted in computing such Consolidated
3
<PAGE> 7
Net Income), plus (ii) provision for taxes based on income or profits of such
Person and its Subsidiaries for such period, to the extent that such provision
for taxes was included in computing such Consolidated Net Income, plus (iii)
consolidated interest expense of such Person and its Subsidiaries for such
period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings or any Receivables Facility, and net payments (if any)
pursuant to Hedging Obligations), to the extent that any such expense was
deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles and
transaction fees and expenses incurred by the Company in connection with the
Acquisition, the New Credit Agreement, any Receivables Facility and the Notes
and in connection with subsequent acquisitions and financings) and other
non-cash charges (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of such
Person and its Subsidiaries for such period, to the extent that such
depreciation, amortization and other non-cash charges were deducted in
computing such Consolidated Net Income, plus (v) charges and expenses related
to the termination or modification of JR Flexible employee benefit plans in
effect on the date of this Indenture, to the extent that such charges and
expenses were deducted in computing such Consolidated Net Income, in each case,
on a consolidated basis and determined in accordance with GAAP. Notwithstanding
the foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of
the referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in same proportion) that the Net
Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmenntal regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net
Income of any Subsidiary shall be excluded to the extent that the declaration
or payment of dividends or similar distributions by that Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the
4
<PAGE> 8
date of such acquisition shall be excluded, (iv) the cumulative effect of a
change in accounting principles shall be excluded, (v) any extraordinary items
and any gains or losses in connection with Asset Sales or reserves related
thereto shall be excluded, (vi) any charges or reserves taken for severance,
plant closings, equipment relocations and other charges related to the
consolidation and rationalization of JR Flexible initiated within 18 months of
the date of this Indenture shall be excluded and (vii) any charge taken for
severance relating to the early retirement program implemented in fiscal year
1996 shall be excluded.
"Continuing Directors" means, as of any date of determination, any member
of the board of directors of the Company who (i) was a member of such board of
directors on the date of this Indenture or (ii) was nominated for election or
elected to such board of directors with the approval of a majority of the
Continuing Directors who were members of such board of directors at the time of
such nomination or election.
"Controlled Subsidiary" of any Person means a Subsidiary of such Person
(which may include the Receivables Subsidiary) (i) 90% or more of the total
Equity Interests or other ownership interests of which (other than directors
qualifying shares) shall at the time be owned by such Person or by one or more
Controlled Subsidiaries of such Person and (ii) of which such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies, whether through the ownership of voting securities, by
agreement or otherwise.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 10.02 of this Indenture or such other address as
to which the Trustee gives notice to the Company.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture and, thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Debt" means (i) so long as any Senior Bank Debt is
outstanding, the Senior Bank Debt, (ii) thereafter, any other Senior Debt
permitted under this Indenture, the principal amount of which is $25.0 million
or more and that has been designated by the Company as "Designated Senior Debt"
and (iii) holders of at least 25% of the then outstanding Senior Notes.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise,
5
<PAGE> 9
or redeemable at the option of the Holder thereof, in whole or in part, on or
prior to the date that is 91 days after the date on which the Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Company pursuant
to the Registration Rights Agreement to issue Series B Notes in exchange for
Series A Notes.
"Existing Employment Agreements" means (a) the Deferred Income Agreements,
dated as of December 17, 1984, with each of Robert B. Paxton, Edward J.
Hilbert, Jr. and a deferred Income Agreement dated as of July 11, 1996 with
Neil Williams, (b) the Deferred Compensation Agreement, dated as of July 1,
1985, with Robert T. Meyer, (c) the Family Security Agreements with each of
Dennis M. Love, R. Michael Hembree, Thomas J. Dunn and Nicklas D. Stucky and
(d) the Amended and Restated Employment Agreement, dated June 23, 1983, by and
between the Company and J. Erskine Love, Jr.
"Existing Indebtedness" means up to $18.0 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the New Credit Agreement) in existence on the date of this
Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Subsidiaries
for such period, whether paid or accrued (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings or any Receivables Facility, and net payments (if any) pursuant to
Hedging Obligations) and (ii) the consolidated interest expense of
such Person and its Subsidiaries that was capitalized during such period, and
(iii) any interest expense on Indebtedness of another Person that is Guaranteed
by such Person or one of its Subsidiaries or secured by a Lien on assets of
such Person or one of its Subsidiaries (whether or not such Guarantee or Lien
is called upon) and (iv) the product of (a) all cash dividend payments (and
non-cash dividend payments in the case of a Person that is a Subsidiary) on any
series of preferred stock of such Person, times (b) a fraction, the numerator
of which is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such Person, expressed
as a decimal, in each case, on a consolidated basis and in accordance with
GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs, assumes,
6
<PAGE> 10
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues preferred stock subsequent to the commencement of the period for
which the Fixed Charge Coverage Ratio is being calculated but prior to the date
on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by the Company or any of its
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall
be excluded, and (iii) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only to the
extent that the obligations giving rise to such Fixed Charges shall not be
obligations of the referent Person or any of its Subsidiaries following the
Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Global Note" means a Note that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 3 to the form of
the Note attached hereto as Exhibit A.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
7
<PAGE> 11
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, for purposes of the Indenture, with respect to any
Person, any indebtedness of such Person, whether or not contingent, in respect
of borrowed money, including without limitation certificates of participation
in Receivables or any similar instruments and certificates (or other than any
interests in the Receivables held by the Receivables Subsidiary), or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all such
indebtedness of others secured by a Lien on any asset of such Person (whether
or not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee by such Person of any such indebtedness of
any other Person; provided, however, that Indebtedness shall not include any
servicing or guarantee of servicing obligations with respect to Receivables or
any payments pursuant to a Tax Incentive Program. The amount of Indebtedness
evidenced by a certificate of participation or other interests in Receivables
and similar instruments or certificates will be deemed to be the outstanding
amount of such certificate of participation or other interests.
"Indenture" means this Indenture, as amended, modified or supplemented
from time to time.
"Initial Public Offering" means an underwritten public offering of common
Capital Stock of the Company registered under Securities Act (other than a
public offering registered on Form S-8 under the Securities Act).
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
the Company for consideration consisting of common equity securities of the
Company shall not be deemed to be an Investment. If the Company or any
Subsidiary of the Company sells or otherwise disposes of any Equity Interests
of any direct or indirect Subsidiary of the Company such that, after giving
effect to any such sale or disposition, such Person is no longer a Subsidiary
of the Company, the Company shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Subsidiary not sold or disposed of.
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<PAGE> 12
"Issue Date" means August 22, 1996.
"James River" means James River Corporation of Virginia, a Virginia
corporation.
"JR Flexible" means the Flexible Packaging Group of James River.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or in the city in which the principal
corporate trust office of the Trustee or at a place of payment are authorized
by law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction), other than liens and setoff rights with respect to deposit
accounts.
"Liquidated Damages" means all liquidated damages owed pursuant to Section
5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any other expenses
incurred or to be incurred as a result thereof (including, without limitation,
severance, relocation, lease termination and other similar expenses), taxes
paid or payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements), amounts required
to be applied to the repayment of Indebtedness (other than term Indebtedness or
revolving Indebtedness under the New Credit Agreement or any one or more
successor or additional bank facilities)
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<PAGE> 13
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"New Credit Agreement" means that certain Credit Agreement, dated as of
August 22, 1996, by and among the Company, the Lenders named therein and The
First National Bank of Chicago, as Agent, providing for term loans, revolving
credit borrowings and other financial accommodations, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced, in whole or in part, from time to time.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Subsidiaries (other than the Receivables Subsidiary) (a)
provides any credit support that would constitute Indebtedness or (b) is
directly or indirectly liable (as a guarantor or otherwise); and (ii) as to
which the lenders have agreed or been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its
Subsidiaries (other than the Receivables Subsidiary); provided that,
notwithstanding the foregoing, the Company and any of its other Subsidiaries
that sell Receivables to the Receivables Subsidiary shall be allowed to provide
such representations, warranties, covenants and indemnities as are customarily
required in such transactions so long as no such representations, warranties,
covenants or indemnities constitute a Guarantee of payment or recourse against
credit losses.
"Note Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chief Executive Officer,
the President, the Vice President - Finance and Administration, the Vice
President - Business Development, the Treasurer, any Assistant Treasurer, the
Controller or the Secretary.
"Officers' Certificate" means a certificate signed on behalf of a Person
by two Officers of such Person, one of whom must be the principal executive
officer, the principal financial officer or the principal accounting officer of
such Person, that meets the requirements of Section 10.05 hereof.
"Opinion of Counsel" means a written opinion in form and substance
satisfactory to, and from legal counsel who is reasonably acceptable to the
Trustee that meets the requirements of Section 10.05 hereof. Such counsel may
be an employee of or counsel to the Company, any Subsidiary of the Company or
the Trustee.
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<PAGE> 14
"Pari Passu Debt" means Indebtedness that ranks pari passu in right of
payment with the Notes or the Senior Notes, as the case may be.
"Permitted Investments" means (a) any Investment in the Company or in a
Controlled Subsidiary of the Company; (b) any Investment in Cash Equivalents;
(c) any Investment by the Company or any Subsidiary of the Company in a Person,
if as a result of such Investment (i) such Person becomes a Controlled
Subsidiary of the Company or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Controlled Subsidiary of the
Company; provided, however, that if the Person in either of subclauses (i) and
(ii) of this clause (c) owns Equity Interests of the Company at the time of
such Investment by the Company or a Subsidiary, such Investment shall not be a
Permitted Investment; (d) any Restricted Investment made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with the provisions of Section 4.10 hereof; (e) any
Investment in trade receivables or interests therein in the ordinary course of
business; (f) Investments received in settlement of trade receivables created
in the ordinary course of business and owing to the Company or any Subsidiary
or in satisfaction of any judgment with respect to any such trade receivable;
and (g) other Investments in any Person (other than a Person that is an
Affiliate of the Company on the Issue Date) having an aggregate fair market
value (measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (g) that are at the time outstanding,
not to exceed $25.0 million.
"Permitted Junior Securities" means equity securities or any subordinated
debt securities of the Company, or of any successor obligor (with respect to
Senior Debt), that, in the case of any such subordinated securities, (i) are
subordinated in right of payment to all Senior Debt and all securities issued
in exchange for Senior Debt that may at the time be outstanding to at least the
same extent as the Notes are subordinated as provided in this Indenture and
(ii) have a Weighted Average Life to Maturity not less than the Notes.
"Permitted Liens" means (i), Liens on assets of the Company and its
Subsidiaries, whether owned on the date of this Indenture or thereafter
acquired, securing any Senior Debt that is permitted by the terms of this
Indenture to be incurred; provided, however, that in the case of Liens granted
by Subsidiaries, each such Subsidiary shall execute a Guarantee in compliance
with Section 4.14 hereof; (ii) Liens in favor of the Company or a Subsidiary;
(iii) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature incurred
in the ordinary course of business; (iv) Liens on assets of Subsidiaries to
secure Indebtedness of Subsidiaries that is permitted by the terms of this
Indenture to be incurred; (v) Liens existing on the date of this Indenture;
(vi) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (vii) Liens to secure Indebtedness
permitted to be incurred pursuant to clauses (vi) or (vii) of the second
paragraph of 4.09 hereof; (viii) Liens to secure Attributable Debt in respect
of sale and leaseback transactions that were permitted by the terms of this
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<PAGE> 15
Indenture to be entered into; (ix) Liens on assets of the Company to secure
Hedging Obligations that were permitted to be incurred pursuant to the
provisions of Section 4.09 hereof; (x) Liens on Receivables to reflect sales of
Receivables to and by the Receivables Subsidiary pursuant to the Receivables
Facility; (xi) Liens on assets of the Receivables Subsidiary; and (xii) in
addition to the foregoing, Liens on assets of the Company or any Subsidiary of
the Company with respect to Obligations that do not exceed $25.0 million at any
one time outstanding.
"Permitted Refinancing Debt" means any Indebtedness of the Company or any
of its Subsidiaries issued in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund other Indebtedness
of the Company or any of its Subsidiaries (other than Indebtedness permitted to
be incurred pursuant to clauses (i) or (ii) of the second paragraph of Section
4.09; provided that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Debt does not exceed the principal
amount (or accreted value, if applicable) of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of accrued
interest and premium thereon, if any, reasonable expenses incurred in
connection therewith); (ii) such Permitted Refinancing Debt has a final
maturity date later than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Debt has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes
on terms at least as favorable to the Holders of the Notes as those contained
in the subordination provisions governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Subsidiary who is the obligor on
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Principals" means Dennis M. Love, James E. Love, III, Carol Anne Love
Jennison, William J. Love, Charles Keith Love, David M. Love and Gay Love.
"Purchase Agreement" means the Purchase Agreement, dated as of August 15,
1996, between the Company and Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), relating to the initial sale by the Company and the
purchase by DLJ of the Notes and the Senior Notes.
"Receivables" means, collectively, (a) the Indebtedness and other
obligations owed to the Company or any of its Subsidiaries (before giving
effect to any sale or transfer thereof pursuant to a Receivables Facility),
whether constituting an account, chattel paper, an instrument, a document or
general intangible, arising in connection with the sale of goods, insurance
and/or services by the Company or such Subsidiary, including, without
limitation, the obligation to pay
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<PAGE> 16
any late fees, interest or other finance charges with respect thereto (each of
the foregoing, collectively, an "Account Receivable"), (b) all of the Company's
or such Subsidiary's interest in the goods (including returned goods), if any,
the sale of which gave rise to any Account Receivable, and all insurance
contracts with respect thereto, (c) all other security interests or Liens and
property subject thereto from time to time, if any, purporting to secure
payment of any Account Receivable, together with all financing statements and
security agreements describing any collateral securing such Account Receivable,
(d) all Guarantees, insurance and other agreements or arrangements of whatever
character from time to time supporting or securing payment of any Account
Receivable, (e) all contracts, invoices, books and records of any kind related
to any Account Receivable, (f) all cash collections in respect of, and cash
proceeds of, any of the foregoing and any lockboxes, lockbox accounts,
collection accounts, concentration accounts and similar accounts in or into
which such collections and cash proceeds are now or hereafter deposited,
collected or concentrated, and (g) all proceeds of any of the foregoing.
"Receivables Facility" means, with respect to any Person, any Receivables
securitization program pursuant to which such Person receives proceeds pursuant
to a pledge, sale or other encumbrance of its Receivables.
"Receivables Subsidiary" means Flexible Funding Corp., created primarily
to purchase or finance the receivables of the Company and/or its Subsidiaries
pursuant to a Receivables Facility, so long as it: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any other Subsidiary of the
Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Subsidiary than
those that might be obtained at the time from Persons who are not Affiliates of
the Company; (c) is a Person with respect to which neither the Company nor any
of its other Subsidiaries has any direct obligation to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results other than to act as servicer of
Receivables; (d) has not Guaranteed or otherwise directly provided credit
support for any Indebtedness of the Company or any of its other Subsidiaries;
and (e) has at least one director on its board of directors that is not a
director or executive officer of the Company or any of its other Subsidiaries.
Notwithstanding the foregoing and without otherwise limiting Permitted
Investments, the Company may make capital contributions in the form of
Receivables transferred to the Receivables Subsidiary for non-cash
consideration to the extent necessary or desirable to prevent a disruption of
purchases of Receivables or to avoid a default under the Receivables Facility.
If, at any time, such Receivables Subsidiary would fail to meet the foregoing
requirements as a Receivables Subsidiary (other than a failure to meet the
requirements set forth in clause (e) above as a result of the death or
resignation of a director, provided that such director is promptly replaced),
it shall thereafter cease to be a Receivables Subsidiary for purposes of the
Indentures and any Indebtedness of such Receivables Subsidiary shall be deemed
to be incurred by a Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under the covenant
described under Section 4.09 hereof, the Company shall be in default of such
covenant).
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<PAGE> 17
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of August 22, 1996, by and among the Company and the other parties
named on the signature pages thereto, as such agreement may be amended,
modified or supplemented from time to time.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Debt.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the corporate trust administration department of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above designated officers, and also means, with respect to a particular
corporate trust matter, any other employee to whom such matter is referred
because of his knowledge of, and familiarity with, the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Bank Debt" means the Indebtedness outstanding under the New Credit
Agreement (including, without limitation, Hedging Obligations owing to lenders
that are parties to the New Credit Agreement or to Affiliates of such lenders),
as such agreement may be restated, further amended, supplemented or otherwise
modified or replaced from time to time hereafter, together with any refunding
or replacement, in whole or in part, of such Indebtedness, to the extent that
any such Indebtedness was permitted by this Indenture to be incurred.
"Senior Debt" means (a) the Senior Notes, (b) the Senior Bank Debt, (c)
all additional Indebtedness and Attributable Debt that is permitted under this
Indenture that is not by its terms pari passu with or subordinated to the
Notes, (d) all Obligations of the Company and its Subsidiaries with respect to
the foregoing clauses (a), (b) and (c), including post-petition interest and
(e) all (including all subsequent) renewals, extensions, amendments,
refinancings, repurchases or redemptions, modifications, replacements or
refundings thereto (whether or not coincident therewith), in whole or in part,
that are permitted by this Indenture. Notwithstanding anything to the contrary
in the foregoing, Senior Debt shall not include (i) any Indebtedness of the
Company to any of its Subsidiaries, (ii) any trade payables or (iii) any
Indebtedness incurred in violation of this Indenture.
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<PAGE> 18
"Senior Note" means 9-7/8% Series A Senior Notes due 2004 and 9-7/8%
Series B Senior Notes due 2004 issued pursuant to the Senior Note Indenture.
"Senior Note Indenture" means the Senior Note Indenture, dated August 22,
1996, between the Company and the Trustee.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Target Assets" means any assets acquired from JR Flexible that are sold
or otherwise disposed of (other than pursuant to a Restricted Payment) for
aggregate consideration not to exceed $25.0 million.
"Tax Allocation Agreement" means that certain Tax Allocation Agreement,
dated as of the first day of the fiscal year of the parties thereto that began
after June 29, 1996, allocating tax liabilities and payments among the Company
and its Affiliates.
"Tax Incentive Program" means (i) the Payment in Lieu of Taxes Program
sponsored by the Industrial Development Board ("IDB") of the City of Jackson,
Tennessee pursuant to which JR Flexible (and after the Acquisition if approval
is granted by the IDB, the Company) (a) transfers to the IDB real property and
equipment associated with the Jackson, Tennessee operations in return for a
non-interest bearing promissory note from the IDB, which promissory note
represents the fair market value of the real property and equipment so
transferred, (b) JR Flexible or the Company, as applicable, pays a fee in lieu
of taxes to the IDB that is less than the taxes that it would otherwise pay if
it were not participating in such Payment in Lieu of Taxes Program and (c) the
IDB leases such real property and equipment back to JR Flexible or the Company,
as applicable, pursuant to a lease that has no interest component and (ii) any
other program sponsored by state or local governments, authorities or political
subdivisions that is materially similar to the Payment in Lieu of Taxes Program
and is equally beneficial from the Holders' perspective.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as in effect on the date on which this Indenture is qualified
under the TIA, except as provided by Section 9.03 hereof.
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<PAGE> 19
"Total Assets" means, with respect to any Person as of any date, the total
consolidated assets of such Person and its Subsidiaries as of such date, as
reflected on the most recently available internal consolidated financial
statements of such Person prepared in accordance with GAAP.
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
SECTION 1.02.OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction" ........... 4.11
"Asset Sale Offer" ................ 3.09
"Asset Sale Offer Purchase Date ... 4.10
"Asset Sale Offer Trigger Date .... 4.10
"Calculation Date" ................ 1.01
"Change of Control Offer" ......... 4.16
"Change of Control Payment" ....... 4.16
"Change of Control Payment Date" .. 4.16
"Covenant Defeasance" ............. 8.03
"DTC" ............................. 2.03
"Event of Default" ................ 6.01
"Excess Proceeds" ................. 4.10
"incur" ........................... 4.09
"Legal Defeasance" ................ 8.02
"Offer Amount" .................... 3.09
"Offer Period" .................... 3.09
"Paying Agent" .................... 2.03
"Payment Default" ................. 6.01
"Purchase Date" ................... 3.09
"Registrar" ....................... 2.03
"Restricted Payments" ............. 4.07
</TABLE>
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<PAGE> 20
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:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligors" on the Notes means the Company and any successor obligors upon
the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
SECTION 1.04.RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement or successor sections or rules
adopted by the Commission from time to time.
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<PAGE> 21
ARTICLE 2
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 part of this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject or usage. Each Note shall be dated the date of
its authentication. The Notes shall be issued initially in denominations of
$1,000 and integral multiples thereof.
Notes issued in global form shall be substantially in the form of Exhibit
A attached hereto (including the text referred to in footnote 1 and the
additional schedule referred to in footnote 3 thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A attached hereto
(but without including the text referred to in footnote 1 and the additional
schedule referred to in footnote 3 thereto). Each Global Note shall represent
such of the outstanding Notes as shall be specified therein and each shall
provide that it shall represent the aggregate amount of outstanding Notes from
time to time endorsed thereon and that the aggregate amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers of the Company shall sign the Notes by manual or facsimile
signature. The seal of the Company, if any, shall be reproduced on the Notes
and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture. The form of the Trustee's certificate of
authentication to be borne by the Notes shall be substantially as set forth in
Exhibit A attached hereto.
The Trustee shall, upon a written order of the Company signed by two
Officers of the Company directing the Trustee to authenticate the Notes and
certifying that all conditions precedent to the issuance of the Notes contained
herein have been complied with, authenticate Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
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<PAGE> 22
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as
an Agent to deal with the Company or Affiliates of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii)
an office or agency where Notes may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent, Registrar or co-registrar without prior notice to any
Holder. The Company shall notify the Trustee in writing and the Trustee shall
notify the Holders of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any
of its Subsidiaries may act as Paying Agent, 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.
Such agreement shall implement the provisions of this Indenture that relate to
such Agent. The Company shall notify the Trustee of the name and address of
any such Agent. If the Company fail to maintain a Registrar or Paying Agent,
or fail to give the foregoing notice, the Trustee shall act as such, and shall
be entitled to appropriate compensation in accordance with Section 7.07 hereof.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoint the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company will 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, interest and Liquidated Damages, if any, on the
Notes, and will promptly 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 and to account for any funds disbursed by it prior to such time. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money delivered to the
Trustee. If the Company or a Subsidiary acts as Paying Agent, such Person
shall segregate and
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hold in a separate trust fund for the benefit of the Holders all money held by
such Person as Paying Agent. Upon any bankruptcy or reorganization proceedings
relating to the Company, the Trustee shall serve as Paying Agent.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee, at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders, including the aggregate principal amount of Notes held by each
thereof, and the Company shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Certificated Securities. When Certificated
Securities are presented by a Holder to the Registrar or a co-registrar with a
request:
(x) to register the transfer of the Certificated Securities; or
(y) to exchange such Certificated Securities for an
equal principal amount of Certificated Securities of other
authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Certificated Securities presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney,
duly authorized in writing; and
(ii) in the case of a Certificated Security that is a Transfer
Restricted Security, such request shall be accompanied by
the following additional information and documents, as
applicable:
(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification
to that effect from such Holder (in substantially the
form of Exhibit B attached hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act)
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in accordance with Rule 144A under the Securities Act or
to an "Accredited Investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) in
accordance with Regulation D under the Securities Act,
or pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of Exhibit B attached hereto); or
(C) if such Transfer Restricted Security
is being transferred in reliance on another exemption
from the registration requirements of the Securities
Act, a certificate to that effect from such Holder (in
substantially the form of Exhibit B attached hereto) and
an Opinion of Counsel from such Holder or the transferee
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
(b) Transfer of a Certificated Security for a Beneficial Interest in a
Global Note. A Certificated Security may not be exchanged for a beneficial
interest in a Global Note except upon satisfaction of the requirements set
forth below. Upon receipt by the Trustee of a Certificated Security, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(i) if such Certificated Security is a Transfer Restricted
Security, a certification from the Holder thereof (in substantially
the form of Exhibit B hereto) to the effect that such Certificated
Security is being transferred by such Holder either (x) to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities
Act or (y) based upon an Opinion of Counsel from such Holder or the
transferee reasonably acceptable to the Company, the Trustee and to
the Registrar, pursuant to another exemption from the registration
requirements of the Securities Act; and
(ii) whether or not such Certificated Security is a Transfer
Restricted Security, written instructions from the Holder thereof
directing the Trustee to make, or to direct the Note Custodian to
make, an endorsement on the Global Note to reflect an increase in
the aggregate principal amount of the Notes represented by the
Global Note,
in which case the Trustee shall cancel such Certificated Security in accordance
with Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Note Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the Trustee shall
authenticate, a new Global Note in the appropriate principal amount.
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(c) Transfer and Exchange of Global Notes. The transfer and exchange of
Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a
Certificated Security.
(i) Any Person having a beneficial interest in a Global
Note may upon request exchange such beneficial interest for a
Certificated Security. Upon receipt by the Trustee of written
instructions or such other form of instructions as is customary
for the Depositary, from the Depositary or its nominee on
behalf of any Person having a beneficial interest in a Global
Note, and, in the case of a Transfer Restricted Security, the
following additional information and documents (all of which
may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the
beneficial owner, a certification to that effect
(B) if such beneficial interest is being transferred to (1)
a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule
144A under the Securities Act or (2) to an "Accredited
Investor" (as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) in accordance with Regulation
D under the Securities Act, or pursuant to an exemption
from registration in accordance with Rule 144 or Rule
904 under the Securities Act or pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit B attached hereto); or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferor (in substantially the
form of Exhibit B attached hereto) and an Opinion of
Counsel from the transferee or transferor reasonably
acceptable to the Company, the Trustee and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
in which case the Trustee or the Note Custodian, at the direction
of the Trustee, shall, in accordance with the standing
instructions and procedures existing between the Depositary and
the Note Custodian, cause the aggregate principal amount of
Global Notes to be reduced accordingly and, following such
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reduction, the Company shall execute and the Trustee shall
authenticate and deliver to the transferee, a Certificated
Security in the appropriate principal amount.
(ii) Certificated Securities issued in exchange for a
beneficial interest in a Global Note pursuant to this Section
2.06(d) shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall
deliver such Certificated Securities to the Persons in whose
names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Certificated Securities in Absence of
Depositary. If at any time:
(i) the Depositary for the Notes notifies the Company
that the Depositary is unwilling or unable to continue as
Depositary for the Global Notes and a successor Depositary
for the Global Notes is not appointed by the Company within
90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing it elects to cause the issuance of
Certificated Securities under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Certificated Securities in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
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(g) Legends.
(i) Except as permitted by the following paragraphs
(ii) and (iii), each Note certificate evidencing Global Notes
and Certificated Securities (and all Notes issued in exchange
therefor or substitution thereof) shall bear legends in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED, (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE
THE U.S. TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS (i) A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A UNDER THE SECURITIES ACT or (ii) AN ACCREDITED INVESTOR (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) IN ACCORDANCE WITH REGULATION D UNDER THE SECURITIES ACT,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY OR ITS TRANSFER AGENT OR REGISTRAR SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE U.S. OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF
THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE."
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(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security
represented by a Global Note) pursuant to Rule 144 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Certificated Security, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Certificated Security that does not bear the legend
set forth in (i) above and rescind any restriction on
the transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security represented
by a Global Note, such Transfer Restricted Security
shall not be required to bear the legend set forth in (i)
above, but shall continue to be subject to the provisions of
Section 2.06(c) hereof; provided, however, that with respect
to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Note for a
Certificated Security that does not bear the legend set
forth in (i) above, which request is made in reliance upon
Rule 144, the Holder thereof shall certify in writing to the
Registrar that such request is being made pursuant to Rule
144 (such certification to be substantially in the
form of Exhibit B attached hereto).
(iii) Notwithstanding the foregoing, upon consummation
of the Exchange Offer, the Company shall issue and, upon
receipt of an authentication order in accordance with Section
2.02 hereof, the Trustee shall authenticate, Series B Notes in
exchange for Series A Notes accepted for exchange in the
Exchange Offer, which Series B Notes shall not bear the legend
set forth in (i) above, and the Registrar shall rescind any
restriction on the transfer of such Notes, in each case unless
the Holder of such Series A Notes is either (A) a broker-dealer
who purchased such Series A Notes directly from the Company to
resell pursuant to Rule 144A or any other available exemption
under the Securities Act, (B) a Person participating in the
distribution of the Series A Notes or (C) a Person who is an
affiliate (as defined in Rule 144) of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in Global Notes have been exchanged for Certificated
Securities, or are redeemed, repurchased or canceled, all Global Notes shall be
returned to or retained and canceled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial
interest in a Global Note is exchanged for Certificated Securities, or are
redeemed, repurchased or canceled, the principal amount of Notes represented by
such Global Note shall be reduced accordingly and an endorsement shall be made
on such Global Note, by the Trustee or the Note Custodian, at the direction of
the Trustee, to reflect such reduction.
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(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall
authenticate Certificated Securities and Global Notes at the
Registrar's request.
(ii) No service charge shall be made to a Holder
for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or
transfer pursuant to Sections 3.07, 4.10, 4.16 and 9.05
hereof).
(iii) The Registrar shall not be required to
register the transfer of or exchange any Note selected for
redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
(iv) All Certificated Securities and Global Notes
issued upon any registration of transfer or exchange of
Certificated Securities or Global Notes shall be the valid
obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the
Certificated Security or Global Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of
or to exchange Notes during a period beginning at the
opening of business 15 days before the date on which a
notice of redemption is mailed under Section 3.03 hereof
and ending at the close of business on the date on which
such notice is mailed; or
(B) to register the transfer of or to
exchange any Note so selected for redemption in whole or
in part, except the unredeemed portion of any Note being
redeemed in part; or
(C) to register the transfer of or to
exchange a Note between a record date and the next
succeeding interest payment date.
(vi) Prior to due presentment for the registration
of a transfer of any Note, the Trustee, any Agent and the
Company may deem and treat the Person in whose name any Note
is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of, premium, if
any, interest and Liquidated Damages, if any, on such Note,
and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
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(vii) The Trustee shall authenticate Certificated Securities and
Global Notes in accordance with the provisions of Section
2.02 hereof.
(viii) Each Holder of a Note agrees to indemnify the Trustee
against any liability that may result from the transfer,
exchange or assignment of such Holder's Note in violation of
any provision of this Indenture and/or applicable United
States federal or state securities law.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, the Note Custodian,
the Depositary or the Company and the Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Note, the Company shall
issue and the Trustee, upon the written order of the Company signed by two
Officers of the Company directing the Trustee to authenticate the Notes and
certifying that all conditions precedent to the issuance of the Notes contained
herein have been complied with, shall authenticate a replacement Note if the
Trustee's requirements for replacements of Notes are met. An indemnity bond
must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company and the Trustee may charge for their expenses in
replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser; provided that the aggregate
principal amount of the Notes shall not increase by reason of this Section 2.08
or Section 2.07 hereof.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
Subject to Section 2.09 hereof, a Note does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Note.
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If the Paying Agent (other than the Company, a Subsidiary or any Affiliate
thereof) holds, on a redemption date or maturity date, money sufficient to pay
Notes payable on that date, then on and after that date such Notes shall be
deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or by any Affiliate thereof shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Responsible Officer actually knows to be so owned shall be so
considered.
SECTION 2.10. TEMPORARY NOTES.
Until Certificated Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon a written order
of the Company signed by two Officers of the Company directing the Trustee to
authenticate the Notes and certifying that all conditions precedent
to the issuance of the Notes contained herein have been complied with.
Temporary Notes shall be substantially in the form of Certificated Securities
but may have variations that the Company and the Trustee consider appropriate
for temporary Notes and as shall be reasonably acceptable to the Trustee.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate Certificated Securities in exchange for temporary Notes. Holders
of temporary Notes shall be entitled to all of the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return
canceled Notes to the Company. The Company may not issue new Notes to replace
Notes that the Company has redeemed or paid or that have been delivered to the
Trustee for cancellation.
SECTION 2.12. RECORD DATE.
The record date for purposes of determining the identity of Holders of the
Notes entitled to vote or consent to any action by vote or consent authorized
or permitted under this Indenture shall be determined as provided for in TIA
Section 316 (c).
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SECTION 2.13. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, 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 and in Section 4.01 hereof. The
Company shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Note and the date of the proposed payment. The
Company shall, with the consent of the Trustee, fix or cause to be fixed each
such special record date and payment date. At least 15 days before the special
record date, the Company (or, upon the written request of the Company, the
Trustee in the name and at the expense of the Company) shall mail or cause to
be mailed to the Holders a notice that states the special record date, the
related payment date and the amount of such interest to be paid.
SECTION 2.14. CUSIP NUMBERS.
The Company in issuing the Notes may use CUSIP numbers (if then generally
in use), and, if so, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company shall promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof and paragraph 5 or the Notes, it shall
furnish to the Trustee, at least 30 days but not more than 60 days before a
redemption date, an Officers' Certificate setting forth (i) the Section of this
Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Notes to be redeemed and (iv) the
redemption price.
If the Company is required to make an offer to redeem Notes pursuant to
the provisions of Section 3.09 or 4.16 hereof, it shall furnish to the Trustee
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the Section of this Indenture pursuant
to which the redemption shall occur, (ii) the redemption date, (iii) the
maximum principal amount of Notes to be redeemed, (iv) the redemption price and
(v) further setting forth a statement to the effect that (a) the Company or one
of its Subsidiaries has effected an Asset Sale and the conditions set forth in
Section 4.10 have been satisfied or (b) a Change of Control has occurred and
the conditions set forth in Section 4.16 have been satisfied.
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The Company shall also provide the Trustee with any additional information
that the Trustee reasonably requests in connection with any redemption.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the Trustee
shall select the Notes to be redeemed among the Holders in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not so listed, on a pro rata basis,
by lot or in accordance with any other method the Trustee deems fair and
appropriate; provided that no Notes of $1,000 or less shall be redeemed in
part. In the event of partial redemption by lot, the particular Notes to be
redeemed shall be selected, unless otherwise provided herein, not less than 30
nor more than 60 days prior to the redemption date by the Trustee from the
outstanding Notes not previously called for redemption. The Company shall
promptly notify the Trustee in writing of the listing of the Notes on any
national securities exchange.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
them selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all Notes of a Holder are to be redeemed, the entire outstanding
amount of Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed. Except as provided in the preceding sentence, provisions of this
Indenture that apply to Notes called for redemption also apply to portions of
Notes called for redemption.
In the event the Company is required to make an offer to redeem Notes
pursuant to Sections 3.09 and 4.10 hereof and the amount of the Excess Proceeds
from the Asset Sale are not evenly divisible by $1,000, the Trustee shall
promptly refund to the Company any remaining Excess Proceeds.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed (including CUSIP
numbers) and shall state:
(a) the redemption date;
(b) the redemption price;
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(c) if any Note is being redeemed in part, 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 in the name of the Holder
thereof upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
painterest on Notes called for redemption ceases to accrue on and
after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent immediately available funds
sufficient to pay the redemption price of and accrued interest and Liquidated
Damages 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 and Liquidated Damages on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in
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whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender
for redemption because of the failure of the Company to comply with the
preceding paragraph, interest shall be paid on the unpaid principal from the
redemption date until such principal is paid and, to the extent lawful, on any
interest not paid on such unpaid principal, in each case at the rate provided
in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company, a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) below of this Section 3.07, the
Company shall not have the option to redeem the Notes prior to August 15, 2001.
Thereafter, the Company shall have the option to redeem the Notes at any time,
in whole or in part, upon not less than 30 nor more than 60 days' prior written
notice at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on August 15 of each of the years indicated
below:
YEAR PERCENTAGE
2001 ................. 105.313%
2002 ................. 103.542%
2003 ................. 101.771%
2004 and thereafter .. 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, on
or prior to August 22, 1999, the Company may redeem up to 35% in aggregate
principal amount of the Notes originally issued under this Indenture at a
redemption price of 109-5/8% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the redemption date,
with the net proceeds of an Initial Public Offering; provided that at least
$100.0 million in aggregate principal amount of the Notes remain outstanding
following such redemption; and provided further, that such redemption shall
have occurred within 60 days of the closing of any such Initial Public
Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made, to the
extent applicable, pursuant to the provisions of Sections 3.01 through 3.06
hereof.
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SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.16 hereof, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders (an "Asset Sale Offer"), it shall
follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same
manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and to each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders of Notes. The
notice, which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
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(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
titled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Company, a depositary,
if appointed by the Company, or a Paying Agent at the address specified in
the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receive,
not later than the expiration of the Offer Period, a facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Note the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes
or portions thereof were accepted for payment by the Company in accordance with
the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than three
Business Days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a
new Note, and the Trustee, upon written request from the Company, shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not
so accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale
Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
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ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes on the dates and in
the manner provided in the Notes. Principal of, premium, if any, and interest
and Liquidated Damages, if any, on the Notes shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary
thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by
the Company in immediately available funds and designated for and sufficient to
pay all principal of, premium, if any, interest and Liquidated Damages, if any,
on the Notes then due. The Paying Agent shall return to the Company, no later
than five days following the date of payment, any money (including accrued
interest) that exceeds such amount of principal of, premium, if any, interest
and Liquidated Damages, if any, paid on the Notes.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; they shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
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SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain within the City and State of New York an office
or agency (which may be an office of the Trustee or an affiliate of the
Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency within the City and
State of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee,
located at 14 Wall Street, 8th floor, New York, N.Y. 10005, as one such office
or agency of the Company in accordance with Section 2.03 hereof.
SECTION 4.03. REPORTS.
(a) whether or not required by the rules and regulations of the Securities
and Exchange Commission (the "Commission"), so long as any Notes are
outstanding, beginning October 31, 1996, the Company shall furnish to the
Holders of Notes (i) all quarterly and annual financial information that would
be required to be contained in a filing with the Commission on Forms 10-Q (such
Form 10-Q shall be filed within 45 days of the end of the applicable fiscal
quarter) and 10-K (such Form 10-K shall be filed within 90 days of the end of
the applicable fiscal year) if the Company were required to file such Forms,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports. In addition, whether or
not required by the rules and regulations of the Commission, beginning October
31, 1996, the Company shall file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities
analysts and prospective investors upon request. The Company shall at all
times comply with TIA Section 314(a).
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(b) For so long as any Notes remain outstanding, the Company shall furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
(c) 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, including the Company's
compliance with any of the covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) 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 each has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that, to the best of his or her knowledge, each has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action each is taking or
proposes to take with respect thereto) and that, to the best of his or her
knowledge, no event has occurred and remains in existence by reason of which
payments on account of the principal of, premium, if any, interest or
Liquidated Damages, if any, on the Notes is prohibited or if such event has
occurred, a description of the event and what action each is taking or proposes
to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by
a written statement of the Company's independent public accountants (who shall
be a firm of established national reputation reasonably satisfactory to the
Trustee) that in making the examination necessary for certification of such
financial statements, nothing has come to their attention that would lead them
to believe that the Company has violated any provisions of Article 4 or Article
5 hereof or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall
not be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default
or Event of Default and what action the Company is taking or propose to take
with respect thereto.
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SECTION 4.05. TAXES.
The Company shall, and shall cause each of its Subsidiaries to, pay prior
to delinquency all material taxes, assessments and governmental levies, except
such as are contested in good faith and by appropriate proceedings.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Company's Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company) or to the direct or indirect holders of
the Company's Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
the Company); (ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Company or any direct or indirect parent of the
Company; (iii) make any principal payment on, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated to
the Notes, except at final maturity; or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv)
above being collectively referred to as "Restricted Payments"), unless, at the
time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the Section
4.09 hereof; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Subsidiaries after the date
of this Indenture (excluding Restricted Payments permitted by clauses (x)
and (y) of the next succeeding paragraph), is less than the sum of (i) 50%
of the Consolidated Net Income of the Company
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for the period (taken as one accounting period) from the beginning of the
first fiscal quarter commencing after the Issue Date to the end of the
Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale since the Issue Date of Equity Interests of
the Company or of debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests (or convertible debt
securities) sold to a Subsidiary of the Company and other than Disqualified
Stock or debt securities that have been converted into Disqualified Stock),
plus (iii) to the extent that any Restricted Investment that was made after
the Issue Date is sold for cash or otherwise liquidated or repaid for cash,
the lesser of (A) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (B) the initial amount
of such Restricted Investment, plus (iv) $10.0 million.
The foregoing provisions shall not prohibit:
(v) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(w) the redemption, repurchase, retirement or other acquisition of any
Equity Interests of the Company in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the Company) of
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement or other acquisition shall be
excluded from clause (c) (ii) of the preceding paragraph;
(x) the defeasance, redemption or repurchase of subordinated Indebtedness
with the net cash proceeds from an incurrence of Permitted Refinancing Debt or
the substantially concurrent sale (other than to a Subsidiary of the Company)
of Equity Interests of the Company (other than Disqualified Stock); provided
that the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded from
clause (c) (ii) of the preceding paragraph;
(y) the payment of dividends to the Company's direct parent to pay
administrative expenses in an aggregate amount not to exceed $200,000 in any
12-month period; and
(z) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Subsidiary of the Company
held by any member of the Company's (or any of its Subsidiaries') management
pursuant to any management equity subscription agreement or stock option
agreement in effect as of the Issue Date or entered into after the Issue Date
with members of the management of any Person acquired after the Issue Date in
connection with the acquisition of such Person or the repurchase of Equity
Interests of the Company or any Subsidiary of the Company held by employees,
former employees, directors or former directors pursuant to the terms of
agreements (including employment agreements)
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approved by the Board of Directors; provided that the aggregate price paid for
all such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $3.0 million in any 12-month period following the date of this Indenture
or $10.0 million in the aggregate since the date of this Indenture; and no
Default or Event of Default shall have occurred and be continuing
immediately after such transaction.
The amount of all Restricted Payments (other than cash) shall be the fair
market value (as determined by the Board of Directors in good faith, whose
determination shall be conclusive evidence thereof and shall be evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) on the date of the Restricted Payment of the asset(s)
proposed to be transferred by the Company or such Subsidiary, as the case may
be, pursuant to the Restricted Payment. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant "Restricted
Payments" were computed, which calculations may be based upon the Company's
latest available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary to
(i)(a) pay dividends or make any other distributions to the Company or any of
its Subsidiaries (1) on its Capital Stock or (2) with respect to any other
interest or participation in, or measured by, its profits, or (b) pay any
indebtedness owed to the Company or any of its Subsidiaries, (ii) make loans or
advances to the Company or any of its Subsidiaries or (iii) transfer any of its
properties or assets to the Company or any of its Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the Issue Date, (b) the New Credit Agreement as in
effect as of the Issue Date and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are, taken as
a whole, no more restrictive with respect to such dividend and other payment
restrictions than those contained in the New Credit Agreement as in effect on
the Issue Date, (c) this Indenture and the Notes, (d) applicable law, (e) any
instrument governing Indebtedness of a Subsidiary of the Company that was
permitted by the terms of this Indenture to be incurred, (f) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired, (h) Permitted Refinancing Debt provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Debt are, taken as a whole, no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced, (i) an agreement that
has been entered into for the sale or disposition of all or substantially all
of the Equity Interests or property or assets of a Subsidiary of the Company or
(j) restrictions on the Receivables Subsidiary pursuant to the Receivables
Facility.
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SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK .
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively, "incur") any Indebtedness (including Acquired Debt) and that
the Company shall not issue any Disqualified Stock and shall not permit any of
its Subsidiaries to issue any shares of preferred stock; provided, however,
that the Company may incur Indebtedness (including Acquired Debt) or issue
shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.5 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
The foregoing provisions shall not apply to:
(i) the incurrence by the Company of term Indebtedness under the New
Credit Agreement or any one or more successor or additional bank
facilities and/or Attributable Debt in respect of sale and leaseback
transactions the net proceeds of which were applied to repay any such
term Indebtedness in an aggregate principal amount at any time
outstanding not to exceed an amount equal to $170.0 million less the
aggregate amount of all repayments, optional or mandatory, of the
principal of any such term Indebtedness (other than repayments that are
immediately reborrowed and other than repayments made with the proceeds
of sale and leaseback transactions pursuant to this clause (i))
that have been made since the Issue Date;
(ii) (a) the incurrence by the Company of revolving Indebtedness
under the New Credit Agreement (or any one or more successor or
additional bank facilities) and letters of credit (with letters of credit
being deemed to have a principal amount equal to the maximum potential
liability of the Company thereunder) and (b) the incurrence by the
Receivables Subsidiary of Non-Recourse Debt under the Receivables
Facility; provided, however, that, the aggregate principal amount at any
time outstanding pursuant to subclauses (a) and (b) of this clause (ii)
(excluding intercompany Indebtedness of the Receivables Subsidiary
permitted by clause (viii) below) shall not exceed an amount equal to
$155.0 million less the aggregate amount of all Net Proceeds of Asset
Sales applied to permanently reduce the commitments with respect to such
revolving Indebtedness pursuant to the provisions of Section 4.10 hereof;
(iii) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
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(iv) the incurrence by the Company of Indebtedness represented by
the Senior Notes and the Notes;
(v) the incurrence by the Company of Indebtedness represented by
Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case, incurred for the purpose of financing all or
any part of the purchase price or cost of construction or improvement of
property, plant or equipment used in the business of the Company, in an
aggregate principal amount not to exceed $25.0 million at any time
outstanding;
(vi) the incurrence by any of the Company's Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new
Subsidiary; provided that (1) such Indebtedness was incurred by the prior
owner of such assets or such Subsidiary prior to such acquisition and was
not incurred in connection with, or in contemplation of, such acquisition
or is in the nature of an earnout payment or holdback payment incurred by
one of the Company's Subsidiaries in connection with the acquisition of
assets or a new Subsidiary, (2) the principal amount (or accreted value,
as applicable) of such Indebtedness, together with any other outstanding
Indebtedness incurred pursuant to this clause (vi), does not exceed $10.0
million and (3) the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred would have been at least 2.5 to 1,
determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been
incurred at the beginning of such four-quarter period;
(vii) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Debt in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by this Indenture to be incurred;
(viii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Subsidiaries, and any intercompany Indebtedness arising in connection
with a Receivables Facility; provided, however, that (1) if the Company
is the obligor on such Indebtedness, such Indebtedness is expressly
subordinate to the payment in full of all Obligations with respect to the
Notes and (2)(A) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than
the Company or a Subsidiary and (B) any sale or other transfer of any
such Indebtedness to a Person that is not either the Company or a
Subsidiary thereof shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company or such Subsidiary, as the
case may be;
(ix) the incurrence by the Company of Hedging Obligations that are
incurred for the purpose of fixing or hedging interest rate risk with
respect to any floating rate
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Indebtedness that is permitted by the terms of this Indenture to be
outstanding or for the purpose of hedging against currency exchange rate
fluctuations;
(x) Guarantees by the Company and its Subsidiaries of Indebtedness
of Subsidiaries, and Guarantees by Subsidiaries of Indebtedness of the
Company, which Indebtedness is, in each case, permitted to be incurred
under this covenant other than Indebtedness permitted to be incurred
pursuant to subclause (b) of clause (ii) above; and
(xi) the incurrence by the Company or any of its Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other clause
of this paragraph) in an aggregate principal amount (or accreted value,
as applicable) at any time outstanding not to exceed $25.0 million.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in an Asset Sale unless (i) the Company (or the Subsidiary, as the case
may be) receives consideration at the time of such Asset Sale at least equal to
the fair market value (as determined by the Board of Directors in good faith,
whose determination shall be conclusive evidence thereof and shall be evidenced
by a resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 80% of the consideration therefor
received by the Company or such Subsidiary is in the form of cash; provided
that the amount of (x) any liabilities (as shown on the Company's or such
Subsidiary's most recent balance sheet), of the Company or any Subsidiary
(other than contingent liabilities and liabilities that are by their terms
subordinated to the Notes or any guarantee thereof) that are assumed by the
transferee of any such assets pursuant to an agreement that releases the
Company or such Subsidiary from further liability and (y) any notes or other
obligations received by the Company or any such Subsidiary from such transferee
that are immediately converted by the Company or such Subsidiary into cash (to
the extent of the cash received), shall be deemed to be cash for purposes of
this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to permanently
reduce, repurchase, repay or redeem term Indebtedness under the New Credit
Agreement or any one or more successor or additional bank facilities, (b) to
permanently reduce or repay revolving Indebtedness (and to correspondingly
reduce commitments with respect thereto) under the New Credit Agreement or any
one or more successor or additional bank facilities, or (c) to the acquisition
of a controlling interest in another business, the making of a capital
expenditure or the acquisition of other long-term assets, in each case, in the
same or a similar line of business as the Company was engaged in on the date of
such Asset Sale or another line of business that is reasonably related thereto.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving Indebtedness under the New Credit Agreement or any
one or more successor or additional bank facilities or otherwise invest such
Net Proceeds in any manner that is not prohibited by this Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested
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as provided in the first sentence of this paragraph shall be deemed to
constitute "Excess Proceeds."
As soon as practical, but in no event later than 10 business days, in the
case of clause (i) below, and 45 business days, in the case of clause (ii)
below, after any date (each, an "Asset Sale Offer Trigger Date") that the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall
(i) commence an offer to purchase the maximum principal amount of Senior Notes
and other Indebtedness of the Company that ranks pari passu in right of payment
with the Senior Notes (to the extent required by the instrument governing such
other Indebtedness), that may be purchased out of the Excess Proceeds and (ii)
to the extent that more than $10.0 million of Excess Proceeds remain following
consummation of the offer to purchase Senior Notes contemplated by the
preceding clause (i), commence an offer to purchase the maximum principal
amount of Notes and other Indebtedness of the Company that ranks pari passu in
right of payment with the Notes (to the extent required by the instrument
governing such other Indebtedness), that may be purchased out of the Excess
Proceeds (each, an "Asset Sale Offer"). Any Notes and other Pari Passu Debt to
be purchased pursuant to an Asset Sale Offer shall be purchased pro rata based
on the aggregate principal amount of Notes and such other applicable Pari Passu
Debt outstanding and all Notes shall be purchased at an offer price in cash
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, to the date of purchase (or if such Asset Sale
Offer is with respect to any discount or zero coupon securities prior to the
date of their full accretion, 100% of the accreted value thereof on the date of
purchase). To the extent that any Excess Proceeds remain after completion of
an Asset Sale Offer, the Company may use the remaining amount for general
corporate purposes and the amount of Excess Proceeds shall be reset at zero.
In connection with each Asset Sale Offer, the Company shall mail to the
Trustee and each Holder of Notes at such Holder's registered address a notice
stating: (i) that an Asset Sale Trigger Date has occurred and that the Company
is offering to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds, at an offer price in cash equal to 100%
of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase which date of purchase (the
"Asset Sale Offer Purchase Date") shall be a Business Day specified in such
notice that is not earlier than 30 days nor later than 60 days from the date
such notice is mailed, (ii) the amount of accrued and unpaid interest and
Liquidated Damages, if any, as of the Asset Sale Offer Purchase Date, (iii)
that any Note not tendered shall continue to accrue interest (iv) that, unless
the Company defaults in the payment of the purchase price for the Notes payable
pursuant to the Asset Sale Offer, any Notes accepted for payment pursuant to
the Asset Sale Offer shall cease to accrue interest after the Asset Sale Offer
Purchase Date, (v) the procedures, consistent with this Indenture, to be
followed by Holders of Notes in order to accept an Asset Sale Offer or to
withdraw such acceptance, and (vi) such other information as may be required by
this Indenture or applicable laws and regulations.
On the Asset Sale Offer Purchase Date, the Company shall (i) accept for
payment the maximum principal amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer that can be purchased out of the Excess
Proceeds, (ii) deposit with the Paying Agent the
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aggregate purchase price of all Notes or portions thereof accepted for payment
and any accrued and unpaid interest and Liquidated Damages, if any, on such
Notes as of the Asset Sale Offer Purchase Date, and (iii) deliver or cause to
be delivered to the appropriate Trustee all Notes tendered pursuant to the
Asset Sale Offer. If less than all of the Notes tendered pursuant to the Asset
Sale Offer are accepted for payment by the Company for any reason consistent
with this Indenture, selection of the Notes to be purchased by the Company
shall be in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not so listed, among Notes of a particular series and Pari Passu Debt on a pro
rata basis; provided that Notes accepted for payment in part shall only be
purchased in integral multiples of $1,000. The appropriate Paying Agent shall
promptly mail to each Holder of Notes or portions thereof accepted for payment
an amount equal to the purchase price for such Notes plus any accrued and
unpaid interest and Liquidated Damages, if any, thereon, and the Trustee shall
promptly authenticate and mail to such Holder of Notes accepted for payment in
part a new Note equal in principal amount of any unpurchased portion of the
Notes, and any Note not accepted for payment in whole or in part shall be
promptly returned to the Holder of such Note. The Company shall announce the
results of the Asset Sale Offer to Holders of the Notes on or as soon as
practicable after the Asset Sale Purchase Date.
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 any Asset Sale Offer.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant Subsidiary than those
that would have been obtained in a comparable transaction by the Company or
such Subsidiary with an unrelated Person and (ii) the Company delivers to the
Trustee (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of
the disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing; provided that (v) sales of Receivables to the Receivables Subsidiary
on arm's length terms, (w) any transaction in accordance with the terms of any
Existing Employment Agreement as the same are in effect on the Issue Date and
any employment agreement entered into by the Company or any of its Subsidiaries
in the ordinary course of business and consistent with the past practice of the
Company or such Subsidiary, (x)
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transactions between or among the Company and/or its Controlled Subsidiaries,
(y) transactions pursuant to the Tax Allocation Agreement as in effect on the
date of this Indenture and (z) Restricted Payments and Permitted Investments
that are permitted by the provisions of Section 4.07 hereof, in each case,
shall not be deemed Affiliate Transactions. In addition, the Company shall
not, and shall not permit any of its Subsidiaries to, merge with or into, or
purchase all or substantially all of the assets of, any Affiliate, unless (i)
such Affiliate had positive Consolidated Cash Flow in each of its most recently
ended two full fiscal years and (ii) the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
transaction is entered into, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the transaction had
been entered into at the beginning of such four-quarter period, would have been
higher than the actual Fixed Charge Coverage Ratio for such
four-quarter period.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Indebtedness on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, except Permitted Liens.
SECTION 4.13. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any sale and leaseback transaction; provided that the Company or any
of its Subsidiaries may enter into a sale and leaseback transaction if (i) the
Company could have incurred Indebtedness in an amount equal to the Attributable
Debt relating to such sale and leaseback transaction pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of Section 4.09
hereof (ii) the gross cash proceeds of such sale and leaseback transaction are
at least equal to the fair market value (as determined in good faith by the
Board of Directors and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, the provisions of Section 4.10 hereof.
Payments or arrangements pursuant to a Tax Incentive Program shall not
constitute sale and leaseback transactions.
SECTION 4.14. LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS.
The Company shall not permit any of its Subsidiaries, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any
other Indebtedness of the Company unless such Subsidiary simultaneously
executes and delivers supplemental indentures to this Indenture providing for
the Guarantee of the payment of the Notes by such Subsidiary, which Guarantee
shall be unsecured, but otherwise shall be senior to or pari passu with such
Subsidiary's Guarantee of or pledge to secure such other Indebtedness;
provided, however, that
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such Guarantee may be subordinated to any Guarantee of Senior Debt to the same
extent that the Notes are subordinated to such Senior Debt. Notwithstanding
the foregoing, any such Guarantee by a Subsidiary of the Notes shall provide by
its terms that it shall be automatically and unconditionally released and
discharged upon any sale, exchange or transfer, to any Person not an Affiliate
of the Company, of all of the Company's stock in, or all or substantially all
the assets of, such Subsidiary, which sale, exchange or transfer is made in
compliance with the applicable provisions of this Indenture. The form of such
Guarantee is attached as an exhibit to this Indenture.
SECTION 4.15. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its existence as
a corporation and the corporate, partnership or other existence of each
Subsidiary, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or each Subsidiary
thereof and the rights (charter and statutory), licenses and franchises of the
Company and each Subsidiary; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Notes.
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SECTION 4.16. REPURCHASE AT THE OPTION OF HOLDERS - CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Company shall mail a notice to the Trustee and each Holder stating (1) that
the Change of Control Offer is being made pursuant to this Section 4.16 and
that all Notes tendered shall be accepted for payment; (2) the purchase price
and purchase date, which shall be no later than 30 business days from the date
such notice is mailed (the "Change of Control Payment Date"); (3) that any Note
not tendered shall continue to accrue interest; (4) that, unless the Company
defaults in the payment of the Change of Control Payment, all Notes accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date; (5) that Holders electing to
have any Notes purchased pursuant to a Change of Control Offer shall be
required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (6) that Holders
shall be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the second Business Day preceding the
Change of Control Payment Date, a facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Notes delivered for
purchase, and a statement that such Holder is withdrawing his election to have
the Notes purchased; and (7) that Holders whose Notes are being purchased only
in part shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof. The Company shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly
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announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Company shall not be required to make a Change of Control Offer upon
the occurrence of a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control
Offer made by the Company and purchases all Notes validly tendered and not
withdrawn under such Change of Control Offer.
The Change of Control provisions described above shall be applicable
whether or not any other provisions of this Indenture are applicable. Except
as described above with respect to a Change of Control, this Indenture does not
contain provisions that permit the Holders of the Notes to require the Company
to repurchase or redeem the Notes in the event of a takeover, recapitalization
or similar transaction.
Prior to complying with the provisions of this Section 4.16, but in any
event within 90 days following a Change of Control, the Company shall either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this Section 4.16. The Company shall publicly announce
the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
SECTION 4.17. LIMITATION ON OTHER SENIOR SUBORDINATED DEBT.
The Company shall not, and shall not permit any Subsidiary to incur,
create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to any Senior
Debt and senior in any respect in right of payment to the Notes.
SECTION 4.18. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY
OWNED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly Owned
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise
dispose of any Capital Stock of any Wholly Owned Subsidiary of the Company to
any Person (other than the Company or a Wholly Owned Subsidiary of the
Company), unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Capital Stock of such Wholly Owned Subsidiary and (b)
the cash Net Proceeds in excess of $1.0 million from such transfer, conveyance,
sale, lease or other disposition are applied in accordance with the provisions
of Section 4.10 hereof, and (ii) shall not permit any Wholly Owned Subsidiary
of the Company to issue any of its Equity Interests (other than, if necessary,
shares of its Capital Stock constituting directors' qualifying shares) to any
Person other than to the Company or a Wholly Owned Subsidiary of the Company,
unless (a) such issuance is of all the Equity Interests of such Wholly Owned
Subsidiary and (b) the cash Net Proceeds in excess of
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$1.0 million from such issuance are applied in accordance with the provisions
of Section 4.10 hereof.
SECTION 4.19. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless (i) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Notes
and this Indenture pursuant to supplemental indentures in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no
Default or Event of Default exists; and (iv) except in the case of a merger of
the Company with or into a Wholly Owned Subsidiary of the Company, the Company
or the entity or Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made shall, at the time
of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
assets of the Company in
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accordance with Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which such Company is merged or to which such
sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that, in the case of any
consolidation or merger, or any sale, assignment transfer, lease, conveyance or
other disposition of all or substantially all of the assets of the Company,
from and after the date of such event, the provisions of this Indenture
referring to the Company shall refer instead to the successor corporation and
not to the Company), and may exercise every right and power of the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein; provided, however, that the predecessor shall not
be relieved from the obligation to pay the principal of and interest on the
Notes, except in the case of a sale of all of the predecessor's assets
that meets the requirements of Section 5.01 hereof.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) default which continues for 30 days in the payment when due of
interest on, or Liquidated Damages with respect to, the Notes (whether or
not such payment is prohibited by the provisions of Article 10 hereof);
(b) default in payment when due of the principal of or premium, if
any, on the Notes (whether or not such payment is prohibited by the
provisions of Article 10 hereof);
(c) failure by the Company to comply with the provisions of Section
4.10 or 4.16 hereof;
(d) failure by the Company for 60 days after notice to comply with
any of its other agreements in this Indenture or the Notes;
(e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of this Indenture, which default (i) is caused by
a failure to pay principal of, premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (ii)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10.0 million or more;
(f) (i) failure by the Company or any of its Subsidiaries to pay
final judgments not covered by insurance aggregating in excess of $10.0
million, which judgments are not paid, discharged, bonded or stayed for a
period of 60 days or (ii) the Company, any Significant Subsidiary or
group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary generally is (or are) not paying its (or their)
debts as they become due;
(g) except as permitted by this Indenture, any Subsidiary Guarantee
shall be held invalid or shall cease to be in full force and effect, or
any Person acting on behalf of any Guarantor shall deny or disaffirm its
obligations under its Subsidiary Guarantee;
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(h) the Company, any Significant Subsidiary or group of Subsidiaries
that, taken together, would constitute a Significant Subsidiary, pursuant
or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it
in an involuntary case;
(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property;
(iv) makes a general assignment for the benefit of its
creditors;
(v) admits in writing the failure generally to pay debts as
they become due; or
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company, any Significant
Subsidiary or group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary, in an involuntary
case;
(ii) appoints a custodian of the Company, any Significant
Subsidiary or group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary for all or
substantially all of the property of the Company or any of its
Significant Subsidiary or group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary;
(iii) orders the liquidation of the Company, any Significant
Subsidiary or group of Subsidiaries that, taken together,
would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes
issued under this Indenture may declare all such Notes to be due and payable
immediately; provided, however, that so long as any Designated Senior Debt is
outstanding, such declaration shall not become effective until the
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earlier of (i) the day which is five Business Days after the receipt by
Representatives of Designated Senior Debt of written notice of acceleration or
(ii) the date of acceleration of any Designated Senior Debt. Notwithstanding
the foregoing, in the case of an Event of Default arising from an event
specified in clause (h) or (i) of Section 6.01 hereof with respect to the
Company, any Significant Subsidiary or any group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Notes
shall become due and payable without further action or notice. Holders of the
Notes may not enforce this Indenture or the Notes except as provided in this
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of this Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs under this
Indenture prior to August 15, 2001 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the
intention of avoiding the prohibition on redemption of the Notes prior to such
date, then an additional premium shall also become and be immediately due and
payable to the extent permitted by law upon the acceleration of the Notes, in
an amount, for each of the years beginning on August 15 of the years set forth
below, as set forth below:
YEAR PERCENTAGE
---- ----------
1996 ......... 110.625%
1997 ......... 109.563%
1998 ......... 108.500%
1999 ......... 107.438%
2000 ......... 106.375%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal of, premium, if any,
interest and Liquidated Damages, if any, on, the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not
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impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of
such Notes waive any existing Default or Event of Default and its consequences
under this Indenture except a continuing Default or Event of Default in the
payment of principal of, premium, if any, interest and Liquidated Damages, if
any, of such Notes.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06.LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any
loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
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SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal of, premium, if any, interest
and Liquidated Damages, if any, on the Note, on or after the respective due
dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, interest and Liquidated Damages, if any,
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), their creditors or their
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof. To the extent that
the payment of any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
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SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Section 6.10, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the reasonable
costs and expenses of collection actually incurred;
Second: to Holders for amounts due and unpaid on the Notes for principal,
premium, interest and Liquidated Damages, if any, ratably, without preference
or priority of any kind, according to the amounts due and payable on the Notes
for principal, premium, interest and Liquidated Damages, if any, respectively;
and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit instituted by the
Trustee, any suit instituted by a Holder of a Note (whether pursuant to Section
6.07 hereof or otherwise) or a suit instituted by Holders of more than 10% in
principal amount of the then outstanding Notes.
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ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture,
and use the same degree of care and skill in its exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c), (e) and (g) of this Section 7.01 and to Section 7.02.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability.
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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. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) Except with respect to Sections 4.01 and 4.04 hereof, the Trustee
shall have no duties to inquire as to the performance of the Company's
covenants in Article 4 hereof. In addition, the Trustee shall not be deemed to
have knowledge of any Default or Event of Default except (i) any Event of
Default occurring pursuant to Sections 6.01(a) or 6.01(b) hereof or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. Subject
to Section 7.01(b)(ii) hereof, the Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense that might
be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company or any Affiliate of
the Company with the same
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rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue as trustee
or resign. Any Agent may do the same with like rights and duties. The Trustee
is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision hereof,
it shall not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee, and it shall not be responsible for
any statement or recital herein or any statement in the Notes or any other
document furnished or issued in connection with the sale of the Notes or
pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to the Holders of the Notes a
notice of the Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment of principal of,
or premium, interest or Liquidated Damages, if any, 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 of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each December 15 beginning with the December 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if
no event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the Commission and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such compensation
as shall be agreed in writing between the Company and the Trustee for its
acceptance of this Indenture and for its services hereunder. To the extent
permitted by law, the Trustee's compensation shall not
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be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances, fees and expenses incurred or made by it in addition
to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents
and counsel.
The Company shall indemnify and hold harmless the Trustee against any and
all losses, liabilities, damages, claims or expenses including taxes (other
than taxes based on the income of the Trustee) incurred by it arising out of or
in connection with the acceptance or administration of its duties under this
Indenture, including the reasonable costs and expenses actually incurred of
enforcing this Indenture against the Company (including this Section 7.07) and
defending itself against any claim (whether asserted by the Company or any
Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall reasonably cooperate in the defense. The Trustee
may have separate counsel and the Company shall pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal of, premium, if any,
interest and Liquidated Damages, if any, on particular Notes. Such Lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
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The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company
may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of 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
of a Note for at least six months fails to comply with Section 7.10, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to the
Holders of the Notes. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee; provided that all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
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SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state authorities and that has a combined capital and surplus of at least
$100.0 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section
310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
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ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of the Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from their obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (i) and (ii) below, and to have satisfied all their
other obligations under such Notes and this Indenture (and the Trustee, on the
written demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (i) the
rights of Holders of outstanding Notes to receive payments in respect of the
principal of, premium, if any, interest and Liquidated Damages, if any, on such
Notes when such payments are due from the trust referred to in Section 8.04
hereof, (ii) the Company's obligations with respect to the Notes under Article
2 and Section 4.02 hereof, (iii) the rights, powers, trusts, duties and
immunities of the Trustee hereunder, and the Company's obligations in
connection therewith and (iv) this Article 8. Subject to compliance with this
Article 8, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.18 and 4.19 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed
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outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.01 hereof, but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby. In addition, upon the Company's exercise under Section 8.01
hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(c) through 6.01(g) hereof shall no longer constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(i) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Notes cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as shall be sufficient, in the opinion of a nationally
recognized investment bank or firm of independent public accountants, to
pay the principal of, premium, if any, interest and Liquidated Damages,
if any, on such outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company must
specify whether such Notes are being defeased to maturity or to a
particular redemption date;
(ii) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the applicable Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the
date hereof, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
Notes shall not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and shall be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(iii) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the applicable Trustee an Opinion of
Counsel in the United States reasonably acceptable to such Trustee
confirming that the Holders of such outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the
same
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amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Sections 6.01(h) or 6.01(i) hereof are concerned,
at any time in the period ending on the 91st day after the date of
deposit (or greater period of time in which any such deposit of trust
funds may remain subject to bankruptcy or insolvency laws insofar as
those apply to the deposit by the Company);
(v) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under any material
agreement or instrument (other than this Indenture) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound;
(vi) the Company must have delivered to the Trustee an Opinion of
Counsel to the effect that, as of the date of such opinion, (A) the
trust funds shall not be subject to rights of holders of Indebtedness
other than the Notes and (B) assuming no intervening bankruptcy of the
Company between the date of deposit and the 91st day following the
deposit and assuming no Holder of Notes is an insider of the Company,
after the 91st day following the deposit, the trust funds shall not be
subject to the effects of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally
under any applicable United States or state law;
(vii) the Company must deliver to the applicable Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of Notes over the
other creditors of the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others; and
(viii) the Company must deliver to the applicable Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or
the Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine,
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to the Holders of such Notes of all sums due and to become due thereon in
respect of principal of, premium, if any, interest and Liquidated Damages, if
any, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(i) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO THE COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, or premium, interest
or Liquidated Damages, if any, on, any Note and remaining unclaimed for two
years after such principal, premium, interest or Liquidated Damages has become
due and payable shall be paid to the Company on their request or (if then held
by the Company) shall be discharged from such trust; and the Holder of such
Note shall thereafter look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
shall be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the
Company makes any payment of principal of, or premium,
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interest or Liquidated Damages, if any, on any Note following the reinstatement
of its obligations, the Company shall be subrogated to the rights of the Holders
of such Notes to receive such payment from the money held by the Trustee or
Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
Notwithstanding Section 9.02 hereof, the Company and the Trustee may amend
or supplement this Indenture or the Notes, as applicable, without the consent
of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes in the case of a merger or consolidation pursuant to
Section 5.01 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights under this Indenture of any such Holder; or
(e) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
Upon the request of the Company accompanied by a resolution of the Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in
Section 9.06 hereof, the Trustee shall join with the Company in the execution
of any amended or supplemental Indenture authorized or permitted by the terms
of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture or the Notes, as applicable, with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes),
and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, or premium, interest or
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Liquidated Damages, if any, on, the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture or the Notes may be waived with the consent of the Holders of
a majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Upon the request of the Company accompanied by a resolution of the Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders as aforesaid, and upon receipt by the
Trustee of the documents described in Section 9.06 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental
Indenture unless such amended or supplemental Indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of each Note affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure
of the Company to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of
a majority in aggregate principal amount of the Notes then outstanding may
waive compliance in a particular instance by the Company with any provision of
this Indenture or the Notes. However, without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Note or alter the provisions with respect to the redemption of the Notes
(other than provisions described in Sections 4.10 and 4.16 hereof);
(c) reduce the rate of or change the time for payment of interest
on any Note;
(d) waive a Default or Event of Default in the payment of principal
of, premium, if any, interest or Liquidated Damages, if any, on the
Notes (except a rescission of acceleration of the Notes by the Holders
of at least a majority in aggregate principal amount of the Notes and a
waiver of the payment default that resulted from such acceleration);
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(e) make any Note payable in money other than that stated in the
Notes,
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest or Liquidated
Damages, if any, on the Notes,
(g) waive a redemption payment with respect to any Note (other than
a payment required by any of the provisions of Section 4.16 hereof) or
(h) make any change in the foregoing amendment and waiver
provisions.
In addition, any amendment to the provisions of Sections 4.10 and 4.16
hereof, including the related definitions, shall require the consent of the
Holders of at least 75% in aggregate principal amount of the Notes issued
hereunder that are then outstanding if such amendment would adversely affect
the rights of Holders of any of the Notes.
SECTION 9.03. 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 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder 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 becomes effective in accordance with its terms and
thereafter binds every Holder.
The Company may fix a record date for determining which Holders must
consent to such amendment or waiver. If the Company fixes a record date, the
record date shall be fixed at (i) the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders
furnished to the Trustee prior to such solicitation pursuant to Section 2.05 or
(ii) such other date as the Company shall lawfully designate.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
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Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder of Notes by accepting a Note agrees,
that the Indebtedness evidenced by the Notes, all Obligations of the Company
under this Indenture, the Purchase Agreement and the Registration Rights
Agreement (including, without limitation, Liquidated Damages, if any) and the
payment of any Claims are subordinated in right of payment, to the extent and
in the manner provided in this Article, to the prior payment in full of all
Senior Debt, including, without limitation, the Senior Notes and borrowings
under the New Credit Agreement (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Debt. Each Holder of Notes by the
Holder's acceptance thereof acknowledges and agrees that each holder of any
Senior Debt, whether such Senior Debt was created or acquired before or after
the issuance of the Notes, shall be deemed conclusively to have relied on the
provisions of this Article 10 in acquiring and continuing to hold, or in
continuing to hold, such Senior Debt.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive payment in full
of all Obligations due or to become due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the
rates specified in the applicable Senior Debt, whether or not an allowable
claim) and to have all Obligations due in respect of letters of
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credit issued pursuant to the New Credit Agreement fully collateralized
before the Holders of Notes shall be entitled to receive any payment or
distribution with respect to the Notes or on account of any Claim; and
(2) until all Obligations with respect to Senior Debt (as provided in
subsection (1) above) are paid in full, any payment or distribution
(including, without limitation, any payment or distribution that may be
payable or deliverable by reason of the payment of any other Indebtedness of
the Company being subordinated to the payment of the Notes) to which the
Holders of Notes would be entitled but for this Article shall be made to
holders of Senior Debt, including the Senior Notes, (except that, in either
case, Holders of Notes may receive (i) Permitted Junior Securities and (ii)
payments and other distributions made from the trust described in Article 8
hereof), as their interests may appear.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution (including, without
limitation, any payment or distribution that may be payable or deliverable by
reason of the payment of any other Indebtedness of the Company being
subordinated to the payment of the Notes) to the Trustee or any Holder of Notes
in respect of Obligations or Claims with respect to the Notes and may not
acquire from the Trustee or any Holder of Notes any Notes for cash or property
(except that Holders of Notes may receive (i) Permitted Junior Securities and
(ii) payments and other distributions made from the trust described in Article
8 hereof) until all principal and other Obligations with respect to the Senior
Debt have been paid in full if:
(i) a default in the payment when due of the principal of, premium, if
any, or interest on Designated Senior Debt or any commitment or letter of
credit fee, letter of credit reimbursement obligation or Hedging Obligation,
in each case, constituting Designated Senior Debt occurs and is continuing;
or
(ii) a default, other than a payment default, occurs and is continuing
with respect to Designated Senior Debt that permits, or would permit, with
the passage of time or the giving of notice or both, holders of Designated
Senior Debt as to which such default relates to accelerate its maturity and
the Trustee receives a notice of such default (a "Payment Blockage Notice")
from the Company or the holders of any Designated Senior Debt. If the
Trustee receives any such Payment Blockage Notice, no new payment blockage
shall be commenced for purposes of this Section 10.04 unless and until (i)
360 days shall have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice and (ii) all scheduled payments of principal of,
premium, if any, and interest on the Notes that have come due have been paid
in full. No nonpayment default that existed or was continuing on the date
of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in respect
of the Notes and may acquire them upon:
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(1) in the case of a default referred to in Section 10.04(i) hereof, the
date on which such default is cured or waived in accordance with the terms of
such Designated Senior Debt, or
(2) in the case of a default referred to in Section 10.04(ii) hereof,
the earlier of the date on which such default is cured or waived in
accordance with the terms of such Designated Senior Debt or 179 days after
the date on which the applicable Payment Blockage Notice is received, unless
the maturity of any Designated Senior Debt has been accelerated,
if this Article otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify the holders of Senior Debt, including the holders
of Senior Notes and the Representative under the New Credit Agreement, of the
acceleration; provided, however, that so long as any Designated Senior Debt is
outstanding, any such acceleration shall not become effective until the earlier
of (i) the day which is five Business Days after the receipt by Representatives
of Designated Senior Debt of written notice of acceleration or (ii) the date of
acceleration of any Designated Senior Debt.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of Notes receives any payment
or distribution with respect to the Notes at a time when the Trustee or such
Holder, as applicable, has actual knowledge that such payment or distribution
is prohibited by Section 10.04 hereof, such payment or distribution shall be
held by the Trustee or such Holder, in trust for the benefit of, and shall be
segregated from other funds and property of the Trustee or such Holder of Notes
and be paid forthwith over and delivered in the same form as received (with any
necessary endorsement), upon written request, to, the holders of Senior Debt as
their interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders of Notes or
the Company or any other Person money or
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assets to which any holders of Senior Debt shall be entitled by virtue of this
Article 10, except if such payment is made as a result of the willful
misconduct or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the President, the Chief Executive Officer or the Vice
President, Finance and Administration of the Company that would cause a payment
of any Obligations with respect to the Notes or of any Claim to violate this
Article, but failure to give such notice shall not affect the subordination of
the Notes and all Claims to the Senior Debt as provided in this Article.
SECTION 10.07. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to
the payment of Senior Debt. A distribution made under this Article to holders
of Senior Debt that otherwise would have been made to Holders of Notes is not,
as between the Company and Holders of Notes, a payment by the Company on the
Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of Senior Subordinated
Notes and holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the obligation
of the Company, which is absolute and unconditional, to pay principal of and
premium, interest and Liquidated Damages, if any, on the Notes in accordance
with their terms;
(2) affect the relative rights of Holders of Notes and creditors of the
Company other than their rights in relation to holders of Senior Debt; or
(3) prevent the Note Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights
of holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders of Notes.
If the Company fails because of this Article to pay principal of or
premium, interest or Liquidated Damages, if any, on a Note on the due date, the
failure is still a Default or Event of Default.
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SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company, Notes or any Holder of Senior Debt or by the failure of the
Company or any Holder of Senior Subordinated Notes to comply with this
Indenture.
SECTION 10.10. 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.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon
any certificate of such Representative or of the liquidating trustee or agent
or other Person making any distribution to the Trustee or to the Holders of
Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.11. RIGHTS OF NOTE TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least two Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
or any Claim with respect to the Notes to violate this Article. Only the
Company or a Representative may give the notice. Nothing in this Article 10
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not the Trustee. Any Agent may
do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representative under the New Credit Agreement is hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes.
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SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified without
the written consent of the holders of all Senior Debt.
SECTION 10.14. MISCELLANEOUS.
(a) The Agreement contained in this Article 10 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any Senior Debt is avoided, rescinded or must otherwise be returned by any
holder of Senior Debt upon the insolvency, bankruptcy or reorganization of the
Company or otherwise, all as though such payment had not been made.
(b) The Trustee shall notify the Representative under the New Credit
Agreement of the existence of any Event of Default under Section 6.01 and of
any event which, with the giving of notice or the passage of time or both,
would constitute such an Event of Default, if and to the extent that any such
notice is sent to the Company.
(c) Unless and until written notice shall be given by the Company and the
Representative under the New Credit Agreement to the Trustee at its Corporate
Trust Office notifying the Trustee that Indebtedness is no longer outstanding
under the New Credit Agreement, the Trustee shall assume that such Indebtedness
is outstanding. The Company agrees to give, and to cause the Representative
under the New Credit Agreement to give, such notice to the Trustee promptly
after the first date on which no Indebtedness shall be outstanding under the
New Credit Agreement.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company or the Trustee to the others is
duly given if in writing and delivered in person or mailed by first class mail
(registered or certified, return receipt requested), telecopier or overnight
air courier guaranteeing next day delivery, to the others' address:
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If to the Company:
Printpack, Inc.
4335 Wendell Drive, S.W.
Atlanta, Georgia 30336
Telecopier No.: (404) 696-4868
Telephone No.: (404) 691-5830
Attention: R. Michael Hembree
With a copy to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Telecopier No.: (404) 881-7777
Telephone No.: (404) 881-7000
Attention: Ralph F. MacDonald III, Esq.
If to the Trustee:
Fleet National Bank
777 Main Street, 11th Floor
hartford, Connecticut 06115
Telecopier No.: (860) 986-7920
Telephone No.: (860) 986-2064
Attention: Corporate Trust Department
The Company or the Trustee, by notice to the others, may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when 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, or by overnight air courier guaranteeing next day delivery to its address
shown on the register kept by the Registrar. Any notice or communication shall
also be so mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives
it.
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If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section
10.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
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SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 11.07. NO PERSONAL LIABILITY OF PARTNERS, DIRECTORS, OFFICERS,
EMPLOYEES, AND STOCKHOLDERS AND STOCKHOLDERS.
No direct or indirect 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 or their creation.
Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall bind
their successors. All agreements of the Trustee in this Indenture shall bind
its successors.
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SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
SIGNATURES
Dated as of August 22, 1996 PRINTPACK, INC.
By: /s/
------------------
Name:
Title:
Dated as of August 22, 1996 FLEET NATIONAL BANK
Trustee
By: /s/
-------------------
Name:
Title:
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EXHIBIT A
(Face of Senior Subordinated Note)
10-5/8% Senior Subordinated Notes due 2006
CUSIP NO.: _________
No. _-_
PRINTPACK, INC.
promises to pay to CEDE & CO.
or registered assigns,
the principal sum of Two Hundred Million
Dollars ($200,000,000) on August 15, 2006.
Interest Payment Dates: February 15 and August 15.
Record Dates: February 1 and August 1.
Dated: August 22, 1996
PRINTPACK, INC.
By: /s/
---------------------------
Name: Dennis M. Love
(SEAL) Title: President and Chief
Executive Officer
By: /s/
----------------------------
Name: R. Michael Hembree
Title: Vice President - Finance and
Administration
This is one of the
Notes referred to in the
within-mentioned Indenture:
Fleet National Bank, (SEAL)
as Trustee
By: /s/
-------------------------
Authorized Signatory
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<PAGE> 85
10-5/8% Senior Subordinated Notes due 2006
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC") to the Company (as defined below) or their agent for registration
of transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.(3)
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED, (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT
OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE U.S. (i) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER
THE SECURITIES ACT or (ii) TO AN ACCREDITED INVESTOR (AS DEFINED
IN RULE 506(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) IN
ACCORDANCE WITH REGULATION D UNDER THE SECURITIES ACT, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144, (c) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON MEETING THE REQUIREMENTS OF RULE
904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE
- ------------------
(3)To be included only if the Note is to be issued in Global form.
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<PAGE> 86
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON
AN OPINION OF COUNSEL IF THE COMPANY OR ITS TRANSFER AGENT OR
REGISTRAR SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE U.S. OR
ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM
IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE.(4)
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
(Back of Senior Subordinated Note)
1. INTEREST. The Notes will be limited in aggregate principal amount to
$200,000,000 and will mature on August 15, 2006. Printpack. Inc., a Georgia
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at the rate of 10-5/8% per annum from August 22, 1996 until
maturity (including any Liquidated Damages required to be paid pursuant to the
provisions of the Registration Rights Agreement). The Company will pay
interest semi-annually in arrears on February 15 and August 15 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day
(each an "Interest Payment Date"). Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of original issuance; provided that if there is no existing
Default in the payment of interest, and if this Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date, and; provided, further, that the first Interest Payment Date shall be
February 15, 1997. The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, from time to time on demand at a rate that is 1% per annum in
excess of the rate then in effect to the extent lawful. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
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 February 1 or August 1 immediately preceding the
Interest Payment Date, even if such Notes are
- ---------------
(4)This legend should be included on the Series A Notes and omitted from the
Series B Notes.
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<PAGE> 87
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.13 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium, interest and
Liquidated Damages, if any, at the office or agency of the Company maintained
for such purpose or, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the Holders at their
addresses set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds will be required with respect to
principal of, and premium, interest and Liquidated Damages (if any) on, all
Global Notes and all other Notes the Holders of which shall have provided
appropriate wire transfer instructions to the Company or the Paying Agent.
Until otherwise designated by the Company, the Company's office or agency will
be the office of the Trustee maintained for such purpose. Such payment shall be
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Fleet National Bank, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of August 22, 1996 (the "Indenture") among the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made a part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended
(15 U.S. Code Section Section 77aaa-77bbbb) (the "TIA"). The Notes are
subject to all such terms and Holders are referred to the Indenture and the TIA
for a statement of such terms. The Notes are general unsecured obligations of
the Company limited to $200,000,000 in aggregate principal amount.
5. SUBORDINATION. The payment of principal of, premium, if any, interest
and Liquidated Damages, if any, on the Notes shall be subordinated in right of
payment as set forth in the Indenture, to the prior payment in full of all
Senior Debt, whether outstanding on the date of the Indenture of thereafter
incurred.
6. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) below of this Paragraph 6, the
Company shall not have the option to redeem the Notes prior to August 15, 2001.
Thereafter, the Company shall have the option to redeem the Notes at any time,
in whole or in part, upon not less than 30 nor more than 60 days' prior written
notice at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on August 15 of each of the years indicated
below:
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<PAGE> 88
YEAR PERCENTAGE
2001 ................. 105.313%
2002 ................. 103.542%
2003 ................. 101.771%
2004 and thereafter .. 100.000%
(b) Notwithstanding the provisions of clause (a) of this Paragraph 6, on
or prior to August 22, 1999, the Company may redeem up to 35% in aggregate
principal amount of the Notes originally issued under this Indenture at a
redemption price of 109-5/8% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the redemption date,
with the net proceeds of an Initial Public Offering; provided that at least
$100.0 million in aggregate principal amount of the Notes remain outstanding
following such redemption; and provided further, that such redemption shall
have occurred within 60 days of the closing of any such Initial Public
Offering.
7. MANDATORY REDEMPTION.
Subject to Section 4.10 and Section 4.16 of the Indenture, the Company
shall not be required to make mandatory redemption or sinking fund payments
with respect to the Notes.
8. REPURCHASE AT THE OPTION OF HOLDERS.
(a) If there is a Change of Control, each Holder of Notes will have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes pursuant to the procedures required by the Indenture and described in
such notice. The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
(b) Prior to complying with the provisions in the foregoing paragraph (b)
of this Section 8, but in any event within 90 days following a Change of
Control, the Company shall either repay all outstanding Senior Debt or obtain
the requisite consents, if any, under all agreements governing outstanding
Senior Debt to permit the repurchase of Notes required by paragraph (a) of this
Section 8. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
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<PAGE> 89
(c) If the Company or a Subsidiary consummates any Asset Sales, as soon as
practical, but in no event later than 10 business days in the case of clause
(i) below, and 45 business days, in the case of clause (ii) below, after any
date that the aggregate amount of Excess Proceeds exceeds $10.0 million, the
Company shall (i) commence an Asset Sale Offer to purchase the maximum
principal amount of Senior Notes and other Indebtedness of the Company that
ranks pari passu in right of payment with the Senior Notes (to the extent
required by the instrument governing such other Indebtedness), that may be
purchased out of the Excess Proceeds and (ii) to the extent that more than
$10.0 million of Excess Proceeds remain following the offer to purchase Senior
Notes contemplated by the preceding clause (i), commence an Asset Sale Offer to
purchase the maximum principal amount of Notes and other Indebtedness of the
Company that ranks pari passu in right of payment with the Notes (to the extent
required by the instrument governing such other Indebtedness), that may be
purchased out of the Excess Proceeds. Any Notes or Senior Notes, as
applicable, and other Pari Passu Debt to be purchased pursuant to an Asset Sale
Offer shall be purchased pro rata based on the aggregate principal amount of
Notes, Senior Notes and such other applicable Pari Passu Debt outstanding and
all Notes and Senior Notes shall be purchased at an offer price in cash equal
to 100% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase (or if such Asset Sale
Offer is with respect to any discount or zero coupon securities prior to the
date of their full accretion, 100% of the accreted value thereof on the date of
purchase). To the extent that any Excess Proceeds remain after completion of
an Asset Sale Offer, the Company may use the remaining amount for general
corporate purposes and the amount of Excess Proceeds shall be reset at zero.
Holders of Notes that are the subject of an offer to purchase will receive an
Asset Sale Offer from the Company prior to any related Asset Sale Offer
Purchase Date and may elect to have such Notes purchased by completing the form
titled "Option of Holder to Elect Purchase" on the reverse of the Notes.
9. NOTICE OF REDEMPTION.
Notice of redemption shall be mailed by first class mail at least 30 days
but not more than 60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. Notes may be redeemed
in part but only in whole multiples of $1,000, unless all of the Notes held by
a Holder are to be redeemed. On and after the redemption date, interest ceases
to accrue on Notes or portions thereof called for redemption.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the
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<PAGE> 90
Indenture. The Company need not exchange or register the transfer of any Note or
portion of a Note selected for redemption, except for the unredeemed portion of
any Note being redeemed in part. Also, the Company need not exchange or
register the transfer of any Notes for a period of 15 days before the date on
which a notice of redemption is mailed or during the period between a record
date and the corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes), and any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium, if any, interest or Liquidated Damages,
if any, on the Notes, except a payment default resulting for an acceleration
that has been rescinded) or compliance with any provision of the Indenture or
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consent obtained in
connection with a purchase of or tender offer or exchange for Notes). Without
the consent of any Holder of a Note, the Indenture or the Notes may be amended
or supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of Certificated Notes, to
provide for the assumption of the Company's obligations to the Holders of the
Notes in the case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with the requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture Act.
13. SUBORDINATION. Each Holder by accepting a Note agrees that the
payment of principal of and premium, if any, interest and Liquidated Damages,
if any, on the Note is subordinated in right of payment, to the extent and in
the manner provided in the Indenture, to the prior payment in full of all
Senior Debt of the Company (whether outstanding on the date of the Indenture or
thereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of such Senior Debt.
14. DEFAULTS AND REMEDIES. Events of Default include: (i) default which
continues for 30 days in the payment when due of interest on, or Liquidated
Damages with respect to, the Notes (whether or not such payment is prohibited
by the provisions of Article 10 of the Indenture); (ii) default in payment when
due of the principal of or premium, if any, on the Notes (whether or not such
payment is prohibited by the provisions of Article 10 of the Indenture); (iii)
failure by the Company to comply with the provisions of Section 4.10 or 4.16 of
the Indenture; (iv) failure by the Company for 60 days after notice to comply
with any of its other agreements in the Indenture or the Notes; (v) default
under any mortgage, indenture or instrument
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<PAGE> 91
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of this Indenture, which default (A) is caused by a failure to
pay principal of or premium, if any, or interest on such Indebtedness prior to
the expiration of the grace period provided in such Indebtedness on the date of
such default (a "Payment Default") or (B) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10.0 million or more; (vi) failure
by the Company or any of its Subsidiaries to pay final judgments not covered by
insurance aggregating in excess of $10.0 million, which judgments are not paid,
discharged, bonded or stayed for a period of 60 days; (vii) except as permitted
by the Indenture, any Subsidiary Guarantee shall be held invalid or shall cease
to be in full force and effect, or any Person acting on behalf of any Guarantor
shall deny or disaffirm its obligations under its Subsidiary Guarantee; and
(viii) certain events of bankruptcy or insolvency with respect to the Company,
any Significant Subsidiary or group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary. The Trustee must, within 90 days after the
occurrence of a Default or Event of Default, give to the Holders notice of all
uncured Defaults or Events of Default known to it; provided that, except in the
case of a Default or Event of Default in payment of any Note, the Trustee may
withhold such notice if a committee of its Responsible Officers in good faith
determines that the withholding of such notice is in the interest of the
Holders. The Company is required to furnish annually to the Trustee a
certificate as to their compliance with the terms of the Indenture.
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee in its individual or any
other capacity may become the owner or pledgee of Notes and may otherwise deal
with the Company or any Affiliate of the Company, with the same rights it would
have if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS. No direct or indirect 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 the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Notes by accepting a Note waives and releases
all such liability. The waiver and release are part of the consideration for
issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Commission that
such a waiver is against public policy.
17. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
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 right of survivorship
and not as tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
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<PAGE> 92
19. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Notes under the Indenture,
Holders of Transfer Restricted Securities (as defined in the Registration
Rights Agreement (as defined below)) shall have all the rights set forth in the
Registration Rights Agreement dated as of August 22, 1996 among the Company and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company have
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to the 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.
21. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.
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<PAGE> 93
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Printpack, Inc.
4335 Wendell Drive, S.W.
Atlanta, Georgia 30336
Attention: R. Michael Hembree
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
----------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:_____________
Your Signature:__________________________
(Sign exactly as your name appears on the face of this Note)
Signature
Guarantee*:______________________
__________________________
* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
A-10
<PAGE> 94
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.16 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.16
Subject to Section 3.02 of the Indenture, if you want to elect to have
only part of the Note purchased by the Company pursuant to Section 4.10 or
Section 4.16 of the Indenture, state the amount you elect to have purchased:
$___________
Date:
Your Signature:________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:_______________________
Signature Guarantee*: ________________________
__________________________
* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
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<PAGE> 95
SCHEDULE OF EXCHANGES OF CERTIFICATED SECURITIES
The following exchanges of a part of this Global Note for Certificated
Securities have been made:(1)
<TABLE>
<CAPTION>
Principal Amount of Signature of
this Global Note authorized
Amount of decrease Amount of increase following such signatory of
in Principal Amount in Principal Amount decrease Trustee or Note
Date of Exchange of this Global Note of this Global Note (or increase) Custodian
- ----------------- ------------------- ------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------
(1)To be included only if the Note is to be issued in Global form.
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<PAGE> 96
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 10-5/8% Senior Subordinated Notes due 2006 of Printpack, Inc.
This Certificate relates to $200,000,000 principal amount of Notes held in
* ________ book-entry or *_______ definitive form by ________________ (the
"Transferor").
The Transferor*:
/ / has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Note held by the Depositary a Note or Notes
in definitive, registered form of authorized denominations in an aggregate
principal amount equal to its beneficial interest in such Global Note (or the
portion thereof indicated above); or
/ / has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
/ / Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section 2.06(d)(i)(A) of
the Indenture).
/ / Such Note is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A or to an "Accredited Investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) in
accordance with Regulation D under the Securities Act (in satisfaction, to the
extent applicable, of Section 2.06(a)(ii)(B), Section 2.06(b)(i)(x) or Section
2.06(d)(i)(B) of the Indenture).
- ---------------
*Check applicable box.
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<PAGE> 97
/ / Such Note is being transferred in accordance with Rule 144 or Rule 904
under the Securities Act, or pursuant to an effective registration statement
under the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
/ / Such Note is being transferred in reliance on and in compliance with an
exemption from the registration requirements of the Securities Act, other than
Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of Counsel to
the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.06(a)(ii)(C), Section 2.06(b)(i)(y) or Section 2.06(d)(i)(C) of the
Indenture).
--------------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-----------------------------------------
Date:
--------------------------
- -------------------
*Check applicable box.
B-2
<PAGE> 98
EXHIBIT C
Form of Subsidiary Guarantee
THIS GUARANTEE (as the same may be amended, modified or supplemented from
time to time, this "Guarantee"), dated as of ____________, is made by
____________________________ (hereinafter referred to as the "Guarantor") in
favor of _____________________, as trustee under the Indenture hereinafter
described (the "Trustee") for the ratable benefit of the holders from time to
time (the "Holders") of the Senior Subordinated Notes (as hereinafter defined).
All terms not otherwise defined herein shall have for the purposes hereof
the meanings set forth in the Indenture (as hereinafter defined) unless the
context otherwise requires.
Recitals
A. Printpack, Inc. (the "Company") is a party to that certain Indenture
dated August 22, 1996 (as amended, supplemented or otherwise modified from time
to time, the "Indenture") among the Company and the Trustee, pursuant to which
the Company issued $200.0 million principal amount of its 10-5/8% Senior
Subordinated Notes due 2006 (including all Series A and Series B Senior
Subordinated Notes issued from time to time pursuant to the Indenture,
collectively, the "Senior Subordinated Notes"); and
B. The Guarantor is a direct or indirect Subsidiary of the Company, and
will derive both direct and indirect economic benefit from the proceeds of the
Senior Subordinated Notes and other financial accommodations made to the
Company under the Indenture.
C. The Indenture requires that the Guarantor execute and deliver this
Guaranty to guarantee the payment and performance by the Company of all of its
Obligations under the Indenture and the Senior Subordinated Notes, including,
in each case, all reasonable costs of collection and enforcement thereof and
interest thereon which would be owing by the Company or such Guarantor but for
the effect of the Bankruptcy Code, 11 U.S.C.Section 101 et seq. (collectively,
the "Guaranteed Obligations").
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without
limitation, any loan or advance by renewal, refinancing or extension of the
Indenture or otherwise) heretofore, now or hereafter made to or for the benefit
of the Company pursuant to the Indenture or any other agreement, instrument or
document executed pursuant to or in connection therewith, and for other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the Guarantor and the Trustee agree as follows:
1. The Guarantee. The Guarantor hereby absolutely, unconditionally and
irrevocably guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the Guaranteed Obligations. This
Guarantee shall be unsecured, but otherwise shall be senior to or pari passu
with all of the Guarantor's guarantees or pledges to secure other
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Indebtedness of the Company; provided, however, that this Guarantee is
subordinated to any Guarantee of Senior Debt to the same extent that the Senior
Subordinated Notes are subordinated to such Senior Debt. This Guarantee is a
guarantee of payment and not of collection. All payments made by the Guarantor
under this Guarantee shall be paid at the place and in the manner specified in
the Indenture and the Senior Subordinated Notes.
2. Amendments, etc. with respect to the Guaranteed Obligations; Waiver of
Rights. The Guarantor shall remain obligated hereunder notwithstanding that
without any reservation of rights against the Guarantor and without notice to
or further assent by the Guarantor any demand for payment of any of the
Guaranteed Obligations made by the Trustee or the Holders may be rescinded by
them and any of the Guaranteed Obligations continued, and the Guaranteed
Obligations, or the liability of any other party upon or for any part thereof,
or guarantee therefor or right of offset with respect thereto, may, from time
to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Trustee or the
Holders, and the Indenture and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Trustee or the Holders may deem advisable from time to
time or as provided in the Indenture, and any guarantee or right of offset at
any time held by the Trustee for the payment of the Guaranteed Obligations may
be sold, exchanged, waived, surrendered or released.
3. Guarantee Absolute and Unconditional. The Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by the Trustee or the
Holders upon this Guarantee, the Guaranteed Obligations, and any of them shall
conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Guarantee; and all
dealings between the Company and the Guarantor, on the one hand, and the
Trustee and the Holders, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon this Guarantee. The
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Company or the Guarantor with respect
to the Guaranteed Obligations. The Guarantor understands and agrees that this
Guarantee shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity, regularity or
enforceability of the Indenture or any of the Senior Subordinated Notes, any of
the Guaranteed Obligations or guarantee or right of offset with respect thereto
at any time or from time to time held by the Trustee or the Holders, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Company against the Trustee or the Holders, or (c) any other circumstances
whatsoever (with or without notice to or knowledge of the Company or such
Guarantor) which constitute, or might be construed to constitute, an equitable
or legal discharge of the Company for the Guaranteed Obligations, or of the
Guarantor under this Guarantee, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against the Guarantor, the Trustee
and/or the Holders may, but shall be under no obligation to, pursue such rights
and remedies as it or they may have against the Company or any other Person or
against any guarantee for the Guaranteed Obligations or any right of offset
with respect thereto, and any failure by the Trustee or the Holders to pursue
such other rights or remedies or to collect any payments from the Company or
any such other Person or to realize upon any such guarantee or to
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<PAGE> 100
exercise any such right of offset, or any release of the Company or any such
other Person or any such guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Trustee and/or the Holders against the Guarantor. This Guarantee shall remain
in full force and effect and be binding in accordance with and to the extent of
its terms upon the Guarantor and its successors and assigns thereof, and shall
inure to the benefit of the Trustee, and its successors, indorsees, transferees
and assigns, and the Holders from time to time of the Senior Subordinated Notes
until all the Guaranteed Obligations and the obligations of the Guarantor under
this Guarantee shall have been satisfied by payment in full, notwithstanding
that from time to time during the term of the Indenture the Company may be free
from any Guaranteed Obligations.
4. Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances. The Guarantor's obligations hereunder shall remain in full
force and effect until the Guaranteed Obligations shall have been paid in full.
If at any time any payment of any of the Guaranteed Obligations is rescinded
or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, the Guarantor's obligations
hereunder with respect to such payment shall be reinstated at such time as
though such payment had been due but not made at such time.
5. Waiver by the Guarantor. The Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken by any Person
against the Company or any other Person.
6. Subrogation. Notwithstanding any payments made by the Guarantor under
this Guarantee, the Guarantor shall not be entitled to be subrogated to any of
the rights of any other Guarantor, the Trustee or any Holder against the
Company until all amounts of principal of, premium, if any, and interest and
Liquidated Damages, if any, on the Senior Subordinated Notes and all other
amounts payable by the Company under the Indenture and the Senior Subordinated
Notes and by the Guarantor under its Guarantee have been paid in full. If any
amount shall be paid to the Guarantor on account of such subrogation rights at
any time when all of the Guaranteed Obligations shall not have been paid in
full, such amount shall be held by the Guarantor in trust for the Trustee
segregated from other funds of the Guarantor, and shall, forthwith upon receipt
by the Guarantor, be turned over to the Trustee in the exact form received by
the Guarantor (duly indorsed by the Guarantor to the Trustee, if required), to
be applied against the Guaranteed Obligations, whether matured or unmatured, at
such time and in such order as the Trustee may determine.
7. Stay of Acceleration. In the event that acceleration of the time for
payment of any of the Guaranteed Obligations is stayed upon insolvency,
bankruptcy or reorganization of the Company, all such amounts otherwise subject
to acceleration under the terms of the Indenture and the Senior Subordinated
Notes shall nonetheless be payable by the Guarantor forthwith on demand by the
Trustee.
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8. Merger, Consolidation or Sale of Assets.
a. The Guarantor may not consolidate with or merge with or into (whether
or not the Guarantor is the surviving Person) another corporation, Person or
entity, whether or not affiliated with the Guarantor, unless (i) subject to the
provisions of Section 8(b), the Person formed by or surviving any such
consolidation or merger (if other than the Guarantor) assumes all the
obligations of the Guarantor, pursuant to a supplemental Guarantee in form and
substance reasonably satisfactory to the Trustee, under the Guarantee; (ii)
immediately after giving effect to such transaction, no Default or Event of
Default exists; and (iii) the Company would be permitted by virtue of the
Company's pro forma Fixed Charge Coverage Ratio, immediately after giving
effect to such transaction, to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09 of
the Indenture; provided, however, that the foregoing will not apply to the
consolidation or merger of the Guarantor with and into the Company or another
Guarantor.
b. In the event of a sale or other disposition of all of the assets of the
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of the Guarantor, then the Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock of the Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all of the assets of the Guarantor) will be automatically and
unconditionally released and relieved of any obligations under this Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied in
accordance with Section 4.10 of the Indenture.
9. Miscellaneous.
a. Benefits of Guarantee; Successors and Assigns. Nothing in this
Guarantee, expressed or implied, shall give to any person, other than Trustee,
the Holders and their respective successors, transferees and assigns hereunder,
any benefit or any legal or equitable rights, remedy or claim under this
Guarantee. This Guarantee shall be binding upon the Guarantor, its successors
and assigns, and inure, together with the rights and remedies of Trustee
hereunder, to the benefit of Trustee, the Holders and their respective
successors, transferees and assigns. The Guarantor shall not, without the
prior written consent of Trustee, assign any rights, duties or obligations
under this Guarantee.
b. Notices. All notices, demands and other communications hereunder
shall be given and shall be effective in accordance with the Indenture, except
that notices to the Guarantor shall be given to its address set forth on the
signature page hereof, or to such other address as the Guarantor may specify in
writing from time to time to the Trustee.
c. Amendments. Neither this Guarantee nor any provision hereof may be
amended, modified, waived, discharged or terminated other than pursuant to the
provisions of the Indenture.
d. No Personal Liability of Directors, Officers, Employees, Partners and
Stockholders. No past, present or future director, officer, employee,
incorporator, partner or stockholder of the Guarantor, as such, shall have any
liability for any obligations of the Guarantor under this
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<PAGE> 102
Guarantee or for any claim based on, in respect of, or by reason of, this
Guarantee. Each Holder by accepting a Note has waived and released all such
liability. The waiver and release are part of the consideration for
issuance of this Guarantee.
e. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS GUARANTEE.
f. No Adverse Interpretation of Other Agreements. This Guarantee may not
be used to interpret any other guarantee, indenture, loan or debt agreement of
the Company, the Guarantor or their respective Subsidiaries or of any other
Person. Any such guarantee, indenture, loan or debt agreement may not be used
to interpret this Guarantee.
g. Successors. All agreements of the Guarantor in this Guarantee shall
bind its successors. All agreements of the Trustee in this Guarantee shall
bind its successors.
h. Severability. In case any provision in this Guarantee 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.
i. Counterpart Originals. The parties may sign any number of copies of
this Guarantee. Each signed copy shall be an original, but all of them
together represent the same agreement.
j. Headings, etc.
The headings of the sections of this Guarantee have been inserted for
convenience of reference only, are not to be considered a part of this
Guarantee and shall in no way modify or restrict any of the terms or provisions
hereof.
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IN WITNESS WHEREOF, the undersigned Guarantor has caused this instrument
to be duly executed and delivered to the Trustee as of the date first above
written.
[GUARANTOR]
[Address]
By:
------------------------------
Name:
Title:
Trustee
By:
------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 5
Legal opinion and consent of Alston & Bird.
<PAGE> 2
ALSTON&BIRD
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-7777
October 3, 1996
Printpack, Inc.
4335 Wendell Drive, S.W.
Atlanta, Georgia 30336
Re: Printpack, Inc. -- Registration Statement on Form S-1 with
respect to $100,000,000 9-7/8% Series B Senior Notes due 2004 and
$200,000,000 10-5/8% Series B Senior Subordinated Notes Due 2006
Gentlemen:
We have acted as counsel to Printpack, Inc., a Georgia corporation (the
"Company"), in connection with the registration under the Securities Act of
1933, as amended, of $100,000,000 aggregate principal amount of 9-7/8% Series B
Senior Notes due 2004 (the "Exchange Senior Notes") and $100,000,000 aggregate
principal amount of 10-5/8% Senior Subordinated Notes due 2006 (the "Exchange
Senior Subordinated Notes," together with the Exchange Senior Notes, the
"Exchange Notes"), pursuant to a Registration Statement on Form S-1 (the
"Registration Statement"). The Exchange Senior Notes will be issued pursuant
to the terms of the Senior Note Indenture, dated August 22, 1996, between the
Company and Fleet National Bank ("Fleet"), as trustee (the "Senior Note
Indenture"), in exchange for the identical principal amount of any and all of
the Company's outstanding 9-7/8% Series A Senior Notes due 2004 (the "Old
Senior Notes".
The Exchange Senior Subordinated Notes will be issued pursuant to the
terms of the Senior Subordinated Note Indenture, dated August 22, 1996, between
the Company and Fleet, as trustee (the "Senior Subordinated Note Indenture"),
in exchange for the identical principal amount of any and all of the Company's
outstanding 10-5/8% Series A Senior Subordinated Notes due 2006 (the "Old
Senior Subordinated Notes," together with the Old Senior Notes, the "Old
Notes"). In connection with the foregoing, we have examined the Company's
Articles of Incorporation and Bylaws, the corporate proceedings taken by the
Company to authorize the offering, sale and issuance of the Old Notes and the
Exchange Notes, the Indentures (including the form of the Exchange Notes), and
the Registration Statement. We also have examined and relied upon such other
records, documents and other instruments in our judgment are necessary or
appropriate in order to express the opinions hereinafter set forth.
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004-2601
<PAGE> 3
Printpack, Inc.
October 3, 1996
Page 2
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia.
2. The Exchange Notes have been duly authorized and, when issued and
exchanged for the Old Notes in accordance with the terms of the Exchange Offer
described in the Prospectus included in the Registration Statement, will be
validly issued and binding obligations of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
ALSTON & BIRD
By: /s/ Ralph F. MacDonald, III
---------------------------
Ralph F. MacDonald, III
<PAGE> 1
EXHIBIT 10.1
Credit Agreement, dated as of August 22, 1996, by and among Printpack, Inc.,
the lenders a party thereto and First National Bank of Chicago, as Contractual
Representative.
<PAGE> 2
Execution Copy
CREDIT AGREEMENT
Dated as of August 22, 1996
among
PRINTPACK, INC.,
THE INSTITUTIONS FROM TIME TO TIME
PARTIES HERETO AS LENDERS
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
<PAGE> 3
------------------------
BANPONCE CORPORATION
P.O. Box 362708
San Juan, Puerto Rico 00936-2708
Telephone (809) 765-9800
BANPONCE
CORPORATION
October 8, 1996
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
BANPONCE CORPORATION 424(B)(3) FILING 3
I have enclosed with this letter, for filing pursuant to Rule 424(b)(2) under
the Securities Act of 1933, as amended (the "Act"), in accordance with
Regulation S-T, a copy of the Pricing Supplement dated October 7, 1996, to the
Prospectus Supplement dated October 6, 1995. Subject Pricing is related with
the Registration Statements of Forms S-3 (No. 033-61601) of BanPonce
Corporation.
Cordially,
/s/ Eric J. Pacheco
Eric J. Pacheco
Vice President
ges
Enclosure
<PAGE> 4
<TABLE>
SECTION PAGE
- ------- ----
<S> <C>
ARTICLE I: DEFINITIONS ................................................... 1
1.1 Certain Defined Terms ........................................... 1
1.2 References ...................................................... 28
1.3 Supplemental Disclosure ......................................... 29
ARTICLE II: THE TERM LOAN AND REVOLVING LOAN FACILITIES .................. 29
2.1 Term Loans ...................................................... 29
2.2 Revolving Loans ................................................. 31
2.3 Swing Line Loans ................................................ 31
2.4 Rate Options for all Advances ................................... 33
2.5 Optional Payments; Mandatory Prepayments ........................ 33
(A) Optional Payments ....................................... 33
(B) Mandatory Prepayments ................................... 33
2.6 Reduction of Commitments ........................................ 35
2.7 Method of Borrowing ............................................. 36
</TABLE>
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<PAGE> 5
<TABLE>
SECTION PAGE
- ------- ----
<S> <C>
2.8 Method of Selecting Types and Interest Periods for Advances ..... 36
2.9 Minimum Amount of Each Advance .................................. 36
2.10 Method of Selecting Types and Interest Periods for Conversion
and Continuation of Advances .................................. 36
(A) Right to Convert ........................................ 36
(B) Automatic Conversion and Continuation ................... 37
(C) No Conversion Post-Default or Post-Unmatured Default .... 37
(D) Conversion/Continuation Notice .......................... 37
2.11 Default Rate .................................................. 37
2.12 Collection Account Arrangements ............................... 37
2.13 Method of Payment ............................................. 38
2.14 Notes, Telephonic Notices ..................................... 38
2.15 Promise to Pay; Interest and Commitment Fees; Interest
Payment Dates; Interest and Fee Basis; Taxes; Loan and
Control Accounts ............................................. 38
(A) Promise to Pay .......................................... 38
(B) Interest Payment Dates .................................. 38
(C) Commitment Fees ......................................... 39
(D) Interest and Fee Basis; Applicable Eurodollar Margin and
Applicable Commitment Fee Percentage ................... 39
(F) Loan Account ............................................ 44
(G) Control Account ......................................... 44
(H) Entries Binding ......................................... 44
2.16 Notification of Advances, Interest Rates, Prepayments and
Aggregate Revolving Loan Commitment Reductions ................ 44
2.17 Lending Installations .......................................... 44
2.18 Non-Receipt of Funds by the Agent .............................. 44
2.19 Termination Date ............................................... 45
2.20 Replacement of Certain Lenders ................................. 45
ARTICLE III: THE LETTER OF CREDIT FACILITY ............................... 46
3.1 Obligation to Issue ............................................. 46
3.2 Transitional Provision .......................................... 46
</TABLE>
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<PAGE> 6
<TABLE>
SECTION PAGE
- ------- ----
<S> <C>
3.3 Types and Amounts ............................................... 46
3.4 Conditions ...................................................... 47
3.5 Procedure for Issuance of Letters of Credit ..................... 47
3.6 Letter of Credit Participation .................................. 48
3.7 Reimbursement Obligation ........................................ 48
3.8 Cash Collateral ................................................. 49
3.9 Letter of Credit Fees ........................................... 49
3.10 Issuing Bank Reporting Requirements ............................ 49
3.11 Indemnification; Exoneration ................................... 50
ARTICLE IV: CHANGE IN CIRCUMSTANCES ...................................... 51
4.1 Yield Protection ................................................ 51
4.2 Changes in Capital Adequacy Regulations ......................... 52
4.3 Availability of Types of Advances ............................... 52
4.4 Funding Indemnification ......................................... 53
4.5 Lender Statements; Survival of Indemnity ........................ 53
ARTICLE V: CONDITIONS PRECEDENT .......................................... 53
5.1 Initial Advances and Letters of Credit .......................... 53
5.2 Each Advance and Letter of Credit ............................... 54
ARTICLE VI: REPRESENTATIONS AND WARRANTIES ............................... 55
6.1 Organization; Corporate Powers .................................. 55
6.2 Authority ....................................................... 55
6.3 No Conflict; Governmental Consents .............................. 56
6.4 Financial Statements ............................................ 57
6.5 No Material Adverse Change ...................................... 57
6.6 Taxes ........................................................... 58
(A) Tax Examinations ........................................ 58
(B) Payment of Taxes ........................................ 58
6.7 Litigation; Loss Contingencies and Violations ................... 58
6.8 Subsidiaries .................................................... 58
6.9 ERISA ........................................................... 59
</TABLE>
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<PAGE> 7
<TABLE>
SECTION PAGE
- ------- ----
<S> <C>
6.10 Accuracy of Information ........................................ 60
6.11 Securities Activities .......................................... 60
6.12 Material Agreements ............................................ 60
6.13 Compliance with Laws ........................................... 60
6.14 Assets and Properties .......................................... 60
6.15 Statutory Indebtedness Restrictions ............................ 61
6.16 Insurance ...................................................... 61
6.17 Labor Matters .................................................. 61
6.18 James River Acquisition; Related Transactions .................. 61
6.19 Environmental Matters .......................................... 62
6.20 Other Indebtedness ............................................. 63
6.21 Fiscal Periods ................................................. 63
ARTICLE VII: COVENANTS ................................................... 63
7.1 Reporting ....................................................... 64
(A) Financial Reporting ..................................... 64
(B) Notice of Default ....................................... 65
(C) Lawsuits ................................................ 66
(D) Insurance ............................................... 66
(E) ERISA Notices ........................................... 66
(F) Labor Matters ........................................... 69
(G) Other Indebtedness ...................................... 69
(H) Other Reports ........................................... 69
(I) Environmental Notices ................................... 69
(J) Other Information ....................................... 69
7.2 Affirmative Covenants ........................................... 70
(A) Corporate Existence, Etc. ............................... 70
(B) Corporate Powers; Conduct of Business ................... 70
(C) Compliance with Laws, Etc. .............................. 70
(D) Payment of Taxes and Claims; Tax Consolidation .......... 70
(E) Insurance ............................................... 70
</TABLE>
-iv-
<PAGE> 8
<TABLE>
SECTION PAGE
- ------- ----
<S> <C>
(F) Inspection of Property; Books and Records; Discussions .. 71
(G) Insurance and Condemnation Proceeds ..................... 71
(H) ERISA Compliance ........................................ 72
(I) Maintenance of Property ................................. 72
(J) Environmental Compliance ................................ 73
(K) Use of Proceeds ......................................... 73
(L) Separate Corporate Existence ............................ 73
7.3 Negative Covenants .............................................. 75
(A) Indebtedness ............................................ 75
(B) Sales of Assets ......................................... 76
(C) Liens ................................................... 78
(D) Investments ............................................. 78
(E) Contingent Obligations .................................. 80
(F) Restricted Payments ..................................... 80
(G) Conduct of Business; Subsidiaries; Acquisitions ......... 81
(H) Transactions with Shareholders and Affiliates ........... 82
(I) Restriction on Fundamental Changes ...................... 83
(J) Sales and Leasebacks .................................... 83
(K) Margin Regulations ...................................... 83
(L) ERISA ................................................... 83
(M) Issuance of Disqualified Stock .......................... 84
(N) Corporate Documents ..................................... 84
(O) Fiscal Year ............................................. 85
(P) Subsidiary Covenants .................................... 85
(Q) Hedging Obligations ..................................... 85
(S) Change of Deposit Accounts .............................. 86
(T) Amendment of Receivables Purchase Documents ............. 86
7.4 Financial Covenants ............................................. 87
(A) Fixed Charge Coverage Ratio ............................. 87
(B) Total Debt to EBITDA Ratio .............................. 87
</TABLE>
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<PAGE> 9
<TABLE>
SECTION PAGE
- ------- ----
<S> <C>
(C) Capital Expenditures .................................... 88
ARTICLE VIII: DEFAULTS ................................................... 89
8.1 Defaults ........................................................ 89
ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND
REMEDIES .............................................................. 93
9.1 Termination of Commitments; Acceleration ......................... 93
9.2 Defaulting Lender ................................................ 93
9.3 Amendments ....................................................... 94
9.4 Preservation of Rights ........................................... 95
ARTICLE X: GENERAL PROVISIONS ............................................ 96
10.1 Survival of Representations ..................................... 96
10.2 Governmental Regulation ......................................... 96
10.3 Performance of Obligations ...................................... 96
10.4 Headings ........................................................ 97
10.5 Entire Agreement ................................................ 97
10.6 Several Obligations; Benefits of this Agreement ................. 97
10.7 Expenses; Indemnification ....................................... 97
(A) Expenses ................................................ 97
(B) Indemnity ............................................... 97
(C) Waiver of Certain Claims; Settlement of Claims .......... 99
(D) Survival of Agreements .................................. 99
10.8 Numbers of Documents ........................................... 99
10.9 Accounting ..................................................... 99
10.10 Severability of Provisions .................................... 100
10.11 Nonliability of Lenders ....................................... 100
10.12 GOVERNING LAW ................................................. 100
10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL ....... 100
(A) EXCLUSIVE JURISDICTION .................................. 100
(B) OTHER JURISDICTIONS ..................................... 101
(C) SERVICE OF PROCESS ...................................... 101
</TABLE>
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<PAGE> 10
<TABLE>
SECTION PAGE
- ------- ----
<S> <C>
(D) WAIVER OF JURY TRIAL .................................... 101
(E) WAIVER OF BOND .......................................... 102
(F) ADVICE OF COUNSEL ....................................... 102
10.14 No Strict Construction ........................................ 102
ARTICLE XI: THE AGENT .................................................... 102
11.1 Appointment; Nature of Relationship ............................ 102
11.2 Powers ......................................................... 103
11.3 General Immunity ............................................... 103
11.4 No Responsibility for Loans, Creditworthiness, Collateral,
Recitals, Etc. ................................................. 103
11.5 Action on Instructions of Lenders .............................. 103
11.6 Employment of Agents and Counsel ............................... 103
11.7 Reliance on Documents; Counsel ................................. 104
11.8 The Agent's Reimbursement and Indemnification .................. 104
11.9 Rights as a Lender ............................................. 104
11.10 Lender Credit Decision ........................................ 104
11.11 Successor Agent ............................................... 105
11.12 Collateral Documents .......................................... 105
ARTICLE XII: SETOFF; RATABLE PAYMENTS .................................... 106
12.1 Setoff ......................................................... 106
12.2 Ratable Payments ............................................... 106
12.3 Application of Payments ........................................ 107
12.4 Relations Among Lenders ........................................ 108
ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS .......... 108
13.1 Successors and Assigns ......................................... 108
13.2 Participations ................................................. 109
(A) Permitted Participants; Effect .......................... 109
(B) Voting Rights ........................................... 109
(C) Benefit of Setoff ....................................... 109
13.3 Assignments .................................................... 110
(A) Permitted Assignments...................................... 110
</TABLE>
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<PAGE> 11
<TABLE>
SECTION PAGE
- ------- ----
<S> <C>
(B) Effect; Effective Date .................................. 110
(C) The Register ............................................ 110
13.4 Confidentiality ................................................ 111
13.5 Dissemination of Information ................................... 111
ARTICLE XIV: NOTICES ..................................................... 111
14.1 Giving Notice .................................................. 111
14.2 Change of Address .............................................. 112
ARTICLE XV: COUNTERPARTS ................................................. 112
15.1 Counterparts ................................................... 112
</TABLE>
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<PAGE> 12
EXHIBITS AND SCHEDULES
EXHIBITS
EXHIBIT A -- Commitments
(Definitions)
EXHIBIT B-1 -- Form of Revolving Note
(Definitions)
EXHIBIT B-2 -- Form of Swing Line Note
(Definitions)
EXHIBIT B-3 -- Form of Term Note
Definitions
EXHIBIT C -- Form of Borrowing Notice (Section 2.8)
EXHIBIT D -- Form of Request for Letter of Credit (Section 3.4)
EXHIBIT E -- Form of Assignment and Acceptance Agreement
(Sections 2.20 and 13.3)
EXHIBIT F -- Form of Borrower's Counsel's Opinion
(Section 5.1)
EXHIBIT G -- List of Closing Documents
(Section 5.1)
EXHIBIT H -- Form of Officer's Certificate
(Sections 5.2 and 7.1(A)(iv))
EXHIBIT I -- Form of Compliance Certificate
(Sections 5.2 and 7.1(A)(iv))
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SCHEDULES
Schedule 1.1.1 -- IHC Assets (Definitions)
Schedule 1.1.2 -- Permitted Existing Contingent Obligations (Definitions)
Schedule 1.1.3 -- Permitted Existing Indebtedness (Definitions)
Schedule 1.1.4 -- Permitted Existing Investments (Definitions)
Schedule 1.1.5 -- Permitted Existing Liens (Definitions)
Schedule 3.2 -- Transitional Letters of Credit (Section 3.2)
Schedule 6.3 -- Conflicts; Governmental Consents (Section 6.3)
Schedule 6.4 -- Pro Forma Financial Statements (Section 6.4(A))
Schedule 6.7 -- Litigation; Loss Contingencies (Section 6.7)
Schedule 6.8 -- Subsidiaries (Section 6.8)
Schedule 6.16 -- Insurance (Sections 6.16 and 7.2(E))
Schedule 6.17 -- Labor Matters; Compensation Agreements (Section 6.17)
Schedule 6.18 -- James River Acquisition (Section 6.18)
Schedule 6.19 -- Environmental Matters (Section 6.19)
Schedule 6.21 -- Fiscal Periods (Section 6.21)
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CREDIT AGREEMENT
This Credit Agreement dated as of August 22, 1996 is entered into among
Printpack, Inc., a Georgia corporation, the institutions from time to time
parties hereto as Lenders, whether by execution of this Agreement or an
assignment and acceptance pursuant to Section 13.3, and The First National Bank
of Chicago, in its capacity as contractual representative for itself and the
other Lenders. The parties hereto agree as follows:
ARTICLE I: DEFINITIONS
1.1 Certain Defined Terms. In addition to the terms defined above, the
following terms used in this Agreement shall have the following meanings,
applicable both to the singular and the plural forms of the terms defined.
As used in this Agreement:
"ACCOMMODATION OBLIGATIONS" is defined in the definition "Contingent
Obligation" below.
"ACQUISITION" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or (ii) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election
of directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage of voting power) of
the outstanding partnership interests of a partnership.
"ADVANCE" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by the Lenders to the Borrower of the same
Type and, in the case of Eurodollar Rate Advances, for the same Interest
Period.
"AFFECTED LENDER" is defined in Section 2.20 hereof.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person is the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934) of greater than ten percent (10%) or more of any class of voting
securities (or other voting interests) of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
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<PAGE> 15
management or policies of the controlled Person, whether through ownership of
Capital Stock, by contract or otherwise.
"AGENT" means First Chicago in its capacity as contractual
representative for itself and the Lenders pursuant to Article XI hereof and any
successor Agent appointed pursuant to Article XI hereof.
"AGGREGATE REVOLVING LOAN COMMITMENT" means the aggregate of the
Revolving Loan Commitments of all the Lenders, as reduced from time to time
pursuant to the terms hereof. The initial Aggregate Revolving Loan Commitment
is One Hundred Five Million and 00/100 Dollars ($105,000,000.00).
"AGGREGATE TERM LOAN COMMITMENT" means the aggregate of the Term Loan
Commitments of all the Lenders. The Aggregate Term Loan Commitment is One
Hundred Seventy Million and 00/100 Dollars ($170,000,000.00).
"AGREEMENT" means this Credit Agreement, as it may be amended, restated
or otherwise modified and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
principles in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section
6.4(B)(1) hereof, provided, however, that with respect to the calculation of
financial ratios and other financial tests required by this Agreement,
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect as of the date of this Agreement, applied in a manner
consistent with that used in preparing the financial statements referred to in
Section 6.4(B)(1) hereof.
"ALTERNATE BASE RATE" means, for any day, a fluctuating rate of
interest per annum equal to the higher of (i) the Corporate Base Rate for such
day and (ii) the sum of (a) the Federal Funds Effective Rate for such day and
(b) one-half of one percent (0.5%) per annum.
"APPLICABLE COMMITMENT FEE PERCENTAGE" means, as at any date of
determination, the rate per annum then applicable in the determination of the
amount payable under Section 2.15(C)(i) hereof determined in accordance with
the provisions of Section 2.15(D)(ii) hereof.
"APPLICABLE EURODOLLAR MARGIN" means, as at any date of determination,
the rate per annum then applicable to Eurodollar Rate Loans determined in
accordance with the provisions of Section 2.15(D)(ii) hereof.
"APPLICABLE L/C FEE PERCENTAGE" means, as at any date of determination,
a rate per annum equal to the Applicable Eurodollar Margin in effect on such
date.
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<PAGE> 16
"ASSET PURCHASE AGREEMENT" is defined in the definition of "James River
Acquisition" below.
"ASSET SALE" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including by way of a sale-leaseback transaction and including the sale or
other transfer of any of the Equity Interests of any Subsidiary of such
Person).
"AUTHORIZED OFFICER" means any of the President, Vice President-Finance
or Treasurer of the Borrower, acting singly.
"BENEFIT PLAN" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which the Borrower or
any other member of the Controlled Group is, or within the immediately
preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA.
"BORROWER" means Printpack, Inc., a Georgia corporation, after
consummation of the James River Acquisition and Related Transactions, together
with its successors and assigns, including a debtor-in-possession on behalf of
the Borrower.
"BORROWER PLEDGE" means that certain Pledge Agreement of even date
herewith executed by the Borrower in favor of the Agent, as amended, restated
or otherwise modified from time to time, pursuant to which the Borrower has
pledged to the Agent, for the benefit of the Holders of Secured Obligations,
(i) as of the Closing Date, all of the Capital Stock of IHC and PRF and (ii)
from time to time after the Closing Date, all of the Capital Stock and/or other
Equity Interests in any other Person acquired by the Borrower.
"BORROWING DATE" means a date on which an Advance or Swing Line Loan is
made hereunder.
"BORROWING NOTICE" is defined in Section 2.8 hereof.
"BUSINESS ACTIVITY REPORT" means (A) a Notice of Business Activities
Report from the State of Minnesota, Department of Revenue, (B) a Notice of
Business Activities Report from the State of New Jersey, Division of Taxation,
or (C) any similar report required by any other State relating to the ability
of the Borrower or its Subsidiaries to enforce their accounts receivable claims
against account debtors located in any such state.
"BUSINESS DAY" means (i) with respect to any borrowing, payment or rate
selection of Loans bearing interest at the Eurodollar Rate, a day (other than a
Saturday or Sunday) on which banks are open for business in Chicago, Illinois
and New York, New York and on which dealings in Dollars are carried on in the
London interbank market and (ii) for all other purposes a day (other than a
Saturday or Sunday) on which banks are open for business in Chicago, Illinois
and New York, New York.
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<PAGE> 17
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including
Capitalized Leases and Permitted Purchase Money Indebtedness) by the Borrower
and its Subsidiaries during that period that, in conformity with Agreement
Accounting Principles, are required to be included in or reflected by the
property, plant, equipment or similar fixed asset accounts reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries, other than
Permitted Acquisitions.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"CAPITALIZED LEASE" of a Person means any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be capitalized
on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"CARRY-OVER AMOUNT" is defined in Section 7.4(C) hereof.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies (fully protected
against currency fluctuations for any such deposits with a term of more than
ten (10) days); (iii) shares of money market, mutual or similar funds having
assets in excess of $100,000,000 and the investments of which are limited to
investment grade securities (i.e., securities rated at least Baa by Moody's
Investors Service, Inc. or at least BBB by Standard & Poor's Corporation); and
(iv) commercial paper of United States and foreign banks and bank holding
companies and their subsidiaries and United States and foreign finance,
commercial industrial or utility companies which, at the time of acquisition,
are rated A-1 (or better) by Standard & Poor's Ratings Group or P-1 (or better)
by Moody's Investors Services, Inc.; provided that the maturities of such Cash
Equivalents shall not exceed 365 days.
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<PAGE> 18
"CASH FLOW PERIOD" means the period from the Closing Date through the
end of the Borrower's fiscal year ending June 28, 1997 and, thereafter, as
separate periods, each fiscal year of the Borrower.
"CHANGE" is defined in Section 4.2 hereof.
"CHANGE OF CONTROL" means an event or series of events by which:
(a) the Principals or their Related Parties cease to be the
"beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of at least eighty
percent (80%) of the combined voting power of the Borrower's
outstanding Capital Stock ordinarily having the right to vote at an
election of directors;
(b) the Principals or their Related Parties cease to have the
right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of the
Borrower; or
(c) during any period of twelve (12) consecutive calendar
months, individuals:
(i) who were directors of the Borrower on the first
day of such period, or
(ii) whose election or nomination for election
to the board of directors of the Borrower was recommended or
approved by at least a majority of the directors then still in
office who were directors of the Borrower on the first day of
such period, or whose election or nomination for election was
so approved, shall cease to constitute a majority of the board
of directors of the Borrower.
"CLOSING DATE" means the date on which the Term Loans and the initial
Revolving Loans are advanced hereunder.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time, or any successor statute.
"COLLATERAL" means all property and interests in property now owned or
hereafter acquired by Enterprises, the Borrower or any of its Subsidiaries in
or upon which a security interest, lien or mortgage is granted to the Agent,
for the benefit of the Holders of Secured Obligations, or to the Agent, for the
benefit of the Lenders, whether under the Security Agreement, under any of the
other Collateral Documents or under any of the other Loan Documents.
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<PAGE> 19
"COLLATERAL DOCUMENTS" means all agreements, instruments and documents
executed in connection with this Agreement that are intended to create or
evidence Liens to secure the Secured Obligations, including, without
limitation, the Security Agreement, the Mexican Pledge, the Borrower Pledge,
the Enterprises Pledge, and all other security agreements, mortgages, deeds of
trust, loan agreements, notes, guarantees, subordination agreements, pledges,
powers of attorney, consents, assignments, contracts, fee letters, notices,
leases, financing statements and all other written matter whether heretofore,
now, or hereafter executed by or on behalf of Enterprises or the Borrower or
any of its Subsidiaries and delivered to the Agent or any of the Lenders,
together with all agreements and documents referred to therein or contemplated
thereby.
"COLLECTION ACCOUNT" means each lock-box and blocked depository account
maintained by the Borrower, subject to a Collection Account Agreement, for the
collection of Receivables and other proceeds of Collateral.
"COLLECTION ACCOUNT AGREEMENT" means a written agreement among the
Borrower, the Agent, and, as applicable, each of the banks at which the
Borrower maintains a Collection Account.
"COMMISSION" means the Securities and Exchange Commission and any Person
succeeding to the functions thereof.
"COMMITMENT" means, for each Lender, collectively, such Lender's
Revolving Loan Commitment and Term Loan Commitment.
"CONSOLIDATED ASSETS" means the total assets of the Borrower and its
Subsidiaries on a consolidated basis, but excluding therefrom all items that
are treated as intangibles under Agreement Accounting Principles.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls ("PCBs"), or any
constituent of any such substance or waste, and includes but is not limited to
these terms as defined in Environmental, Health or Safety Requirements of Law.
"CONTINGENT OBLIGATION", as applied to any Person, means (i) any
Contractual Obligation, contingent or otherwise, of that Person with respect to
any Indebtedness of another or other obligation or liability of another,
including, without limitation, any such Indebtedness, obligation or liability
of another directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), co-made or
discounted or sold with recourse by that Person, or in respect of which that
Person is otherwise directly or indirectly liable, including Contractual
Obligations (contingent or otherwise) arising through any agreement to
purchase, repurchase, or otherwise acquire such Indebtedness, obligation or
liability or any security therefor, or to provide funds for
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<PAGE> 20
the payment or discharge thereof (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain solvency,
assets, level of income, or other financial condition, or to make payment other
than for value received (such obligations under this clause (i) being sometimes
referred to as "Accommodation Obligations") and (ii) any other contingent
obligation or liability of such Person, whether or not reflected in financial
statements of such Person as a liability.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision
of any equity or debt securities issued by that Person or any indenture,
mortgage, deed of trust, security agreement, pledge agreement, guaranty,
contract, undertaking, agreement or instrument, in any case in writing, 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.
"CONTROLLED GROUP" means the group consisting of (i) any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as the Borrower; (ii) a partnership or
other trade or business (whether or not incorporated) which is under common
control (within the meaning of Section 414(c) of the Code) with the Borrower;
and (iii) a member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as the Borrower, any corporation described in
clause (i) above or any partnership or trade or business described in clause
(ii) above.
"CONTROLLED SUBSIDIARY" of any Person means a Subsidiary of such Person
(i) 90% or more of the total Equity Interests or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more wholly-owned Subsidiaries of such Person and (ii)
of which such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies, whether through the
ownership of voting securities, by agreement or otherwise.
"CONVERSION/CONTINUATION NOTICE" is defined in Section 2.10(D) hereof.
"CORPORATE BASE RATE" means the corporate base rate of interest
announced by First Chicago from time to time, changing when and as said
corporate base rate changes.
"CURE LOAN" is defined in Section 9.2(iii) hereof.
"CUSTOMARY PERMITTED LIENS" means:
(i) Liens (other than Environmental Liens and Liens in favor of
the PBGC) with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or (if
foreclosure, distraint, sale or other similar proceedings shall not
have been commenced) which are being contested in good faith by
appropriate proceedings properly instituted and diligently conducted
and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with Agreement Accounting
Principles;
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(ii) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
similar Liens imposed by law created in the ordinary course of business
for amounts not yet due or which are being contested in good faith by
appropriate proceedings properly instituted and diligently conducted
and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with Agreement Accounting
Principles;
(iii) Liens (other than Environmental Liens and Liens in favor
of the PBGC) incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment
insurance or other types of social security benefits or to secure the
performance of bids, tenders, sales, contracts (other than for the
repayment of borrowed money), surety, appeal and performance bonds;
provided that (A) all such Liens do not in the aggregate materially
detract from the value of the Borrower's or such Subsidiary's assets
or property taken as a whole or materially impair the use thereof in
the operation of the businesses taken as a whole, and (B) all Liens
securing bonds to stay judgments or in connection with appeals do not
secure at any time an aggregate amount exceeding $5,000,000;
(iv) Liens arising with respect to zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar charges or
encumbrances on the use of real property which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Borrower
or any of its Subsidiaries;
(v) Liens of attachment or judgment with respect to judgments,
writs or warrants of attachment, or similar process against the
Borrower or any of its Subsidiaries which do not constitute a Default
under Section 8.1(h) hereof; and
(vi) any interest or title of the lessor in the property subject
to any operating lease entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business.
"DECISION PERIOD" is defined in Section 7.2(G) hereof.
"DECISION RESERVE" is defined in Section 7.2(G) hereof.
"DEFAULT" means an event described in Article VIII hereof.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund
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<PAGE> 22
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is 91 days after the Revolving
Loan Termination Date.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"DOLLAR" and "$" means dollars in the lawful currency of the United
States.
"EBITDA" means, for any period, on a consolidated basis for the
Borrower and its Subsidiaries, the sum of the amounts for such period of (i)
Net Income, plus (ii) Interest Expense, plus (iii) charges against income for
foreign, federal, state and local taxes, plus (iv) depreciation expense, plus
(v) amortization expense, including, without limitation, amortization of
goodwill and other intangible assets, Transaction Costs, and other fees, costs
and expenses in connection with Permitted Acquisitions, plus (vi) other
non-cash charges classified as long-term deferrals in accordance with Agreement
Accounting Principles.
"ENTERPRISES" means Printpack Enterprises, Inc., a Georgia corporation,
and owner of 99.77% of the Capital Stock of the Borrower, together with its
successors and assigns, including a debtor-in-possession on behalf of
Enterprises.
"ENTERPRISES GUARANTY" means that certain Guaranty of even date
herewith executed by Enterprises in favor of the Agent for the benefit of the
Holders of Secured Obligations, as amended, restated or otherwise modified from
time to time.
"ENTERPRISES PLEDGE" means that certain Pledge Agreement of even date
herewith executed by Enterprises in favor of the Agent, as amended, restated or
otherwise modified from time to time, pursuant to which Enterprises has pledged
to the Agent, for the benefit of the Holders of Secured Obligations, all of the
Capital Stock of the Borrower owned by Enterprises.
"ENVIRONMENTAL AUDIT" means the Environmental Audit dated July 24,
1996, prepared for the Borrower by ESCM & Associates, Inc., including the Phase
I Environmental Property Assessments for Printpack Facilities and James River
Facilities appended thereto.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all
Requirements of Law derived from or relating to federal, state and local laws
or regulations relating to or addressing pollution or protection of the
environment, or protection of worker health or safety, including, but not
limited to, the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq., the Occupational Safety and
Health Act of 1970, 29 U.S.C. Section 651 et seq., and the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., in
each case including any amendments thereto, any successor statutes, and any
regulations or guidance promulgated thereunder, and any state or local
equivalent thereof.
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"ENVIRONMENTAL LIEN" means a lien in favor of any Governmental
Authority for (a) any liability under Environmental, Health or Safety
Requirements of Law, or (b) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACT" means any applicable requirement
of law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called "Industrial Site Recovery
Act" or "Responsible Property Transfer Act."
"EQUIPMENT" means all of the Borrower's present and future (i)
equipment, including, without limitation, machinery, manufacturing,
distribution, selling, data processing and office equipment, assembly systems,
tools, molds, dies, fixtures, appliances, furniture, furnishings, vehicles,
vessels, aircraft, aircraft engines, and trade fixtures, (ii) other tangible
personal property (other than the Borrower's Inventory), and (iii) any and all
accessions, parts and appurtenances attached to any of the foregoing or used in
connection therewith, and any substitutions therefor and replacements, products
and proceeds thereof.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.
"EURODOLLAR BASE RATE" means, with respect to a Eurodollar Rate Loan
for the relevant Interest Period, the rate determined by the Agent to be the
arithmetic average of the respective rates at which deposits in Dollars are
offered by the Reference Lenders to first-class banks in the London interbank
market at approximately 11 a.m. (London time) two Business Days prior to the
first day of such Interest Period, in the approximate amounts of the portions
of the relevant Eurodollar Rate Loan of each Reference Lender, and having a
maturity approximately equal to such Interest Period, as adjusted for Reserves.
"EURODOLLAR RATE" means, with respect to a Eurodollar Rate Loan for the
relevant Interest Period, the Eurodollar Base Rate applicable to such Interest
Period plus the then Applicable Eurodollar Margin. The Eurodollar Rate shall be
rounded to the next higher multiple of 1/16 of 1% if the rate is not such a
multiple.
"EURODOLLAR RATE ADVANCE" means an Advance which bears interest at the
Eurodollar Rate.
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"EURODOLLAR RATE LOAN" means a Loan, or portion thereof, which bears
interest at the Eurodollar Rate.
"EXCESS CASH FLOW" means, for any Cash Flow Period, an amount equal to
the Borrower's and its Subsidiaries' consolidated (i) EBITDA for such period,
minus (ii) income taxes paid in cash for such period, minus (iii) Capital
Expenditures paid in cash during such period, minus (iv) cash charges related
to plant closings and early retirement programs for such period, such as
severance and equipment relocation charges and termination and modification of
benefit programs, minus (v) Interest Expense for such period, minus (vi)
scheduled amortization of the principal portion of the Term Loans and scheduled
amortization of the principal portion of all other Indebtedness of the Borrower
and its Subsidiaries during such period, minus (vii) cash payments in respect
of extraordinary and nonrecurring items, minus (viii) the increase (or plus the
decrease) in Working Capital during such period, in each case as calculated in
accordance with Agreement Accounting Principles. All such amounts shall be
calculated assuming that the Borrower has conducted its business in the
ordinary course and in accordance with past practices.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately 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 at approximately 10:00
a.m. (Chicago time) on such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the Agent in its
sole discretion.
"FINANCING" means, with respect to any Person, the issuance or sale by
such Person of any Equity Interests of such Person or any Indebtedness
consisting of debt securities of such Person pursuant to a registered offering
or private placement.
"FIRST CHICAGO" means The First National Bank of Chicago, in its
individual capacity, and its successors.
"FIXED CHARGE COVERAGE RATIO" is defined in Section 7.4(A) hereof.
"FLOATING RATE" means, for any day for any Loan, a rate per annum equal
to the Alternate Base Rate for such day, changing and as the Alternate Base
Rate changes.
"FLOATING RATE ADVANCE" means an Advance which bears interest at the
Floating Rate.
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<PAGE> 25
"FLOATING RATE LOAN" means a Loan, or portion thereof, which bears
interest at the Floating Rate.
"FOREIGN EMPLOYEE BENEFIT PLAN" means a plan which would be a Benefit
Plan except that such plan is maintained or contributed to by an entity which
is not a U.S.
business entity.
"GOVERNMENTAL ACTS" is defined in Section 3.11(a) hereof.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"HEDGING OBLIGATIONS" of a Person means any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"HOLDERS OF SECURED OBLIGATIONS" means the holders of the Secured
Obligations from time to time and shall refer to (i) each Lender in respect of
its Loans, (ii) the Issuing Bank in respect of Reimbursement Obligations, (iii)
the Agent, the Lenders, the Swing Line Bank and the Issuing Bank in respect of
all other present and future obligations and liabilities of the Borrower, any
of its Subsidiaries, Holdings or Enterprises of every type and description
arising under or in connection with this Agreement or any other Loan Document,
(iii) each Indemnitee in respect of the obligations and liabilities of the
Borrower to such Person hereunder, (iv) each Lender (or affiliate thereof), in
respect of all Hedging Obligations of the Borrower to such Lender (or such
affiliate) as exchange party or counterparty under any Interest Rate Agreement,
and (v) their respective successors, transferees and assigns.
"HOLDINGS" means Printpack Holdings, Inc., a Delaware corporation, and
owner of 97.39% of the Capital Stock of Enterprises, together with its
successors and assigns, including a debtor-in-possession on behalf of Holdings.
"HOLDINGS GUARANTY" means that certain Guaranty of even date herewith
executed by Holdings in favor of the Agent for the benefit of the Holders of
Secured Obligations, as amended, restated or otherwise modified from time to
time.
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"IHC" means Printpack Illinois, Inc., an Illinois corporation, together
with its successors and assigns, including a debtor-in-possession on behalf of
IHC.
"IHC AGREEMENTS" means the Intercorporate Services Agreement between
the Borrower and IHC, the respective Trademark License Agreements between IHC
and the Borrower, Holdings, Enterprises and Empaques Printpack de Mexico, S.A.
de C.V., and the respective Intellectual Property License Agreements between
IHC and the Borrower, Holdings, Enterprises and Empaques Printpack de Mexico,
S.A. de C.V., in each case dated as of June 30, 1996.
"IHC ASSETS" means certain intellectual property, certain tangible
assets located in Elgin, Illinois, and certain Equity Interests in the Mexican
Subsidiaries, as more specifically described on Schedule 1.1.1 to this
Agreement.
"INDEBTEDNESS" of any Person means such Person's (a) obligations for
borrowed money, (b) obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary
course of such Person's business payable on terms customary in the trade), (c)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from property or assets now or hereafter owned or
acquired by such Person, (d) obligations which are evidenced by notes,
acceptances or other instruments, (e) Capitalized Lease Obligations, (f)
Contingent Obligations, (g) obligations with respect to letters of credit, (h)
Hedging Obligations and (i) Disqualified Stock as provided in Section 7.3(M).
The amount of Indebtedness of any Person at any date shall be without
duplication (i) the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any such Contingent
Obligations at such date and (ii) in the case of Indebtedness of others secured
by a Lien to which the property or assets owned or held by such Person is
subject, the lesser of the fair market value at such date of any asset subject
to a Lien securing the Indebtedness of others and the amount of the
Indebtedness secured. In the case of PRF, Indebtedness shall include the
unrecovered investment of purchasers of Receivables from PRF pursuant to the
Receivables Purchase Documents, and such Indebtedness shall be deemed to be
funded Indebtedness for purposes of Section 7.1(G).
"INDEMNIFIED MATTERS" is defined in Section 10.7(B) hereof.
"INDEMNITEES" is defined in Section 10.7(B) hereof.
"INTEREST EXPENSE" means, for any period, the sum of (i) the total
interest expense of the Borrower and its consolidated Subsidiaries, whether
paid or accrued (including the interest component of Capitalized Leases,
commitment and letter of credit fees, and discount and other fees and charges
incurred under the Receivables Purchase Documents), but excluding interest
expense not payable in cash (including amortization of discount), and (ii) the
product of (a) all cash dividend payments on any series of preferred stock
issued by the Borrower or any of its Subsidiaries, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined
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federal, state and local statutory tax rate of the Borrower, expressed as a
decimal, in each case on a consolidated basis, all as determined in conformity
with Agreement Accounting Principles.
"INTEREST PERIOD" means, with respect to a Eurodollar Rate Loan, a
period of one (1), two (2), three (3) months or six (6) months commencing on a
Business Day selected by the Borrower pursuant to this Agreement. Such Interest
Period shall end on (but exclude) the day which corresponds numerically to such
date one, two, three or six months thereafter; provided, however, that if there
is no such numerically corresponding day in such next, second, third or sixth
succeeding month, such Interest Period shall end on the last Business Day of
such next, second, third or sixth succeeding month. If an Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
end on the next succeeding Business Day, provided, however, that if said next
succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.
"INTEREST RATE AGREEMENTS" is defined in Section 7.3(Q) hereof.
"INVENTORY" shall mean any and all goods, including, without
limitation, goods in transit, wheresoever located, whether now owned or
hereafter acquired by the Borrower, which are held for sale or lease, furnished
under any contract of service or held as raw materials, work in process or
supplies, and all materials used or consumed in the Borrower's business, and
shall include all right, title and interest of the Borrower in any property the
sale or other disposition of which has given rise to Receivables and which has
been returned to or repossessed or stopped in transit by the Borrower.
"INVESTMENT" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of any Indebtedness, Equity Interests or other
securities, or of a beneficial interest in any Indebtedness, Equity Interests
or other securities, issued by any other Person, (ii) any purchase by that
Person of all or substantially all of the assets of a business conducted by
another Person, and (iii) any loan, advance (other than deposits with financial
institutions available for withdrawal on demand, prepaid expenses, accounts
receivable, advances to employees and similar items made or incurred in the
ordinary course of business) or capital contribution by that Person to any
other Person, including all Indebtedness to such Person arising from a sale of
property by such Person other than in the ordinary course of its business.
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"ISSUING BANKS" means First Chicago and SunTrust Bank, Atlanta, and any
other Lender which, at the Borrower's request, agrees, in each such Lender's
sole discretion, to become an Issuing Bank for the purpose of issuing Letters
of Credit, and their respective successors and assigns, in each case in such
Lender's separate capacity as an issuer of Letters of Credit pursuant to
Article III hereof. The designation of any Lender as an
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Issuing Bank after the date hereof shall be subject to the prior written
consent of the Agent.
"JAMES RIVER" means James River Corporation of Virginia, a Virginia
corporation, together with its successors and assigns, including a
debtor-in-possession on behalf of James River.
"JAMES RIVER ACQUISITION" means the acquisition by the Borrower of
certain of the assets and liabilities of the flexible packaging group of James
River and its Affiliates on the terms and conditions set forth in that certain
Asset Purchase Agreement ("Asset Purchase Agreement") dated as of April 10,
1996, as amended through the Closing Date, by and between the Borrower and
James River.
"JAMES RIVER ACQUISITION DOCUMENTS" means the Asset Purchase Agreement
and all other documents, instruments and agreements entered into by Holdings,
Enterprises, the Borrower or any of their Subsidiaries in connection with the
James River Acquisition.
"L/C DOCUMENTS" is defined in Section 3.4 hereof.
"L/C DRAFT" means a draft drawn on an Issuing Bank pursuant to a Letter
of Credit.
"L/C INTEREST" is defined in Section 3.6 hereof.
"L/C OBLIGATIONS" means, without duplication, an amount equal to the
sum of (i) the aggregate of the amount then available for drawing under each of
the Letters of Credit, (ii) the face amount of all outstanding L/C Drafts
corresponding to the Letters of Credit, which L/C Drafts have been accepted by
the applicable Issuing Bank, (iii) the aggregate outstanding amount of all
Reimbursement Obligations at such time and (iv) the aggregate face amount of
all Letters of Credit requested by the Borrower but not yet issued (unless the
request for an unissued Letter of Credit has been denied).
"LENDERS" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"LENDING INSTALLATION" means, with respect to a Lender or the Agent,
any office, branch, subsidiary or affiliate of such Lender or the Agent.
"LETTER OF CREDIT" means the letters of credit to be (a) issued by the
Issuing Banks pursuant to Section 3.1 hereof or (b) deemed issued by the
Issuing Banks pursuant to Section 3.2 hereof.
"LEVERAGE RATIO" is defined in Section 7.4(B) hereof.
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"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"LOAN(S)" means, with respect to a Lender, such Lender's portion of any
Advance made pursuant to Section 2.1 or Section 2.2 hereof, as applicable, and
in the case of the Swing Line Bank, any Swing Line Loan made pursuant to
Section 2.3 hereof, and collectively all Term Loans, Revolving Loans and Swing
Line Loans, whether made or continued as or converted to Floating Rate Loans or
Eurodollar Rate Loans.
"LOAN ACCOUNT" is defined in Section 2.15(F) hereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the L/C Documents,
the Collateral Documents, the Parent Agreements and all other documents,
instruments and agreements executed in connection therewith or contemplated
thereby, as the same may be amended, restated or otherwise modified and in
effect from time to time.
"MANAGEMENT" means those employees or former employees of the Borrower
holding common stock of Holdings, Enterprises or the Borrower as of the Closing
Date and from time to time thereafter.
"MARGIN STOCK" shall have the meaning ascribed to such term in
Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower, or the Borrower and its Subsidiaries,
taken as a whole, (b) the ability of the Borrower or any of its Subsidiaries to
perform their respective obligations under the Loan Documents in any material
respect, or (c) the ability of the Lenders or the Agent to enforce in any
material respect the Obligations or their rights with respect to the
Collateral.
"MAXIMUM REVOLVING CREDIT AMOUNT" means, at any particular time, the
Aggregate Revolving Loan Commitment at such time minus the amount of any
Decision Reserve in effect at such time.
"MEXICAN PLEDGE" means that certain Pledge Agreement of even date
herewith executed by the Borrower in favor of the Agent, as amended, restated
or otherwise modified from time to time, pursuant to which the Borrower has
pledged to the Agent, for the benefit of the Holders of Secured Obligations,
sixty-five percent (65%) of the Capital Stock of Empaques Printpack de Mexico,
S.A. de C.V.
"MEXICAN SUBSIDIARIES" means, collectively, (i) James River Packaging
de Mexico, S.A. de C.V., (ii) Servicios James River de Mexico, S.A. de C.V.,
(iii) James
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River de Mexico, S.A. de C.V., and (iv) Empaques Printpack de Mexico, S.A. de
C.V., each a Mexican corporation, together with their respective successors
and assigns.
"MULTIEMPLOYER PLAN" means a "Multiemployer Plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by either the Borrower or any member of the Controlled
Group.
"NET CASH PROCEEDS" means, with respect to any Asset Sale or Financing
by any Person, (a) cash (freely convertible into Dollars) received by such
Person or any Subsidiary of such Person from such Asset Sale (including cash
received as consideration for the assumption or incurrence of liabilities
incurred in connection with or in anticipation of such Asset Sale) or
Financing, after (i) provision for all income or other taxes measured by or
resulting from such Asset Sale, (ii) payment of all brokerage commissions and
other fees and expenses related to such Asset Sale or Financing, (iii) all
amounts used to repay Indebtedness secured by a Lien on any asset disposed of
in such Asset Sale or which is or may be required (by the express terms of the
instrument governing such Indebtedness) to be repaid in connection with such
Asset Sale (including payments made to obtain or avoid the need for the consent
of any holder of such Indebtedness) or Financing consisting of Permitted
Refinancing Indebtedness, and (iv) deduction of appropriate amounts to be
provided by such Person or a Subsidiary of such Person as a reserve, in
accordance with Agreement Accounting Principles, against any liabilities
associated with the assets sold or disposed of in such Asset Sale and retained
by such Person or a Subsidiary of such Person after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters or against any indemnification
obligations associated with the assets sold or disposed of in such Asset Sale;
and (b) cash payments in respect of any Indebtedness, Equity Interest or other
consideration received by such Person or any Subsidiary of such Person from
such Asset Sale upon receipt of such cash payments by such Person or such
Subsidiary.
"NET INCOME" means, for any period, the net earnings (or loss) after
taxes of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with
Agreement Accounting Principles; provided, that when calculating Net Income the
following items shall be excluded from such calculation: (i) the earnings (but
not loss) of any Person that is not a Subsidiary or that is accounted for by
the equity method of accounting, except to the extent of the amount of
dividends or distributions paid in cash to the Borrower or a consolidated
Subsidiary; (ii) the earnings of a Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
to the Borrower with respect to such earnings is not, at the date of
determination, permitted without the prior approval of a Governmental Authority
(and such approval has not been obtained), or is prohibited, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Subsidiary or the holders of its Capital Stock, (iii) the
cumulative effect of a change in accounting principles, (iv) nonrecurring
items, such as gains or losses on the sale of assets, (v) charges or reserves
taken within eighteen (18) months following the Closing Date for
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<PAGE> 31
severance (including severance relating to the early retirement program
implemented during the fiscal year ended June 29, 1996), plant closings,
equipment relocations and other charges arising out of the consolidation and
rationalization of the assets and liabilities acquired pursuant to the James
River Acquisition, including charges and expenses not exceeding $3,000,000 in
the aggregate relating to termination or modification of benefit programs in
connection with the James River Acquisition, and (vi) corporate overhead
reflected in the James River Group financial statements referred to in Section
6.4(B); but when calculating Net Income such calculation shall include
historical audited Net Income (as calculated above) for such period of any
Person (or division of such Person) that became a Subsidiary of the Borrower
during such period or was merged into or was consolidated with the Borrower or
any of its Subsidiaries during such period, or where the assets of such Person
(or division of such Person) were acquired by the Borrower or any of its
Subsidiaries during such period, whether accrued prior or subsequent to the
date of such acquisition, merger or consolidation.
"NON PRO RATA LOAN" is defined in Section 9.2 hereof.
"NOTES" means the Revolving Notes, Swing Line Note and Term Notes.
"NOTICE OF ASSIGNMENT" is defined in Section 13.3(B) hereof.
"OBLIGATIONS" means all Loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Agent, any
Lender, any affiliate of the Agent or any Lender, the Swing Line Bank, any
Issuing Bank, or any Indemnitee, of any kind or nature, present or future,
arising under this Agreement, the Notes, the L/C Documents, the Collateral
Documents or any other Loan Document, whether or not evidenced by any note,
guaranty or other instrument, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty, indemnification,
or in any other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, attorneys' fees and disbursements,
paralegals' fees (in each case whether or not allowed), and any other sum
chargeable to the Borrower under this Agreement or any other Loan Document.
"OTHER TAXES" is defined in Section 2.15(E)(ii) hereof.
"PARENT AGREEMENTS" means, collectively, the Enterprises Guaranty,
Enterprises Pledge and Holdings Guaranty.
"PARTICIPANTS" is defined in Section 13.2(A) hereof.
"PAYMENT DATE" means the last Business Day of each fiscal quarter of
the Borrower.
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"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PERMITTED ACQUISITION" is defined in Section 7.3(G) (iii) hereof.
"PERMITTED ADDITIONAL SUBORDINATED INDEBTEDNESS" is defined in Section
7.3(A)(v) hereof.
"PERMITTED EXISTING CONTINGENT OBLIGATIONS" means the Contingent
Obligations of the Borrower and its Subsidiaries identified as such on Schedule
1.1.2 to this Agreement.
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the
Borrower and its Subsidiaries identified as such on Schedule 1.1.3 to this
Agreement.
"PERMITTED EXISTING INVESTMENTS" means the Investments of the Borrower
and its Subsidiaries identified as such on Schedule 1.1.4 to this Agreement.
"PERMITTED EXISTING LIENS" means the Liens on assets of the Borrower
and its Subsidiaries identified as such on Schedule 1.1.5 to this Agreement.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" is defined in Section 7.3(A)(xi)
hereof.
"PERMITTED RECEIVABLES TRANSFER" means (i) a sale or other transfer by
the Borrower to PRF of "Receivables" and "Related Security" under and as such
terms are defined in the Receivables Sale Agreement, in accordance with the
terms of the Receivables Sale Agreement and/or (ii) a sale by PRF to purchasers
in accordance with the terms of the Receivables Purchase Agreement.
"PERMITTED REFINANCING INDEBTEDNESS" means any replacement, renewal,
refinancing or extension of any Indebtedness (other than the Subordinated
Notes) permitted by this Agreement that (i) does not exceed the aggregate
principal amount (plus accrued interest and any applicable premium and
associated fees and expenses) of the Indebtedness being replaced, renewed,
refinanced or extended, (ii) does not have a Weighted Average Life to Maturity
at the time of such replacement, renewal, refinancing or extension that is less
than the Weighted Average Life to Maturity of the Indebtedness being replaced,
renewed, refinanced or extended, (iii) does not rank at the time of such
replacement, renewal, refinancing or extension senior to the Indebtedness being
replaced, renewed, refinanced or extended, and (iv) does not contain terms
(including, without limitation, terms relating to security, amortization,
interest rate, premiums, fees, covenants, subordination, events of default and
remedies) materially less favorable to the Borrower or to the Lenders, taken as
a whole, than those applicable to the Indebtedness being replaced, renewed,
refinanced or extended.
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"PERSON" means any individual, corporation, firm, enterprise,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, limited liability company or other entity of any kind, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"PLAN" means an employee benefit plan defined in Section 3(3) of ERISA
in respect of which the Borrower or any member of the Controlled Group is, or
within the immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA.
"PRF" means Flexible Funding Corp., a Delaware corporation, together
with its successors and assigns, including a debtor-in-possession on behalf of
PRF.
"PRINCIPALS" means Dennis M. Love, James E. Love, III, Carol Anne Love
Jennison, William J. Love, Charles Keith Love, David M. Love and Gay Love.
"PRO RATA SHARE" means, with respect to any Lender, (i) at any time
prior to the Closing Date, the percentage obtained by dividing (A) such
Lender's Commitments at such time (in each case, as adjusted from time to time
in accordance with the provisions of this Agreement) by (B) the sum of the
Aggregate Term Loan Commitment and the Aggregate Revolving Loan Commitment at
such time and (ii) at any time after the Closing Date, the percentage obtained
by dividing (A) the sum of such Lender's Term Loans and Revolving Loan
Commitment at such time (in each case, as adjusted from time to time in
accordance with the provisions of this Agreement) by (B) the sum of the
aggregate amount of all of the Term Loans and the Aggregate Revolving Loan
Commitment at such time; provided, however, if all of the Commitments are
terminated pursuant to the terms of this Agreement, then "Pro Rata Share" means
the percentage obtained by dividing (x) the sum of such Lender's Term Loans and
Revolving Loans and, in the case of the Swing Line Bank, Swing Line Loans, by
(y) the aggregate amount of all Term Loans, Revolving Loans and Swing Line
Loans.
"PURCHASERS" is defined in Section 13.3(A) hereof.
"RATE OPTION" means the Eurodollar Rate or the Floating Rate.
"RECEIVABLE(S)" means and includes all of the Borrower's presently
existing and hereafter arising or acquired accounts, accounts receivable, and
all present and future rights of the Borrower to payment for goods sold or
leased or for services rendered (except those evidenced by instruments or
chattel paper), whether or not they have been earned by performance, and all
rights in any merchandise or goods which any of the same may represent, and all
rights, title, security and guaranties with respect to each of the foregoing,
including, without limitation, any right of stoppage in transit; provided,
however, that Receivables that are transferred to PRF pursuant to
a Permitted Receivables Transfer shall be deemed not to be Receivables
hereunder, until such time, if any, as any such Receivables are repurchased by
or otherwise transferred to the Borrower pursuant to
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<PAGE> 34
the terms of the Receivables Sale Agreement or otherwise; provided further,
that upon any such Permitted Receivables Transfer, the Lien of the Agent shall
automatically attach to the proceeds of such sale .
"RECEIVABLES PURCHASE AGREEMENT" means that certain Receivables
Purchase Agreement dated as of August 22, 1996, among PRF, Falcon Asset
Securitization Corporation ("Falcon"), the other purchasers party thereto and
First Chicago as agent for Falcon and such other purchasers, as such agreement
may be amended, restated or otherwise modified from time to time in accordance
with the terms hereof, or any replacement or substitution therefor.
"RECEIVABLES PURCHASE DOCUMENTS" means the Receivables Sale Agreement
and the Receivables Purchase Agreement.
"RECEIVABLES SALE AGREEMENT" means that certain Receivables Sale
Agreement dated as of August 22, 1996, between the Borrower and PRF, pursuant
to which the Borrower shall sell to PRF all of its "Receivables" and "Related
Security" (as such terms are defined therein), as such agreement may be
amended, restated or otherwise modified from time to time in accordance with
the terms hereof, or any replacement or substitution therefor.
"REFERENCE LENDERS" means First Chicago, The Chase Manhattan Bank and
Morgan Guaranty Trust Company of New York.
"REGISTER" is defined in Section 13.3(C) hereof.
"REGULATION G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by nonbank, nonbroker lenders for the purpose of
purchasing or carrying margin stock (as defined therein).
"REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by and to brokers and dealers of securities for the
purpose of purchasing or carrying margin stock (as defined therein).
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by banks for the purpose of purchasing or carrying
Margin Stock applicable to member banks of the Federal Reserve System.
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"REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the obtaining of credit by borrowers for the purpose of purchasing or
carrying margin stock (as defined therein).
"REIMBURSEMENT OBLIGATION" is defined in Section 3.7 hereof.
"RELATED PARTY" with respect to any Principal means (A) any spouse or
immediate family member of such Principal or (B) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons beneficially holding the outstanding Equity Interests of which
consist of such Principal and/or such other Persons referred to in the
immediately preceding clause (A).
"RELATED TRANSACTIONS" means (i) the formation of Holdings and the
exchange of approximately 99.7% of the Borrower's Capital Stock and
approximately 90.8% of Enterprises' Capital Stock in exchange for capital stock
of Holdings, (ii) the Borrower's transfer of its Equity Interests in certain
entities located in the United Kingdom to Holdings and the Borrower's issuance
of 1,189,850 shares of the Borrower's Capital Stock to Enterprises, (iii)
Enterprises' transfer of all of its North American operating assets other than
the IHC Assets held by it to the Borrower, the assumption by the Borrower of
all of the liabilities of Enterprises with respect to such North American
operating assets, and Enterprises' issuance of 7,975,499 shares of Enterprises'
Capital Stock to Holdings so that, together with the shares of Enterprises'
Capital Stock already held by Holdings, Holdings holds approximately 97.4% of
Enterprises' outstanding capital stock, (iv) Holdings' transfer of all of the
shares of the Borrower's Capital Stock held by it to Enterprises so that,
together with the shares of the Borrower's Capital Stock issued to Enterprises
by the Borrower, Enterprises holds approximately 99.8% of the Borrower's
outstanding capital stock, (v) the formation of IHC and (vi) the contribution
by the Borrower and Enterprises of the IHC Assets to IHC.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Contaminants
through or in the air, soil, surface water or groundwater.
"REPLACEMENT LENDER" is defined in Section 2.20 hereof.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days
after such event occurs, provided, however, that a failure to meet the minimum
funding standards of Section 412 of the Code and of Section 302 of ERISA shall
be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
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"REQUIRED LENDERS" means Lenders whose Pro Rata Shares, in the
aggregate, are equal to or greater than sixty-six and two-thirds percent
(66-2/3%); provided, however, that, if any of the Lenders shall have wrongfully
failed to fund its Pro Rata Share of any Revolving Loan requested by the
Borrower, or any Swing Line Loan as requested by the Agent, which such Lenders
are obligated to fund under the terms of this Agreement and any such failure
has not been cured, then for so long as such failure continues, "REQUIRED
LENDERS" means Lenders (excluding all Lenders whose failure to fund their
respective Pro Rata Shares of such Revolving Loans or Swing Line Loans has not
been so cured) whose Pro Rata Shares represent at least sixty-six and
two-thirds percent (66-2/3%) of the aggregate Pro Rata Shares of such Lenders;
provided further, however, that, if the Commitments have been terminated
pursuant to the terms of this Agreement, "REQUIRED LENDERS" means Lenders
(without regard to such Lenders' performance of their respective obligations
hereunder) whose aggregate ratable shares (stated as a percentage) of the
aggregate outstanding principal balance of all Loans and L/C Obligations are
equal to or greater than sixty-six and two-thirds percent (66-2/3%).
"REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws
or other organizational or governing documents of such Person, and any law,
rule or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject including, without limitation, the Securities Act of 1933, the
Securities Exchange Act of 1934, Regulations G, T, U and X, ERISA, the Fair
Labor Standards Act, the Worker Adjustment and Retraining Notification Act,
Americans with Disabilities Act of 1990, and any certificate of occupancy,
zoning ordinance, building, environmental or land use requirement or permit or
environmental, labor, employment, occupational safety or health law, rule or
regulation, including Environmental, Health or Safety Requirements of Law.
"RESERVES" shall mean the maximum reserve requirement, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor), with
respect to "Eurocurrency liabilities" or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurodollar Rate Loans is determined or category of extensions of credit or
other assets which includes loans by a non-United States office of any Lender
to United States residents.
"RESTRICTED INVESTMENT" means any Investment other than an Investment
permitted by Section 7.3(D) (other than clause (xi) thereof).
"RESTRICTED PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any Equity Interests of the Borrower now or
hereafter outstanding, except a dividend payable solely in the Borrower's
Capital Stock (other than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock, (ii) any redemption, retirement,
purchase or other acquisition for value, direct or indirect, of any Equity
Interests of the Borrower or any of its Subsidiaries now or hereafter
outstanding,
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other than in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the Borrower) of
other Equity Interests of the Borrower (other than Disqualified Stock), (iii)
any redemption, purchase, retirement, defeasance, prepayment or other
acquisition for value, direct or indirect, of any Indebtedness prior to the
stated maturity thereof, other than the Obligations and other than with the
proceeds of Permitted Refinancing Indebtedness, (iv) any payment of a claim for
the rescission of the purchase or sale of, or for material damages arising from
the purchase or sale of, any Indebtedness (other than the Obligations) or any
Equity Interests of the Borrower or any of the Borrower's Subsidiaries, or of a
claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission, and (v) any Restricted
Investment.
"REVOLVING CREDIT AVAILABILITY" means, at any particular time, the
amount by which the Maximum Revolving Credit Amount at such time exceeds the
Revolving Credit Obligations at such time.
"REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the sum
of (i) the outstanding principal amount of the Revolving Loans at such time,
plus (ii) the outstanding principal amount of the Swing Line Loans at such
time, plus (iii) the L/C Obligations at such time.
"REVOLVING LOAN" is defined in Section 2.2 hereof.
"REVOLVING LOAN COMMITMENT" means, for each Lender, the obligation of
such Lender to make Revolving Loans and to purchase participations in Letters
of Credit not exceeding the amount set forth on Exhibit A to this Agreement
opposite its name thereon under the heading "Revolving Loan Commitment" or on
Schedule 1 of the assignment and acceptance by which it became a Lender, as
such amount may be modified from time to time pursuant to the terms of this
Agreement or to give effect to any applicable assignment and acceptance.
"REVOLVING LOAN TERMINATION DATE" means August 22, 2002.
"REVOLVING NOTE" means a promissory note, in substantially the form of
Exhibit B-1 hereto, duly executed by the Borrower and payable to the order of a
Lender in the amount of its Revolving Loan Commitment, including any amendment,
restatement, modification, renewal or replacement of such Revolving Note.
"RISK-BASED CAPITAL GUIDELINES" is defined in Section 4.2 hereof.
"SECURED OBLIGATIONS" means, collectively, (i) the Obligations and (ii)
all Hedging Obligations owing under Interest Rate Agreements to any Lender or
any affiliate of any Lender.
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<PAGE> 38
"SECURITY AGREEMENT" means that certain Security Agreement of even date
herewith executed by the Borrower in favor of the Agent for the benefit of the
Holders of Secured Obligations, as amended, restated or otherwise modified from
time to time.
"SENIOR NOTE INDENTURE" means that certain Indenture dated as of August
22, 1996, between the Borrower and Fleet National Bank, as Trustee, as amended,
supplemented or modified in accordance with Section 7.3(R) hereof.
"SENIOR NOTES" means those certain Senior Notes due 2004, issued by the
Borrower in the aggregate principal amount of $100,000,000 pursuant to the
Senior Note Indenture, as amended, supplemented or modified in accordance with
Section 7.3(R) hereof.
"SENIOR SUBORDINATED NOTE INDENTURE" means that certain Indenture dated
as of August 22, 1996, between the Borrower and Fleet National Bank, as
Trustee, as amended, supplemented or modified in accordance with Section 7.3(R)
hereof.
"SENIOR SUBORDINATED NOTES" means those certain Senior Subordinated
Notes due 2006, issued by the Borrower in the aggregate principal amount of
$200,000,000 pursuant to the Senior Subordinated Note Indenture, as amended,
supplemented or modified in accordance with Section 7.3(R) hereof.
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"SUBORDINATED INDEBTEDNESS" means, collectively, (i) the Senior
Subordinated Notes, (ii) the Subordinated Notes, and (ii) any Permitted
Additional Subordinated Indebtedness.
"SUBORDINATED NOTE AGREEMENT" means that certain Note Purchase
Agreement dated March 13, 1995, as amended as of the Closing Date, between the
Borrower and the purchasers named therein, as amended, supplemented or modified
in accordance with Section 7.3(R) hereof.
"SUBORDINATED NOTES" means those certain 11.00% Subordinated Notes due
May 4, 2014, issued by the Borrower in the aggregate principal amount of
$10,384,000 pursuant to the Subordinated Note Agreement, as amended,
supplemented or modified in accordance with Section 7.3(R) hereof.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests
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<PAGE> 39
having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"SWING LINE BANK" means First Chicago or any other Lender as a successor
Swing Line Bank.
"SWING LINE COMMITMENT" means the obligation of the Swing Line Bank to
make Swing Line Loans up to a maximum principal amount of $10,000,000 at any
one time outstanding.
"SWING LINE LOAN" means a Loan made available to the Borrower by the Swing
Line Bank pursuant to Section 2.3 hereof.
"SWING LINE NOTE" means a promissory note, in substantially the form of
Exhibit B-2 hereto, duly executed by the Borrower and payable to the order of
the Swing Line Bank in the amount of its Swing Line Commitment, including any
amendment, restatement, modification, renewal or replacement of such Swing Line
Note.
"TARGET ASSETS" means certain assets acquired in the James River
Acquisition having an aggregate value not exceeding $25,000,000.
"TAX ALLOCATION AGREEMENT" means the Tax Allocation Agreement among the
Borrower and, Holdings, Enterprises, IHC and PRF, as executed by such parties
as of the Closing Date.
"TAX INCENTIVE PROGRAM" means the Payment in Lieu of Taxes Program
sponsored by the Industrial Development Board ("IDB") of the City of Jackson,
Tennessee, pursuant to which (a) real property and equipment associated with
the Jackson, Tennessee, operations are transferred (or were transferred by
James River or an Affiliate thereof prior to the Closing Date) to the IDB in
exchange for a non-interest bearing promissory note in an original amount equal
to the fair market value of the property so transferred, (b) the IDB leases
such transferred property to the Borrower pursuant to a lease having no
interest component and providing for rental payments that match the payment
terms of the related promissory note, and (c) the Borrower pays a fee to the
IDB that is substantially less than the property taxes that it would otherwise
pay if it were not participating in such Payment in Lieu of Taxes Program.
"TAXES" is defined in Section 2.15(E)(i) hereof.
"TERMINATION DATE" means the earlier of (a) the Revolving Loan Termination
Date, and (b) the date of termination of the Aggregate Revolving Loan
Commitment pursuant to Section 2.6 hereof or the Commitments pursuant to
Section 9.1 hereof.
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"TERMINATION EVENT" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Borrower or any member of the
Controlled Group from a Benefit Plan during a plan year in which the Borrower
or such Controlled Group member was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or the cessation of operations which within a
twelve-month period results in the termination of employment of twenty percent
(20%) of Benefit Plan participants who are employees of the Borrower or any
member of the Controlled Group; (iii) the imposition of an obligation on the
Borrower or any member of the Controlled Group under Section 4041 of ERISA to
provide affected parties written notice of intent to terminate a Benefit Plan
in a distress termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Benefit Plan; (v) any
event or condition which could reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Benefit Plan; or (vi) the partial or complete
withdrawal of the Borrower or any member of the Controlled Group from a
Multiemployer Plan.
"TERM LOAN" is defined in Section 2.1(a) hereof.
"TERM LOAN COMMITMENT" means, for each Lender, the obligation of such
Lender to make its Term Loan pursuant to the terms and conditions of this
Agreement, and which shall not exceed the principal amount set forth on Exhibit
A to this Agreement opposite its name thereon under the heading "Term Loan
Commitment," as such amount may be modified from time to time pursuant to the
terms hereof.
"TERM LOAN TERMINATION DATE" means August 22, 2002.
"TERM NOTE" means a promissory note, in substantially the form of Exhibit
B-3 hereto, duly executed by the Borrower and payable to the order of a Lender
in the amount of its Term Loan Commitment, including any amendment,
restatement, modification, renewal or replacement of such Term Note.
"TOTAL DEBT" means, for any period, on a consolidated basis for the
Borrower and its
Subsidiaries, the sum of Indebtedness of the Borrower and its Subsidiaries,
other than (i) Hedging Obligations and (ii) the sum of the amounts then
available for drawing under Letters of Credit.
"TRANSACTION COSTS" means the fees, costs and expenses payable by the
Borrower in connection with the execution, delivery and performance of the
Transaction Documents, the issuance of the Senior Subordinated Notes and Senior
Notes, and the consummation of the James River Acquisition and the Related
Transactions.
"TRANSACTION DOCUMENTS" means the Loan Documents, the James River
Acquisition Documents, and the documents executed in connection with the Senior
Subordinated Notes, the Senior Notes and the Related Transactions.
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<PAGE> 41
"TRANSFEREE" is defined in Section 13.5 hereof.
"TYPE" means, with respect to any Loan, its nature as a Floating Rate Loan
or a Eurodollar Rate Loan.
"UNFUNDED LIABILITIES" means (i) in the case of Single Employer Plans, the
amount (if any) by which the present value of all vested nonforfeitable
benefits under all Single Employer Plans exceeds the fair market value of all
such Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plans, and (ii) in the case of Multiemployer
Plans, the withdrawal liability that would be incurred by the Controlled Group
if all members of the Controlled Group completely withdrew from all
Multiemployer Plans.
"UNMATURED DEFAULT" means an event which, but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"WEIGHTED AVERAGE LIFE TO MATURITY" means when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"WORKING CAPITAL" means, as at any date of determination, the excess, if
any, of (i) the Borrower's consolidated current assets, except cash and Cash
Equivalents, over (ii) the Borrower's consolidated current liabilities, except
current maturities of long-term debt and Revolving Credit Obligations as of
such date and all accrued interest as of such date.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms. Any accounting terms used in this
Agreement which are not specifically defined herein shall have the meanings
customarily given them in accordance with Agreement Accounting Principles.
1.2 References. The existence throughout the Agreement of references to
the Borrower's Subsidiaries is for a matter of convenience only. Any
references to Subsidiaries of the Borrower set forth herein shall (i) with
respect to representations and warranties which deal with historical matters be
deemed to include Enterprises and its Subsidiaries, together with the
businesses acquired pursuant to the James River Acquisition; and (ii) shall not
in any way be construed as consent by the Agent or any Lender to the
establishment, maintenance or acquisition of any Subsidiary, except as may
otherwise be permitted hereunder.
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<PAGE> 42
1.3 Supplemental Disclosure. At any time at the reasonable request of
the Agent and at such additional times as the Borrower determines, the Borrower
shall supplement each schedule or representation herein or in the other Loan
Documents with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such schedule or as an exception to such representation
or which is necessary to correct any information in such schedule or
representation which has been rendered inaccurate thereby. Unless any such
supplement to such schedule or representation discloses the existence or
occurrence of events, facts or circumstances which are not prohibited by the
terms of this Agreement or any other Loan Documents, such supplement to such
schedule or representation shall not be deemed an amendment thereof unless
expressly consented to in writing by the Agent and the Required Lenders, and no
such amendments, except as the same may be consented to in a writing which
expressly includes a waiver, shall be or be deemed a waiver by the Agent or any
Lender of any Default disclosed therein.
ARTICLE II: THE TERM LOAN AND REVOLVING LOAN FACILITIES
2.1. Term Loans. (a) Amount of Term Loans. Subject to the terms and
conditions set forth in this Agreement, each Lender on the Closing Date
severally and not jointly agrees to make on the Closing Date, a term loan, in
Dollars, to the Borrower in an amount equal to such Lender's Term Loan
Commitment (each individually, a "TERM LOAN" and, collectively, the "TERM
LOANS"). All Term Loans shall be made by the Lenders on the Closing Date
simultaneously and proportionately to their respective Pro Rata Shares, it
being understood that no Lender shall be responsible for any failure by any
other Lender to perform its obligation to make any Term Loan hereunder nor
shall the Term Loan Commitment of any Lender be increased or decreased as a
result of any such failure.
(b) Borrowing Notice. The Borrower shall deliver to the Agent a
Borrowing Notice, signed by it, on the Closing Date. Such Borrowing Notice
shall specify (i) the aggregate amount of the Term Loans and (ii) instructions
for the disbursement of the proceeds of the Term Loans. The Term Loans shall
initially be Floating Rate Loans and thereafter may be continued as Floating
Rate Loans or converted into Eurodollar Rate Loans in the manner provided in
Section 2.10 and subject to the other conditions and limitations therein set
forth and set forth in this Article II. Any Borrowing Notice given pursuant to
this Section 2.1(b) shall be irrevocable.
(c) Making of Term Loans. Promptly after receipt of the Borrowing Notice
under Section 2.1(b) in respect of the Term Loans, the Agent shall notify each
Lender by telex or telecopy, or other similar form of transmission, of the
proposed Advance. Each Lender shall deposit an amount equal to its Pro Rata
Share of the Term Loans with the Agent at its office in Chicago, Illinois, in
immediately available funds, on the Closing Date specified in the Borrowing
Notice. Subject to the fulfillment of the conditions precedent set forth in
Sections 5.1 and 5.2, the Agent shall make the proceeds of such amounts
received by it
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available to the Borrower at the Agent's office in Chicago, Illinois on such
Closing Date and shall disburse such proceeds in accordance with the Borrower's
disbursement instructions set forth in such Borrowing Notice. The failure of
any Lender to deposit the amount described above with the Agent on the Closing
Date shall not relieve any other Lender of its obligations hereunder to make
its Term Loan on the Closing Date.
(d) Repayment of the Term Loans. (i) The Term Loans shall be repaid in
twenty two (22) quarterly installments, payable on the last Business Day of
each fiscal quarter of the Borrower as set forth below, commencing on March 29,
1997, and continuing thereafter (other than the fiscal quarter ending June 29,
2002) until the Term Loan Termination Date, and the Term Loans shall be
permanently reduced by the amount of each installment on the date payment
thereof is made hereunder. The installments shall be in the aggregate amounts
set forth below:
<TABLE>
<CAPTION>
INSTALLMENT DATE INSTALLMENT AMOUNT
-------------------------- -------------------
<S> <C>
March 29, 1997 $4,000,000
June 28, 1997 $4,000,000
September 27, 1997 $4,000,000
December 27, 1997 $4,000,000
March 28, 1998 $4,000,000
June 27, 1998 $4,000,000
September 26, 1998 $6,000,000
December 26, 1998 $6,000,000
March 27, 1999 $6,000,000
June 26, 1999 $6,000,000
September 25, 1999 $8,000,000
December 25, 1999 $8,000,000
March 25, 2000 $8,000,000
June 24, 2000 $8,000,000
September 23, 2000 $10,000,000
December 23, 2000 $10,000,000
March 24, 2001 $10,000,000
June 30, 2001 $10,000,000
September 29, 2001 $12,500,000
December 29, 2001 $12,500,000
March 30, 2002 $12,500,000
Term Loan Termination Date $12,500,000
</TABLE>
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Notwithstanding the foregoing, the final installment shall be in the amount of
the then outstanding principal balance of the Term Loans. In addition, the
then outstanding principal balance of the Term Loans, if any, shall be due and
payable on the Termination Date. No installment of any Term Loan shall be
reborrowed once repaid.
(ii) In addition to the scheduled payments on the Term Loans, the
Borrower (a) may make the voluntary prepayments described in Section 2.5(A)
for credit against the scheduled payments on the Term Loans pursuant to Section
2.5(A) and (b) shall make the mandatory prepayments prescribed in Section
2.5(B) for credit against the scheduled payments on the Term Loans pursuant to
Section 2.5(B).
2.2 Revolving Loans. Upon the satisfaction of the conditions precedent
set forth in Sections 5.1 and 5.2, from and including the date of this
Agreement and prior to the Termination Date, each Lender severally and not
jointly agrees, on the terms and conditions set forth in this Agreement, to
make revolving loans to the Borrower from time to time, in Dollars, in an
amount not to exceed such Lender's Pro Rata Share of Revolving Credit
Availability at such time (each individually, a "REVOLVING LOAN" and,
collectively, the "REVOLVING LOANS"); provided, however, at no time shall the
Revolving Credit Obligations exceed the Maximum Revolving Credit Amount.
Subject to the terms of this Agreement, the Borrower may borrow, repay and
reborrow Revolving Loans at any time prior to the Termination Date. The
Revolving Loans made on the Closing Date shall initially be Floating Rate Loans
and thereafter may be continued as Floating Rate Loans or converted into
Eurodollar Rate Loans in the manner provided in Section 2.10 and subject to
the other conditions and limitations therein set forth and set forth in this
Article II. On the Termination Date, the Borrower shall repay in full the
outstanding principal balance of the Revolving Loans. Each Advance under this
Section 2.2 shall consist of Revolving Loans made by each Lender ratably in
proportion to such Lender's respective Pro Rata Share.
2.3 Swing Line Loans. (a) Amount of Swing Line Loans. Upon the
satisfaction of the conditions precedent set forth in Section 5.1 and 5.2, from
and including the date of this Agreement and prior to the Termination Date, the
Swing Line Bank agrees, on the terms and conditions set forth in this
Agreement, to make swing line loans to the Borrower from time to time, in
Dollars, in an amount not to exceed the Swing Line Commitment (each,
individually, a "SWING LINE LOAN" and collectively, the "SWING LINE LOANS");
provided, however, at no time shall the Revolving Credit Obligations exceed the
Maximum Revolving Credit Amount; and provided, further, that at no time shall
the sum of (a) the outstanding amount of the Swing Line Loans, plus (b) the
outstanding amount of Revolving Loans made by the Swing Line Bank pursuant to
Section 2.2 (after giving effect to any concurrent repayment of Loans), exceed
the Swing Line Bank's Revolving Loan Commitment at such time. Subject to the
terms of this Agreement, the Borrower may borrow, repay and reborrow Swing Line
Loans at any time prior to the Termination Date.
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(b) Borrowing Notice. The Borrower shall deliver to the Agent and the
Swing Line Bank a Borrowing Notice, signed by it, not later than 10:00 a.m.
(Chicago time) on the Borrowing Date of each Swing Line Loan, specifying (i)
the applicable Borrowing Date (which shall be a Business Day), and (ii) the
aggregate amount of the requested Swing Line Loan. The Swing Line Loans shall
at all times be Floating Rate Loans, which shall be an amount not less than
$100,000. The Agent shall promptly notify each Lender of such request.
(c) Making of Swing Line Loans. Promptly after receipt of the Borrowing
Notice under Section 2.3(b) in respect of Swing Line Loans, the Agent shall
notify each Lender by telex or telecopy, or other similar form of transmission,
of the requested Swing Line Loan. Not later than 2:00 p.m. (Chicago time) on
the applicable Borrowing Date, the Swing Line Bank shall make available its
Swing Line Loan, in funds immediately available in Chicago to the Agent at its
address specified pursuant to Article XIV. The Agent will promptly make the
funds so received from the Swing Line Bank available to the Borrower at the
Agent's aforesaid address.
(d) Repayment of Swing Line Loans. The Swing Line Loans shall be
evidenced by the Swing Line Note, and each Swing Line Loan shall be paid in
full by the Borrower on or before the fifth Business Day after the Borrowing
Date for such Swing Line Loan. The Borrower may at any time pay, without
penalty or premium, all outstanding Swing Line Loans or, in a minimum amount of
$100,000, any portion of the outstanding Swing Line Loans, upon notice to the
Agent and the Swing Line Bank. In addition, the Agent (i) may at any time in
its sole discretion with respect to any outstanding Swing Line Loan, or (ii)
shall on the fifth Business Day after the Borrowing Date of any Swing Line
Loan, require each Lender (including the Swing Line Bank) to make a Revolving
Loan in the amount of such Lender's Pro Rata Share of such Swing Line Loan, for
the purpose of repaying such Swing Line Loan. Not later than 2:00 p.m.
(Chicago time) on the date of any notice received pursuant to this Section
2.3(d), each Lender shall make available its required Revolving Loan or
Revolving Loans, in funds immediately available in Chicago to the Agent at its
address specified pursuant to Article XIV. Revolving Loans made pursuant to
this Section 2.3(d) shall initially be Floating Rate Loans and thereafter may
be continued as Floating Rate Loans or converted into Eurodollar Rate Loans in
the manner provided in Section 2.10 and subject to the other conditions and
limitations therein set forth and set forth in this Article II. Unless a
Lender shall have notified the Swing Line Bank, prior to its making any Swing
Line Loan, that any applicable condition precedent set forth in Sections 5.1
and 5.2 had not then been satisfied, such Lender's obligation to make Revolving
Loans pursuant to this Section 2.3(d) to repay Swing Line Loans shall be
unconditional, continuing, irrevocable and absolute and shall not be affected
by any circumstances, including, without limitation, (A) any set-off,
counterclaim, recoupment, defense or other right which such Lender may have
against the Agent, the Swing Line Bank or any other Person, (B) the occurrence
of continuance of a Default or Unmatured Default, (C) any adverse change in the
condition (financial or otherwise) of the Borrower, or (D) any other
circumstances, happening or event whatsoever. In the event that any Lender
fails to make payment to the Agent of any amount due under this Section 2.3(d),
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the Agent shall be entitled to receive, retain and apply against such
obligation the principal and interest otherwise payable to such Lender
hereunder until the Agent receives such payment from such Lender or such
obligation is otherwise fully satisfied. In addition to the foregoing, if for
any reason any Lender fails to make payment to the Agent of any amount due
under this Section 2.3(d), such Lender shall be deemed, at the option of the
Agent, to have unconditionally and irrevocably purchased from the Swing Line
Bank, without recourse or warranty, an undivided interest and participation in
the applicable Swing Line Loan in the amount of such Revolving Loan, and such
interest and participation may be recovered from such Lender together with
interest thereon at the Federal Funds Effective Rate for each day during the
period commencing on the date of demand and ending on the date such amount is
received. On the Termination Date, the Borrower shall repay in full the
outstanding principal balance of the Swing Line Loans.
2.4 Rate Options for all Advances. The Advances may be Floating Rate
Advances or Eurodollar Rate Advances, or a combination thereof, selected by the
Borrower in accordance with Section 2.10. The Borrower may select, in
accordance with Section 2.10, Rate Options and Interest Periods applicable to
portions of the Revolving Loans and the Term Loans; provided that there shall
be no more than six (6) Interest Periods in effect with respect to all of the
Loans at any time. The Swing Line Loans shall at all times be Floating Rate
Loans.
2.5 Optional Payments; Mandatory Prepayments.
(A) Optional Payments. The Borrower may from time to time repay or
prepay, without penalty or premium all or any part of outstanding Floating Rate
Advances; provided, that the Borrower may not so prepay Floating Rate Advances
consisting of Term Loans unless it shall have provided at least one Business
Day's written notice to the Agent of such prepayment. Eurodollar Rate Advances
may be voluntarily repaid or prepaid prior to the last day of the applicable
Interest Period, subject to the indemnification provisions contained in Section
4.4, provided, that the Borrower may not so prepay Eurodollar Rate Advances
unless it shall have provided at least three Business Days' written notice to
the Agent of such prepayment. Unless the aggregate outstanding principal
balance of the Term Loans is to be prepaid in full, voluntary prepayments of
the Term Loans shall be in an aggregate minimum amount of $500,000 and integral
multiples of $100,000 in excess of that amount, and shall be applied to each of
the then remaining installments payable thereunder, on a ratable basis based
upon the respective amounts of such installments.
(B) Mandatory Prepayments.
(i) Mandatory Prepayments of Term Loans.
(a) Upon the consummation of any Asset Sale by the Borrower or any
Subsidiary of the Borrower other than those Asset Sales permitted
pursuant to Section 7.3(B)(i), (ii), (iii), (iv), (v) and (vii), except
to the extent that the Net
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<PAGE> 47
Cash Proceeds of such Asset Sale, when combined with the Net Cash
Proceeds of all such Asset Sales during the immediately preceding
twelve-month period, do not exceed $5,000,000, and except as provided in
the second and third sentences of this Section 2.5(B)(i)(a), within
fifteen (15) Business Days after the Borrower's or any of its
Subsidiaries' (i) receipt of any Net Cash Proceeds from any such Asset
Sale, or (ii) conversion to cash or Cash Equivalents of non-cash proceeds
(whether principal or interest and including securities, release of
escrow arrangements or lease payments) received from any Asset Sale, the
Borrower shall make a mandatory prepayment of the Obligations in an
amount equal to one hundred percent (100%) of such Net Cash Proceeds or
such proceeds converted from non-cash to cash or Cash Equivalents. Net
Cash Proceeds of Asset Sales with respect to which the Borrower shall
have given the Agent written notice of its intention to replace the
assets within six months, in the case of a sale of Equipment, or twelve
months, in the case of a sale of real property, following such Asset Sale
shall not be subject to the provisions of the first sentence of this
Section 2.5(B)(i)(a) unless and to the extent that such applicable period
shall have expired without such replacement having been made. The Net
Cash Proceeds of Asset Sales permitted by Section 7.3(B)(vi) shall not be
subject to the provisions of the first sentence of this Section
2.5(B)(i)(a) to the extent that such aggregate Net Cash Proceeds, less
the aggregate costs of equipment relocations and replacements related
thereto, do not exceed $5,700,000.
(b) Upon the consummation of any Financing by the Borrower or any
Subsidiary of the Borrower, except as provided in the second sentence of
this Section 2.5(B)(i)(b), within three (3) Business Days after the
Borrower's or any of its Subsidiaries' receipt of any Net Cash Proceeds
from such Financing, the Borrower shall make a mandatory prepayment of
the Obligations in an amount equal to one hundred percent (100%) of such
Net Cash Proceeds. Net Cash Proceeds of Financings consisting of
Permitted Refinancing Indebtedness or which are used, after written
notice by the Borrower to the Agent thereof, for any Permitted
Acquisition or any Restricted Payment permitted under Section 7.3(F)
shall not be subject to the provisions of the first sentence of this
Section 2.5(B)(i)(b).
(c) Simultaneously with the delivery of the annual audited
financial statements required to be delivered pursuant to Section
7.1(A)(iii) for each Cash Flow Period, the Borrower shall calculate
Excess Cash Flow for such Cash Flow Period and shall make a mandatory
prepayment, payable not later than the earlier of ten (10) days after
such financial statements and calculation are delivered or one hundred
(100) days after the end of such Cash Flow Period, in an amount equal to
fifty percent (50.0%) of such Excess Cash Flow.
(d) Nothing in this Section 2.5(B)(i) shall be construed to
constitute the Lenders' consent to any transaction referred to in clauses
(a) and (b) above which is not expressly permitted by the terms of this
Agreement.
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<PAGE> 48
(e) Each mandatory prepayment required by clauses (a), (b) and (c)
of this Section 2.5(B) shall be referred to herein as a "Designated
Prepayment." Designated Prepayments shall be allocated and applied to
the Obligations as follows:
(I) the amount of each Designated Prepayment shall be
applied to each of the then remaining installments payable under
the Term Loans, on a ratable basis based upon the respective
amounts of such installments; and
(II) following the payment in full of the Term Loans, the
amount of each Designated Prepayment shall be applied to repay
Revolving Loans (but shall reduce Revolving Loan Commitments only
at the option of the Required Lenders) and following the payment
in full of the Revolving Loans, the amount of each Designated
Prepayment shall be applied first to interest on the Reimbursement
Obligations, then to principal on the Reimbursement Obligations,
then to fees on account of Letters of Credit and then, to the
extent any L/C Obligations are contingent, deposited with the
Agent as cash collateral in respect of such L/C Obligations.
(f) On the date any Designated Prepayment is received by the Agent,
such prepayment shall be applied first to Floating Rate Loans and to any
Eurodollar Rate Loans maturing on such date and then to subsequently
maturing Eurodollar Rate Loans in order of maturity.
(ii) Mandatory Prepayments of Revolving Loans. In addition to repayments
under Section 2.5(B)(i)(e)(II), if at any time and for any reason the Revolving
Credit Obligations are greater than the Maximum Revolving Credit Amount, the
Borrower shall immediately make a mandatory prepayment of the Obligations in an
amount equal to such excess.
(iii) Subject to the preceding provisions of this Section 2.5(B), all of
the mandatory prepayments made under this Section 2.5(B) shall be applied first
to Floating Rate Loans and to any Eurodollar Rate Loans maturing on such date
and then to subsequently maturing Eurodollar Rate Loans in order of maturity.
2.6 Reduction of Commitments. The Borrower may permanently reduce the
Aggregate Revolving Loan Commitment in whole, or in part ratably among the
Lenders, in an aggregate minimum amount of $1,000,000 and integral multiples of
$1,000,000 in excess of that amount (unless the Aggregate Revolving Loan
Commitment is reduced in whole), upon at least five Business Days' written
notice to the Agent, which notice shall specify the amount of any such
reduction; provided, however, that the amount of the Aggregate Revolving Loan
Commitment may not be reduced below the aggregate principal amount of the
outstanding Revolving Credit Obligations. All accrued commitment fees shall be
payable on the effective date of any termination of the obligations of the
Lenders to make Loans hereunder.
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<PAGE> 49
2.7 Method of Borrowing. Not later than 2:00 p.m. (Chicago time) on each
Borrowing Date, each Lender shall make available its Revolving Loan or
Revolving Loans, in funds immediately available in Chicago to the Agent at its
address specified pursuant to Article XIV. The Agent will promptly make the
funds so received from the Lenders available to the Borrower at the Agent's
aforesaid address.
2.8 Method of Selecting Types and Interest Periods for Advances. The
Borrower shall select the Type of Advance and, in the case of each Eurodollar
Rate Advance, the Interest Period applicable to each Advance from time to time.
The Borrower shall give the Agent irrevocable notice in substantially the form
of Exhibit C hereto (a "BORROWING NOTICE") not later than 10:00 a.m. (Chicago
time) (a) on the Borrowing Date of each Floating Rate Advance and (b) three
Business Days before the Borrowing Date for each Eurodollar Rate Advance,
specifying: (i) the Borrowing Date (which shall be a Business Day) of such
Advance; (ii) the aggregate amount of such Advance; (iii) the Type of Advance
selected; and (iv) in the case of each Eurodollar Rate Advance, the Interest
Period applicable thereto. The Borrower shall select Interest Periods so that,
to the best of the Borrower's knowledge, it will not be necessary to prepay all
or any portion of any Eurodollar Rate Advance prior to the last day of the
applicable Interest Period in order to make mandatory prepayments as required
pursuant to the terms hereof. Each Floating Rate Advance and all Obligations
other than Loans shall bear interest from and including the date of the making
of such Advance to (but not including) the date of repayment thereof at the
Floating Rate, changing when and as such Floating Rate changes. Changes in the
rate of interest on that portion of any Advance maintained as a Floating Rate
Loan will take effect simultaneously with each change in the Alternate Base
Rate. Each Eurodollar Rate Advance shall bear interest from and including the
first day of the Interest Period applicable thereto to (but not including) the
last day of such Interest Period at the interest rate determined as applicable
to such Eurodollar Rate Advance.
2.9 Minimum Amount of Each Advance. Each Advance (other than an
Advance to repay Swing Line Loans pursuant to Section 2.3(d) or a Reimbursement
Obligation pursuant to Section 3.7) shall be in the minimum amount of
$5,000,000 (and in multiples of $1,000,000 if in excess thereof), provided,
however, that any Floating Rate Advance may be in the amount of the unused
Aggregate Revolving Loan Commitment.
2.10 Method of Selecting Types and Interest Periods for Conversion and
Continuation of Advances.
(A) Right to Convert. The Borrower may elect from time to time, subject
to the provisions of Section 2.4 and this Section 2.10, to convert all or any
part of a Loan of any Type into any other Type or Types of Loans; provided that
any conversion of any Eurodollar Rate Advance shall be made on, and only on,
the last day of the Interest Period applicable thereto.
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<PAGE> 50
(B) Automatic Conversion and Continuation. Floating Rate Loans shall
continue as Floating Rate Loans unless and until such Floating Rate Loans are
converted into Eurodollar Rate Loans. Eurodollar Rate Loans shall continue as
Eurodollar Rate Loans until the end of the then applicable Interest Period
therefor, at which time such Eurodollar Rate Loans shall be automatically
converted into Floating Rate Loans unless the Borrower shall have given the
Agent notice in accordance with Section 2.10(D) requesting that, at the end of
such Interest Period, such Eurodollar Rate Loans continue as a Eurodollar Rate
Loan.
(C) No Conversion Post-Default or Post-Unmatured Default.
Notwithstanding anything to the contrary contained in Section 2.10(A) or
Section 2.10(B), no Loan may be converted into or continued as a Eurodollar
Rate Loan (except with the consent of the Required Lenders) when any Default or
Unmatured Default has occurred and is continuing.
(D) Conversion/Continuation Notice. The Borrower shall give the Agent
irrevocable notice (a "CONVERSION/CONTINUATION NOTICE") of each conversion of a
Floating Rate Loan into a Eurodollar Rate Loan or continuation of a Eurodollar
Rate Loan not later than 10:00 a.m. (Chicago time) three Business Days prior to
the date of the requested conversion or continuation, specifying: (1) the
requested date (which shall be a Business Day) of such conversion or
continuation; (2) the amount and Type of the Loan to be converted or continued;
and (3) the amount of Eurodollar Rate Loan(s) into which such Loan is to be
converted or continued and the duration of the Interest Period applicable
thereto.
2.11 Default Rate. After the occurrence and during the continuance of a
Default, at the direction of the Required Lenders, the interest rate(s)
applicable to the Obligations and the fees payable under Section 3.8 with
respect to Letters of Credit shall be increased by two percent (2.0%) per annum
above the Floating Rate or Eurodollar Rate, as applicable.
2.12 Collection Account Arrangements. All collections of Receivables
included in the Collateral and other proceeds of Collateral shall be deposited
in a Collection Account which is subject to a Collection Account Agreement or
pursuant to another similar arrangement for the collection of such amounts
established by the Borrower and Agent and shall be transferred in accordance
with the provisions of the respective Collection Account Agreements. On or
prior to the Closing Date, the Borrower shall have entered into and shall
thereafter maintain lock-box services agreements with banks which are parties
to Collection Account Agreements and to which lock-boxes account debtors shall
directly remit all payments on Receivables. Any of the foregoing collections
received by the Borrower and not so deposited, shall be deemed to have been
received by the Borrower as the Agent's trustee and, upon the Borrower's
receipt thereof, the Borrower shall immediately transfer all such amounts into
a Collection Account in their original form. Such deposits shall be remitted to
the Agent, the Borrower or as the Agent may direct, all in accordance with the
provisions of the Collection Account Agreements.
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2.13 Method of Payment. All payments of principal, interest, and fees
hereunder shall be made, without setoff, deduction or counterclaim, in
immediately available funds to the Agent at the Agent's address specified
pursuant to Article XIV, or at any other Lending Installation of the Agent
specified in writing by the Agent to the Borrower, by 2:00 p.m. (Chicago time)
on the date when due and shall be made ratably among the Lenders (unless such
amount is not to be shared ratably in accordance with the terms hereof). Each
payment delivered to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds which the Agent
received at its address specified pursuant to Article XIV or at any Lending
Installation specified in a notice received by the Agent from such Lender. The
Borrower authorizes the Agent to charge the account of the Borrower maintained
with First Chicago for each payment of principal, interest and fees as it
becomes due hereunder.
2.14 Notes, Telephonic Notices. Each Lender is authorized to record the
principal amount of each of its Loans and each repayment with respect to its
Loans on the schedule attached to its respective Notes; provided, however, that
the failure to so record shall not affect the Borrower's obligations under any
such Note. The Borrower authorizes the Lenders and the Agent to extend
Advances, effect selections of Types of Advances and to transfer funds based on
telephonic notices made by any person or persons the Agent or any Lender in
good faith believes to be acting on behalf of the Borrower. The Borrower
agrees to deliver promptly to the Agent a written confirmation, signed by an
Authorized Officer, if such confirmation is requested by the Agent or any
Lender, of each telephonic notice. If the written confirmation differs in any
material respect from the action taken by the Agent and the Lenders, (i) the
telephonic notice shall govern absent manifest error and (ii) the Agent or the
Lender, as applicable, shall promptly notify the Authorized Officer who
provided such confirmation of such difference.
2.15 Promise to Pay; Interest and Commitment Fees; Interest Payment
Dates; Interest and Fee Basis; Taxes; Loan and Control Accounts.
(A) Promise to Pay. The Borrower unconditionally promises to pay when
due the principal amount of each Loan and all other Obligations incurred by it,
and to pay all unpaid interest accrued thereon, in accordance with the terms of
this Agreement and the Notes.
(B) Interest Payment Dates. Interest accrued on each Floating Rate Loan
shall be payable on each Payment Date, commencing with the first such date to
occur after the date hereof, on any date on which the Floating Rate Loan is
prepaid, whether due to acceleration or otherwise, and at maturity (whether by
acceleration or otherwise). Interest accrued on each Eurodollar Rate Loan
shall be payable on the last day of its applicable Interest Period, on any date
on which the Eurodollar Rate Loan is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Eurodollar Rate Loan
having an Interest Period longer than three months shall also be payable on the
last day of each three-month interval during such Interest Period. Interest
accrued on the principal
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balance of all other Obligations shall be payable in arrears (i) on the last
day of each calendar month, commencing on the first such day following the
incurrence of such Obligation, (ii) upon repayment thereof in full or in part,
and (iii) if not theretofore paid in full, at the time such other Obligation
becomes due and payable (whether by acceleration or otherwise).
(C) Commitment Fees. (i) The Borrower shall pay to the Agent, for the
account of the Lenders in accordance with their Pro Rata Shares, from and after
the Closing Date until the date on which the Aggregate Revolving Loan
Commitment shall be terminated in whole, a commitment fee accruing at the rate
of the then Applicable Commitment Fee Percentage, on the amount by which (A)
the Aggregate Revolving Loan Commitment in effect from time to time exceeds (B)
the Revolving Credit Obligations in effect from time to time. All such
commitment fees payable under this clause (C) shall be payable quarterly in
arrears on the last day of each fiscal quarter of the Borrower occurring after
the Closing Date (with the first such payment being calculated for the period
from the Closing Date and ending on September 28, 1996), and, in addition, on
the date on which the Aggregate Revolving Loan Commitment shall be terminated
in whole.
(ii) The Borrower agrees to pay to the Agent for the sole account of the
Agent (unless otherwise agreed between the Agent and any Lender) the fees set
forth in the letter agreement between the Agent and the Borrower dated May 31,
1996, payable at the times and in the amounts set forth therein.
(D) Interest and Fee Basis; Applicable Eurodollar Margin and Applicable
Commitment Fee Percentage.
(i) Interest and fees shall be calculated for actual days elapsed on the
basis of a 360-day year. Interest shall be payable for the day an Obligation
is incurred but not for the day of any payment on the amount paid if payment is
received prior to 2:00 p.m. (Chicago time) at the place of payment. If any
payment of principal of or interest on a Loan or any payment of any other
Obligations shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment.
(ii) The Applicable Eurodollar Margin and Applicable Commitment Fee
Percentage shall be determined from time to time by reference to the table set
forth below, on the basis of the then applicable Leverage Ratio as described in
this Section 2.15(D)(ii):
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<PAGE> 53
<TABLE>
<CAPTION>
Applicable Eurodollar Applicable
Commitment
Leverage Ratio Margin Fee Percentage
-------------- -------------------------- --------------------------
<S> <C> <C>
Greater than
or equal to
4.5 to 1.0 1.50% 0.35%
Greater than
or equal to
4.0 to 1.0 and
less than
4.5 to 1.0 1.25% 0.30%
Greater than
or equal to
3.5 to 1.0 and
less than
4.0 to 1.0 1.00% 0.25%
Greater than
or equal to
3.0 to 1.0 and
less than
3.5 to 1.0 0.75% 0.20%
Less than
3.0 to 1.0 0.50% 0.15%
</TABLE>
For purposes of this Section 2.15(D)(ii), the Leverage Ratio shall be
determined as of the last day of each fiscal quarter based upon (a) for Total
Debt, Total Debt as of the last day of each such fiscal quarter; and (b) for
EBITDA, the actual amount for the four-quarter period ending on such day,
calculated, with respect to Permitted Acquisitions, on a pro forma basis using
historical audited and reviewed unaudited financial statements obtained from
the seller, broken down by fiscal quarter in the Borrower's reasonable
judgment. Upon receipt of the financial statements delivered pursuant to
Section 7.1(A)(ii), the Applicable Eurodollar Margin and Applicable Commitment
Fee Percentage shall be adjusted, such adjustment being effective five (5)
Business Days following the Agent's receipt of such financial statements and
the compliance certificate required to be delivered in connection therewith
pursuant to Section 7.1(A)(iv); provided, that if the Borrower shall not have
timely delivered its financial statements in accordance with Section
7.1(A)(ii), then commencing on the date upon which such financial statements
should have been delivered and continuing until such financial statements are
actually delivered, it shall be assumed for purposes of determining the
Applicable Eurodollar Margin and Applicable Commitment Fee Percentage that the
Leverage Ratio was greater than 4.5 to 1.0. The initial Applicable Eurodollar
Margin and Applicable Commitment Fee Percentage shall be 1.50% and 0.35%,
respectively, until any adjustment thereof shall be required in accordance with
this Section 2.15(D)(ii).
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(E) Taxes.
(i) Any and all payments by the Borrower hereunder shall be made
free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings or any
liabilities with respect thereto including those arising after the date
hereof as a result of the adoption of or any change in any law, treaty,
rule, regulation, guideline or determination of a Governmental Authority
or any change in the interpretation or application thereof by a
Governmental Authority but excluding, in the case of each Lender and the
Agent, such taxes (including income taxes, franchise taxes and branch
profit taxes) as are imposed on or measured by such Lender's or Agent's,
as the case may be, income by the United States of America or any
Governmental Authority of the jurisdiction under the laws of which such
Lender or Agent, as the case may be, is organized or maintains a Lending
Installation (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings, and liabilities which the Agent or a Lender
determines to be applicable to this Agreement, the other Loan Documents,
the Revolving Loan Commitments, the Loans or the Letters of Credit being
hereinafter referred to as "TAXES"). If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the other Loan Documents to any Lender or the Agent,
(i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 2.15(E)) such Lender or the
Agent (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall
make such deductions, and (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law. If a withholding tax of the United
States of America or any other Governmental Authority shall be or become
applicable (y) after the date of this Agreement, to such payments by the
Borrower made to the Lending Installation or any other office that a
Lender may claim as its Lending Installation, or (z) after such Lender's
selection and designation of any other Lending Installation, to such
payments made to such other Lending Installation, such Lender shall use
reasonable efforts to make, fund and maintain its Loans through another
Lending Installation of such Lender in another jurisdiction so as to
reduce the Borrower's liability hereunder, if the making, funding or
maintenance of such Loans through such other Lending Installation of such
Lender does not, in the judgment of such Lender, otherwise adversely
affect such Loans, or obligations under the Revolving Loan Commitments or
such Lender.
(ii) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes,
charges, or similar levies which arise from any payment made hereunder,
from the issuance of Letters of Credit hereunder, or from the execution,
delivery or registration of, or otherwise with respect to, this
Agreement, the other Loan Documents, the Revolving Loan Commitments, the
Loans or the Letters of Credit (hereinafter referred to as "OTHER
TAXES").
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<PAGE> 55
(iii) The Borrower indemnifies each Lender and the Agent for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed by any Governmental Authority on amounts payable
under this Section 2.15(E)) paid by such Lender or the Agent (as the case
may be) and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. This indemnification
shall be made within thirty (30) days after the date such Lender or the
Agent (as the case may be) makes written demand therefor. A certificate
as to any additional amount payable to any Lender or the Agent under this
Section 2.15(E) submitted to the Borrower and the Agent (if a Lender is
so submitting) by such Lender or the Agent shall show in reasonable
detail the amount payable and the calculations used to determine such
amount and shall, absent manifest error, be final, conclusive and binding
upon all parties hereto. With respect to such deduction or withholding
for or on account of any Taxes and to confirm that all such Taxes have
been paid to the appropriate Governmental Authorities, the Borrower shall
promptly (and in any event not later than thirty (30) days after receipt)
furnish to each Lender and the Agent such certificates, receipts and
other documents as may be required (in the judgment of such Lender or the
Agent) to establish any tax credit to which such Lender or the Agent may
be entitled.
(iv) Within thirty (30) days after the date of any payment of Taxes
or Other Taxes by the Borrower, the Borrower shall furnish to the Agent
the original or a certified copy of a receipt evidencing payment thereof.
(v) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.15(E) shall survive the payment in full of
principal and interest hereunder, the termination of the Letters of
Credit and the termination of this Agreement.
(vi) Without limiting the obligations of the Borrower under this
Section 2.15(E), each Lender that is not created or organized under the
laws of the United States of America or a political subdivision thereof
shall deliver to the Borrower and the Agent on or before the Closing
Date, or, if later, the date on which such Lender becomes a Lender
pursuant to Section 13.3, a true and accurate certificate executed in
duplicate by a duly authorized officer of such Lender, in a form
satisfactory to the Borrower and the Agent, to the effect that such
Lender is capable under the provisions of an applicable tax treaty
concluded by the United States of America (in which case the certificate
shall be accompanied by two executed copies of Form 1001 of the IRS) or
under Section 1442 of the Code (in which case the certificate shall be
accompanied by two copies of Form 4224 of the IRS) of receiving payments
of interest hereunder without deduction or withholding of United States
federal income tax. Each such Lender further agrees to deliver to
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<PAGE> 56
the Borrower and the Agent from time to time a true and accurate
certificate executed in duplicate by a duly authorized officer of such
Lender substantially in a form satisfactory to the Borrower and the
Agent, before or promptly upon the occurrence of any event requiring a
change in the most recent certificate previously delivered by it to the
Borrower and the Agent pursuant to this Section 2.15(E)(vi). Further,
each Lender which delivers a certificate accompanied by Form 1001 of the
IRS covenants and agrees to deliver to the Borrower and the Agent within
fifteen (15) days prior to January 1, 1998, and every third (3rd)
anniversary of such date thereafter on which this Agreement is still in
effect, another such certificate and two accurate and complete original
signed copies of Form 1001 (or any successor form or forms required under
the Code or the applicable regulations promulgated thereunder), and each
Lender that delivers a certificate accompanied by Form 4224 of the IRS
covenants and agrees to deliver to the Borrower and the Agent within
fifteen (15) days prior to the beginning of each subsequent taxable year
of such Lender during which this Agreement is still in effect, another
such certificate and two accurate and complete original signed copies of
IRS Form 4224 (or any successor form or forms required under the Code or
the applicable regulations promulgated thereunder). Each such
certificate shall certify as to one of the following:
(a) that such Lender is capable of receiving payments of
interest hereunder without deduction or withholding of United
States of America federal income tax;
(b) that such Lender is not capable of receiving payments of
interest hereunder without deduction or withholding of United
States of America federal income tax as specified therein but is
capable of recovering the full amount of any such deduction or
withholding from a source other than the Borrower and will not
seek any such recovery from the Borrower; or
(c) that, as a result of the adoption of or any change in
any law, treaty, rule, regulation, guideline or determination of a
Governmental Authority or any change in the interpretation or
application thereof by a Governmental Authority after the date
such Lender became a party hereto, such Lender is not capable of
receiving payments of interest hereunder without deduction or
withholding of United States of America federal income tax as
specified therein and that it is not capable of recovering the
full amount of the same from a source other than the Borrower.
Each Lender shall promptly furnish to the Borrower and the Agent such
additional documents as may be reasonably required by the Borrower or the
Agent to establish any exemption from or reduction of any Taxes or Other
Taxes required to be deducted or withheld and which may be obtained
without undue expense to such Lender.
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<PAGE> 57
(F) Loan Account. Each Lender shall maintain in accordance with its
usual practice an account or accounts (a "LOAN ACCOUNT") evidencing the
Obligations of the Borrower to such Lender owing to such Lender from time to
time, including the amount of principal and interest payable and paid to such
Lender from time to time hereunder and under the Notes.
(G) Control Account. The Register maintained by the Agent pursuant to
Section 13.3(C) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Advance made hereunder, the type of Loan comprising such
Advance and any Interest Period applicable thereto, (ii) the effective date and
amount of each assignment and acceptance delivered to and accepted by it and
the parties thereto pursuant to Section 13.3, (iii) the amount of any principal
or interest due and payable or to become due and payable from the Borrower to
each Lender hereunder or under the Notes, (iv) the amount of any sum received
by the Agent from the Borrower hereunder and each Lender's share thereof, and
(v) all other appropriate debits and credits as provided in this Agreement,
including, without limitation, all fees, charges, expenses and interest.
(H) Entries Binding. The entries made in the Register and each Loan
Account shall be conclusive and binding for all purposes, absent manifest
error, unless the Borrower objects to information contained in the Register and
each Loan Account within thirty (30) days of the Borrower's receipt of such
information.
2.16 Notification of Advances, Interest Rates, Prepayments and Aggregate
Revolving Loan Commitment Reductions. Promptly after receipt thereof, the
Agent will notify each Lender of the contents of each Aggregate Revolving Loan
Commitment reduction notice, Borrowing Notice, Continuation/Conversion Notice,
and repayment notice received by it hereunder. The Agent will notify each
Lender of the interest rate applicable to each Eurodollar Rate Loan promptly
upon determination of such interest rate and will give each Lender prompt
notice of each change in the Alternate Base Rate.
2.17 Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or
facsimile notice to the Agent and the Borrower, designate a Lending
Installation through which Loans will be made by it and for whose account Loan
payments are to be made.
2.18 Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender,
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that
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such payment has been made. The Agent may, but shall not be obligated to, make
the amount of such payment available to the intended recipient in reliance upon
such assumption. If such Lender or the Borrower, as the case may be, has not
in fact made such payment to the Agent, the recipient of such payment shall, on
demand by the Agent, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period commencing on
the date such amount was so made available by the Agent until the date the
Agent recovers such amount at a rate per annum equal to (i) in the case of
payment by a Lender, the Federal Funds Effective Rate for such day or (ii) in
the case of payment by the Borrower, the interest rate applicable to the
relevant Loan.
2.19 Termination Date. This Agreement shall be effective until the
Termination Date. Notwithstanding the termination of this Agreement on the
Termination Date, until all of the Obligations (other than contingent indemnity
obligations) shall have been fully and indefeasibly paid and satisfied, all
financing arrangements among the Borrower and the Lenders shall have been
terminated (other than under Interest Rate Agreements or other agreements with
respect to Hedging Obligations) and all of the Letters of Credit shall have
expired, been cancelled or terminated, all of the rights and remedies under
this Agreement and the other Loan Documents shall survive and the Agent shall
be entitled to retain its security interest in and to all existing and future
Collateral for the benefit of itself and the Holders of Secured Obligations.
2.20 Replacement of Certain Lenders. In the event a Lender ("AFFECTED
LENDER") shall have: (i) failed to fund its Pro Rata Share of any Advance
requested by the Borrower, or to fund a Revolving Loan in order to repay Swing
Line Loans pursuant to Section 2.3(d), which such Lender is obligated to fund
under the terms of this Agreement and which failure has not been cured, (ii)
requested compensation from the Borrower under Sections 2.15(E), 4.1 or 4.2 to
recover Taxes, Other Taxes or other additional costs incurred by such Lender
which are not being incurred generally by the other Lenders, (iii) delivered a
notice pursuant to Section 4.3 claiming that such Lender is unable to extend
Eurodollar Rate Loans to the Borrower for reasons not generally applicable to
the other Lenders or (iv) has invoked Section 10.2, then, in any such case, the
Borrower or the Agent may make written demand on such Affected Lender (with a
copy to the Agent in the case of a demand by the Borrower and a copy to the
Borrower in the case of a demand by the Agent) for the Affected Lender to
assign, and such Affected Lender shall use its best efforts to assign pursuant
to one or more duly executed assignments and acceptances in substantially the
form of Exhibit E five (5) Business Days after the date of such demand, to one
or more financial institutions that comply with the provisions of Section
13.3(A) which the Borrower or the Agent, as the case may be, shall have engaged
for such purpose ("REPLACEMENT LENDER"), all of such Affected Lender's rights
and obligations under this Agreement and the other Loan Documents (including,
without limitation, its Revolving Loan Commitment, all Loans owing to it, all
of its participation interests in existing Letters of Credit, and its
obligation to participate in additional Letters of Credit hereunder) in
accordance with Section 13.3. The Agent agrees, upon the occurrence of such
events with respect to an Affected Lender and upon the written request of the
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Borrower, to use its reasonable efforts to obtain the commitments from one or
more financial institutions to act as a Replacement Lender. The Agent is
authorized to execute one or more of such assignment agreements as
attorney-in-fact for any Affected Lender failing to execute and deliver the
same within five (5) Business Days after the date of such demand. Further,
with respect to such assignment the Affected Lender shall have concurrently
received, in cash, all amounts due and owing to the Affected Lender hereunder
or under any other Loan Document, including, without limitation, the aggregate
outstanding principal amount of the Loans owed to such Lender, together with
accrued interest thereon through the date of such assignment, amounts payable
under Sections 2.15(E), 4.1, and 4.2 with respect to such Affected Lender and
compensation payable under Section 2.15(C) in the event of any replacement of
any Affected Lender under clause (ii) or clause (iii) of this Section 2.20;
provided that upon such Affected Lender's replacement, such Affected Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15(E), 4.1, 4.2, 4.4, and 10.7, as well as to any fees
accrued for its account hereunder and not yet paid, and shall continue to be
obligated under Section 11.8. Upon the replacement of any Affected Lender
pursuant to this Section 2.20, the provisions of Section 9.2 shall continue to
apply with respect to Borrowings which are then outstanding with respect to
which the Affected Lender failed to fund its Pro Rata Share and which failure
has not been cured.
ARTICLE III: THE LETTER OF CREDIT FACILITY
3.1 Obligation to Issue. Subject to the terms and conditions of this
Agreement and in reliance upon the representations, warranties and covenants of
the Borrower herein set forth, each Issuing Bank hereby agrees to issue for the
account of the Borrower through such Issuing Bank's branches as it and the
Borrower may jointly agree, one or more Letters of Credit in accordance with
this Article III, from time to time during the period, commencing on the date
hereof and ending on the Business Day prior to the Termination Date.
3.2 Transitional Provision. Schedule 3.2 contains a schedule of certain
letters of credit issued for the account of the Borrower prior to the Closing
Date by SunTrust Bank, Atlanta. Subject to the satisfaction of the conditions
contained in Sections 5.1 and 5.2, from and after the Closing Date such letters
of credit shall be deemed to be Letters of Credit issued pursuant to this
Article III.
3.3 Types and Amounts. No Issuing Bank shall have any obligation to and
no Issuing Bank shall:
(i) issue any Letter of Credit if on the date of issuance,
before or after giving effect to the Letter of Credit requested
hereunder, (a) the Revolving Credit Obligations at such time would
exceed the Maximum Revolving Credit Amount at such time, or (b)
the aggregate outstanding amount of the L/C Obligations would
exceed $10,000,000; or
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(ii) issue any Letter of Credit which has an expiration date
later than the date which is the earlier of one (1) year after the
date of issuance thereof or five (5) Business Days immediately
preceding the Termination Date.
3.4 Conditions. In addition to being subject to the satisfaction of the
conditions contained in Sections 5.1 and 5.2, the obligation of an Issuing Bank
to issue any Letter of Credit is subject to the satisfaction in full of the
following conditions:
(i) the Borrower shall have delivered to the applicable
Issuing Bank at such times and in such manner as such Issuing Bank
may reasonably prescribe, a request for issuance of such Letter of
Credit in substantially the form of Exhibit D hereto, duly
executed applications for such Letter of Credit, and such other
customary documents, instructions and agreements as may be
required pursuant to the terms thereof (all such applications,
documents, instructions, and agreements being referred to herein
as the "L/C Documents"), and the proposed Letter of Credit shall
be reasonably satisfactory to such Issuing Bank as to form and
content; and
(ii) as of the date of issuance no order, judgment or decree
of any court, arbitrator or Governmental Authority shall purport
by its terms to enjoin or restrain the applicable Issuing Bank
from issuing such Letter of Credit and no law, rule or regulation
applicable to such Issuing Bank and no request or directive
(whether or not having the force of law) from a Governmental
Authority with jurisdiction over such Issuing Bank shall prohibit
or request that such Issuing Bank refrain from the issuance of
Letters of Credit generally or the issuance of that Letter of
Credit.
To the extent that any provision of any L/C Document cannot reasonably be
construed to be consistent with this Agreement, requires greater collateral
security or imposes additional obligations not reasonably related to customary
letter of credit arrangements, such provision shall be invalid and this
Agreement shall control.
3.5 Procedure for Issuance of Letters of Credit. (a) Subject to the
terms and conditions of this Article III and provided that the applicable
conditions set forth in Sections 5.1 and 5.2 hereof have been satisfied, the
applicable Issuing Bank shall, on the requested date, issue a Letter of Credit
on behalf of the Borrower in accordance with such Issuing Bank's usual and
customary business practices and, in this connection, such Issuing Bank may
assume that the applicable conditions set forth in Section 5.2 hereof have been
satisfied unless it shall have received notice to the contrary from the Agent
or a Lender or has knowledge that the applicable conditions have not been met.
(b) The applicable Issuing Bank shall give the Agent written or telex
notice, or telephonic notice confirmed promptly thereafter in writing, of the
issuance of a Letter of
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Credit, provided, however, that the failure to provide such notice shall not
result in any liability on the part of such Issuing Bank.
(c) No Issuing Bank shall extend or amend any Letter of Credit unless the
requirements of this Section 3.5 are met as though a new Letter of Credit was
being requested and issued.
3.6 Letter of Credit Participation. Immediately upon the issuance of
each Letter of Credit hereunder, each Lender shall be deemed to have
automatically, irrevocably and unconditionally purchased and received from the
applicable Issuing Bank an undivided interest and participation in and to such
Letter of Credit, the obligations of the Borrower in respect thereof, and the
liability of such Issuing Bank thereunder (collectively, an "L/C INTEREST" in
an amount equal to the amount available for drawing under such Letter of Credit
multiplied by such Lender's Pro Rata Share. Each Issuing Bank will notify each
Lender promptly upon presentation to it of an L/C Draft or upon any other draw
under a Letter of Credit. On or before the Business Day on which an Issuing
Bank makes payment of each such L/C Draft or, in the case of any other draw on
a Letter of Credit, on demand by the Agent, each Lender shall make payment to
the Agent, for the account of the applicable Issuing Bank, in immediately
available funds in an amount equal to such Lender's Pro Rata Share of the
amount of such payment or draw. The obligation of each Lender to reimburse the
Issuing Banks under this Section 3.6 shall be unconditional, continuing,
irrevocable and absolute. In the event that any Lender fails to make payment
to the Agent of any amount due under this Section 3.6, the Agent shall be
entitled to receive, retain and apply against such obligation the principal and
interest otherwise payable to such Lender hereunder until the Agent receives
such payment from such Lender or such obligation is otherwise fully satisfied;
provided, however, that nothing contained in this sentence shall relieve such
Lender of its obligation to reimburse the applicable Issuing Bank for such
amount in accordance with this Section 3.6.
3.7 Reimbursement Obligation. The Borrower agrees unconditionally,
irrevocably and absolutely to pay immediately to the Agent, for the account of
the Lenders, the amount of each advance which may be drawn under or pursuant to
a Letter of Credit or an L/C Draft related thereto (such obligation of the
Borrower to reimburse the Agent for an advance made under a Letter of Credit or
L/C Draft being hereinafter referred to as a "REIMBURSEMENT OBLIGATION" with
respect to such Letter of Credit or L/C Draft). If the Borrower at any time
fails to repay a Reimbursement Obligation pursuant to this Section 3.7, the
Borrower shall be deemed to have elected to borrow Revolving Loans from the
Lenders, as of the date of the advance giving rise to the Reimbursement
Obligation, equal in amount to the amount of the unpaid Reimbursement
Obligation. Such Revolving Loans shall be made as of the date of the payment
giving rise to such Reimbursement Obligation, automatically, without notice and
without any requirement to satisfy the conditions precedent otherwise
applicable to an Advance of Revolving Loans. Such Revolving Loans shall
constitute a Floating Rate Advance, the proceeds of which Advance shall be used
to repay such Reimbursement Obligation. If, for any reason, the Borrower fails
to repay a Reimbursement Obligation on the day such Reimbursement Obligation
arises and,
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for any reason, the Lenders are unable to make or have no obligation to make
Revolving Loans, then such Reimbursement Obligation shall bear interest from
and after such day, until paid in full, at the interest rate applicable to a
Floating Rate Advance.
3.8 Cash Collateral. Notwithstanding anything to the contrary herein or
in any application for a Letter of Credit, after the occurrence and during the
continuance of Default, the Borrower shall, upon the Agent's demand, deliver to
the Agent for the benefit of the Lenders and the Issuing Banks, cash, or other
collateral of a type satisfactory to the Required Lenders, having a value, as
determined by such Lenders, equal to the aggregate outstanding L/C Obligations.
Any such collateral shall be held by the Agent in a separate interest bearing
account appropriately designated as a cash collateral account in relation to
this Agreement and the Letters of Credit and retained by the Agent for the
benefit of the Lenders and the Issuing Banks as collateral security for the
Borrower's obligations in respect of this Agreement and each of the Letters of
Credit and L/C Drafts. Such amounts shall be applied to reimburse the Issuing
Banks for drawings or payments under or pursuant to Letters of Credit or L/C
Drafts, or if no such reimbursement is required, to payment of such of the
other Obligations as the Agent shall determine. If no Default shall be
continuing, amounts (including interest income) remaining in any cash
collateral account established pursuant to this Section 3.8 which are not to be
applied to reimburse an Issuing Bank for amounts actually paid or to be paid by
such Issuing Bank in respect of a Letter of Credit or L/C Draft, shall be
returned to the Borrower (after deduction of the Agent's expenses incurred in
connection with such cash collateral account).
3.9 Letter of Credit Fees. The Borrower agrees to pay (i) on each
Payment Date and on the Termination Date, in arrears, to the Agent for the
ratable benefit of the Lenders, except as set forth in Section 9.2, a letter of
credit fee at a rate per annum equal to the Applicable L/C Fee Percentage on
the average daily outstanding face amount available for drawing under all
Letters of Credit, (ii) on each Payment Date and on the Termination Date, in
arrears, to the Agent for the sole account of each Issuing Bank, a letter of
credit fee of one-quarter of one percent (0.25%) per annum on the average daily
outstanding face amount available for drawing under all Letters of Credit
issued by such Issuing Bank, and (iii) to the Agent for the benefit of each
Issuing Bank, all customary fees and other issuance, amendment, document
examination, negotiation and presentment expenses and related charges in
connection with the issuance, amendment, presentation of L/C Drafts, and the
like customarily charged by such Issuing Bank with respect to standby and
commercial Letters of Credit, including, without limitation, standard
commissions with respect to commercial Letters of Credit, payable at the time
of invoice of such amounts.
3.10 Issuing Bank Reporting Requirements. In addition to the notices
required by Section 3.5(c), each Issuing Bank shall, no later than the tenth
Business Day following the last day of each month, provide to the Agent, upon
the Agent's request, schedules, in form and substance reasonably satisfactory
to the Agent, showing the date of issue, account party, amount, expiration date
and the reference number of each Letter of Credit issued by
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it outstanding at any time during such month and the aggregate amount payable
by the Borrower during such month. In addition, upon the request of the Agent,
each Issuing Bank shall furnish to the Agent copies of any Letter of Credit and
any application for or reimbursement agreement with respect to a Letter of
Credit to which the Issuing Bank is party and such other documentation as may
reasonably be requested by the Agent. Upon the request of any Lender, the
Agent will provide to such Lender information concerning such Letters of
Credit.
3.11 Indemnification; Exoneration. (a) In addition to amounts payable
as elsewhere provided in this Article III, the Borrower hereby agrees to
protect, indemnify, pay and save harmless the Agent, each Issuing Bank and each
Lender from and against any and all liabilities and costs which the Agent, such
Issuing Bank or such Lender may incur or be subject to as a consequence, direct
or indirect, of (i) the issuance of any Letter of Credit other than, in the
case of the applicable Issuing Bank, as a result of its gross negligence or
willful misconduct, as determined by the final judgment of a court of competent
jurisdiction, or (ii) the failure of the applicable Issuing Bank to honor a
drawing under a Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto Governmental
Authority (all such acts or omissions herein called "GOVERNMENTAL ACTS").
(b) As among the Borrower, the Lenders, the Agent and the Issuing Banks,
the Borrower assumes all risks of the acts and omissions of, or misuse of such
Letter of Credit by, the beneficiary of any Letters of Credit. In furtherance
and not in limitation of the foregoing, subject to the provisions of the Letter
of Credit applications and Letter of Credit reimbursement agreements executed
by the Borrower at the time of request for any Letter of Credit, neither the
Agent, any Issuing Bank nor any Lender shall be responsible (in the absence of
gross negligence or willful misconduct in connection therewith, as determined
by the final judgment of a court of competent jurisdiction): (i) for 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
the Letters of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
a Letter of Credit to comply duly with conditions required in order to draw
upon such Letter of Credit; (iv) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex,
or other similar form of teletransmission or otherwise; (v) for errors in
interpretation of technical trade terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a Letter of Credit of the proceeds of any
drawing under such Letter of Credit; and (viii) for any consequences arising
from causes beyond the control of the Agent, the Issuing Banks and the Lenders,
including, without limitation, any Governmental Acts.
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None of the above shall affect, impair, or prevent the vesting of any Issuing
Bank's rights or powers under this Section 3.11.
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Issuing
Bank under or in connection with the Letters of Credit or any related
certificates shall not, in the absence of gross negligence or willful
misconduct, as determined by the final judgment of a court of competent
jurisdiction, put the applicable Issuing Bank, the Agent or any Lender under
any resulting liability to the Borrower or relieve the Borrower of any of its
obligations hereunder to any such Person.
(d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 3.11 shall survive the payment in full of principal and interest
hereunder, the termination of the Letters of Credit and the termination of this
Agreement.
ARTICLE IV: CHANGE IN CIRCUMSTANCES
4.1 Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement and
having general applicability to all banks within the jurisdiction in which such
Lender operates (excluding, for the avoidance of doubt, the effect of and
phasing in of capital requirements or other regulations or guidelines passed
prior to the date of this Agreement), or any interpretation or application
thereof by any Governmental Authority charged with the interpretation or
application thereof, or the compliance of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due from the
Borrower (excluding federal taxation of the overall net income of any
Lender or applicable Lending Installation), or changes the basis of
taxation of payments to any Lender in respect of its Loans, its L/C
Interests, the Letters of Credit or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Rate Loans) with respect to its
Loans, L/C Interests or the Letters of Credit, or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation of
making, funding or maintaining the Loans, the L/C Interests or the
Letters of Credit or reduces any
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amount received by any Lender or any applicable Lending Installation in
connection with Loans or Letters of Credit, or requires any Lender or any
applicable Lending Installation to make any payment calculated by
reference to the amount of Loans or L/C Interests held or interest
received by it or by reference to the Letters of Credit, by an amount
deemed material by such Lender;
and the result of any of the foregoing is to increase the cost to that Lender
of making, renewing or maintaining its Loans, L/C Interests or Letters of
Credit or to reduce any amount received under this Agreement, then, within 15
days after receipt by the Borrower of written demand by such Lender pursuant to
Section 4.5, the Borrower shall pay such Lender that portion of such increased
expense incurred or reduction in an amount received which such Lender
determines is attributable to making, funding and maintaining its Loans, L/C
Interests, Letters of Credit and its Revolving Loan Commitment.
4.2 Changes in Capital Adequacy Regulations. If a Lender determines (i)
the amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a "Change" (as defined below), and (ii) such
increase in capital will result in an increase in the cost to such Lender of
maintaining its Loans, L/C Interests, the Letters of Credit or its obligation
to make Loans hereunder, then, within 15 days after receipt by the Borrower of
written demand by such Lender pursuant to Section 4.5, the Borrower shall pay
such Lender the amount necessary to compensate for any shortfall in the rate of
return on the portion of such increased capital which such Lender determines is
attributable to this Agreement, its Loans, its L/C Interests, the Letters of
Credit or its obligation to make Loans hereunder (after taking into account
such Lender's policies as to capital adequacy). "CHANGE" means (i) any change
after the date of this Agreement in the "Risk-Based Capital Guidelines" (as
defined below) excluding, for the avoidance of doubt, the effect of any phasing
in of such Risk-Based Capital Guidelines or any other capital requirements
passed prior to the date hereof, or (ii) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this Agreement and having general applicability to all banks and
financial institutions within the jurisdiction in which such Lender operates
which affects the amount of capital required or expected to be maintained by
any Lender or any Lending Installation or any corporation controlling any
Lender. "RISK-BASED CAPITAL GUIDELINES" means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing
the July 1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
4.3 Availability of Types of Advances. If (i) any Lender determines that
maintenance of its Eurodollar Rate Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation or directive, whether or not
having the force of law, or
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(ii) the Required Lenders determine that (x) deposits of a type and maturity
appropriate to match fund Eurodollar Rate Advances are not available or (y) the
interest rate applicable to a Type of Advance does not accurately reflect the
cost of making or maintaining such an Advance, then the Agent shall suspend the
availability of the affected Type of Advance and, in the case of any occurrence
set forth in clause (i) require any Advances of the affected Type to be repaid.
4.4 Funding Indemnification. If any payment of a Eurodollar Rate Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment, or otherwise, or a Eurodollar Rate
Advance is not made on the date specified by the Borrower for any reason other
than default by the Lenders, the Borrower indemnifies each Lender for any loss
or cost incurred by it resulting therefrom, including, without limitation, any
loss or cost in liquidating or employing deposits acquired to fund or maintain
the Eurodollar Rate Advance.
4.5 Lender Statements; Survival of Indemnity. If reasonably possible,
each Lender shall designate an alternate Lending Installation with respect to
its Eurodollar Rate Loans to reduce any liability of the Borrower to such
Lender under Sections 4.1 and 4.2 or to avoid the unavailability of a Type of
Advance under Section 4.3, so long as such designation is not disadvantageous
to such Lender. Each Lender requiring compensation pursuant to Section 2.15(E)
or to this Article IV shall use its best efforts to notify the Borrower and the
Agent in writing of any Change, law, policy, rule, guideline or directive
giving rise to such demand for compensation not later than ninety (90) days
following the date upon which the responsible account officer of such Lender
knows or should have known of such Change, law, policy, rule, guideline or
directive. Any demand for compensation pursuant to this Article IV shall be in
writing and shall state the amount due, if any, under Section 4.1, 4.2 or 4.4
and shall set forth in reasonable detail the calculations upon which such
Lender determined such amount. Such written demand shall be rebuttably
presumed correct for all purposes. Determination of amounts payable under such
Sections in connection with a Eurodollar Rate Loan shall be calculated as
though each Lender funded its Eurodollar Rate Loan through the purchase of a
deposit of the type and maturity corresponding to the deposit used as a
reference in determining the Eurodollar Rate applicable to such Loan, whether
in fact that is the case or not. The obligations of the Borrower under
Sections 4.1, 4.2 and 4.4 shall survive payment of the Obligations and
termination of this Agreement.
ARTICLE V: CONDITIONS PRECEDENT
5.1 Initial Advances and Letters of Credit. The Lenders shall not be
required to make the initial Loans or issue any Letters of Credit or purchase
any participations therein unless (i) such initial Loans are made not later
than August 30, 1996; (ii) the Senior Subordinated Notes and Senior Notes have
been issued and the Borrower has received the net proceeds thereof; (iii) the
James River Acquisition and Related Transactions have been consummated; and
(iv) the Borrower has furnished to the Agent each of the
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following, with sufficient copies for the Lenders, all in form and substance
satisfactory to the Agent and the Lenders:
(1) Copies of the Articles of Incorporation of the Borrower,
together with all amendments and a certificate of good standing, both
certified by the appropriate governmental officer in its jurisdiction of
incorporation;
(2) Copies, certified by the Secretary or Assistant Secretary of
the Borrower, of its By-Laws and of its Board of Directors' resolutions
(and resolutions of other bodies, if any are deemed necessary by counsel
for any Lender) authorizing the execution of the Loan Documents;
(3) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify by name and
title and bear the signature of the officers of the Borrower authorized
to sign the Loan Documents and to make borrowings hereunder, upon which
certificate the Lenders shall be entitled to rely until informed of any
change in writing by the Borrower;
(4) A certificate, in form and substance satisfactory to the Agent,
signed by the chief financial officer of the Borrower, stating that on
Closing Date no Default or Unmatured Default has occurred and is
continuing;
(5) A written opinion of the Borrower's counsel, addressed to the
Agent and the Lenders, substantially in the form of Exhibit F hereto, and
a written opinion of Sidley & Austin, special counsel to the Agent,
addressed to the Agent and the Lenders, as to enforceability of certain
of the Loan Documents under Illinois law;
(6) Notes payable to the order of each of the applicable Lenders;
(7) Written money transfer instructions reasonably requested by the
Agent, addressed to the Agent and signed by an Authorized Officer; and
(8) Such other documents as the Agent or any Lender or its counsel
may have reasonably requested, including, without limitation all of the
documents reflected on the List of Closing Documents attached as Exhibit
G to this Agreement.
5.2 Each Advance and Letter of Credit. The Lenders shall not be required
to make any Advance, issue any Letter of Credit or purchase any participation
therein, unless on the applicable Borrowing Date, or in the case of a Letter of
Credit, the date on which the Letter of Credit is to be issued:
(i) There exists no Default or Unmatured Default; and
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(ii) The representations and warranties contained in Article VI are
true and correct as of such Borrowing Date except for changes reflecting
events, conditions or transactions permitted or not prohibited by this
Agreement.
Each Borrowing Notice with respect to each such Advance and the letter of
credit application with respect to a Letter of Credit shall constitute a
representation and warranty by the Borrower that the conditions contained in
Sections 5.2(i) and (ii) have been satisfied. Any Lender may require a duly
completed officer's certificate in substantially the form of Exhibit H hereto
and/or a duly completed compliance certificate in substantially the form of
Exhibit I hereto as a condition to making an Advance.
ARTICLE VI: REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this Agreement
and to make the Loans and the other financial accommodations to the Borrower
and to issue the Letters of Credit described herein, the Borrower represents
and warrants as follows to each Lender and the Agent as of the Closing Date,
giving effect to the James River Acquisition and the consummation of the other
transactions contemplated by the Transaction Documents on the Closing Date, and
thereafter on each date as required by Section 5.2:
6.1 Organization; Corporate Powers. The Borrower and each of its
Subsidiaries (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (ii) is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each jurisdiction in which failure to be so qualified and in good
standing will have a Material Adverse Effect, (iii) has filed and maintained
effective (unless exempt from the requirements for filing) a current Business
Activity Report with the appropriate Governmental Authority in the States in
which it is required to do so and (iv) has all requisite corporate power and
authority to own, operate and encumber its property and to conduct its business
as presently conducted and as proposed to be conducted.
6.2 Authority.
(A) The Borrower and each of its Subsidiaries has the requisite corporate
power and authority (i) to execute, deliver and perform each of the Transaction
Documents which are to be executed by it in connection with the James River
Acquisition and the Related Transactions or which have been executed by it as
required by this Agreement on or prior to Closing Date and (ii) to file the
Transaction Documents which must be filed by it in connection with the James
River Acquisition and the Related Transactions or which have been filed by it
as required by this Agreement on or prior to the Closing Date with any
Governmental Authority.
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(B) The execution, delivery, performance and filing, as the case may be,
of each of the Transaction Documents which must be executed or filed by the
Borrower or any of its Subsidiaries in connection with the James River
Acquisition and the Related Transactions or which have been executed or filed
as required by this Agreement on or prior to the Closing Date and to which the
Borrower or any of its Subsidiaries is party, and the consummation of the
transactions contemplated thereby, have been duly approved by the respective
boards of directors and, if necessary, the shareholders of the Borrower and its
Subsidiaries, and such approvals have not been rescinded. No other corporate
action or proceedings on the part of the Borrower or its Subsidiaries are
necessary to consummate such transactions.
(C) Each of the Transaction Documents to which the Borrower or any of its
Subsidiaries is a party has been duly executed, delivered or filed, as the case
may be, by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms (except as enforceability
may be limited by bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally), is in full force and effect and no
material term or condition thereof has been amended, modified or waived from
the terms and conditions contained in the Transaction Documents delivered to
the Agent pursuant to Section 5.1 without the prior written consent of the
Required Lenders, and the Borrower and its Subsidiaries have, and, to the best
of the Borrower's and its Subsidiaries' knowledge, all other parties thereto
have, performed and complied with all the terms, provisions, agreements and
conditions set forth therein and required to be performed or complied with by
such parties on or before the Closing Date, and no unmatured default, default
or breach of any covenant by any such party exists thereunder.
6.3 No Conflict; Governmental Consents. The execution, delivery and
performance of each of the Loan Documents and other Transaction Documents to
which the Borrower or any of its Subsidiaries is a party do not and will not
(i) conflict with the certificate or articles of incorporation or by-laws of
the Borrower or any such Subsidiary, (ii) constitute a tortious interference
with any Contractual Obligation of the Borrower or any such Subsidiary or
conflict with, result in a breach of or constitute (with or without notice or
lapse of time or both) a default under any Requirement of Law (including,
without limitation, any Environmental Property Transfer Act) or Contractual
Obligation of the Borrower or any such Subsidiary, or require termination of
any Contractual Obligation, except such interference, breach, default or
termination which individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect, (iii) result in or require the
creation or imposition of any Lien whatsoever upon any of the property or
assets of the Borrower or any such Subsidiary, other than Liens permitted by
the Loan Documents, or (iv) require any approval of the Borrower's or any such
Subsidiary's shareholders except such as have been obtained. Except as set
forth on Schedule 6.3 to this Agreement, the execution, delivery and
performance of each of the Transaction Documents to which the Borrower or any
of its Subsidiaries is a party do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by any
Governmental Authority, including under any Environmental Property Transfer
Act, except (i) filings, consents or notices which have been made, obtained or
given, or which, if not made,
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obtained or given, individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect, and (ii) filings necessary to
create or perfect security interests in the Collateral.
6.4 Financial Statements.
(A) The pro forma financial statements of the Borrower and its
Subsidiaries, copies of which are attached hereto as Schedule 6.4 to this
Agreement, present on a pro forma basis the financial condition of the Borrower
and such Subsidiaries as of such date, and reflect on a pro forma basis those
liabilities reflected in the notes thereto and resulting from consummation of
the James River Acquisition and the Related Transactions and the other
transactions contemplated by this Agreement, and the payment or accrual of all
Transaction Costs payable on the Closing Date with respect to any of the
foregoing. The projections and assumptions expressed in the pro forma
financials referenced in this Section 6.4(A) were prepared in good faith and
represent management's opinion based on the information available to the
Borrower at the time so furnished.
(B) Complete and accurate copies of the following financial statements
and the following related information have been delivered to the Agent: (1) the
combined balance sheets of Enterprises and the Borrower as at June 29, 1996,
and the related combined statements of income, changes in stockholders' equity
investment and cash flows of Enterprises and the Borrower for the fiscal year
then ended, and the audit report related thereto; and (2) the combined balance
sheet of the flexible packaging group of James River (the "JAMES RIVER GROUP")
as at December 31, 1995, and the related combined statements of operations,
changes in stockholder's investment and cash flows of the James River Group for
the fiscal year then ended, and the audit report related thereto, and the
unaudited combined balance sheet of the James River Group as at June 30, 1996,
and the related unaudited combined statements of operations, changes in
stockholder's investment and cash flows of the James River Group for the six
months then ended.
6.5 No Material Adverse Change. (a) Since June 29, 1996 up to the
Closing Date, there has occurred no change in the business, properties,
condition (financial or otherwise) or results of operations of Enterprises, the
Borrower, or the Borrower and its Subsidiaries taken as a whole or any other
event which has had or could reasonably be expected to have a Material Adverse
Effect.
(b) Since June 30, 1996 up to the Closing Date, there has occurred no
change in the business, properties, condition (financial or otherwise) or
results of operations of the James River Group which has had or could
reasonably be expected to have a Material Adverse Effect.
(c) Since the Closing Date, there has occurred no change in the business,
properties, condition (financial or otherwise) or results of operations of the
Borrower or the Borrower and its Subsidiaries taken as a whole or any other
event which has had or could reasonably be expected to have a Material Adverse
Effect.
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6.6 Taxes.
(A) Tax Examinations. All deficiencies which have been asserted against
the Borrower or any of the Borrower's Subsidiaries as a result of any federal,
state, local or foreign tax examination for each taxable year in respect of
which an examination has been conducted have been fully paid or finally settled
or are being contested in good faith, and as of the Closing Date no issue has
been raised by any taxing authority in any such examination which, by
application of similar principles, reasonably can be expected to result in
assertion by such taxing authority of a material deficiency for any other year
not so examined which has not been reserved for in the Borrower's consolidated
financial statements to the extent, if any, required by Agreement Accounting
Principles. Except as permitted pursuant to Section 7.2(D), neither the
Borrower nor any of the Borrower's Subsidiaries anticipates any material tax
liability with respect to the years which have not been closed pursuant to
applicable law.
(B) Payment of Taxes. All tax returns and reports of the Borrower and
its Subsidiaries required to be filed have been timely filed, and all taxes,
assessments, fees and other governmental charges thereupon and upon their
respective property, assets, income and franchises which are shown in such
returns or reports to be due and payable have been paid except those items
which are being contested in good faith and have been reserved for in
accordance with Agreement Accounting Principles. The Borrower has no knowledge
of any proposed tax assessment against the Borrower or any of its Subsidiaries
that will have or could reasonably be expected to have a Material Adverse
Effect.
6.7 Litigation; Loss Contingencies and Violations. Except as set forth
in Schedule 6.7 to this Agreement, there is no action, suit, proceeding,
arbitration or (to the Borrower's knowledge) investigation before or by any
Governmental Authority or private arbitrator pending or, to the Borrower's
knowledge, threatened against the Borrower or any of its Subsidiaries or any
property of any of them (i) challenging the validity or the enforceability of
any material provision of the Transaction Documents or (ii) which will have or
could reasonably be expected to have a Material Adverse Effect. There is no
material loss contingency within the meaning of Agreement Accounting Principles
which has not been reflected in the consolidated financial statements of the
Borrower prepared and delivered pursuant to Section 7.1(A) for the fiscal
period during which such material loss contingency was incurred. Neither the
Borrower nor any of its Subsidiaries is (A) in violation of any applicable
Requirements of Law which violation will have or could reasonably be expected
to have a Material Adverse Effect, or (B) subject to or in default with respect
to any final judgment, writ, injunction, restraining order or order of any
nature, decree, rule or regulation of any court or Governmental Authority which
will have or could reasonably be expected to have a Material Adverse Effect.
6.8 Subsidiaries. Schedule 6.8 to this Agreement (i) contains a
description of the corporate structure of Holdings, Enterprises, the Borrower,
its Subsidiaries and any other Person in which Holdings, Enterprises, the
Borrower or any of its Subsidiaries holds an
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Equity Interest (both narratively and in chart form); and (ii) accurately sets
forth (A) the correct legal name, the jurisdiction of incorporation and the
jurisdictions in which each of the Borrower and the direct and indirect
Subsidiaries of the Borrower is qualified to transact business as a foreign
corporation, (B) the authorized, issued and outstanding shares of each class of
Capital Stock of Holdings, Enterprises, the Borrower and each of its
Subsidiaries and the owners of such shares (both as of the Closing Date and on
a fully-diluted basis), and (C) a summary of the direct and indirect
partnership, joint venture, or other Equity Interests, if any, of the Borrower
and each Subsidiary of the Borrower in any Person that is not a corporation.
None of the issued and outstanding Capital Stock of the Borrower or any of its
Subsidiaries is subject to any vesting, redemption, or repurchase agreement,
and there are no warrants or options outstanding with respect to such Capital
Stock. The outstanding Capital Stock of Enterprises, the Borrower and each of
the Borrower's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and is not Margin Stock. The Borrower has no Subsidiaries other
than IHC, PRF and the Mexican Subsidiaries.
6.9 ERISA. No Benefit Plan has incurred any accumulated funding
deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the Code)
whether or not waived. Neither the Borrower nor any member of the Controlled
Group has incurred any liability to the PBGC which remains outstanding other
than the payment of premiums, and there are no premium payments which have
become due which are unpaid. Schedule B to the most recent annual report filed
with the IRS with respect to each Benefit Plan and furnished to the lenders is
complete and accurate. Since the date of each such Schedule B, there has been
no material adverse change in the funding status or financial condition of the
Benefit Plan relating to such Schedule B. Neither the Borrower nor any member
of the Controlled Group has (i) failed to make a required contribution or
payment to a Multiemployer Plan or (ii) made a complete or partial withdrawal
under Sections 4203 or 4205 of ERISA from a Multiemployer Plan where such
failure or such withdrawal could reasonably be expected to subject the Borrower
to liability in excess of $1,000,000. Neither the Borrower nor any member of
the Controlled Group has failed to make a required installment or any other
required payment under Section 412 of the Code on or before the due date for
such installment or other payment. Neither the Borrower nor any member of the
Controlled Group is required to provide security to a Benefit Plan under
Section 401(a)(29) of the Code due to a Plan amendment that results in an
increase in current liability for the plan year. Each Plan which is intended
to be qualified under Section 401(a) of the Code as currently in effect is so
qualified, and each trust related to any such Plan is exempt from federal
income tax under Section 501(a) of the Code as currently in effect. The
Borrower and all Subsidiaries are in compliance in all respects with the
responsibilities, obligations and duties imposed on them by ERISA and the Code
with respect to all Plans, except where such noncompliance could not reasonably
be expected to subject the Borrower to liability in excess of $1,000,000.
Neither the Borrower nor any of its Subsidiaries nor any fiduciary of any Plan
has engaged in a nonexempt prohibited transaction described in Sections 406 of
ERISA or 4975 of the Code which could reasonably be expected to subject the
Borrower to liability in excess of $1,000,000. Neither the Borrower nor any
member of the Controlled Group has taken or
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failed to take any action which would constitute or result in a Termination
Event, which action or inaction could reasonably be expected to subject the
Borrower to liability in excess of $1,000,000. Neither the Borrower nor any
Subsidiary is subject to any liability under Sections 4063, 4064, 4069, 4204 or
4212(c) of ERISA and no other member of the Controlled Group is subject to any
liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of ERISA which could
reasonably be expected to subject the Borrower to liability in excess of
$1,000,000. Neither the Borrower nor any of its Subsidiaries has, by reason of
the transactions contemplated hereby, any obligation to make any payment to any
employee pursuant to any Plan or existing contract or arrangement.
6.10 Accuracy of Information. The information, exhibits and reports
furnished by or on behalf of the Borrower and any of its Subsidiaries to the
Agent or to any Lender in connection with the negotiation of, or compliance
with, the Loan Documents, the representations and warranties of the Borrower
and its Subsidiaries contained in the Loan Documents, and all certificates and
documents delivered to the Agent and the Lenders pursuant to the terms thereof,
taken as a whole, do not contain as of the date furnished any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
6.11 Securities Activities. Neither the Borrower nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
6.12 Material Agreements. Neither the Borrower nor any of its
Subsidiaries has received notice or has knowledge that (i) it is in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any Contractual Obligation applicable to it, or (ii)
any condition exists which, with the giving of notice or the lapse of time or
both, would constitute a default with respect to any such Contractual
Obligation, in each case, except where such default or defaults, if any,
individually or in the aggregate will not have or could not reasonably be
expected to have a Material Adverse Effect.
6.13 Compliance with Laws. The Borrower and its Subsidiaries are in
compliance with all Requirements of Law applicable to them and their respective
businesses, in each case where the failure to so comply individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
6.14 Assets and Properties. The Borrower and each of its Subsidiaries
has good and marketable title to all of its assets and properties (tangible and
intangible, real or personal) owned by it or a valid leasehold interest in all
of its leased assets (except insofar as marketability may be limited by any
laws or regulations of any Governmental Authority affecting such assets), and
all such assets and property are free and clear of all Liens, except Liens
securing the Obligations and Liens permitted under Section 7.3(C).
Substantially all of the assets and properties owned by, leased to or used by
the Borrower
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and/or each such Subsidiary of the Borrower are in adequate operating condition
and repair, ordinary wear and tear excepted. Except for Liens granted to the
Agent for the benefit of the Agent and the Holders of Secured Obligations,
neither this Agreement nor any other Transaction Document, nor any transaction
contemplated under any such agreement, will affect any right, title or interest
of the Borrower or such Subsidiary in and to any of such assets in a manner
that would have or could reasonably be expected to have a Material Adverse
Effect.
6.15 Statutory Indebtedness Restrictions. Neither the Borrower nor any
of its 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 any other federal or state statute or
regulation which limits its ability to incur indebtedness or its ability to
consummate the transactions contemplated hereby or in connection with James
River Acquisition and the Related Transactions.
6.16 Insurance. Schedule 6.16 to this Agreement accurately sets forth as
of the Closing Date all insurance policies and programs currently in effect
with respect to the respective properties and assets and business of the
Borrower and its Subsidiaries, specifying, for each such policy and program,
(i) the amount thereof, (ii) the risks insured against thereby, (iii) the name
of the insurer and each insured party thereunder, (iv) the policy or other
identification number thereof, (v) the expiration date thereof, (vi) the annual
premium with respect thereto, and (vii) any reserves relating to any
self-insurance program that is in effect. Such insurance policies and programs
reflect coverage that is reasonably consistent with prudent industry practice.
6.17 Labor Matters.
(A) Except as listed on Schedule 6.17 to this Agreement, there are on the
Closing Date no collective bargaining agreements, other labor agreements or
Multiemployer Plans covering any of the employees of the Borrower or any of its
Subsidiaries. As of the Closing Date, no attempt to organize the employees of
the Borrower, and no labor disputes, strikes or walkouts affecting the
operations of the Borrower or any of its Subsidiaries, is pending, or, to the
Borrower's knowledge, threatened, planned or contemplated.
(B) Set forth in Schedule 6.17 to this Agreement is a list, as of the
Closing Date, of all material consulting agreements, executive compensation
plans, deferred compensation agreements, Love Family compensation arrangements,
employee pension plans or retirement plans, employee profit sharing plans,
employee stock purchase and stock option plans, severance plans, group life
insurance, hospitalization insurance or other plans or arrangements of the
Borrower and its Subsidiaries providing for benefits for employees of the
Borrower and its Subsidiaries.
6.18 James River Acquisition; Related Transactions. As of the Closing
Date and immediately prior to the making of the initial Loans:
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(i) the James River Acquisition Documents are in full force and
effect, no material breach, default or waiver of any term or provision
thereof by the Borrower or any of its Subsidiaries or, to the best of the
Borrower's knowledge, the other parties thereto, has occurred (except for
such breaches, defaults and waivers, if any, consented to in writing by
the Agent and the Required Lenders) and no action has been taken by any
competent authority which restrains, prevents or imposes any material
adverse condition upon, or seeks to restrain, prevent or impose any
material adverse condition upon, the James River Acquisition or the
Related Transactions;
(ii) the representations and warranties of the Borrower contained
in the James River Acquisition Documents, if any, are true and correct in
all material respects;
(iii) except as set forth in Schedule 6.18 to this Agreement, all
material conditions precedent to, and all material consents necessary to
permit, the James River Acquisition pursuant to the James River
Acquisition Documents have been satisfied or waived, the James River
Acquisition has been consummated in accordance with the James River
Acquisition Documents, the Related Transactions have been consummated,
and the Borrower has obtained good and marketable title to the "Assets"
(as defined in the Asset Purchase Agreement) free and clear of any Liens
other than Liens permitted under Section 7.3(C).
6.19 Environmental Matters. (a) Except as disclosed on Schedule 6.19 to
this Agreement, in the Executive Summary of the Environmental Audit, a copy of
which Executive Summary was delivered by the Borrower to each Lender prior to
the Closing Date, or otherwise in the Environmental Audit, a copy of which was
delivered by the Borrower to the Agent and made available by the Agent to each
Lender prior to the Closing Date:
(i) the operations of the Borrower and its Subsidiaries comply in
all material respects with Environmental, Health or Safety Requirements
of Law;
(ii) the Borrower and its Subsidiaries have all permits, licenses
or other authorizations required under Environmental, Health or Safety
Requirements of Law and are in material compliance with such permits;
(iii) neither the Borrower, any of its Subsidiaries nor any of
their respective present property or operations, or, to the best of, the
Borrower's or any of its Subsidiaries' knowledge, any of their respective
past property or operations, are subject to or the subject of, any
investigation known to the Borrower or any of its Subsidiaries, any
judicial or administrative proceeding, order, judgment, decree,
settlement or other agreement respecting: (A) any material violation of
Environmental, Health or Safety Requirements of Law; (B) any remedial
action; or
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(C) any material claims or liabilities arising from the Release or
threatened Release of a Contaminant into the environment;
(iv) there is not now, nor to the best of the Borrower's or any of
its Subsidiaries' knowledge has there ever been on or in the property
of the Borrower or any of its Subsidiaries any landfill, waste pile,
underground storage tanks, aboveground storage tanks, surface impoundment
or hazardous waste storage facility of any kind, any polychlorinated
biphenyls (PCBs) used in hydraulic oils, electric transformers or other
equipment, or any asbestos containing material; and
(v) neither the Borrower nor any of its Subsidiaries has any
material Contingent Obligation in connection with any Release or
threatened Release of a Contaminant into the environment.
(b) For purposes of this Section 6.19 "material" means any noncompliance
or basis for liability which could reasonably be likely to subject the Borrower
to liability in excess of $1,000,000.
6.20 Other Indebtedness.
(i) As of the Closing Date and immediately prior to the making of
the initial Loans, the Borrower has issued the Senior Subordinated Notes
in an aggregate original principal amount of $200,000,000 and received
the net proceeds thereof, and the subordination provisions of the Senior
Subordinated Note Indenture are enforceable against the holders of the
Senior Subordinated Notes.
(ii) As of the Closing Date and immediately prior to the making of
the initial Loans, the Borrower has issued the Senior Notes in an
aggregate original principal amount of $100,000,000 and received the net
proceeds thereof.
(iii) The subordination provisions of the Subordinated Note
Agreement are enforceable against the holders of the Subordinated Notes.
6.21 Fiscal Periods. The ending dates of all fiscal quarters of the
Borrower from the Closing Date until the Revolving Loan Termination Date are
set forth on Schedule 6.21 to this Agreement.
ARTICLE VII : COVENANTS
The Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until payment in full of all of the Obligations
(other than contingent indemnity obligations), unless the Required Lenders
shall otherwise give prior written consent:
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7.1 Reporting. The Borrower shall:
(A) Financial Reporting. Furnish to the Lenders:
(i) Monthly Reports. As soon as practicable, and in any event
within twenty (20) days after the end of each calendar month, the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
end of such period and the related consolidated statements of income and
cash flows of the Borrower and its Subsidiaries for such calendar month,
certified by the chief financial officer of the Borrower on behalf of the
Borrower as fairly presenting the consolidated financial position of the
Borrower and its Subsidiaries as at the dates indicated and the results
of their operations and cash flows for the calendar months indicated in
accordance with Agreement Accounting Principles, subject to normal year
end adjustments.
(ii) Quarterly Reports. As soon as practicable, and in any event
within forty-five (45) days after the end of each fiscal quarter in each
fiscal year, the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such period and the related consolidated
statements of income and cash flows of the 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, certified
by the chief financial officer of the Borrower on behalf of the Borrower
as fairly presenting the consolidated financial position of the Borrower
and its Subsidiaries as at the dates indicated and the results of their
operations and cash flows for the periods indicated in accordance with
Agreement Accounting Principles, subject to normal year end adjustments,
and a forecasted consolidated balance sheet and consolidated statements
of income and cash flows of the Borrower for and as of the end of the
next succeeding fiscal quarter and a comparison of the statements of
income and cash flows to the budget.
(iii) Annual Reports. As soon as practicable, and in any event
within ninety (90) days after the end of each fiscal year, (a) the
consolidated and consolidating balance sheets of Holdings and its
Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income, stockholders' equity
and cash flows of Holdings and its Subsidiaries for such fiscal year,
which consolidating financial statements may treat the Borrower and its
Subsidiaries as a single entity, (b) the consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such fiscal year and
the related consolidated statements of income, stockholders' equity and
cash flows of the Borrower and its Subsidiaries for such fiscal year, and
in comparative form the corresponding figures for the previous fiscal
year, in form and substance sufficient to calculate the financial
covenants set forth in Section 7.4, (c) a schedule from the Borrower
setting forth for each item in clause (a) hereof, the corresponding
figures from the consolidated financial budget for the current fiscal
year delivered pursuant to Section 7.1(A)(v), and (d) an audit report on
the items listed in clauses (a) and (b)
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hereof of independent certified public accountants of recognized
national standing, which audit report shall be unqualified and shall
state that such financial statements fairly present the consolidated and
consolidating financial position of Holdings and its Subsidiaries or the
Borrower and its Subsidiaries, as applicable, as at the dates indicated
and the results of their operations and cash flows for the periods
indicated in conformity with Agreement Accounting Principles and that the
examination by such accountants in connection with such consolidated and
consolidating financial statements has been made in accordance with
generally accepted auditing standards. The deliveries made pursuant to
this clause (iii) shall be accompanied by (x) any management letter
prepared by the above-referenced accountants and (y) a certificate of
such accountants that, in the course of their examination necessary for
their certification of the foregoing, they have obtained no knowledge of
any Default or Unmatured Default, or if, in the opinion of such
accountants, any Default or Unmatured Default shall exist, stating the
nature and status thereof.
(iv) Officer's Certificate. Together with each delivery of any
financial statement (a) pursuant to clauses (i), (ii) and (iii) of this
Section 7.1(A), an Officer's Certificate of the Borrower, substantially
in the form of Exhibit H attached hereto and made a part hereof, stating
that no Default or Unmatured Default exists, or if any Default or
Unmatured Default exists, stating the nature and status thereof and (b)
pursuant to clauses (ii) and (iii) of this Section 7.1(A), a compliance
certificate, substantially in the form of Exhibit I attached hereto and
made a part hereof, signed by the Borrower's chief financial officer or
treasurer, setting forth calculations for the period then ended for
Section 2.5(B), if applicable, which demonstrate compliance, when
applicable, with the provisions of Section 7.4, and which calculate the
Leverage Ratio for purposes of determining the then Applicable Eurodollar
Margin and Applicable Commitment Fee Percentage.
(v) Budgets; Business Plans; Financial Projections. As soon as
practicable and in any event not later than thirty (30) days after the
beginning of each fiscal year, a copy of the plan and forecast (including
a projected balance sheet, income statement and funds flow statement) of
the Borrower and its Subsidiaries for the upcoming fiscal year prepared
in such detail as shall be reasonably satisfactory to the Agent.
(B) Notice of Default. Promptly upon any of the chief executive officer,
chief operating officer, chief financial officer, treasurer or controller of
the Borrower obtaining knowledge (i) of any condition or event which
constitutes a Default or Unmatured Default, or becoming aware that any Lender
or Agent has given any written notice with respect to a claimed Default or
Unmatured Default under this Agreement, or (ii) that any Person has given any
written notice to the Borrower or any Subsidiary of the Borrower or taken any
other action with respect to a claimed default or event or condition of the
type referred to in Section 8.1(e), deliver to the Agent and the Lenders an
Officer's Certificate
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specifying (a) the nature and period of existence of any such claimed default,
Default, Unmatured Default, condition or event, (b) the notice given or action
taken by such Person in connection therewith, and (c) what action the Borrower
has taken, is taking and proposes to take with respect thereto.
(C) Lawsuits. (i) Promptly upon the Borrower obtaining knowledge of the
institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Borrower or
any of its Subsidiaries or any property of the Borrower or any of its
Subsidiaries not previously disclosed pursuant to Section 6.7, which action,
suit, proceeding, governmental investigation or arbitration exposes, or in the
case of multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances which
expose, in the Borrower's reasonable judgment, the Borrower or any of its
Subsidiaries to liability in an amount aggregating $5,000,000 or more
(exclusive of claims covered by insurance policies of the Borrower or any of
its Subsidiaries unless the insurers of such claims have disclaimed coverage or
reserved the right to disclaim coverage on such claims and exclusive of claims
covered by the indemnity of a financially responsible indemnitor in favor of
the Borrower or any of its Subsidiaries unless the indemnitor has disclaimed or
reserved the right to disclaim coverage thereof), give written notice thereof
to the Agent and the Lenders and provide such other information as may be
reasonably available to enable each Lender and the Agent and its counsel to
evaluate such matters; and (ii) in addition to the requirements set forth in
clause (i) of this Section 7.1(C), upon request of the Agent or the Required
Lenders, promptly give written notice of the status of any action, suit,
proceeding, governmental investigation or arbitration covered by a report
delivered pursuant to clause (i) above and provide such other information as
may be reasonably available to it that would not violate any attorney-client
privilege by disclosure to the Lenders to enable each Lender and the Agent and
its counsel to evaluate such matters.
(D) Insurance. As soon as practicable and in any event within ninety
(90) days of the end of each fiscal year commencing with fiscal year ending
June 28, 1997, deliver to the Agent and the Lenders a report in form and
substance reasonably satisfactory to the Agent and the Lenders outlining all
material insurance coverage maintained as of the date of such report by the
Borrower and its Subsidiaries and the duration of such coverage.
(E) ERISA Notices. Deliver or cause to be delivered to the Agent and the
Lenders, at the Borrower's expense, the following information and notices as
soon as reasonably possible, and in any event:
(i) (a) within ten (10) Business Days after the Borrower obtains
knowledge that a Termination Event has occurred which, when aggregated
with any previous Termination Events during the twelve months prior to
such Termination Event, could reasonably be expected to subject the
Borrower to liability in excess of $1,000,000, a written statement of the
chief financial officer of the Borrower describing such Termination
Event(s) and the action, if any, which
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the Borrower has taken, is taking or proposes to take with respect
thereto, and when known, any action taken or threatened by the IRS, DOL
or PBGC with respect thereto and (b) within fifteen (15) Business Days
after any officer of any member of the Controlled Group obtains knowledge
that a Termination Event has occurred which, when aggregated with any
previous Termination Events during the twelve months prior to such
Termination Event, could reasonably be expected to subject the Borrower
to liability in excess of $1,000,000, a written statement of the chief
financial officer of the Borrower describing such Termination Event(s)
and the action, if any, which the member of the Controlled Group has
taken, is taking or proposes to take with respect thereto, and when
known, any action taken or threatened by the IRS, DOL or PBGC with
respect thereto;
(ii) within fifteen (15) Business Days after any officer of the
Borrower or any of its Subsidiaries obtains knowledge that a prohibited
transaction (defined in Sections 406 of ERISA and Section 4975 of the
Code) has occurred which, when aggregated with any previous prohibited
transactions during the twelve months prior to such prohibited
transaction, could reasonably be expected to subject the Borrower to
liability in excess of $1,000,000, a statement of the chief financial
officer of the Borrower describing such transaction(s) and the action
which the Borrower or such Subsidiary has taken, is taking or proposes to
take with respect thereto;
(iii) within fifteen (15) Business Days after the material increase
in the benefits of any existing Plan or the establishment of any new
Benefit Plan or the commencement of, or obligation to commence,
contributions to any Benefit Plan or Multiemployer Plan to which the
Borrower or any member of the Controlled Group was not previously
contributing where the aggregate annual contributions to such Plan(s)
resulting therefrom are or could reasonably be expected to exceed
$1,000,000, notification of such increase, establishment, commencement or
obligation to commence and the amount of such contributions;
(iv) within fifteen (15) Business Days after the Borrower or any of
its Subsidiaries receives notice of any unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a)
of the Code, copies of each such letter;
(v) within fifteen (15) Business Days after the establishment of
any Foreign Employee Benefit Plan or the commencement of, or obligation
to commence, contributions to any Foreign Employee Benefit Plan to which
the Borrower or any Subsidiary was not previously contributing, where the
aggregate annual contribution by the Borrower or any Subsidiary to such
Plan are or could reasonably be expected to exceed $1,000,000,
notification of such establishment, commencement or obligation to
commence and the amount of such contributions;
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(vi) within fifteen (15) Business Days after the filing thereof
with the DOL, IRS or PBGC, copies of each annual report (form 5500
series), including Schedule B thereto, filed with respect to each Benefit
Plan;
(vii) within fifteen (15) Business Days after receipt by the
Borrower or any member of the Controlled Group of each actuarial report
for any Benefit Plan or Multiemployer Plan and each annual report for any
Multiemployer Plan, copies of each such report;
(viii) within fifteen (15) Business Days after the filing thereof
with the IRS, a copy of each funding waiver request filed with respect to
any Benefit Plan and all communications received by the Borrower or a
member of the Controlled Group with respect to such request;
(ix) within fifteen (15) Business Days after receipt by the
Borrower or any member of the Controlled Group of the PBGC's intention to
terminate a Benefit Plan or to have a trustee appointed to administer a
Benefit Plan, copies of each such notice;
(x) within fifteen (15) Business Days after receipt by the Borrower
or any member of the Controlled Group of a notice from a Multiemployer
Plan regarding the imposition of withdrawal liability which, when
aggregated with any previous withdrawal liability with respect to which
any such Person has received a notice during the twelve months prior to
such notice, could reasonably be expected to subject the Borrower to
liability in excess of $1,000,000, copies of each such notice;
(xi) within fifteen (15) Business Days after the Borrower or any
member of the Controlled Group fails to make a required installment or
any other required payment under Section 412 of the Code on or before the
due date for such installment or payment and the aggregate of such unpaid
installments or other required payments exceeds $1,000,000, a
notification of such failure; and
(xii) within fifteen (15) Business Days after any officer of the
Borrower or any member of the Controlled Group knows or has reason to
know that (a) a Multiemployer Plan has been terminated, (b) the
administrator or plan sponsor of a Multiemployer Plan intends to
terminate a Multiemployer Plan, or (c) the PBGC has instituted or will
institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan, if any such termination or proceedings, individually
or in the aggregate, could reasonably be expected to subject the Borrower
to liability in excess of $1,000,000.
For purposes of this Section 7.1(E), the Borrower, any of its Subsidiaries and
any member of the Controlled Group shall be deemed to know all facts known by
the Plan
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Administrator (as defined in Section 3(16)(A) of ERISA) of any Plan of
which the Borrower or any member of the Controlled Group or such Subsidiary is
the plan sponsor.
(F) Labor Matters. Notify the Agent in writing, promptly upon the
Borrower's learning thereof, of (i) any material labor dispute to which the
Borrower or any of its Subsidiaries may become a party, including, without
limitation, any strikes, lockouts or other disputes relating to such Persons'
plants and other facilities and (ii) any failure to comply with the Worker
Adjustment and Retraining Notification Act with respect to the closing of any
plant or other facility of the Borrower or any of its Subsidiaries.
(G) Other Indebtedness. Deliver to the Agent (i) a copy of each regular
report, notice or other written communication regarding potential or actual
defaults (including any accompanying officer's certificate) delivered by or on
behalf of the Borrower to the holders of funded Indebtedness, the outstanding
principal amount of which Indebtedness is in excess of $15,000,000, pursuant to
the terms of the agreements governing such Indebtedness, such delivery to be
made at the same time and by the same means as such notice or other
communication is delivered to such holders, and (ii) a copy of each notice or
other written communication received by the Borrower from the from the holders
of funded Indebtedness, the outstanding principal amount of which Indebtedness
is in excess of $15,000,000, pursuant to the terms of such Indebtedness, such
delivery to be made promptly after such notice or other communication is
received by the Borrower.
(H) Other Reports. Deliver or cause to be delivered to the Agent copies
of all financial statements, reports and notices, if any, sent or made
available generally by the Borrower to its securities holders or filed with the
Commission by the Borrower, all press releases made available generally by the
Borrower or any of the Borrower's Subsidiaries to the public concerning
material developments in the business of the Borrower or any such Subsidiary
and all notifications received from the Commission by the Borrower or its
Subsidiaries pursuant to the Securities Exchange Act of 1934 and the rules
promulgated thereunder.
(I) Environmental Notices. As soon as possible and in any event within
ten (10) days after receipt by the Borrower, a copy of (i) any notice or claim
to the effect that the Borrower or any of its Subsidiaries is or may be liable
to any Person as a result of the Release by the Borrower, any of its
Subsidiaries, or any other Person of any Contaminant into the environment, and
(ii) any notice alleging any violation of any Environmental, Health or Safety
Requirements of Law by the Borrower or any of its Subsidiaries if, in either
case, such notice or claim relates to an event which could reasonably be
expected to subject the Borrower to liability in excess of $1,000,000.
(J) Other Information. Promptly upon receiving a request therefor from
the Agent, prepare and deliver to the Agent such other information with respect
to Holdings, Enterprises, the Borrower, any of its Subsidiaries, or the
Collateral, including, without limitation, schedules identifying and describing
the Collateral and any dispositions thereof
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or any Asset Sale or Financing (and the use of the Net Cash Proceeds thereof),
as from time to time may be reasonably requested by the Agent.
7.2 Affirmative Covenants.
(A) Corporate Existence, Etc. The Borrower shall, and shall cause each
of its Subsidiaries to, at all times maintain its corporate existence and
preserve and keep, or cause to be preserved and kept, in full force and effect
its rights and franchises material to its businesses.
(B) Corporate Powers; Conduct of Business. The Borrower shall, and shall
cause each of its Subsidiaries to, qualify and remain qualified to do business
in each jurisdiction in which the nature of its business requires it to be so
qualified and where the failure to be so qualified will have or could
reasonably be expected to have a Material Adverse Effect. The Borrower will,
and will cause each Subsidiary to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of
enterprise as it is presently conducted.
(C) Compliance with Laws, Etc. The Borrower shall, and shall cause its
Subsidiaries to, (a) comply with all Requirements of Law and all restrictive
covenants affecting such Person or the business, properties, assets or
operations of such Person, and (b) obtain as needed all Permits necessary for
its operations and maintain such Permits in good standing unless failure to
comply or obtain could not reasonably be expected to have a Material Adverse
Effect.
(D) Payment of Taxes and Claims; Tax Consolidation. The Borrower shall
pay, and cause each of its Subsidiaries to pay, (i) all taxes, assessments and
other governmental charges imposed upon it or on any of its properties or
assets or in respect of any of its franchises, business, income or property
before any penalty or interest accrues thereon, and (ii) all claims (including,
without limitation, claims for labor, services, materials and supplies) for
sums which have become due and payable and which by law have or may become a
Lien (other than a Lien permitted by Section 7.3(C)) upon any of the Borrower's
or such Subsidiary's property or assets, prior to the time when any penalty or
fine shall be incurred with respect thereto; provided, however, that no such
taxes, assessments and governmental charges referred to in clause (i) above or
claims referred to in clause (ii) above (and interest, penalties or fines
relating thereto) need be paid if being contested in good faith by appropriate
proceedings diligently instituted and conducted and if such reserve or other
appropriate provision, if any, as shall be required in conformity with
Agreement Accounting Principles shall have been made therefor. The Borrower
will not, nor will it permit any of its Subsidiaries to, file or consent to the
filing of any consolidated income tax return with any Person other than as
contemplated by the Tax Allocation Agreement.
(E) Insurance. The Borrower shall maintain for itself and its
Subsidiaries, or shall cause each of its Subsidiaries to maintain in full force
and effect, the insurance policies and
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programs listed on Schedule 6.16 to this Agreement or substantially similar
policies and programs or other policies and programs as reflect coverage that
is reasonably consistent with prudent industry practice. The Borrowers shall
deliver to the Agent endorsements (y) to all "All Risk" physical damage
insurance policies on all of the Borrowers' tangible real and personal property
and assets and business interruption insurance policies naming the Agent loss
payee, and (z) to all general liability and other liability policies naming the
Agent an additional insured. In the event the Borrower or any of its
Subsidiaries at any time or times hereafter shall fail to obtain or maintain
any of the policies or insurance required herein or to pay any premium in whole
or in part relating thereto, then the Agent, without waiving or releasing any
obligations or resulting Default hereunder, may at any time or times thereafter
(but shall be under no obligation to do so) obtain and maintain such policies
of insurance and pay such premiums and take any other action with respect
thereto which the Agent deems advisable. All sums so disbursed by the Agent
shall constitute part of the Obligations, payable as provided in this
Agreement.
(F) Inspection of Property; Books and Records; Discussions. The Borrower
shall permit and cause each of the Borrower's Subsidiaries to permit, any
authorized representative(s) designated by either the Agent or any Lender to
visit and inspect any of the properties of the Borrower or any of its
Subsidiaries, to examine, audit, check and make copies of their respective
financial and accounting records, books, journals, orders, receipts and any
correspondence and other data relating to their respective businesses or the
transactions contemplated hereby or by the James River Acquisition (including,
without limitation, in connection with environmental compliance, hazard or
liability), and to discuss their affairs, finances and accounts with their
officers and independent certified public accountants, all upon reasonable
notice and at such reasonable times during normal business hours, as often as
may be reasonably requested. The Borrower shall keep and maintain, and cause
each of the Borrower's Subsidiaries to keep and maintain, in all material
respects, proper books of record and account in which entries in conformity
with Agreement Accounting Principles shall be made of all dealings and
transactions in relation to their respective businesses and activities,
including, without limitation, transactions and other dealings with respect to
the Collateral. If a Default has occurred and is continuing, the Borrower,
upon the Agent's request, shall turn over any such records to the Agent or its
representatives.
(G) Insurance and Condemnation Proceeds. The Borrower directs (and, if
applicable, shall cause its Subsidiaries to direct) all insurers under policies
of property damage, boiler and machinery and business interruption insurance
and payors of any condemnation claim or award relating to the property to pay
all proceeds payable under such policies or with respect to such claim or award
for any loss with respect to the Collateral directly to the Agent, for the
benefit of the Agent and the Holders of the Secured Obligations; provided,
however, in the event that such proceeds or award are less than $2,500,000
("EXCLUDED PROCEEDS"), unless a Default shall have occurred and be continuing,
the Agent shall remit such Excluded Proceeds to the Borrower. Each such policy
shall contain a long-form loss-payable endorsement naming the Agent as loss
payee, which endorsement shall be in form and substance acceptable to the
Agent. The Agent
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shall, upon receipt of such proceeds (other than Excluded Proceeds) and at the
Borrower's direction, either apply the same to the principal amount of the
Loans outstanding at the time of such receipt and create a corresponding
reserve against the Maximum Revolving Credit Amount in an amount equal to such
application (the "DECISION RESERVE") or hold them as cash collateral for the
Obligations in an interest bearing account. For up to 150 days from the date
of any loss (the "DECISION PERIOD"), the Borrower may notify the Agent that it
intends to restore, rebuild or replace the property subject to any insurance
payment or condemnation award and shall, as soon as practicable thereafter,
provide the Agent detailed information, including a construction schedule and
cost estimates. Should a Default occur at any time during the Decision Period,
should the Borrower notify the Agent that it has decided not to rebuild or
replace such property during the Decision Period, or should the Borrower fail
to notify the Agent of the Borrower's decision during the Decision Period, then
the amounts held as cash collateral pursuant to this Section 7.2(G) or as the
Decision Reserve shall upon the Required Lenders' direction be applied as a
mandatory prepayment of the Term Loans pursuant to Section 2.5(B). Proceeds
held as cash collateral pursuant to this Section 7.2(G) or constituting the
Decision Reserve shall be disbursed as payments for restoration, rebuilding or
replacement of such property become due; provided, however, should a Default
occur after the Borrower has notified the Agent that it intends to rebuild or
replace the property, the Decision Reserve or amounts held as cash collateral
may, or shall, upon the Required Lenders' direction, be applied as a mandatory
prepayment of the Term Loans pursuant to Section 2.5(B). In the event the
Decision Reserve is to be applied as a mandatory prepayment to the Term Loans,
the Borrower shall be deemed to have requested Revolving Loans in an amount
equal to the Decision Reserve, and such Loans shall be made regardless of any
failure of the Borrower to meet the conditions precedent set forth in Article
V. Upon completion of the restoration, rebuilding or replacement of such
property, the unused proceeds shall constitute Net Cash Proceeds of an Asset
Sale and shall be applied as a mandatory prepayment of the Term Loans pursuant
to Section 2.5(B).
(H) ERISA Compliance. The Borrower shall, and shall cause each of the
Borrower's Subsidiaries to, establish, maintain and operate all Plans to comply
in all respects with the provisions of ERISA, the Code, all other applicable
laws, and the regulations and interpretations thereunder and the respective
requirements of the governing documents for such Plans, except where such
noncompliance could not reasonably be expected to subject the Borrower to
liability in excess of $1,000,000.
(I) Maintenance of Property. The Borrower shall cause all property used
or useful in the conduct of its business or the business of any Subsidiary to
be maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Borrower may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 7.2(I) shall prevent the
Borrower from discontinuing the operation or maintenance of any of such
property if such discontinuance is, in the judgment of the Borrower, desirable
in
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the conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Agent or the Lenders.
(J) Environmental Compliance. The Borrower and its Subsidiaries shall
comply with all Environmental, Health or Safety Requirements of Law, except
where noncompliance will not have or is not reasonably likely to subject the
Borrower to liability in excess of $1,000,000.
(K) Use of Proceeds. The Borrower shall use the proceeds of the
Revolving Loans and the Term Loans to (i) facilitate the James River
Acquisition, (ii) repay existing Indebtedness, and (ii) provide funds for the
additional working capital needs and other general corporate purposes of the
Borrower. The Borrower shall use the proceeds of the Term Loans to (i)
facilitate the James River Acquisition, (ii) repay existing Indebtedness, and
(iii) pay the Transaction Costs. The Borrower will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Loans to purchase or carry any
"Margin Stock" or to make any Acquisition, other than the James River
Acquisition and any other Permitted Acquisition pursuant to Section 7.3(G).
(L) Separate Corporate Existence. The Borrower shall take all reasonable
steps (including, without limitation, all steps which the Agent may from time
to time reasonably request) to maintain its and its Subsidiaries' identity as
separate legal entities and to make it apparent to third parties that Borrower
and such Subsidiaries are each an entity with assets and liabilities distinct
from those of Holdings, Enterprises and any of their respective Affiliates
(other than the Borrower and its Subsidiaries) (each of Holdings, Enterprises
and such other Persons are referred to in this Section 7.2(L), as the
"PARENT"). Without limiting the generality of the foregoing, the Borrower
shall:
(i) require that all full-time employees of the Borrower and each
of its Subsidiaries identify themselves as such and not as employees of
the Parent;
(ii) compensate all employees, consultants, investment bankers,
accountants, lawyers and agents directly, from the Borrower's or such
Subsidiary's applicable bank accounts, for services provided to the
Borrower or such Subsidiary by such employees, consultants, investment
bankers and agents and, if any employee, consultant, investment banker or
agent of the Borrower or any of its Subsidiaries is also an employee,
consultant, investment banker or agent of the Parent, allocate the
compensation of such employee, consultant, investment banker or agent
between the Borrower or the Subsidiary, as applicable, and the Parent on
the basis of actual use of the services so rendered to the extent
practicable and, to the extent such allocation is not practical, on a
basis reasonably related to actual use of such services;
(iii) allocate all overhead expenses (including, without
limitation, telephone and other utility charges and lease and office
expenses) for items shared between the Borrower or any Subsidiary of the
Borrower and the Parent on the
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basis of actual use to the extent practicable and, to the extent such
allocation is not practicable, on a basis reasonably related to actual
use;
(iv) cause the Borrower and each Subsidiary of the Borrower to be
named as an insured on the insurance policy covering its property, or
enter into an agreement with the holder of such policy whereby in the
event of a loss in connection with such property, proceeds are paid to
the Borrower or such Subsidiary;
(v) maintain the Borrower's and its Subsidiaries' books and records
complete and separate from those of the Parent;
(vi) ensure that any of the Borrower's or the Parent's consolidated
financial statements or other public information with respect to the
Borrower and its Affiliates prepared on a consolidated basis contain
appropriate disclosures concerning the Borrower's separate existence;
(vii) not maintain bank accounts or other depository accounts to
which the Parent is an account party, into which the Parent makes
deposits or from which the Parent has the power to make withdrawals;
(viii) not permit the Parent to pay any of the Borrower's operating
expenses (except when paid and charged pursuant to an allocation based
upon actual use, to the extent practicable and, to the extent such
allocation is not practicable, on a basis reasonably related to actual
use); and
(ix) not pay dividends or make distributions, loans or other
advances to the Parent except to the extent duly authorized by its board
of directors and in accordance with applicable corporation law.
(M) Future Liens on Real Property. The Borrower shall, and shall cause
each of its Subsidiaries that is required to guarantee the Obligations to,
execute and deliver to the Agent, immediately upon its acquisition or leasing
of any real property after the Closing Date, a mortgage, deed of trust,
collateral assignment or other appropriate instrument evidencing a Lien upon
any such acquired property, lease or interest, to be in form and substance
reasonably acceptable to the Agent and subject only to such Liens as otherwise
shall be permitted by this Agreement. The foregoing provision shall apply to
the leasing of any real property only if (i) the term of such lease (without
regard to any extension thereof at then current market rent) is more than five
years, (ii) such real property consists of an operating plant or (iii) such
lease has a material value by reason of a purchase option, below-market rent or
otherwise.
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7.3 Negative Covenants.
(A) Indebtedness. Neither the Borrower nor any of its Subsidiaries shall
directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness, except:
(i) the Obligations;
(ii) Indebtedness incurred in connection with the Receivables
Purchase Documents;
(iii) Permitted Existing Indebtedness and Permitted Refinancing
Indebtedness;
(iv) Indebtedness evidenced by the Senior Subordinated Notes, the
Senior Notes and the Subordinated Notes;
(v) subordinated indebtedness the terms (including, without
limitation, those with respect to amount, maturity, amortization,
interest rate, premiums, fees, covenants, subordination, events of
default and remedies) of which are acceptable to the Required Lenders
when issued, but in each case not any increase in the principal amount
thereof and not any refinancing, modification, refunding or extension of
maturity thereof, in whole or in part, unless such refinancing,
modification, refunding or extension is not materially less favorable to
the Borrower, including, without limitation, with respect to amount,
maturity, amortization, interest rate, premiums, fees, covenants,
subordination, events of default and remedies (such Indebtedness being
referred to herein as "PERMITTED ADDITIONAL SUBORDINATED INDEBTEDNESS");
(vi) Indebtedness in respect of obligations secured by Customary
Permitted Liens;
(vii) Indebtedness constituting Contingent Obligations permitted by
Section 7.3(E);
(viii) Indebtedness arising from intercompany loans from the
Borrower to any Controlled Subsidiary or from any Subsidiary to the
Borrower or any Controlled Subsidiary, provided that if the Borrower is
the obligor on such Indebtedness, such Indebtedness shall be expressly
subordinate to the payment in full of the Secured Obligations;
(ix) guaranties by the Borrower of Indebtedness permitted to be
incurred by any Subsidiary or Indebtedness of any Person in which the
Borrower makes an Investment pursuant to Section 7.3(D)(viii);
(x) Indebtedness in respect of Hedging Obligations permitted under
Section 7.3(Q);
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(xi) secured or unsecured purchase money Indebtedness (including
Capitalized Leases) incurred by the Borrower or any of its Subsidiaries
after the Closing Date to finance the acquisition of assets used in the
business, if (1) at the time of such incurrence, no Default or Unmatured
Default has occurred and is continuing or would result from such
incurrence, (2) such Indebtedness has a scheduled maturity and is not due
on demand, (3) such Indebtedness does not exceed the lower of the fair
market value or the cost of the applicable fixed assets on the date
acquired, (4) such Indebtedness does not exceed $25,000,000 in the
aggregate outstanding at any time, and (5) any Lien securing such
Indebtedness is permitted under Section 7.3(C) (such Indebtedness being
referred to herein as "PERMITTED PURCHASE MONEY INDEBTEDNESS");
(xii) Indebtedness with respect to surety, appeal and performance
bonds obtained by the Borrower or any of its Subsidiaries in the ordinary
course of business;
(xiii) Indebtedness incurred by the Borrower to the seller in any
Permitted Acquisition as part of the consideration therefor, provided
that such Indebtedness is unsecured and does not exceed in any case 25%
of the total consideration paid in connection with such Permitted
Acquisition.
(xiv) Indebtedness in addition to that referred to elsewhere in this
Section 7.3(A) in an amount not to exceed $10,000,000 at any time; and
(xv) any other Indebtedness if, at the time such Indebtedness is
incurred, (1) no Default or Unmatured Default has occurred and is
continuing or would result from such incurrence and (2) the Borrower's
Fixed Charge Coverage Ratio, calculated on a pro forma basis, including
pro forma application of the proceeds of such Indebtedness, would be
greater than or equal to the ratio set forth below during the applicable
period:
<TABLE>
<CAPTION>
Period Ratio
--------------------- -------------
<S> <C>
Closing Date
through June 30, 1998 2.50 to 1
July 1, 1998
through June 30, 1999 2.75 to 1
July 1, 1999
and thereafter 3.00 to 1
</TABLE>
(B) Sales of Assets. Neither the Borrower nor any of its Subsidiaries
shall sell, assign, transfer, lease, convey or otherwise dispose of any
property, whether now owned
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<PAGE> 90
or hereafter acquired, or any income or profits therefrom, or enter into any
agreement to do so, except:
(i) sales of Inventory in the ordinary course of business;
(ii) Permitted Receivables Transfers;
(iii) the disposition in the ordinary course of business of
Equipment or other assets that are obsolete, excess or no longer useful
in the Borrower's business;
(iv) transfers of assets pursuant to the Tax Incentive Program,
provided that the aggregate value of such assets, calculated at the times
of such transfers, transferred on or after the Closing Date shall not
exceed $20,000,000;
(v) transfers of assets between the Borrower and any Controlled
Subsidiary or between Controlled Subsidiaries of the Borrower not
otherwise prohibited by this Agreement;
(vi) sales of the Target Assets;
(vii) transfers of assets pursuant to Investments permitted by
Section 7.3(D) and Restricted Payments permitted by Section 7.3(F); and
(viii) sales, assignments, transfers, leases, conveyances or other
dispositions of other assets, provided that any such transaction (a) is
for consideration consisting at least 80% of cash, (b) is for not less
than fair market value (as determined by the board of directors of the
Borrower in good faith, whose determination shall be conclusive evidence
thereof and shall be evidenced by a resolution of such board of directors
set forth in an Authorized Officer's certificate delivered to the Agent),
and (c) when combined with all such other transactions pursuant to this
clause (viii) (each such transaction being valued at book value) (i)
during the immediately preceding twelve-month period, represents the
disposition of not greater than ten percent (10.0%) of the Borrower's
Consolidated Assets at the end of the fiscal year immediately preceding
that in which such transaction is proposed to be entered into, and (ii)
during the period from the Closing Date to the date of such proposed
transaction, represents the disposition of not greater than twenty
percent (20.0%) of the Borrower's Consolidated Assets at the end of the
fiscal year immediately preceding that in which such transaction is
proposed to be entered into.
Not less than five (5) Business Days prior to the consummation of any
transaction permitted by clause (viii) above, the Borrower shall deliver to the
Agent a certificate of an Authorized Officer certifying compliance with the
requirements of clause (viii) and showing in reasonable detail the calculations
on which such certification is based.
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<PAGE> 91
(C) Liens. Neither the Borrower nor any of its Subsidiaries shall
directly or indirectly create, incur, assume or permit to exist any Lien on or
with respect to any of their respective property or assets except:
(i) Liens created by the Loan Documents or otherwise securing the
Secured Obligations;
(ii) Liens arising under the Receivables Purchase Documents;
(iii) Permitted Existing Liens;
(iv) Customary Permitted Liens;
(v) purchase money Liens (including the interest of a lessor under
a Capitalized Lease and Liens to which any property is subject at the
time of the Borrower's acquisition thereof) securing Permitted Purchase
Money Indebtedness; provided that such Liens shall not apply to any
property of the Borrower or its Subsidiaries other than that purchased or
subject to such Capitalized Lease; and
(vi) Liens securing other obligations not exceeding $5,000,000 in
the aggregate at any time outstanding.
In addition, neither the Borrower nor any of its Subsidiaries shall become a
party to any agreement, note, indenture or other instrument, or take any other
action, which would prohibit the creation of a Lien on any of its properties or
other assets in favor of the Agent for the benefit of itself and the Holders of
Secured Obligations, as additional collateral for the Obligations; provided
that any agreement, note, indenture or other instrument in connection with
Permitted Purchase Money Indebtedness (including Leases) may prohibit the
creation of a Lien in favor of the Agent for the benefit of itself and the
Holders of the Secured Obligations on the items of property obtained with the
proceeds of such Permitted Purchase Money Indebtedness.
(D) Investments. Other than Investments permitted pursuant to paragraph
(G) below, neither the Borrower nor any of its Subsidiaries shall directly or
indirectly make or own any Investment except:
(i) Investments in Cash Equivalents;
(ii) Permitted Existing Investments in an amount not greater than
the amount thereof on the Closing Date;
(iii) Investments in PRF required in connection with the Receivables
Purchase Documents;
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<PAGE> 92
(iv) Investments in trade receivables or received in connection
with the bankruptcy or reorganization of suppliers and customers and in
settlement (including settlements of litigation) of delinquent
obligations of, and other disputes with, customers and suppliers arising
in the ordinary course of business;
(v) Investments consisting of deposit accounts maintained by the
Borrower in connection with its cash management system, provided funds
deposited in such deposit accounts are regularly transferred to the
Borrower's concentration account maintained, as of the date of this
Agreement with SunTrust Bank, Atlanta, or such other concentration
account as is established with the consent of the Agent, deposit accounts
maintained by the Mexican Subsidiaries in the ordinary course of their
business and deposit accounts maintained by the Borrower and its
Subsidiaries pursuant to the Receivables Purchase Documents;
(vi) Investments consisting of non-cash consideration from a sale,
assignment, transfer, lease, conveyance or other disposition of property
permitted by Section 7.3(B);
(vii) Investments consisting of intercompany loans from any
Subsidiary to the Borrower or any other Subsidiary permitted by Section
7.3(A)(viii);
(viii) Investments which do not constitute Acquisitions, made in
cash and consisting of at least thirty-five percent (35.0%) of the
Equity Interests in any Person having similar lines of business to those
of the Borrower, provided that the total amount of all such Investments
made after the Closing Date (including the amount of all cash invested,
the fair market value of assets or property contributed and the principal
amount of any Indebtedness guaranteed in connection therewith, but
excluding, to the extent that any such Investment permitted hereunder
shall be sold for cash, the lesser of (x) the cash return of capital with
respect to such Investment (net of the cost of disposition) and (y) the
initial amount of such Investment) shall not exceed $25,000,000 during
the term of this Agreement, that such Investments shall not include any
Investment in any of the Borrower's Affiliates located in the United
Kingdom and that all such Equity Interests are pledged to the Agent as
Collateral; and
(ix) Investments in any Controlled Subsidiary of the Borrower;
(x) Investments constituting Permitted Acquisitions;
(xi) Restricted Investments permitted by Section 7.3(F)(v); and
(xii) Investments in addition to those referred to elsewhere in this
Section 7.3(D) in an amount not to exceed $5,000,000 in the aggregate at
any time outstanding;
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<PAGE> 93
provided, however, that the Investments described in clauses (viii), (x) and
(xi) above shall not be permitted if either a Default or an Unmatured Default
shall have occurred and be continuing on the date thereof or would result
therefrom.
(E) Contingent Obligations. Neither the Borrower nor any of its
Subsidiaries shall directly or indirectly create or become or be liable with
respect to any Contingent Obligation, except: (i) recourse obligations
resulting from endorsement of negotiable instruments for collection in the
ordinary course of business; (ii) Permitted Existing Contingent Obligations;
(iii) obligations, warranties, and indemnities, not relating to Indebtedness of
any Person, which have been or are undertaken or made in the ordinary course of
business and not for the benefit of or in favor of an Affiliate of the Borrower
or such Subsidiary; (iv) Contingent Obligations arising under the Transaction
Documents; (v) guaranties of Indebtedness permitted by Section 7.3(A); (vi)
additional Contingent Obligations which do not exceed $5,000,000 in the
aggregate at any time; and (vii) Contingent Obligations with respect to surety,
appeal and performance bonds obtained by the Borrower or any Subsidiary in the
ordinary course of business.
(F) Restricted Payments. Neither the Borrower nor any of its
Subsidiaries shall declare or make any Restricted Payment, except:
(i) the defeasance, redemption or repurchase of any Indebtedness
with the Net Cash Proceeds of Permitted Refinancing Indebtedness;
(ii) mandatory payments of interest, principal or premium, if any,
due on the Indebtedness in accordance with mandatory redemption or
repayment provisions in effect with respect to such Indebtedness as of
the Closing Date, unless in each case such payments are prohibited by the
terms of such Indebtedness or the subordination provisions applicable
thereto;
(iii) the payment of dividends to Enterprises to pay administrative
expenses of Enterprises and/or Holdings in an aggregate amount not to
exceed $200,000 in any twelve-month period;
(iv) in connection with the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the
Borrower owned by any member of the Borrower's management, pursuant to a
management equity subscription agreement or stock option agreement in
effect on the Closing Date or entered into after the Closing Date with
members of the management of any Person acquired after the Closing Date,
or the repurchase of Equity Interests of the Borrower or any Subsidiary
of the Borrower held by employees, former employees, directors or former
directors pursuant to the terms of agreements (including employment
agreements) approved by the Borrower's board of directors, provided, that
the aggregate purchase price of all such repurchased, redeemed, acquired
or retired Equity Interests shall not exceed $3,000,000 during any
twelve-month period or $10,000,000 in the aggregate since the Closing
Date; and
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<PAGE> 94
(v) additional Restricted Payments (including Restricted
Investments) which do not exceed, for the period commencing with the
Borrower's fiscal quarter ending September 28, 1996, and ending on the
last day of the last quarter ending prior to such Restricted Payment, the
sum of (a) fifty percent (50.0%) of Net Income for such period (or, if
Net Income for such period is a deficit, less 100% of such deficit), (b)
the aggregate Net Cash Proceeds from the sale or issuance of Equity
Interests (other than Disqualified Stock) of the Borrower for such
period, (c) to the extent that any Restricted Investment permitted
hereunder and made after the Closing Date shall be sold for cash during
such period, the lesser of (x) the cash return of capital with respect to
such Restricted Investment (net of the cost of disposition) and (y) the
initial amount of such Restricted Investment, and (d) $10,000,000;
provided, however, that the Restricted Payments described in clause (v) above
shall not be permitted (1) if either a Default or an Unmatured Default shall
have occurred and be continuing at the date of declaration or payment thereof
or would result therefrom, (2) unless, after giving effect to such Restricted
Payment, the Borrower could incur $1 of additional Indebtedness pursuant to
Section 7.3(A)(xv), or (3) if such Restricted Payment constitutes an Investment
in any of the Borrower's Affiliates located in the United Kingdom.
(G) Conduct of Business; Subsidiaries; Acquisitions. (i) Neither the
Borrower nor any of its Subsidiaries shall engage in any business other than
the businesses engaged in by the Borrower on the date hereof and any business
or activities which are substantially similar, related or incidental thereto.
IHC shall not, either directly or indirectly, engage in any operating business
enterprise other than the operation of the Elgin, Illinois plant (effected
through the Borrower for the benefit of IHC), incur any Indebtedness or other
liabilities other than pursuant to the IHC Agreements and the Tax Allocation
Agreement, or own any real or personal property other than the IHC Assets.
(ii) The Borrower may create, acquire and/or capitalize any Subsidiary (a
"NEW SUBSIDIARY") after the date hereof pursuant to any transaction that is
permitted by or not otherwise prohibited by this Agreement, provided that (1)
the assets of all of the Borrower's New Subsidiaries shall at no time exceed in
the aggregate ten percent (10.0%) of the Borrower's Consolidated Assets or
constitute assets that in the aggregate contribute more than ten percent
(10.0%) of the Borrower's EBITDA, (2) each New Subsidiary shall execute a
guaranty of the Obligations and grant to the Agent, for the benefit of Holders
of Secured Obligations, Liens on all of its assets, pursuant to documentation
in form and substance satisfactory to the Agent, and (3) all of the Equity
Interests in each New Subsidiary owned by the Borrower or any other Subsidiary
shall be pledged to the Agent, for the benefit of Holders of Secured
Obligations, pursuant to documentation in form and substance satisfactory to
the Agent.
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<PAGE> 95
(iii) The Borrower shall not make any Acquisitions, other than the James
River Acquisition and other Acquisitions meeting the following requirements
(each such Acquisition constituting a "PERMITTED ACQUISITION"):
(1) no Default or Unmatured Default shall have occurred and be
continuing or would result from such Acquisition or the incurrence of any
Indebtedness in connection therewith;
(2) in the case of an Acquisition of Equity Interests of an entity,
such Acquisition shall be of at least ninety percent (90%) of the Equity
Interests of such entity;
(3) the businesses being acquired shall be substantially similar,
related or incidental to the businesses or activities engaged in by the
Borrower on the Closing Date, but shall not, in any event, constitute an
Acquisition of any of the Borrower's Affiliates in the United Kingdom;
(4) the aggregate purchase price of all Acquisitions made (a) from
the Closing Date until the first anniversary thereof shall not exceed
$10,000,000, and (b) from the first anniversary of the Closing Date until
the second anniversary of the Closing Date shall not exceed $10,000,000;
and
(5) from and after the second anniversary of the Closing Date, prior
to each such Acquisition, the Borrower shall deliver to the Agent and the
Lenders a certificate from one of the Authorized Officers, demonstrating
to the reasonable satisfaction of the Agent and the Required Lenders that
after giving effect to such Acquisition and the incurrence of any
Indebtedness permitted by Section 7.3(A) in connection therewith, on a
pro forma basis using historical audited and reviewed unaudited financial
statements obtained from the seller, broken down by fiscal quarter in the
Borrower's reasonable judgment, as if the Acquisition and such incurrence
of Indebtedness had occurred on the first day of the twelve-month period
ending on the last day of the Borrower's most recently completed fiscal
quarter, the Borrower would have had a Fixed Charge Coverage Ratio for
such four fiscal quarters of greater than 2.75 to 1.0, and a Leverage
Ratio for such four fiscal quarters of less than 3.00 to 1.0.
(H) Transactions with Shareholders and Affiliates. Neither the Borrower
nor any of its Subsidiaries shall directly or indirectly (i) except as
permitted in Section 7.3(F), pay any management fees or other similar fees or
compensation to Enterprises, Holdings, Management or any other holder or
holders of the Borrower's, Enterprises' or Holdings' equity securities, other
than wages, salaries, compensation arrangements and bonuses of employees who
are also stockholders of the Borrower in the ordinary course and consistent
with past practices or (ii) 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, but excluding transactions described
in clause (i) above) with any
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<PAGE> 96
holder or holders of any of the Equity Interests of Holdings, Enterprises or
the Borrower, or with any Affiliate of the Borrower which is not its
Subsidiary, on terms that are less favorable to the Borrower or any of its
Subsidiaries, as applicable, than those that might be obtained in an arm's
length transaction at the time from Persons who are not such a holder or
Affiliate, except for (a) Permitted Receivables Transfers, (b) transactions
pursuant to the Tax Allocation Agreement, and (c) Restricted Payments permitted
by Section 7.3(F).
(I) Restriction on Fundamental Changes. Neither the Borrower nor any of
its Subsidiaries shall enter into any merger or consolidation, or liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of the Borrower's or any such
Subsidiary's business or property, whether now or hereafter acquired, except
(a) transactions permitted under Sections 7.3(B) or 7.3(G) and (b) the merger
of any Subsidiary into the Borrower or into a Controlled Subsidiary.
(J) Sales and Leasebacks. Neither the Borrower nor any of its
Subsidiaries shall become liable, directly, by assumption or by Contingent
Obligation, with respect to any lease, whether an operating lease or a
Capitalized Lease, of any property (whether real or personal or mixed) (i)
which it or one of its Subsidiaries sold or transferred or is to sell or
transfer to any other Person, or (ii) which it or one of its Subsidiaries
intends to use for substantially the same purposes as any other property which
has been or is to be sold or transferred by it or one of its Subsidiaries to
any other Person in connection with such lease, unless in either case the sale
involved is not prohibited under Section 7.3(B) and the lease involved is not
prohibited under Section 7.3(A). Transactions or payments pursuant to the Tax
Incentive Program shall not be considered sale and leaseback transactions
hereunder.
(K) Margin Regulations. Neither the Borrower nor any of its
Subsidiaries, shall use all or any portion of the proceeds of any credit
extended under this Agreement to purchase or carry Margin Stock.
(L) ERISA. To the extent that any of the following actions or omissions,
individually or in the aggregate, could reasonably be expected to subject the
Borrower or any member of the Controlled Group to liability in excess of
$1,000,000, the Borrower shall not:
(i) engage, or permit any of its Subsidiaries to engage, in any
prohibited transaction described in Sections 406 of ERISA or 4975 of the
Code for which a statutory or class exemption is not available or a
private exemption has not been previously obtained from the DOL;
(ii) permit to exist any accumulated funding deficiency (as defined
in Sections 302 of ERISA and 412 of the Code) with respect to any Benefit
Plan, whether or not waived;
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<PAGE> 97
(iii) fail, or permit any Controlled Group member to fail, to pay
timely required contributions or annual installments due with respect to
any waived funding deficiency to any Benefit Plan;
(iv) terminate, or permit any Controlled Group member to terminate,
any Benefit Plan which would result in any liability of the Borrower or
any Controlled Group member under Title IV of ERISA;
(v) fail to make any contribution or payment to any Multiemployer
Plan which the Borrower or any Controlled Group member may be required to
make under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto;
(vi) fail, or permit any Controlled Group member to fail, to pay
any required installment or any other payment required under Section 412
of the Code on or before the due date for such installment or other
payment; or
(vii) amend, or permit any Controlled Group member to amend, a Plan
resulting in an increase in current liability for the plan year such that
the Borrower or any Controlled Group member is required to provide
security to such Plan under Section 401(a)(29) of the Code.
(M) Issuance of Disqualified Stock. Neither the Borrower nor any of its
Subsidiaries shall issue any Disqualified Stock other than (i) the issuance of
Disqualified Stock having a liquidation preference in an aggregate amount not
in excess of the principal amount of Indebtedness that the Borrower and its
Subsidiaries could incur on the date of such issuance pursuant to Section
7.3(A)(iv) or (v) or (ii) pursuant to an exchange or conversion of then
outstanding Indebtedness of the Borrower or any of its Subsidiaries for or into
Disqualified Stock, provided that, to the extent that the aggregate amount of
the liquidation preference of such Disqualified Stock exceeds the principal
amount of the Indebtedness so exchanged or converted, such Disqualified Stock
could be issued pursuant to clause (i) above. All such issued and outstanding
Disqualified Stock shall be treated as Indebtedness for all purposes of this
Agreement (and as funded Indebtedness for purposes of Section 7.1(G)), and the
amount of such deemed Indebtedness shall be the aggregate amount of the
liquidation preference of such Disqualified Stock. The Borrower shall not
permit any Subsidiary to issue any shares of preferred stock.
(N) Corporate Documents. Neither the Borrower nor any of its
Subsidiaries shall amend, modify or otherwise change any of the terms or
provisions in any of their respective constituent documents or the Tax
Allocation Agreement as in effect on the date hereof in any manner materially
adverse to the ability of the Borrower or any of its Subsidiaries to perform
their respective obligations under the Loan Documents, without the prior
written consent of the Required Lenders.
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<PAGE> 98
(O) Fiscal Year. Neither the Borrower nor any of its consolidated
Subsidiaries shall change its fiscal year for accounting or tax purposes from a
period consisting of the 12-month period ending on the last Saturday of June of
each calendar year.
(P) Subsidiary Covenants. Except as required in connection with the
Receivables Purchase Documents, the Borrower will not, and will not permit any
Subsidiary to, create or otherwise cause to become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary to pay
dividends or make any other distribution on its stock, or make any other
Restricted Payment, pay any Indebtedness or other Obligation owed to the
Borrower or any other Subsidiary, make loans or advances or other Investments
in the Borrower or any other Subsidiary, or sell, transfer or otherwise convey
any of its property to the Borrower or any other Subsidiary.
(Q) Hedging Obligations. The Borrower shall not and shall not permit any
of its Subsidiaries to enter into any interest rate, commodity or foreign
currency exchange, swap, collar, cap or similar agreements evidencing Hedging
Obligations, other than interest rate, foreign currency or commodity exchange,
swap, collar, cap or similar agreements entered into by the Borrower pursuant
to which the Borrower has hedged its actual interest rate, foreign currency or
commodity exposure. Such permitted hedging agreements entered into by the
Borrower and any Lender or any affiliate of any Lender to hedge floating
interest rate risk are sometimes referred to herein as "INTEREST RATE
AGREEMENTS."
(R) Other Indebtedness. The Borrower shall not amend, modify or
supplement, or permit any Subsidiary to amend, modify or supplement (or consent
to any amendment, modification or supplement of), any document, agreement or
instrument evidencing the Senior Notes or any Subordinated Indebtedness (or any
replacements, substitutions or renewals thereof) or pursuant to which the
Senior Notes or any Subordinated Indebtedness is issued where such amendment,
modification or supplement provides for the following or which has any of the
following effects:
(i) increases the overall principal amount of any such Indebtedness or
increases the amount of any single scheduled installment of principal or
interest;
(ii) shortens or accelerates the date upon which any installment of
principal or interest becomes due or adds any additional mandatory redemption
provisions;
(iii) shortens the final maturity date of such Indebtedness or
otherwise accelerates the amortization schedule with respect to such
Indebtedness;
(iv) increases the rate of interest accruing on such Indebtedness;
(v) provides for the payment of additional fees or increases existing
fees;
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<PAGE> 99
(vi) amends or modifies any financial or negative covenant (or covenant
which prohibits or restricts the Borrower or a Subsidiary of the Borrower from
taking certain actions) in a manner which is more onerous or more restrictive
to the Borrower (or any Subsidiary of the Borrower) or which is otherwise
materially adverse to the Borrower and/or the Lenders or, in the case of adding
covenants, which places additional restrictions on the Borrower (or a
Subsidiary of the Borrower) or which requires the Borrower or any such
Subsidiary to comply with more restrictive financial ratios or which requires
the Borrower to better its financial performance from that set forth in the
existing financial covenants;
(vii) amends, modifies or adds any affirmative covenant in a manner
which, when taken as a whole, is materially adverse to the Borrower and/or the
Lenders;
(viii) in the case of any Subordinated Indebtedness, amends, modifies
or supplements the subordination provisions thereof; or
(ix) in the case of the Subordinated Notes or the Subordinated Note
Agreement, amends or modifies the limitations on transfer provided therein.
(S) Change of Deposit Accounts. The Borrower shall not, and shall not
permit any Subsidiary (other than PRF) to, establish or maintain any deposit
account with any bank or other financial institution other than those which
have entered into a Collection Account Agreement in form and substance
acceptable to the Agent, except the deposit accounts with Fleet Bank described
on Schedule 4 to the Security Agreement.
(T) Amendment of Receivables Purchase Documents. The Borrower shall not,
and shall not permit any of its Subsidiaries to, agree to or enter into any
amendment, restatement or other modification of the Receivables Purchase
Documents, or substitute or replace the Receivables Purchase Documents with
another receivables securitization facility, that would (i) increase the
maximum amount of Indebtedness permitted to be incurred thereunder, unless the
Borrower concurrently reduces the Aggregate Revolving Loan Commitment pursuant
to Section 2.6 by an amount equal to or greater than the amount of such
increase; (ii) accelerate any scheduled amortization date; (iii) increase the
recourse obligations of the Borrower or any of its Subsidiaries (other than
PRF) in any material respect; (iv) provide for an "Event of Default,"
"Termination Event," "Early Amortization Event," "Servicer Default" or other
similar event upon the occurrence of a Default or Unmatured Default hereunder;
(v) impose net worth covenants for PRF that are materially more stringent than
those in existence on the Closing Date; (vi) materially decrease the cash
consideration to be paid to PRF or the Borrower on account of any Permitted
Receivables Transfers; or (vii) materially increase the amount of discount,
yield or interest payable thereunder.
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<PAGE> 100
7.4 Financial Covenants. The Borrower shall comply with the following:
(A) Fixed Charge Coverage Ratio. The Borrower shall maintain a ratio
("FIXED CHARGE COVERAGE RATIO") of EBITDA to Interest Expense of at least:
(i) 1.50 to 1.00 for each fiscal quarter for the period commencing
with the fiscal quarter ending September 28, 1996 through the fiscal
quarter ending March 29, 1997;
(ii) 1.75 to 1.00 for each fiscal quarter for the period commencing
with the fiscal quarter ending June 28, 1997 through the fiscal quarter
ending March 28, 1998;
(iii) 2.00 to 1.00 for each fiscal quarter for the period commencing
with the fiscal quarter ending June 27, 1998 through the fiscal quarter
ending March 27, 1999;
(iv) 2.25 to 1.00 for each fiscal quarter for the period commencing
with the fiscal quarter ending June 26, 1999 through the fiscal quarter
ending March 25, 2000;
(v) 2.50 to 1.00 for each fiscal quarter for the period commencing
with the fiscal quarter ending June 24, 2000 through the fiscal quarter
ending March 24, 2001; and
(vi) 2.75 to 1.00 for each fiscal quarter thereafter until the
Termination Date.
In each case the Fixed Charge Coverage Ratio shall be determined as of the last
day of each fiscal quarter for the four-quarter period ending on such day,
calculated, with respect to Permitted Acquisitions, on a pro forma basis using
historical audited and reviewed unaudited financial statements obtained from
the seller, broken down by fiscal quarter in the Borrower's reasonable
judgment.
(B) Total Debt to EBITDA Ratio. The Borrower shall not permit the ratio
(the "LEVERAGE RATIO") of Total Debt to EBITDA to be greater than the ratio set
forth below under the column entitled "Default Ratio" at the end of the fiscal
quarter ending on the corresponding date set forth below:
<TABLE>
<CAPTION>
QUARTER ENDING DEFAULT RATIO TRIGGER RATIO
------------------ ---------------- -----------------
<S> <C> <C>
September 28, 1996 6.50 to 1.0
December 28, 1996 6.25 to 1.0
March 29, 1997 6.00 to 1.0
June 28, 1997 5.25 to 1.0 4.75 to 1.0
</TABLE>
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September 27, 1997 5.25 to 1.0 4.75 to 1.0
December 27, 1997 5.25 to 1.0 4.75 to 1.0
March 28, 1998 5.25 to 1.0 4.75 to 1.0
June 27, 1998 4.50 to 1.0 4.00 to 1.0
September 26, 1998 4.50 to 1.0 4.00 to 1.0
December 26, 1998 4.50 to 1.0 4.00 to 1.0
March 27, 1999 4.50 to 1.0 4.00 to 1.0
June 26, 1999 3.75 to 1.0 3.25 to 1.0
September 25, 1999 3.75 to 1.0 3.25 to 1.0
December 25, 1999 3.75 to 1.0 3.25 to 1.0
March 25, 2000 3.75 to 1.0 3.25 to 1.0
June 24, 2000 3.00 to 1.0 2.50 to 1.0
September 23, 2000 3.00 to 1.0 2.50 to 1.0
December 23, 2000 3.00 to 1.0 2.50 to 1.0
March 24, 2001 3.00 to 1.0 2.50 to 1.0
June 30, 2001
and each quarter
thereafter 2.50 to 1.0
In the event that the Leverage Ratio at the end of any fiscal quarter ending
after March 29, 1997 shall be greater than the ratio set forth above under the
column entitled "Trigger Ratio" for such fiscal quarter, the Required Lenders
shall have the right to require that IHC (i) execute a guaranty of the
Obligations in form and substance satisfactory to the Required Lenders, and
(ii) grant to the Agent, for the benefit of the Holders of Secured Obligations,
Liens on all of the IHC Assets, pursuant to documentation in form and substance
satisfactory to the Required Lenders. If, upon such demand by the Required
Lenders, the Borrower shall elect to merge IHC into the Borrower, such Liens
shall thereupon be granted by the Borrower. The Leverage Ratio shall be
calculated, in each case, determined as of the last day of each fiscal quarter
based upon (a) for Total Debt, Total Debt as of the last day of each such
fiscal quarter; and (b) for EBITDA, the actual amount for the four-quarter
period ending on such day, calculated, with respect to Permitted Acquisitions,
on a pro forma basis using historical audited and reviewed unaudited financial
statements obtained from the seller, broken down by fiscal quarter in the
Borrower's reasonable judgment.
(C) Capital Expenditures. The Borrower will not, nor will it permit any
Subsidiary to, expend, or be committed to expend, for Capital Expenditures
during the following periods, on a non-cumulative basis except as provided
herein, in the aggregate for the Borrower and its Subsidiaries, in excess of:
(i) $45,000,000 for the period from the Closing Date through June
28, 1997;
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(ii) $46,000,000 for the period from June 29, 1997 through June 27,
1998;
(iii) $47,000,000 for the period from June 28, 1998 through June 26,
1999;
(iv) $48,000,000 for the period from June 27, 1999 through June 24,
2000;
(v) $49,000,000 for the period from June 25, 2000 through June 30,
2001; and
(vi) $50,000,000 for the period from July 1, 2001 through June 29,
2002.
In the event that for any of the foregoing periods the actual amount of Capital
Expenditures for the Borrower and its Subsidiaries shall be less than the
applicable limitation amount set forth above (plus any increase therein
pursuant to this sentence), an amount (the "CARRY-OVER AMOUNT") equal to
seventy-five percent (75.0%) of (a) permitted Capital Expenditures minus (b)
actual amount of Capital Expenditures for such period, shall be added to the
permitted Capital Expenditures for the next succeeding fiscal year; provided,
that the Carry-Over Amount shall not exceed $50,000,000 in any fiscal year.
ARTICLE VIII: DEFAULTS
8.1 Defaults. Each of the following occurrences shall constitute a
Default under this Agreement:
(a) Failure to Make Payments When Due. The Borrower shall (i) fail to
pay when due any of the Obligations consisting of principal with respect to the
Loans or (ii) shall fail to pay within five (5) Business Days of the date when
due any of the other Obligations under this Agreement or the other Loan
Documents.
(b) Breach of Certain Covenants. The Borrower shall fail duly and
punctually to perform or observe any agreement, covenant or obligation binding
on the Borrower under:
(i) Section 7.1(C) through and including 7.1(J), 7.2(B) or 7.2(F)
and such failure shall continue unremedied for fifteen (15) days;
(ii) Sections 7.1(A), 7.1(B), 7.2(A), 7.2(C), 7.2(D), 7.2(E) and
7.2(G) through and including 7.2(L) and such failure shall continue
unremedied for five (5) Business Days; or
(iii) Section 7.3 or 7.4.
(c) Breach of Representation or Warranty. Any representation or warranty
made or deemed made by the Borrower to the Agent or any Lender herein or by
Holdings,
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Enterprises, the Borrower or any of its Subsidiaries in any of the other Loan
Documents or in any statement or certificate at any time given by any such
Person pursuant to any of the Loan Documents shall be false or misleading in
any material respect on the date as of which made (or deemed made).
(d) Other Defaults. The Borrower shall default in the performance of or
compliance with any term contained in this Agreement (other than as covered by
paragraphs (a), (b) or (c) of this Section 8.1), or the Borrower or any of its
Subsidiaries shall default in the performance of or compliance with any term
contained in any of the other Loan Documents, and such default shall continue
for thirty (30) days after the earlier of (i) notice from the Agent or (ii) the
date on which any member of Management shall first have actual knowledge
thereof.
(e) Default as to Other Indebtedness. The Borrower or any of its
Subsidiaries shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with respect
to any Indebtedness (other than the Obligations and the Indebtedness under the
Receivables Purchase Documents) the aggregate outstanding principal amount of
which Indebtedness is in excess of $5,000,000; or any breach, default or event
of default shall occur, or any other condition shall exist under any
instrument, agreement or indenture pertaining to any such Indebtedness, if the
effect thereof is to cause an acceleration, mandatory redemption, a requirement
that the Borrower offer to purchase such Indebtedness or other required
repurchase of such Indebtedness, or permit the holder(s) of such Indebtedness
to accelerate the maturity of any such Indebtedness or require a redemption or
other repurchase of such Indebtedness; or any such Indebtedness shall be
otherwise declared to be due and payable (by acceleration or otherwise) or
required to be prepaid, redeemed or otherwise repurchased by the Borrower or
any of its Subsidiaries (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case shall be commenced against Holdings,
Enterprises, the Borrower or any of the Borrower's Subsidiaries and the
petition shall not be dismissed, stayed, bonded or discharged within
sixty (60) days after commencement of the case; or a court having
jurisdiction in the premises shall enter a decree or order for relief in
respect of Holdings, Enterprises, the Borrower or any of the Borrower's
Subsidiaries in an involuntary case, under any applicable bankruptcy,
insolvency or other similar law now or hereinafter in effect; or any
other similar relief shall be granted under any applicable federal,
state, local or foreign law.
(ii) 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 Holdings,
Enterprises, the Borrower or any of the Borrower's Subsidiaries or over
all or a substantial part of the property of
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Holdings, Enterprises, the Borrower or any of the Borrower's
Subsidiaries shall be entered; or an interim receiver, trustee or other
custodian of Holdings, Enterprises, the Borrower or any of the Borrower's
Subsidiaries or of all or a substantial part of the property of Holdings,
Enterprises, the Borrower or any of the Borrower's Subsidiaries shall be
appointed or a warrant of attachment, execution or similar process
against any substantial part of the property of Holdings, Enterprises,
the Borrower or any of the Borrower's Subsidiaries shall be issued and
any such event shall not be stayed, dismissed, bonded or discharged
within sixty (60) days after entry, appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. Holdings,
Enterprises, the Borrower or any of the Borrower's Subsidiaries shall (i)
commence a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (ii) 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, (iii) consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property, (iv) make any assignment for the benefit of
creditors or (v) take any corporate action to authorize any of the foregoing.
(h) Judgments and Attachments. Any money judgment(s) (other than a money
judgment covered by insurance as to which the insurance company has not
disclaimed or reserved the right to disclaim coverage), writ or warrant of
attachment, or similar process against the Borrower or any of its Subsidiaries
or any of their respective assets involving in any single case or in the
aggregate an amount in excess of $5,000,000 is or are entered and shall remain
undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days
or in any event later than fifteen (15) days prior to the date of any proposed
sale thereunder.
(i) Dissolution. Any order, judgment or decree shall be entered against
the Borrower decreeing its involuntary dissolution or split up and such order
shall remain undischarged and unstayed for a period in excess of sixty (60)
days; or the Borrower shall otherwise dissolve or cease to exist except as
specifically permitted by this Agreement.
(j) Loan Documents; Failure of Security. At any time, for any reason,
(i) any Loan Document as a whole that materially affects the ability of the
Agent, or any of the Lenders to enforce the Obligations or enforce their rights
against the Collateral ceases to be in full force and effect or the Borrower or
any of the Borrower's Subsidiaries party thereto seeks to repudiate its
obligations thereunder and the Liens intended to be created thereby are, or the
Borrower or any such Subsidiary seeks to render such Liens, invalid or
unperfected, or (ii) any Lien on Collateral in favor of the Agent contemplated
by the Loan Documents shall, at any time, for any reason, be invalidated or
otherwise cease to be in full force and effect, or such Lien shall not have the
priority contemplated by this Agreement or the Loan Documents.
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(k) Termination Event. Any Termination Event occurs which could
reasonably be expected to subject the Borrower to liability in excess of
$5,000,000.
(l) Waiver of Minimum Funding Standard. The plan administrator of any
Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code and the substantial business
hardship upon which the application for the waiver is based could reasonably be
expected to subject either the Borrower or any Controlled Group member to
liability in excess of $5,000,000.
(m) Change of Control. A Change of Control shall occur.
(n) Interest Rate Agreements. Nonpayment by the Borrower of any
obligation under any Interest Rate Agreement or the breach by the Borrower of
any term, provision or condition contained in any such Interest Rate Agreement.
(o) Environmental Matters. The Borrower or any of its Subsidiaries shall
be the subject of any proceeding or investigation pertaining to (i) the Release
by the Borrower or any of its Subsidiaries of any Contaminant into the
environment, (ii) the liability of the Borrower or any of its Subsidiaries
arising from the Release by any other Person of any Contaminant into the
environment, or (iii) any violation of any Environmental, Health or Safety
Requirements of Law by the Borrower or any of its Subsidiaries, which, in any
case, has subjected or is reasonably likely to subject the Borrower to
liability in excess of $5,000,000.
(p) Guarantor Default or Revocation. There shall occur a default under
any of the Parent Agreements or Enterprises or Holdings shall terminate or
revoke any of their respective obligations thereunder, or any other guarantor
of the Obligations shall terminate or revoke any of its obligations under the
applicable guarantee agreement or breach any of the terms of such guarantee
agreement.
(q) Failure of Subordination. The subordination provisions of the
documents and instruments evidencing any Subordinated Indebtedness shall, at
any time, be invalidated or otherwise cease to be in full force and effect.
(r) Receivables Purchase Documents. An "Event of Default," "Termination
Event," "Early Amortization Event," "Servicer Default" or similar event shall
occur resulting in the termination of purchases and/or funding under the
Receivables Purchase Documents, or the Borrower or a Subsidiary of the Borrower
shall cease to act as "Servicer" thereunder.
A Default shall be deemed "continuing" until cured or until waived in
writing in accordance with Section 9.3.
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ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS,
AMENDMENTS AND REMEDIES
9.1 Termination of Commitments; Acceleration. If any Default described
in Section 8.1(f) or 8.1(g) occurs with respect to the Borrower, the
obligations of the Lenders to make Loans hereunder and the obligation of the
Agent to issue Letters of Credit hereunder shall automatically terminate and
the Obligations shall immediately become due and payable without any election
or action on the part of the Agent or any Lender. If any other Default occurs,
the Required Lenders may terminate or suspend the obligations of the Lenders to
make Loans hereunder and the obligation of the Agent to issue Letters of Credit
hereunder, or declare the Obligations to be due and payable, or both, whereupon
the Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower expressly
waives.
9.2 Defaulting Lender. In the event that any Lender fails to fund its
Pro Rata Share of any Advance requested or deemed requested by the Borrower,
which such Lender is obligated to fund under the terms of this Agreement (the
funded portion of such Advance being hereinafter referred to as a "NON PRO RATA
LOAN"), until the earlier of such Lender's cure of such failure and the
termination of the Revolving Loan Commitments, the proceeds of all amounts
thereafter repaid to the Agent by the Borrower and otherwise required to be
applied to such Lender's share of all other Obligations pursuant to the terms
of this Agreement shall be advanced to the Borrower by the Agent on behalf of
such Lender to cure, in full or in part, such failure by such Lender, but shall
nevertheless be deemed to have been paid to such Lender in satisfaction of such
other Obligations. Notwithstanding anything in this Agreement to the contrary:
(i) the foregoing provisions of this Section 9.2 shall apply
only with respect to the proceeds of payments of Obligations and shall
not affect the conversion or continuation of Loans pursuant to Section
2.10;
(ii) any such Lender shall be deemed to have cured its failure
to fund its Pro Rata Share of any Advance at such time, within five (5)
Business Days after such failure, as an amount equal to such Lender's
original Pro Rata Share of the requested principal portion of such
Advance is fully funded to the Borrower, whether made by such Lender
itself or by operation of the terms of this Section 9.2, and whether or
not the Non Pro Rata Loan with respect thereto has been repaid,
converted or continued;
(iii) amounts advanced to the Borrower to cure, in full or in
part, any such Lender's failure to fund its Pro Rata Share of any
Advance ("CURE LOANS") shall bear interest at the rate applicable to
Floating Rate Loans in effect from time to time, and for all other
purposes of this Agreement shall be treated as if they were Floating
Rate Loans;
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(iv) regardless of whether or not a Default has occurred or is
continuing, and notwithstanding the instructions of the Borrower as to
its desired application, all repayments of principal which, in
accordance with the other terms of this Agreement, would be applied to
the outstanding Floating Rate Loans shall be applied first, ratably to
all Floating Rate Loans constituting Non Pro Rata Loans, second,
ratably to Floating Rate Loans other than those constituting Non Pro
Rata Loans or Cure Loans and, third, ratably to Floating Rate Loans
constituting Cure Loans;
(v) for so long as and until the earlier of any such Lender's
cure of the failure to fund its Pro Rata Share of any Advance and the
termination of the Revolving Loan Commitments, the term "Required
Lenders" for purposes of this Agreement shall mean Lenders (excluding
all Lenders whose failure to fund their respective Pro Rata Shares of
such Advance have not been so cured) whose Pro Rata Shares represent at
least sixty-six and two thirds percent (66-2/3%) of the aggregate Pro
Rata Shares of such Lenders; and
(vi) for so long as and until any such Lender's failure to fund
its Pro Rata Share of any Advance is cured in accordance with Section
9.2(ii), (A) such Lender shall not be entitled to any commitment fees
with respect to its Revolving Loan Commitment and (B) such Lender shall
not be entitled to any letter of credit fees, which commitment fees and
letter of credit fees shall accrue in favor of the Lenders which have
funded their respective Pro Rata Share of such requested Advance, shall
be allocated among such performing Lenders ratably based upon their
relative Revolving Loan Commitments, and shall be calculated based upon
the average amount by which the aggregate Revolving Loan Commitments of
such performing Lenders exceeds the sum of (I) the outstanding
principal amount of the Loans owing to such performing Lenders, plus
(II) the outstanding Reimbursement Obligations owing to such performing
Lenders, plus (III) the aggregate participation interests of such
performing Lenders arising pursuant to Section 3.6 with respect to
undrawn and outstanding Letters of Credit.
9.3 Amendments. Subject to the provisions of this Article IX, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving
any Default hereunder; provided, however, that no such supplemental agreement
shall, without the consent of each Lender affected thereby:
(i) Postpone or extend the Revolving Loan Termination Date or
Term Loan Termination Date or any other date fixed for any payment of
principal of, or
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interest on, the Loans, the Reimbursement Obligations or any fees or
other amounts payable to such Lender (except with respect to (a) any
modifications of the provisions relating to prepayments of Loans and
other Obligations or (b) a waiver of the application of the default
rate of interest pursuant to Section 2.11 hereof).
(ii) Reduce the principal amount of any Loans or L/C
Obligations or the rate of interest thereon or any fees or other
amounts payable to such Lender.
(iii) Reduce the percentage specified in the definition of
Required Lenders or any other percentage of Lenders specified to be the
applicable percentage in this Agreement to act on specified matters.
(iv) Increase the amount of the Revolving Loan Commitment
and/or Term Loan Commitment of any Lender hereunder.
(v) Permit the Borrower to assign its rights under this
Agreement.
(vi) Amend this Section 9.3.
(vii) Release any of the Parent Agreements or all or
substantially all of the Collateral.
No amendment of any provision of this Agreement relating to (a) the Agent shall
be effective without the written consent of the Agent or (b) Swing Line Loans
shall be effective without the written consent of the Swing Line Bank. The
Agent may waive payment of the fee required under Section 13.3(B) without
obtaining the consent of any of the Lenders.
9.4 Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan or the issuance of a Letter of Credit notwithstanding the
existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Loan or issuance of such Letter of Credit shall
not constitute any waiver or acquiescence. Any single or partial exercise of
any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to Section 9.3, and
then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Agent and the Lenders until the Obligations have been
paid in full.
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ARTICLE X: GENERAL PROVISIONS
10.1 Survival of Representations. All representations and warranties of
the Borrower contained in this Agreement shall survive delivery of the Notes
and the making of the Loans herein contemplated.
10.2 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
10.3 Performance of Obligations. The Borrower agrees that the Agent
may, but shall have no obligation to (i) at any time, pay or discharge taxes,
liens, security interests or other encumbrances levied or placed on or
threatened against any Collateral and (ii) after the occurrence and during the
continuance of a Default make any other payment or perform any act required of
the Borrower under any Loan Document or take any other action which the Agent
in its discretion deems necessary or desirable to protect or preserve the
Collateral, including, without limitation, any action to (y) effect any repairs
or obtain any insurance called for by the terms of any of the Loan Documents
and to pay all or any part of the premiums therefor and the costs thereof and
(z) pay any rents payable by the Borrower which are more than 30 days past due,
or as to which the landlord has given notice of termination, under any lease.
The Agent shall use its best efforts to give the Borrower notice of any action
taken under this Section 10.3 prior to the taking of such action or promptly
thereafter provided the failure to give such notice shall not affect the
Borrower's obligations in respect thereof. The Borrower agrees to pay the
Agent, upon demand, the principal amount of all funds advanced by the Agent
under this Section 10.3, together with interest thereon at the rate from time
to time applicable to Floating Rate Loans from the date of such advance until
the outstanding principal balance thereof is paid in full. If the Borrower
fails to make payment in respect of any such advance under this Section 10.3
within one (1) Business Day after the date the Borrower receives written demand
therefor from the Agent, the Agent shall promptly notify each Lender and each
Lender agrees that it shall thereupon make available to the Agent, in Dollars
in immediately available funds, the amount equal to such Lender's Pro Rata
Share of such advance. If such funds are not made available to the Agent by
such Lender within one (1) Business Day after the Agent's demand therefor, the
Agent will be entitled to recover any such amount from such Lender together
with interest thereon at the Federal Funds Effective Rate for each day during
the period commencing on the date of such demand and ending on the date such
amount is received. The failure of any Lender to make available to the Agent
its Pro Rata Share of any such unreimbursed advance under this Section 10.3
shall neither relieve any other Lender of its obligation hereunder to make
available to the Agent such other Lender's Pro Rata Share of such advance on
the date such payment is to be made nor increase the obligation of any other
Lender to make such payment to the Agent. All outstanding principal of, and
interest on, advances made under this Section 10.3 shall constitute Obligations
secured by the Collateral until paid in full by the Borrower.
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10.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
10.5 Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Borrower, the Agent and the Lenders and supersede
all prior agreements and understandings among the Borrower, the Agent and the
Lenders relating to the subject matter thereof.
10.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other Lender (except to the extent to
which the Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
10.7 Expenses; Indemnification.
(A) Expenses. The Borrower shall reimburse the Agent for any reasonable
costs, internal charges and out-of-pocket expenses (including attorneys' and
paralegals' fees and time charges of attorneys and paralegals for the Agent,
which attorneys and paralegals may be employees of the Agent) paid or incurred
by the Agent in connection with the preparation, negotiation, execution,
delivery, syndication, review, amendment, modification, and administration of
the Loan Documents. The Borrower also agrees to reimburse the Agent and the
Lenders for any costs, internal charges and out-of-pocket expenses (including
attorneys' and paralegals' fees and time charges of attorneys and paralegals
for the Agent and the Lenders, which attorneys and paralegals may be employees
of the Agent or the Lenders) paid or incurred by the Agent or any Lender in
connection with the collection of the Obligations and enforcement (whether by
legal proceedings, negotiation or otherwise) of the Loan Documents. Agent shall
provide the Borrower with a detailed statement of all reimbursements requested
under this Section 10.7(A).
(B) Indemnity. The Borrower further agrees to defend, protect,
indemnify, and hold harmless the Agent and each and all of the Lenders and each
of their respective Affiliates, and each of such Agent's, Lender's, or
Affiliate's respective officers, directors, employees, attorneys and agents
(including, without limitation, those retained in connection with the
satisfaction or attempted satisfaction of any of the conditions set forth in
Article V) (collectively, the "INDEMNITEES") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses of any kind or nature whatsoever (including,
without limitation, the fees and disbursements of counsel for such Indemnitees
in connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnitees shall be designated
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a party thereto), imposed on, incurred by, or asserted against such Indemnitees
in any manner relating to or arising out of:
(i) this Agreement, the other Loan Documents or any of the
Transaction Documents, or any act, event or transaction related or
attendant thereto or to the James River Acquisition or the Related
Transactions, the making of the Loans, and the issuance of and
participation in Letters of Credit hereunder, the management of such
Loans or Letters of Credit, the use or intended use of the proceeds of
the Loans or Letters of Credit hereunder, or any of the other
transactions contemplated by the Transaction Documents; or
(ii) any liabilities, obligations, responsibilities, losses,
damages, personal injury, death, punitive damages, economic damages,
consequential damages, treble damages, intentional, willful or wanton
injury, damage or threat to the environment, natural resources or
public health or welfare, costs and expenses (including, without
limitation, attorney, expert and consulting fees and costs of
investigation, feasibility or remedial action studies), fines,
penalties and monetary sanctions, interest, direct or indirect, known
or unknown, absolute or contingent, past, present or future relating to
violation of any Environmental, Health or Safety Requirements of Law
arising from or in connection with the past, present or future
operations of Holdings, Enterprises, the Borrower, its Subsidiaries or
any of their respective predecessors in interest, or, the past, present
or future environmental, health or safety condition of any respective
property of the Borrower or its Subsidiaries, the presence of
asbestos-containing materials at any respective property of the
Borrower or its Subsidiaries or the Release or threatened Release of
any Contaminant into the environment (collectively, the "INDEMNIFIED
MATTERS");
provided, however, the Borrower shall have no obligation to an Indemnitee
hereunder with respect to Indemnified Matters caused solely by or resulting
solely from (y) a dispute among the Lenders or a dispute between any Lender and
the Agent, or (z) the willful misconduct or gross negligence of such Indemnitee
or breach of contract by such Indemnitee with respect to the Loan Documents, in
each case, as determined by the final non-appealed judgment of a court of
competent jurisdiction. If the undertaking to indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all Indemnified Matters incurred by the
Indemnitees. If any action, claim, investigation or other proceeding is
instituted or threatened against any Indemnitees in respect of which indemnity
may be sought hereunder, the Borrower shall be entitled to assume the defense
thereof with counsel selected by the Borrower (which counsel shall be
reasonably satisfactory to such Indemnitees) and after notice from the Borrower
to such Indemnitees of its election so to assume the defense thereof, the
Borrower will not be liable to such Indemnitees hereunder for any legal or
other expenses subsequently incurred by such Indemnitees in connection with the
defense thereof other
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than reasonable costs of investigation and such other expenses as have been
approved in advance; provided that (i) if counsel for such Indemnitees
determines in good faith that there is a conflict which requires separate
representation for the Borrower and such Indemnitees, or (ii) if the Borrower
fails to assume or proceed in a timely and reasonable manner with the defense
of such action or fails to employ counsel reasonably satisfactory to such
Indemnitees in any such action, then in either such event such Indemnitees
shall be entitled to select one primary counsel and, if necessary, one local
counsel, of their own choice to represent such Indemnitees and the Borrower
shall not, or no longer, be entitled to assume the defense thereof on behalf of
such Indemnitees and such Indemnitees shall be entitled to indemnification for
the reasonable expenses (including reasonable fees and expenses of such
counsel) to the extent provided above. Such counsel shall, to the fullest
extent consistent with its professional responsibilities, cooperate with the
Borrower and any counsel designated by the Borrower. Nothing contained herein
shall preclude any Indemnitees, at their own expense, from retaining additional
counsel to represent such Indemnitees in any action with respect to which
indemnity may be sought from the Borrower hereunder. The Borrower shall not be
liable under this Agreement for any settlement made by any Indemnitees without
the Borrower's prior written consent (which consent shall not be unreasonably
withheld), and the Borrower agrees to indemnify and hold harmless any
Indemnitees from and against any loss or liability by reason of the settlement
of any claim or action with the consent of the Borrower. The Borrower shall not
settle any claim or action without the prior written consent of the
Indemnitees, which consent shall not be unreasonably withheld.
(C) Waiver of Certain Claims; Settlement of Claims. The Borrower
further agrees to assert no claim against any of the Indemnitees on any theory
of liability for consequential, special, indirect, exemplary or punitive
damages. No settlement shall be entered into by Holdings, Enterprises, the
Borrower or any if its Subsidiaries with respect to any claim, litigation,
arbitration or other proceeding relating to or arising out of the transactions
evidenced by this Agreement, the other Loan Documents or in connection with the
James River Acquisition or Related Transactions (whether or not the Agent or
any Lender or any Indemnitee is a party thereto) unless such settlement
releases all Indemnitees from any and all liability with respect thereto.
(D) Survival of Agreements. The obligations and agreements of the
Borrower under this Section 10.7 shall survive the termination of this
Agreement.
10.8 Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
10.9 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
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10.10 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
10.11 Nonliability of Lenders. The relationship between the Borrower
and the Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
the Borrower. Neither the Agent nor any Lender undertakes any responsibility to
the Borrower to review or inform the Borrower of any matter in connection with
any phase of the Borrower's business or operations.
10.12 GOVERNING LAW. THE AGENT ACCEPTS THIS AGREEMENT, ON BEHALF OF
ITSELF AND THE LENDERS, AT CHICAGO, ILLINOIS BY ACKNOWLEDGING AND AGREEING TO
IT THERE. ANY DISPUTE BETWEEN THE BORROWER AND THE AGENT, ANY LENDER, OR ANY
OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH,
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE
OF ILLINOIS.
10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY
TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH
OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE
PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES
HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE
DISPUTE.
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(B) OTHER JURISDICTIONS. THE BORROWER AGREES THAT THE AGENT, ANY LENDER
OR ANY HOLDER OF SECURED OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST
THE BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SUCH PERSON
TO (1) OBTAIN PERSONAL JURISDICTION OVER THE BORROWER OR (2) REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. THE BORROWER AGREES THAT
IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY
SUCH PERSON TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH
PERSON. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION (B).
(C) SERVICE OF PROCESS. THE BORROWER WAIVES PERSONAL SERVICE OF ANY
PROCESS UPON IT AND, AS ADDITIONAL SECURITY FOR THE OBLIGATIONS, IRREVOCABLY
APPOINTS IHC, WHOSE ADDRESS IS 1400 ABBOTT DRIVE, ELGIN, ILLINOIS 60123, AS THE
BORROWER'S AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS ISSUED BY ANY
COURT. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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(E) WAIVER OF BOND. THE BORROWER WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS
OR PROCEEDING TO REALIZE ON THE COLLATERAL (INCLUDING, WITHOUT LIMITATION, THE
REAL PROPERTY COLLATERAL) OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO
ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PARTY, OR TO
ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER, PRELIMINARY OR
PERMANENT INJUNCTION, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF THIS SECTION 10.13, WITH ITS COUNSEL.
10.14 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
ARTICLE XI: THE AGENT
11.1 Appointment; Nature of Relationship. The First National Bank of
Chicago is appointed by the Lenders as the Agent hereunder and under each other
Loan Document, and each of the Lenders irrevocably authorizes the Agent to act
as the contractual representative of such Lender with the rights and duties
expressly set forth herein and in the other Loan Documents. The Agent agrees to
act as such contractual representative upon the express conditions contained in
this Article XI. Notwithstanding the use of the defined term "Agent," it is
expressly understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Holder of Secured Obligations by reason of this
Agreement and that the Agent is merely acting as the representative of the
Lenders with only those duties as are expressly set forth in this Agreement and
the other Loan Documents. In its capacity as the Lenders' contractual
representative, the Agent (i) does not assume any fiduciary duties to any of
the Holders of Secured Obligations, (ii) is a "representative" of the Holders
of Secured Obligations within the meaning of Section 9-105 of the Uniform
Commercial Code and (iii) is acting as an independent contractor, the rights
and duties of which are limited to those expressly set forth in this Agreement
and the other Loan Documents. Each of the Lenders, for itself and on behalf of
its affiliates as Holders of Secured Obligations, agrees to assert no claim
against the Agent on any agency theory or any other theory of liability for
breach of fiduciary duty, all of which claims each Holder of Secured
Obligations waives.
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11.2 Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties or fiduciary duties to the Lenders, or
any obligation to the Lenders to take any action hereunder or under any of the
other Loan Documents except any action specifically provided by the Loan
Documents required to be taken by the Agent.
11.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
to the extent such action or inaction is found in a final judgment by a court
of competent jurisdiction to have arisen solely from (i) the gross negligence
or willful misconduct of such Person or (ii) breach of contract by such Person
with respect to the Loan Documents.
11.4 No Responsibility for Loans, Creditworthiness, Collateral,
Recitals, Etc. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into,
or verify (i) any statement, warranty or representation made in connection with
any Loan Document or any borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of any obligor under any Loan
Document; (iii) the satisfaction of any condition specified in Article V,
except receipt of items required to be delivered solely to the Agent; (iv) the
existence or possible existence of any Default or (v) the validity,
effectiveness or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith. The Agent shall not be responsible
to any Lender for any recitals, statements, representations or warranties
herein or in any of the other Loan Documents, for the perfection or priority of
any of the Liens on any of the Collateral, or for the execution, effectiveness,
genuineness, validity, legality, enforceability, collectibility, or sufficiency
of this Agreement or any of the other Loan Documents or the transactions
contemplated thereby, or for the financial condition of any guarantor of any or
all of the Obligations, Holdings, Enterprises, the Borrower or any of their
respective Subsidiaries.
11.5 Action on Instructions of Lenders. The Agent in all cases, as
between the Agent and the Holders of Secured Obligations, shall be fully
protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and on all holders of
Notes. As between the Agent and the Holders of Secured Obligations, the Agent
shall be fully justified in failing or refusing to take any action hereunder
and under any other Loan Document unless it shall first be indemnified to its
satisfaction by the Lenders pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take any such
action.
11.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as the Agent hereunder and under any other Loan Document by or through
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employees, agents, and attorney-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the
Lenders and all matters pertaining to the Agent's duties hereunder and under
any other Loan Document.
11.7 Reliance on Documents; Counsel. As between the Agent and the
Holders of Secured Obligations, the Agent shall be entitled to rely upon any
Note, notice, consent, certificate, affidavit, letter, telegram, statement,
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which counsel may
be employees of the Agent.
11.8 The Agent's Reimbursement and Indemnification. The Lenders agree
to reimburse and indemnify the Agent ratably in proportion to their respective
Revolving Loan Commitments (i) for any amounts not reimbursed by the Borrower
for which the Agent is entitled to reimbursement by the Borrower under the Loan
Documents, (ii) for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever which
may be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby, or
the enforcement of any of the terms thereof or of any such other documents,
provided that no Lender shall be liable for any of the foregoing to the extent
any of the foregoing is found in a final non-appealable judgment by a court of
competent jurisdiction to have arisen solely from the gross negligence or
willful misconduct of the Agent.
11.9 Rights as a Lender. With respect to its Revolving Loan Commitment,
its Term Loan Commitment, Loans made by it and the Notes issued to it, the
Agent shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as through it were not the
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, and generally engage in any kind of trust, debt,
equity or other transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which such Person is not prohibited hereby from engaging with
any other Person.
11.10 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this
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Agreement and the other Loan Documents. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents.
11.11 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, and the Agent may be
removed at any time with or without cause by written notice received by the
Agent from the Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint, on behalf of the Borrower and
the Lenders, a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty days after the retiring Agent's giving notice of resignation,
then the retiring Agent may appoint, on behalf of the Borrower and the Lenders,
a successor Agent. Notwithstanding anything herein to the contrary, so long as
no Default has occurred and is continuing, each such successor Agent shall be
subject to approval by the Borrower, which approval shall not be unreasonably
withheld. Such successor Agent shall be a commercial bank having capital and
retained earnings of at least $500,000,000. Upon the acceptance of any
appointment as the Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article XI shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Agent hereunder and under the other Loan Documents.
11.12 Collateral Documents. (a) Each Lender authorizes the Agent to
enter into each of the Collateral Documents to which it is a party and to take
all action contemplated by such documents. Each Lender agrees that no Holder of
Secured Obligations (other than the Agent) shall have the right individually to
seek to realize upon the security granted by any Collateral Document, it being
understood and agreed that such rights and remedies may be exercised solely by
the Agent for the benefit of the Holders of Secured Obligations upon the terms
of the Collateral Documents.
(b) In the event that any Collateral is hereafter pledged by
any Person as collateral security for the Obligations, the Agent is hereby
authorized to execute and deliver on behalf of the Holders of Secured
Obligations any Loan Documents necessary or appropriate to grant and perfect a
Lien on such Collateral in favor of the Agent on behalf of the Holders of
Secured Obligations.
(c) The Lenders hereby authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment and satisfaction
of all of the Obligations at any time arising under or in respect of this
Agreement or the Loan Documents or the transactions contemplated hereby or
thereby; (ii) as permitted by, but
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only in accordance with, the terms of the applicable Loan Document; or (iii) if
approved, authorized or ratified in writing by the Requisite Lenders, unless
such release is required to be approved by all of the Lenders hereunder. Upon
request by the Agent at any time, the Lenders will confirm in writing the
Agent's authority to release particular types or items of Collateral pursuant
to this Section 11.12(c).
(d) Upon any sale or transfer of assets constituting Collateral
which is permitted pursuant to the terms of any Loan Document, or consented to
in writing by the Requisite Lenders or all of the Lenders, as applicable, and
upon at least five Business Days' prior written request by the Borrower, the
Agent shall (and is hereby irrevocably authorized by the Lenders to) execute
sch documents as may be necessary to evidence the release of the Liens granted
to the Agent for the benefit of the Holders of Secured Obligations herein or
pursuant hereto upon the Collateral that was sold or transferred; provided,
however, that (i) the Agent shall not be required to execute any such document
on terms which, in the Agent's opinion, would expose the Agent to liability or
create any obligation or entail any consequence other than the release of such
Liens without recourse or warranty, and (ii) such release shall not in any
manner discharge, affect or impair the Secured Obligations or any Liens upon
(or obligations of the Borrower or any Subsidiary in respect of) all interests
retained by the Borrower or any Subsidiary, including (without limitation) the
proceeds of the sale, all of which shall continue to constitute part of the
Collateral.
ARTICLE XII: SETOFF; RATABLE PAYMENTS
12.1 Setoff. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if any Default occurs and is continuing, any
indebtedness from any Lender to the Borrower (including all account balances,
whether provisional or final and whether or not collected or available) may be
offset and applied toward the payment of the Obligations owing to such Lender,
whether or not the Obligations, or any part hereof, shall then be due.
12.2 Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
Sections 4.1, 4.2 or 4.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion
of the Loans held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of Loans. If any Lender, whether in connection
with setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligation or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such
action necessary such that all Lenders share in the benefits of such collateral
ratably in proportion to the obligations owing to them. In case any such
payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made.
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12.3 Application of Payments. Subject to the provisions of Section 9.2,
the Agent shall, unless otherwise specified at the direction of the Required
Lenders which direction shall be consistent with the last sentence of this
Section 12.3, apply all payments and prepayments in respect of any Obligations
and all proceeds of Collateral in the following order:
(A) first, to pay interest on and then principal of any portion
of the Loans which the Agent may have advanced on behalf of any Lender
for which the Agent has not then been reimbursed by such Lender or the
Borrower;
(B) second, to pay interest on and then principal of any
advance made under Section 10.3 for which the Agent has not then been
paid by the Borrower or reimbursed by the Lenders;
(C) third, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Agent;
(D) fourth, to pay Obligations in respect of any fees,
expenses, reimbursements or indemnities then due to the Lenders and the
issuer(s) of Letters of Credit;
(E) fifth, to pay interest due in respect of Swing Line Loans;
(F) sixth, to pay interest due in respect of Loans (other than
Swing Line Loans) and L/C Obligations;
(G) seventh, to the ratable payment or prepayment of principal
outstanding on Swing Line Loans;
(H) eighth, to the ratable payment or prepayment of principal
outstanding on Loans (other than Swing Line Loans), Reimbursement
Obligations and Hedging Obligations under Interest Rate Agreements in
such order as the Agent may determine in its sole discretion;
(I) ninth, to provide required cash collateral, if required
pursuant to Section 3.11 and
(J) tenth, to the ratable payment of all other Obligations.
Unless otherwise designated (which designation shall only be applicable prior
to the occurrence of a Default) by the Borrower, all principal payments in
respect of Loans (other than Swing Line Loans) shall be applied first, to the
outstanding Revolving Loans, and second, to the outstanding Term Loans, in each
case, first, to repay outstanding Floating Rate Loans, and then to repay
outstanding Eurodollar Rate Loans with those Eurodollar Rate Loans which have
earlier expiring Interest Periods being repaid prior to
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those which have later expiring Interest Periods. The order of priority set
forth in this Section 12.3 and the related provisions of this Agreement are set
forth solely to determine the rights and priorities of the Agent, the Lenders,
the issuer(s) of Letters of Credit and other Holders of Secured Obligations as
among themselves. The order of priority set forth in clauses (D) through (J) of
this Section 12.3 may at any time and from time to time be changed by the
Required Lenders without necessity of notice to or consent of or approval by
the Borrower, or any other Person; provided, that the order of priority of
payments in respect of Swing Line Loans may be changed only with the prior
written consent of the Swing Line Bank. The order of priority set forth in
clauses (A) through (C) of this Section 12.3 may be changed only with the prior
written consent of the Agent.
12.4 Relations Among Lenders. Except with respect to the exercise of
set-off rights of any Lender in accordance with Section 12.1, the proceeds of
which are applied in accordance with this Agreement, and except as set forth in
the following sentence, each Lender agrees that it will not take any action,
nor institute any actions or proceedings, against the Borrower or any other
obligor hereunder or with respect to any Collateral or Loan Document, without
the prior written consent of the Required Lenders or, as may be provided in
this Agreement or the other Loan Documents, at the direction of the Agent. The
Lenders are not partners or co-venturers, and no Lender shall be liable for the
acts or omissions of, or (except as otherwise set forth herein in case of the
Agent) authorized to act for, any other Lender. Notwithstanding the foregoing,
and subject to Section 12.2, any Lender shall have the right to enforce on an
unsecured basis the payment of the principal of and interest on any Loan made
by it after the date such principal or interest has become due and payable
pursuant to the terms of this Agreement.
ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
13.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with Section 13.3 hereof. Notwithstanding clause (ii) of this Section 13.1, any
Lender may at any time, without the consent of the Borrower or the Agent,
assign all or any portion of its rights under this Agreement and its Notes to a
Federal Reserve Bank; provided, however, that no such assignment shall release
the transferor Lender from its obligations hereunder. The Agent may treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
such payee complies with Section 13.3 hereof in the case of an assignment
thereof or, in the case of any other transfer, a written notice of the transfer
is filed with the Agent. Any assignee or transferee of a Note agrees by
acceptance thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the holder of any
Note, shall be
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conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
13.2 Participations.
(A) Permitted Participants; Effect. Subject to the terms set forth in
this Section 13.2, any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time sell to one or more banks or
other entities ("PARTICIPANTS") participating interests in any Loan owing to
such Lender, any Note held by such Lender, any Revolving Loan Commitment of
such Lender, any L/C Interest of such Lender or any other interest of such
Lender under the Loan Documents on a pro rata or non-pro rata basis. In the
event of any such sale by a Lender of participating interests to a Participant,
such Lender's obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the holder of any
such Note for all purposes under the Loan Documents, all amounts payable by the
Borrower under this Agreement shall be determined as if such Lender had not
sold such participating interests, and the Borrower and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents except that, for
purposes of Article IV hereof, the Participants shall be entitled to the same
rights as if they were Lenders.
(B) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver
of any provision of the Loan Documents other than any amendment, modification
or waiver with respect to any Loan or Revolving Loan Commitment in which such
Participant has an interest which forgives principal, interest or fees or
reduces the interest rate or fees payable pursuant to the terms of this
Agreement with respect to any such Loan or Revolving Loan Commitment, postpones
any date fixed for any regularly-scheduled payment of principal of, or interest
or fees on, any such Loan or Revolving Loan Commitment, or releases all or
substantially all of the Collateral, if any, securing any such Loan.
(C) Benefit of Setoff. The Borrower agrees that each Participant shall
be deemed to have the right of setoff provided in Section 12.1 hereof in
respect to its participating interest in amounts owing under the Loan Documents
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under the Loan Documents, provided that each Lender
shall retain the right of setoff provided in Section 12.1 hereof with respect
to the amount of participating interests sold to each Participant except to the
extent such Participant exercises its right of setoff. The Lenders agree to
share with each Participant, and each Participant, by exercising the right of
setoff provided in Section 12.1 hereof, agrees to share with each Lender, any
amount received pursuant to the exercise of its right of setoff, such amounts
to be shared in accordance with Section 12.2 as if each Participant were a
Lender.
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<PAGE> 123
13.3 Assignments.
(A) Permitted Assignments. Any Lender may, in accordance with
applicable law, at any time assign to one or more banks or other entities
("PURCHASERS") all or a portion of its rights and obligations under this
Agreement (including, without limitation, its Revolving Loan Commitment, all
Loans owing to it, all of its participation interests in existing Letters of
Credit, and its obligation to participate in additional Letters of Credit
hereunder) in accordance with the provisions of this Section 13.3. Each
assignment shall be of a constant, and not a varying, ratable percentage of all
of the assigning Lender's rights and obligations under this Agreement. Such
assignment shall be substantially in the form of Exhibit E hereto and shall not
be permitted hereunder unless such assignment is either for all of such
Lender's rights and obligations under the Loan Documents or, without the prior
written consent of the Agent, involves loans and commitments in an aggregate
amount of at least $5,000,000 (which minimum amount may be waived by the
Required Lenders after the occurrence of a Default or Unmatured Event of
Default). The consent of the Agent and, prior to the occurrence of a Default or
Unmatured Default, the Borrower (which consent, in each such case, shall not be
unreasonably withheld), shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate
thereof.
(B) Effect; Effective Date. Upon (i) delivery to the Agent of a notice
of assignment, substantially in the form attached as Appendix I to Exhibit E
hereto (A "NOTICE OF ASSIGNMENT"), together with any consent required by
Section 13.3.(A) hereof, and (ii) payment of a $3,500 fee by the assignee or
the assignor (as agreed) to the Agent for processing such assignment, such
assignment shall become effective on the effective date specified in such
Notice of Assignment. The Notice of Assignment shall contain a representation
by the Purchaser to the effect that none of the consideration used to make the
purchase of the Commitment, Loans and L/C Obligations under the applicable
assignment agreement are "plan assets" as defined under ERISA and that the
rights and interests of the Purchaser in and under the Loan Documents will not
be "plan assets" under ERISA. On and after the effective date of such
assignment, such Purchaser, if not already a Lender, shall for all purposes be
a Lender party to this Agreement and any other Loan Documents executed by the
Lenders and shall have all the rights and obligations of a Lender under the
Loan Documents, to the same extent as if it were an original party hereto, and
no further consent or action by the Borrower, the Lenders or the Agent shall be
required to release the transferor Lender with respect to the percentage of the
Aggregate Revolving Loan Commitment, Loans and Letter of Credit participations
assigned to such Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 13.3(B), the transferor Lender, the Agent
and the Borrower shall make appropriate arrangements so that replacement Notes
are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Revolving Loan Commitment and their Term Loans, as
adjusted pursuant to such assignment.
(C) The Register. The Agent shall maintain at its address referred to
in Section 14.1 a copy of each assignment delivered to and accepted by it
pursuant to this Section
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13.3 and a register (the "REGISTER") for the recordation of the names and
addresses of the Lenders and the Revolving Loan Commitment of and principal
amount of the Loans owing to, each Lender from time to time and whether such
Lender is an original Lender or the assignee of another Lender pursuant to an
assignment under this Section 13.3. The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower and each of its Subsidiaries, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
13.4 Confidentiality. Subject to Section 13.5, the Agent and the
Lenders and their respective representatives, consultants and advisors shall
hold all nonpublic information obtained pursuant to the requirements of this
Agreement and identified as such by the Borrower in accordance with such
Person's customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices and in any event
may make disclosure reasonably required by a prospective Transferee in
connection with the contemplated participation or assignment or as required or
requested by any Governmental Authority or representative thereof or pursuant
to legal process and shall require any such Transferee to agree (and require
any of its Transferees to agree in writing) to comply with this Section 13.4.
In no event shall the Agent or any Lender be obligated or required to return
any materials furnished by the Borrower; provided, however, each prospective
Transferee shall be required to agree that if it does not become a participant
or assignee it shall return all materials furnished to it by or on behalf of
the Borrower in connection with this Agreement.
13.5 Dissemination of Information. The Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "TRANSFEREE") and
any prospective Transferee any and all information in such Lender's possession
concerning the Holdings, Enterprises, the Borrower and its Subsidiaries and the
Collateral; provided that prior to any such disclosure, such prospective
Transferee shall agree in writing to preserve in accordance with Section 13.4
the confidentiality of any confidential information described therein.
ARTICLE XIV: NOTICES
14.1 Giving Notice. Except as otherwise permitted by Section 2.14 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Documents shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as
may be designated by such party in a notice to the other parties; provided,
however, that Borrowing Notices shall be delivered to the Agent at One First
National Plaza, Suite 0634, Chicago, Illinois 60670-0634, Attention: Nanette
Wilson, Telephone No. 312-732-1221, Facsimile No. 312-732-4840. Any notice,
111
<PAGE> 125
if mailed and properly addressed with postage prepaid, shall be deemed given
when received; any notice, if transmitted by telex or facsimile, shall be
deemed given when transmitted (answerback confirmed in the case of telexes).
14.2 Change of Address. The Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
ARTICLE XV: COUNTERPARTS
15.1 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower, the Agent and the Lenders and each party has notified the Agent by
telex or telephone, that it has taken such action.
112
<PAGE> 126
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have
executed this Agreement as of the date first above written.
PRINTPACK, INC., as the Borrower
By:/s/
---------------------------
Name:
Title:
Address:
4335 Wendell Drive, S.W.
Atlanta, Georgia 30336-1622
Attention: Dennis M. Love, President
Telephone No.: ____________
Facsimile No.: ____________
THE FIRST NATIONAL BANK OF
CHICAGO, as Agent and as a Lender
By:/s/
---------------------------
Name:
Title:
Address:
One First National Plaza
Suite ____
Chicago, Illinois 60670
Attention: ________________
Telephone No.: ____________
Facsimile No.: ____________
113
<PAGE> 1
EXHIBIT 10.2
Note Purchase Agreement, dated as of March 13, 1995 by and among
Printpack, Inc. and certain shareholders of Printpack, Inc. as amended.
<PAGE> 2
PRINTPACK, INC.
$10,384,000 IN AGGREGATE PRINCIPAL AMOUNT
OF
11.00% SUBORDINATED NOTES DUE MAY 4, 2014
<PAGE> 3
PRINTPACK, INC.
$10,384,000 IN AGGREGATE PRINCIPAL AMOUNT
OF
11.00% SUBORDINATED NOTES DUE MAY 4, 2014
---------------------------------
NOTE PURCHASE AGREEMENT
---------------------------------
Dated as of March 13, 1995
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
1. ISSUANCE OF NOTES .............................................. 1
1.1 Authorization of Notes ................................. 1
1.2 Purchase and Sale of Notes; Closing .................... 2
1.3 Use of Proceeds ........................................ 2
1.4 Definitions ............................................ 2
2. GENERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY .......... 2
2.1 Capital Stock .......................................... 2
2.2 Organization and Authority ............................. 3
2.3 No Material Adverse Change ............................. 3
2.4 Licenses, Registrations, etc ........................... 3
2.5 Compliance with Other Instruments, etc. ................ 4
2.6 Compliance with Law .................................... 4
2.7 Corporate Proceedings .................................. 4
2.8 No Event of Default .................................... 4
2.9 No Materially Adverse Contracts ........................ 4
2.10 Compliance with ERISA; Multiemployer Plans ............. 5
2.11 Compliance with Environmental Laws ..................... 6
2.12 Pending Litigation, etc ................................ 7
2.13 Taxes .................................................. 7
2.14 Holding Company Act; Investment Company Act ............ 8
2.15 No Margin Regulation Violation ......................... 8
2.16 Outstanding Securities ................................. 8
2.17 Consents ............................................... 9
2.18 Validity of Agreement and Notes ........................ 9
2.19 Labor Relations ........................................ 9
2.20 Insurance ..............................................10
2.21 Solvency ...............................................10
3. REPRESENTATIONS OF THE PURCHASER ...............................10
3.1 No Intent to Distribute ................................10
4. NOTE PREPAYMENTS ...............................................11
4.1 Mandatory Prepayments ..................................11
4.2 Optional Prepayments ...................................11
4.3 Partial Prepayments Pro Rata ...........................12
5. CERTAIN COVENANTS OF THE COMPANY ...............................12
5.1 Corporate Existence ....................................12
5.2 General Maintenance of Properties and Business, Etc ....12
5.3 Compliance with Law, etc ...............................13
5.4 Prepayment of Taxes and Claims .........................13
5.5 Notice of Certain Events and Conditions ................14
5.6 Inspection .............................................14
5.7 ERISA ..................................................14
5.8 Transactions with Affiliates ...........................15
</TABLE>
i
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
5.9 Nature of Business .....................................15
5.10 Environmental Law Compliance ...........................15
5.11 Further Assurances .....................................16
6. DEFAULTS AND REMEDIES ..........................................16
6.1 Events of Default; Acceleration of Notes ...............16
6.2 Default Remedies .......................................18
6.3 Notice of Default ......................................18
7. SUBORDINATION OF THE NOTES .....................................19
7.1 Subordination ..........................................19
7.2 Definitions ............................................19
7.3 Payment Blockage Period ................................20
7.4 Acceleration of Subordinated Notes .....................20
7.5 Insolvency, Bankruptcy, etc ............................21
7.6 Maturity or Acceleration of Senior Debt ................22
7.7 Constructive Trust .....................................22
7.8 Obligations of the Company .............................23
7.9 Subrogation ............................................23
7.10 Amendment to Senior Debt, etc ..........................23
7.11 Filing Proofs of Claim, Consents, Assignments, etc .....23
8. INTERPRETATION OF AGREEMENT AND NOTES ..........................24
8.1 Definitions ............................................24
8.2 Accounting Terms .......................................28
8.3 Governing Law ..........................................28
8.4 Headings ...............................................28
8.5 Independence of Covenants ..............................28
9. MISCELLANEOUS ..................................................29
9.1 Limitation on Transfer .................................29
9.2 Notices ................................................29
9.3 Survival ...............................................29
9.4 Successors and Assigns .................................29
9.5 Amendment and Waiver ...................................29
9.6 Counterparts ...........................................30
</TABLE>
SCHEDULES AND EXHIBITS
SCHEDULE 1 Purchasers
EXHIBIT A Form of Note
ii
<PAGE> 6
PRINTPACK, INC.
4335 Wendell Drive, S.W.
Atlanta, Georgia 30336-1622
Telephone No.: (404) 691-2538
Telecopier No.: (404) 696-4868
---------------------------
NOTE PURCHASE AGREEMENT
---------------------------
Dated as of March 13, 1995
To the Purchasers of the Notes
(as defined herein) named in Schedule I hereto
Ladies and Gentlemen:
The undersigned, Printpack, Inc., a Georgia corporation (the
"Company"), hereby agrees with you as follows.
1. ISSUANCE OF NOTES.
1. 1. Authorization of Notes.
The Company has authorized the issuance and sale of $10,384,000 in
aggregate principal amount of its 11.00% Subordinated Notes due May 4, 2014
(such notes, together with all notes in the form annexed hereto as Exhibit A
issued in exchange or replacement for, or on registration of transfer of, such
notes are hereinafter called the "Notes"). Each Note shall bear interest from
the date thereof until such Note shall become due and payable in accordance
with the terms thereof and hereof (whether at maturity, by acceleration or
otherwise) at the rate of 11.00% per annum, payable annually each December 15
(each, an "Interest Payment Date"), commencing December 15, 1995, and shall
have a stated maturity of May 4, 2014. Interest shall be computed on the basis
of a 360-day year of twelve 30-day months. Each Note shall bear interest on any
overdue principal, including any overdue payment or prepayment of principal and
(to the extent permitted by applicable law) on any overdue installment of
interest, at the rate of 13.00% per annum. If the Company shall have paid or
agreed to pay any interest on any Note in excess of that permitted by law, then
it is the express intent of the Company and the holder thereof that all excess
amounts previously paid or to be paid by the Company be applied to
<PAGE> 7
reduce the principal balance of such Note, and the provisions thereof
immediately be deemed reformed and the amounts thereafter collectable
thereunder reduced, without the necessity of the execution of any new document,
so as to comply with the then applicable law, but so as to permit the recovery
of the fullest amount otherwise called for thereunder.
1.2. PURCHASE AND SALE OF NOTES; CLOSING.
The Company agrees to sell to you, and upon and subject to the terms
and conditions hereof and in reliance upon the representations and warranties
of the Company contained herein, you agree to purchase from the Company, Notes
in the aggregate of principal amount specified opposite your name in Schedule I
hereto at a purchase price equal to one hundred percent (100%) of such
principal amount (the "Purchase Price"). The Notes are to be sold and delivered
on March 13, 1995 (the "Closing Date"). On the Closing Date, the Company will
deliver to you a Note or Notes dated the Closing Date, in the principal amount
or amounts specified therefor opposite your name in Schedule I hereto and
registered in your name, or in the name of such nominee as may be set forth
under your name in Schedule I hereto or you shall have designated by notice to
the Company at least two (2) Business Days prior to the Closing Date.
1.3 USE OF PROCEEDS.
The proceeds of the sale of the Notes (net of expenses and costs) will
be used for general corporate purposes.
1.4. DEFINITIONS.
Certain capitalized terms used in this Agreement are defined in Section
8. 1. hereof. References to a "Schedule" or "Exhibit" are, unless otherwise
specified, to the appropriate Schedule or Exhibit annexed to this Agreement,
each of which is deemed to be a part hereof.
2. GENERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Prior to giving effect to the transactions contemplated herein, the
Company represents and warrants to you as follows:
2.1. CAPITAL STOCK.
The authorized capital stock of the Company consists of 3,049,814
shares of Common Stock, no par value per share (the "Common Stock"), of which
3,049,814 shares are issued and outstanding. All such outstanding shares of
capital stock of the Company have been validly issued and are fully paid and
nonassessable shares and free of preemptive rights. The Company's Common Stock
is vested with all the voting rights of the Company.
2
<PAGE> 8
2.2. ORGANIZATION AND AUTHORITY.
(a) The Company:
(i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation;
(ii) has all requisite power and authority (corporate and
other) to own and operate its properties, to conduct its business as currently
conducted, and
(iii) has made all filings and holds all franchises, licenses,
permits and registrations which are required under the laws of each
jurisdiction in which the properties owned (or held under lease) by it or the
nature of its activities makes such filings, franchises, licenses, permits or
registrations necessary, except for filings, franchises, licenses, permits or
registrations which individually or in the aggregate are not material to the
Company.
(b) The Company has all requisite power and authority (corporate and
other) necessary to enter into this Agreement, to offer, issue, sell and
deliver the Notes and to perform its obligations under this Agreement and the
Notes.
2.3. NO MATERIAL ADVERSE CHANGE.
Since June 25, 1994, there has been no material adverse change in the
business, earnings, prospects, properties or condition (financial or other) of
the Company or any of its Affiliates.
2.4. LICENSES, REGISTRATIONS, ETC.
Each of the Company and its Affiliates owns or possesses, and holds
free from burdensome restrictions or known conflicts with the rights of others,
all licenses, registrations, franchises, permits, copyrights, trademarks,
service marks, trade names and patents and all rights with respect to the
foregoing, necessary for the conduct of their respective businesses as now
conducted and as proposed to be conducted, and is in full compliance with the
terms and conditions, if any, of all such licenses, registrations, franchises,
permits, copyrights, trademarks, serviced marks, trade names, patents and all
rights with respect to the foregoing and the terms and conditions of any
agreements relating thereto, except for such conflicts or noncompliance which,
either individually or in the aggregate, do not materially and adversely
affect, and in the future will not materially and adversely affect, the
business, earnings, prospects, properties or condition (financial or other) of
the Company or any of its Affiliates.
3
<PAGE> 9
2.5. COMPLIANCE WITH OTHER INSTRUMENTS, ETC.
The Company is not (a) in violation of any term of its charter,
by-laws, articles of association or other organizational document or (b) in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in, and is not otherwise in
default under, (i) any evidence of Indebtedness for Money Borrowed or any
instrument or agreement under or pursuant to which any evidence of Indebtedness
for Money Borrowed has been issued or (ii) any other instrument or agreement to
which it is a party or by which it is bound or any of its properties is
affected. Neither the execution, delivery or performance by the Company of this
Agreement, nor the offer, issuance, sale, delivery or performance of the Notes
by the Company does or will: (A) conflict with or violate the charter, by-laws,
articles of association or other organizational documents of the Company or (B)
require any consent of, or other action by, any stockholder, trustee or any
creditor of, any lessor to or any investor in, the Company which has not been
obtained.
2.6. COMPLIANCE WITH LAW.
The Company is in compliance with all statutes, laws and ordinances and
all governmental rules and regulations to which it is subject, the violation of
which, either individually or in the aggregate, could materially adversely
affect the business, earnings, properties or condition (financial or other) of
the Company. Neither the execution, delivery or performance by the Company of
this Agreement, nor the offer, issuance, sale, delivery or performance by the
Company of the Notes does or will cause the Company to be in violation of any
law or ordinance, or any order, rule or regulation, of any federal, state,
municipal or other governmental or public authority or agency.
2.7. CORPORATE PROCEEDINGS.
The Company has taken all corporate action necessary, as the case may
be, to authorize the execution and delivery of this Agreement, the offer,
issuance, sale and delivery of the Notes, and the performance of all
obligations to be performed by them hereunder and thereunder.
2.8. NO EVENT OF DEFAULT.
No event has occurred and is continuing, and no condition exists, that,
if the Notes had been issued and were outstanding on the date hereof, would
constitute a Default or an Event of Default.
2.9. NO MATERIALLY ADVERSE CONTRACTS.
None of the Company nor any of its Affiliates is a party to or bound by
(nor are any of their respective properties affected by) any contract or
agreement, or subject to any order, writ, injunction or decree or other action
of any court or any governmental
4
<PAGE> 10
department, commission, bureau, board or other administrative agency or
official, or any charter or other corporate or contractual restriction, which
materially and adversely affects, or in the future will materially and
adversely affect, the business, earnings, prospects, properties or condition
(financial or other) of the Company or any of its Affiliates.
2.10. COMPLIANCE WITH ERISA; MULTIEMPLOYER PLANS.
(a) Neither the execution and delivery of this Agreement by the
Company, the offer, issuance, sale and delivery of the Notes by the Company,
the acquisition of the Notes by you, the application by the Company of the
proceeds of the sale of the Notes, nor the consummation of any of the other
transactions contemplated by this Agreement, constitutes or will constitute a
"prohibited transaction" (within the meaning of Section 4975 of the Code or
Section 406 of ERISA). The representation by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of the
representations made by you in Section 3.1. hereof
(b) Each Plan of each of the Company and its Affiliates is in
compliance in all respects with applicable provisions of ERISA, the Code and
applicable foreign law. Each of the Company and its Affiliates has made all
contributions to the Plans required to be made by them.
(c) Except for liabilities to make contributions and to pay PBGC
premiums and administrative costs, none of the Company, any of its Affiliates,
or any ERISA Affiliate has incurred any material liability to or on account of
any Plan or Pension Plan under applicable provisions of ERISA, the Code or
applicable foreign law, and no condition exists which presents a material risk
to the Company, any of its Affiliates, or any ERISA Affiliate of incurring any
such liability. No domestic Pension Plan has an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code), whether or not
waived, and no foreign Pension Plan is in violation of any funding requirements
imposed by applicable foreign law. None of the Company, any of its Affiliates,
or any ERISA Affiliate, the PBGC or any other Person has instituted any
proceedings or taken any other action to terminate any Pension Plan.
(d) The actuarial present value of all accrued benefit liabilities
under each domestic Pension Plan and under each foreign Pension Plan (based on
the assumptions used in the funding of such Pension Plan, which assumptions are
reasonable, and determined as of the last day of the most recent plan year of
such domestic Pension Plan for which an annual report has been filed with the
Internal Revenue Service (the "IRS") or of such foreign Pension Plan for which
year-end actuarial information is available) did not exceed the current fair
market value of the assets of such Pension Plan as of such last day.
(e) None of the Plans is a Multiemployer Plan, and none of the Company,
any of its Affiliates, or any ERISA Affiliate has contributed or been obligated
to contribute to any Multiemployer Plan at any time within the preceding six
years.
5
<PAGE> 11
2.11. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) Each of the Company and its Affiliates is, and will continue to be,
in full compliance with all applicable federal, state and local environmental
laws, regulations and ordinances governing its business, products, properties
or assets with respect to all discharges into the ground and surface water,
emissions into the ambient air and generation, accumulation, storage,
treatment, transportation, labeling or disposal of waste materials or process
by-products the violation of which could materially and adversely affect the
business, earnings, prospects, properties or condition (financial or other) of
the Company or any of its Affiliates, and none of the Company or any of its
Affiliates is liable for any penalties, fines or forfeitures for failure to
comply with any of the foregoing. All licenses, permits or registrations
required for the business of the Company and any of its Affiliates as presently
conducted and proposed to be conducted, under any federal, state or local
environmental laws, regulations or ordinances have been obtained or made, other
than any such licenses, permits or registrations the failure to obtain or make
which, either individually or in the aggregate, does not materially and
adversely affect, and will not materially and adversely affect, the business,
earnings, prospects, properties or condition (financial or other) of the
Company or any of its Affiliates, and each of the Company and its Affiliates is
in compliance therewith.
(b) No release, emission or discharge into the environment of hazardous
substances, as defined under the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended, or hazardous waste, as defined
under the Resource Conservation and Recovery Act, or air pollutants as defined
under the Clean Air Act, or pollutants, as defined under the Clean Water Act,
has occurred or is presently occurring on or from any property owned or leased
by the Company or any of its Affiliates in excess of federal, state or local
permitted releases or reportable quantities, or other concentrations, standards
or limitations under the foregoing laws or any state or local law governing the
protection of health and the environment or under any other federal, state or
local laws or regulations (then or now applicable, as the case may be) other
than any such releases, emissions or discharges which could result in the
incurrence by the Company and any of its Affiliates of liabilities of any
nature whatsoever, including civil or criminal fines or penalties, judgments,
indemnity obligations and costs of remediation (including all fees and expenses
of professionals), which, either individually or in the aggregate, does not
materially and adversely affect, and will not materially and adversely affect,
the business, earnings, prospects, properties or condition (financial or other)
of the Company or any of its Affiliates.
c) None of the Company or any of its Affiliates has ever (i) owned,
occupied or operated a site or structure on or in which any hazardous substance
was or is stored, transported or disposed of, or (ii) transported or arranged
for the transportation of any hazardous substance except, in each case, in full
compliance with all applicable federal, state and local environmental laws,
regulations and ordinances governing its business, products, properties or
assets or the storage, transportation or disposal of hazardous
6
<PAGE> 12
substances other than noncompliance which, either individually or in the
aggregate, does not materially and adversely affect, and will not materially
and adversely affect, the business, earnings, prospects, properties or
condition (financial or other) of the Company or any of its Affiliates. None of
the Company or any of its Affiliates has ever caused or been held legally
responsible for any release or threatened release of any hazardous substance,
or received notification from any federal, state or other governmental
authority of any such release or threatened release, or that it may be required
to pay any costs or expenses incurred or to be incurred in connection with any
efforts to mitigate the environmental impact of any release or threatened
release, of any hazardous substance from any site or structure owned, occupied
or operated by the Company or any of its Affiliates.
2.12. PENDING LITIGATION, ETC.
There is no action at law, suit in equity or other proceeding or
investigation (whether or not purportedly on behalf of the Company or any of
its Affiliates) in any court, tribunal or by or before any other governmental
or public authority or agency or any arbitrator or arbitration panel, pending
or, to the best knowledge of the Company, threatened against or affecting the
Company or any of its Affiliates or any of their respective properties, that
either individually or in the aggregate (a) would be reasonably likely to
materially and adversely affect the business, earnings, prospects, properties
or condition (financial or other) of the Company or any of its Affiliates, or
(b) could question the validity of this Agreement or the Notes. None of the
Company or any of its Affiliates is in default with respect to any order, writ,
injunction, judgment or decree of any court or other governmental or public
authority or agency or arbitrator or arbitration panel.
2.13. TAXES.
All federal, state and other tax returns of the Company and each of its
Affiliates required by law to be filed have been duly filed or a valid
extension for such filing has been obtained, and all federal, state and other
taxes, assessments, fees and other governmental charges upon the Company or
each of its Affiliates or upon any of their properties, income or assets that
are due and payable have been paid. The Company does not know of any proposed,
asserted or assessed tax deficiency against the Company or any of its
Affiliates. None of the Company or any of its Affiliates is a party to or bound
by or obligated under any tax sharing or similar agreement. There are no Liens
on any properties or assets of the Company or any of its Affiliates or arising
as a result of the delinquent payment or the non-payment of any tax,
assessment, fee or other governmental charge. None of the Company or any of its
Affiliates (a) has assumed or is liable for any federal, state or other income
tax liability of any other Person, including any predecessor corporation, as a
result of any purchase of assets or other business acquisition transaction
(other than a merger in which the Company was the surviving corporation or a
consolidation) or (b) has indemnified any other Person or otherwise agreed to
pay on behalf of any other Person tax liability growing out of or which may be
asserted on the basis of any tax treatment adopted with respect to all or any
aspect of such a business acquisition transaction. The
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charges, accruals and reserves, if any, on the books of each of the Company and
any of its Affiliates in respect of federal, state and local corporate
franchise and income taxes for all fiscal periods to date are adequate in
accordance with generally accepted accounting principles, and the Company knows
of no additional unpaid assessments for such periods or of any basis therefor
here are no applicable taxes, fees or other governmental charges payable by the
Company or any of its Affiliates in connection with the execution and delivery
of this Agreement or the offer, issuance, sale and delivery of the Notes.
2.14. HOLDING COMPANY ACT; INVESTMENT COMPANY ACT.
(a) None of the Company or any of its Affiliates is a "public utility
company" or a "holding company," or a "subsidiary company" of a "holding
company," or an affiliate of a "holding company" as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended, or a "public
utility" within the meaning of the Federal Power Act, as amended.
(b) None of the Company or any of its Affiliates is an "investment
company," or an "affiliated person" of an "investment company," or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended, and none of the Company or any of
its Affiliates is an "investment adviser" or an "affiliated person" of an
"investment adviser" as such terms are defined in the Investment Advisers Act
of 1940, as amended.
2.15. NO MARGIN REGULATION VIOLATION.
None of the transactions contemplated by this Agreement nor the
application of any part of the proceeds from the sale of the Notes will violate
or result in a violation of Section 7 of the Exchange Act or any regulations
issued pursuant thereto, including, without incantation, Regulation G (12
C.F.R., Part 207), as amended, Regulation T (12 C.F.R., Part 220), as amended,
and Regulation X (12 C.F.R., Part 224), as amended, of the Board of Governors
of the Federal Reserve System, or will require you to obtain a statement in
conformity with the requirements of Federal Reserve Form FR G-3 to register on
Federal Reserve Form FR G-1 under such regulations. The assets of the Company
do not include any "margin securities" within the meaning of such Regulation G,
and the Company does not have any intention of acquiring any such margin
securities.
2.16. OUTSTANDING SECURITIES.
All Securities (as defined in the Securities Act) of the Company have
been offered, issued, sold and delivered in compliance with, or pursuant to
exemptions from, all applicable federal and state laws, and the rules and
regulations of federal and state regulatory bodies governing the offering,
issuance, sale and delivery of securities. The Company is not required to file
on the date hereof nor has it filed prior to the date hereof, pursuant to
Section 12 of the Exchange Act, a registration statement relating to any class
of debt or equity securities.
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2.17. CONSENTS.
Any prior consent, approval or authorization of, registration,
qualification, designation, declaration or filing with, or notice to any
federal, state or local governmental or public authority or agency that is, was
or will be required for the valid execution, delivery and performance of this
Agreement and the valid offer, issuance, sale, delivery and performance of the
Notes has been obtained. Each of the Company and its Affiliates have obtained
all consents, approvals or authorizations of, made all declarations or filings
with, or given all notices to, all federal, state or local governmental or
public authorities or agencies which are necessary for the continued conduct by
the Company and any of its Affiliates of their respective businesses as now
conducted, other than such consents, approvals, authorizations, declarations,
filings and notices which, neither individually nor in the aggregate,
materially and adversely affect, or in the future will materially and adversely
affect, the business, earnings, prospects, properties or condition (financial
or other) of the Company or any of its Affiliates.
2.18. VALIDITY OF AGREEMENT AND NOTES.
This Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company, enforceable
in accordance with its terms. Upon receipt by the Company of payment for the
Notes as provided in this Agreement, the Notes will have been duly issued and
will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
2.19. LABOR RELATIONS.
None of the Company or any of its Affiliates is engaged in any unfair
labor practice which could materially adversely affect the business, earnings,
prospects, properties or condition (financial or other) of the Company or any
of its Affiliates. There is (a) no unfair labor practice complaint pending or,
to the best knowledge of the Company, threatened against the Company or any of
its Affiliates before the National Labor Relations Board or any court or labor
board, and no grievance or arbitration proceedings arising out of or under
collective bargaining agreements is so pending or, to the best knowledge of the
Company, threatened; (b) no strike, lock-out, labor dispute, slowdown or work
stoppage pending or, to the best knowledge of the Company, threatened against
the Company or any of its Affiliates; and (c) no union representation or
certification question existing or pending with respect to the employees of the
Company or any of its Affiliates and, to the best knowledge of the Company, no
union organization activity taking place, which unfair labor practice
complaint, grievance or arbitration proceedings, strike, lock-out, labor
dispute, slowdown or work stoppage or union representation or certification
question could have a material adverse effect on the business, earnings,
properties, prospects or condition (financial or other) of the Company or any
of its Affiliates.
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2.20. INSURANCE.
Each of the Company and its Affiliates has, with respect to its
properties and businesses, insurance of the types, with the insurers of such a
nature and with such terms as a prudent person would maintain with respect to
similar properties and a similar business.
2.21. SOLVENCY.
Each of the Company and its Affiliates is Solvent and, immediately
after giving effect to the issue and sale of the Notes and the consummation of
the other transactions contemplated by this Agreement, each of the Company and
its Affiliates will be Solvent.
For purposes of this Section 2.21. the term "Solvent" shall mean, with
respect to any Person, that:
(a) the assets of such Person, at a fair valuation, exceed the total
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of such Person,
(b) based on current projections, which are based on underlying
assumptions which provide a reasonable basis for the projections and which
reflect such Person's judgment based on present circumstances of the most likely
set of conditions and such Person's most likely course of action for the period
projected, such Person believes it has sufficient cash flow to enable it to pay
its debts as they mature, and
(c) such Person does not have an unreasonably small capital with
which to engage in its anticipated business.
For purposes of this Section 2.21., the "fair valuation" of the assets
of any Person shall be determined on the basis of the amount which may be
realized within a reasonable time, either through collection or sale of such
assets at the regular market value, conceiving the latter as the amount which
could be obtained for the property in question within such period by a capable
and diligent businessman from an interested buyer who is willing to purchase
under ordinary selling conditions.
3. REPRESENTATIONS OF THE PURCHASER.
3.1. NO INTENT TO DISTRIBUTE.
This Agreement is made with you in reliance upon your representation to
the Company, which by your acceptance hereof you confirm, that you are
purchasing the Notes as principal for your own account and not with a view to
the distribution thereof, and that you have no present intention of distributing
any of the same; provided, however,
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that the disposition of your property shall be at all times within your own
control and that your right to sell or otherwise dispose of all or any part of
the Notes purchased or acquired by you pursuant to an effective registration
statement under the Securities Act or under an exemption from such registration
available under the Securities Act (including but not limited to the exemption
provided by Rule 144A of the SEC thereunder) and in accordance with any
applicable state securities law shall not be prejudiced; provided further, that
you acknowledge that nothing in this Agreement is intended to impose an
obligation on the Company to register the Notes under the Securities Act or any
state securities law. You hereby represent that you have not engaged any Person
to act as your agent, broker or dealer in connection with the purchase of the
Notes hereunder. The Company and you each acknowledge that the Notes are
securities (as defined in the Securities Act and the Exchange Act).
4. NOTE PREPAYMENTS.
4.1. MANDATORY PREPAYMENTS.
(a) The Company shall, without notice, make a prepayment with respect
to the Notes, without premium, on May 25, 2005, in an aggregate amount of
$3,422,000, to be allocated among the holders of the Notes in proportion
pursuant to Section 4.3. hereof. Notwithstanding anything contained in this
Section, on the maturity date of the Notes, the full principal amount of the
Notes then outstanding, together with accrued interest thereon, shall be due
and payable.
(b) With respect to any Note which is held by an employee of the
Company who is not a member of the Love Family, the Company shall prepay,
without premium, the principal and accrued interest on such Note on a date
determined by the Company within 60 days after the termination of such
employment for any reason whatsoever, including death.
4.2. OPTIONAL PREPAYMENTS.
(a) Upon the terms and subject to the conditions hereinafter set forth,
and subject to the approval of the number of holders of the Senior Debt as are
required to amend the affirmative covenants under the holders' respective
governing document (the "Required Senior Debt Holders"), the Company, at its
option, upon notice as provided in Section 4.2.(b) hereof, may prepay the Notes
on any Interest Payment Date either in whole or from time to time in any part,
at a prepayment price equal to the aggregate principal amount of the Notes so to
be prepaid, plus interest accrued on the amount to be prepaid to the date fixed
for prepayment.
(b) Notice of any prepayment of Notes pursuant to this Section 4.2.
shall be given to each holder of the Notes not less than thirty (30) nor more
than sixty (60) days before the Interest Payment Date fixed for prepayment (the
"Optional Prepayment Date"),
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and shall state: (i) the Optional Prepayment Date, (ii) the aggregate principal
amount of the Notes to be prepaid on such Optional Prepayment Date, (iii) the
aggregate principal amount of the Notes and the principal amount of each such
Note held by such holder to be prepaid, and (iv) the aggregate amount of accrued
interest applicable to such prepayment.
4.3. PARTIAL PREPAYMENT PRO RATA.
The aggregate principal amount of each partial prepayment of Notes
pursuant to Article 4. hereof shall be (i) applied to installments of principal
in inverse order of maturity and (ii) allocated among the holders of the Notes
to be prepaid in proportion, as nearly as practicable, to the respective unpaid
principal amounts of Notes then held thereby, with adjustments, to the extent
practicable, to compensate for any prior prepayments not made in exactly such
proportion.
5. CERTAIN COVENANTS OF THE COMPANY.
The Company covenants and agrees that so long as any Notes shall remain
outstanding:
5.1 CORPORATE EXISTENCE.
The Company will, and will cause each of its Affiliates to, take and
fulfill, or cause to be taken and fulfilled, all actions and conditions
necessary to preserve and keep in full force and effect its existence, rights
and privileges as a corporation and will not liquidate or dissolve, and it will
take and fulfill, or cause to be taken and fulfilled, all actions and
conditions necessary to qualify, and to preserve and keep in full force and
effect its qualification, to do business as a foreign corporation in each
jurisdiction in which the conduct of its business or the ownership or leasing
of its properties requires such qualification except to the extent that any
failure to so qualify, or to so preserve and keep din full force and effect
such qualification, could not have a material and adverse effect on the
business, earnings, prospects, properties or condition (financial or other) of
the Company or any of its Affiliates.
5.2. GENERAL MAINTENANCE OF PROPERTIES AND BUSINESS, ETC.
The Company will, and will cause each of its Affiliates to:
(a) maintain its property in good condition (subject to ordinary wear
and tear) and make all reasonable and necessary renewals, replacements,
additions, betterments and improvements thereof and thereto, so that the
business carried on in connection therewith may be conducted properly at a
times;
(b) maintain or cause to be maintained, with financially sound insurers
of nationally recognized stature and responsibility, insurance with respect to
its property and business of such a nature, with such terms and in such
amounts, as a prudent person
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would maintain with respect to similar properties and a similar business, and,
in any event, will maintain insurance on all its property of a character usually
insured by corporations engaged in the same or a similar business similarly
situated against loss, damage or business interruption of the kinds and in the
amounts customarily insured against and for by such corporations, and carry or
cause to be carried, with such insurers in customary amounts, such other
insurance, including public liability insurance, as is usually carried by
corporations engaged in the same or a similar business similarly situated, in
each case subject to such retentions and/or deductibles as are usually carried
by corporations engaged in the same or a similar business that are similarly
situated or that have similar consolidated revenues;
c) keep proper books of record and accounts in which entries will
be made of its business transactions in accordance with and to the extent
required by generally accepted accounting principles; and
d) set aside on its books from its earnings for each fiscal year,
in amounts deemed adequate in the reasonable opinion of the Company, all proper
accruals and reserves that, in accordance with generally accepted accounting
principles, should be set aside from such earnings in connection with its
business and the business of the Affiliates, including reserves for
depreciation, obsolescence and/or amortization and accruals for taxes based on
or measured by income or profits and for all other taxes.
5.3. COMPLIANCE WITH LAW, ETC.
The Company will not, and will not permit any of its Affiliates to, (i)
violate any laws, ordinances, governmental rules or regulations to which it is
or may become subject, or (ii) fail to obtain or maintain any patents,
trademarks, service marks, trade names, copyrights, design patents, licenses,
permits, franchises or other governmental authorizations necessary to the
ownership of its property or to the conduct of its business except to the extent
that any such violation or failure could not materially and adversely affect the
business, earnings, prospects, properties or condition (financial or other) of
the Company or any of its Affiliates.
5.4. PAYMENT OF TAXES AND CLAIMS.
The Company will, and will cause each of its Affiliates to, pay and
discharge promptly when due:
(a) all taxes, assessments and governmental charges and levies
imposed upon it, its income or profits or any of its properties; and
(b) all lawful claims of materialmen, mechanics, carriers,
warehousemen, landlords and other similar Persons for labor, materials,
supplies and rentals that, if unpaid, might by law become a Lien upon any of
its property;
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provided, however, that none of the foregoing need be paid while the same is
being contested in good faith by appropriate proceedings diligently conducted
so long as:
(i) adequate reserves shall have been established in accordance with
generally accepted accounting principles with respect thereto; and
(ii) the right of the Company or such Affiliate, as the case may
be, to use the particular property shall not be materially and adversely
affected thereby.
5.5 NOTICE OF CERTAIN EVENTS AND CONDITIONS.
The Company will give prompt written notice to each holder of an
outstanding Note of any event of default (or any event which with notice or
lapse of time or both would constitute an event of default) under any evidence
of Indebtedness for Money Borrowed in an aggregate amount of $1,000,000 or more
of the Company or any of its Affiliates, or under any indenture, mortgage or
other agreement or instrument relating to any such evidence of Indebtedness for
Money Borrowed, and what action the Company has taken, is taking or proposes to
take and an estimate of the time necessary to cure any such default.
5.6. INSPECTION.
The Company will, and will cause each of its Affiliates to, permit upon
reasonable notice any holder of Notes by its representatives, agents or
attorneys, (i) to examine all books of account, records, reports and other
papers of the Company and the Affiliates, (ii) to make copies and take extracts
from any thereof, (iii) to discuss the affairs, finances and accounts of the
Company and the Affiliates with their respective officers and independent
certified public accountants (and by this provision the Company each hereby
authorizes said accountants to discuss with any such Noteholder the finances and
accounts of the Company and the Affiliates), and (iv) to visit and inspect, at
reasonable times during normal business hours, the properties of the Company or
any of its Affiliates. Each such inspection shall be at the expense of the
Person making the inspection unless such inspection shall be made during the
continuance of a Default or Event of Default (in which event, the expense of
such inspection shall be borne by the Company). Notwithstanding the foregoing
sentence, it is understood and agreed by the Company that all expenses in
connection with any such inspection or discussion incurred by the Company or any
of its Affiliates, any officers and employees thereof and the independent
certified public accountants thereof or shall be expenses payable by the Company
and shall not be expenses of the Person making the inspection or discussion.
5.7. ERISA.
(a) The Company, its Affiliates and the ERISA Affiliates each will
take all actions and fulfill all conditions necessary to maintain any and all
Plans in substantial compliance with applicable requirements of ERISA, the
Code and applicable foreign law
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until such Plans are terminated and the liabilities thereof discharged, in
accordance with applicable law.
(b) No domestic Pension Plan will have any "accumulated funding
deficiency" (within the meaning of Section 412 of the Code), and no foreign
Pension Plan will be in violation of any funding requirement imposed by
applicable foreign law, which deficiency or violation could materially adversely
affect the business, earnings, prospects, properties or condition (financial or
other) of the Company or any of its Affiliates.
5.8. TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any of its Affiliates to,
enter into any transaction (including, without limitation, the purchase, sale or
exchange of any property, the rendering of any services or the payment of
management fees) with any Affiliate (other than the Company or any of its
Affiliates), except in the ordinary course of, and pursuant to the reasonable
requirements of, the business of the Company and the Affiliates, and in good
faith and upon commercially reasonable terms that are no less favorable to the
Company or such Affiliate than would obtain in a comparable arm's-length
transaction with a Person other than an Affiliate.
5.9. NATURE OF BUSINESS.
The Company will not, and will not permit any of its Affiliates to,
engage in any other line of business than those engaged in on the Closing Date.
5.10. ENVIRONMENTAL LAW COMPLIANCE.
(a) The Company will at all times comply and cause each Affiliate to
comply, in all respects, with all environmental laws the failure to comply with
which is, individually or in the aggregate, reasonably likely to have a material
adverse effect on the business, earnings, prospects, properties or condition
(financial or other) of the Company or any of its Affiliates, and indemnify, pay
and hold each Noteholder harmless from and against any and all losses, costs
(including attorney's fees), liabilities and damages whatsoever incurred by such
Noteholder by reason of (i) any liability of the Company or any of its
Affiliates under any applicable environmental laws, or (ii) any violation of any
applicable environmental laws for which the Company or any of its Affiliates is
liable or which is related to any real estate or other facility owned, leased or
operated by the Company or any of its Affiliates, or (iii) the imposition of any
governmental Lien for the recovery of any such liability or violation.
(b) The Company will provide each Noteholder promptly with a copy of any
notice received by the Company or any Affiliate from any governmental agency
stating that the Company or such Affiliate has become liable for the cost of
investigating, removing or remediating hazardous materials or subject to a
cleanup order or decree, or a fine or penalty issued or imposed, by an agency
having jurisdiction over the Company or
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any such Affiliate if the Company believes or reasonably should believe that the
matter that is the subject of such notice is, individually or in the aggregate,
reasonably likely to have a material adverse effect on the business, earnings,
prospects, properties or condition (financial or other) of the Company or any of
its Affiliates. Upon receipt of such notice, or if any Noteholder at any time
has a reasonable basis to believe that any facility owned, leased or operated by
the Company or any of its Affiliates has become contaminated or subject to a
cleanup or mitigation order or decree, or a fine or penalty, issued or imposed
by any federal, state or local governmental agency, then the Company agrees,
upon request from such Noteholder, to provide such Noteholder, at the Company's
expense, with such reports, certificates, engineering studies or other written
material or data as such Noteholder may reasonably require.
5.11. FURTHER ASSURANCES.
The Company will, and will cause each Affiliate to, promptly execute
and deliver all further instruments and documents and take all further action
that may be necessary in order to give effect to the provisions of this
Agreement and the Notes.
6. DEFAULTS AND REMEDIES
6.1. EVENTS OF DEFAULT; ACCELERATION OF NOTES.
If any of the following conditions or events ("Events of Default")
shall occur and be continuing:
(a) any payment of principal on any Note shall not be made when the
same becomes due and payable, whether at maturity, upon acceleration, or
otherwise; or
(b) any payment of interest on any Note shall not be made when the
same becomes due and payable and such default shall continue for five (5)
Business Days following the date on which such payment was due and payable; or
(c) the Company shall default in any material respect in the due and
punctual performance of or compliance with any other covenant, condition or
agreement to be performed or observed by it under any provision hereof, and any
such failure shall continue unremedied for thirty (30) days; or
(d) any representation, warranty, certification or statement of the
Company, made or contained in this Agreement, or in any agreement, instrument,
certificate, statement or other writing furnished in connection herewith or
therewith or pursuant hereto or thereto, shall prove to have been false or
inaccurate in any material respect on the date as of which such representation
or warranty was made, or
(e) the holder, trustee or agent of any Indebtedness of Money
Borrowed of the Company or any of its Affiliates shall, in respect of any of its
Indebtedness for Money
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Borrowed (excluding the Notes) in an amount, individually or in the aggregate,
exceeding $10,000,000 causes the maturity of such Indebtedness for Money
Borrowed to be accelerated or otherwise to become due and payable prior to its
stated maturity, or to take any action to realize upon any assets or property of
the Company or any of its Affiliates under any agreement or instrument
evidencing or securing such Indebtedness for Money Borrowed;
(f) a final judgment or judgments entered by a court or courts of
competent jurisdiction for the payment of money in excess of $3,000,000 in the
aggregate shall be rendered against the Company or any of its Affiliates and
shall remain in force undischarged and unstayed for a period of more than
forty-five (45) days; or
(g) either of the Company or Enterprises becomes insolvent or bankrupt,
is generally not paying its debts as they become due or makes an assignment for
the benefit of creditors, or either of the Company or Enterprises causes or
suffers an order for relief to be entered with respect to it under applicable
federal bankruptcy law or applies for or consents to the appointment of a
custodian, trustee or receiver for either of the Company or Enterprises or for
the major part of the property of either; or
(h) a custodian, trustee or receiver is appointed for either of the
Company or Enterprises or for the major part of the property of either and is
not discharged within 60 days after such appointment; or
(i) bankruptcy, reorganization, arrangement or insolvency proceedings,
or other proceedings for relief under any bankruptcy or similar law or laws for
the relief of debtors, are instituted by or against either of the Company or
Enterprises and, if instituted against either of the Company or Enterprises,
are consented to or are not dismissed within 60 days after such institution.
then:
(x) upon the occurrence and continuance of any of the Events of Default
set forth in clauses (g) through (i), inclusive, of this Section 6.1.,
the unpaid principal amount of the Notes shall automatically become
due and payable, together with interest accrued thereon, without
presentment, demand, protest or any notice, all of which are expressly
hereby waived; or
(y) upon the occurrence and continuance of any of the Events of Default
set forth in clauses (a) through (f), inclusive, of this Section 6.1.,
the Required Holders may by written notice or notices to the Company
declare all of the Notes then outstanding to be due and payable,
whereupon the same shall mature and become due and payable, without
presentment,demand, protest or any other notice, all of which are
hereby waived.
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6.2. DEFAULT REMEDIES.
If an Event of Default shall occur and be continuing, the holder of any
Notes then outstanding may exercise any right, power or remedy permitted to it
by law, either by suit in equity or by action at law, or both, whether for
specific performance of any covenant or agreement contained in this Agreement,
or in such Note or for an injunction against a violation of any of the terms of
this Agreement or such Note or in aid of any exercise of any power granted in
this Agreement or in such Note, or may proceed to enforce payment of such Note
or to enforce any other legal or equitable right of the holder of such Note. No
remedy herein conferred upon any Noteholder is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law, in equity, by statute or otherwise. No course of dealing on the part of
any Noteholder, or any delay or failure on the part of any Noteholder to
exercise any right or power, shall operate as a waiver of such right or power
or otherwise prejudice the rights, powers and remedies of any other Noteholder.
No failure to insist upon strict compliance with any covenant, term, condition
or other provision of this Agreement or the Notes shall constitute a waiver by
any Noteholder of any such covenant, term, condition or other provision or of
any Default or Event of Default in connection therewith. To the extent
effective under applicable law, the Company hereby agrees to waive, and does
hereby absolutely and irrevocably waive and relinquish, the benefit and
advantage of any valuation, stay, appraisement, extension or redemption laws
now existing or that may hereafter exist that, but for this provision, might be
applicable to any sale made under any judgment, order or decree of any court,
or otherwise, based on the Notes or on any claim for interest on the Notes. If
an Event of Default shall occur, and be continuing, the Company will pay to the
Noteholders, to the extent not prohibited by applicable law, such further
amount as shall be sufficient to cover the reasonable costs and expenses of
collection and of the taking of remedial actions and the maintenance of
enforcement proceedings, including, without limitation, reasonable attorneys'
fees and disbursements. All sums payable by the Company under the Notes shall
be paid without counterclaim, setoff, deduction or defense and without
abatement, suspension, deferment, diminution or reduction.
6.3. NOTICE OF DEFAULT.
If the holder of any Note or the holder of any other evidence of
Indebtedness for Money Borrowed of the Company shall give any notice or take any
other action with respect to a claimed default, the Company shall forthwith give
written notice thereof to all holders of Notes then outstanding describing the
notice or action and the nature of the claimed default.
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7. SUBORDINATION OF THE NOTES.
7.1. SUBORDINATION.
Anything in this Agreement, the Notes or the Senior Debt to the
contrary notwithstanding, the Indebtedness evidenced by the Notes shall be
subordinate and junior in right of payment, to the extent and in the manner set
forth in this Article 7., to the prior payment in full of all Senior Debt (as
defined in Section 7.2. hereof).
7.2. DEFINITIONS.
For the purposes of this Article 7., the following terms shall have the
following respective meanings:
"Blockage Default" means one or more Senior Covenant Defaults
and/or one or more Senior Payment Defaults existing at any one time.
"Payment Blockage Period" means a period commencing on the
occurrence of any Blockage Default and ending on the earliest of (i) the day on
which no Blockage Default shall be continuing (or remain unremedied or
unwaived); or (ii) any day after the commencement of such Payment Blockage
Period on which more than $1,000,000 in aggregate principal amount of Senior
Debt has become due and payable prior to its stated maturity, whether by
declaration of the holder or holders thereof or otherwise.
"Senior Bankruptcy Default" means any event of default under or
contained in any agreement or instrument evidencing Senior Debt or pursuant to
which Senior Debt has been incurred of the type or similar to the events of
default set forth in Section 6.1. (g), (h) and (i) of this Agreement.
"Senior Covenant Default" means any default other than a Senior
Payment Default, but including a Senior Bankruptcy Default, occurring under any
Senior Debt, which event of default entities the holder or holders of such
Senior Debt to accelerate the maturity thereof, after all applicable grace
periods have expired.
"Senior Debt" means Indebtedness for Money Borrowed pursuant to
(a) each of the following: (i) that certain Credit Agreement dated as of
November 15, 1994 among the Company, Enterprises, the lenders listed therein and
Bank of America National Trust and Savings Association as agent; (ii) those
certain Note Agreements dated as of December 9, 1993 regarding the sale of an
aggregate principal amount of $52,000,000 of the Company's and Enterprises'
6.47% Senior Notes, Series A due December 9, 2008 and an aggregate principal
amount of $8,000,000 of the Company's and Enterprises' Senior Notes, Series B
due December 9, 1997; (iii) that certain Term Loan dated as of December 31, 1991
among Trust Company Bank ("Trust Company"), Enterprises, the Company,
19
<PAGE> 25
Printpack (Europe), Ltd., and Printpack (N.I.), Ltd., as amended by that certain
First Amendment to Term Loan Agreement dated as of December 8, 1993 among
Enterprises, the Company, Printpack Holdings, Ltd. and Trust Company; (iv) those
certain Note Agreements dated as of January 15, 1990 regarding the sale of an
aggregate principal amount of $25,000,000 of the Company's and Enterprises'
9.35% Senior Notes due January 15, 2002; (v) those certain Note Agreements dated
as of January 15, 1988 regarding the sale of an aggregate principal amount of
$25,000,000 of the Company's 9.90% Senior Notes due January 15, 1998; and (vi)
that certain Agreement of Sale dated as of December 1, 1980 by and between the
Industrial Development Authority of the County of Spotsylvania and the Company
(items (i) through (vi) collectively referred to as the "Senior Agreements");
(b) any amendments, supplements, modifications, extensions or refinancings of
the Senior Agreements and (c) all other Indebtedness for Money Borrowed which is
hereafter designated by the Company to be Senior Debt; provided, however, that
in no event shall the aggregate amount of Senior Debt outstanding exceed
$250,000,000; provided further, that the holders of a majority of the
outstanding principal amount of the Notes may amend the limitation on Senior
Debt in this Section 7 2.
"Senior Payment Default" means any event of default in respect
of any payment or prepayment of principal or interest with respect to any
Senior Debt, which event of default entitles the holder or holders of such
Senior Debt to accelerate the maturity thereof.
7.3. PAYMENT BLOCKAGE PERIOD.
During any Payment Blockage Period, unless and until all Senior Debt
shall have been paid in full, or each Blockage Default shall have been remedied
or waived or shall have ceased to exist, no direct or indirect payment (in cash,
property or securities or by set-off or otherwise) shall be made or agreed to be
made by or on behalf of the Company or from any of its properties or from any
other source on account of the principal of, or interest on any Note, or in
respect of any prepayment, redemption, retirement, purchase or other acquisition
of any of the Notes or of any judgment for any of the foregoing; provided that,
the Company shall promptly inform each holder of the Notes of the existence of
such Blockage Default, specifying whether such Blockage Default(s) is a Senior
Payment Default(s) and/or a Senior Covenant Default(s) and describing such
Blockage Default(s) with particularity; provided further, that any such failure
on the part of the Company to so notify each holder of the Notes of any such
Blockage Default(s) shall not in any way affect the validity of the Payment
Blockage Period.
7.4. ACCELERATION OF SUBORDINATED NOTES.
Unless (i) any Senior Debt has matured by passage of time or by
acceleration and has not been paid or (ii) any Senior Bankruptcy Default has
occurred and is continuing, no holder of any Note shall have the right during
any Payment Blockage Period to take any
20
<PAGE> 26
action to accelerate the maturity of the Subordinated Notes pursuant to Section
6. 1. hereof or to pursue, by suit or otherwise, any remedy with respect to its
rights hereunder or under the Notes, whether provided hereunder or by law;
provided, however, that any holder of any Note may, during a Payment Blockage
Period, take legal action to compel the Company to perform any obligation
hereunder or under the Notes or to enjoin the Company from violating any
obligation hereunder or under the Notes, so long as such obligation is not a
payment obligation and the performance or observance of such obligation would
not directly conflict with or be inconsistent with the performance or observance
of any of the Company's obligations to any holder of Senior Debt. Nothing in
this Section 7.4. shall prohibit the Required Holders from taking any action to
accelerate the maturity of the Notes pursuant to Section 6.2. hereof or from
pursuing any remedy with respect to its rights hereunder or under the Notes if
(i) any payment with respect to the Notes which was due at its scheduled
maturity at the beginning of a Payment Blockage Period or which became due at
its scheduled maturity during a Payment Blockage Period is not made at the
expiration of such Payment Blockage Period or (ii) an Event of Default under
this Agreement regarding the Notes exists and is continuing and no Payment
Blockage Period has commenced and is continuing; provided, however, that no such
acceleration shall become effective and no such remedies shall be commenced
until five days after written notice has been given to the Company of the
intention to accelerate or commence remedies (which notice shall immediately be
conveyed by the Company to all holders of Senior Debt) and such notice shall
have been received by the holders of Senior Debt; and provided, further, that
any such acceleration shall be rescinded and any proceedings seeking such
remedies shall be discontinued if, within ten days after receiving such notice
from the Company, a Blockage Default occurs and is continuing.
7.5. INSOLVENCY, BANKRUPTCY, ETC.
In the event of:
(i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company, its creditors as such or its property,
(ii) any proceeding for the liquidation, dissolution or other
winding-up of the Company, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of creditors, or
(iv) any other marshaling of the assets of the Company,
all Senior Debt shall first be paid in full in cash before any payment or
distribution, whether in cash, securities or other property, shall be made by
or on behalf of the Company or from its assets or any other source to any
holder of any Note on account of such Note. Any payment or distribution,
whether in cash, securities or other property
21
<PAGE> 27
(including securities of the Company or any other Person provided for by a plan
of reorganization or readjustment the payment of which is subordinate, at least
to the extent provided in these subordination provisions with respect to the
Notes, to the payment in full of all Senior Debt at the time outstanding and to
any securities issued in respect thereof under any such plan of reorganization
or readjustment), which would otherwise (but for these subordination provisions)
be payable or deliverable in respect of any Notes shall first be paid or
delivered directly to the holders of Senior Debt for application pro rata in
accordance with the priorities then existing among such holders until all Senior
Debt shall have been paid in full.
7.6. MATURITY OR ACCELERATION OF SENIOR DEBT.
In the event that any Senior Debt (i) has matured by passage of time or
by acceleration and has not been paid or (ii) has been declared due and payable
as the result of the occurrence of any one or more defaults or events of default
(including any Blockage Default) in respect thereof, under circumstances in
which the terms of Section 7.5. hereof are not applicable, no payment shall be
made by or on behalf of the Company or from its assets or any other source in
respect of any Note and no purchase, redemption, retirement or other acquisition
shall be made in respect thereof unless and until such Senior Debt shall have
been paid in full or provision for such payment has been made or such
declaration and its consequences shall have been rescinded and all such defaults
shall have been remedied or waived or shall have ceased to exist.
7.7. CONSTRUCTIVE TRUST.
If any payment or distribution of any character or any security, whether
in cash, securities or other property (including any securities of the Company
or any other Person provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in this Article
7. with respect to the Notes, to the payment of all Senior Debt at the time
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment), shall be received from or on behalf of the
Company, or from any of its properties or any other source, including pursuant
to a judgment, by any holder of any Note on account of such Note in
contravention of any of the terms hereof, including without limitation the
prohibitions on payments contained in Sections 7.3., 7.5. and 7.6. hereof, and
before all the Senior Debt shall have been paid in full, or provision for such
payment has been made, such payment or distribution or security shall be
received in trust for the benefit of, and shall be paid over or delivered and
transferred to, the holders of the Senior Debt at the time outstanding in
accordance with the priorities then existing among such holders for application
to the payment of all Senior Debt remaining unpaid, to the extent necessary to
pay all such Senior Debt in full. In the event of a failure of any holder of any
Note to endorse or assign any such payment, distribution or security, each
holder of Senior Debt is hereby irrevocably authorized to endorse or assign the
same.
22
<PAGE> 28
7.8. OBLIGATIONS OF THE COMPANY.
No present or future holder of any Senior Debt shall be prejudiced in
the right to enforce subordination of the Notes by any act or failure to act on
the part of the Company. Nothing contained herein shall impair, as between the
Company and any holder of any Note, the obligation of the Company to pay to the
holder thereof the principal thereof, and interest thereon as and when the same
shall become due and payable in accordance with the terms thereof, or prevent
any holder of any Note from exercising all rights, powers and remedies otherwise
permitted by applicable law or hereunder or thereunder upon a Default or Event
of Default hereunder, all subject to the rights of the holders of the Senior
Debt to receive cash securities or other property otherwise payable or
deliverable to any holder of any Note. The Company hereby covenants and agrees
that, immediately upon receipt of any notice or otherwise has knowledge
regarding the existence of a Blockage Default, the Company will promptly notify
the holder or holders of the Notes of such Blockage Default(s), provided,
however, that any failure on the part of the Company to so notify each holder of
the Notes of any such Blockage Default shall not in any way affect the validity
of any Payment Blockage Period.
7.9. SUBROGATION.
Upon the payment in full of all Senior Debt, the holder or holders of
the Notes shall be subrogated to all rights of any holders of Senior Debt to
receive any further payments or distributions applicable to the Senior Debt
until the Notes shall have been paid in full, and for the purposes of such
subrogation, no payment or distribution received by the holders of Senior Debt
of cash, securities or other property to which the holder or holders of the
Subordinated Notes would have been entitled except for these subordination
provisions shall, as between the Company and its creditors other than in each
case the holders of Senior Debt, on the one hand, and the holder or holders of
the Notes, on the other, be deemed to be a payment or distribution by the
Company to or on account of the Senior Debt.
7.10. AMENDMENT TO SENIOR DEBT, ETC.
No right of any present or future holder of any Senior Debt to enforce
the subordination herein shall at any time or in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or a holder of
any Senior Debt or by any noncompliance by the Company with the terms,
provisions and covenants of this Agreement, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
7.11. FILING PROOFS OF CLAIM, CONSENTS, ASSIGNMENTS, ETC.
The holder of each Note undertakes and agrees for the benefit of each
holder of Senior Debt to execute, verify, deliver and file any proofs of claim,
consents, assignments or other instruments which any holder of Senior Debt may
at any time require in order to
23
<PAGE> 29
prove and realize upon any rights or claims pertaining to the Notes and to
effectuate the full benefit of the subordination contained herein; and upon
failure of the holder of any Note so to do, any such holder of Senior Debt shall
be deemed to be irrevocably appointed the agent and attorney-in-fact of the
holder of such Note to execute, verify, deliver and file any such proofs of
claim, consents, assignments or other instrument.
8. INTERPRETATION OF AGREEMENT AND NOTES.
8.1. DEFINITIONS.
Except as the context shall otherwise require, the following terms
shall have the following meanings for all purposes of this Agreement (the
definitions to be applicable to both the singular and the plural form of the
terms defined, where either such form is used in this Agreement):
"Affiliate," with respect to any Person (hereinafter "such
Person"), shall mean any other Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with, such Person or another Affiliate of such
Person, (ii) which beneficially owns or holds five percent (5%) or more
of the shares of any class of the Voting Stock of such Person, or (iii)
five percent (5%) or more of the shares of any class of Voting Stock of
which is beneficially owned or held of record by such Person or any of
its Affiliates. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
Voting Stock, by contract or otherwise. "Affiliate," when used herein
without reference to any Person, shall mean an Affiliate of the Company.
"Board" shall mean, with respect to any Person, its board of
directors or, if it does not have a board of directors, its governing
body which performs the same duties as a board of directors.
"Business Day" shall mean any day on which commercial banks are
not authorized or required to close in Atlanta, Georgia.
"Capital Lease" shall mean any lease or other agreement for the
use of property which is required to be capitalized on a balance sheet
of the lessee or other user of property in accordance with generally
accepted accounting principles.
"Capital Lease Obligation" with respect to any Person, shall
mean the aggregate amount which, in accordance with generally accepted
accounting principles, is required to be reported as a liability on the
balance sheet of such Person at such time in respect of such Person's
interest as lessee under a Capital Lease.
24
<PAGE> 30
"Closing Date" shall have the meaning set forth in Section 1.2.
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time and any successor statute, together with the rules and
regulations thereunder.
"Company" shall have the meaning set forth in the first sentence
hereof.
"Dollars" or "$" shall mean the lawful currency of the United
States of America, and in relation to any payment under this Agreement,
same day or immediately available funds.
"Event of Default" shall have the meaning assigned thereto in Section 6.
1. hereof
"Enterprises" shall mean Printpack Enterprises, Inc., a Georgia
corporation.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute, together with the rules
and regulations thereunder.
"ERISA Affiliate" shall mean any Person which is under "common control"
with the Company or any of its Affiliates (within the meaning of Section 414(b)
or (c) of the Code or Section 4001(a)(14) of ERISA).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
The term "generally accepted accounting principles" shall mean, as of
the date of any determination with respect thereto, generally accepted
accounting principles as understood and applied in the United States at the
time in question.
The terms "hereof", "herein," "hereunder" and other words of similar
import shall be construed to refer to this Agreement as a whole and not to any
particular Section or other subsection.
The term "holder," with respect to any Note, shall mean the Person in
whose name such Note is registered.
"Indebtedness" with respect to any Person, shall mean all items (other
than capital stock, capital surplus, retained earnings and deferred credits and
deferred income taxes), which in accordance with generally accepted accounting
principles would be included in determining total liabilities as shown on the
liability side of a balance sheet as at the date on which Indebtedness is to be
determined. "Indebtedness" shall also include, whether or not so reflected, (a)
indebtedness, obligations and liabilities secured by any Lien on property of
such Person whether or not the indebtedness secured thereby shall have been
25
<PAGE> 31
assumed by such person, (b) all obligations of such Person in respect of Capital
Leases, and (c) all guarantees.
"Indebtedness for Money Borrowed" with respect to any Person, shall mean
and include all Indebtedness of such Person (a) in respect of money borrowed or
evidenced by a promissory note, debenture or other like written obligation to
pay money, (b) in respect of any Capital Lease Obligations, (c) representing all
or part of the deferred purchase price of any assets acquired by such Person (d)
all obligations or liabilities of others secured by a Lien on any asset owned by
such Person, irrespective of whether such obligation or liability is assumed, to
the extend of the lesser of such obligation or liability or the fair market
value of such asset; and (e) any guarantees by such Person of any Indebtedness
for Money Borrowed of another Person, provided, however, that in determining the
Indebtedness for Money Borrowed of the Company or any Affiliate, (i) all
liabilities for which the Company or any Affiliate is jointly and severally
liable with one or more other Persons (including, without limitation, all
liabilities of any partnership or joint venture of which the Company is a
general partner or co-venturer) shall be included at the full amount thereof
without regard to any right the Company or Affiliate may have against any such
other Person for contribution or indemnity, and (ii) no effect shall be given to
deposits, trust arrangements or similar arrangements which, in accordance with
generally accepted accounting principles extinguish Indebtedness for Money
Borrowed for which the Company or any Affiliate remains legally liable.
"Interest Payment Date" shall have the meaning set forth in Section 1.
1. hereof
"Lien" shall mean any interest in property securing an obligation owed
to, or a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, civil law, statute, civil code or
contract, whether or not such interest shall be recorded or perfected and
whether or not such interest shall be contingent upon the occurrence of some
future event or events or the existence of some future circumstance or
circumstances, and including the lien, privilege, security interest or other
encumbrance arising from a mortgage, deed of trust, hypothecation, cession,
transfer, assignment, pledge, adverse claim or charge, conditional sale or trust
receipt, or from a lease, consignment or bailment for security purposes. "Lien"
shall also include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting property. For the purposes of this
Agreement, a Person shall be deemed to be the owner of any property that such
Person shall have acquired or shall hold subject to a conditional sale agreement
or other arrangement (including a leasing arrangement) pursuant to which title
to the property shall have been retained by or vested in some other Person for
security purposes.
"Love Family" shall mean Gay M. Love, Dennis M. Love, James E. Love,
III, C. Keith Love, William J. Love, Carol Anne Love Jennison, David M. Love or
any of their respective spouses, estates or lineal descendants, or any trust
created for the direct and sole benefit of any such Persons or while and to the
extent they are serving in such capacity, the executors, administrators or
personal representatives of such Persons.
26
<PAGE> 32
"Multiemployer Plan" shall mean any Plan that is a "multiemployer plan"
(within the meaning of Section 4001 (a)(3) of ERISA).
"Noteholder", with respect to any Note, shall mean the Person in whose
name such Note is registered.
"Notes" shall have the meaning set forth in Section 1. 1. hereof.
"Optional Prepayment Date" shall have the meaning set forth in Section
4.2. hereof.
The term "outstanding," with respect to the Notes, shall mean, as of
the date of determination, all Notes heretofore delivered pursuant to this
Agreement, except Notes theretofore cancelled or delivered for cancellation and
Notes in exchange or replacement for which other Notes have been delivered
pursuant to this Agreement; provided, however, that, in determining whether the
holders of the requisite aggregate unpaid principal amount of Notes outstanding
have given any notice or taken any action hereunder, Notes held or owned,
directly or indirectly, by the Company, any of its Affiliates or any other
Affiliate shall be disregarded and deemed not to be outstanding.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereof.
"Pension Plan" shall mean any Plan that is an "employee pension benefit
plan" (within the meaning of Section 3(2) of ERISA).
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, estate, unincorporated
organization or government (or any agency or political subsection thereof).
"Plan" shall mean any "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) that the Company, any of its Affiliates or any ERISA
Affiliate maintains, contributes to or is obligated to contribute to for the
benefit of employees or former employees of the Company, any of its Affiliates
or any ERISA Affiliate.
"Purchaser" shall have the meaning set forth in Section 3.1. hereof.
"Purchase Price" shall have the meaning set forth in Section 1.2.
hereof.
"Required Noteholders" shall mean the holders of at least seventy-five
percent (75%) of the aggregate outstanding principal amount of the Notes.
"SEC" shall mean the Securities and Exchange Commission and any
successor organization.
27
<PAGE> 33
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
The term "this Agreement" shall mean this Purchase Agreement (including
the annexed Exhibits and Schedules), as it may from time to time be amended,
supplemented or modified in accordance with its terms.
"Voting Stock," with respect to a corporation, shall mean the stock of
such corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect members of the Board (or other governing body)
of such corporation, and with respect to any partnership, shall mean the
partnership interests in such partnership the owners of which are entitled to
manage the affairs of partnership, or vote in connection with the management of
the affairs of the partnership or the designation of another Person as the
Person entitled to manage the affairs of the partnership (it being understood
that, in the case of any partnership, "shares" of Voting Stock shall refer to
such partnership interests).
8.2. ACCOUNTING TERMS.
All accounting terms used herein that are not otherwise expressly
defined shall have the respective meanings given to them in accordance with
generally accepted accounting principles at the particular time.
8.3. GOVERNING LAW.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF GEORGIA.
8.4. HEADINGS.
The headings of the Sections and other subsections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
constitute a part hereof.
8.5 INDEPENDENCE OF COVENANTS.
Each covenant made by the Company herein is independent of each other
covenant so made. The fact that the operation of any such covenant permits a
particular action to be taken or condition to exist does not mean that such
action or condition is not prohibited, restricted or conditioned by the
operation of the provisions of any other covenant herein.
28
<PAGE> 34
9. MISCELLANEOUS.
9.1. LIMITATION ON TRANSFER.
The Notes may not be transferred, except by will or intestacy, to any
Person, other than (i) the Company, (ii) an initial holder of the Notes or (iii)
any member of the Love Family.
9.2. NOTICES.
(a) All communications under this Agreement or the Notes shall be in
writing and shall be delivered or mailed or sent by facsimile transmission and
confirmed in writing (i) if to you, to you at your address set forth in
Schedule I hereto, marked for attention as there indicated, or at such other
address as you may have furnished to the Company in writing, (ii) if to any
other Noteholder, to it at its address listed in the books for the registration
and registration of transfer of Notes, or at such other address as such
Noteholder shall have furnished to the Company in writing and (iii) if to the
Company, to it at its address shown at the head of this Agreement or at such
other address or facsimile number as it shall have furnished in writing to you
and all other holders of the Notes at the time outstanding.
(b) Any written communication so addressed and mailed by certified or
registered mail, return receipt requested, shall be deemed to have been given
when so mailed. All other written communications shall be deemed to have been
given upon receipt thereof
9.3. SURVIVAL.
All representations, warranties and covenants made by the Company
herein or by the Company or any of its Affiliates in any certificate or other
instrument delivered under or in connection with this Agreement shall be
considered to have been relied upon by you and shall survive the delivery to
you of the Notes regardless of any investigation made by you or on your behalf.
All statements in any such certificate or other instrument shall constitute
representations and warranties of the Company hereunder.
9.4. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereof and their
respective successors and assigns, and shall inure to the benefit of and be
enforceable by the parties hereof and their respective successors and assigns
permitted hereunder; provided, however, that you shall not have any obligation
to purchase Notes of any Person other than Printpack, Inc., a Georgia
corporation.
9.5. AMENDMENT AND WAIVER.
(a) This Agreement and the Notes may be amended or supplemented, and
the observance of any term hereof or thereof may be waived, with the written
consent of the
29
<PAGE> 35
Company and (i) on or prior to the Closing Date, you, and (ii) after the Closing
Date and subject to 7.2., the Required Noteholders; provided, however, that no
such amendment, supplement or waiver shall, without the written consent of the
holders of all the Notes then outstanding, (a) change, with respect to the
Notes, the amount or time of any required prepayment or payment of principal or
the rate or time of payment of interest, or change the funds in which any
prepayment or payment on the Notes is required to be made; (b) reduce the
percentage of the aggregate principal amount of Notes required for any
amendment, consent or waiver hereunder; or (c) amend this Section 9.5., provided
further, that no such amendment, supplement or waiver shall, without the written
consent of the Required Senior Debt Holders amend Article 7. hereof.
(b) Any amendment, supplement or waiver effected in accordance with
this Section 9.5. shall be binding upon each holder of any Note at the time
outstanding, each future holder of any Note and the Company. Notwithstanding
any other provision of this Agreement, no consent to any such amendment,
supplement or waiver by any Noteholder, shall have any effect for the purposes
of this Section 9.5. if such amendment, supplement or waiver was obtained in
connection with or in anticipation of the purchase by the Company, any
Affiliate of the Company or any other Person of any Note from the holder
thereof, unless the holder of each Note at the time outstanding has executed an
amendment, supplement or waiver, as the case may be, to substantially the same
effect as the amendment, supplement or waiver obtained from such Noteholder.
9.6. COUNTERPARTS.
This Agreement may be executed and delivered to you simultaneously in
two (2) or more counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute but one and the same
instrument.
If the foregoing is satisfactory to you, please sign the form of
acceptance on the enclosed counterparts hereof and return the same to the
Company, whereupon this letter, as so accepted, shall become a binding contract
between you and each of the undersigned.
Very truly yours,
PRINTPACK, INC.
By: /s/ Dennis M. Love
------------------------------------
Name:
--------------------------
Title: President
---------
By: /s/ R. Michael Hembree
------------------------------------
Name:
--------------------------
Title: Vice President - Finance
-------------------------
[Signatures continued on following page]
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<PAGE> 36
The foregoing Agreement
is hereby accepted.
By: /s/ Dennis M. Love By: /s/ James E. Love, III C/F
--------------------------------- ------------------------------
Dennis M. Love James E. Love, IV
By: /s/ James E. Love, III By: /s/ John O. Exum
--------------------------------- ------------------------------
James E. Love, III John O. Exum
By: /s/ Carol Anne Love Jennison By: /s/ August J. Franchini, Jr.
--------------------------------- ------------------------------
Carol Anne Love Jennison August J. Franchini, Jr.
By: /s/ William J. Love By: /s/ James J. Greco
--------------------------------- ------------------------------
William J. Love James J. Greco
By: /s/ C. Keith Love By: /s/ Anthony J. Llorca, Jr.
--------------------------------- ------------------------------
C. Keith Love Anthony J. Llorca, Jr.
By: /s/ Gay M. Love C/F By: /s/ S. H. McKinley
--------------------------------- ------------------------------
David M. Love /s/ David M. Love S. H. McKinley
By: /s/ Dennis M. Love C/F By: /s/ Robert B. Paxton
--------------------------------- ------------------------------
Dennis M. Love Robert B. Paxton
By: /s/ Dennis M. Love C/F By: /s/ David Peake
--------------------------------- ------------------------------
Dennis M. Love G. David Peake
By: /s/ Dennis M. Love C/F By: /s/ Travis D. Shepard
--------------------------------- ------------------------------
Dennis M. Love Travis D. Shepard
By: /s/ Carol Anne Love Jennison C/F
---------------------------------
John E. Jennison
By: /s/ Carol Anne Love Jennison C/F
---------------------------------
David J. Jennison
31
<PAGE> 37
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount of
Name of Purchaser Notes to be Purchased
----------------- ---------------------
<S> <C>
Dennis M. Love $1,507,631
James E. Love, III $1,430,191
Carol Anne Love Jennison $1,430,191
William J. Love $1,607,654
C. Keith Love $1,607,654
David M. Love $1,607,654
Catherine C. Love $ 59,154
Dennis M. Love, Jr. $ 59,154
Alison T. Love $ 59,154
John E. Jennison $ 88,732
David J. Jennison $ 88,732
James E. Love, IV $ 177,463
John 0. Exum $ 23,542
August J. Franchini, Jr. $ 39,262
James J. Greco $ 39,262
Anthony J. Llorca, Jr. $ 23,542
S. Howard McKinley $ 78,602
Robert B. Paxton $ 78,602
G. David Peake $ 353,823
Travis D. Shepard $ 23,542
</TABLE>
<PAGE> 38
EXHIBIT A
[FORM OF NOTE]
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
Atlanta, Georgia
$----------------
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to ____________________________ or registered
assigns, the principal sum of ___________________ ($________) on May 4, 2014;
and to pay interest (computed on the basis of a three hundred sixty (360) day
year of twelve (12) thirty (30) day months) on the unpaid principal balance
thereof from the date of this Note at the rate of 11.00% per annum, annually on
each December 15 commencing December 15, 1995 until the principal amount hereof
shall become due and payable; and to pay, on demand, interest on any overdue
principal, including any overdue prepayment of principal, and (to the extent
permitted by applicable law) on any overdue installment of interest, at a rate
equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered
holder hereof in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, at the office of the Company at 4335 Wendell Drive, S.W., Atlanta,
Georgia 30336-1622, or at such other location designated under the Purchase
Agreement referred to below, in each case, subject to the right of the
registered holder hereof under the Purchase Agreement to receive direct payment
in immediately available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of
the Company issued in an aggregate principal amount limits of $10,384,000
pursuant to the Note Purchase Agreements dated as of March 13, 1995, between
the Company and each of the original purchasers of the Notes (collectively, the
"Purchase Agreement") and is entitled to the benefits thereof. As and to the
extent provided in the Purchase Agreement, this Note is, under certain
circumstances as specified in the Purchase Agreement, subject to mandatory
prepayment, without premium, in the aggregate amount of $3,422,000 on May 25,
2005 and upon the termination of employment with the Company of any holder, and
is subject to optional redemption, under certain circumstances, in whole or in
part, without premium.
<PAGE> 39
Under certain circumstances, as specified in the Purchase Agreement,
the principal of and accrued interest on this Note may be declared due and
payable in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of
the covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By:
---------------------------
Name:
Title:
<PAGE> 40
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
Atlanta, Georgia
$1,507,631.00
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to DENNIS M. LOVE or registered assigns, the
principal sum of ONE MILLION FIVE HUNDRED SEVEN THOUSAND SIX HUNDRED THIRTY ONE
AND No/100 DOLLARS ($1,507,631.00) on May 4, 2014; and to pay interest (computed
on the basis of a three hundred sixty (360) day year of twelve (12) thirty (30)
day months) on the unpaid principal balance thereof from the date of this Note
at the rate of 11.00% per annum, annually on each December 15 commencing
December 15, 1995 until the principal amount hereof shall become due and
payable; and to pay, on demand, interest on any overdue principal, including any
overdue prepayment of principal, and (to the extent permitted by applicable law)
on any overdue installment of interest, at a rate equal to the rate of 13.00%
per annum.
Payment of principal and interest shall be made to the registered
holder hereof in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, at the office of the Company at 4335 Wendell Drive, S.W., Atlanta,
Georgia 30336-1622, or at such other location designated under the Purchase
Agreement referred to below, in each case, subject to the right of the
registered holder hereof under the Purchase Agreement to receive direct payment
in immediately available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of
the Company issued in an aggregate principal amount limits of $10,384,000
pursuant to the Note Purchase Agreements dated as of March 13, 1995, between
the Company and each of the original purchasers of the Notes (collectively, the
"Purchase Agreement") and is entitled to the benefits thereof. As and to the
extent provided in the Purchase Agreement, this Note is, under certain
circumstances as specified in the Purchase Agreement, subject to mandatory
prepayment, without premium, in the aggregate amount of $3,422,000 on May 25,
2005 and upon the termination of employment with the Company of any holder, and
is subject to optional redemption, under certain circumstances, in whole or in
part, without premium.
<PAGE> 41
Under certain circumstances, as specified in the Purchase Agreement,
the principal of and accrued interest on this Note may be declared due and
payable in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of
the covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembre
-----------------------------------
Name: R. Michael Hembre
Title: Vice President-Finance
<PAGE> 42
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
Atlanta, Georgia
$1,430,191.00
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to JAMES E. LOVE, III or registered assigns,
the principal sum of ONE MILLION FOUR HUNDRED THIRTY THOUSAND ONE HUNDRED
NINETY ONE AND NO/100 DOLLARS ($1,430,191.00) on May 4, 2014; and to pay
interest (computed on the basis of a three hundred sixty (360) day year of
twelve (12) thirty (30) day months) on the unpaid principal balance thereof
from the date of this Note at the rate of 11.00% per annum, annually on each
December 15 commencing December 15, 1995 until the principal amount hereof
shall become due and payable; and to pay, on demand, interest on any overdue
principal, including any overdue prepayment of principal, and (to the extent
permitted by applicable law) on any overdue installment of interest, at a rate
equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered
holder hereof in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, at the office of the Company at 4335 Wendell Drive, S.W., Atlanta,
Georgia 30336-1622, or at such other location designated under the Purchase
Agreement referred to below, in each case, subject to the right of the
registered holder hereof under the Purchase Agreement to receive direct payment
in immediately available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of
the Company issued in an aggregate principal amount limits of $10,384,000
pursuant to the Note Purchase Agreements dated as of March 13, 1995, between
the Company and each of the original purchasers of the Notes (collectively, the
"Purchase Agreement") and is entitled to the benefits thereof. As and to the
extent provided in the Purchase Agreement, this Note is, under certain
circumstances as specified in the Purchase Agreement, subject to mandatory
prepayment, without premium, in the aggregate amount of $3,422,000 on May 25,
2005 and upon the termination of employment with the Company of any holder, and
is subject to optional redemption, under certain circumstances in whole or in
part, without premium.
<PAGE> 43
Under certain circumstances, as specified in the Purchase Agreement,
the principal of and accrued interest on this Note may be declared due and
payable in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of
the covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereinto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
------------------------------------
Name: R. Michael Hembree
Title: Vice President - Finance
<PAGE> 44
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$1,430,191.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to CAROL ANNE LOVE JENNISON or registered
assigns, the principal sum of ONE MILLION FOUR HUNDRED THIRTY THOUSAND ONE
HUNDRED NINETY ONE AND NO/100 DOLLARS ($1,430,191.00) on May 4, 2014; and to
pay interest (computed on the basis of a three hundred sixty (360) day year of
twelve (12) thirty (30) day months) on the unpaid principal balance thereof
from the date of this Note at the rate of 11.00% per annum, annually on each
December 15 commencing December 15, 1995 until the principal amount hereof
shall become due and payable; and to pay, on demand, interest on any overdue
principal, including any overdue payment of principal, and (to the extent
permitted by applicable law) on any overdue installment of interest, at a rate
equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered
holder hereof in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, at the office of the Company at 4335 Wendell Drive, S.W., Atlanta,
Georgia 30336-1622, or at such other location designated under the Purchase
Agreement referred to below, in each case, subject to the right of the
registered holder hereof under the Purchase Agreement to receive direct payment
in immediately available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of
the Company issued in an aggregate principal amount limits of $10,384,000
pursuant to the Note Purchase Agreements dated as of March 13, 1995, between
the Company and each of the original purchasers of the Notes (collectively, the
"Purchase Agreement") and is entitled to the benefits thereof. As and to the
extent provided in the Purchase Agreement, this Note is, under certain
circumstances as specified in the Purchase Agreement, subject to mandatory
prepayment, without premium, in the aggregate amount of $3,422,000 on May 25,
2005 and upon the termination of employment with the Company of any holder, and
is subject to optional redemption, under certain circumstances, in whole or in
part, without premium.
<PAGE> 45
Under certain circumstances, as specified in the Purchase Agreement,
the principal of and accrued interest on this Note may be declared due and
payable in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of
the covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
------------------------------------
Name: R. Michael Hembree
Title: Vice President - Finance
<PAGE> 46
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$1,607,654.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to WILLIAM J. LOVE or registered assigns, the
principal sum of ONE MILLION SIX HUNDRED SEVEN THOUSAND SIX HUNDRED FIFTY FOUR
AND NO/100 DOLLARS ($1,607,654.00) on May 4, 2014; and to pay interest
(computed on the basis of a three hundred sixty (360) day year of twelve (12)
thirty (30) day months) on the unpaid principal balance thereof from the date
of this Note at the rate of 11.00% per annum, annually on each December 15
commencing December 15, 1995 until the principal amount hereof shall become due
and payable; and to pay, on demand, interest on any overdue principal,
including any overdue prepayment of principal, and (to the extent permitted by
applicable law) on any overdue installment of interest, at a rate equal to the
rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered
holder hereof in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, at the office of the Company at 4335 Wendell Drive, S.W., Atlanta,
Georgia 30336-1622, or at such other location designated under the Purchase
Agreement referred to below, in each case, subject to the right of the
registered holder hereof under the Purchase Agreement to receive direct payment
in immediately available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of
the Company issued in an aggregate principal amount limits of $10,384,000
pursuant to the Note Purchase Agreements dated as of March 13, 1995, between
the Company and each of the original purchasers of the Notes (collectively, the
"Purchase Agreement") and is entitled to the benefits thereof. As and to the
extent provided in the Purchase Agreement, this Note is, under certain
circumstances as specified in the Purchase Agreement, subject to mandatory
prepayment, without premium, in the aggregate amount of $3,422,000 on May 25,
2005 and upon the termination of employment with the Company of any holder, and
is subject to optional redemption, under certain circumstances, in whole or in
part, without premium.
<PAGE> 47
Under certain circumstances, as specified in the Purchase Agreement,
the principal of and accrued interest on this Note may be declared due and
payable in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of
the covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name: R. Michael Hembree
Title: Vice President - Finance
<PAGE> 48
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$1,607,654.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to C. KEITH LOVE or registered assigns, the
principal sum of ONE MILLION SIX HUNDRED SEVEN THOUSAND SIX HUNDRED FIFTY FOUR
AND NO/100 DOLLARS ($1,607,654.00) on May 4, 2014; and to pay interest
(computed on the basis of a three hundred sixty (360) day year of twelve (12)
thirty (30) day months) on the unpaid principal balance thereof from the date
of this Note at the rate of 11.00% per annum, annually on each December 15
commencing December 15, 1995 until the principal amount hereof shall become due
and payable; and to pay, on demand, interest on any overdue principal,
including any overdue prepayment of principal, and (to the extent permitted by
applicable law) on any overdue installment of interest, at a rate equal to the
rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered
holder hereof in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, at the office of the Company at 4335 Wendell Drive, S.W., Atlanta,
Georgia 30336-1622, or at such other location designated under the Purchase
Agreement referred to below, in each case, subject to the right of the
registered holder hereof under the Purchase Agreement to receive direct payment
in immediately available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of
the Company issued in an aggregate principal amount limits of $10,384,000
pursuant to the Note Purchase Agreements dated as of March 13, 1995, between
the Company and each of the original purchasers of the Notes (collectively, the
"Purchase Agreement") and is entitled to the benefits thereof. As and to the
extent provided in the Purchase Agreement, this Note is, under certain
circumstances as specified in the Purchase Agreement, subject to mandatory
prepayment, without premium, in the aggregate amount of $3,422,000 on May 25,
2005 and upon the termination of employment with the Company of any holder, and
is subject to optional redemption, under certain circumstances, in whole or in
part, without premium.
<PAGE> 49
Under certain circumstances, as specified in the Purchase Agreement,
the principal of and accrued interest on this Note may be declared due and
payable in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of
the covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name: R. Michael Hembree
Title: Vice President - Finance
<PAGE> 50
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$1,607,654.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to DAVID M. LOVE or registered assigns, the
principal sum of ONE MILLION SIX HUNDRED SEVEN THOUSAND SIX HUNDRED FIFTY FOUR
AND N0/100 DOLLARS ($1,607,654.00) on May 4, 2014; and to pay interest
(computed on the basis of a three hundred sixty (360) day year of twelve (12)
thirty (30) day months) on the unpaid principal balance thereof from the date
of this Note at the rate of 11.00% per annum, annually on each December 15
commencing December 15, 1995 until the principal amount hereof shall become due
and payable; and to pay, on demand, interest on any overdue principal,
including any overdue prepayment of principal, and (to the extent permitted by
applicable law) on any overdue installment of interest, at a rate equal to the
rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered
holder hereof in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, at the office of the Company at 4335 Wendell Drive, S.W., Atlanta,
Georgia 30336-1622, or at such other location designated under the Purchase
Agreement referred to below, in each case, subject to the right of the
registered holder hereof under the Purchase Agreement to receive direct payment
in immediately available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of
the Company issued in an aggregate principal amount limits of $10,384,000
pursuant to the Note Purchase Agreements dated as of March 13, 1995, between
the Company and each of the original purchasers of the Notes (collectively, the
"Purchase Agreement") and is entitled to the benefits thereof. As and to the
extent provided in the Purchase Agreement, this Note is, under certain
circumstances as specified in the Purchase Agreement, subject to mandatory
prepayment, without premium in the aggregate amount of $3,422,000 on May 25,
2005 and upon the termination of employment with the Company of any holder, and
is subject to optional redemption, under certain circumstances, in whole or in
part, without premium.
<PAGE> 51
Under certain circumstances, as specified in the Purchase Agreement,
the principal of and accrued interest on this Note may be declared due and
payable in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of
the covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
----------------------------------
Name: R. Michael Hembree
Title: Vice President - Finance
<PAGE> 52
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$59,154.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to CATHERINE C. LOVE or registered assigns,
the principal sum of FIFTY NINE THOUSAND ONE HUNDRED FIFTY FOUR AND NO/100
DOLLARS ($59,154.00) on May 4, 2014; and to pay interest (computed on the basis
of a three hundred sixty (360) day year of twelve (12) thirty (30) day months)
on the unpaid principal balance thereof from the date of this Note at the rate
of 11.00% per annum, annually on each December 15 commencing December 15, 1995
until the principal amount hereof shall become due and payable; and to pay, on
demand, interest on any overdue principal, including any overdue prepayment of
principal, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered
holder hereof in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, at the office of the Company at 4335 Wendell Drive, S.W., Atlanta,
Georgia 30336-1622, or at such other location designated under the Purchase
Agreement referred to below, in each case, subject to the right of the
registered holder hereof under the Purchase Agreement to receive direct payment
in immediately available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of
the Company issued in an aggregate principal amount limits of $10,384,000
pursuant to the Note Purchase Agreements dated as of March 13, 1995, between
the Company and each of the original purchasers of the Notes (collectively, the
"Purchase Agreement") and is entitled to the benefits thereof. As and to the
extent provided in the Purchase Agreement, this Note is, under certain
circumstances as specified in the Purchase Agreement, subject to mandatory
prepayment, without premium, in the aggregate amount of $3,422,000 on May 25,
2005 and upon the termination of employment with the Company of any holder, and
is subject to optional redemption, under certain circumstances, in whole or in
part, without premium.
<PAGE> 53
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 54
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$59,154.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to DENNIS M. LOVE, JR. or registered assigns,
the principal sum of FIFTY NINE THOUSAND ONE HUNDRED FIFTY FOUR AND NO/100
DOLLARS ($59,154.00) on May 4, 2014; and to pay interest (computed on the basis
of a three hundred sixty (360) day year of twelve (12) thirty (30) day months)
on the unpaid principal balance thereof from the date of this Note at the rate
of 11.00% per annum, annually on each December 15 commencing December 15, 1995
until the principal amount hereof shall become due and payable; and to pay, on
demand, interest on any overdue principal, including any overdue prepayment of
principal, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement") and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium, in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances, in whole or in part, without
premium.
<PAGE> 55
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 56
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$59,154.00 Atlanta, Georgia
PRINTPACK INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to ALISON T. LOVE or registered assigns, the
principal sum of FIFTY NINE THOUSAND ONE HUNDRED FIFTY FOUR AND NO/100 DOLLARS
($59,154.00) on May 4, 2014; and to pay interest (computed on the basis of a
three hundred sixty (360) day year of twelve (12) thirty (30) day months) on
the unpaid principal balance thereof from the date of this Note at the rate of
11.00% per annum, annually on each December 15 commencing December 15, 1995
until the principal amount hereof shall become due and payable; and to pay, on
demand, interest on any overdue principal, including any overdue prepayment of
principal, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement") and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium, in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances, in whole or in part, without
premium.
<PAGE> 57
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 58
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$88,732.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to JOHN E. JENNISON or registered assigns, the
principal sum of EIGHTY EIGHT THOUSAND SEVEN HUNDRED THIRTY TWO AND NO/100
DOLLARS ($88,732.00) on May 4, 2014; and to pay interest (computed on the basis
of a three hundred sixty (360) day year of twelve (12) thirty (30) day months)
on the unpaid principal balance thereof from the date of this Note at the rate
of 11.00% per annum, annually on each December 15 commencing December 15, 1995
until the principal amount hereof shall become due and payable; and to pay, on
demand, interest on any overdue principal, including any overdue prepayment of
principal, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March, 13, 1995, between the
Company and each of the original purchasers of the Notes (collectively, the
"Purchase Agreement") and is entitled to the benefits thereof. As and to the
extent provided in the Purchase Agreement, this Note is, under certain
circumstances as specified in the Purchase Agreement, subject to mandatory
prepayment, without premium, in the aggregate amount of $3,422,000 on May 25,
2005 and upon the termination of employment with the Company of any holder, and
is subject to optional redemption, under certain circumstances, in whole or in
part, without premium.
<PAGE> 59
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the laws
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer, thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 60
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$88,732.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to DAVID J. JENNISON or registered assigns,
the principal sum of EIGHTY EIGHT THOUSAND SEVEN HUNDRED THIRTY TWO AND NO/100
DOLLARS ($88,732.00) on May 4, 2014; and to pay interest (computed on the basis
of a three hundred sixty (360) day year of twelve (12) thirty (30) day months)
on the unpaid principal balance thereof from the date of this Note at the rate
of 11.00% per annum, annually on each December 15 commencing December 15, 1995
until the principal amount hereof shall become due and payable; and to pay, on
demand, interest on any overdue principal, including any overdue prepayment of
principal, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement") and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium, in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances, in whole or in part, without
premium.
<PAGE> 61
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 62
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$177,463.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to JAMES E. LOVE, IV or registered assigns,
the principal sum of ONE HUNDRED SEVENTY SEVEN THOUSAND FOUR HUNDRED SIXTY
THREE AND NO/100 DOLLARS ($177,463.00) on May 4, 2014; and to pay interest
(computed on the basis of a three hundred sixty (360) day year of twelve (12)
thirty (30) day months) on the unpaid principal balance thereof from the date
of this Note at the rate of 11.00% per annum, annually on each December 15
commencing December 15, 1995 until the principal amount hereof shall become due
and payable; and to pay, on demand, interest on any overdue principal,
including any overdue prepayment of principal, and (to the extent permitted by
applicable law) on any overdue installment of interest, at a rate equal to the
rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement") and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium, in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances in whole or in put, without
premium.
<PAGE> 63
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note she be governed by and construed in accordance with the law of
the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 64
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$23,542.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to JOHN O. EXUM or registered assigns, the
principal sum of TWENTY THREE THOUSAND FIVE HUNDRED FORTY TWO AND NO/100
DOLLARS ($23,542.00) on May 4, 2014; and to pay interest (computed on the basis
of a three hundred sixty (360) day year of twelve (12) thirty (30) day months)
on the unpaid principal balance thereof from the date of this Note at the rate
of 11.00% per annum, annually on each December 15 commencing December 15, 1995
until the principal amount hereof shall become due and payable; and to pay, on
demand, interest on any overdue principal, including any overdue prepayment of
principal, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 puts to
the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement') and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium, in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances, in whole or in full, without
premium.
<PAGE> 65
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 66
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$39,262.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to AUGUST J. FRANCHINI, JR. or registered
assigns, the principal sum of THIRTY NINE THOUSAND TWO HUNDRED SIXTY TWO AND
NO/100 DOLLARS ($39,262.00) on May 4, 2014; and to pay interest (computed on
the basis of a three hundred sixty (360) day year of twelve (12) thirty (30)
day months) on the unpaid principal balance thereof from the date of this Note
at the rate of 11.00% per annum, annually on each December 15 commencing
December 15, 1995 until the principal amount hereof shall become due and
payable; and to pay, on demand, interest on any overdue principal, including
any overdue prepayment of principal, and (to the extent permitted by applicable
law) on any overdue installment of interest, at a rate equal to the rate of
13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement") and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium, in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances, in whole or in part, without
premium.
<PAGE> 67
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 68
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$39,262.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to JAMES J. GRECO or registered assigns, the
principal sum of THIRTY NINE THOUSAND TWO HUNDRED SIXTY TWO AND NO/100 DOLLARS
($39,262.00) on May 4, 2014; and to pay interest (computed on the basis of a
three hundred sixty (360) day year of twelve (12) thirty (30) day months) on
the unpaid principal balance thereof from the date of this Note at the rate of
11.00% per annum, annually on each December 15 commencing December 15, 1995
until the principal amount hereof shall become due and payable; and to pay, on
demand, interest on any overdue principal, including any overdue prepayment of
principal, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement") and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium, in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances, in whole or in put, without
premium.
<PAGE> 69
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 70
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$23,542.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to ANTHONY J. LLORCA, JR. or registered
assigns, the principal sum of TWENTY THREE THOUSAND FIVE HUNDRED FORTY TWO AND
NO/100 DOLLARS ($23,542.00) on May 4, 2014; and to pay interest (computed on
the basis of a three hundred sixty (360) day year of twelve (12) thirty (30)
day months) on the unpaid principal balance thereof from the date of this Note
at the rate of 11.00% per annum, annually on each December 15 commencing
December 15, 1995 until the principal amount hereof shall become due and
payable; and to pay, on demand, interest on any overdue principal, including
any overdue prepayment of principal, and (to the extent permitted by applicable
law) on any overdue installment of interest, at a rate equal to the rate of
13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement") and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium, in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances, in whole or in part, without
premium.
<PAGE> 71
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 72
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$78,602.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to S. HOWARD MCKINLEY or registered assigns,
the principal sum of SEVENTY EIGHT THOUSAND SIX HUNDRED TWO AND NO/100 DOLLARS
($78,602.00) on May 4, 2014; and to pay interest (computed on the basis of a
three hundred sixty (360) day year of twelve (12) thirty (30) day months) on
the unpaid principal balance thereof from the date of this Note at the rate of
11.00% per annum, annually on each December 15 commencing December 15, 1995
until the principal amount hereof shall become due and payable; and to pay, on
demand, interest on any overdue principal, including any overdue prepayment of
principal, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement") and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium, in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances, in whole or in part, without
premium.
<PAGE> 73
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 74
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$78,602.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to ROBERT B. PAXTON or registered assigns, the
principal sum of SEVENTY EIGHT THOUSAND SIX HUNDRED TWO AND NO/100 DOLLARS
($78,602.00) on May 4, 2014; and to pay interest (computed on the basis of a
three hundred sixty (360) day year of twelve (12) thirty (30) day months) on
the unpaid principal balance thereof from the date of this Note at the rate of
11.00% per annum, annually on each December 15 commencing December 15, 1995
until the principal amount hereof shall become due and payable; and to pay, on
demand, interest on any overdue principal, including any overdue prepayment of
principal, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement") and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances, in whole or in part, without
premium.
<PAGE> 75
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 76
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$353,823.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received hereby promises to pay to G. DAVID PEAKE or registered assigns, the
principal sum of THREE HUNDRED FIFTY THREE THOUSAND EIGHT HUNDRED TWENTY THREE
AND NO/100 DOLLARS ($353,823.00) on May 4, 2014; and to pay interest (computed
on the basis of a three hundred sixty (360) day year of twelve (12) thirty (30)
day months) on the unpaid principal balance thereof from the date of this Note
at the rate of 11.00% per annum, annually on each December 15 commencing
December 15, 1995 until the principal amount hereof shall become due and
payable; and to pay, on demand, interest on any overdue principal, including
any overdue prepayment of principal, and (to the extent permitted by applicable
law) on any overdue installment of interest, at a rate equal to the rate of
13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement") and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium, in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances, in whole or in part, without
premium.
<PAGE> 77
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 78
PROMISSORY NOTE
PRINTPACK, INC.
11.00% Subordinated Note
due May 4, 2014
March 13, 1995
$23,542.00 Atlanta, Georgia
PRINTPACK, INC. (the "Company"), a Georgia corporation, for value
received, hereby promises to pay to TRAVIS D. SHEPARD or registered assigns,
the principal sum of TWENTY THREE THOUSAND FIVE HUNDRED FORTY TWO AND NO/100
DOLLARS ($23,542.00) on May 4, 2014; and to pay interest (computed o the basis
of a three hundred sixty (360) day year of twelve (12) thirty (30) day months)
on the unpaid principal balance thereof from the date of this Note at the rate
of 11.00% per annum, annually on each December 15 commencing December 15, 1995
until the principal amount hereof shall become due and payable; and to pay, on
demand, interest on any overdue principal, including any over prepayment of
principal, and (to the extent permitted by applicable law) on any overdue
installment of interest, at a rate equal to the rate of 13.00% per annum.
Payment of principal and interest shall be made to the registered holder
hereof in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
at the office of the Company at 4335 Wendell Drive, S.W., Atlanta, Georgia
30336-1622, or at such other location designated under the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 11.00% Subordinated Notes due May 4, 2014 of the
Company issued in an aggregate principal amount limits of $10,384,000 pursuant
to the Note Purchase Agreements dated as of March 13, 1995, between the Company
and each of the original purchasers of the Notes (collectively, the "Purchase
Agreement') and is entitled to the benefits thereof. As and to the extent
provided in the Purchase Agreement, this Note is, under certain circumstances
as specified in the Purchase Agreement, subject to mandatory prepayment,
without premium, in the aggregate amount of $3,422,000 on May 25, 2005 and upon
the termination of employment with the Company of any holder, and is subject to
optional redemption, under certain circumstances, in whole or in part, without
premium.
<PAGE> 79
Under certain circumstances, as specified in the Purchase Agreement, the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of the
covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, PRINTPACK, INC. has caused this Note to be duly
executed on its behalf by its officer thereunto duly authorized.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------------
Name:
Title: Vice President - Finance
<PAGE> 80
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT dated as of March 13, 1995 by
and among PRINTPACK, INC., a Georgia corporation ("Printpack"), PRINTPACK
ENTERPRISES, INC., a Georgia corporation ("Enterprises" together with
Printpack, each a "Borrower" and collectively the "Borrowers"), the financial
institutions from time to time party thereto (the "Banks") and Bank of America
National Trust and Savings Association, as agent for the Banks (the "Agent");
WITNESSETH:
WHEREAS, the Borrowers, the Banks and the Agent have entered into that
certain Credit Agreement dated as of November 15, 1994 (the "Credit
Agreement"), pursuant to which the Banks agreed to make available to the
Borrowers a $35,000,000 revolving credit facility;
WHEREAS, the Borrowers, the Banks and the Agent hereby agree, on the
terms and conditions set forth herein, to amend the Credit Agreement to permit
Printpack to make a certain distribution to its shareholders and incur certain
obligations pursuant to the transactions contemplated by that certain Note
Purchase Agreement dated as of March 13, 1995 (the "Subordinated Note
Agreement") whereby Printpack issued an aggregate amount of $10,384,000 in
original principal amount of its 11.00% Notes due May 4, 2014 (the
"Subordinated Notes") to various shareholders of Printpack; and
WHEREAS, the Borrowers, the Banks and the Agent hereby agree that the
incurrence of the new obligations by Printpack will necessitate a revision of
certain of the covenants contained in the Credit Agreement and that as a
convenience, rather than renegotiating such covenants, the parties will instead
treat the new obligations and the interest thereon as equity, or assets or
dividends, as the context may require;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
SECTION 1. Amendment to Credit Agreement.
(a) Addition of Definitions. The Credit Agreement is hereby amended by
adding the following definitions in the appropriate place in Section 1.1:
"'Subordinated Note Agreement' means that certain Note Purchase Agreement
dated as of March 13, 1995 pursuant to which Printpack issued the
Subordinated Notes to various shareholders of Printpack."
1
<PAGE> 81
"'Subordinated Notes' means the $10,384,000 in original principal amount
of Printpack's 11.00% Notes due May 4, 2014, issued pursuant to the
Subordinated Note Agreement."
(b) Amendment of the Definition of "Adjusted Consolidated Tangible Net
Worth". The Credit Agreement is hereby further amended by deleting the
definition of "Adjusted Consolidated Tangible Net Worth" in its entirety and
substituting in lieu thereof the following:
"'Adjusted Consolidated Tangible Net Worth' means, as of the date of any
determination thereof, the sum of (i) the aggregate amount of (a) the
capital stock (less treasury stock), surplus and retained earnings of the
Borrowers and their Subsidiaries after deducting Minority Interests to
the extent included in the capital stock accounts of the Borrowers less
(b) all good will, patents, trade names, trade marks, copyrights,
franchises, experimental expense, organization expense, unamortized debt
discount and expense, deferred assets other than prepaid insurance and
prepaid taxes, the excess of cost of shares acquired over book value of
related assets and such other assets as are property classified as
'intangible assets' in accordance with GAAP plus (ii) the LIFO Reserve
plus the accrued deferred tax liability, all as determined on a
consolidated basis by the Borrowers and their Subsidiaries plus (iii) the
aggregate principal amount of the Subordinated Notes outstanding."
(c) Amendment of the Definition of "Funded Debt". The Credit Agreement is
hereby further amended by adding the following at the end of the definition of
"Funded Debt":
"Notwithstanding anything herein to the contrary, no obligation of
Printpack incurred pursuant to the Subordinated Note Agreement or the
Subordinated Notes shall constitute Funded Debt,"
(d) Amendment of the Definition of "Indebtedness". The Credit Agreement
is hereby further amended by adding the following at the end of the definition
of "Indebtedness":
"Notwithstanding anything herein to the contrary, no obligation of
Printpack incurred pursuant to the Subordinated Note Agreement or the
Subordinated Notes shall constitute Indebtedness except for purposes of
Section 8.1 hereof "
(e) Amendment of Section 7. 1 0.
(i) The Credit Agreement is hereby further amended by deleting the first
sentence of Section 7.10 in its entirety and substituting in lieu thereof the
following:
2
<PAGE> 82
"7.10 Dividends, Stock Purchases. The Borrowers shall not except as
hereinafter provided:
(a) declare or pay any dividends, either in cash or property, on any
shares of their capital stock of any class (except dividends or other
distributions payable solely in shares of common stock of the Borrowers); or
(b) directly or indirectly, or through any Subsidiary, purchase, redeem
or retire any shares of their capital stock of any class or any warrants,
rights or options to purchase or acquire any shares of their capital stock; or
(c) make any other payment or distribution, either directly or indirectly
or through any Subsidiary, in respect of their capital stock; or
(d) make any Restricted Investment; or
(e) make any payment of principal of or interest on the Subordinated
Notes pursuant to the terms of the Subordinated Note Agreement;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, and all
such other distributions, Restricted Investments and other payments on
the Subordinated Notes being herein collectively called "Restricted
Payments"), unless, after giving effect thereto, (i) the aggregate amount
of Restricted Payments (including, without limitation, all Tax Dividends)
made during the period from and after June 26, 1993 to and including the
date of the making of the Restricted Payment in question would not exceed
the sum of (x) $5,000,000 plus (y) 85% of Consolidated Net Income for the
period from and after June 26, 1993 to and including the date of the
making of the Restricted Payment in question, computed on a cumulative
basis for said entire period (or if such Consolidated Net Income is a
deficit figure, then minus 100% of such deficit) plus (z) the net
proceeds received by either of the Borrowers after June 26, 1993 in cash
from the sale or issuance of additional shares of common stock of either
Borrower or warrants, rights or options to purchase or acquire any shares
of their common stock, and (ii) no Default or Event of Default shall have
occurred and be continuing."
(ii) The Credit Agreement is hereby further amended by adding at the end
of Section 7.10 the following:
"Notwithstanding the foregoing provisions of this Section 7.10, Printpack
may pay, in addition to the Restricted Payments permitted by this
Section, a single distribution to its shareholders in an amount not to
exceed $10,384,000 in connection with the transactions contemplated by
the Subordinated Note Agreement and the Subordinated Notes. Such
distribution shall not be deemed to be a Restricted Payment hereunder.
3
<PAGE> 83
(e) Amendment to Section 7.16. The Credit Agreement is hereby further
amended by deleting Section 7.16 in its entirety and substituting in lieu
thereof the following-.
"7.16 Consolidated Fixed Charge Coverage Ratio. The Borrowers shall not
permit the ratio, determined as of the end of each fiscal quarter of the
Borrowers for the Computation Period ending at the end of such quarter, of (i)
EBIT and rental expense under Operating Leases that are not cancelable by the
Borrowers for any Computation Period, all determined on a consolidated basis,
to (ii) the Borrowers' interest expense and rental expense under Operating
Leases that are not cancelable by the Borrowers for such Computation Period,
all determined on a consolidated basis, to be less than 1.5 to 1.0 at the end
of any fiscal quarter. As used in this Section 7.16 and the definition of EBIT,
the term "interest expense" shall not include any interest which accrues on the
Subordinated Notes."
Section 2. Consent. Each of the Banks and the Agent hereby agree that (i)
the indebtedness to be incurred by Printpack pursuant to the Subordinated Note
Agreement is hereby permitted pursuant to Section 7.5(d) of the Credit
Agreement and (ii) that (A) the dividend in the amount of $10,384,000 to be
paid by Printpack to its shareholders in connection with the transactions
contemplated by the Subordinated Note Agreement and (B) all payments of
principal and interest pursuant to the Subordinated Note Agreement are not
prohibited by Section 7.6 of the Credit Agreement.
Section 3. References to the Credit Agreement and the Other Loan
Documents. Each reference to the Credit Agreement and any of the Loan Documents
shall be deemed to be a reference to the Credit Agreement as amended by this
Amendment, and as each may from time to time be further amended, supplemented,
restated or otherwise modified in the future by one or more other written
amendments or supplemental or modification agreements entered into pursuant to
the applicable provisions of the Credit Agreement.
Section 4. No Default. The Borrowers hereby acknowledge and agree that,
as of the date hereof, and after giving effect to the terms hereof, there
exists (i) no Default or Event of Default and (ii) no right of offset, defense,
counterclaim, claim or objection in favor of the Borrowers arising out of or
with respect to any of the obligations under the Credit Agreement and the other
Loan Documents.
SECTION 5. BENEFITS. This Amendment shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS.
4
<PAGE> 84
SECTION 7. EFFECT. Except as expressly herein amended, the terms and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect.
SECTION 8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.
SECTION 9. DEFINITIONS. All terms defined in the Credit Agreement which
are used herein shall have the meanings defined in the Credit Agreement, unless
specifically defined otherwise herein.
[Signatures on following page]
5
<PAGE> 85
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Credit Agreement to be executed by their duly authorized officers as of the
date first above written.
PRINTPACK, INC.
/s/ R. Michael Hembree
-------------------------------------------------
By: R. Michael Hembree
---------------------------------------------
Title: VP - Finance
------------------------------------------
PRINTPACK, ENTERPRISES, INC.
/s/ R. Michael Hembree
-------------------------------------------------
By: R. Michael Hembree
---------------------------------------------
Title: VP - Finance
------------------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, AS AGENT
/s/ David G. Farthing
-------------------------------------------------
By: David G. Farthing
---------------------------------------------
Title: Vice President
------------------------------------------
BANK OF AMERICA ILLINOIS, AS A BANK
/s/ Michael J. McKenney
-------------------------------------------------
By: Michael J. McKenney
---------------------------------------------
Title: Vice President
------------------------------------------
TRUST COMPANY BANK, AS A BANK
/s/ Robert V. Honeycutt
-------------------------------------------------
By: Robert V. Honeycutt
---------------------------------------------
Title: Banking Officer
------------------------------------------
/s/ David H. Eidson
-------------------------------------------------
By: David H. Eidson
---------------------------------------------
Title: Group Vice President
------------------------------------------
6
<PAGE> 86
FIRST AMENDMENT TO NOTE AGREEMENT
THIS FIRST AMENDMENT TO NOTE AGREEMENT dated as of March 13, 1995 by and
among PRINTPACK, INC., a Georgia corporation (the "Company"), PRINTPACK
ENTERPRISES, INC., a Georgia corporation (together with the Company, the
"Constituent Companies"), and EACH OF THE OTHER PERSONS NAMED ON THE SIGNATURE
PAGES HEREOF (collectively, the "Noteholders");
WITNESSETH:
WHEREAS, the Constituent Companies have entered into those separate Note
Agreements, each dated as of December 9, 1993 (collectively, the "Note
Agreement"), pursuant to which the Constituent Companies issued and sold to the
Noteholders (i) an aggregate amount of $52,000,000 of the Constituent
Companies' 6.47% Senior Notes, Series A Due December 9, 2008 and (ii) an
aggregate amount of $8,000,000 of the Constituent Companies' 5.30% Senior
Notes, Series B Due December 9, 1997;
WHEREAS, the Constituent Companies and the Noteholders hereby agree, on
the terms and conditions set forth herein, to amend the Note Agreement to
permit the Company to make a certain distribution to its shareholders and incur
certain obligations pursuant to the transactions contemplated by that certain
Note Purchase Agreement dated as of March 13, 1995 (the "Subordinated Note
Agreement") whereby the Company issued an aggregate amount of $10,384,000 in
original principal amount of its 11.00% Notes due May 4, 2014 (the
"Subordinated Notes") to various shareholders of the Company; and
WHEREAS, the Constituent Companies and the Noteholders hereby agree that
the incurrence of the new obligations by the Company will necessitate a
revision of certain of the covenants contained in the Note Agreement and that
as a convenience, rather than renegotiating such covenants, the parties will
instead treat the new obligations and the interest thereon as equity, or assets
or dividends, as the context may require;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
SECTION 1. AMENDMENT TO NOTE AGREEMENT.
(a) Amendment to Section 5.8.
(i) The Note Agreement is hereby amended by deleting the first sentence
of Section 5.8 in its entirety and substituting in lieu thereof the following:
1
<PAGE> 87
"Section 5.8. Dividends, Stock Purchases. The Constituent Companies will
not except as hereinafter provided:
(a) declare or pay any dividends, either in cash or property, on any
shares of their capital stock of any class (except dividends or other
distributions payable solely in shares of common stock of the Constituent
Companies); or
(b) directly or indirectly, or through any Subsidiary, purchase, redeem
or retire any shares of their capital stock of any class or any warrants,
rights or options to purchase or acquire any shares of their capital stock; or
(c) make any other payment or distribution, either directly or indirectly
or through any Subsidiary, in respect of their capital stock; or
(d) make any Restricted Investment; or
(e) make any payment of principal of or interest on the Subordinated
Notes pursuant to the terms of the Subordinated Note Agreement;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, and all such
other distributions, Restricted Investments and other payments on the
Subordinated Notes being herein collectively called "Restricted Payments"),
unless, after giving effect thereto, (i) the aggregate amount of Restricted
Payments (including, without limitation, all Tax Dividends) made during the
period from and after June 26, 1993 to and including the date of the making of
the Restricted Payment in question would not exceed the sum of (x) $5,000,000
plus (y) 85% of Consolidated Net Income for the period from and after June 26,
1993 to and including the date of the making of the Restricted Payment in
question, computed on a cumulative basis for said entire period (or if such
Consolidated Net Income is a deficit figure, then minus 100% of such deficit)
plus (z) the net proceeds received by either of the Constituent Companies after
June 26, 1993 in cash from the sale or issuance of additional shares of common
stock of either Constituent Company or warrants, rights or options to purchase
or acquire any shares of their common stock, and (ii) no Default or Event of
Default shall have occurred and be continuing. In addition to the foregoing,
the Constituent Companies shall not make any payments of principal or interest
on the Subordinated Notes at any time a default or an event of default or any
event which with the passage of time or the giving of notice would constitute a
default or event of default, shall have occurred and be continuing under the
Subordinated Note Agreement."
(ii) The Note Agreement is hereby further amended by adding at the end of
Section 5.8. the following:
"Notwithstanding the foregoing provisions of this Section 5.8, the
Company may pay, in addition to the Restricted Payments permitted by this
Section, a single distribution to its shareholders in an amount not to
exceed $10,384,000 in connection with the
2
<PAGE> 88
transactions contemplated by the Subordinated Note Agreement and the
Subordinated Notes. Such distribution shall not be deemed to be a
Restricted Payment hereunder."
(b) Addition of Section 5.18. The Note Agreement is hereby further
amended by adding a new Section 5.18 which shall read as follows:
"Section 5.18. Obligations of Subordinated Notes. Printpack
Enterprises, Inc. will not, and the Constituent Companies will not permit
any of their Restricted Subsidiaries to, Guaranty, assume or otherwise
become liable in any respect for the obligations under the Subordinated
Notes or the Subordinated Note Agreement, or permit, create or incur, or
in any way allow to exist, any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind on its or their property or
assets, whether now owned or hereafter acquired, or upon any income or
profits therefrom, for the purpose of subjecting the same to the payment
of the obligations under the Subordinated Notes or the Subordinated Note
Agreement.
(c) Addition of Definitions. The Note Agreement is hereby further amended
by adding the following definitions in the appropriate place in Section 8.1:
"'Subordinated Note Agreement' means that certain Note Purchase
Agreement dated as of March l3, 1995 pursuant to which the Company would
issue the Subordinated Notes to various shareholders of the Company. "
"'Subordinated Notes' means the $10,384,000 in original principal
amount of the Company's 11.00% unsecured Notes due May 4, 2014, issued
pursuant to the Subordinated Note Agreement."
(d) Amendment to the Definition of "Adjusted Consolidated Tangible Net
Worth". The Note Agreement is hereby further amended by deleting the definition
of "Adjusted Consolidated Tangible Net Worth" in its entirety and substituting
in lieu thereof the following:
"Adjusted Consolidated Tangible Net Worth" shall mean, as of the
date of any determination thereof, the sum of (i) the aggregate amount of
(a) the capital stock (less treasury stock), surplus and retained
earnings of the Constituent Companies and their Restricted Subsidiaries after
deducting Minority Interests to the extent included in the capital stock
accounts of the Constituent Companies less (b) all good will, patents, trade
names, trade marks, copyrights, franchises, experimental expense, organization
expense, unamortized debt discount and expense, deferred assets other than
prepaid insurance and prepaid taxes, the excess of cost of shares acquired over
book value of related assets and such other assets as are properly classified
as "intangible assets" in accordance with generally accepted accounting
principles, all as determined on a consolidated basis by the Constituent
Companies and their Restricted Subsidiaries plus (ii)
3
<PAGE> 89
the LIFO Reserve, all as determined on a consolidated basis by the Constituent
Companies and their Restricted Subsidiaries, plus (iii) the aggregate principal
amount of the Subordinated Notes outstanding."
(e) Amendment to the Definition of "Consolidated Net Income". The Note
Agreement is hereby further amended by deleting the "and" after subsection (h),
deleting the period after subsection (i), adding "; and" thereafter, and adding
the following subsection (j):
"(j) any expense for interest arising pursuant to the Subordinated
Note Agreement and the Subordinated Notes."
(f) Amendment to the Definition of "Indebtedness". The Note Agreement is
hereby further amended by adding the following at the end of the definition of
"Indebtedness":
"Notwithstanding anything herein to the contrary, no obligation of
the Company incurred pursuant to the Subordinated Note Agreement
or the Subordinated Notes shall constitute Indebtedness except for
purposes of Section 6. 1 hereof."
SECTION 2. CONSENT. Each of the Noteholders hereby agrees that (i) the
dividend in the amount of $10,384,000 to be paid by the Company to its
shareholders in connection with the transactions contemplated by the
Subordinated Note Agreement and (ii) all payments of principal and interest
pursuant to the Subordinated Note Agreement are not prohibited by Section 5.13
of the Note Agreement.
SECTION 3. REFERENCES TO THE NOTE AGREEMENT. Each reference to the Note
Agreement shall be deemed to be a reference to the Note Agreement as amended by
this Amendment, and as the Note Agreement may from time to time be further
amended, supplemented, restated or otherwise modified in the future by one or
more other written amendments or supplemental or modification agreements
entered into pursuant to the applicable provisions of the Note Agreement.
SECTION 4. NO DEFAULT. The Constituent Companies hereby acknowledge and
agree that, as of the date hereof, and after giving effect to the terms hereof,
there exists (i) no Default or Event of Default and (ii) no right of offset,
defense, counterclaim, claim or objection in favor of the Constituent Companies
arising out of or with respect to any of the obligations under the Note
Agreement and the other documents related thereto.
SECTION 5. BENEFITS. This Amendment shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
4
<PAGE> 90
SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION 7. EFFECT. Except as expressly herein amended, the terms and
conditions of the Note Agreement and the other documents related thereto shall
remain in full force and effect.
SECTION 8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.
SECTION 9. DEFINITIONS. All terms defined in the Note Agreement which are
used herein shall have the meanings defined in the Note Agreement, unless
specifically defined otherwise herein. The Note Agreement shall be further
amended by incorporating all terms defined in this Amendment.
[Signatures on Next Page]
5
<PAGE> 91
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Note Agreement to be executed by their duly authorized officers as of the
date first above written.
PRINTPACK, INC.
/s/ R. Michael Hembree
-------------------------------------------------
By: R. Michael Hembree
---------------------------------------------
Title: VP - Finance
------------------------------------------
PRINTPACK, ENTERPRISES, INC.
/s/ R. Michael Hembree
-------------------------------------------------
By: R. Michael Hembree
---------------------------------------------
Title: VP - Finance
------------------------------------------
PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY
/s/ Christopher J. Henderson
-------------------------------------------------
By: Christopher J. Henderson
---------------------------------------------
Title: Counsel
------------------------------------------
/s/ Nora Everett
-------------------------------------------------
By: Nora Everett
---------------------------------------------
Title: Counsel
------------------------------------------
ALL STATE LIFE INSURANCE
COMPANY
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
/s/ James G. Schelling
-------------------------------------------------
By: James G. Schelling
---------------------------------------------
Title: Managing Director
------------------------------------------
[Signatures continued on following page]
6
<PAGE> 92
LIFE INSURANCE COMPANY OF
NORTH AMERICA
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF
AMERICA
/s/ Raymond J. Albright, Jr.
-------------------------------------------------
By: Raymond J. Albright, Jr.
---------------------------------------------
Title: Associate Director-Private Placements
------------------------------------------
JEFFERSON-PILOT LIFE INSURANCE
COMPANY
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
CENTRAL LIFE ASSURANCE
COMPANY
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
AMERITAS LIFE INSURANCE CORP.
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
THE CANADA LIFE ASSURANCE
COMPANY
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
7
<PAGE> 93
LIFE INSURANCE COMPANY OF
NORTH AMERICA
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF
AMERICA
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
JEFFERSON-PILOT LIFE INSURANCE
COMPANY
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
AMERICAN MUTUAL LIFE INSURANCE
(FORMERLY CENTRAL LIFE
ASSURANCE COMPANY)
/s/ Marsha A. Yelick
-------------------------------------------------
By: Marsha A. Yelick
---------------------------------------------
Title: Vice President - Fixed Income Investments
------------------------------------------
AMERITAS LIFE INSURANCE CORP.
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
THE CANADA LIFE ASSURANCE
COMPANY
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
8
<PAGE> 94
LIFE INSURANCE COMPANY OF
NORTH AMERICA
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF
AMERICA
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
JEFFERSON-PILOT LIFE INSURANCE
COMPANY
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
CENTRAL LIFE ASSURANCE
COMPANY
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
AMERITAS LIFE INSURANCE CORP.
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
MORGAN GUARANTY TR. CO. OF NY
AS TRUSTEE ON BEHALF OF
CANADA LIFE ASSURANCE
COMPANY INCE & CO., $8,000,000
/s/ Ince & Co.
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
9
<PAGE> 95
FOURTH AMENDMENT TO TERM LOAN AGREEMENT
THIS FOURTH AMENDMENT TO TERM LOAN AGREEMENT dated as of March 13, 1995
by and among PRINTPACK, INC., a Georgia corporation ("Printpack"), PRINTPACK
ENTERPRISES, INC., a Georgia corporation ("Enterprises"), PRINTPACK HOLDINGS,
LTD., a corporation organized under the laws of the United Kingdom ("Holdings";
together with Printpack and Enterprises, each a "Borrower" and collectively the
"Borrowers"), and TRUST COMPANY BANK, a Georgia banking corporation whose
principal place of business is at 25 Park Place, Atlanta, Georgia 30301 (the
"Bank");
WITNESSETH:
WHEREAS, the Borrowers and the Bank entered into that certain Term Loan
Agreement dated as of December 31, 1991 (as amended the "Loan Agreement"),
pursuant to which the Bank agreed to make available to the Borrowers a
$25,000,000 term loan;
WHEREAS, the Borrowers and the Bank entered into that certain First
Amendment to Term Loan Agreement dated as of January 22, 1992 whereby the
definition of "Permitted Dividends" was amended;
WHEREAS, the Borrowers and the Bank entered into that certain First
Amendment to Term Loan Agreement dated as of December 8, 1993, whereby Holdings
was added as a Borrower, certain negative covenants were amended and the Bank
waived certain defaults;
WHEREAS, the Borrowers and the Bank entered into that certain Second
Amendment to Term Loan Agreement dated as of November, 1994, whereby certain
negative covenants were amended;
WHEREAS, the Borrowers and the Bank hereby agree, on the terms and
conditions set forth herein, to amend the Loan Agreement to permit Printpack to
make a certain distribution to its shareholders and incur certain obligations
pursuant to the transactions contemplated by that certain Note Purchase
Agreement dated as of March 13, 1995 (the "Subordinated Note Agreement")
whereby Printpack issued an aggregate amount of $10,384,000 in original
principal amount of its 11.00% Notes due May 4, 2014 (the "Subordinated Notes")
to various shareholders of Printpack; and
WHEREAS, the Borrowers and the Bank hereby agree that the incurrence of
the new obligations by Printpack will necessitate a revision of certain of the
covenants contained in the Loan Agreement and that as a convenience, rather
than renegotiating such covenants, the parties will instead treat the new
obligations and the interest thereon as equity, or assets or dividends, as the
context may require;
1
<PAGE> 96
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
SECTION 1. AMENDMENT TO LOAN AGREEMENT.
(a) Addition of Definitions. The Loan Agreement is hereby amended by
adding the following definitions in the appropriate place in Section 1. 1:
"'Subordinated Note Agreement' means that certain Note Purchase
Agreement dated as of March 13, 1995 pursuant to which Printpack issued
the Subordinated Notes to various shareholders of Printpack."
"'Subordinated Notes' means the $10,384,000 in original principal
amount of Printpack's 11.00% Notes due May 4, 2014, issued pursuant to
the Subordinated Note Agreement."
(b) Amendment of the Definition of "Adjusted Combined Tangible Net
Worth". The Loan Agreement is hereby further amended by deleting the definition
of "Adjusted Combined Tangible Net Worth" in its entirety and substituting in
lieu thereof the following:
"Adjusted Combined Tangible Net Worth" shall mean, as of the date of
any determination thereof, the sum of (i) the aggregate amount of (a) the
capital stock (less treasury stock), surplus and retained earnings of the
Borrowers less (b) all deferred assets and all other items of the
Borrowers which would be considered "intangible assets" under GAAP (such
as goodwill, trademarks, service marks, formulae, franchise rights and
patents), plus (ii) the amount of any LIFO inventory reserves of the
Borrowers, all as determined on a combined basis; plus (iii) the
aggregate principal amount of the Subordinated Notes outstanding."
(c) Amendment of the Definition of "Indebtedness". The Loan Agreement is
hereby further amended by adding the following at the end of the definition of
"Indebtedness":
"Notwithstanding anything herein to the contrary, no obligation of
Printpack incurred pursuant to the Subordinated Notes or the Subordinated
Note Agreement shall constitute Indebtedness except for purposes of
Section 8.1 hereof."
(d) Amendment of the Definition of "Long Term Debt". The Loan Agreement
is hereby further amended by adding the following at the end of the deflection
of "Long Term Debt":
2
<PAGE> 97
"Notwithstanding anything herein to the contrary, no obligation of
Printpack incurred pursuant to the Subordinated Notes or the Subordinated
Note Agreement shall constitute Long Term Debt."
(e) Amendment of the Definition of "Permitted Dividends". The Loan
Agreement is hereby further amended by deleting the definition of Permitted
Dividends in its entirety and substituting in lieu thereof the following:
"Permitted Dividends" shall mean, for the Borrowers on a combined
basis for any fiscal year, the sum of (A) the aggregate Imputed Taxes for
the shareholders of the Borrowers, (B) payments of principal of and
interest on the Subordinated Notes scheduled to be paid during such
fiscal year and (C) $2,000,000; provided that any Permitted Dividends not
paid in any given year may be paid in any subsequent year.
(f) Amendment Regarding the Use of the Term "Interest". The Loan
Agreement is hereby further amended to provide that the terms "interest" and
"interest expense" and similar terms shall not include interest on the
Subordinated Notes for purposes of the determination of any of the other
defined terms of the Loan Agreement or for making any of the computations
necessary to determine the Borrowers' compliance with Section 7.9. Interest on
the Subordinated Notes shall be treated as dividends for such purposes.
(g) Amendment of the Definition of "Restricted Payment". The Loan
Agreement is hereby further amended by deleting the definition of "Restricted
Payment" in its entirety and substituting in lieu thereof the following:
"'Restricted Payment' shall mean (i) any direct or indirect
distribution, dividend or other payment to any Person on account of any
general or limited partnership interest in, or shares of capital stock or
other securities, of any of the Borrowers, or (ii) any payment of
interest or principal by Printpack on the Subordinated Notes pursuant to
the terms of the Subordinated Note Agreement."
(h) Amendment to Section 7.7. The Loan Agreement is hereby further
amended by adding at the end of Section 7.7 the following:
"Notwithstanding anything to contrary in this Section 7.7, Printpack may
pay, in addition to the Restricted Payments permitted herein, a
distribution in an amount not to exceed $10,384,000 to its shareholders
pursuant to the transactions contemplated by the Subordinated Note
Agreement. Such distribution shall not constitute a Permitted Dividend."
SECTION 2. CONSENT. The Bank hereby agrees that (i) the dividend in the
amount of $10,384,000 to be paid by Printpack to its shareholders in connection
with the transactions contemplated by the Subordinated Note Agreement and (ii)
all payments of
3
<PAGE> 98
principal and interest pursuant to the Subordinated Note Agreement are not
prohibited by Section 7.12 of the Loan Agreement.
SECTION 3. REFERENCES TO THE LOAN AGREEMENT. Each reference to the Loan
Agreement shall be deemed to be a reference to the Loan Agreement as amended by
this Amendment, and as the Loan Agreement may from time to time be further
amended, supplemented, restated or otherwise modified in the future by one or
more other written amendments or supplemental or modification agreements
entered into pursuant to the applicable provisions of the Loan Agreement.
SECTION 4. NO DEFAULT. The Borrowers hereby acknowledge and agree that,
as of the date hereof, and after giving effect to the terms hereof, there
exists (1) no Default or Event of Default and (ii) no right of offset, defense,
counterclaim, claim or objection in favor of the Borrowers arising out of or
with respect to any of the obligations under the Loan Agreement and the other
documents related thereto.
SECTION 5. BENEFITS. This Amendment shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION 7. EFFECT. Except as expressly herein amended, the terms and
conditions of the Loan Agreement and the other documents related thereto shall
remain in full force and effect.
SECTION 8. COUNTERPARTS. This Amendment may be executed any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.
SECTION 9. DEFINITIONS. All terms defined in the Loan Agreement which are
used herein shall have the meanings defined in the Loan Agreement, unless
specifically defined otherwise herein. The Loan Agreement shall be further
amended by incorporating all terms defined in this Amendment.
[Signatures on Next Page]
4
<PAGE> 99
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment
to Term Loan Agreement to be executed by their duly authorized officers as of
the date first above written.
PRINTPACK, INC.
/s/ R. Michael Hembree
-------------------------------------------------
By: R. Michael Hembree
---------------------------------------------
Title: VP - Finance
------------------------------------------
PRINTPACK, ENTERPRISES, INC.
/s/ R. Michael Hembree
-------------------------------------------------
By: R. Michael Hembree
---------------------------------------------
Title: VP - Finance
------------------------------------------
PRINTPACK HOLDINGS, LTD.
/s/ R. Michael Hembree
-------------------------------------------------
By: R. Michael Hembree
---------------------------------------------
Title: VP - Finance
------------------------------------------
TRUST COMPANY BANK
/s/ Robert V. Honeycutt
-------------------------------------------------
By: Robert V. Honeycutt
---------------------------------------------
Title: Banking Officer
------------------------------------------
/s/ David H. Eidson
-------------------------------------------------
By: David H. Eidson
---------------------------------------------
Title: Group Vice President
------------------------------------------
5
<PAGE> 100
FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT dated as of March 13,
1995 by and among PRINTPACK, INC., a Georgia corporation (the "Company"),
PRINTPACK ENTERPRISES, INC., a Georgia corporation (together with the Company,
the "Constituent Companies"), and EACH OF THE OTHER PERSONS NAMED ON THE
SIGNATURE PAGES HEREOF (collectively, the "Noteholders");
WITNESSETH:
WHEREAS, the Constituent Companies have entered into those separate Note
Agreements, each dated as of January 15, 1990 (collectively, the "Note
Agreement"), pursuant to which the Constituent Companies issued and sold to the
Noteholders an aggregate amount of $25,000,000 of the Constituent Companies'
9.35% Senior Notes Due January 15, 2002;
WHEREAS, the Constituent Companies and the Noteholders hereby agree, on
the terms and conditions set forth herein, to amend the Note Agreement to
permit the Company to make a certain distribution to its shareholders and incur
certain obligations pursuant to the transactions contemplated by that certain
Note Purchase Agreement dated as of March 13, 1995 (the "Subordinated Note
Agreement") whereby the Company issued an aggregate amount of $10,384,000 in
original principal amount of its 11.00% Notes due May 4, 2014 (the
"Subordinated Notes") to various shareholders of the Company; and
WHEREAS, the Constituent Companies and the Noteholders hereby agree that
the incurrence of the new obligations by the Company will necessitate a
revision of certain of the covenants contained in the Note Agreement and that
as a convenience, rather than renegotiating such covenants, the parties will
instead treat the new obligations and the interest thereon as equity, or assets
or dividends, as the context may require;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
SECTION 1. AMENDMENT TO NOTE AGREEMENT.
(a) Amendment of Section 5.9.
(i) The Note Agreement is hereby further amended by deleting the first
sentence of Section 5.9 in its entirety and substituting in lieu thereof the
following:
"5.9. Dividends, Stock Purchases. The Constituent Companies will not
except as hereinafter provided:
1
<PAGE> 101
(a) declare or pay any dividends, either in cash or property, on any
shares of their capital stock of any class (except dividends or other
distributions payable solely in shares of common stock of the Constituent
Companies); or
(b) directly or indirectly, or through any Subsidiary, purchase, redeem
or retire any shares of their capital stock of any class or any warrants,
rights or options to purchase or acquire any shares of their capital stock
(other than in exchange for or out of the net cash proceeds received by the
Constituent Companies after January 15, 1990 from the substantially concurrent
issue or sale of other shares of capital stock of the Constituent Companies or
warrants, rights or options to purchase or acquire any shares of their capital
stock); or
(c) make any other payment or distribution, either directly or indirectly
or through any Subsidiary, in respect of their capital stock; or
(d) make any Restricted Investment (other than in exchange for or out of
the net cash proceeds received by the Constituent Companies after January 15,
1990, from the substantially concurrent issue or sale of shares of capital
stock of the Constituent Companies or warrants, rights or options to purchase
or acquire any shares of their capital stock); or
(e) make any payment of principal of or interest on the Subordinated
Notes pursuant to the terms of the Subordinated Note Agreement;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, and all
such other distributions, Restricted Investments and other payments on
the Subordinated Notes being herein collectively called "Restricted
Payments"), unless, after giving effect thereto, (i) the aggregate amount
of Restricted Payments made during the period from and after July 1, 1989
to and including the date of the making of the Restricted Payment in
question would not exceed the sum of (x) $5,000,000 plus (y) 85% of
Consolidated Net Income for the twelve-month period immediately preceding
the date of the making of the Restricted Payment in question, computed on
a cumulative basis for said entire period (or if such Consolidated Net
Income is a deficit figure, then minus 100% of such deficit), and (ii)
the Constituent Companies would be permitted to incur at least $1.00 of
additional Senior Funded Debt under the provisions of Section 5.7(c)."
(ii) The Note Agreement is hereby further amended by adding at the end of
Section 5.9 the following:
"Notwithstanding the foregoing provisions of this Section 5.9, the
Company may pay, in addition to the Restricted Payments permitted by this
Section, a single distribution to its shareholders in an amount not to
exceed $10,384,000 in connection with the
2
<PAGE> 102
transactions contemplated by the Subordinated Note Agreement and the
Subordinated Notes. Such distribution shall not be deemed to be a
Restricted Payment hereunder."
(b) Addition of Definitions. The Note Agreement is hereby further amended
by adding the following definitions at the appropriate place in Section 8. 1:
"'Subordinated Note Agreement' means that certain Note Purchase
Agreement dated as of March 13, 1995 pursuant to which the Company issued
the Subordinated Notes to various shareholders of the Company."
"'Subordinated Notes' means the $10,384,000 in original principal
amount of the Company's 11.00% Notes due May 4, 2014, issued pursuant to
the Subordinated Note Agreement."
(c) Amendment of the Definition of "Consolidated Net Tangible Assets".
The Note Agreement is hereby further amended by deleting the definition of
"Consolidated Net Tangible Assets" in its entirety and substituting in lieu
thereof the following:
"'Consolidated Net Tangible Assets' shall mean as of the date of any
determination thereof the sum of (a) the total amount of all assets of
the Constituent Companies and their Restricted Subsidiaries (less
depreciation, depletion and other properly deductible valuation reserves)
after deducting (i) good will, patents, trade names, trademarks,
copyrights, franchises, experimental expense, organization expense,
unamortized debt discount and expense, deferred assets other than prepaid
insurance and prepaid taxes, the excess of cost of shares acquired over
book value of the related assets and such other assets as are properly
classified as 'intangible assets' in accordance with generally accepted
accounting principles, (ii) Minority Interests and (iii) all items which
in accordance with generally accepted accounting principles would be
included on the liability side of a consolidated balance sheet, except
capital stock (less treasury stock), surplus and retained earnings,
deferred taxes, the aggregate principal amount of Subordinated Notes
outstanding and Funded Debt plus (b) the LIFO Reserve. For purposes of
calculating the Consolidated Net Tangible Assets, Investments shall be
calculated on the basis of the net book value of such Investments on the
books of the Constituent Companies."
(e) Amendment to the Definition of "Consolidated Net Worth". The Note
Agreement is hereby further amended by deleting the definition of "Consolidated
Net Worth" and substituting in lieu thereof the following:
"Consolidated Net Worth' shall mean as of the date of any
determination thereof the aggregate amount of (a) capital stock (less
treasury stock), surplus and retained earnings of the Constituent
Companies and their Restricted Subsidiaries after deducting Minority
Interests to the extent included in the capital stock
3
<PAGE> 103
accounts of the Constituent Companies plus (b) the aggregate principal
amount of Subordinated Notes outstanding plus (c) the LIFO Reserve, all
as determined on a consolidated basis by the Constituent Companies and
their Restricted Subsidiaries."
(f) Amendment of the Definition of "Indebtedness". The Note Agreement is
hereby further amended by adding the following at the end of the definition of
"Indebtedness":
"Notwithstanding anything herein to the contrary, no obligation of the
Company incurred pursuant to the Subordinated Note Agreement or the
Subordinated Notes shall constitute Indebtedness except for purposes of
Section 6.1 hereof."
SECTION 2. CONSENT. Each of the Noteholders hereby agrees that (i) the
dividend in the amount of $10,384,000 to be paid by the Company to its
shareholders in connection with the transactions contemplated by the
Subordinated Note Agreement and (ii) all payments of principal and interest
pursuant to the Subordinated Note Agreement are not prohibited by Section 5.14
of the Note Agreement.
SECTION 3. REFERENCES TO THE NOTE AGREEMENT. Each reference to the Note
Agreement shall be deemed to be a reference to the Note Agreement as amended by
this Amendment, and as the Note Agreement may from time to time be further
amended, supplemented, restated or otherwise modified in the future by one or
more other written amendments or supplemental or modification agreements
entered into pursuant to the applicable provisions of the Note Agreement.
SECTION 4. NO DEFAULT. The Constituent Companies hereby acknowledge and
agree that, as of the date hereof, and after giving effect to the terms hereof,
there exists (i) no Default or Event of Default and (ii) no right of offset,
defense, counterclaim, claim or objection in favor of the Constituent Companies
arising out of or with respect to any of the obligations under the Note
Agreement and the other documents related thereto.
SECTION 5. BENEFITS. This Amendment shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION 7. EFFECT. Except as expressly herein amended, the terms and
conditions of the Note Agreement and the other documents related thereto shall
remain in full force and effect.
4
<PAGE> 104
SECTION 8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.
SECTION 9. DEFINITIONS. All terms defined in the Note Agreement which are
used herein shall have the meanings defined in the Note Agreement, unless
specifically defined otherwise herein. The Note Agreement shall be further
amended by incorporating all terms defined in this Amendment.
[Signatures on following page]
5
<PAGE> 105
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Note Purchase Agreement to be executed by their duly authorized officers as
of the date first above written.
PRINTPACK, INC.
/s/ R. Michael Hembree
-------------------------------------------------
By: R. Michael Hembree
---------------------------------------------
Title: VP - Finance
------------------------------------------
PRINTPACK, ENTERPRISES, INC.
/s/ R. Michael Hembree
-------------------------------------------------
By: R. Michael Hembree
---------------------------------------------
Title: VP - Finance
------------------------------------------
MML PENSION INSURANCE
COMPANY
/s/ Bruce E. Gaudette
-------------------------------------------------
By: Bruce E. Gaudette
---------------------------------------------
Title: Vice President
------------------------------------------
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
/s/ Bruce E. Gaudette
-------------------------------------------------
By: Bruce E. Gaudette
---------------------------------------------
Title: Vice President
------------------------------------------
AID ASSOCIATION FOR LUTHERANS
/s/ James Abitz
-------------------------------------------------
By: James Abitz
---------------------------------------------
Title: Vice President - Securities
------------------------------------------
/s/ R. Jerry Scheel
-------------------------------------------------
By: R. Jerry Scheel
---------------------------------------------
Title: Second Vice President - Securities
------------------------------------------
6
<PAGE> 106
FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT dated as of March 13,
1995 by and among PRINTPACK, INC., a Georgia corporation (the "Company") and
EACH OF THE OTHER PERSONS NAMED ON THE SIGNATURE PAGES HEREOF (collectively,
the "Noteholders"),
WITNESSETH:
WHEREAS, the Company has entered into those separate Note Agreements,
each dated as of January 15, 1988 (collectively, the "Note Agreement"),
pursuant to which the Company issued and sold to the Noteholders an aggregate
amount of $25,000,000 of the Company's 9.90% Senior Notes Due January 15, 1998;
and
WHEREAS, the Company and the Noteholders hereby agree, on the terms and
conditions set forth herein, to amend the Note Agreement to permit the Company
to make a certain distribution to its shareholders and incur certain
obligations pursuant to the transactions contemplated by that certain Note
Purchase Agreement dated as of March 13, 1995 (the "Subordinated Note
Agreement") whereby the Company issued an aggregate amount of $10,384,000 in
original principal amount of its 11.00% Notes due May 4, 2014 (the
"Subordinated Notes") to various shareholders of the Company; and
WHEREAS, the Company and the Noteholders hereby agree that the incurrence
of the new obligations by the Company will necessitate a revision of certain of
the covenants contained in the Note Agreement and that as a convenience, rather
than renegotiating such covenants, the parties will instead treat the new
obligations and the interest thereon as equity, or assets or dividends, as the
context may require;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
SECTION 1. AMENDMENT TO NOTE AGREEMENT.
(a) Amendment to Section 5.8.
(i) The Note Agreement is hereby further amended by deleting the first
sentence of Section 5.8 in its entirety and substituting in lieu thereof the
following:
"5.8. Dividends. Stock Purchases. The Company will not except as
hereinafter provided:
1
<PAGE> 107
(a) declare or pay any dividends, either in cash or property, on any
shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of common stock of the Company); or
(b) directly or indirectly, or through any Subsidiary, purchase, redeem
or retire any shares of its capital stock of any class or any warrants, rights
or options to purchase or acquire any shares of its capital stock other than in
exchange for or out of the net cash proceeds received by the Company after
January 15, 1988 from the substantially concurrent issue or sale of other
shares of capital stock of the Company or warrants, rights or options to
purchase or acquire any shares of its capital stock); or
(c) make any other payment or distribution, either directly or indirectly
or through any Subsidiary, in respect of its capital stock; or
(d) make any Restricted Investment (other than in exchange for or out of
the net cash proceeds received by the Company after January 15, 1988, from the
substantially concurrent issue or sale of shares of capital stock of the
Company or warrants, rights or options to purchase or acquire any shares of its
capital stock); or
(e) make any payment of principal of or interest on the Subordinated
Notes pursuant to the terms of the Subordinated Note Agreement;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options, and all
such other distributions, Restricted Investments and other payments on
the Subordinated Notes being herein collectively called "Restricted
Payments"), unless, after giving effect thereto, (i) the aggregate amount
of Restricted Payments made during the period from and after July 1, 1987
to and including the date of the making of the Restricted Payment in
question, would not exceed the sum of (x) $15,000,000 plus (y) 85% of
Consolidated Net Income for such period, computed on a cumulative basis
for said entire period (or if such Consolidated Net Income is a deficit
figure, then minus 100% of such deficit), and (ii) the Company would be
permitted to incur at least $1.00 of additional Senior Funded Debt under
the provisions of Section 5.6(c). "
(ii) The Note Agreement is hereby further amended by adding at the end of
Section 5.8. the following:
"Notwithstanding the foregoing provisions of this Section 5.8, the
Company may pay, in addition to the Restricted Payments permitted by this
Section, a single distribution to its shareholders in an amount not to
exceed $10,384,000 in connection with the transactions contemplated by
the Subordinated Note Agreement and the Subordinated Notes. Such
distribution shall not be deemed to be a Restricted Payment hereunder."
2
<PAGE> 108
(b) Addition of Definitions. The Note Agreement is hereby further amended
by adding the following definitions at the appropriate place in Section 8. 1:
"'Subordinated Note Agreement' means that certain Note Purchase Agreement
dated as of March 13, 1995 pursuant to which the Company issued the
Subordinated Notes to various shareholders of the Company."
"'Subordinated Notes' means the $10,384,000 in original principal amount
of the Company's 11.00% Notes due May 4, 2014, issued pursuant to the
Subordinated Note Agreement."
(c) Amendment of the Definition of "Consolidated Net Income". The Note
Agreement is hereby further amended by deleting "and" after subsection (j),
deleting the period after subsection (k), and adding"; and" thereafter, and
adding the following subsection (l):
"(l) any expense for interest arising pursuant to the Subordinated
Note Agreement and the Subordinated Notes."
(d) Amendment of the Definition of "Consolidated Net Tangible Assets".
The Note Agreement is hereby further amended by deleting the definition of
"Consolidated Net Tangible Assets" in its entirety and substituting in lieu
thereof the following:
"'Consolidated Net Tangible Assets' shall mean as of the date of any
determination thereof the total amount of all assets of the Company and
its Restricted Subsidiaries (less depreciation, depletion and other
properly deductible valuation reserves) after deducting (i) good will,
patents, trade names, trademarks, copyrights, franchises, experimental
expense, organization expense, unamortized debt discount and expense,
deferred assets other than prepaid insurance and prepaid taxes, the
excess of cost of shares acquired over book value of the related assets
and such other assets as are properly classified as 'intangible assets'
in accordance with generally accepted accounting principles, (ii)
Minority Interests, (iii) all items which in accordance with generally
accepted accounting principles would be included on the liability side of
a consolidated balance sheet, except capital stock (less treasury stock),
surplus and retained earnings, deferred taxes, the aggregate principal
amount of Subordinated Notes outstanding and Funded Debt, and (iv)
Investments permitted under Section 5.14(g). For purposes of calculating
the Consolidated Net Tangible Assets, Investments shall be calculated on
the basis of the net book value of such Investments on the books of the
Company."
(e) Amendment to the Definition of "Consolidated Net Worth". The Note
Agreement is hereby further amended by deleting the definition of "Consolidated
Net Worth" and substituting in lieu thereof the following:
3
<PAGE> 109
"'Consolidated Net Worth' shall mean as of the date of any
determination thereof the aggregate amount of the capital stock (less
treasury stock), surplus and retained earnings of the Company and its
Restricted Subsidiaries after deducting Minority Interests to the extent
included in the capital stock accounts of the Company, plus the aggregate
principal amount of the Subordinated Notes outstanding, all as determined
on a consolidated basis by the Company and its Restricted Subsidiaries."
(f) Amendment of the Definition of "Indebtedness". The Note Agreement is
hereby further amended by adding the following at the end of the definition of
"Indebtedness":
"Notwithstanding anything herein to the contrary, no obligation of the
Company incurred pursuant to the Subordinated Note Agreement or the
Subordinated Notes shall constitute Indebtedness except for purposes of
Section 6.1 hereof."
SECTION 2. CONSENT. Each of the Noteholders hereby agrees that (i) the
dividend in the amount of $10,384,000 to be paid by the Company to its
shareholders in connection with the transactions contemplated by the
Subordinated Note Agreement and (ii) all payments of principal and interest
pursuant to the Subordinated Note Agreement are not prohibited by Section 5.13
of the Note Agreement.
SECTION 3. REFERENCES TO THE NOTE AGREEMENT. Each reference to the Note
Agreement shall be deemed to be a reference to the Note Agreement as amended by
this Amendment, and as the Note Agreement may from time to time be further
amended, supplemented, restated or otherwise modified in the future by one or
more other written amendments or supplemental or modification agreements
entered into pursuant to the applicable provisions of the Note Agreement.
SECTION 4. NO DEFAULT. The Company hereby acknowledges and agrees that,
as of the date hereof, and after giving effect to the terms hereof, there
exists (i) no Default or Event of Default and (ii) no right of offset, defense,
counterclaim, claim or objection in favor of the Company arising out of or with
respect to any of the obligations under the Note Agreement and the other
documents related thereto.
SECTION 5. BENEFITS. This Amendment shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION 7. EFFECT. Except as expressly herein amended, the terms and
conditions of the Loan Agreement and the other documents related thereto shall
remain in full force and effect.
4
<PAGE> 110
SECTION 8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.
SECTION 9. DEFINITIONS. All terms defined in the Note Agreement which are
used herein shall have the meanings defined in the Note Agreement, unless
specifically defined otherwise herein. The Note Agreement shall be further
amended by incorporating all terms defined in this Amendment.
[Signatures on Next Page]
5
<PAGE> 111
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Note Purchase Agreement to be executed by their duly authorized officers as
of the date first above written.
PRINTPACK, INC.
/s/ R. Michael Hembree
-------------------------------------------------
By: R. Michael Hembree
---------------------------------------------
Title: VP - Finance
------------------------------------------
ALLSTATE LIFE INSURANCE
COMPANY
PRINTPACK, INC.
-------------------------------------------------
By:
---------------------------------------------
Title:
------------------------------------------
By:
AID ASSOCIATION FOR LUTHERANS
/s/ James Abitz
-------------------------------------------------
By: James Abitz
---------------------------------------------
Title: Vice President - Securities
------------------------------------------
/s/ R. Jerry Scheel
-------------------------------------------------
By: R. Jerry Scheel
---------------------------------------------
Title: Second Vice President - Securities
------------------------------------------
6
<PAGE> 112
NationsBank
P. 0. Box 4899
Atlanta, GA 30302-4899
Tel 404 581-2121
NATIONSBANK
March 9, 1995
Printpack, Inc.
4335 Wendell Drive, S.W.
P.O. Box 43687
Atlanta, Georgia 30378
Attention: R. Michael Hembree
Re: $3,500,000 Industrial Development Revenue Bonds (Printpack,
Inc.) Series of 1980 (the "Bonds") issued by the Industrial
Development Authority of the County of Spotsylvania (the
"Authority") for the benefit of Printpack, Inc. (the "Company")
Ladies and Gentlemen:
NationsBank of Georgia, National Association is the owner (the "Bondholder") of
all of the outstanding Bonds, and is the bond trustees (the "Trustee") under
the Indenture of Trust pursuant to which the Bonds were issued. The purpose of
this letter is to evidence the agreement of the Bondholder to waive compliance
with certain provisions of the Agreement of Sale dated as of December 1, 1980,
as amended (the "Agreement").
The Company has informed us that it plans to make a single distribution to
certain shareholders in the amount of $10,383,542 and issue to certain
shareholders an aggregate of $10,383,542 in original principal amount of the
Company's 11.00% Notes due May 4, 2014, which Notes will be subordinate to the
Bonds (collectively, the "Note Transaction").
The Bondholder hereby waives any covenant default under the Agreement that may
arise out of the Note Transaction, including but not limited to compliance with
the provisions of Section 7.5, 7.8, and 7.9 of the Agreement.
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<PAGE> 113
The Bondholder hereby directs the Trustee to execute such waivers or other
documents as may be necessary or appropriate under the Indenture of Trust to
give effect to the waiver granted hereby.
Except as specifically provided in this waiver, each provision of the Agreement
and the Indenture of Trust shall remain in full force and effect.
Very truly yours,
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Bondholder
By: /s/
---------------------------------------
Title: Senior Vice President
-----------------------------------
The undersigned, as Trustee under the Indenture of Trust, hereby consents to
the foregoing waiver.
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Trustee
By: /s/
---------------------------------------
Title: Vice President
-----------------------------------
- ii -
<PAGE> 114
FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT dated as of August 22,
1996 by and among Printpack, Inc., a Georgia corporation (together with its
successors and assigns, the "Company") and the Purchasers (the "Purchasers")
listed on the signature pages hereto.
WHEREAS, the Company issued $10,384,000 in aggregate principal amount of
its 11.00% Subordinated Notes due May 4, 2014 (the "Notes") to the Purchasers
pursuant to the terms of that certain Note Purchase Agreement dated as of March
13, 1995 (the "Note Purchase Agreement") by and among the Company and the
Purchasers;
WHEREAS, in order to finance the purchase of certain assets from James
River Corporation of Virginia, a Virginia corporation (the "Seller") and its
subsidiaries pursuant to the terms of that certain Asset Purchase Agreement
dated as of April 10, 1996 by and between the Seller and the Company, the
Company will be refinancing a substantial portion of its existing Indebtedness
and incurring certain additional Indebtedness;
WHEREAS, the parties hereto desire to amend the Note Purchase Agreement
in order to reflect the refinancing and incurrence of such Indebtedness, and
for certain other purposes;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
Section 1. Amendment to Note Purchase Agreement.
(a) The Note Purchase Agreement is hereby amended by deleting Section 4.1
in its entirety and substituting in lieu thereof the following:
"4.1 MANDATORY PREPAYMENTS.
The Company shall, without notice, make a prepayment with
respect to the Notes, without premium, on May 25, 2005, in an
aggregate amount of $3,422,000, to be allocated among the holders
of the Notes in proportion pursuant to Section hereof.
Notwithstanding anything contained in this Section, on the
maturity date of the Notes, the full principal amount of the Notes
then outstanding, together with accrued interest thereon, shall be
due and payable."
(b) The Note Purchase Agreement is hereby further amended by deleting
Section 4.2 in its entirety and substituting in lieu thereof the following:
<PAGE> 115
"4.2 OPTIONAL PREPAYMENTS.
(a) Upon the terms and subject to the conditions hereinafter
set forth, and subject to the approval of the number of holders of
the Senior Debt as are required to amend the affirmative covenants
under the holders' respective governing document (the "Required
Senior Debt Holders"), the Company, at its option, upon notice as
provided in Section (b) hereof, may prepay the Notes on any
Interest Payment Date either in whole or from time to time in any
part, at a prepayment price equal to the aggregate principal
amount of the Notes so to be prepaid, plus interest accrued on the
amount to be prepaid to the date fixed for prepayment.
(b) Notice of any prepayment of Notes pursuant to Section
shall be given to each holder of the Notes not less than thirty
(30) nor more than sixty (60) days before the Interest Payment
Date fixed for prepayment (the "Optional Prepayment Date"), and
shall state: (i) the Optional Prepayment Date, (ii) the aggregate
principal amount of the Notes to be prepaid on such Optional
Prepayment Date, (iii) the aggregate principal amount of the Notes
and the principal amount of each such Note held by such holder to
be prepaid, and (iv) the aggregate amount of accrued interest
applicable to such prepayment.
(c) With respect to any Note which is held by an employee of
the Company who is not a member of the Love Family, the Company
may prepay, without premium, at its sole option, the principal and
accrued interest on such Note on a date determined by the Company
within 60 days after the termination of such employment for any
reason whatsoever, including death."
(c) The Note Purchase Agreement is hereby further amended by deleting
Section 5.8 in its entirety and substituting in lieu thereof the following:
"5.8 Intentionally Omitted"
(d) The Note Purchase Agreement is hereby further amended by deleting
subsections (g), (h) and (i) of Section 6.1 and substituting in lieu thereof
the following:
"(g) the Company becomes insolvent or bankrupt, is generally
not paying its debts as they become due or makes an assignment for
the benefit of creditors, or the Company causes or suffers an
order for relief to be entered with respect to it under applicable
federal bankruptcy law or applies for or consents to the appointment of a
custodian, trustee or
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<PAGE> 116
receiver for the Company or for the major part of the Company's property;
or
(h) a custodian, trustee or receiver is appointed for the
Company or for the major part of the Company's property and is not
discharged within 60 days after such appointment; or
(i) bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy
or similar law or laws for the relief of debtors, are instituted
by or against the Company and, if instituted against the Company,
are consented to or are not dismissed within 60 days after such
institution."
(e) The Note Purchase Agreement is hereby further amended by deleting the
definition of "Enterprises" in Section 8.1 thereof in its entirety.
(f) The Note Purchase Agreement is hereby further amended by deleting the
definitions of "Senior Covenant Default", "Senior Debt" and "Senior Payment
Default" in Section 7.2 thereof in their entirety and substituting in lieu
thereof the following:
"'Senior Covenant Default' means any default other than a
Senior Payment Default, but including a Senior Bankruptcy Default,
occurring under any Senior Debt, which event of default permits,
or would permit, with the passage of time or the giving of notice
or both the holder or holders of such Senior Debt to accelerate
the maturity thereof.
'Senior Debt' means Indebtedness of the Company and its
subsidiaries pursuant to (a) the Senior Agreements (including,
without limitation, Hedging Obligations owing to lenders that are
parties to the Credit Agreement or to Affiliates of such lenders);
(b) all other Indebtedness for Money Borrowed and Attributable
Debt which is hereafter designated by the Company to be Senior
Debt; (c) all Obligations of the Company and its subsidiaries with
respect to the foregoing clauses (a) and (b), including
post-petition interest and (d) all (including all subsequent)
renewals, extensions, amendments, refinancings, repurchases or
redemptions, modifications, replacements or refundings thereto
(whether or not coincident therewith), whether in whole or in
part.
'Senior Payment Default' means any event of default in
respect of any payment or prepayment of principal or interest when
due with respect to any Senior Debt occurs and is continuing."
(g) The Note Purchase Agreement is hereby further amended by inserting
the following definitions in their appropriate alphabetical order in Section
7.2:
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<PAGE> 117
"'Attributable Debt' in respect of a sale and leaseback
transaction means, at the time of determination, the present value
(discounted at the rate of interest implicit in such transaction,
determined in accordance with generally accepted accounting
principles) of the obligation of the lessee for net rental
payments during the remaining term of the lease included in such
sale and leaseback transaction (including any period for which
such lease has been extended or may, at the option of the lessor
be extended).
'Hedging Obligations' means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements
and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates.
'Obligations' means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
'Senior Agreements' shall mean each of that certain (a)
senior note indenture dated as of August 22, 1996 by and between
the Company and the trustee thereof; (b) senior subordinated note
indenture dated as of August 22, 1996, 1996 by and between the
Company and the trustee thereof; (c) that certain Credit Agreement
dated as of August 22, 1996 (the "Credit Agreement") by and among
the Company, the lenders from time to time a party thereto and The
First National Bank of Chicago, as agent; and (d) any amendments,
supplements, modifications, extensions, replacements,
substitutions or refinancings of any of the foregoing."
(h) The Note Purchase Agreement is hereby further amended by deleting the
first clause (i) of Section 7.4 in its entirety and substituting in lieu
thereof the following:
"(i) any Senior Debt incurred pursuant to any Senior Agreement has
matured by passage of time or by acceleration and has not been
paid or".
Section 2. Reaffirmation. The Company hereby reaffirms all
representations and warranties made by the Company to the Purchasers in the
Note Purchase Agreement on and as of the date hereof with the same force and
effect as if such representations and warranties were set forth in this
Amendment in full.
Section 3. Representations. The Company further represents to the
Purchasers that:
(a) Authorization. The Company has the right and power, and has taken all
necessary action to authorize it, to execute and deliver this Amendment and to
perform the Note Purchase Agreement, as amended by this Amendment, in
accordance with its terms.
- 4 -
<PAGE> 118
2
This Amendment has been duly executed and delivered by the duly authorized
officers of the Company, and each of this Amendment and the Note Purchase
Agreement, as amended by this Amendment, is a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting generally the enforcement of
creditors' rights.
(b) Compliance of Loan Documents with Laws, etc. The execution and
delivery of this Amendment, and the performance of the Note Purchase Agreement,
as amended by this Amendment, in accordance with their respective terms do not
and will not, by the passage of time, the giving of notice or otherwise
conflict with, result in a breach of or constitute a default under the articles
of incorporation or by-laws of the Company, or any indenture, agreement or
other instrument to which the Company is a party or by which it or any of its
properties may be bound.
(c) No Default. No Event of Defaults exists as of the date hereof and,
after giving effect to this Amendment, no Event of Default will occur or exist.
Section 4. References to the Note Purchase Agreement and the Other Loan
Documents. Each reference to the Note Purchase Agreement shall be hereby deemed
to be a reference to the Note Purchase Agreement as amended by this Amendment,
and as may from time to time be further amended, supplemented, restated or
otherwise modified in the future by one or more other written amendments or
supplemental or modification agreements entered into pursuant to the applicable
provisions of the Note Purchase Agreement.
Section 5. Benefits. This Amendment shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
Section 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 7. Effect. Except as expressly herein amended, the terms and
conditions of the Note Purchase Agreement shall remain in full force and
effect.
Section 8. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.
Section 9. Definitions. All terms defined in the Note Purchase Agreement
which are used herein shall have the meanings defined in the Note Purchase
Agreement, unless specifically defined otherwise herein. The Note Purchase
Agreement shall be further amended by incorporating all terms defined in this
Amendment.
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<PAGE> 119
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Note Purchase Agreement to be executed by their duly authorized officers as of
the date first above written.
PRINTPACK, INC.
By:
---------------------------------
Title:
------------------------------
[Signatures continued on following page]
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<PAGE> 120
The foregoing Amendment
is hereby accepted as of the
date first above written.
<TABLE>
<S> <C>
By: By:
------------------------ ------------------------
Dennis M. Love James E. Love, IV
By: By:
------------------------ ------------------------
James E. Love, III John O. Exum
By: By:
------------------------ ------------------------
Carol Anne Love Jennison August J. Franchini, Jr.
By: By:
------------------------ ------------------------
William J. Love James J. Greco
By: By:
------------------------ ------------------------
C. Keith Love Anthony J. Llorca, Jr.
By: By:
------------------------ ------------------------
David M. Love S. Howard McKinley
By: By:
------------------------ ------------------------
Catherine C. Love Robert B. Paxton
By: By:
------------------------ ------------------------
Dennis M. Love, Jr. G. David Peake
By: By:
------------------------ ------------------------
Alison T. Love Travis D. Shepard
By:
------------------------
John E. Jennison
By:
------------------------
David J. Jennison
</TABLE>
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<PAGE> 1
EXHIBIT 10.3
Printpack, Inc. Savings and Profit Sharing Plan, as amended.
<PAGE> 2
PRINTPACK, INC. SAVINGS AND PROFIT SHARING PLAN
(As Amended, Renamed and Restated Effective July 1, 1993)
<PAGE> 3
PRINTPACK, INC. SAVINGS AND PROFIT SHARING PLAN
(As Amended, Renamed and Restated Effective July 1, 1993)
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1 - INTRODUCTION .......................................... 1
1.01 History of the Plan ...................................... 1
1.02 New Plan ................................................. 1
1.03 Effective Dates .......................................... 1
1.04 Purpose .................................................. 2
ARTICLE 2 - DEFINITIONS ........................................... 3
Account ....................................................... 3
Adjustment .................................................... 3
Affiliate ..................................................... 3
Authorized Leave of Absence ................................... 3
Basic Pre-Tax Contributions ................................... 3
Beneficiary ................................................... 3
Board ......................................................... 4
Break in Service .............................................. 4
Code .......................................................... 4
Committee ..................................................... 4
Company ....................................................... 4
Compensation .................................................. 4
Controlled Affiliate Sponsor .................................. 5
Cost of Living Factor ......................................... 5
Credited Service .............................................. 5
Effective Date ................................................ 6
Eligible Employee ............................................. 6
Employee ...................................................... 6
Employee After-Tax Contribution Account ....................... 6
Employer ...................................................... 6
Employer Contributions ........................................ 7
Employer Contribution Account ................................. 7
</TABLE>
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<PAGE> 4
<TABLE>
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Employer Matching Contribution ................................ 7
Employer Matching Contribution Account ........................ 7
Employment .................................................... 7
Entry Date .................................................... 7
ERISA ......................................................... 7
Family Member ................................................. 7
Fiduciary ..................................................... 7
Former Participant ............................................ 7
Highly Compensated Employee ................................... 7
Hour of Service ............................................... 7
Investment Fund ............................................... 8
Investment Manager ............................................ 8
Non-Controlled Sponsor ........................................ 9
Normal Retirement Date ........................................ 9
One-Year Break in Service ..................................... 9
Participant ................................................... 9
Permanent Disability .......................................... 9
Plan .......................................................... 9
Plan Administrator or Administrator ........................... 9
Plan Year ..................................................... 9
Pre-Tax Contributions ......................................... 9
Pre-Tax Contribution Account .................................. 9
Prior Plan .................................................... 9
Profit Sharing Contribution ................................... 9
Profit Sharing Contribution Account ........................... 9
Qualified ..................................................... 10
Retirement .................................................... 10
Rollover Account .............................................. 10
Rollover Contribution ......................................... 10
Spouse ........................................................ 10
Supplemental Pre-Tax Contributions ............................ 10
Termination of Employment ..................................... 10
Treasury Regulation ........................................... 10
</TABLE>
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<PAGE> 5
<TABLE>
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Trust or Trust Agreement ...................................... 11
Trust Fund or Fund ............................................ 11
Trustee ....................................................... 11
Valuation Date ................................................ 11
Defined Terms ................................................. 11
ARTICLE 3 - PARTICIPATION ......................................... 12
3.01 Participation ............................................ 12
3.02 Participation and Rehire ................................. 13
3.03 Not Contract for Employment .............................. 13
3.04 Transferred Participants ................................. 13
Article 4 - Contributions ......................................... 14
4.01 Pre-Tax Contributions .................................... 14
4.02 Employee After-Tax Contributions ......................... 14
4.03 Elections Regarding Pre-Tax Contributions ................ 14
4.04 Change in Employee Contribution Percentage or
Suspension of Contributions ........................... 15
4.05 Deadline for Contribution and Allocation of Pre-Tax
Contributions ......................................... 16
4.06 Rollover Contribution .................................... 16
ARTICLE 5 - EMPLOYER CONTRIBUTIONS ................................ 17
5.01 Employer Contributions ................................... 17
5.02 Form and Timing of Contributions ......................... 17
ARTICLE 6 - ACCOUNTS AND ALLOCATIONS .............................. 19
6.01 Participant Accounts ..................................... 19
6.02 Allocation of Adjustments ................................ 20
6.03 Investment Funds and Elections ........................... 20
6.04 Errors ................................................... 21
6.05 Valuation For Purposes of Distributions .................. 22
6.06 Allocations Do Not Affect Vesting ........................ 22
ARTICLE 7 - VESTING AND DISTRIBUTIONS ............................. 23
7.01 Retirement ............................................... 23
7.02 Death .................................................... 23
7.03 Permanent Disability ..................................... 23
7.04 Other Termination of Employment .......................... 23
7.05 Forfeitures and Repayment Right .......................... 24
</TABLE>
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<PAGE> 6
<TABLE>
<S> <C>
7.06 Commencement of Distribution ........................... 25
7.07 Method of Distribution ................................. 26
7.08 Attainment of Age 59-1/2 ............................... 26
7.09 Payment to Minors and Incapacitated Persons ............ 27
7.10 Application for Benefits ............................... 27
7.11 Special Distribution Rules ............................. 27
7.12 Distributions Pursuant to Qualified Domestic Relations
Orders ............................................. 28
7.13 Direct Rollovers ....................................... 28
ARTICLE 8 - HARDSHIP WITHDRAWALS AND LOANS ........................ 30
8.01 Hardship Withdrawal of Account ......................... 30
8.02 Definition of Hardship ................................. 30
8.03 Maximum and Minimum Hardship Distribution .............. 30
8.04 Procedure to Request Hardship Distribution ............. 32
8.05 Authority to Establish Loan Program .................... 32
8.06 Eligibility ............................................ 32
8.07 Loan Amount ............................................ 32
8.08 Maximum Number of Loans ................................ 33
8.09 Assignment of Account .................................. 33
8.10 Interest ............................................... 33
8.11 Term of Loan ........................................... 33
8.12 Level Amortization ..................................... 33
8.13 Directed Investment .................................... 34
8.14 Other Requirements ..................................... 34
8.15 Distribution of Hardship Withdrawals and Loans ......... 34
8.16 Valuation for Purposes of Withdrawals and Loans ........ 35
ARTICLE 9 - ADMINISTRATION OF THE PLAN ............................ 36
9.01 Named Fiduciaries ...................................... 36
9.02 Board of Directors ..................................... 36
9.03 Trustee ................................................ 36
9.04 Committee .............................................. 36
9.05 Standard of Fiduciary Duty ............................. 38
9.06 Claims Procedure ....................................... 39
9.07 Indemnification of Committee ........................... 40
</TABLE>
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<PAGE> 7
<TABLE>
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ARTICLE 10 - AMENDMENT AND TERMINATION ............................ 41
10.01 Right to Amend ........................................ 41
10.02 Termination and Discontinuance of Contributions ....... 41
10.03 IRS Approval of Termination ........................... 42
ARTICLE 11 - SPECIAL DISCRIMINATION RULES ......................... 43
11.01 Definitions ........................................... 43
11.02 $8,994 Limit on Pre-Tax Contributions ................. 45
11.03 Average Actual Deferral Percentage .................... 47
11.04 Special Rules For Determining Average Actual Deferral
Percentage ......................................... 48
11.05 Distribution of Excess ADP Deferrals .................. 48
11.06 Average Actual Contribution Percentage ................ 50
11.07 Special Rules For Determining Average Actual Contribution
Percentages ........................................ 51
11.08 Distribution of Employer Matching Contributions ....... 51
11.09 Combined ACP and ADP Test ............................. 52
11.10 Order of Applying Certain Section of Article .......... 54
ARTICLE 12 - HIGHLY COMPENSATED EMPLOYEES ......................... 55
12.01 In General ............................................ 55
12.02 Highly Compensated Employees .......................... 55
12.03 Former Highly Compensated Employee .................... 55
12.04 Family Aggregation Rules .............................. 56
12.05 Definitions ........................................... 56
12.06 Other Methods Permissible ............................. 58
ARTICLE 13 - MAXIMUM BENEFITS ..................................... 59
13.01 General Rule .......................................... 59
13.02 Combined Plan Limitation .............................. 61
13.03 Definitions ........................................... 61
ARTICLE 14 - TOP HEAVY RULES ...................................... 63
14.01 General ............................................... 63
14.02 Definitions ........................................... 63
14.03 Minimum Benefits ...................................... 64
14.04 Combined Plan Limitation For Top Heavy Years .......... 65
ARTICLE 15 - MISCELLANEOUS ........................................ 66
15.01 Headings .............................................. 66
</TABLE>
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<PAGE> 8
<TABLE>
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15.02 Action by Employer .................................... 66
15.03 Spendthrift Clause .................................... 66
15.04 Distributions Upon Special Occurrences ................ 66
15.05 Discrimination ........................................ 67
15.06 Release ............................................... 67
15.07 Compliance with Applicable Laws ....................... 67
15.08 Merger ................................................ 67
15.09 Governing Law ......................................... 67
15.10 Legally Incompetent ................................... 67
15.11 Location of Participant or Beneficiary Unknown ........ 68
15.12 Adoption of the Plan by Controlled Affiliate Sponsors . 68
15.13 Protected Benefits .................................... 70
</TABLE>
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<PAGE> 9
PRINTPACK, INC. SAVINGS AND PROFIT SHARING PLAN
(As Amended and Restated Effective July 1, 1993)
ARTICLE 1
INTRODUCTION
1.01 History of the Plan.
The Board of Directors established the Printpack, Inc. Profit Sharing
Plan on July 1, 1961 for the exclusive benefit of its eligible
employees. The Prior Plan was amended and restated from time to time
and most recently was amended and restated effective October 1, 1984
(the "Prior Plan"). The Prior Plan was at all times maintained as a
plan meeting the qualification requirements of Section 401(a) of the
Internal Revenue Code, as amended, and the Employee Retirement Income
Security Act of 1974.
1.02 New Plan.
Effective July 1, 1993, the Prior Plan is continued in an amended and
restated form as set forth in this document to comply with the
requirements of the Internal Revenue Code of 1986 (the "Code") and the
Employee Retirement Income Security Act of 1974 ("ERISA").
1.03 Effective Dates.
Notwithstanding that the Plan was amended and restated effective July 1,
1993, the following provisions of the Plan shall have effective dates
prior to the Effective Date of this Plan:
(a) The definition of "Compensation" contained in Article 2
shall be effective July 1, 1987.
(b) The provisions regarding the Code Section 401(a)(17) limits
on compensation which can be taken into account for Plan purposes
and which is contained in the definition of "Compensation" in
Article 2 shall be effective as of the dates set forth in such
definition.
(c) The provision regarding "leased employees" contained in the
definition of "Eligible Employees" in Article 2 shall be effective
July 1, 1987.
(d) Section 4.02, regarding Employee After-Tax Contributions,
shall be effective April 1, 1989.
(e) Section 7.06(c), regarding the removal of Committee
discretion as to the commencement date of benefit payments, shall
be effective April 1, 1989.
<PAGE> 10
(f) Section 7.13, regarding Direct Rollovers, shall be
effective January 1, 1993.
(g) Article 13, Maximum Benefits, shall be effective April 1,
1987.
(h) Article 14, Top-Heavy Provisions, shall be effective April
1, 1987.
In addition, certain other provisions of the Plan by their express
terms have different effective date rules.
1.04 Purpose.
The purpose of this Plan is to encourage retirement savings by
Participants by allowing them to accumulate tax-deferred savings while
providing an incentive through matching contributions made by the
Employer. Further, the benefits described in the Plan are provided for
the exclusive benefit of the Participants and their Beneficiaries and
this Plan shall be administered and interpreted in accordance with such
purpose.
- 2 -
<PAGE> 11
ARTICLE 2
DEFINITIONS
Certain terms of this Plan have defined meanings which are set forth in this
Article and which shall govern unless the context in which they are used
clearly indicates that some other meaning is intended.
Account. The Account established and maintained by the Committee or Trustee
for each Participant or their Beneficiaries to which shall be allocated each
Participant's interest in the Fund. Each Account shall be comprised of the
sub-accounts described in Section 6.01.
Adjustment. For any Valuation Date, the aggregate earnings, realized or
unrealized appreciation, losses, expenses, and realized or unrealized
depreciation of the Fund since the immediately preceding Valuation Date. For
purposes of such adjustment, all assets of the Trust Fund shall be valued at
their fair market value as of each Valuation Date. The determination of the
valuation of assets and the adjustment shall be made by the Trustee and shall
be final and binding.
Affiliate. The Company and any corporation which is a member of a controlled
group of corporations (as defined in Code Section 414(b)) which includes the
Company; any trade or business which is under common control (as defined in
Code Section 414(c)) with the Company; any organization which is a member of
an affiliated service group (as defined in Code Section 414(m)) which
includes the Company; and any other entity required to be aggregated with the
Company pursuant to regulations under Code Section 414(o).
Authorized Leave of Absence. Any temporary layoff or any absence authorized
by the Employer under the Employer's standard personnel practices provided
that all persons under similar circumstances must be treated alike in the
granting of such Authorized Leaves of Absence and provided further that the
Participant returns within the period of authorized absence. An absence due
to service in the Armed Forces of the United States shall be considered an
Authorized Leave of Absence to the extent required by federal law.
Basic Pre-Tax Contributions. See Section 4.01(a).
Beneficiary.
(a) Unmarried Participants. For unmarried Participants, any
individual(s), trust(s), estate(s), partnership(s), corporation(s)
or other entity or entities designated by the Participant in
accordance with procedures established by the Committee to receive
any distribution to which the Participant is entitled under the
Plan in the event of the Participant's death. The Committee may
require certification by a Participant in any form it deems
appropriate of the Participant's marital status prior to accepting
or honoring any Beneficiary designation. Any Beneficiary
designation shall be void if the Participant revokes the designation
or marries. Any Beneficiary
- 3 -
<PAGE> 12
designation shall be void to the extent it conflicts with the terms
of a "qualified domestic relations order," as defined in Code
Section 414(p).
If an unmarried Participant fails to designate a Beneficiary or
if the designated Beneficiary fails to survive the Participant
and the Participant has not designated a contingent Beneficiary,
the Beneficiary shall be the Participant's estate.
(b) Married Participant. A married Participant's Beneficiary
shall be his Spouse at the time of his death unless the
Participant has designated a non-spouse Beneficiary (or
Beneficiaries) with the written consent of his Spouse given in the
presence of a Notary Public on a form provided by the Committee,
or unless the terms of a qualified domestic relations order
require payment to a non-spouse Beneficiary. A married
Participant's designation of a non-spouse Beneficiary in
accordance with the preceding sentence shall remain valid until
revoked by the Participant or until the Participant marries a
Spouse who has not consented to a designation in accordance with
the preceding sentence.
For the purposes of this Section, revocation of prior
Beneficiary designations will occur when a Participant (i) files
a subsequent valid designation with the Committee; or (ii) files
a signed statement with the Committee evidencing his intent to
revoke any prior designations.
Board. The Board of Directors of the Company.
Break in Service. A period of five consecutive One-Year Breaks in Service.
A period of an Authorized Leave of Absence shall not result in a Break in
Service if employment is resumed immediately upon expiration of such period.
Code. The Internal Revenue Code of 1986, as amended.
Committee. The Committee appointed by the Board under Article 9 to
administer the Plan.
Company. Printpack, Inc. and its successors and assigns which adopt this
Plan.
Compensation. Effective July 1, 1987, the gross annual earnings reported on a
Participant's Form W-2 (box 10 or its comparable location as provided on Form
W-2 in future years) as required by Code Sections 6041(d) and 6051(a)(3); but
adding back Pre-Tax Contributions under this Plan and salary reduction pre-tax
contributions to a Section 125 Plan maintained by the Employer and ignoring
reimbursements or other expense allowances, fringe benefits (cash and non-cash,
including but not limited to personal use of automobiles and condominiums,
split dollar life insurance, and estate planning services), moving expenses,
deferred compensation (and for this purpose benefits under a stock option plan
is "deferred compensation") and welfare benefits (and for this purpose,
- 4 -
<PAGE> 13
worker's compensation payments of any type and severance pay of any type shall
be considered "welfare benefits," but sick pay, short term disability and
vacation pay are not considered "welfare benefits"). Compensation shall be
determined by ignoring any income exclusions under Code Section 3401(a) based
on the nature or location of employment.
Effective April 1, 1989, no more than $200,000 in Compensation (adjusted
annually as provided in Code Section 401(a)(17)) shall be taken into account
for any Participant during a Plan Year. Effective July 1, 1994, no more than
$150,000 in Compensation (adjusted annually as provided in Code Section
401(a)(17)) shall be taken into account for any Participant during a Plan
Year.
See also Section 12.04 for additional rules regarding aggregation of
Compensation for certain Family Members.
Controlled Affiliate Sponsor. Any Affiliate that adopts or is deemed to
adopt this Plan. See also Section 15.12.
Cost of Living Factor. The cost of living factor prescribed by the Secretary
of the Treasury under Section 415(d) of the Code, as applied to such items
and in such manner as the Secretary may provide.
Credited Service. The number of years of service as an Employee of the
Employer which shall be measured in accordance with the following rules:
(a) Every Employee who is employed on the Effective Date shall receive one
year of Credited Service under this Plan for each year of Credited
Service earned prior to July 1, 1993.
(b) After the Effective Date, an Employee shall receive one year of
Credited Service for any Plan Year, including the Plan Year in which
employment commences and the Plan Year in which employment terminates,
during which the Employee is credited with 1,000 or more Hours of
Service.
(c) An Employee shall not receive any Credited Service for any period of
employment during any Plan Year if the Employee is credited with less
than 1,000 Hours of Service during such Plan Year Notwithstanding the
foregoing, no Employee shall have a vesting percentage after April 1,
1993 that is less than the vesting percentage such Employee would have
had if the Plan Year for this Plan had continued to be the twelve-month
period ending each March 31. Accordingly, as an example, if a
Participant terminates employment without being fully vested in his
Account under this Plan, the Committee shall determine whether such
Participant would have had a greater vesting percentage if the Plan had
not changed Plan Years during 1993 from a March 31 year-end to a June 30
year-end, and if so, such Participant shall have the higher vesting
percentage. The Committee shall maintain such records as are necessary to
implement this provision.
- 5 -
<PAGE> 14
(d) An Employee shall not receive Credited Service for any period of
employment which precedes a Break in Service, if, as of the first day of
the Break in Service, the Employee was not entitled to a vested benefit
under the Plan.
(e) For purposes of determining Credited Service, periods of employment
with an Affiliate shall be deemed to be employment with the Employer.
(f) Credited Service shall not include any employment with an Affiliated
Sponsor prior to its designation as an Affiliated Sponsor or any period
of employment with a predecessor employer prior to its acquisition by
Employer except to the extent provided in this Article 2.
(g) The Committee, in its sole discretion and in accordance with a uniform
and nondiscriminatory policy, may grant Credited Service to an Employee
for periods of Authorized Leave of Absence.
Effective Date. July 1, 1993, but see Section 1.03 concerning other
effective dates.
Eligible Employee. Except for those Employees identified in the following
sentence, all Employees employed by an Employer shall be considered Eligible
Employees. The following Employees shall not be considered Eligible
Employees: (i) any employee included in a collective bargaining unit for
which a labor organization is recognized as collective bargaining agent
unless the collective bargaining agreement provides for participation in this
Plan and (ii) any Employee who is a nonresident alien and who does not
receive earned income from an Employer which constitutes income from sources
within the United States. "Leased Employees," within the meaning of Code
Section 414(n)(2), with respect to an Employer shall not be considered
Eligible Employees.
Employee. Any person employed by or on Authorized Leave of Absence from an
Employer and any person who is a "leased employee" within the meaning of Code
Section 414(n)(2) with respect to an Employer, as applicable. However, if
such "leased employees" constitute less than 20 percent of the Company's and
Affiliates' combined nonhighly compensated work force, or the Non-Controlled
Affiliate's nonhighly compensated work force (as applicable) within the
meaning of Code Section 414(n)(1)(C)(ii), the term "Employee" shall not
include "leased employees" covered by a plan described in Code Section
414(n)(5).
Employee After-Tax Contribution Account. The portion of a Participant's
total Account attributable to After-Tax Contributions under the Prior Plan
and the total of the Adjustments which have been credited to or deduction
from a Participant's Account with respect to those contributions.
Employer. The Company, each Controlled Affiliate Sponsor, and each
Non-Controlled Sponsor.
- 6 -
<PAGE> 15
Employer Contributions. Employer Matching Contributions and Profit Sharing
Contributions.
Employer Contribution Account. The portion of a Participant's total Account
attributable to Employer Contributions, and the total of the Adjustments
which have been credited to or deducted from a Participant's Account with
respect to Employer Contributions.
Employer Matching Contribution. See Section 5.01(a).
Employer Matching Contribution Account. The portion of a Participant's total
Account attributable to Employer Matching Contributions, and the total of the
Adjustments which have been credited to or deducted from a Participant's
Account with respect to Employer Matching Contributions.
Employment. The active service of an Employee with an Employer.
Entry Date. The Entry Dates will be January 1, May 1, July 1 and November 1
of each Plan Year. Effective January 1, 1994, the Entry Dates shall be the
first day of each calendar month.
ERISA. Public Law No. 93-406, the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
Family Member. See Section 12.04.
Fiduciary. Any party named as a Fiduciary in Article 9 of the Plan. Any
party shall be considered a Fiduciary of the Plan only to the extent of the
powers and duties specifically allocated to such party under the Plan.
Former Participant. See Section 3.02(a).
Highly Compensated Employee. See Article 12.
Hour of Service shall mean:
(a) Each hour for which an Employee is paid, or entitled to payment, for
performance of duties for an Employer.
(b) Each hour for which an Employee is paid, or entitled to payment, by an
Employer, on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship is
terminated) due to vacation, holiday, illness, incapacity, layoff, jury
duty, military duty, or leave of absence; provided that in no event,
shall an Employee receive credit for more than 501 Hours of Service for
any single continuous period of non-working time.
- 7 -
<PAGE> 16
(c) Each hour for which an Employee is absent from work by reason of: (i)
the pregnancy of the Employee, (ii) birth of a child of the Employee,
(iii) placement of a child with the Employee in connection with the
adoption of the child by the Employee, or (iv) caring for a child
referred to in paragraphs (i) through (iii) immediately following birth
or placement. Hours credited under this paragraph shall be credited at
the rate of 8 hours per day, but shall not, in the aggregate, exceed the
number of hours required to prevent the Employee from incurring a
One-Year Break in Service (a maximum of 501 hours) during the first
computation period in which a One-Year Break in Service would otherwise
occur, provided, however, that this rule shall apply only during the
Plan Year in which the absence from work begins and the immediately
following Plan Year.
(d) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by an Employer. These hours shall be
credited to the Employee for the computation period or period to which
the award or agreement pertains, rather than the computation period in
which the award, agreement, or payment is made.
(e) In lieu of the foregoing, an Employee who is not compensated on an
hourly basis (such as salary, commission or piecework employees) shall
be credited with 45 Hours of Service for each week in which such
Employee would be credited with Hours of Service in hourly pay.
However, this method of computing Hours of Service may not be used for
any Employee whose Hours of Service is required to be counted and
recorded by any Federal law, such as the Fair Labor Standards Act. Any
such method must yield an equivalency of at least 1,000 hours per
computation period.
(f) The following rules shall apply in determining whether an Employee
completes an "Hour of Service":
1. The same hours shall not be credited under paragraphs
(a), (b) or (c) above, as the case may be, and paragraph (d)
above, nor shall the same hours credited under paragraphs (a)
through (d) above be credited under paragraph (e) above.
2. The rules relating to determining hours of service for
reasons other than the performance of duties and for crediting
hours of service to particular periods of employment shall be
those rules stated in Department of Labor regulations Title 29,
Chapter XXV, subchapter C, part 2530, Sections 200b2(b) and
200b2(c), respectively.
Investment Fund. The separate funds under the Trust Fund which are
distinguished by their investment objectives. See Section 6.03.
Investment Manager. The individual or entity having exclusive power and
authority for the investment and reinvestment of the Fund as provided in the
Trust Agreement.
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<PAGE> 17
Non-Controlled Sponsor. A corporation or other business entity that
co-sponsors this Plan (see Section 15.12), but is not an Affiliate of the
Company (i.e., generally is not an 80% subsidiary or sister company).
Normal Retirement Date. The date a Participant attains age 65.
One-Year Break in Service. Any Plan Year in which an Employee accrues 500 or
fewer Hours of Service.
Participant. An Employee who becomes eligible to participate in the Plan as
provided in Article 3.
Permanent Disability. A physical or mental condition which, in the judgment
of the Committee, based upon medical reports and other evidence satisfactory
to the Committee, presumably prevents an Employee from satisfactorily
performing his usual duties for the Employer or the duties of such other
position or job which the Employer makes available to him and for which such
Employee is qualified by reason of his training, education or experience.
Plan. Printpack, Inc. Savings and Profit Sharing Plan as set forth in this
document together with any subsequent amendments hereto.
Plan Administrator or Administrator, within the meaning of Section 3(16) of
ERISA, shall mean the Company.
Plan Year. Effective July 1, 1993, the Plan Year shall be the annual period
from July 1 through the following June 30.
Pre-Tax Contributions. Basic Pre-Tax Contributions and Supplemental Pre-Tax
Contributions made to the Plan during the Plan Year by the Employer, at the
election of the Participant, in lieu of cash compensation and that are made
pursuant to a salary reduction agreement. Such contributions are nonforfeitable
when made and distributable only as specified in Article 7.
Pre-Tax Contribution Account. The portion of a Participant's Account
attributable to Pre-Tax Contributions, and the total of the Adjustments which
have been credited to or deducted from a Participant's Account with respect
to Pre-Tax Contributions.
Prior Plan. See Section 1.01.
Profit Sharing Contribution. See Section 5.01(b).
Profit Sharing Contribution Account. The portion of a Participant's Account
attributable to Profit Sharing Contributions, and the total of the
Adjustments which have been credited to or deducted from a Participant's
Account with respect to Profit Sharing Contributions.
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<PAGE> 18
Qualified as used in "qualified plan" or "qualified trust", shall mean a plan
and trust which are entitled to the tax benefits provided respectively by
Sections 401 and 501 of the Code, and related provisions of the Code.
Retirement. The Termination of Employment of a Participant on or after his
Normal Retirement Date.
Rollover Account. The portion of a Participant's Account attributable to
Rollover Contributions or the total of the Adjustments attributable to such
Rollover Contributions.
Rollover Contribution. See Section 4.06.
Spouse. The person who was married to the Participant (in a civil or
religious ceremony recognized under the laws of the state where the marriage
was contracted) immediately prior to the date on which payments to the
Participant from the Plan begin. If the Participant dies prior to the
commencement of benefits, Spouse shall mean a person who is married to a
Participant (as defined in the immediately preceding sentence) on the date of
the Participant's death. A Participant shall not be considered married to
another person as a result of any common law marriage whether or not such
common law marriage is recognized by applicable state law.
Supplemental Pre-Tax Contributions. See Section 4.01(b).
Termination of Employment. An Employee that has ceased to be employed by the
Employer for any of the following reasons:
(i) Voluntary resignation from the service of the Employer;
(ii) Discharge from the service of the Employer by the Employer;
(iii) Retirement;
(iv) Death; or
(v) Permanent Disability.
Notwithstanding the foregoing, an Employee who ceases to be actively employed
by reason of an Authorized Leave of Absence shall not be considered as having
a Termination of Employment. See Section 3.04 regarding transfers of
employment between the Company, Controlled Affiliate Sponsors and
Non-Controlled Sponsors.
Treasury Regulation. Regulations pertaining to certain Sections of the Code
as issued by the Secretary of the Treasury.
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<PAGE> 19
Trust or Trust Agreement. The separate Agreement of Trust entered into
between the Employer and the Trustee which governs the creation of the Fund
and all amendments thereto which may hereafter be made.
Trust Fund or Fund. The cash and other properties held and administered by
the Trustee in accordance with the Plan and Trust Agreement.
Trustee. The persons, corporation, association or a combination of them
acting as Trustee under the Trust Agreement.
Valuation Date. The last day of each calendar quarter of the Plan Year or
such other date as the Committee, in its sole discretion, may determine.
Defined Terms. A defined term, such as "Retirement," will normally govern
the definitions of derivatives therefrom, such as "Retire," even though such
derivatives are not specifically defined and even if they are or are not
initially capitalized. The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, unless the context clearly
indicates to the contrary. Singular and plural nouns and pronouns shall be
interchangeable as the factual context may allow or require. The words
"hereof," "herein," "hereunder" and other similar compounds of the word
"here" shall mean and refer to the entire Plan and not to any particular
provision or Section.
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<PAGE> 20
ARTICLE 3
PARTICIPATION
3.01 Participation.
(a) An Eligible Employee who was a Participant in the Prior
Plan on the day preceding the Effective Date of this Plan shall
be a Participant in this Plan on the Effective Date provided he
is employed on the Effective Date.
(b) On and after the Effective Date but prior to January 1,
1994, and for all purposes other than being eligible to receive
an Employer Profit Sharing Contribution under Section 5.01(b), an
Eligible Employee who is not described in subsection (a) above,
shall become a Participant in the Plan on the first Entry Date
after such Employee's initial date of hire. On and after January
1, 1994, and for all purposes other than being eligible to
receive an Employer Profit Sharing Contribution under Section
5.01(b), an Eligible Employee who is not described in subsection
(a) above shall become a Participant in the Plan on the first
Entry Date that falls at least sixty (60) days after such
Employee's initial date of hire.
(c) On and after the Effective Date, and for purposes of
being eligible to receive an Employer Profit Sharing Contribution
under Section 5.01(b), an Eligible Employee who is not described
in (a) above, shall become a Participant in this Plan on the
first Entry Date coincident with or next following the date the
Employee completes the 12-consecutive month period following his
initial date of hire, provided that the Employee accrues 1,000 or
more Hours of Service during such period; and if he does not
accrue 1,000 or more Hours of Service during his first 12 months
of employment, then he shall become a Participant under this
clause (ii) on the Entry Date coincident with or next following
the date the Employee completes a Plan Year during which he
accrues 1,000 or more Hours of Service.
(d) If an Eligible Employee either (i) is not employed or
(ii) is no longer an Eligible Employee on the earliest Entry Date
on or after such Employee's initial date of hire as described
above, but returns to work or again becomes an Eligible Employee
before incurring a Break in Service, such Eligible Employee shall
commence participation on the date such Employee returns to work
or again becomes an Eligible Employee. If the Employee returns
to work or again becomes an Eligible Employee after a Break in
Service, such Employee must again satisfy the requirements of
Section 3.01(b).
(e) An Eligible Employee who becomes eligible to participate
in this Plan will be asked to follow certain procedures to enroll
in the Plan, and pursuant to which he will designate Beneficiaries
and may elect to make Pre-Tax Contributions. However, an Eligible
Employee's pursuant to which he will designate Beneficiaries and
may elect to make Pre-Tax
- 12 -
<PAGE> 21
Contributions. However, an Eligible Employee's participation in
the Plan shall not be contingent upon completion of such enrollment
process.
3.02 Participation and Rehire.
(a) Status as a Participant. A Participant's participation
in the Plan shall continue until the Participant's Termination of
Employment. On or after his Termination of Employment, the
Employee shall be known as a Former Participant and his benefits
shall thereafter be governed by the provisions of Article 7. The
individual's status as a Former Participant shall cease as of the
date the individual ceases to have any balance in his Account.
If a Participant ceases to be an Eligible Employee but does not
have a Termination of Employment, then such person shall continue
to be known as a "Participant," but shall not be eligible to make
Pre-Tax Contributions and shall not be eligible to receive
Employer Matching Contributions.
(b) Rehire of Person who was a Participant in this Plan. An
Eligible Employee who was a Participant in this Plan at the time
of his Termination of Employment and who is subsequently rehired
by an Employer, shall be eligible to immediately participate in
this Plan on the date of his rehire or, if later, on the date he
becomes an Eligible Employee.
3.03 Not Contract for Employment.
Participation in the Plan shall not give any Employee the right to be
retained in the Employer's employ, nor shall any Employee, upon
dismissal from or voluntary termination of his employment, have any
right or interest in the Fund, except as herein provided.
3.04 Transferred Participants.
In the event that a Participant or Employee transfers from the
Company or a Controlled Affiliated Sponsor to a Non-Controlled
Sponsor, or vice versa, then (i) if such person was a Participant in
this Plan, such person shall continue participation in this Plan
without interruption; and (ii) if such person was not a Participant
in this Plan, such person's Eligibility Service with the organization
such person transfers from, shall be treated as though it were
service with the organization to which such person transfers. In
addition, if this Plan provide different rules with respect to
employer contributions for the Company and its Controlled Affiliated
Sponsors (on the one hand) and Non-Controlled Sponsors (on the other
hand), then a transferring Participant shall be subject to the rules
that apply to the transferee Sponsor (rather than the rules that
apply to the transferor Sponsor and rather than a pro rata application
of rules for both the transferor and transferee Sponsor).
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<PAGE> 22
ARTICLE 4
CONTRIBUTIONS
4.01 Employee Pre-Tax Contributions
(a) Basic Pre-Tax Contributions. Except during periods of
suspension (see Section 4.03(b)), a Participant may elect to make
Basic Pre-tax Contributions to the Plan by means of payroll
deduction. A Participant may contribute as a Basic Pre-Tax
Contribution any whole percentage from 1% to 6% of his
Compensation during any Plan Year. Basic Pre-Tax Contributions
will be matched by Employer Matching Contributions, to the extent
provided in Section 5.01(a).
(b) Supplemental Pre-Tax Contributions. Any Participant who
has elected to make Basic Pre-Tax Contributions at a rate of 6%
as provided in Section 4.01(a) may elect to make Supplemental
Pre-Tax contributions to the Plan by means of payroll deduction.
A Participant may contribute as a Supplemental Pre-Tax
Contribution any whole percentage from 1% to 9%. Supplemental
Pre-Tax Contributions will not be matched by the Employer.
4.02 Employee After-Tax Contributions.
Employees shall not be permitted to make After-Tax Contributions.
4.03 Elections Regarding Pre-Tax Contributions.
(a) Procedure for Making Elections. Elections by a
Participant to make Pre-Tax Contributions to the Plan shall be
made in writing on a form prescribed by the Committee and by
designating on such form the percentage of Compensation that will
be contributed as a Pre-Tax Contribution during each pay period.
The election to make Pre-Tax Contributions shall be effective no
earlier than the first day of the Participant's normal pay period
beginning at least 20 days after the Employer receives such
election form. The Committee may prescribe rules and regulations
regarding the manner and timing of the Participant's election
including a shorter or longer period of required notice.
(b) Treatment as 401(k) Contributions. It is expressly
intended that, to the extent allowable by law, Pre-Tax
Contributions shall not be included in the gross income of the
Employee for income tax purposes and shall be deemed
contributions under a cash or deferred arrangement pursuant to
Code Section 401(k).
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<PAGE> 23
(c) Additional Limitations of Pre-Tax Contributions. Pre-Tax
Contributions shall be subject to the limitations described in
Section 11.02 (maximum dollar contribution limit), Section 11.03
(ADP non-discrimination test) and Article 13 (Code Section 415
limit).
4.04 Change in Employee Contribution Percentage or Suspension of
Contributions.
(a) Change of Contribution Percentage. A Participant may
increase or decrease the percentage of his Compensation
contributed as a Pre-Tax Contribution at any time during the Plan
Year; provided that prior to July 1, 1994, such changes may be
made only on May 1 and November 1 of each Plan Year. For such
change to be effective, whether made before or after July 1,
1994, the Participant must notify the Committee at least 60 days
prior to the date that the increase or decrease will become
effective or such lesser time as determined by the Committee on a
nondiscriminatory basis.
(b) Suspension of Contributions. A Participant may suspend
his Pre-Tax Contributions at any time by properly completing a
form prescribed by the Committee. The suspension of Pre-Tax
Contributions will be effective on the first day of the
Participant's normal payroll period that begins after the
Participant properly notifies the Committee; provided that prior
to June 3, 1994, the suspension of Pre-Tax Contributions will be
effective on the first day of the Participant's normal payroll
period that begins 60 days after the Participant delivers the
completed form to the Committee. A Participant may resume making
Pre-Tax Contributions as of the first day of any payroll period
following the effective date of such suspension of contributions
and only after informing the Committee in writing at least 90
days prior to the date on which the Pre-Tax Contributions are to
resume; provided, however, that prior to July 1, 1994, such
resumption of contributions may be made only on the May 1 or
November 1 following the effective date of such suspension. The
Committee, on a nondiscriminatory basis, may prescribe a lesser
number of days on which the suspension or resumption of Pre-Tax
Contributions is to be effective. A Participant's Pre-Tax
Contributions shall automatically be suspended beginning on the
first payroll period that commences after the Participant is not
in receipt of Compensation, the Participant's layoff or the
Participant's Authorized Leave of Absence without pay.
(c) Other Rules.
(1) See Section 8.03 for circumstances under
which a Participant's Pre-Tax Contributions could be
suspended for a period of at least 12 months after such
Participant receives a hardship distribution.
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<PAGE> 24
(2) In order to satisfy the provisions of
Article 11 and Article 13, the Committee may from time to
time either temporarily suspend the Pre-Tax Contributions
of Highly Compensated Employees or reduce the maximum
permissible Pre-Tax Contribution that may be made to the
Plan by Highly Compensated Employees.
(3) Any reduction, increase, or suspension of
Pre-Tax Contributions described in this Section 4.03 shall
be made in such manner as the Committee may prescribe from
time to time consistent with the provisions of this
Section.
4.05 Deadline for Contribution and Allocation of Pre-Tax Contributions.
Pre-Tax Contributions shall be deducted by the Employer from the
Participant's Compensation and paid to the Trustee as promptly as
possible after the end of each regular pay period but in no event later
than 90 days after such Pre-Tax Contributions have been retained by the
Employer.
4.06 Rollover Contribution.
(a) Without regard to any limitation on contributions set
forth in this Article, a person who is an Eligible Employee but
has not yet become a Participant in the Plan, or a person who has
become a Participant in the Plan shall be permitted to transfer
to the Trustee during any Plan Year additional property
acceptable to the Trustee, provided such property:
(1) was received by such Eligible Employee or
Participant from a Qualified Plan maintained by a previous
employer of the Eligible Employee or Participant and
qualifies as a rollover contribution within the meaning of
Code Section 402(a)(5); or
(2) was received by the Eligible Employee or
Participant from an individual retirement account or
individual retirement annuity and qualifies as a rollover
contribution within the meaning of Code Section
408(d)(3)(A)(ii).
(b) Such property shall be held by the Trustee in the
Rollover Account for such Eligible Employee or Participant. Such
amounts shall be invested as provided in Section 6.03 and
distributed to the Eligible Employee or Participant upon
Termination of Employment in the manner provided in Article 7.
The fact that an Eligible Employee may make a rollover contribution
pursuant to this Section shall not operate to make such person a
Participant in this Plan for any other purpose.
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<PAGE> 25
ARTICLE 5
EMPLOYER CONTRIBUTIONS
5.01 Employer Contributions.
(a) Employer Matching Contribution. The Employer shall
contribute a Matching Contribution to the Account of each
Participant who made a Basic Pre-Tax Contribution. The amount
allocated to a Participant's Employer Matching Contribution
Account shall be an amount equal to fifty percent (50%) of such
Participant's Basic Pre-Tax Contributions made during the Plan
Year.
(b) Profit Sharing Contribution. At the end of each Plan
Year, the Employer may, but is not required to, make a Profit
Sharing Contribution to the Account of each Participant who has
met the eligibility requirements for a Profit Sharing
Contribution under Section 4.01(c)), who is employed on the last
Valuation Date of the Plan Year (the "Final Valuation Date") and
who has completed at least 1,000 Hours of Service during such
Plan Year. The Profit Sharing Contribution, if any, shall be
allocated in the proportion that the total points awarded to a
Participant in accordance with subsections (i) and (ii) below
bear to the total points awarded to all such Participants for the
Plan Year, and without regard to the amount, if any, each
Participant individually contributed for the same Plan Year.
(i) Each Participant shall be awarded one (1)
point for each Five Hundred Dollars ($500) of Compensation
paid by the Employer to the Participant during the Plan
Year; provided, however, that the Compensation earned by a
Participant prior to his Entry Date into the Plan shall
not be included. Fractional points shall not be awarded.
(ii) Each Participant shall be awarded one (1)
point for each year of his Credited Service (including the
current Plan Year). Fractional points shall not be
awarded.
5.02 Form and Timing of Contributions.
(a) Employer Contributions shall be made in cash or in
property acceptable to the Trustee valued at the property's fair
market value on the date the property is delivered to the
Trustee. Employer Contributions shall be delivered to the
Trustee on or before the date prescribed by the Code for filing
the Employer's federal income tax return, including authorized
extensions.
- 17 -
<PAGE> 26
(b) Except as provided in this Section 5.02, all Employer
Contributions shall be irrevocable, shall never inure to the
benefit of any Employer, shall be held for the exclusive purpose
of providing benefits to Participants and their Beneficiaries
(and contingently for defraying reasonable expenses of
administering the Plan), and shall be held and distributed by the
Trustees only in accordance with this Plan.
(c) Upon an Employer's request and to the extent permitted by
the Code and other applicable laws and regulations thereunder, a
contribution which was made by a mistake in fact, or conditioned
upon the initial qualification of the Plan under Code Section
401(a) or upon the deductibility of the contribution under
Section 404 of the Code shall be returned to the Employer within
one year after the payment of the contribution, the denial of the
Plan's initial qualification, or the disallowance of the
deduction (to the extent disallowed) whichever is applicable.
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<PAGE> 27
ARTICLE 6
ACCOUNTS AND ALLOCATIONS
6.01 Participant Accounts.
(a) Individual Account Plan. This Plan is an "individual
account plan," as that term is used in ERISA. A separate Account
shall be maintained for each Participant, former Participant or
Beneficiary, so long as he has an interest in the Trust Fund.
(b) Sub-Accounts. Each Account shall be divided (as
appropriate) into the following parts and sub-parts:
(1) The Pre-Tax Contribution Account, which
shall reflect Basic Pre-Tax Contributions and Supplemental
Pre-Tax Contributions contributed to this Plan and any
Adjustments thereto.
(2) The Employer Matching Contribution Account,
which shall reflect Employer Matching Contributions
contributed to this Plan and any Adjustments thereto.
(3) The Profit Sharing Contribution Account,
which shall reflect the Profit Sharing Contributions
contributed to this Plan and any Adjustments thereto.
(4) The Employee After-Tax Contribution
Account, which shall reflect the Employee's After-Tax
Contributions contributed to the Prior Plan and any
adjustments thereto.
(5) The Rollover Account, which shall reflect
the value of all investments derived from the
Participant's Rollover Contributions under this Plan and
any Adjustments thereto.
In addition, the Committee may divide such sub-accounts into
such additional sub-portions as the Committee deems to be
necessary or advisable under the circumstances or to establish
other accounts or sub-accounts as needed.
(c) Value of Account as of Valuation Date. As of each
Valuation Date, each Participant's Account shall equal:
(1) his total Account as determined on the immediately preceding
Valuation Date, plus
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<PAGE> 28
(2) his Pre-Tax Contributions added to his
Account since the immediately preceding Valuation Date,
plus
(3) his Employer Matching Contributions added
to his Account since the immediately preceding Valuation
Date, plus
(4) his Profit Sharing Contributions added to
his Account since the immediately preceding Valuation
Date; plus
(5) his Rollover Contributions or amounts
transferred to this Plan from the trustee of another
Qualified Plan and which were added to his Account since
the immediately preceding Valuation Date, minus
(6) his distributions, if any, since the
immediately preceding Valuation Date, plus or minus
(7) his allocable share of Adjustments.
6.02 Allocation of Adjustments.
The Adjustment for each Investment Fund shall be calculated as of each
Valuation Date. The Adjustment for a given Investment Fund shall be
allocated to each Account invested in such Investment Fund in the
proportion that each such Account bears to the total of all such
Accounts. The Committee may direct that expenses attributable to general
Plan administration be allocated among the Accounts of all Participants
in proportion to their Account balances. The Adjustment that is
allocable to the Participant's directed investment of his loan shall be
the interest payments made by the Participant with respect to such loan
since the immediately preceding Valuation Date.
6.03 Investment Funds and Elections.
(a) Election of Investment Funds. Each Participant shall
direct, following such procedures as may be specified by the
Committee, to have his Account allocated or reallocated in 10%
increments among the Investment Funds available under the Plan.
(b) Initial Investment Direction. A Participant's initial
investment election must allocate his entire Account in 10%
increments among the Investment Funds, as of the date of the
directive, and all subsequent contributions to each sub-account
for so long as the election remains in effect. An Employee who
fails to make a proper investment election by the deadline
established by the Committee shall have his Account invested
- 20 -
<PAGE> 29
in the Investment Funds that provide for the least volatility
in the value of principal (as determined by the Committee).
(c) Subsequent Investment Elections.
(i) Investment elections will remain in effect
until changed by a new election.
(ii) New elections may be made in 10% increments
by a Participant at any time during the Plan Year;
provided that prior to July 1, 1994, such changes may be
made only on May 1 and November 1 of each Plan Year, by
delivery of written notice to the Committee. For such
change to be effective, whether made before or after July
1, 1994, such election must be received at least 60 days
(or a shorter period established by the Committee on a
nondiscriminatory basis) prior to the desired effective
date. New elections may change future allocations to the
Participant's Account, may reallocate between the
Investment Funds any amounts previously credited to the
Participant's Account, or may leave the allocation of such
prior amounts unchanged.
(iii) All Trust transactions reflecting
investment elections among the various Investment Funds
will occur as of the date upon which the elections are to
take effect and the values of the various funds shall be
determined as of such dates.
(d) Investment Options. The Committee shall select such
Investment Funds as are deemed appropriate and shall notify
affected Participants of such Investment Funds. The Committee
may modify, eliminate or select new Investment Funds from time to
time and shall notify affected Participants of such changes and
solicit new investment elections, if appropriate.
6.04 Errors.
Where an error or omission is discovered in any Participant's
Account, the Committee shall make appropriate corrective adjustments
as of the end of the Plan Year in which the error or omission is
discovered. If it is not practical to correct the error
retroactively, then the Committee shall take such action in its sole
discretion as may be necessary to make such corrective adjustments,
provided that any such actions shall treat similarly situated
Participants alike and shall not discriminate in favor of Highly
Compensated Employees.
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<PAGE> 30
6.05 Valuation For Purposes of Distributions.
(a) For the purposes of Article 7, each Participant's Account
shall be valued as of the Valuation Date immediately preceding
the distribution of the Participant's Account.
(b) No person entitled to a distribution shall receive
interest or other earnings on the Account from the applicable
Valuation Date described in subsection (a) above to the date of
actual distribution to such person.
(c) Notwithstanding the foregoing, if the Committee in its
discretion determines that there has been a significant change in
the market value of the assets held in the Fund since the Valuation
Date which precedes the proposed date of distribution, the
Committee in its discretion and on a non-discriminatory basis may
postpone the distribution until a reasonable time following the
next Valuation Date and shall use the value of the Account computed
as of the later Valuation Date in determining the amount of the
distribution.
(d) This Section 6.05 shall not apply to the valuation of
Accounts for purposes of in-service withdrawals or loans.
6.06 Allocations Do Not Affect Vesting.
The fact that an allocation has been made shall not operate to vest in
any Participant any right or interest in or to any specific assets of the
Fund except as herein provided.
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<PAGE> 31
ARTICLE 7
VESTING AND DISTRIBUTIONS
7.01 Retirement.
Upon a Participant's Retirement on or after his Normal Retirement Date,
all amounts credited to the Participant's Account shall become fully
vested and nonforfeitable and such Account shall be distributed in
accordance with this Article.
7.02 Death.
In the event that a Participant incurs a Termination of Employment on
account of death, all amounts credited to the Account of such Participant
as of the date of death, valued in accordance with Article 6, shall be
distributed to the deceased Participant's Beneficiary in accordance with
this Article.
7.03 Permanent Disability.
Any Participant who experiences a Permanent Disability while an Employee
shall be entitled to a distribution of all amounts credited to the
Participant's Account in accordance with this Article.
7.04 Other Termination of Employment.
(a) Upon a Participant's Termination of Employment for any
reason other than Retirement, Permanent Disability or death, the
Participant shall be entitled to the vested portion of his
Account, valued in accordance with Article 6. The portion of
the Participant's Account which is not vested upon Termination
of Employment shall be subject to forfeiture by such Participant
in accordance with this Section and Section 7.05.
(b) The vested portion of a Participant's Account shall be
determined as follows:
(i) A Participant who ceases to be an Employee
of the Employer shall always be one hundred percent (100%)
vested in his Pre-Tax Contribution Account, Rollover
Account and Employee After-Tax Contribution Account.
- 23 -
<PAGE> 32
(ii) A Participant who ceases to be an Employee
of the Employer shall have a vested interest in his
Employer Contribution Account (i.e., Employer Matching
Contributions and Profit Sharing Contributions) as
follows:
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE AS OF
DATE OF TERMINATION VESTED PERCENTAGE
------------------------------- -----------------
<S> <C>
Less than 2 Years 0%
2 Years 20%
3 Years 40%
4 Years 60%
5 Years 80%
6 Years or More 100%
</TABLE>
7.05 Forfeitures and Repayment Right.
(a) Forfeitures.
(1) If a Participant incurs a Termination of
Employment, at such time is not vested in his Employer
Contribution Account, and receives a distribution of his
entire Account that is vested, then such Participant
shall, upon such distribution, forfeit the non-vested
portion of his Account. If such a Participant resumes
Employment with the Employer prior to incurring a Break in
Service, then, if such Participant exercises the repayment
right described below, upon such repayment the non-vested
portion of such Participant's Account that was previously
forfeited shall be restored to such Participant's Account.
(2) If a Participant incurs a Termination of
Employment, at such time is not vested in his Employer
Contribution Account, and incurs a Break in Service
without receiving a distribution of his Account, then upon
incurring such Break in Service the non-vested portion of
such Participant's Account shall be forfeited and such
Participant may not exercise the repayment right described
below.
(3) If a Participant incurs a Termination of
Employment, at such time is not vested in his Employer
Contribution Account, and resumes Employment with the
Employer before incurring a Break in Service and without
receiving a distribution of his Account, then upon
reemployment the Participant's entire Account, unreduced
by any forfeiture, shall become his beginning Account in
the Plan.
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<PAGE> 33
(4) If the repayment right described herein is
applicable to a Participant, then the Participant may
exercise such right by repaying to the Plan the entire
amount previously distributed to him from the Plan,
including Pre-Tax Contributions. Such repayment right
shall lapse as of the earlier of (i) five years from the
date the Participant resumed employment with the Employer;
or (ii) the date the Participant incurs a Break in Service
after such reemployment. In the event the Participant
repays the entire distribution he received from the Plan,
the Employer shall restore the non-vested portion of the
Participant's Account first, to the extent possible, out
of forfeitures under the Plan in the Plan Year in which he
was reemployed, and to the extent such forfeitures are
insufficient to restore the Participant's Account,
restoration shall be made from Employer Contributions.
(b) To the extent that Forfeitures are not needed during a
given Plan Year to restore a returning Participant's Account under
this Section 7.05, Forfeitures shall be allocated as described in
Section 5.01(b), in the same manner as Employer Profit Sharing
Contributions.
7.06 Commencement of Distribution.
(a) Except as provided below, a Participant's Account shall
be distributed (i) within ninety (90) days following the
Valuation Date which immediately follows the Participant's
Termination of Employment or (ii) any later Valuation Date which
is at least 60 days (or such number of days as selected by the
Committee on a nondiscriminatory basis) after the Committee
receives the Participant's written request for a distribution.
Except as provided in Section 7.06(b), the Participant's Account
shall not be distributed without the Participant's consent.
(b) Notwithstanding the foregoing, under the following
circumstances the Committee shall direct the Trustee to
distribute a Participant's Account balance regardless of whether
the Participant or Beneficiary consents to such distribution:
(1) Small Accounts. If the Participant incurs
a Termination of Employment with an Account balance of
$3,500 or less, benefits shall be distributed as soon as
practicable after the Participant's Termination of
Employment, but in no event later than 60 days after the
end of the Plan Year coincident with or immediately
following the Participant's Termination of Employment.
(2) Attainment of Normal Retirement Age. A
Participant's Account shall be distributed within 60 days
after the end of the Plan Year coincident with or
immediately following the Participant's attainment of his
Normal Retirement Age, or if later, the Participant's
Termination of Employment.
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(3) Death of Participant. If the Participant
dies, the Participant's Account balance shall be
distributed within 90 days after such death unless the
particular facts and circumstances require a longer
waiting period.
(4) Attainment of Age 70-1/2. If a
distribution is required under Section 7.11 (attainment of
age 70-1/2) , the Participant's Account shall be
distributed as provided in that Section.
(c) Effective April 1, 1989, the Committee shall not have any
discretion as to the commencement of payment of a Participant's
benefit.
(d) The Committee may establish, for administrative purposes,
other uniform and nondiscriminatory guidelines concerning the
commencement of benefits.
7.07 Method of Distribution.
(a) The method of distribution of a Participant's Account
shall be payment in a single lump sum.
(b) Distributions may be made in cash or in kind, provided
that no discrimination in value results therefrom, and further
provided that no distribution shall be made in the form of a life
annuity.
(c) The Committee shall issue directions to the Trustees
concerning the recipient and the commencement date of all
benefits which are to be paid from the Trust pursuant to the
Plan.
7.08 Attainment of Age 59-1/2.
At any time after a Participant attains age 59-1/2, the Participant may
elect to withdraw a part or all of his Account valued as of the most
recent Valuation Date (including any earnings thereon), provided that
only one such request may be made during any Plan Year. Such payment may
be made even though such Participant continues to be employed by the
Employer. Any such payments shall be made not later than sixty (60) days
after the end of the Plan Year in which such request was made by the
Participant. Any Participant who receives such a payment may continue to
participate in this Plan, but in no event shall a Participant be
permitted to repay the amount of his or her in-service withdrawal.
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7.09 Payment to Minors and Incapacitated Persons.
In the event that any amount is payable to a minor or to any person who,
in the judgment of the Committee, is incapable of making proper
disposition thereof, such payment shall be made for the benefit of such
minor or such person in any of the following ways as the Committee, in
its sole discretion, shall determine:
(a) By payment to the legal representative of such minor or
such person;
(b) By payment directly to such minor or such person;
(c) By payment in discharge of bills incurred by or for the
benefit of such minor or such person. The Trustee shall make
such payments as directed by the Committee without the necessary
intervention of any guardian or like fiduciary, and without any
obligation to require bond or to see to the further application
of such payment. Any payment so made shall be in complete
discharge of the Plan's obligation to the Participant and his
Beneficiaries.
7.10 Application for Benefits.
The Committee may require a Participant or Beneficiary to complete and
file with the Committee certain forms as a condition precedent to the
payment of benefits. The Committee may rely upon all such information
given to it, including the Participant's current mailing address. It is
the responsibility of all persons interested in distributions from the
Trust Fund to keep the Committee informed of their current mailing
addresses.
7.11 Special Distribution Rules.
(a) To the extent that the distribution rules described in this
Section provide a limitation upon distribution rules stated
elsewhere in this Plan, the distribution rules stated in this
Section shall take precedence over such conflicting rules.
However, under no circumstances shall the rules stated in this
Section be deemed to provide distribution rights to Participants
or their Beneficiaries which are more expansive or greater than
the distribution rights stated elsewhere in this Plan. For
example, if the only distribution method permitted under the Plan
is a lump sum, then distributions under this Section 7.11 may
only be made in a lump sum. In addition, if the Plan requires
distributions to commence at age 65 for Participants who have
terminated Employment, distributions must commence at age 65 and
may not be delayed to age 70-1/2.
(b) Distribution to a Participant shall begin not later than April 1
following the calendar year in which he attains age 70-1/2.
However, if a Participant attained age 70-1/2 prior to January 1,
1988 and is not a 5%
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owner of an Employer (as defined in Code Section 401(a)(9) and
the Treasury Regulations thereunder), such Participant's Account
shall be distributed no later than April 1 following the calendar
year in which he incurs a Termination of Employment. This
paragraph shall not apply to any Participant who made an election
before January 1, 1984 in a manner that satisfies the
requirements of the transitional rule of Section 242(b)(2) of the
Tax Equity and Fiscal Responsibility Act of 1982.
(c) The entire interest of each Participant in this Plan will be
distributed in a single lump sum, beginning not later than the
required beginning date described in paragraph (b) above.
(d) If a Participant dies before distribution of the Participant's
interest has begun in accordance with paragraph (b) above, the
entire interest of the Participant must be distributed within
five years after the death of the Participant.
(e) Notwithstanding anything to the contrary herein, distributions
under the Plan will comply with Treasury Regulations issued under
Code Section 401(a)(9) and any other provisions reflecting Code
Section 401(a)(9) as prescribed by the Commissioner of the
Internal Revenue Service, including the minimum distribution
incidental benefit rules under Code Section 401(a)(9)(G) and
Treasury Regulations issued thereunder.
7.12 Distributions Pursuant to Qualified Domestic Relations Orders.
Notwithstanding anything to the contrary in this Plan, a "qualified
domestic relations order", as defined in Code Section 414(p), may
provide that any amount to be distributed to an alternate payee may be
distributed immediately even though the Participant is not yet entitled
to a distribution under the Plan. The intent of this Section is to
provide for the distribution of benefits to an alternate payee as
permitted by Treasury Regulation 1.401(a)-13(g)(3).
7.13 Direct Rollovers.
(a) This Section applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a Distributee's election under this
Section, a Distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an
eligible rollover distribution paid directly to an eligible
retirement plan specified by the Distributee in a direct
rollover.
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<PAGE> 37
(b) Definitions.
Eligible Rollover Distribution. An Eligible Rollover Distribution
is any distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover
Distribution does not include (i) any distribution that is one of
a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy)
of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or more; (ii)
any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and (iii) the portion of any
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation
with respect to employer securities.
Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section
408(b) of the Code, an annuity plan described in Section 403(a)
of the Code, or a qualified trust described in Section 401(a) of
the Code, that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover
Distribution to the surviving spouse, an Eligible Retirement Plan
is an individual retirement account or individual retirement
annuity.
Distributee. A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's spouse
or former spouse who is an alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the
Code, are Distributees with regard to the interest of the spouse
or former spouse.
Direct Rollover. A Direct Rollover is a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.
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ARTICLE 8
HARDSHIP WITHDRAWALS AND LOANS
8.01 Hardship Withdrawal of Account.
(a) In General. Any Participant may request the Committee to
distribute to him part or all of his Pre-Tax Contribution Account
to meet a hardship experienced by the Participant. Such Account
and sub-account shall be valued in accordance with Section 8.16.
(b) No Distribution of Earnings. Notwithstanding the above, hardship
distributions may not exceed the sum of the Participant's Pre-Tax
Contributions allocated to the Account. It is the purpose of this
restriction to prevent a distribution of any income or gain that
is allocated to the Participant's Pre-Tax Contribution Account
when making a hardship distribution out of such Account.
8.02 Definition of Hardship.
Hardship shall mean an immediate and heavy financial need experienced by
reason of expenses of any accident to or sickness of such Participant,
his Spouse or his dependents or expenses necessary to provide medical
care for such Participant, his Spouse or his dependents.
8.03 Maximum and Minimum Hardship Distribution.
(a) Maximum Hardship. A hardship distribution cannot exceed the
amount required to meet the immediate financial need created by
the hardship (after taking into account applicable federal,
state, or local income taxes and penalties) and not reasonably
available from other resources of the Participant. In order to
ensure compliance with this requirement, the Committee may
require the Participant to satisfy any or all of the provisions
described below in (1), (2) or (3) below as a condition precedent
to the Participant receiving a hardship distribution:
(1) No Other Sources Available. Certification by the Participant on a
form provided by the Committee for such purpose that the
financial need cannot be relieved (1) through reimbursement or
payment by insurance; (2) by reasonable liquidation of the
Participant's assets; (3) by ceasing Pre-Tax Contributions under
the Plan; (4) by other in-service distributions (including loans)
as may be provided under the Plan and under any other plan
maintained by the Employer; or (5) by borrowing from commercial
lenders on reasonable commercial terms.
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<PAGE> 39
(2) Receipt of all Distributions Available; Suspension of Future
Contributions. Receipt by the Participant of all distributions
that he is eligible to receive (including loans) under this Plan
and under any other plan maintained by the Employer. For this
purpose, the phrase "any other plan" includes all qualified and
nonqualified plans of deferred compensation, stock option plans
and stock purchase plans. It does not include a health or welfare
plan including one that is part of a section 125 cafeteria plan.
In addition, the Participant must agree to the following
limitations and restrictions:
(A) The Participant's Pre-Tax Contributions shall
automatically be suspended beginning on the first payroll
period that commences after such Participant requests and
receives a hardship distribution. Such Participant may
resume making Pre-Tax Contributions as of the first day of
any payroll period which is at least 12 months after the
effective date of such suspension and only after informing
the Committee in writing at least 60 days (or such lesser
time as specified by the Committee) prior to the date on
which the Pre-Tax Contributions are to resume.
(B) The maximum Pre-Tax Contribution the Participant may make
for the calendar year following his hardship distribution
shall be reduced by the amount of Pre-Tax Contributions
made by the Participant during the calendar year in which
he received his hardship distribution.
(C) The Participants shall be prohibited under a legally
enforceable agreement from making an employee contribution
to any other plan maintained by the Employer for at least
twelve months after the receipt of the hardship
distribution. For this purpose, the phrase "any other
plan" includes all qualified and nonqualified plans and
deferred compensation, stock option plans and stock
purchase plans. It does not include a health or welfare
plan including one that is part of a Section 125 cafeteria
plan.
(3) Other. Any other condition or method approved by the Internal
Revenue Service.
(b) Minimum Hardship Withdrawal. No withdrawal will be permitted unless
the amount to be withdrawn is at least $500 (or the entire amount
available for withdrawal, if less).
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<PAGE> 40
8.04 Procedure to Request Hardship Distribution.
The request to receive a hardship distribution shall be made on such
forms and following such procedures as the Committee may prescribe from
time to time. Under no circumstances shall the Committee permit a
Participant to repay to the Plan the amount of any withdrawal by a
Participant under this Section.
8.05 Authority to Establish Loan Program.
The Committee is authorized and directed to administer the loan program.
8.06 Eligibility.
Loans shall be available to all Participants on a reasonably equivalent
basis. For the purposes of receiving a loan, the term "Participant"
shall include any Former Participant who is a "party in interest" as
defined in Section 3(14) of ERISA.
8.07 Loan Amount.
Any Participant may request the Committee to loan to him a part of his
vested Account valued as of the most recent Valuation Date an amount
equal to his Pre-Tax Contribution Account, his Rollover Account and his
Employer Contribution Account. Any such loan shall be subject to the
following rules:
(a) Minimum Loan. No loan of less than $1,000 will be made.
(b) Maximum Loan. A loan to any Participant (determined immediately
after the origination of the loan) shall not exceed the lesser
of:
(1) Fifty percent (50%) of the Participant's balance in his
Account as of the Valuation Date with respect to which the
loan is processed; or
(2) $50,000, reduced by the excess (if any) of (A) the highest
outstanding balance of loans from the plan during the
one-year period ending on the day before the date on which
such loan was made, over (B) the outstanding loan balance
of loans from the Plan on the date on which the loan was
made; or
(3) A principal loan amount that would require payments in
excess of fifteen percent (15%) of the Participant's gross
take-home pay. Net take-home pay is computed by ignoring
Pre-Tax Contributions made to this Plan but be counting
all other payroll deductions (either pre-tax or
after-tax).
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<PAGE> 41
8.08 Maximum Number of Loans.
(a) Only one loan per year may be made to any Participant.
(b) No more than one loan may be made outstanding to any Participant
at any time.
(c) After completely repaying any loan, the Participant must wait at
least one month before applying for a new loan.
8.09 Assignment of Account.
Each loan shall be supported by the Participant's promissory note for
the amount of the loan, including interest, payable to the order of the
Trustee. In addition, each loan shall be supported by an assignment of
fifty percent (50%) of the Participant's right, title and interest in
and to his Account and shall be supported by any other reasonable
security required by the Trustee.
8.10 Interest.
Interest shall be charged on any loan at the rate for reasonably
equivalent loans charged by a commercial lender, as determined by the
Committee.
8.11 Term of Loan.
The maximum repayment term of any loan is five years unless the loan is
used to acquire any dwelling unit which within a reasonable time after
the loan is made is to be used as the principal residence of the
Participant. The maximum repayment term for a loan used to acquire a
dwelling unit shall be a reasonable time, as determined by the
Committee, that may exceed five years but shall not exceed ten years.
Except for Former Participants described in Section 8.06, the term of
the loan may not extend beyond the Participant's Termination of
Employment. The Committee may, in its discretion, establish a shorter
repayment term than the maximum repayment term otherwise permitted under
the Plan.
8.12 Level Amortization.
Each loan shall provide for level amortization with payments to be made
at such regular intervals as the Committee determines in its discretion,
but not less frequently than once every three months over the term of
the loan. Loans to Participants in active Employment shall be repaid
through payroll deductions and the Participant shall be required to
authorize such payroll deduction as a condition to receiving the loan.
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<PAGE> 42
8.13 Directed Investment.
A Participant who requests a loan shall be deemed to have directed the
Committee to reduce his Investment Funds by the amount of the loan, and
until such loan is repaid, such loan shall be considered a directed
investment of the Participant's Account hereunder. The Plan monies which
are used to fund the Participant loan shall be withdrawn from the
Participant's Accounts in the following order (and principal and
interest loan repayments shall be added back to such Accounts in the
same order):
(1) the Pre-Tax Contribution Account;
(2) the Employer Matching Contribution Account;
(3) the Profit Sharing Account
(4) the Rollover Account;
(5) the Employee After-Tax Contribution Account
(and from such sub-accounts therein in the order provided
above).
Within each such Account the monies which are used to fund the
Participant loan shall be withdrawn on a pro rata basis according to the
value of the Investment Funds in which such Account was invested,
determined as of the most recent date such Investment Funds were valued
(see Section 8.16). Principal and interest payments on the loan will be
allocated to the Participant's Investment Funds according to the
Participant's investment election at the time of the payment.
8.14 Other Requirements.
The Committee may establish such additional guidelines and rules as it
deems necessary. Such guidelines and rules shall be set forth in the
loan application and the terms specified in such loan application are
hereby incorporated by reference in the Plan. The Committee may amend or
modify the loan application as it deems necessary to carry out the
provisions of this Article Eight.
8.15 Distribution of Hardship Withdrawals and Loans.
Hardship withdrawals and loans will be distributed as soon as
practicable after the application for hardship withdrawal or loan
request is approved and after the Participant completes all
documentation necessary to make such hardship withdrawal or loan.
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<PAGE> 43
8.16 Valuation for Purposes of Withdrawals and Loans.
The Participant's Account for purposes of determining the amount of a
hardship withdrawal or loan shall be determined as of the Valuation Date
preceding the date the hardship distribution or loan amount is
distributed to the Participant. However, if the Committee, in its
discretion, determines that there has been a significant change in the
market value of the assets held in the Fund since the Valuation Date
which precedes the proposed date of distribution or loan, the Committee,
in its discretion and on a non-discriminatory basis, may postpone the
hardship distribution or loan until a reasonable time following the next
Valuation Date and shall use the value of the Account computed as of the
later Valuation Date in determining the amount of the distribution or
loan. Alternatively, the Committee may implement such other measures as
it deems appropriate, including suspension of withdrawals or loans or
special valuations, to insure that each Participant's Account receives an
appropriate allocation of income or loss.
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ARTICLE 9
ADMINISTRATION OF THE PLAN
9.01 Named Fiduciaries.
The following parties are named as Fiduciaries of the Plan and shall
have the authority to control and manage the operation and
administration of the Plan:
(a) The Company;
(b) The Board;
(c) The Trustee;
(d) The Committee.
The Fiduciaries named above shall have only the powers and duties
expressly allocated to them in the Plan and in the Trust Agreement and
shall have no other powers and duties in respect of the Plan;
provided, however, that if a power or responsibility is not expressly
allocated to a specific named fiduciary, the power or responsibility
shall be that of the Company. No Fiduciary shall have any liability
for, or responsibility to inquire into, the acts and omissions of any
other Fiduciary in the exercise of powers or the discharge of
responsibilities assigned to such other Fiduciary under this Plan or
the Trust Agreement.
9.02 Board of Directors.
The Board shall have the power to appoint and remove the Trustee and the
members of the Committee. The Board shall have no other responsibilities
with respect to the Plan.
9.03 Trustee.
The Trustee shall exercise all of the powers and duties assigned to the
Trustee as set forth in the Trust Agreement. The Trustee shall have no
other responsibilities with respect to the Plan.
9.04 Committee.
(a) A Committee of one or more individuals shall be appointed by and
serve at the pleasure of the Board to administer the Plan. Any
Participant, officer, or director of the Employer shall be
eligible to be appointed a member of the Committee and all
members shall serve as such without compensation. Upon
termination of his employment with the Employer, or upon ceasing
to be an officer or director, if not an employee, he shall
cease to be a member of the Committee. The Board shall have
the right
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<PAGE> 45
to remove any member of the Committee at any time, with or
without cause. A member may resign at any time by written notice
to the Committee and the Board. If a vacancy in the Committee
should occur, a successor shall be appointed by the Board. The
Committee shall by written notice keep the Trustee notified of
current membership of the Committee, its officers and agents. The
Committee shall furnish the Trustee a certified signature card
for each member of the Committee and for all purposes hereunder
the Trustee shall be conclusively entitled to rely upon such
certified signatures.
(b) The Board shall appoint a Chairman and a Secretary from among the
members of the Committee. All resolutions, determinations and
other actions shall be by a majority vote of all members of the
Committee. The Committee may appoint such agents, who need not be
members of the Committee, as it deems necessary for the effective
performance of its duties, and may delegate to such agents such
powers and duties, whether ministerial or discretionary, as the
Committee deems expedient or appropriate. The compensation of
such agents shall be fixed by the Committee; provided, however,
that in no event shall compensation be paid if such payment
violates the provisions of Section 408 of ERISA and is not
exempted from such prohibitions by Section 408 of ERISA.
(c) The Committee shall have complete control of the administration
of the Plan with all powers necessary to enable it to properly
carry out the provisions of the Plan. In addition to all implied
powers and responsibilities necessary to carry out the objectives
of the Plan and to comply with the requirements of ERISA, the
Committee shall have the following specific powers and
responsibilities:
(1) To construe the Plan and Trust Agreement
and to determine all questions arising in the
administration, interpretation and operation of the Plan;
(2) To amend any or all of the provisions of
the Plan and to terminate the Plan in whole or in part
pursuant to the procedures provided hereunder;
(3) To decide all questions relating to the
eligibility of Employees to participate in the benefits of
the Plan and Trust Agreement;
(4) To determine the benefits of the Plan to
which any Participant, Beneficiary or other person may be
entitled;
(5) To keep records of all acts and
determinations of the Committee, and to keep all such
records, books of accounts, data and other
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<PAGE> 46
documents as may be necessary for the proper
administration of the Plan;
(6) To prepare and distribute to all Plan
Participants and Beneficiaries information concerning the
Plan and their rights under the Plan, including, but not
limited to, all information which is required to be
distributed by ERISA, the regulations thereunder, or by
any other applicable law;
(7) To file with the Secretary of Labor such
reports and additional documents as may be required by
ERISA and regulations issued thereunder, including, but
not limited to, summary plan description, modifications
and changes, annual reports, terminal reports and
supplementary reports;
(8) To file with the Secretary of the Treasury
all reports and information required to be filed by the
Code, ERISA and regulations issued under each; and
(9) To do all things necessary to operate and
administer the Plan in accordance with its provisions and
in compliance with applicable provisions of federal law.
(d) To enable the Committee to perform its functions, the Employer
shall supply full and timely information of all matters relating
to the compensation and length of service of all Participants,
their Retirement, death or other cause of termination of
employment, and such other pertinent facts as the Committee may
require. The Committee shall advise the Trustee of such facts and
issue to the Trustee such instructions as may be required by the
Trustee in the administration of the Plan. The Committee and the
Employer shall be entitled to rely upon all certificates and
reports made by a Certified Public Accountant selected or
approved by the Employer. The Committee, the Employer and its
officers shall be fully protected in respect of any action
suffered by them in good faith in reliance upon the advice or
opinion of any accountant or attorney, and all action so taken or
suffered shall be conclusive upon each of them and upon all other
persons interested in the Plan.
9.05 Standard of Fiduciary Duty.
Any Fiduciary, or any person designated by a Fiduciary to carry out
fiduciary responsibilities with respect to the Plan, shall discharge his
duties solely in the interests of the Participants and Beneficiaries for
the exclusive purpose of providing them with benefits and defraying the
reasonable expenses of administering the Plan. Any Fiduciary shall
discharge his duties with the care, skill, prudence and diligence under
the circumstances then prevailing that a
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<PAGE> 47
prudent man acting in a like capacity and familiar with such matter
would use in the conduct of an enterprise of a like character and with
like aims. Any Fiduciary shall discharge his duties in accordance
with the documents and instruments governing the Plan insofar as such
documents and instruments are consistent with the provisions of ERISA.
Notwithstanding any other provisions of the Plan, no Fiduciary shall
be authorized to engage in any transaction which is prohibited by
Sections 408 and 2003(a) of ERISA or Section 4975 of the Code in the
performance of its duties hereunder.
9.06 Claims Procedure.
Any Participant, former Participant, Beneficiary, or Spouse or
authorized representative thereof (hereinafter referred to as
"Claimant"), may file a claim for benefits under the Plan by submitting
to the Committee a written statement describing the nature of the claim
and requesting a determination of its validity under the terms of the
Plan. Within ninety (90) days after the date such claim is received by
the Committee, it shall issue a ruling with respect to the claim. If
special circumstances require an extension of time for processing the
claim, the Committee shall send the Claimant written notice of the
extension prior to the termination of the 90-day period. The written
notice shall indicate the special circumstances requiring an extension
and the date by which the Committee believes a decision will be made. In
no case, however, shall the extension of time delay the Committee's
decision on such appeal request beyond 180 days following receipt of the
claim for benefits. If the claim is wholly or partially denied, written
notice shall be furnished to the Claimant, which notice shall set forth
in a manner calculated to be understood by the Claimant:
(1) The specific reason or reasons for denial;
(2) Specific reference to pertinent Plan provisions on which the
denial is based;
(3) A description of any additional material or information necessary
for the Claimant to perfect the claim and an explanation of why
such material or information is necessary; and
(4) An explanation of the claims review procedures.
Any Claimant whose claim for benefits has been denied, may appeal such
denial by resubmitting to the Committee a written statement requesting
a further review of the decision within sixty (60) days of the date
the Claimant receives notice of such denial. Such statement shall set
forth the reasons supporting the claim, the reasons such claim should
not have been denied, and any other issues or comments which the
Claimant deems appropriate with respect to the claim.
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<PAGE> 48
If the Claimant shall request in writing, the Committee shall make
copies of the Plan documents pertinent to his claim available for
examination of the Claimant.
Within sixty (60) days after the request for further review is
received, the Committee shall review its determination of benefits and
the reasons therefor and notify the Claimant in writing of its final
decision. Such written notice shall include specific reasons for the
decision, written in a manner calculated to be understood by the
Claimant, with specific references to the pertinent Plan provisions on
which the decision is based. If special circumstances require an
extension of time for processing the appeal, the Committee shall send
the Claimant written notice of the extension prior to the termination
of the 60-day period. In no case, however, shall the extension of
time delay the Committee's decision on such appeal request beyond 120
days following receipt of the appeal request.
The Committee's decision of appeal may be reviewed by the Board, which
shall have the right to overrule the Committee. If the Committee's
decision is not reviewed by the Board, the Committee's determination
shall be conclusive as to all persons.
9.07 Indemnification of Committee.
To the extent permitted under ERISA, the Plan shall indemnify the Board
and the Committee against any cost or liability which they may incur in
the course of administering the Plan and executing the duties assigned
pursuant to the Plan. The Employer shall indemnify the Committee and the
members of the Board against any personal liability or cost not provided
for in the preceding sentence which they may incur as a result of any
act or omission in relation to the Plan or its Participants.
Notwithstanding the foregoing, however, no person shall be indemnified
for any act or omission which results from that person's intentional or
willful misconduct, or illegal activity. The Employer may purchase
fiduciary liability insurance to insure its obligation under this
Section. The Employer shall have the right to select counsel to defend
the Board or Committee in connection with any litigation arising from
the execution of their duties under the Plan.
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ARTICLE 10
AMENDMENT AND TERMINATION
10.01 Right to Amend.
The Company intends for the Plan to be permanent so long as the
corporation exists; however, it reserves the right to modify, alter, or
amend this Plan or the Trust Agreement, from time to time, to any extent
that it may deem advisable, including, but not limited to any amendment
deemed necessary to insure the continued qualification of the Plan under
Sections 40l(a) and 401(k) of the Code or to insure compliance with
ERISA; provided, however, that the Company shall not have the authority
to amend this Plan in any manner which will:
(a) Permit any part of the Fund (other than such part as is required
to pay taxes and administrative expenses) to be used for or
diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries;
(b) Cause or permit any portion of the funds to revert to or become
the property of the Employer;
(c) Change the duties, liabilities, or responsibilities of the
Trustee without its prior written consent.
10.02 Termination and Discontinuance of Contributions.
The Company shall have the right at any time to terminate this Plan or
to discontinue permanently its contributions hereunder (hereinafter
referred to as "Plan Termination"). Upon Plan Termination, the Committee
shall direct the Trustee with reference to the disposition of the Fund,
after payment of any expenses properly chargeable against the Fund. The
Trustee shall distribute all amounts held in Trust to the Participants
and others entitled to distributions in proportion to the Accounts of
such Participants and other distributees as of the date of such
Termination. In the event that this Plan is partially terminated, then
the provisions of this Section 10.02 shall apply, but solely with
respect to the Employees affected by the partial termination. If the
Plan is terminated or partially terminated, or if the Employer
permanently discontinues its contributions to the Plan, then all
Participants (in the case of complete Plan termination or permanent
discontinuance of contributions) or the affected Participants (in the
event of partial Plan termination), shall become 100% vested in all of
their Accounts under the Plan immediately upon such event.
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<PAGE> 50
10.03 IRS Approval of Termination.
Notwithstanding Section 10.02, the Trustee shall not be required to make
any distribution from this Plan in the event of complete or partial
termination until the Internal Revenue Service has issued a favorable
determination with respect to the Plan's termination.
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<PAGE> 51
ARTICLE 11
SPECIAL DISCRIMINATION RULES
11.01 Definitions.
Actual Contribution Percentage or ACP shall mean the ratio (expressed as
a percentage) of (i) the sum of the Employer Matching Contributions on
behalf of the Participant for the Plan Year to (ii) the Participant's
Compensation for the Plan Year. An Employer may elect on an annual
basis to count a Participant's Employer Matching Contribution toward
satisfying the required minimum contribution under Section 14.03
(minimum contribution for Non-Key Employees in a top-heavy plan) in lieu
of including such contributions in the ACP. If a Participant (as
defined below) does not receive an allocation of Employer Matching
Contributions for a Plan Year, such Participant's ACP for the Plan Year
shall be zero.
Actual Deferral Percentage or ADP shall mean the ratio (expressed as a
percentage) of (i) the sum of Pre-Tax Contributions on behalf of a
Participant for the Plan Year (excluding any Excess Deferrals by a
Non-highly Compensated Employee) and, to the extent permitted in
Treasury Regulations and elected by the Employer, the Participating
Qualified Matching Contributions to (ii) the Participant's Compensation
for the Plan Year. The Employer, on an annual basis, may elect to
include or not to include Qualified Matching Contributions in computing
the ADP for a Plan Year.
Average Actual Contribution Percentage shall mean the average (expressed
as a percentage) of the Actual Contribution Percentages of the
Participants in a group. The percentage shall be rounded to the nearest
one-hundredth of one percent (four decimal places).
Average Actual Deferral Percentage shall mean the average (expressed as
a percentage) of the Actual Deferral Percentages of the Participants in
a group. The percentage shall be rounded to the nearest one-hundredth
of one percent (four decimal places).
Combined ADP and ACP Test shall have the meaning as defined in Section
11.09.
Compensation for purposes of this Article 11 shall be that definition
selected by the Committee that satisfies the requirements of Code
Sections 414(s) and 401(a)(17). Such definition may change from year to
year but must apply uniformly among all Eligible Employees being tested
under the Plan for a given Plan Year and among all Employees being
tested under any other plan that is aggregated with this Plan during the
Plan Year. If the Committee fails to select a definition of Compensation
for purposes of this Article 11, Compensation (for purposes of Article
11 shall have the same meaning as defined in Article 2.
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<PAGE> 52
Employer Matching Contributions. For purposes of this Article 11, an
Employer Matching Contribution for a particular Plan Year includes
only those contributions that are (i) allocated to the Participant's
Account under the Plan as of any date within such Plan Year, (ii)
contributed to the Trust no later than the end of the 12-month period
following the close of such Plan Year, and (iii) made on account of
such Participant's Pre-Tax Contributions for the Plan Year.
Excess Deferrals shall have that meaning as defined in Section 11.02.
Excess ACP Contributions shall have that meaning as defined in Section
11.08.
Excess ADP Deferrals shall have that meaning as defined in Section
11.05.
Family Member. See Article 12.
Highly Compensated Employee. See Article 12.
Maximum Combined Percentage shall have the meaning as defined in
Section 11.09(c).
Non-highly Compensated Employee. See Article 12.
Participant. For purposes of this Article 11, a Participant shall
mean any Eligible Employee who (i) is eligible to receive an
allocation of an Employer Matching Contribution, even if no Employer
Matching Contribution is allocated due to the Eligible Employee's
failure to make a required Pre-Tax Contribution, (ii) is eligible to
make a Pre-Tax Contribution, including an Eligible Employee whose
right to make Pre-Tax Contribution has been suspended because of an
election not to participate or a hardship distribution, and (iii) is
unable to receive an Employer Matching Contribution or make a Pre-Tax
Contribution because his Compensation is less than a stated amount.
Pre-Tax Contributions. For purposes of this Article 11, a Pre-Tax
Contribution is taken into account only if the contribution (i) is
allocated to the Participant's Account under the terms of the Plan as
of any date within the Plan Year, and (ii) relates to Compensation
that would have been received by the Participant during the Plan Year
or within 2-1/2 months after the Plan Year but for the deferral
election. A Pre-Tax Contribution is considered to be allocated as of
a date within a Plan Year only if the allocation is not contingent on
participation in the Plan or performance of service after the Plan
Year to which the Pre-Tax Contribution relates.
Qualified Matching Contribution shall mean an Employer Matching
Contribution that the Committee designates as a Qualified Matching
Contribution to meet the
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<PAGE> 53
ADP testing requirements of Section 11.03. In addition, all of the
following requirements must be satisfied:
(1) The Employer Matching Contributions for a Plan Year (including
any Qualified Matching Contributions for such Plan Year) must
satisfy the requirements of Code Section 401(a)(4).
(2) The Employer Matching Contributions for a Plan Year (excluding
any Qualified Matching Contributions for such Plan Year that are
used to satisfy the ADP testing requirements of Section 11.03)
must satisfy the requirements of Code Section 401(a)(4).
(3) The Qualified Matching Contribution for a given Plan Year
satisfies the requirements of an Employer Matching Contribution
for such Plan Year as defined in this Section 11.01.
(4) The Qualified Matching Contribution, at the time it was
contributed to the Plan, was 100% vested at all times and was
subject to the distribution restrictions applicable to Pre-Tax
Contributions (except that the Qualified Matching Contribution
cannot be distributed as a hardship distribution).
(5) Qualified Matching Contributions shall, if deemed necessary, be
held in a sub-account of the Participant's Employer Matching
Contribution Account.
11.02 $8,994 Limit on Pre-Tax Contributions.
(a) Notwithstanding any other provision of the Plan to the contrary,
the aggregate of a Participant's Pre-Tax Contributions during a
calendar year may not exceed $8,994 (or such greater amount as
established by the Secretary of the Treasury pursuant to Code
Section 402(g)(5)). Any Pre-Tax Contributions in excess of the
foregoing limits ("Excess Deferral"), plus any income and minus
any loss allocable thereto, may be distributed to the applicable
Participant no later than April 15 following the calendar year in
which the Pre-Tax Contributions were made.
(b) Any Participant who has an Excess Deferral during a calendar year
may receive a distribution of the Excess Deferral during such
calendar year plus any income or minus any loss allocable
thereto, provided (1) the Participant requests (or is deemed to
request) the distribution of the Excess Deferral, (2) the
distribution occurs after the date the Excess Deferral arose, and
(3) the Committee designates the distribution as a distribution
of an Excess Deferral.
(c) If a Participant makes a Pre-Tax Contribution under this Plan and
in the same calendar year makes a contribution to a Code Section
401(k) plan
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<PAGE> 54
containing a cash or deferred arrangement (other than this Plan),
a Code Section 408(k) plan (simplified employee pension plan) or
a Code Section 403(b) plan (tax sheltered annuity) and, after the
return of any Excess Deferral pursuant to Section 11.02(a) and
(b) the aggregate of all such Pre-Tax Contributions and
contributions exceed the limitations contained in Code Section
402(g), then such Participant may request that the Committee
return all or a portion of the Participant's Pre-Tax
Contributions for the calendar year plus any income and minus any
loss allocable thereto. The amount by which such Pre-Tax
Contributions and contributions exceed the Code Section 402(g)
limitations will also be known as an Excess Deferral.
(d) Any request for a return of Excess Deferrals arising out of
contributions to a plan described in Section 11.02(c) above which
is maintained by an entity other than the Employer must:
(1) be made in writing;
(2) be submitted to the Committee not later
than the March 1 following the Plan Year in which the
Excess Deferral arose;
(3) specify the amount of the Excess Deferral;
and,
(4) contain a statement that if the Excess
Deferral is not distributed, it will, when added to
amounts deferred under other plans or arrangements
described in Sections 401(k), 408(k),or 403(b) of the
Code, exceed the limit imposed on the Participant by
Section 402(g) of the Code for the year in which the
Excess Deferral occurred.
In the event an Excess Deferral arises out of contributions to a
plan (including this Plan) described in Section 11.02(c) above
which is maintained by the Employer, the Participant making the
Excess Deferral shall be deemed to have requested a return of the
Excess Deferral.
(e) Pre-Tax Contributions may only be returned to the extent
necessary to eliminate a Participant's Excess Deferral. Excess
Deferrals that are distributed pursuant to this Section shall not
be treated as annual additions under the Plan. In no event shall
the returned Excess Deferrals for a particular calendar year
exceed the Participant's aggregate Pre-Tax Contributions for such
calendar year.
(f) The income or loss allocable to an Excess Deferral that is
returned to a Participant pursuant to Section 11.02 shall be
determined using any reasonable method adopted by the Plan to
measure income earned or loss incurred during the Plan Year or
any other method authorized by the
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<PAGE> 55
Internal Revenue Service to compute the income earned or loss
incurred for the calendar year in which the Pre-Tax Contribution
was made, provided that the method does not violate Code Section
401(a)(4), is used consistently for all participants and for all
corrective distributions under the Plan for the Plan Year, and is
used by the Plan for allocating income to Participants' Accounts.
(g) Any Employer Matching Contribution allocable to an Excess
Deferral that is returned to a Participant pursuant to this
Section 11.02 shall be forfeited notwithstanding the provisions
of Article 7 (vesting). For this purpose, however, the Pre-Tax
Contributions that are returned to the Participant as an Excess
Deferral shall be deemed to be first those Pre-Tax Contributions
for which no Employer Matching Contribution was made and second
those Pre-Tax Contributions for which an Employer Matching
Contribution was made. Accordingly, if the Pre-Tax Contributions
that are returned to the Participant as Excess Deferrals were not
matched, no Employer Matching Contribution will be forfeited.
11.03 Average Actual Deferral Percentage.
(a) The Average Actual Deferral Percentage for Highly Compensated
Employees for each Plan Year and the Average Actual Deferral
Percentage for Non-highly Compensated Employees for the same Plan
Year must satisfy one of the following tests:
(1) The Average Actual Deferral Percentage for Participants
who are Highly Compensated Employees for the Plan Year
shall not exceed the Average Actual Deferral Percentage
for Participants who are Non-highly Compensated Employees
for the Plan Year multiplied by 1.25; or
(2) The excess of the Average Actual Deferral Percentage for
Participants who are Highly Compensated Employees for the
Plan Year over the Average Actual Deferral Percentage for
Participants who are Non-highly Compensated Employees for
the Plan Year is not more than two percentage points, and
the Average Actual Deferral Percentage for Participants
who are Highly Compensated Employees is not more than the
Average Actual Deferral Percentage for Participants who
are Non-highly Compensated Employees multiplied by two.
(b) The permitted disparity between the Average Actual Deferral
Percentage for Highly Compensated Employees and the Average
Actual Deferral Percentage for Non-Highly Compensated Employees
may be further reduced as required by Section 11.09.
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<PAGE> 56
(c) If at the end of the Plan Year, the Plan does not comply with the
provisions of Section 11.03(a), the Employer may do any or all of
the following, except as otherwise provided in the Code or
Treasury Regulations:
(1) Distribute Pre-Tax Contributions to certain Highly
Compensated Employees as provided in Section 11.05;
(2) Aggregate Qualified Matching Contributions with Pre-Tax
Contributions as provided in Section 11.01 (definition of
ADP).
11.04 Special Rules For Determining Average Actual Deferral Percentage.
(a) The Actual Deferral Percentage for any Highly Compensated
Employee for the Plan Year who is eligible to have Pre-Tax
Contributions allocated to his Account under two or more
arrangements described in Section 401(k) of the Code that are
maintained by an Employer or its Affiliates shall be determined
as if such Pre-Tax Contributions were made under a single
arrangement.
(b) If two or more plans maintained by the Employer or its Affiliates
are treated as one plan for purposes of the nondiscrimination
requirements of Code Section 401(a)(4) or the coverage
requirements of Code Section 410(b) (other than for purposes of
the average benefits test), all Pre-Tax Contributions that are
made pursuant to those plans shall be treated as having been made
pursuant to one plan.
(c) For purposes of determining the ADP of a Highly Compensated
Employee who is either a 5% or more owner of an Employer or one
of the ten highest paid Highly Compensated Employees during the
Plan Year, the Pre-Tax Contributions and Compensation of such
Participant shall include the Pre-Tax Contributions and
Compensation of his Family Members. Any person who is a Family
Member shall not be treated as a separate Employee in determining
the Average Actual Deferral Percentage for either Non-highly
Compensated Employees or for Highly Compensated Employees.
(d) The determination and treatment of the Pre-Tax Contributions and
Actual Deferral Percentage of any Participant shall be in
accordance with such other requirements as may be prescribed from
time to time in Treasury Regulations.
11.05 Distribution of Excess ADP Deferrals.
(a) Pre-Tax Contributions exceeding the limitations of Section
11.03(a) ("Excess ADP Deferrals") and any income or loss
allocable to such
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<PAGE> 57
Excess ADP Deferral shall be designated by the Committee as
Excess ADP Deferrals and shall be distributed to Highly
Compensated Employees whose Accounts were credited with Excess
ADP Deferrals in the preceding Plan Year. In determining the
amount of Excess ADP Deferrals for each Highly Compensated
Employee, the Committee shall reduce the ADP for each Highly
Compensated Employee as follows:
(1) The ADP for the Highly Compensated Employee(s) with the
highest ADP will be reduced until equal to the second
highest ADPs under the Plan; then
(2) The ADP for the two (or more) Highly Compensated Employees
with the highest ADPs under the Plan will be reduced until
equal to the third highest ADP level under the Plan; then
(3) The steps described in (1) and (2) shall be repeated with
respect to the third and successive highest ADP levels
under the Plan until the Plan complies with one or both of
the ADP tests described in Section 11.03(a).
(b) To the extent administratively possible, the Committee shall
distribute all Excess ADP Deferrals and any income or loss
allocable thereto prior to 2-1/2 months following the end of the
Plan Year in which the Excess ADP Deferrals arose. In any event,
however, the Excess ADP Deferrals and any income or loss
allocable thereto shall be distributed prior to the end of the
Plan Year following the Plan Year in which the Excess ADP
Deferrals arose. Excess ADP Deferrals shall be treated as annual
additions under the Plan.
(c) The income or loss allocable to Excess ADP Deferrals shall be
determined using any reasonable method adopted by the Plan to
measure income earned or loss incurred during the Plan Year or
any other method authorized by the Internal Revenue Service to
compute the income earned or loss incurred for the Plan Year in
which the Excess ADP Deferral was made, provided that the method
does not violate Code Section 401(a)(4), is used consistently for
all participants and for all corrective distributions under the
Plan for the Plan Year, and is used by the Plan for allocating
income to Participants' Accounts.
(d) If an Excess Deferral has been distributed to the Participant
pursuant to Section 11.02(a) or (b) for any taxable year of a
Participant, then any Excess ADP Deferral allocable to such
Participant for the same Plan Year in which such taxable year
ends shall be reduced by the amount of such Excess Deferral.
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<PAGE> 58
(e) Distribution of Excess ADP Deferrals to Participants described in
Section 11.05(c) shall be made in accordance with the provisions
of Treasury Regulation Section 1.401(k)-1(f)(5)(ii) or any
successor Treasury Regulation thereto.
(f) Any Employer Matching Contribution allocable to an Excess ADP
Deferral that is returned to the Participant pursuant to this
Section 11.05 shall be forfeited notwithstanding the provisions
of Article 7 (vesting). For this purpose, however, the Pre-Tax
Contributions that are returned to the Participant shall be
deemed to be first those Pre-Tax Contributions for which no
Employer Matching Contribution was made and second those Pre-Tax
Contributions for which an Employer Matching Contribution was
made. Accordingly, unmatched Pre-Tax Contributions shall be
returned as an Excess ADP Deferral before matched Pre-Tax
Contributions.
11.06 Average Actual Contribution Percentage.
(a) The Average Actual Contribution Percentage for Highly Compensated
Employees for each Plan Year and the Average Actual Contribution
Percentage for Non-highly Compensated Employees for the same Plan
Year must satisfy one of the following tests:
(1) The Average Actual Contribution Percentage for
Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the Average Actual Contribution
Percentage for Participants who are Non-highly Compensated
Employees for the Plan Year multiplied by 1.25; or
(2) The excess of the Average Actual Contribution Percentage
for Participants who are Highly Compensated Employees for
the Plan Year over the Average Actual Contribution
Percentage for Participants who are Non-highly Compensated
Employees for the Plan Year is not more than two
percentage points, and the Average Actual Contribution
Percentage for Participants who are Highly Compensated
Employees is not more than the Average Actual Contribution
Percentage for Participants who are Non-highly Compensated
Employees multiplied by two.
(b) If at the end of the Plan Year, the Plan does not comply with the
provisions of Section 11.06(a), the Employer may comply with such
provision as applicable (except as otherwise provided in the Code
or in Treasury Regulations) by distributing Employer Matching
Contributions to certain Highly Compensated Employees as provided
in Section 11.08.
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<PAGE> 59
11.07 Special Rules For Determining Average Actual Contribution Percentages.
(a) The Actual Contribution Percentage for any Highly Compensated
Employee for the Plan Year who is eligible to have Employer
Matching Contributions allocated to his Account under two or more
arrangements described in Sections 401(a) or 401(m) of the Code
that are maintained by an Employer or its Affiliates shall be
determined as if such contributions were made under a single
arrangement.
(b) If two or more plans maintained by the Employer or its Affiliates
are treated as one plan for purposes of the nondiscrimination
requirements of Code Section 401(a)(4) or the coverage
requirements of Code Section 410(b) (other than for purposes of
the average benefits test), all Employer Matching Contributions
that are made pursuant to those plans shall be treated as having
been made pursuant to one plan.
(c) For purposes of determining the Actual Contribution Percentage of
a Highly Compensated Employee who is a 5% or more owner of an
Employer or one of the ten highest paid Highly Compensated
Employees during the Plan Year, the Employer Matching
Contributions and Compensation of such Participant shall include
all Employer Matching Contributions and Compensation of Family
Members. Family Members shall not be treated as separate
Employees for purposes of determining the Average Actual
Contribution Percentage for either Non-highly Compensated
Employees or for Highly Compensated Employees.
(d) The determination and treatment of the Actual Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
11.08 Distribution of Employer Matching Contributions.
(a) Employer Matching Contributions exceeding the limitations of
Section 11.06(a) ("Excess ACP Contributions") and any income or
loss allocable to such Excess ACP Contribution may be designated
by the Committee as Excess ACP Contributions and may be
distributed in the Plan Year following the Plan Year in which the
Excess ACP Contributions arose to those Highly Compensated
Employees whose Accounts were credited with Excess ACP
Contributions in the preceding Plan Year. The amount of Excess
ACP Contributions to be distributed to a Highly Compensated
Employee shall be determined using the procedure described in
Section 11.05(a).
(b) To the extent administratively possible, the Committee shall
distribute all Excess ACP Contributions and any income or loss
allocable thereto prior to 2-1/2 months following the end of the
Plan Year in which the Excess
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<PAGE> 60
ACP Contributions arose. In any event, however, the Excess ACP
Contributions and any income or loss allocable thereto shall be
distributed prior to the end of the Plan Year following the Plan
Year in which the Excess ACP Contributions arose.
(c) The income or loss allocable to Excess ACP Contributions shall be
determined using any reasonable method adopted by the Plan to
measure income earned or loss incurred during the Plan Year or
any other method authorized by the Internal Revenue Service to
compute the income earned or loss incurred for the Plan Year in
which the Excess ACP Contribution was made, provided that the
method does not violate Code Section 401(a)(4), is used
consistently for all participants and for all corrective
distributions under the Plan for the Plan Year, and is used by
the Plan for allocating income to Participants' Accounts.
(d) Amounts distributed to Highly Compensated Employees under this
Section 11.08 shall be treated as annual additions with respect
to the Employee who received such amount.
(e) Distribution of Excess ACP Contributions to Participants
described in Section 11.08(c) shall be made in accordance with
the provisions of Treasury Regulation Section
1.401(m)-1(e)(2)(iii) or any successor Treasury Regulations
thereto.
11.09 Combined ACP and ADP Test.
(a) The Plan must satisfy the Combined ACP and ADP Test described in
this Section 11.09 only if (1) the Average Actual Deferral
Percentage of the Highly Compensated Employees exceeds 125% of
the Average Actual Deferral Percentage of the Non-highly
Compensated Employees and (2) the Average Actual Contribution
Percentage of the Highly Compensated Employees exceeds 125% of
the Average Actual Contribution Percentage of the Non-highly
Compensated Employees.
(b) The Combined ACP and ADP Test is satisfied if the sum of the
Highly Compensated Employees' Average Actual Deferral Percentage
and Average Actual Contribution Percentage is equal to or less
than the Maximum Combined Percentage defined in paragraph (c)
below.
(c) The Maximum Combined Percentage shall be determined by adjusting
the Non-Highly Compensated Employees' Average Actual Deferral
Percentage and Average Actual Contribution Percentage in the
following manner:
(1) The greater of the two percentages shall be multiplied by
1.25; and
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<PAGE> 61
(2) The lesser of the two percentages shall be increased by
two percentage points; however, in no event shall such
adjusted percentage exceed twice the original percentage.
The sum of (i) and (ii) shall be the Maximum Combined Percentage.
Notwithstanding the foregoing, the Maximum Combined Percentage
shall be determined in the following manner if such calculation
results in a higher Maximum Combined Percentage than the formula
specified above:
(1) The lesser of the Average Actual Deferral Percentage and
Average Actual Contribution Percentage of the Non-Highly
Compensated Employees shall be multiplied by 1.25; and
(2) The greater of such two percentages shall be increased by
two percentage points; however, in no event shall such
percentage exceed twice the original percentage.
(d) In the event the Plan does not satisfy the Combined ADP and ACP
Test, the Highly Compensated Employees' Average Actual
Contribution Percentage shall be decreased by distributing
Employer Matching Contributions to certain Highly Compensated
Employees by using the procedures described in Section 11.08
until the sum of such percentage and the Highly Compensated
Employees' Average Actual Deferral Percentage equals the Maximum
Combined Percentage.
(e) If Employer Matching Contributions are distributed to certain
Highly Compensated Employees in order to satisfy the Combined ADP
and ACP Test, income or loss allocable to such Employer Matching
Contributions shall also be distributed.
(f) To the extent administratively possible, the Committee shall
distribute the Employer Matching Contributions (if applicable)
and allocable income or loss prior to 2-1/2 months following the
end of the Plan Year for which the Combined ADP and ACP Test is
computed. In any event, however, such Employer Matching
Contributions (if applicable) and allocable income or loss shall
be distributed by the end of the Plan Year following the Plan
Year for which the Combined ADP and ACP Test is computed.
Employer Matching Contributions that are distributed pursuant to
this Section 11.09 shall be treated as annual additions under the
Plan.
(g) The income or loss allocable to returned Employer Matching
Contributions shall be determined using the same procedures as
Section 11.05(c).
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<PAGE> 62
11.10 Order of Applying Certain Sections of Article.
In applying the provisions of this Article 11, the determination and
distribution of Excess Deferrals shall be made first, the determination
and elimination of Excess ACP Deferrals shall be made second, the
determination and elimination of Excess ADP Contributions shall be made
third and finally the determination and any necessary adjustment related
to the Combined ADP and ACP Test shall be made.
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ARTICLE 12
HIGHLY COMPENSATED EMPLOYEES
12.01 In General.
For the purposes of this Plan, the term "Highly Compensated Employee" is
any active Employee described in Section 12.02 below and any Former
Employee described in Section 12.03 below. Various definitions used in
this Section are contained in Section 12.04. A Non-highly Compensated
Employee is an Employee who is neither a Highly Compensated Employee nor
a Family Member of a Highly Compensated Employee.
12.02 Highly Compensated Employees.
An Employee is a Highly Compensated Employee if during the Determination
Year the Employee:
(a) is a 5 Percent Owner;
(b) receives Compensation in excess of $75,000;
(c) receives Compensation in excess of $50,000 and is a
member of the Top Paid Group; or
(d) is an Includable Officer.
The dollar amounts described above shall be increased annually
as provided in Code Section 414(q)(1).
12.03 Former Highly Compensated Employee.
A Former Employee is a Highly Compensated Employee if (applying the
rules of Section 12.02 the Former Employee was a Highly Compensated
Employee during a Separation Year or during any Determination Year
ending on or after the Former Employee's 55th birthday. With respect to
a Former Employee whose Separation Year was prior to January 1, 1987,
such Former Employee will be treated as a Highly Compensated Employee
only if the Former Employee was a 5% Owner or received Compensation in
excess of $50,000 during (i) the Former Employee's Separation Year (or
the year preceding such Separation Year); or (ii) any year ending on or
after such Former Employee's 55th birthday (or the last year ending
before such Former Employee's 55th birthday).
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<PAGE> 64
12.04 Family Aggregation Rules.
(a) For purposes of this Article 12, an Employee who is, for
a given Determination Year or Look-Back Year, either (i) a 5
Percent Owner, or (ii) a Highly Compensated Employee who is one
of the ten most highly compensated Employees ranked on the basis
of Compensation paid during such year, shall be aggregated with
such Employee's Family Members.
(b) For purposes of this Section 12.04, the term "Family
Member" means, with respect to an Employee described in Section
12.04(a), a person who is, on any day during the given
Determination Year or Look-Back Year:
(1) his spouse; or
(2) his lineal ascendant or descendant; or
(3) the spouse of his lineal ascendant or
descendant.
(c) The determination of Employees and Family Members who
must be aggregated for purposes of this Article 12 shall be made
in accordance with Temporary Regulation Section 1.414(q)-1T,
Q&A-11 and Q&A-12.
(d) For purposes of applying the limits of Code Section
401(a)(17) (i.e., the $200,000 limit on compensation, as
adjusted) with respect to Compensation under Articles 11
(401(k)/401(m) tests) and 13 (Section 415 limits), the
Compensation for any Employee described in Section 12.04(a) and
for any Family Member who is such Employee's spouse or lineal
descendant under age 19, shall be aggregated. In such event, the
deemed Compensation for each such Employee shall be an amount
equal to the Section 401(a)(17) limit for the Plan Year (as
adjusted) multiplied by a fraction, the numerator of which is the
Employee's actual Compensation for the Plan Year, and the
denominator of which is the aggregate Compensation of the
Employee and the aggregated Family Member for the Plan Year. The
same procedure shall then be used to determine the deemed
Compensation of the aggregated Family Member.
12.05 Definitions.
The following special definitions shall apply to this Article 12:
Compensation for purposes of this Article 12 shall mean the gross annual
earnings reported on the Participant's IRS Form W-2 (box 10 or its
comparable location as provided on Form W-2 in future years) as required
by Code Sections 6041(d) and 6051(a)(3). In addition, Compensation
shall include compensation which is not includible in the Participant's
IRS Form W-2 (Box 10) by reason of
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Code Section 402(a)(8) (employee pre-tax contributions under a Code
Section 401(k) plan) or Code Section 125 (salary deferrals under a
cafeteria plan). Compensation shall not include amounts paid or
reimbursed by the Employer for moving expenses if, at the time of the
payment of such moving expenses, it is reasonable to believe that the
moving expenses will be deductible by the Participant under Code
Section 217. Compensation shall be determined by ignoring any income
exclusions under Code Section 3401(a) based on the nature or location
of employment. In no event shall more than $200,000 (as adjusted
annually pursuant to Code Section 401(a)(17)) in Compensation be taken
into account for any Employee.
Determination Year shall mean the Plan Year for which the ACP and the
ADP are computed.
Employer for purposes of this Article 12 shall mean the Company and
its Affiliates.
5 Percent Owner shall mean any Employee who owns or is deemed to own
(within the meaning of Code Section 318), more than five percent of
the value of the outstanding stock of the Employer or stock possessing
more than five percent of the total combined voting power of the
Employer.
Former Employee shall mean an Employee (i) who has incurred a
Severance from Service or (ii) who remains employed by the Employer
but who has not performed services for the Employer during the
Determination Year (e.g., an Employee on Authorized Leave of Absence).
Includable Officer shall mean any officer of the Employer who, during
the applicable year, receives Compensation in excess of 50% of the
dollar limitations under Code Section 415(b)(1)(A)(as adjusted by the
Secretary of the Treasury for cost of living increases)($57,821 in
1993). The Employer shall be deemed to have a minimum of 3 officers
or, if greater, a number equal to 10 percent of all Employees.
However, no more than 50 officers shall be considered Includable
Officers under this Article 12. If the Employer does not have any
Includable Officers because no officer receives Compensation in excess
of the dollar limitations of Code Section 415(b)(1)(A), the Employer's
highest paid officer shall be considered an Includable Officer.
Look Back Year shall mean the Plan Year preceding the Determination
Year, or if the Employer elects, the calendar year ending with or
within the determination year.
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Separation Year shall mean any of the following years:
(1) An Employee who incurs a Termination of Employment shall
have a Separation Year in the Determination Year in which such
Termination of Employment occurs;
(2) An Employee who remains employed by the Employer but who
temporarily ceases to perform services for the Employer (e.g., an
Employee on Authorized Leave of Absence) shall have a Separation
Year in the calendar year in which he last performs services for
the Employer;
(3) An Employee who remains employed by the Employer but
whose Compensation for a calendar year is less than 50% of the
Employee's average annual Compensation for the immediately
preceding three calendar years (or the Employee's total years of
employment, if less) shall have a Separation Year in such
calendar year. However, such Separation Year shall be ignored if
the Employee remains employed by the Employer and the Employee's
Compensation returns to a level comparable to the Employee's
Compensation immediately prior to such Separation Year.
Top Paid Group shall mean the top 20% of all Employees ranked on the
basis of Compensation received from the Employer during the applicable
year. The number of Employees in the Top Paid Group shall be
determined by ignoring Employees who are non-resident aliens and
Employees who do not perform services for the Employer during the
applicable year. The Employer elects to compute the Top Paid Group
without the age and service exclusion provided in applicable Treasury
Regulations.
12.06 Other Methods Permissible.
To the extent permitted by the Code, judicial decisions, Treasury
Regulations and IRS pronouncements, the Committee may (without further
amendment to this Plan) take such other steps and actions or adopt such
other methods or procedures (in addition to those methods and procedures
described in this Article 12) to determine and identify Highly
Compensated Employees (including adopting alternative definitions of
Compensation which satisfy Code Section 414(q)(7) and are uniformly
applied).
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ARTICLE 13
MAXIMUM BENEFITS
13.01 General Rule.
(a) Except as otherwise indicated, the provisions of this
Article shall be effective as of October 1, 1987.
(b) Notwithstanding any other provision of this Plan, for any
Plan Year, the annual additions to a Participant's Account, when
combined with the annual additions to the Participant's Account
under all other Qualified individual account plans maintained by
the Employer or its Affiliates shall not exceed the lesser of (i)
$30,000 or (ii) twenty-five percent (25%) of the Participant's
Compensation for such Plan Year (the "maximum permissible
amount").
(c) The Employer hereby elects that the Limitation Year for
purposes of Code Section 415 shall be the Plan Year.
(d) For purposes of determining the limit on Annual Additions
under paragraph (b) of this Section, the dollar limit described
therein, to wit, $30,000, shall be increased for each Plan Year
to the extent permitted by law.
(e) If the amount to be allocated to a Participant's Account
exceeds the maximum permissible amount (and for this purpose
Employer Matching Contributions shall be deemed to be allocated
after Pre-Tax Contributions), the excess will be disposed of as
follows. First, if the Participant's Annual Additions exceed the
maximum permissible amount as a result of (i) a reasonable error
in estimating the Participant's Compensation, (ii) a reasonable
error in estimating the amount of Pre-Tax Contributions that the
Participant could make under Code Section 415 or (iii) other
facts and circumstances that the Internal Revenue Service finds
justifiable, the Committee may direct the Trustee to return to
the Participant his Pre-Tax Contributions (and income allocable
thereto) for such Plan Year to the extent necessary to reduce the
excess amount. Such returned Pre-Tax Contributions shall be
ignored in performing the discrimination tests of Article 11.
Second, any excess annual additions still remaining after the
return of Pre-Tax Contributions shall be reallocated as
determined by the Committee among the Participants whose accounts
have not exceeded the limit in the same proportion that the
Compensation of each such Participant bears to the Compensation
of all such Participants. If such reallocation would result in
an addition to another Participant's Account which exceeds the
permitted limit, that excess shall likewise be reallocated among
the Participants whose
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Accounts do not exceed the limit. However, if the allocation or
reallocation of the excess amounts pursuant to these provisions
causes the limitations of Section 415 of the Internal Revenue Code
to be exceeded with respect to each Participant for the limitation
year, then any such excess shall be held unallocated in a 415
Suspense Account. If the 415 Suspense Account is in existence at
any time during a limitation year, other than the limitation year
described in the preceding sentence, all amounts in the 415 Suspense
Account shall be allocated and reallocated to Participants' Accounts
(subject to the limitations of Code Section 415) before any
Contributions which would constitute annual additions may be made to
the Plan for that limitation year.
(f) If the Participant is covered under another qualified
defined contribution plan maintained by an Employer or its
Affiliates during any limitation year, the annual additions which
may be credited to a Participant's account under this Plan for
any such limitation year shall not exceed the maximum permissible
amount reduced by the annual additions credited to a
Participant's account under all such plans for the same
limitation year. If a Participant's annual additions under this
Plan and under any other individual account plan maintained by
the Employer or its Affiliates would result in an excess amount
for a limitation year, the excess amount will be deemed to
consist of the annual additions last allocated (and for this
purpose, Employer Matching Contributions shall be deemed to be
allocated after Pre-Tax Contributions). If an excess amount is
allocated to a Participant on an allocation date of this Plan
which coincides with an allocation date of another plan, the
excess amount attributed to this Plan will be the product of
(i) the total excess amount as of such date, times
(ii) the ratio of (A) the annual additions allocated to the
Participant for the limitation year as of such date under
this Plan to (B) the total annual additions allocated to
the Participant for the limitation year as of such date
under this and all the other qualified defined
contribution plans maintained by the Employer or its
Affiliates.
Any excess amount attributed to this Plan will be disposed in
the manner described in Section 13.01(e) above.
(g) For purposes of this Section 13.01, all defined contribution plans
(whether or not terminated) of the Employer are to be treated as one
defined contribution plan.
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13.02 Combined Plan Limitation.
If the Employer or its Affiliates maintains, or at any time maintained,
a qualified defined benefit plan covering any Participant in this Plan,
the sum of the Participant's defined benefit plan fraction and defined
contribution plan fraction shall not exceed 1.0 in any limitation year
and the annual benefit otherwise payable to the Participant under such
defined benefit plan shall be frozen or reduced to the extent necessary
so that the sum of such fractions shall not exceed 1.0.
13.03 Definitions.
For the purposes of this Article 13, the following definitions shall
apply:
(a) "Annual Addition" shall mean the sum of:
(i) Employee Contributions;
(ii) Employer Matching Contributions;
(iii) Forfeitures; and
(iv) Amounts described in Code Sections
415(l)(1) and 419A(d)(2).
Annual Additions shall not include any amounts credited to the
Participant's Account resulting from Rollover Contributions.
(b) "Affiliates" shall have that meaning contained in Article
2 except that for purposes of determining who is an Affiliate the
phrase "more than 50 percent" shall be substituted for the phrase
"at least 80 percent" each place it appears in Code Section
1563(a)(1).
(c) "Compensation" shall have the same meaning as defined in
Article 12 except that Compensation for purposes of Article 13
shall not include Pre-Tax Contributions under this Plan and shall
not include salary deferrals under a Code Section 125 Cafeteria
Plan.
(d) "Defined benefit fraction" means a fraction, the numerator of which
is the sum of the Participant's projected annual benefits under all
the defined benefit plans (whether or not terminated) maintained by
the Employer or its Affiliates, and the denominator of which is the
lesser of (i) 125 percent of the dollar limitation in effect for the
limitation year under Section 415(b)(1)(A) of the Code or (ii) 140
percent of the highest average compensation. Notwithstanding the
foregoing, if the Participant was a Participant as of the first day
of the first Limitation Year beginning after December 31, 1986,
in one or more defined benefit plans maintained by the Employer or
its Affiliates which were in existence on May 6, 1986,
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the denominator of this fraction will not be less than 125 percent
of the sum of the annual benefits under such plans which the
Participant had accrued as of the end of the last limitation year
beginning before January 1, 1987, but determined without regard to
any changes in the terms and conditions of the Plan occurring after
May 5, 1986. The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied the
requirements of Section 415 for all limitation years beginning
before January 1, 1987.
(e) "Defined contribution fraction" means a fraction, the
numerator of which is the sum of the annual additions to the
Participant's account under all the defined contribution plans
(whether or not terminated) maintained by the Employer or its
Affiliates for the current and all prior limitation years, and
the denominator of which is the sum of the maximum aggregate
amounts for the current and all prior limitation years of service
with the Employer or its Affiliates (regardless of whether a
defined contribution plan was maintained by the Employer or its
Affiliates). The maximum aggregate amount in any limitation year
is the lesser of (i) 125 percent of the dollar limitation in
effect under Section 415(c)(1)(A) of the Code; or (ii) 35 percent
of the Participant's compensation for such year. If the Employee
was a Participant as of the first day of the first Limitation
Year beginning after December 31, 1986, in one or more defined
contribution plans maintained by the Employer or its Affiliates
which were in existence on May 6, 1986, the numerator of this
fraction will be adjusted if the sum of this fraction and the
defined benefit fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal to the
product of (i) the excess of the sum of the fractions over 1.0
times and (ii) the denominator of this fraction, will be
permanently subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they would be
computed as of the end of the limitation year beginning before
January 1, 1987, and disregarding any changes in the terms and
conditions of the plans made after May 5, 1986, but using the
Section 415 limitation applicable to the first Limitation Year
beginning on or after January 1, 1987. The annual addition for
any Limitation Year beginning before January 1, 1987 shall not be
recomputed to treat employee contributions as annual additions.
(f) "Highest average compensation' means the average
compensation for the three consecutive years of service with the
employer that produces the highest average.
(g) "Projected annual benefit" means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or
qualified joint and survivor annuity) to which the Participant would
be entitled under the terms of the plan assuming (i) the Participant
will continue employment until normal retirement age under the plan
(or current age, if later), and (ii) the Participant's compensation
for the current limitation year and all other relevant factors used
to determine benefits under the plan will remain constant for all
future limitation years.
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ARTICLE 14
TOP HEAVY RULES
14.01 General.
Effective as of October 1, 1987, the provisions of this Article of the
Plan shall be applicable in any Plan Year in which the Plan is
determined to be Top Heavy and shall supersede any conflicting provision
of this Plan.
14.02 Definitions.
(a) Top Heavy. The Plan shall be Top Heavy for the Plan Year
if, as of the Valuation Date which coincides with or immediately
precedes the Determination Date, the value of the Participant
Accounts of Key Employees exceeds 60% of the value of all
Participant Accounts. If the Employer maintains more than one
plan, all plans in which any Key Employee participates and all
plans which enable this Plan to satisfy the antidiscrimination
requirements of Code Sections 401(a)(4) and 410 must be combined
with this Plan ("required aggregation group") for the purposes of
applying the 60% test described in the preceding sentence. Plans
maintained by the Employer which are not in the required
aggregation group may be combined at the Employer's election with
this Plan for the purposes of determining Top Heavy status if the
combined plan satisfies the requirements of Code Section
401(a)(4) and 410 ("permissive aggregation group"). In
determining the value of Participant Accounts, all distributions
made during the five-year period ending on the Determination Date
shall be included and any unallocated Employer Matching
Contributions or forfeitures attributable to the Plan Year in
which the Determination Date falls shall also be included. The
Account of (i) any Employee who at one time was a Key Employee
but who is not a Key Employee for any of the five Plan Years
ending on the Determination Date; and (ii) any Employee who has
not performed services for the Employer or a related employer
maintaining a plan in the aggregation group for the five Plan
Years ending on the Determination Date, shall be disregarded in
determining Top Heavy status.
If the Employer maintains a defined benefit plan during the
Plan Year which is subject to aggregation with this Plan, the
60% test shall be applied after calculating the present value
of the Participants' accrued benefits under the defined benefit
plan in accordance with the rules set forth in that plan and
combining the present value of such accrued benefits with the
Participant's account balances under this Plan.
Solely for the purpose of determining if the Plan, or any other
plan included in the required aggregation group, is Top-Heavy,
a Non-key
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Employee's accrued benefit in a defined benefit plan shall be
determined under (i) the method, if any, that uniformly applies for
accrual purposes under all plans maintained by the Affiliates, or
(ii) if there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the fractional
accrual rate of Code Section 411(b)(1)(C).
(b) Key Employee. Any employee of the Employer who, during
the Plan Year or the four preceding Plan Years was an officer
receiving Compensation in excess of 50% of the limit described in
Code Section 415(b)(1)(A), one of the ten employees of the
Employer owning the largest interests in the Employer and
receiving Compensation equal to or greater than the dollar limit
described in Code Section 415(c)(1)(A), a greater than 5% owner
of the Employer, a greater than 1% owner of the Employer
receiving Compensation in excess of $150,000, or the Beneficiary
of a Key Employee. The Code Section 415(b)(1)(A) and
415(c)(1)(A) limits referred to in the preceding sentence shall
be the specified dollar limit plus any increases reflecting cost
of living adjustments specified by the Secretary of the Treasury.
(c) Determination Date. The last day of the Plan Year
immediately preceding the Plan Year for which Top Heavy status is
determined. For the first Plan Year, the Determination Date
shall be the last day of the first Plan Year.
(d) Non-key Employee. Any Participant who is not a Key
Employee.
(e) Employer. The term "Employer" shall include any
Affiliate of such Employer.
(f) Compensation. The term "Compensation" shall have that
meaning as defined in Article 13.
14.03 Minimum Benefit.
(a) Except as provided below, the Employer Matching
Contributions allocated on behalf of any Non-Key Employee who is
employed by the Employer on the Determination Date shall not be
less than the lesser of (i) 3% of such Non-Key Employee's
Compensation or (ii) the largest percentage of Employer Matching
Contributions and Pre-Tax Contributions, as a percentage of the
Key Employee's Compensation, allocated on behalf of any Key
Employee for such Plan Year. Pre-Tax Contributions allocated to
the Accounts of Non-key Employees and Employer Matching
Contributions allocated to the Accounts of Non-key Employees that
are used to satisfy the provisions of Article 11 shall not
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be considered in determining whether a Non-Key Employee has
received the minimum contribution required by this Section
14.03.
(b) The minimum allocation is determined without regard to
any Social Security contribution and shall be made even though,
under other Plan provisions, the Non-Key Employee would have
received a lesser allocation or no allocation for the Plan Year
because of the Non-Key Employee's failure to complete 1,000 Hours
of Service, his failure to make mandatory employee contributions,
or his earning compensation less than a stated amount.
(c) If the Employer maintains a defined benefit plan in
addition to this Plan, the minimum contribution and benefit
requirements for both plans in a Top Heavy Plan Year may be
satisfied by an allocation of Employer Matching Contributions to
the Account of each Non-Key Employee in the amount of 5% of the
Non-Key Employee's compensation.
14.04 Combined Plan Limitation For Top Heavy Years.
In any Plan Year during which more than 90% of the Participant Account
balances are attributable to Key Employees, 100% or an equivalent factor
shall be substituted for 125% or an equivalent factor in the combined
plan fraction denominators set forth in the Section of this Plan which
limits maximum benefits pursuant to Section 415 of the Code. In any
Plan Year during which more than 60% but not more than 90% of the
Participant Account balances are attributable to Key Employees, 100% or
an equivalent factor shall be substituted for 125% or an equivalent
factor in the combined plan fraction denominators unless the Account of
each Non-Key Employee participating in the Plan receives an allocation
which satisfies Section 14.03 above, except that for this purpose the
figure "4%" shall be substituted for "3%" where it appears in Section
14.03(a) and the figure "7.5%" shall be substituted for "5%" where it
appears in Section 14.03(c).
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ARTICLE 15
MISCELLANEOUS
15.01 Headings.
The headings and sub-headings in this Plan have been inserted for
convenience of reference only and are to be ignored in any construction
of the provisions hereof.
15.02 Action by Employer.
Any action by an Employer under this Plan shall be by resolution of its
Board of Directors, or by any person or persons duly authorized by
resolution of said Board to take such action.
15.03 Spendthrift Clause.
Except as otherwise required by a "qualified domestic relations order"
as defined in Code Section 414(p), none of the benefits, payments,
proceeds or distributions under this Plan shall be subject to the claim
of any creditor of any Participant or Beneficiary, or to any legal
process by any creditor of such Participant or Beneficiary, and none of
them shall have any right to alienate, commute, anticipate or assign any
of the benefits, payments, proceeds or distributions under this Plan
except for the extent expressly provided herein to the contrary.
15.04 Distributions Upon Special Occurrences.
(a) Subject to Section 10.03, Pre-Tax Contributions and any
income attributable thereto, shall be distributed to Participants
or their Beneficiaries after the termination of the Plan,
provided that neither the Employer nor its Affiliates maintain a
successor plan.
(b) Pre-Tax Contributions and any income attributable thereto
shall be distributed to Participants after the sale, to an entity
that is not an Affiliate, of substantially all of the assets used
by the Employer in the trade or business in which the Participant
is employed.
(c) After the sale of an incorporated Affiliate's interest in
a subsidiary to an entity that is not an Affiliate, Pre-Tax
Contributions and any income attributable thereto of a
Participant who continues to work for such subsidiary shall be
distributed.
(d) The provisions of this Section 15.04 including the
definitions of terms such as "successor plan" and "substantially
all of the assets" shall be governed by Treasury Regulation
Section 1.401(k)-1(d).
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15.05 Discrimination.
The Employer, the Committee, the Trustee and all other persons involved
in the administration and operation of the Plan shall administer and
operate the Plan and Trust in a uniform and consistent manner with
respect to all Participants similarly situated and shall not permit
discrimination in favor of Highly Compensated Employees.
15.06 Release.
Any payment to a Participant or Beneficiary, or to their legal
representatives, in accordance with the provisions of this Plan, shall
to the extent thereof be in full satisfaction of all claims hereunder
against the Trustee, Plan Administrator, Committee and the Employer, any
of whom may require such Participant, Beneficiary, or legal
representative, as a condition precedent to such payment, to execute a
receipt and release therefor in such form as shall be determined by the
Trustee, the Committee, or the Employer, as the case may be.
15.07 Compliance with Applicable Laws.
The Company, through the Plan Administrator, shall interpret and
administer the Plan in such manner that the Plan and Trust shall remain
in compliance with the Code, with ERISA, and all other applicable laws,
regulations, and rulings.
15.08 Merger.
In the event of any merger or consolidation of the Plan with any other
Plan, or the transfer of assets or liabilities by the Plan to another
Plan, each Participant must receive (assuming that the Plan would
terminate) the benefit immediately after the merger, consolidation, or
transfer which is equal to or greater than the benefit such Participant
would have been entitled to receive immediately before the merger,
consolidation, or transfer (assuming that the Plan had then terminated),
provided such merger, consolidation, or transfer took place after the
date of enactment of ERISA.
15.09 Governing Law.
The Plan shall be governed by the laws of the State of Georgia to the
extent that such laws are not preempted by Federal law.
15.10 Legally Incompetent.
If any Participant, former Employee or Beneficiary is a minor or, in the
judgment of the Committee is otherwise legally incapable of personally
receiving and giving a valid receipt for any payment due him hereunder,
the Committee may, unless and until a claim shall have been made by a
duly appointed guardian or committee
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of such person, direct that such payment or any part thereof be made to
such person's spouse, child, parent, brother, sister, or such other
person deemed by the Committee to have incurred expense for or assumed
responsibility for the expense of such person. Such payment shall fully
discharge the Trustee, Employer, Committee and Plan Administrator from
further liability on account thereof.
15.11 Location of Participant or Beneficiary Unknown.
In the event that all or any portion of the distribution payable to a
Participant or his Beneficiary shall remain unpaid solely by reason of
the Committee's inability to ascertain the whereabouts of such
Participant or Beneficiary, the amount unpaid shall be forfeited.
However, such forfeiture shall not occur until five (5) years after the
amount first became payable. The Committee shall make a diligent effort
to locate the Participant or Beneficiary including the mailing of a
registered letter, return receipt requested, to the last known address
of such Participant or Beneficiary. In the event a Participant or
Beneficiary is located subsequent to his benefit being forfeited, such
benefit shall be restored and distributed.
15.12 Adoption of the Plan by Controlled Affiliate Sponsors.
(a) Committee shall determine which employers shall become
Controlled Affiliate Sponsors and Non-Controlled Sponsors within
the terms of the Plan (Controlled Affiliate Sponsors and
Non-Controlled Sponsors are sometime referred to herein as
"Co-Sponsors"). The Plan shall indicate each business enterprise
that is a Co-Sponsor. The Committee may specify such terms and
conditions pertaining to the adoption of the Plan by the
Co-Sponsor as the Committee deems appropriate. A list of the
Co-Sponsors of the Plan as of the Effective Date is attached
hereto as Appendix A. A Co-Sponsor is entitled to adopt the Plan
with respect to certain of its Employees, while not adopting the
Plan with respect to the remainder of its Employees.
(b) The Plan of the Company and each Co-Sponsor shall be
considered a single plan for purposes of Section 1.414(1)-1(b)(1)
of the Treasury Regulations. All assets contributed to the Plan
by the Company and each Co-Sponsor shall be held in a single
fund; and so long as the Co-Sponsor continues to be designated as
such, all assets held in such fund shall be available to pay
benefits to all eligible employees and beneficiaries covered by the
Plan irrespective of whether such Employees are employed by the
Company or by the Co-Sponsor. Nothing contained herein shall be
construed to prohibit the separate accounting of assets contributed
by the Company and the Co-Sponsors for purposes of cost allocation
if directed by the Committee or the holding of Plan assets in more
than one Trust Fund with more than one Trustee.
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(c) So long as the Co-Sponsor's designation as such remains
in effect, the Co-Sponsor shall be bound by, and subject to all
provisions of the Plan and the Trust Agreement. The exclusive
authority to amend the Plan and the Trust Agreement shall be
vested in the Committee and no Co-Sponsor shall have any right to
amend the Plan or the Trust Agreement. Any amendment to the Plan
or the Trust Agreement adopted by the Company shall be binding
upon every Co-Sponsor without further action by such Co-Sponsor.
(d) Each Co-Sponsor shall be solely responsible for making an
Employer Matching Contribution with respect to the Pre-Tax
Contributions made by its Employees and solely responsible for
making any contribution required by Article 14. Neither the
Company nor any other Co-Sponsor is obligated to make an Employer
Matching Contribution on behalf of the Employees of a different
Co-Sponsor.
(e) The Company and each Co-Sponsor which is a Controlled
Affiliate Sponsor will be tested on a combined basis to determine
whether the Company and such Controlled Affiliate Sponsors
satisfy the Average Actual Deferral Percentage Test described in
Section 11.03 and the Average Actual Contribution Percentage test
described in Section 11.06. A Co-Sponsor which is not a
Controlled Affiliate Sponsor shall be tested separately from the
Company and the Controlled Affiliate Sponsors for purposes of the
ADP test and ACP test described in Article 11.
(f) No Co-Sponsor other than the Company shall have the right
to terminate the Plan. However, any Co-Sponsor may withdraw from
the Plan by action of its board of directors provided such action
is communicated in writing to the Committee. The withdrawal of
an Co-Sponsor shall be effective as of the last day of the Plan
Year following receipt of the notice of withdrawal (unless the
Committee consents to a different effective date). In addition,
the Committee may terminate the designation of an Controlled
Affiliate Sponsor to be effective on such date as the Committee
specifies. Any such Controlled Affiliate Sponsor which ceases to
be a Controlled Affiliate Sponsor shall be liable for all cost
accrued through the effective date of its withdrawal or termination
and any contributions owing as a result of Pre-Tax Contributions by
its Employees or any other contribution as provided in paragraphs
(d) and (e). In the event of the withdrawal or termination of a
Co-Sponsor as provided in this paragraph, such Co-Sponsor shall have
no right to direct that assets of the Plan be transferred to a
successor plan for its Employees unless such a transfer is approved
by the Committee in its sole discretion.
(g) Any entity which adopts this Plan and which is not a member of the
Company's controlled group of corporations are be referred to as
"Non-
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Controlled Sponsors". The Company and members of the controlled
group shall be referred to as the "Printpack Group". It is the
Company's intent that there may be different rules under the Plan
for the Printpack Group and for the Non-Controlled Sponsors. Such
different rules, if any, shall be set forth in an appendix to this
Plan.
15.13 Protected Benefits.
Early retirement benefits, retirement-type subsidies, or optional
forms of benefits protected under Code Section 411(d)(6)
("Protected Benefits") shall not be reduced or eliminated with
respect to benefits accrued under such Protected Benefits unless
such reduction or elimination is permitted under the Code, Treasury
Regulations, authority issued by the Internal Revenue Service, or
judicial authority.
IN WITNESS WHEREOF, the Company has caused this Plan to be duly
executed and adopted on behalf of the Company effective as of July 1, 1993.
PRINTPACK, INC.
By /s/ R. Michael Hembree
-------------------------------------
Name R. Michael Hembree
-------------------------------
Title V.P. Finance
-------------------------------
Date July 1, 1994
----------------------------------
PRINTPACK ENTERPRISES, INC.
By /s/ R. Michael Hembree
------------------------------------
Name R. Michael Hembree
------------------------------
Title V.P. Finance
-----------------------------
Date July 1, 1994
----------------------------------
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<PAGE> 79
APPENDIX A
PLAN CO-SPONSORS
CONTROLLED AFFILIATE SPONSORS
Printpack Enterprises, Inc.
NON-CONTROLLED SPONSORS
None
<PAGE> 1
EXHIBIT 10.4
Printpack, Inc. Incentive Compensation Plan.
<PAGE> 2
February 12, 1996
PRINTPACK INC.
INCENTIVE COMPENSATION PLAN
(ECONOMIC VALUE ADDED [EVA] PLAN AND
PERFORMANCE SHARE PLAN)
Section
1 EVA Plan Statement of Purpose
2 Definition of EVA and its Components
3 Definition and Computation of Unit Award Pool
4 Definition of Award Allocation
5 Description of Bonus Banks
6 EVA Plan Transfers and Termination
7 Performance Share Plan Statement of Purpose
8 Purchase of Performance Shares
9 Limitation on Outstanding Performance Shares and Call Provision
10 Performance Shares Redemption
11 Performance Share Plan Participation, Transfers and Terminations
12 Limitations
13 Authority
14 General Provisions
Exhibit
A Calculation of the Cost of Capital
B Calculation of CIP Charge
C Calculation of the EVA Award
D Bonus Bank
E Purchase of Performance Shares
F Calculation of Performance Share Value
<PAGE> 3
PRINTPACK INC.
INCENTIVE COMPENSATION PLAN
(ECONOMIC VALUE ADDED [EVA] PLAN AND
PERFORMANCE SHARE PLAN)
1. EVA PLAN STATEMENT OF PURPOSE
1.1 The purpose of the Plan is to provide a system of incentive compensation
that will promote the maximization of shareholder value over the long
term. In order to align management incentives with shareholder interests,
incentive compensation will reward the creation of value. This Plan will
tie incentive compensation to Economic Value Added ("EVA") and, thereby,
reward management for creating value and penalize management for
destroying value.
1.2 EVA is the performance measure of value creation. EVA reflects the
benefits and costs of capital employment. Managers create value when they
employ capital in an endeavor that generates an operating profit exceeding
the cost of the capital employed. Managers destroy value when they employ
capital in an endeavor that generates an operating profit less than the
cost of capital employed. By comparing the cost of capital to the
operating profits generated by a business unit, EVA measures the total
value created (or destroyed) by management.
EVA = Net Operating Profits After Taxes - Capital Charge
1.3 For each business unit, a percentage of total management salary and a
percentage of the change in EVA are summed to create an Award Pool for the
managers of that unit. That Award Pool is then allocated among the
individual managers and is deposited in each manager's Bonus Bank. A
portion of the balance in the Bonus Banks (if it is positive) is then paid
out in cash as an annual bonus.
2. DEFINITION OF EVA AND THE COMPONENTS OF EVA
Unless the context provides a different meaning, the following terms
shall have the following meanings.
2.1 "Participating Unit" or "Unit" means a business unit or group of business
units that is uniquely identified for the purpose of calculating EVA and
EVA based bonus awards.
The Participating Units for 1995 are defined as follows:
Total Company Performance Packaging
Confectionery Labels
National Account Europe
Snacks
<PAGE> 4
These units may change as the divisional structure of the Company
changes.
2.2 "Capital" means the net investment utilized in the operation of each
Participating Unit. The components of Capital are as follows:
Cash
Plus: Net receivables
Plus: Inventory
Plus: Other current assets (i.e., deposits, prepaids, etc.)
Less: Accounts payable
Less: Taxes and dividends payable
Less: Accrued salaries, wages, benefits and bonuses
Plus: Net fixed assets
Plus: Other operating assets
Less: Construction-in-progress
Plus: Adjustments (if any):
LIFO reserve
Cumulative amortization of goodwill
Cumulative write-offs (after-tax)
NOTES:
Non-interest Bearing Current Liabilities (NIBCL's) do not include
the contingent liability associated with Bonus Banks, accrued
interest payable, or the current portion of deferred taxes.
2.3 Each component of Capital will be measured by computing an average
balance based on the ending monthly balance for the twelve months of the
fiscal year.
2.4 "Cost of Capital" means the weighted average of the (after tax) cost of
debt and equity.
The Cost of Capital will be reviewed annually and revised if it has
changed significantly. Calculations will be carried to one decimal
point.
The methodology for the calculation of the Cost of Capital is:
Weighted cost of debt
Plus: Weighted cost of equity
Equals: Weighted average Cost of Capital
The cost of equity equals the risk free investment rate plus the
historical equity market risk premium times our industry's risk index.
The historical equity market risk premium will be held constant at 6% and
our industry's risk index will be held constant at .89. This industry
risk was determined by a comparison of our publicly
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<PAGE> 5
traded peers and is equivalent to their betas during the period from 1990
to 1992. The risk free investment rate will be measured using the daily
average of the yield on twenty year U.S. Treasury Bonds for the two months
prior to the beginning of each fiscal year. The weighting factor for
equity will be our target equity percentage of our total capitalization.
The cost of debt equals our marginal long-term borrowing cost times our
marginal cash after-tax rate (one minus our marginal cash tax rate). The
weighting factor for debt will be our target debt percentage of our total
capitalization. Our marginal long-term borrowing cost will be measured
using the daily average of the yield on ten year U.S. Treasury Bonds for
the two months prior to the beginning of each fiscal year plus our market
spread over Treasury Bonds in effect for our last borrowing prior to the
computation.
See Exhibit A for sample calculation.
2.5 "Capital Charge" means the deemed opportunity cost of employing the
Capital in the business of each Participating Unit.
The Capital Charge shall be equal to the Cost of Capital multiplied by
Capital.
2.6 "Net Operating Profit After Tax" or "NOPAT"
"NOPAT" means the adjusted cash earnings attributable to the capital
employed in the Participating Unit for the year in question. The
components of NOPAT are as follows:
Net Sales
Less: Operating expenses
Less: Other expense/(income)
Less: Profit sharing and other benefit expenses
Less: Bonuses (other than EVA and Performance Share)
Equals: EBIT
Less: Cash taxes paid
Less: Amortization of CIP charge
Plus: Amortization of intangibles
Plus: Increases/(decreases) in the LIFO reserve
Plus: Write-offs (after-tax)
Note: "Cash taxes paid" is calculated as EBIT times the cash operating tax
rate.
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<PAGE> 6
Note: "Amortization of CIP Charge" means the amortization of the
capital charge on construction-in-progress (CIP).
For each year, there is a capital charge computed on the average
balance of CIP. This charge equals the average CIP times the cost
of capital.
This capital charge is not subtracted from NOPAT in the year in
which it is measured, but amortized against NOPAT over the
following five years.
The amount of this amortization is determined in the manner of a
mortgage payment, with the capital charge as the principal, the
cost of capital as the interest rate, and five as the number of
years over which the principal is amortized.
Using this method, the Amortization of CIP Charge will be the sum
of the five overlapping amortization payments. That is, for a
given year the Amortization of CIP Charge will be the sum of
amortization amounts that were calculated one, two, three, four
and five years prior.
See Exhibit B for sample calculation.
2.7 "Economic Value Added" or "EVA" means the NOPAT that remains after
subtracting the Capital Charge, expressed as follows:
EVA = NOPAT minus Capital Charge
EVA may be positive or negative.
3. DEFINITION AND COMPUTATION OF UNIT AWARD POOL
3.1 "Actual EVA" means the EVA as calculated for each Participating Unit for
the year in question.
3.2 "Target EVA" means the measure of the EVA for the year prior to the year
in question. The Target EVA is calculated as follows:
NOPAT of year prior to year in question
Less the following quantity:
Capital of year prior to year in question
Times: Cost of Capital for year in question
In the first year of the Plan, the Target EVA is derived such that
achieving budgeted performance will result in Target Awards.
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<PAGE> 7
3.3 "Unit Award Pool" means the total award that is calculated for each
Participating Unit. It is equal to the sum of the Base Award and the
Improvement Award for the year in question.
The Unit Award Pool can be positive or negative.
3.4 "Base Award" means the dollar award for each Participating Unit which is
a fixed percentage of the total Participant salaries for that unit. Each
unit will be allocated a portion of Participant salaries for Participants
at the corporate level and such allocation will be based on the capital
employed by each unit at the beginning of the year.
The computation for the Base Award is as follows:
Average Responsibility Percentage
Times: Total participant salaries
Times: Performance Indicator (75% for Participating Units with
negative EVA and 1 00% for those with positive EVA)
3.5 "Average Responsibility Percentage" means the weighted average award, as
a percent of salary, for the participant group based on each Participant's
"Responsibility Percentage."
3.6 "Responsibility Percentage" means the typical award that a Participant
would expect to earn, as a percent of salary, given that Participant's
base salary and level of responsibility.
3.7 "Improvement Award" means the dollar award for each Participating Unit
which results from the difference between the Target EVA and the Actual
EVA of that Participating Unit.
The Improvement Award can be positive or negative.
The computation for the Improvement Award for each Participating Unit is
as follows:
Improvement Award Percentage
Times the following quantity,
Actual EVA
Less: Target EVA
The "Improvement Award Percentage" for each of the Participating Units is
20%.
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<PAGE> 8
See Exhibit C for sample calculation of both Base and Improvement Awards.
The Committee will review Improvement Award Percentages annually and
revise them when appropriate.
4. DEFINITION OF AWARD ALLOCATION
4.1 "Individual Allocation Percentage" means the percentage of a Unit's Award
Pool that is allocated to an individual Participant.
The Individual Allocation Percentage for each Participant is
calculated as follows:
The Participant's Target Award
Divided By:
The sum of all Target Awards for
the Participant group
4.2 "Target Award" means the dollar award that is determined by multiplying
the Responsibility Percentage times the Participant's base salary.
4,3 "Individual Award" means the amount of the Unit Award Pool that is
allocated to each individual. The Individual Award is calculated as
follows:
Individual Allocation Percentage
Times:
Unit Award Pool
5. DESCRIPTION OF BONUS BANKS
5.1 Establishment of a Bonus Bank. To encourage a long-term commitment by
Participants to the Company, awards under the Plan shall be credited to
"at risk" deferred accounts ("Bonus Banks"), with the level of payout
contingent on sustained high performance and improvements and continued
employment as provided herein.
5.2 Annual Allocation. Each Participant's Individual Award is credited to
the Bonus Bank maintained for that Participant. Such crediting will occur
as soon as possible after the conclusion of each Plan Year. Although a
Bonus Bank may, as a result of negative EVA, have a deficit, no Plan
Participant shall be required, at any time, to reimburse his Bonus Bank.
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<PAGE> 9
5.3 "Bonus Bank" means, with respect to each Participant, a bookkeeping
record of an account to which Individual Awards for such Participant are
added or subtracted, as the case may be, from time to time under the Plan
and from which bonus payments to such Participant are subtracted.
5.4 "Bank Balance" means, with respect to each Participant, a bookkeeping
record of the net balance of the amounts added to and subtracted from such
Participant's Bonus Bank. A Participant's Bank Balance shall initially be
equal to zero.
5.5 "Available Balance" means the Bank Balance at the point in time
immediately after the Individual Award has been added to the Bonus Bank.
5.6 "Current Bonus" means amount of the Available Balance that may be paid
out in cash to the Participant. The Current Bonus is calculated as
follows:
If the Available Balance is zero or less,
Current Bonus equals zero.
If the Available Balance is greater than zero, but less than the
Target Award,
Current Bonus equals the Available Balance.
If the Available Balance is greater than the
Target Award,
Current Bonus equals the Target Award plus one-third of the
amount by which the Available Balance exceeds the Target
Award.
The Current Bonus is subtracted from the Bank Balance.
See Exhibit D for sample calculation.
6. EVA PLAN TRANSFERS AND TERMINATION
6.1 Transfers. A Participant who transfers his employment from one
Participating Unit of the Company to another shall have his Bonus Bank
transferred to such new unit on an equitable basis. At the time of
transfer, the Participant and the Company shall agree on the manner of
prorating any award with respect to the year in which the transfer occurs.
If the new entity does not offer Bonus Banking or a similar deferred
compensation plan, the Participant's Bank Balance (giving effect to any
prorated award for the year of transfer) shall vest and be distributed
over a three-year period.
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<PAGE> 10
6.2 Death. A Participant who dies shall receive full payment of his Bank
Balance and a pro rata bonus for the year in which he dies. Such payment
shall be made at the regular time for making bonus payments attributable
to the year of such death.
6.3 Retirement or Disability. A Participant who retires from the Company
upon or after reaching age 60 or suffers a "permanent incapacitating
disability" while in the employ of the Company shall receive a pro rata
bonus for the year in which he retires. Payment shall be equal to the
Current Bonus for the year of retirement. Any remaining Bank Balance will
be paid over two years in two equal installments at the regular time for
making bonus payments.
A Participant shall be deemed to suffer a "permanent incapacitating
disability" if, because of physical or mental condition, the Participant
is unable for a period of at least one year to perform the principal
duties of his occupation as determined by a physician selected by the
Committee.
6.4 Voluntary Termination or Involuntary Termination for Cause. Voluntary
termination of employment with the Company shall result in forfeiture of
the Balance in a Participant's Bonus Bank. In addition, a Participant's
Bank Balance shall be forfeited in the event of termination of employment
for cause.
"Cause" shall mean:
(i) any act or acts of the Participant constituting
a felony under the laws of the United States, any state
thereof or any foreign jurisdiction;
(ii) any material breach by the Participant of any
employment agreement with the Company or the policies of the
Company or the willful and persistent (after written notice
to the Participant) failure or refusal of the Participant to
comply with any lawful directives of the Board;
(iii) a course of conduct amounting to gross neglect, willful
misconduct or dishonesty;
(iv) any misappropriation of material property of
the Company by the Participant or any misappropriation of a
corporate or business opportunity of the Company by the
Participant; or
(v) the Participant not meeting the performance
standards specified for his job.
6.5 Involuntary Termination Without Cause. A Participant who is terminated
without cause and has a positive Bank Balance in his Bonus Bank shall
become vested with
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<PAGE> 11
respect to such Bank Balance and shall be paid in full at the regular time
for making bonus payments in respect of the year of such termination.
6.6 Breach of Agreement. Notwithstanding any other provision of the Plan or
any other agreement, in the event that a Participant shall breach any
non-competition agreement with the Company or breach any agreement with
respect to the post-employment conduct of such Participant, the Bank
Balance in such Participant's Bonus Bank shall be forfeited.
6.7 No Guarantee. Participation in the Plan provides no guarantee that a
bonus under the Plan will be paid. Similarly, the payment of a bonus
under the Plan in one year or selection as a Participant is no guarantee
that a bonus under the Plan will be paid in the subsequent year. The
success of the Company as measured by the achievement of EVA shall
determine the extent to which Participants shall be entitled to receive
bonuses hereunder.
7. PERFORMANCE SHARE PLAN STATEMENT OF PURPOSE
7.1 The Performance Share Plan is designed to build upon the EVA Incentive
Compensation Plan by tying the interests of all managers to the
consolidated results of Printpack Inc. In this way, managers throughout
the divisions will be more closely aligned with Printpack's owners.
7.2 Whereas the EVA Plan provides for near and intermediate term rewards, the
Performance Share Plan provides a longer term focus by allowing managers
to participate in the long-term appreciation in the equity value of
Printpack Inc.
7.3 In general, the Plan is structured such that each year managers reinvest
25% of their EVA Bonus in Performance Shares (phantom stock). These
Performance Shares become exercisable after they have been held for four
years.
7.4 The Committee may establish a deferral plan for the Performance Share
proceeds so that Participants can minimize their personal taxes.
8. PURCHASE OF PERFORMANCE SHARES
8.1 "Reinvestment Percentage" means the percentage of each Participant's EVA
Plan Current Bonus that is reinvested in Performance Shares. The
Reinvestment Percentage is 25%.
8.2 "Reinvestment Amount" means the Reinvestment Percentage times the Current
Bonus as determined by the EVA Plan.
8.3 "Cash Bonus" means the Current Bonus less the Reinvestment Amount. The
Cash Bonus is the cash payment that Participants receive from the EVA
Plan.
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<PAGE> 12
8.4 "Number of Performance Shares" means the number of Performance Shares
that each Participant purchases in a given year. The Number of
Performance Shares equals the Reinvestment Amount divided by the
Performance Share Value.
See Exhibit E for example of Number of Performance Shares calculation.
8.5 "Phantom Equity Value" means the estimated value of Printpack's equity.
It is determined as follows:
Seven times the average of the current year's EVA and the
prior year's EVA.
Plus:
The end of the year Adjusted Book Equity Value of Printpack.
8.6 "Performance Share Value" means the Phantom Equity Value divided by the
sum of the number of the Company's outstanding common shares plus the
number of outstanding Performance Shares.
8.7 "Adjusted Book Equity Value" equals the book value of Printpack's equity
plus the following adjustments: LIFO reserve; cumulative amortization of
intangibles; and cumulative write-offs (after-tax).
8.8 "Excess Dividend" means the dividend in excess of any dividends required
for tax purposes. Excess Dividends increase the Number of Performance
Shares by an amount equal to the Excess Dividend divided by the beginning
of the year Adjusted Book Equity Value. The purpose of this adjustment is
to offset the decline in book value due to excess dividend payments.
See Exhibit F for example of Performance Share Value Calculation.
9. LIMITATION ON OUTSTANDING PERFORMANCE SHARES AND CALL PROVISION
9,1 "Performance Share Series" means all of the Performance Shares issued in
a given year. For example, all Performance Shares issued for 1993 would
be referred to as the 1993 Series. All Performance Shares issued prior to
1993 under the "old" Performance Share program will be referred to as the
1991 Series.
9.2 No more than fifteen percent (1 5%) of the Company's outstanding common
shares (real stock) can be issued as Performance Shares.
9.3 If the 15% limitation is reached, the required Reinvestment Amount will
not be made. The required Reinvestment Amount of 25% may be reduced pro
rata if the 15% limitation would be exceeded because of the full
reinvestment.
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<PAGE> 13
9.4 In order to make room for new investment, the Company, at its sole
option, may call a certain percent of all outstanding Performance Shares.
The shares redeemed subject to this "call" provision will be the oldest
shares first.
10. PERFORMANCE SHARES REDEMPTION
10.1 "Vested Performance Shares" means Performance Shares that are eligible
for redemption. Each Performance Share Series becomes eligible for
redemption four years after issuance. Thus, a Participant may exercise
100% of their Performance Shares that have been held for four years.
10.2 Redemption Election. After the end of each fiscal year, each Participant
who holds vested Performance Shares will receive a form upon which to
indicate the number of Performance Shares that the Participant wishes to
redeem. Such redemption will take place in March.
10.3 "Redemption Proceeds" equals the Performance Share Value times the number
of Performance Shares redeemed. Redemption Proceeds which are to be paid
in cash will be distributed in March subsequent to the end of the fiscal
year.
11. PERFORMANCE SHARE PLAN PARTICIPATION, TRANSFERS AND TERMINATIONS
11.1 Participant Group. The Committee will have sole discretion in
determining who shall participate in the Performance Shares Plan.
11.2 Transfers. A Participant who transfers his employment from one
participating Unit of the Company to another shall retain his Performance
Shares and will be eligible to receive future Performance Shares in
accordance with the provisions of the EVA and Performance Shares Plans.
11.3 Retirement or Disability. A Participant who retires from the Company
upon or after reaching age 60 or suffers a "permanent incapacitating
disability" while in the employ of the Company shall retain their
Performance Shares and be eligible to redeem those Performance Shares in
accordance with the provisions of this Plan.
A Participant shall be deemed to suffer a "permanent incapacitating
disability" if, because of physical or mental condition, the Participant
is unable for a period of at least one year to perform the principal
duties of his occupation as determined by a physician selected by the
Committee.
11.4 Involuntary Termination Without Cause or Death. A Participant who is
Terminated without cause or who dies shall receive the Performance Share
Value of all Performance Shares held by such Participant, whether those
Performance Shares were vested or not. Such payments will be made as soon
as is practical.
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<PAGE> 14
11.5 Voluntary Termination. In the event that a Participant voluntarily
terminates employment with the Company, the Participant will receive the
lesser of either the Performance Share Value times the Number of
Performance Shares, or the Reinvestment Amount related to those
Performance Shares.
11.6 Involuntary Termination for Cause. In the event of termination of
employment for cause, the right of the Participant to exercise his
Performance Shares shall be determined by the Committee.
"Cause" shall mean:
(i) any act or acts of the Participant constituting
a felony under the laws of the United States, any state
thereof or any foreign jurisdiction;
(ii) any material breach by the Participant of any
employment agreement with the Company or the policies of the
Company or the willful and persistent (after written notice
to the Participant) failure or refusal of the Participant to
comply with any lawful directives of the Board;
(iii) a course of conduct amounting to gross
neglect, willful misconduct or dishonesty;
(iv) any misappropriation of material property of
the Company by the Participant or any misappropriation of a
corporate or business opportunity of the Company by the
Participant; or
(v) the Participant not meeting the performance
standards specified for his job.
11.7 Breach of Agreement. Notwithstanding any other provision of the Plan or
any other agreement, in the event that a Participant shall breach any
non-competition agreement with the Company or breach any agreement with
respect to the post employment conduct of such Participant, the
Performance Shares held by such Participant shall be forfeited.
11.8 No Guarantee. Participation in the Plan provides no guarantee that a
payment under the Plan will be paid. Similarly, the payment of Redemption
Proceeds under the Plan in one year or selection as a Participant is no
guarantee that payments under the Plan will be paid in the subsequent
year.
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<PAGE> 15
12. LIMITATIONS
12.1 No Continued Employment. Nothing contained herein shall provide any
employee with any right to continued employment or in any way abridge the
rights of the Company and its Participating Groups to determine the terms
and conditions of employment and whether to terminate employment of any
employee.
12.2 No Vested Rights. Except as otherwise provided herein, no employee or
other person shall have any claim of right (legal, equitable, or
otherwise) to any award, allocation, or distribution or any right, title,
or vested interest in any amounts in his Bonus Bank and no officer or
employee of the Company or any Participating Group or any other person
shall have any authority to make representations or agreements to the
contrary. No interest conferred herein to a Participant shall be
assignable or subject to claim by a Participant's creditors.
12.3 Not Part of Other Benefits. The benefits provided in this Plan shall not
be deemed a part of any other benefit provided by the Company to its
employees. The Company assumes no obligation to Plan Participants except
as specified herein. This is a complete statement, along with the
Schedules and Appendices attached hereto, of the terms and conditions of
the Plan.
12.4 Other Plans. Nothing contained herein shall limit the Company or the
Committee's power to grant bonuses to employees of the Company, whether or
not they are Participants in this Plan.
12.5 Limitations. Neither the establishment of the Plan or the grant of an
award hereunder shall be deemed to constitute an express or implied
contract of employment for any period of time or in any way abridge the
rights of the Company to determine the terms and conditions of employment
or to terminate the employment of any employee with or without cause at
any time.
13. AUTHORITY
13.1 Committee Authority. Except as otherwise expressly provided herein, full
power and authority to interpret and administer this Plan shall be vested
in a Committee comprised of the President and Vice Presidents of Finance
and of Human Resources. The Committee may from time to time make such
decisions and adopt such rules and regulations for implementing the Plan
as it deems appropriate for any Participant under the Plan. Any decision
taken by the Committee arising out of or in connection with the
construction, administration, interpretation and effect of the Plan shall
be final, conclusive and binding upon all Participants and any person
claiming under or through them.
13.2 Board of Directors Authority. The Board shall be ultimately responsible
for administration of the Plan. References made herein to the "Committee"
assume
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<PAGE> 16
that the Board of Directors has created a committee to administer the Plan.
In the event a Committee is not so designated, the Board shall administer
the Plan. The Board or its Committee, as appropriate, shall work with the
CEO of the Company in all aspects of the administration of the Plan.
14. GENERAL PROVISIONS
14.1 Withholding of Taxes. The Company shall have the right to withhold the
amount of taxes, which in the determination of the Company, are required
to be withheld under law with respect to any amount due or paid under the
Plan.
14.2 Expenses. All expenses and costs in connection with the adoption and
administration of the Plan shall be borne by the Company.
14.3 No Prior Right or Offer. Except and until expressly granted pursuant to
the Plan, nothing in the Plan shall be deemed to give any employee any
contractual or other right to participate in the benefits of the Plan.
14.4 Claims for Benefits. In the event a Participant (a "claimant") desires
to make a claim with respect to any of the benefits provided hereunder,
the claimant shall submit evidence satisfactory to the Committee of facts
establishing his entitlement to a payment under the Plan. Any claim with
respect to any of the benefits provided under the Plan shall be made in
writing within ninety (90) days of the event which the claimant asserts
entitles him to benefits. Failure by the claimant to submit his claim
within such ninety (90) day period shall bar the claimant from any claim
for Benefits under the Plan.
14.5 In the event that a claim which is made by a claimant is wholly or
partially denied, the claimant will receive from the Committee a written
explanation of the reason for denial and the claimant or his duly
authorized representative may appeal the denial of the claim to the
Committee at any time within ninety (90) days after the receipt by the
claimant of written notice from the Committee of the denial of the claim.
In connection therewith, the claimant or his duly authorized
representative may request a review of the denied claim, may review
pertinent documents, and may submit issues and comments in writing. Upon
receipt of an appeal, the Committee shall make a decision with respect to
the appeal and, not later than sixty (60) days after receipt of a request
for review, shall furnish the claimant with a decision on review in
writing, including the specific reasons for the decision written in a
manner calculated to be understood by the claimant, as well as specific
reference to the pertinent provisions of the Plan upon which the decision
is based. In reaching its decision, the Committee shall have complete
discretionary authority to determine all questions arising in the
interpretation and administration of the Plan, and to construe the terms of
the Plan, including any doubtful or disputed terms and the eligibility of a
Participant for benefits.
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<PAGE> 17
14.6 Action Taken in Good Faith; Indemnification. The Committee may employ
attorneys, consultants, accountants or other persons and the Company's
directors and officers shall be entitled to rely upon the advice, opinions
or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith
shall be final and binding upon all employees who have received awards,
the Company and all other interested parties. No member of the Committee,
nor any officer, director, employee or representative of the Company, or
any of its affiliates acting on behalf of or in conjunction with the
Committee, shall be personally liable for any action, determination, or
interpretation, whether of commission or omission, taken or made with
respect to the Plan, except in circumstances involving actual bad faith or
willful misconduct. In addition to such other rights of indemnification
as they may have as members of the Board, as members of the Committee or
as officers or employees of the Company, all members of the Committee and
any officer, employee or representative of the Company or any of its
subsidiaries acting on their behalf shall be fully indemnified and
protected by the Company with respect to any such action, determination or
interpretation against the reasonable expenses, including attorneys' fees
actually and necessarily incurred, in connection with the defense of any
civil or criminal action, suit or proceeding, or in connection with any
appeal therein, to which they or any of them may be a party by reason of
any action taken or failure to act under or in connection with the Plan or
an award granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent
legal counsel selected by Company) or paid by them in satisfaction of a
judgment in any action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that
such person claiming indemnification shall in writing offer the Company
the opportunity, at its own expense, to handle and defend the same.
Expenses (including attorneys' fees) incurred in defending a civil or
criminal action, suit or proceeding shall be paid by the Company in
advance of the final disposition of such action, suit or proceeding if
such person claiming indemnification is entitled to be indemnified as
provided in this Section.
14.7 Rights Personal to Employee. Any rights provided to an employee under
the Plan shall be personal to such employee, shall not be transferable
(except by will or pursuant to the laws of descent or distribution), and
shall be exercisable, during his lifetime, only by such employee.
14.8 Upon termination of the Plan or suspension for a period of more than 90
days, the Bank Balance of each Participant shall be distributed as soon as
practicable but in no event later than 90 days from such event. The
Committee, in its sole discretion, may accelerate distribution of the Bank
Balance, in whole or in part, at any time without penalty.
14.9 Non-Allocation of Award. In the event of a suspension of the Plan in any
Plan Year, as provided herein at Section 14.8, the Current Bonus for the
subject Plan
- 15 -
<PAGE> 18
Year shall be deemed forfeited and no portion thereof shall be allocated
to Participants. Any such forfeiture shall not affect the calculation of
EVA in any subsequent year.
14.10 Any notice to be given pursuant to the provisions of the Plan shall be
in writing and directed to the appropriate recipient thereof at his
business address or office location.
14.11 This Plan shall be effective as of December 31, 1994.
14.12 This Plan may be amended, suspended or terminated at any time at the sole
discretion of the Board upon the recommendation of the Committee.
Provided, however, that no such change in the Plan shall be effective to
eliminate or diminish the distribution of any Award that has been
allocated to the Bank of a Participant prior to the date of such
amendment, suspension or termination. Notice of any such amendment,
suspension or termination shall be given promptly to each Participant.
14.13 Captions. Paragraph titles or captions and the index contained in this
Plan are inserted only as a matter of convenience and for reference. Such
titles and captions in no way define, limit, extend, or describe the scope
of this Plan or the intent of any provision.
14.14 Pronouns. Any pronoun shall be deemed to be of the number and gender
necessary to refer to the person or persons designated in the context of
the reference.
14.15 Severability. If any portion of this Plan is declared by a court of
competent jurisdiction to be void or unenforceable, such portion shall be
deemed severed from the Plan and the balance of the Plan shall remain in
effect.
14.16 Construction. This Plan shall be interpreted, construed and enforced in
accordance with the laws of the State of Georgia.
- 16 -
<PAGE> 19
EXHIBIT A
CALCULATION OF THE COST OF CAPITAL
<TABLE>
<S> <C> <C>
Risk free investment rate 8.25%
-----
Industry risk index 0.89
X Historical equity market risk premium 6.0%
----
5.3%
====
= Cost of equity 13.6%
=====
Marginal cost of debt 8.00%
Marginal tax rate (t) = 40%
Multiplied by (l - t) 60%
------
= Cost of debt 4.80%
======
Target
After-Tax Capital Weighted
Cost Weight Cost
--------- ------- --------
Debt 4.80% 40% 1.92%
Equity 13.60% 60 8.16
---- -----
Weighted Cost of Capital 100% 10.08%
==== ======
</TABLE>
<PAGE> 20
EXHIBIT B
CALCULATION OF CIP CHARGE
<TABLE>
<CAPTION>
1985 1986 1987 1988 1989 1990 1991 1992
----- ----- ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year End CIP 3,132 1,953 5,174 13,788 6,906 11,582 19,940 10,000
Average CIP 2,543 3,564 9,481 10,347 9,244 15,761 14,970
X Cost of Capital 12.0% 12.4% 12.8% 12.3% 11.8% 11.9% 11.7%
= Capital Charge 305 443 1,215 1,273 1,091 1,876 1,751
Amortization
Payment (1) 85 124 344 356 301 519 482
Amortization of
Capital Charge
====================
1986 85 85 85 85 85
1987 124 124 124 124 124
1988 344 344 344 344
1989 356 356 356
1990 301 301
1991 519
- -------------------- ----- ------ ------ ------ ------ ------
Total Amortization 85 209 553 908 1,209 1,644
</TABLE>
(1) The Amortization Payment is calculated by taking the Capital Charge as
the principal and then determining the payment necessary to amortize it in
five years using an interest rate equal to the Cost of Capital.
<PAGE> 21
EXHIBIT C
CALCULATION OF THE EVA AWARD
<TABLE>
<S> <C> <C>
Average Target Award Percentage 27.5%
x Total Participant Salaries $600,000
---------
= Base Award 165,000
---------
Improvement Award Percentage 20%
Actual EVA 2,415,000
- Target EVA 833,000
---------
= Improvement in EVA 1,582,000
= Improvement Award 316,400
---------
UNIT AWARD POOL $481,400
=========
</TABLE>
<PAGE> 22
EXHIBIT D
BONUS BANK
<TABLE>
<S> <C> <C>
Calculated bonus $30,000
+ Beginning balance 0
-------
= Available balance 30,000
-------
Less distribution:
Target award 20,000
1/3 of excess 3,333
-------
Total current bonus 23,333
-------
Ending balance $ 6,667
=======
</TABLE>
<PAGE> 23
EXHIBIT E
PURCHASE OF PERFORMANCE SHARES
<TABLE>
<S> <C>
EVA Current Bonus $23,333
Reinvestment Percentage 25%
-------
Reinvestment Amount $ 5,833
=======
Performance Share Value $ 20.00
=======
Number of Performance Shares Purchased $291.65
=======
</TABLE>
<PAGE> 24
EXHIBIT F
CALCULATION OF PERFORMANCE SHARE VALUE
<TABLE>
<S> <C>
ADJUSTED BOOK VALUE EQUITY Book value equity + LIFO reserve + cumulative
amortization of intangibles + cumulative after-tax
write-offs
AVERAGE EVA (Current EVA + Prior EVA)/2
7 X AVERAGE EVA Average EVA times 7
PHANTOM EQUITY VALUE Adjusted Book Value Equity + 7 X Average EVA
EXAMPLE
ADJ. BOOK VALUE EQUITY = $1,000,000
AVERAGE EVA = (100,000 + 120,000)/2 = 110,000
7 X AVERAGE EVA = 110,000 X 7 = 770,000
PHANTOM EQUITY VALUE = 1,000,000 + 770,000 = 1,770,000
ACTUAL COMMON SHARES
OUTSTANDING AT BEGINNING
OF YEAR PLUS PERFORMANCE
SHARES OUTSTANDING AT END
OF YEAR (INCLUDING CURRENT
YEAR'S REINVESTMENT) = 100,000
PERFORMANCE SHARE VALUE = 1,770,000/100,000 = $17.70
</TABLE>
<PAGE> 1
EXHIBIT 10.5
Guarantee dated as of January 5, 1995 made by Printpack, Inc. in favor of PNC
Bank, Ohio, National Association, as amended.
<PAGE> 2
GUARANTEE
In consideration of the extension of credit by PNC BANK, OHIO, NATIONAL
ASSOCIATION ("Lender"), to ORFLEX LTD ("Debtor"), and other good and valuable
consideration the receipt of which is acknowledged, PRINTPACK, INC.
("Guarantor") hereby unconditionally and irrevocably guarantees Lender the
prompt payment of all types of indebtedness, liabilities and obligations of
Debtor to Lender of every kind and description, direct or indirect, absolute or
contingent, joint or several, whether as drawer, maker, endorser, guarantor,
surety, pursuant to letter of credit obligations or otherwise, whether due or
to become due, and whether now existing or hereafter arising or contracted in
connection with the Loan Agreement of even date herewith between Debtor and
Lender ("Loan Agreement"), all documents executed in connection therewith and
all amendments, extensions and renewals thereto, and all charges, expenses,
fees, attorneys' fees and any other fees chargeable to Debtor under the Loan
Agreement and all indemnification obligations contained in any of the foregoing
(hereinafter collectively referred to as the "Obligations"). If Debtor
defaults in the payment of any such Obligations, Guarantor will pay the amount
due to Lender.
Guarantor will benefit directly and indirectly from Lender making the
extension of credit to Debtor and is willing to execute this Guarantee in order
to induce Lender to extend such credit.
Capitalized terms used herein and not otherwise defined herein will have
the meanings given such terms in the Loan Agreement.
1. NATURE OF GUARANTEE, WAIVERS. This is a guarantee of payment and not of
collection. This is an absolute, unconditional, irrevocable and continuing
guarantee and will remain in full force and effect until all of the Obligations
have been indefeasibly paid in full, and Lender has terminated this Guarantee.
This Guarantee will extend to and cover any and all amendments, extensions,
supplements, substitutions and renewals of the Obligations and any number of
extensions of time for payment thereof and will not be affected by any
surrender, exchange, acceptance, compromise or release by Lender of any other
party, or any other guarantee or any security held by it for any of the
Obligations, by any delay or omission of Lender in exercising any right or
power with respect to any of the Obligations or any guarantee or collateral
held by it for any of the Obligations, by any failure of Lender to take any
steps to perfect or maintain its lien or security interest in or to preserve
its rights to, any security or other collateral for any of the Obligations or
any guarantee, or by any irregularity, unenforceability or invalidity of any of
the Obligations or any part thereof or any security or other guarantee thereof.
Notice of acceptance of this Guarantee, notice of extensions of credit to
Debtor from time to time, notice of default, diligence, presentment, protest,
demand for payment, notice of demand or protest, and any defense based upon a
failure of Lender to comply with the notice requirements of the applicable
version of Uniform Commercial Code Section 9-504 are hereby waived.
1
<PAGE> 3
Lender at any time and from time to time, without the consent of Guarantor, and
without impairing or releasing, discharging or modifying the liabilities of
Guarantor hereunder, may in its sole discretion (a) change the manner, place or
terms of payment or performance of or interest rates on, or change or extend the
time of payment or performance of, or other terms relating to any of the
Obligations, (b) renew, substitute, modify, amend or alter, or grant consents or
waivers relating to any of the Obligations, any other guarantees, or any
security for any Obligations or Guarantees, (c) apply any and all payments from
any source whatsoever including any proceeds of any Collateral, to any
Obligations of Debtor in any order, manner and amount, (d) deal with any other
person with respect to any Obligations in such manner as Lender deems
appropriate, and/or (e) substitute, exchange or release any security or
guarantee. Irrespective of the taking or refraining from taking of any action
concerning the Obligations, the obligations of Guarantor ,will remain in full
force and effect and will not be affected, impaired, discharged or released in
any manner. Lender in its sole discretion may determine the reasonableness of
the period which may elapse prior to the making of demand for any payment upon
Debtor and it need not pursue any of its remedies against Debtor, any other
guarantor or other person, or any security for any of the Obligations before
having recourse against Guarantor under this Guarantee. No setoff,
counterclaim, reduction or diminution of any Obligation, or any defense of any
kind or nature, that Guarantor has or may have in the future against Debtor, or
that Debtor has or may have in the future against Lender, will be available
hereunder to Guarantor against Lender.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. Guarantor hereby represents,
warrants and covenants as follows:
2.1 This Guarantee is a legal, valid and binding obligation of Guarantor
enforceable in accordance with its terms.
2.2 The execution, delivery and performance of this Guarantee does not and
will not violate or contravene any laws, statutes, ordinances, orders, rules or
regulations applicable hereto or to Guarantor, or any indenture, agreement or
other instrument or document to which Guarantor is a party or by which
Guarantor or any of Guarantor's properties or assets is or may be bound.
2.3 Guarantor is fully aware of the financial condition of Debtor and is
executing and delivering this Guarantee based solely upon Guarantor's own
independent investigation of all matters pertinent hereto and is not relying in
any manner upon any representation or statement of Lender.
2.4 Guarantor will give Lender prompt written notice of the occurrence of
any Event of Default or default of which Guarantor has actual or constructive
notice.
2.5 Guarantor will maintain an NAIC rating of 2 or better.
2
<PAGE> 4
2.6 Guarantor will not permit a default with respect to any evidence of
Indebtedness in excess of $5,000,000 for borrowed money to exist, if the effect
of such default is to accelerate the maturity of such Indebtedness or to permit
the holder thereof to cause such Indebtedness to become due prior to the stated
maturity thereof (regardless of any waiver by such holder), and will pay any
Indebtedness of it in excess of $5,000,000 for borrowed money when due and
payable, whether at the due date thereof or a date fixed for prepayment or
otherwise (after the expiration of any applicable grace period).
2.7 Guarantor will furnish Lender within 90 days after the end of each
fiscal year of the Guarantor annual audited financial statements which will:
(a) include a balance sheet as of the end of such year, and statements of
income, retained earnings and cash flow for such year; (b) be on a consolidated
and consolidating basis with Guarantor, its Subsidiaries, if any, and any
entity into which Guarantor's financial information is consolidated in
accordance with generally accepted accounting principles; and (c) contain a
report of an independent certified public accountant acceptable to Lender.
Guarantor will also furnish to Lender at such time a compliance certificate
signed by the Chief Financial Officer of Guarantor certifying that no default
or event of default exists as to Guarantor's Indebtedness.
3. REPAYMENTS OR RECOVERY FROM LENDER. If any demand is made at any time
upon Lender for the repayment or recovery of any amount or amounts received by
it in payment or on account of any of the Obligations and if Lender repays all
or any part of such amount or amounts by reason of any judgment, decree or
order of any court or administrative body or by reason of any settlement or
compromise of any such demand, Guarantor will be and remain liable hereunder
for the amount or amounts so repaid or recovered to the same extent as if such
amount or amounts had never been received originally by Lender. The provisions
of this Section will be and remain effective notwithstanding any contrary
action which may have been taken by Guarantor in reliance upon such payment,
and any such contrary action so taken will be without prejudice to Lender's
rights under this Guarantee and will be deemed to have been conditioned upon
such payment having become final and irrevocable. The provisions of this
Section will survive the termination or revocation of this Guarantee.
4. BANKRUPTCY, ETC. It is specifically understood that any modification,
limitation or discharge of the Obligations arising out of or by virtue of any
bankruptcy, reorganization or similar proceeding for relief of debtors under
federal or state law will not affect, modify, limit or discharge the liability
of Guarantor in any manner whatsoever and this Guarantee will remain and
continue in full force and effect and will be enforceable against Guarantor to
the same extent and with the same force and effect as if any such proceeding
had not been instituted. Guarantor waives all rights and benefits which might
accrue to it by reason of any such proceeding and will be liable to the full
extent hereunder, irrespective of any modification, limitation or discharge of
the liability of Debtor that may result from any such proceeding.
3
<PAGE> 5
5. EVENTS OF DEFAULT. Immediately upon the filing of a proceeding in
bankruptcy, reorganization, debt adjustment or receivership by or against
Debtor or Guarantor, or any assignment by Debtor or Guarantor for the benefit
of creditors, or, at the option of Lender upon the event of the occurrence of:
(i) any other Event of Default (as defined in any of the Obligations) or (ii)
any other default under any of the Obligations that does not have a defined set
of "Events of Default," Guarantor will immediately deposit with Lender in U.S.
dollars all amounts due or to become due under the Obligations, and Lender will
use such funds to prepay the Obligations. Such amounts will be paid by
Guarantor to Lender without presentment, demand, protest or notice of any kind,
which are hereby expressly waived. The rights and remedies of Lender, after
the occurrence of any such event, will include but not be limited to the right
to (i) set off against the Obligations, without notice, the amount of any or
all deposits of Guarantor with Lender, and (ii) to exercise any one or more of
the rights and remedies provided a secured party under applicable law with
respect to any Collateral.
6. COSTS. To the extent that Lender incurs any costs or expenses in
protecting or enforcing its rights under this Guarantee or under any of the
documents that grant Lender a lien on the Collateral, including but not limited
to reasonable Attorneys' Fees and the costs and expenses of litigation, such
costs and expenses will be due on demand, will be included in the Obligations
and will bear interest from the incurring or payment thereof at the Default
Rate.
7. GENERAL.
7.1 INDEMNITY. Guarantor will indemnify, defend and hold harmless Lender,
its directors, officers, counsel and employees, from and against all claims,
demands, liabilities, judgments, losses, damages, costs and expenses (including
all accounting fees and attorneys' fees reasonably incurred), that any such
indemnified party may incur (whether joint or several) arising under or by
reason of this Guarantee or any act hereunder or with respect hereto or thereto
except the willful misconduct or gross negligence of such indemnified party.
The provisions of this Section will survive the termination or revocation of
this Guarantee.
7.2 NOTICES. All notices, demands, requests, consents or approvals and
other communications required or permitted hereunder will be in writing and
will be conclusively deemed to have been received by a party hereto and to be
effective if delivered personally to such party, or sent by telex, facsimile
(followed by written confirmation) or other telegraphic means, or by overnight
courier service, or by certified or registered mail, return receipt requested,
postage prepaid, addressed to such party at the address set forth below or to
such other address as any party may give to the other in writing for such
purpose:
4
<PAGE> 6
To Lender: PNC Bank, Ohio, National Association
201 East Fifth Street
Cincinnati, Ohio 45202
Attention: Metropolitan Lending Division
To Guarantor
for personal delivery: Printpack, Inc.
4335 Wendell Drive, SW
Atlanta, Georgia 30336
Attention: Vice President - Finance
To Guarantor otherwise: Printpack, Inc.
P.O. Box 43687
Atlanta, Georgia 30378
Attention: Vice President - Finance
All such communications, if personally delivered, will be conclusively deemed
to have been received by a party hereto and to be effective when so delivered,
or if sent by telex, facsimile or telegraphic means, on the day on which
transmitted, or if sent by overnight courier service, on the day after deposit
thereof with such service, or if sent by certified or registered mail, on the
third business day after the day on which deposited in the mail.
7.3 REMEDIES CUMULATIVE, ETC. The terms of this Guarantee may be enforced
as to any one or more breaches either separately, successively, concurrently,
independently or cumulatively from time to time and as often and in such order
as Lender may deem expedient, and no single or partial exercise of any right or
remedy will preclude any further exercise thereof. No right or remedy herein
conferred upon or reserved to Lender hereunder is intended to be exclusive of
any other available right or remedy, but each and every such right or remedy
will be cumulative and will be in addition to every other right or remedy given
under this Guarantee or now or hereafter existing at law or in equity or by
statute. No delay or omission to exercise any right, remedy or power accruing
upon any Event of Default or default, omission or failure of performance
hereunder or under any of the Obligations will impair any such right, remedy or
power or will be construed to be a waiver thereof or an acquiescence therein,
nor will it affect any subsequent Event of Default or default of the same or a
different nature.
7.4 MODIFICATIONS. No modification or waiver of any provision of this
Guarantee nor consent to any departure by Guarantor therefrom, will in any
event be effective unless the same is in writing and specifically refers to
this Guarantee, and then such waiver or consent will be effective only in the
specific instance and for the purpose for which given. No notice to or demand
on Guarantor in any case will entitle Guarantor to any other or further notice
or demand in the same, similar or other circumstance. No modification or
waiver of any provision of this Guarantee, nor consent to any departure by
Guarantor therefrom, will be established by conduct, custom or course of
dealing.
7.5 BINDING EFFECT, ASSIGNABILITY. This Guarantee will be binding upon
Guarantor and Guarantor's successors and assigns and inure to the benefit of
Lender and its successors and assigns; provided, however, that Guarantor may
not assign this
5
<PAGE> 7
Guarantee in whole or in part without the prior written consent of Lender, and
Lender at any time may assign this Guarantee in whole or in part. If any or all
of the Obligations are assigned by Lender, this Guarantee will inure to the
benefit of Lender's assignee, and to the benefit of any subsequent assignee, to
the extent of the assignment or assignments; provided that no assignment will
operate to relieve Guarantor from any duty to Lender hereunder with respect to
any unassigned portion of the Obligations.
7.6 VALIDITY. Any provisions of this Guarantee which are held to be
invalid or unenforceable by any court will not affect the validity or
enforceability of any other provision hereof.
7.7 GENDER, ETC. Whenever used herein, the singular number will include
the plural, the plural the singular and the use of the masculine, feminine or
neuter gender will include all genders.
7.8 HEADINGS. The headings in this Guarantee are for convenience only and
will not limit or otherwise affect any of the terms hereof.
7.9 SUBROGATION AND PURCHASE OF LOAN DOCUMENTS. Upon payment in full of
the Obligations, Guarantor will be subrogated to the rights of Lender with
respect to the Obligations pursuant to the Loan Agreement and all related
documents (collectively the "Loan Documents"). If Lender shall make demand on
Guarantor to pay any of the Obligations pursuant to the terms of this
Guarantee, in lieu of such payment, but in exchange for payment to Lender of
cash in an amount equal to that amount as Guarantor shall be obligated to pay
Lender pursuant to this Guarantee, at the option and request of Guarantor,
Lender shall sell and assign to Guarantor, without recourse, representations or
warranties, all of Lender's right, title and interest in and the Loan Documents
relating to such Obligations.
7.10 TERMINATION OF GUARANTEE. Upon indefeasible payment in full of the
Obligations, Lender agrees to terminate this Guarantee. Notwithstanding any
other provisions of this Guarantee, Guarantor may, upon written notice to
Lender as provided in Section 7.2, terminate Guarantor's guarantee with respect
to any additional advances by Lender subsequent to receipt of such notice,
which advances Lender is not legally obligated to make at the time of receipt
of such notice.
7.11 GOVERNING LAW AND JURISDICTION. THIS GUARANTEE WILL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF OHIO WITHOUT REGARD TO ITS CONFLICTS OF LAWS
PRINCIPLES. GUARANTOR HEREBY AGREES TO THE JURISDICTION OF ANY FEDERAL COURT
LOCATED WITHIN HAMILTON COUNTY, OHIO AND ACCEPTS, GENERALLY AND UNCONDITIONALLY,
THE JURISDICTION OF ANY SUCH COURT. GUARANTOR CONSENTS THAT ANY SERVICE OF
PROCESS MAY BE MADE BY CERTIFIED MAIL DIRECTED TO GUARANTOR AT GUARANTOR'S
6
<PAGE> 8
ADDRESS SET FORTH HEREIN FOR NOTICES AND SERVICE SO MADE WILL BE DEEMED TO BE
COMPLETED FIVE (5) BUSINESS DAYS AFTER THE SAME HAS BEEN DEPOSITED IN U.S.
MAILS, POSTAGE PREPAID. GUARANTOR WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY
SUCH JURISDICTION. NOTHING CONTAINED HEREIN WILL AFFECT THE RIGHT OF LENDER TO
SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR PREVENT LENDER FROM BRINGING ANY
ACTION OR EXERCISING ANY RIGHTS AGAINST GUARANTOR OR AGAINST ANY SECURITY OR
AGAINST ANY PROPERTY OF GUARANTOR WITHIN ANY OTHER JURISDICTION. GUARANTOR AND
LENDER EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
RELATING TO THIS GUARANTEE.
PRINTPACK, INC.
By: /s/ Dennis M. Love
----------------------------------------
Print Name: Dennis M. Love
--------------------------------
Title: President
-------------------------------------
Date: 1/5/95
--------------------------------------
7
<PAGE> 1
EXHIBIT 10.6
Registration Rights Agreement dated as of August 22, 1996 by and between
Printpack, Inc. and Donaldson, Lufkin & Jenrette Securities Corporation.
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
Dated as of August 22, 1996
by and among
PRINTPACK, INC.
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE> 3
This Registration Rights Agreement (this "Agreement") is made and entered
into as of August 22, 1996 by and among Printpack, Inc., a Georgia corporation
(the "Company") and Donaldson, Lufkin & Jenrette Securities Corporation (the
"Initial Purchaser"), who has agreed to purchase the Company's 9 7/8% Series A
Senior Notes due 2004 (the "Series A Senior Notes") and 10 5/8% Senior
Subordinated Notes due 2006 (the "Series A Senior Subordinated Notes" and,
together with the Series A Senior Notes, the "Series A Notes") pursuant to the
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated as of
August 15, 1996 (the "Purchase Agreement"), by and among the Company and the
Initial Purchaser. In order to induce the Initial Purchaser to purchase the
Series A Notes, the Company has agreed, among other things, to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchaser set
forth in Section 3 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered as such under the Exchange
Act.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (i) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (ii) the maintenance of such
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the minimum period required pursuant to
Section 3(b) hereof, and (iii) the delivery by the Company to the Registrar
under the Indentures of Series B Notes in the same aggregate principal amount
as the aggregate principal amount of Series A Notes that were tendered by
Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each Interest
Payment Date.
1
<PAGE> 4
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the
Series B Notes pursuant to the Exchange Offer Registration Statement pursuant
to which the Company offers (subject to the provisions of Section 4 hereof) the
Holders of all outstanding Transfer Restricted Securities the opportunity to
exchange all such outstanding Transfer Restricted Securities held by such
Holders for Series B Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser proposes
to sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, and to certain "accredited
investors," as such term is defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Act ("Accredited Investors").
Holders: As defined in Section 2(b) hereof.
Indentures: The Indentures, dated as of August 22, 1996, among the
Company and Fleet National Bank, as trustee (the "Trustee"), pursuant to which
the Notes are to be issued, as such Indentures are amended or supplemented from
time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indentures and the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes.
Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or an agency,
authority or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
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Record Holder: With respect to any Damages Payment Date relating to
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company filed
with the Commission relating to (a) an offering of Series B Notes pursuant to
an Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, which is filed
pursuant to the provisions of this Agreement, in each case, including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Series B Notes: The Company's 9 7/8% Series B Senior Notes due 2004 (the
"Series B Senior Notes") and 10 5/8% Senior Subordinated Notes due 2006 (the
"Series B Senior Subordinated Notes") to be issued pursuant to the Indentures
(a) in the Exchange Offer or (b) pursuant to a Shelf Registration Statement, in
each case, in exchange for Series A Senior Notes and the Series A Senior
Subordinated Notes, respectively.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
amended and in effect on the date of the Indentures.
Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in the Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note
has been effectively registered under the Act and disposed of in accordance
with a Shelf Registration Statement and (c) the date on which such Note is
resold pursuant to Rule 144 under the Act or by a Broker-Dealer pursuant to the
"Plan of Distribution" contemplated by the Exchange Offer Registration
Statement (including delivery of the Prospectus contained therein).
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to
the public pursuant to an effective registration statement filed with the
Commission.
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SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be a
holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Company shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 60 days after the Closing Date, the Exchange Offer Registration Statement,
(ii) use all commercially reasonable efforts to have such Exchange Offer
Registration Statement to be declared effective by the Commission no later than
120 days after the Closing Date, (iii) in connection with the foregoing, file
(A) all pre-effective amendments to such Exchange Offer Registration Statement
as may be necessary in order to cause such Exchange Offer Registration
Statement to become effective, (B) if applicable, a post-effective amendment to
such Exchange Offer Registration Statement pursuant to Rule 430A under the Act
and (C) cause all necessary filings in connection with the registration and
qualification of the Series B Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer,
and (iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Series B Notes to be offered in
exchange for the Transfer Restricted Securities and to permit resales of Notes
held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall use all commercially reasonable efforts to cause the
Exchange Offer Registration Statement to be effective continuously and shall
keep the Exchange Offer open for a period of not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such period be less
than 20 business days. The Company shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other
than the Notes shall be included in the Exchange Offer Registration Statement.
The Company shall use all commercially reasonable efforts to cause the Exchange
Offer to be Consummated on the earliest practicable date after the Exchange
Offer Registration Statement has become effective, but in no event later than
45 business days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Series A Notes that are Transfer
Restricted Securities and that were acquired
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for its own account as a result of market-making activities or other trading
activities (other than Transfer Restricted Securities acquired directly from the
Company), may exchange such Series A Notes pursuant to the Exchange Offer;
however, such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with any resales of the Series B Notes
received by such Broker-Dealer in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of the
Prospectus contained in the Exchange Offer Registration Statement. Such "Plan
of Distribution" section shall also contain all other information with respect
to such resales by Broker-Dealers that the Commission may require in order to
permit such resales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer except to the extent required by the Commission as a result of a
change in policy after the date of this Agreement.
The Company shall use all commercially reasonable best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended from time to time as required by the provisions of Section 6(c) below
to the extent necessary to ensure that it is available for resales of Notes
acquired by Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities, and to ensure that it conforms with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of 180 days from
the date on which the Exchange Offer Registration Statement is declared
effective.
The Company shall provide sufficient copies of the latest version of such
Prospectus to Broker-Dealers promptly upon request at any time during such
180-day period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement or permitted to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy (after the procedures set forth in Section 6(a) below have
been complied with) or (ii) if any Holder of Transfer Restricted Securities
notifies the Company on or prior to the 20th business day following the
Consummation of the Exchange Offer (A) that such Holder is prohibited by
applicable law or Commission policy from participating in the Exchange Offer or
(B) that such Holder may not resell the Series B Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and that the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder, or (C) that such
Holder is a Broker-Dealer and holds Series A Notes acquired directly from the
Company or one of its affiliates, then the Company shall:
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<PAGE> 8
(x) use its best efforts to file a shelf registration statement on
the appropriate Commission form available to the Company with the
Commission pursuant to Rule 415 under the Act, which may be an amendment
to the Exchange Offer Registration Statement (in either event, the
"Shelf Registration Statement") on or prior to the earliest to occur of
(1) the 30th day after the date on which the Company determines that it
is not required to file the Exchange Offer Registration Statement, (2)
the 60th day after the date on which the Company receives notice from a
Holder of Transfer Restricted Securities as contemplated by clause (ii)
above (such earliest date being the "Shelf Filing Deadline"), which
Shelf Registration Statement shall provide for resales of all Transfer
Restricted Securities the Holders of which shall have provided the
information required pursuant to Section 4(b) hereof; and
(y) use all commercially reasonable efforts to cause such Shelf
Registration Statement to be declared effective as promptly as possible
by the Commission, but in no event later than the 60th day after the
Shelf Filing Deadline.
The Company shall use its best efforts to keep such Shelf Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure
that it is available for resales of Notes by the Holders of Transfer Restricted
Securities entitled to the benefit of this Section 4(a), and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least three years following the Closing Date or such shorter
period ending when all Transfer Restricted Securities covered by such Shelf
Registration Statement have been sold in the manner set forth and as
contemplated by such Shelf Registration Statement.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
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SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement is
not filed with the Commission on or prior to the date specified for such filing
in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 60 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is
filed and declared effective but shall thereafter cease to be effective or fail
to be usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself immediately declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company hereby
agrees to pay liquidated damages to each Holder of Transfer Restricted
Securities, with respect to the first 90-day period immediately following the
occurrence of a Registration Default in an amount equal to $.05 per week per
$1,000 principal amount of Transfer Restricted Securities held by such Holder.
The amount of the additional interest shall increase by an additional $.05 per
week per $1,000 principal amount of Transfer Restricted Securities with respect
to each subsequent 90-day period until all Registration Defaults have been
cured, up to a maximum amount of liquidated damages of $.50 per week per $1,000
principal amount of Transfer Restricted Securities. All accrued additional
interest shall be paid to Record Holders by the Company in cash on each Damages
Payment Date by wire transfer of immediately available funds or by such other
method, as provided in the Indentures. Following the cure of all Registration
Defaults, relating to any particular Transfer Restricted Securities, the
accrual of liquidated damages with respect to such Transfer Restricted
Securities will cease.
All obligations of the Company set forth in the preceding paragraph that
are outstanding with respect to any Transfer Restricted Security at the time
such security ceases to be a Transfer Restricted Security shall survive until
such time as all such obligations with respect to such security shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall comply with all of the provisions of Section
6(c) below, shall use all commercially reasonable efforts to effect such
exchange to permit the sale of Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
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<PAGE> 10
(i) If in the reasonable opinion of counsel to the Company there is a
question as to whether the Exchange Offer is permitted by applicable law,
the Company hereby agrees to seek a no-action letter or other favorable
decision from the Commission allowing the Company to Consummate an Exchange
Offer for such Series A Notes. The Company hereby agrees to pursue the
issuance of such a decision to the Commission staff level but shall not be
required to take commercially unreasonable actions to effect a change of
Commission policy. The Company hereby agrees, however, to (A) participate
in telephonic conferences with the Commission, (B) deliver to the Commission
staff an analysis prepared by counsel to the Company setting forth the legal
bases, if any, upon which such counsel has concluded that such an Exchange
Offer should be permitted and (C) diligently pursue a resolution (which need
not be favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation thereof, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate of the
Company, (B) it is not engaged in, and does not intend to engage in, and has
no arrangement or understanding with any person to participate in, a
distribution of the Series B Notes to be issued in the Exchange Offer and
(C) it is acquiring the Series B Notes in its ordinary course of business.
In addition, all such Holders of Transfer Restricted Securities shall
otherwise cooperate in the Company's preparations for the Exchange Offer.
The Initial Purchaser hereby acknowledges and agrees that any Broker-Dealer
and any Holder using the Exchange Offer to participate in a distribution of
the securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
May 13, 1988), as interpreted in the Commission' Shearman & Sterling dated
July 2, 1993, and similar no-action letters (including any no-action letter
os letter to btained pursuant to clause (i) above), and (2) must comply with
the registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a secondary
resale transaction should be covered by an effective registration statement
containing the selling security holder information required by Items 507 or
508, as applicable, of Regulation S-K if the resales are of Series B Notes
obtained by a Holder in exchange for Series A Notes acquired by such Holder
directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the Commission
(A) stating that the Company is registering the Exchange Offer in reliance
on the position of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley and Co., Inc.
(available June 5, 1991) and, if applicable, any no-action letter obtained
pursuant to clause (i) above and (B) including a representation that the
Company has not entered into any
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<PAGE> 11
arrangement or understanding with any Person to distribute the Series B Notes
to be received in the Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Exchange Offer is
acquiring the Series B Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use all commercially reasonable efforts to effect
such registration to permit the sale of the Transfer Restricted Securities
being sold in accordance with the intended method or methods of distribution
thereof (as indicated in the information furnished to the Company pursuant to
Section 4(b) hereof), and pursuant thereto the Company will prepare and file
with the Commission a Registration Statement relating to the registration on
any appropriate form under the Act, which form shall be available for the sale
of the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof.
(c) General Provisions. In connection with any Registration Statement and
any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Notes by
Broker-Dealers), the Company shall:
(i) use all commercially reasonable efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement, as
applicable; upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by this
Agreement, the Company shall file promptly an appropriate amendment to such
Registration Statement, in the case of clause (A), correcting any such
misstatement or omission, and, in the case of either clause (A) or (B), use
all commercially reasonable efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus to
become usable for their intended purpose(s) as soon as practicable
thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as applicable, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with the
applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable
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period in accordance with the intended method or methods of distribution by
the sellers thereof set forth in such Registration Statement or supplement to
the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders promptly
and, if requested by such Persons, to confirm such advice in writing, (A)
when the Prospectus or any Prospectus supplement or post-effective amendment
has been filed, and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B) of
any request by the Commission for amendments to the Registration Statement
or amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act or
of the suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding purposes, (D)
of the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of any
additions to or changes in the Registration Statement in order to make the
statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Company
shall use all commercially reasonable efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) furnish to each of the selling Holders beneficially owning 15%
or more of the aggregate principal amount of the Notes and each of the
underwriter(s), if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review and
comment of such Holders and underwriter(s), if any, for a period of at least
five business days, and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) to which a selling Holder of Transfer Restricted
Securities covered by such Registration Statement or the underwriter(s), if
any, shall reasonably object within five business days after the receipt
thereof. A selling Holder or underwriter, if any, shall be deemed to have
reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be filed,
contains a material misstatement or omission with respect to information
regarding such Holder or underwriter or fails to comply with the applicable
requirements of the Act;
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(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide on a confidential basis copies of such document to the selling
Holders beneficially owning 15% or more of the aggregate principal amount of
the Notes and to the underwriter(s), if any, make the Company's
representatives available for discussion on a confidential basis of such
document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such selling
Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times and upon reasonable notice for
inspection on a confidential basis by the selling Holders, any underwriter
participating in any disposition pursuant to such Registration Statement,
and any attorney or accountant retained by such selling Holders or any of
the underwriter(s), all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's officers,
directors and employees to supply all information reasonably requested by
any such Holder, underwriter, attorney or accountant in connection with such
Registration Statement subsequent to the filing thereof and prior to its
effectiveness;
(vii) if requested by any selling Holders beneficially owning 15% or
more of the aggregate principal amount of the Notes or the underwriter(s),
if any, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer
Restricted Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering of
the Transfer Restricted Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal amount of
Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the underwriter(s), if
any, without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto, including
all documents incorporated by reference therein;
(x) deliver to each selling Holder and each of the underwriter(s), if
any, without charge, as many copies of the Prospectus and any amendment or
supplement thereto as such Persons reasonably may request; the Company
hereby consents to the use of the Prospectus
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and any amendment or supplement thereto by each of the selling Holders and
each of the underwriter(s), if any, in connection with the offering and the
sale of the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(xi) enter into such agreements (including an underwriting agreement
in form and scope as is customary for similar offerings of debt securities),
and make such customary representations and warranties, and take all such
other commercially reasonable actions in connection therewith in order to
expedite or facilitate the disposition of the Transfer Restricted Securities
pursuant to any Registration Statement contemplated by this Agreement, all
to such extent as may be reasonably requested by the Initial Purchaser or by
any Holder of Transfer Restricted Securities or underwriter in connection
with any sale or resale pursuant to any Registration Statement contemplated
by this Agreement; and whether or not an underwriting agreement is entered
into and whether or not the registration is an Underwritten Registration,
the Company shall:
(A) furnish to each selling Holder and each underwriter, if any,
in such substance and scope as they may request and as are customarily
made by issuers to underwriters in primary underwritten offerings, upon
the date of the Consummation of the Exchange Offer and, if applicable,
the effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed by (x) the
President or any Vice President and (y) a principal financial or
accounting officer of the Company confirming, as of the date
thereof, the matters set forth in paragraphs (a), (b), (c) and (d)
of Section 8 of the Purchase Agreement and such other matters as
such parties may reasonably request;
(2) opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for the Company, covering
the matters set forth in paragraphs (f) and (g) of Section 8 of the
Purchase Agreement and such other matters as such parties may
reasonably request, and in any event including a statement to the
effect that such counsel has participated in conferences with
officers and other representatives of the Company and
representatives of the independent public accountants for the
Company in connection with the preparation of such Registration
Statement and the related Prospectus and have considered the matters
required to be stated therein and the statements contained therein,
although such counsel has not independently verified the accuracy,
completeness or fairness of such statements; and that such counsel
advises that, on the basis of the foregoing (relying as to
materiality to a large extent upon facts provided to such counsel by
officers and other representatives of the Company and without
independent check or verification), no facts came to such counsel's
attention that caused such counsel to believe that the applicable
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Registration Statement, at the time such Registration Statement or
any post-effective amendment thereto became effective, and, in the
case of the Exchange Offer Registration Statement, as of the date of
Consummation, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus contained in such Registration Statement as of its date
and, in the case of the opinion dated the date of Consummation of
the Exchange Offer, as of the date of Consummation, contained an
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state further that
such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of
the financial statements, notes and schedules and other financial
data included in any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) a customary comfort letter, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness of
the Shelf Registration Statement, as the case may be, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort letters
by underwriters in connection with primary underwritten offerings,
and affirming the matters set forth in the comfort letters delivered
pursuant to Section 8(h) of the Purchase Agreement, without
exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with clause
(A) above and with any customary conditions contained herein in the
underwriting agreement or other agreement entered into by the Company,
the selling Holders and/or the underwriters, if any, pursuant to this
clause (xi), if any.
(D) The Company may require each selling Holder to furnish to the
Company within 20 Business Days after written request for such
information has been made by the Company, such information regarding the
Holder and the distribution of such securities as the Company may from
time to time reasonably require for inclusion in such Registration
Statement and such other information as may be necessary or advisable in
the reasonable opinion of the Company and its counsel, in connection
with any Registration Statement. No Holder of Transfer Restricted
Securities shall be entitled to use a Prospectus unless and until such
Holder shall have furnished the reasonably
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requested information required by this Section 6(c)(xi)(D), and shall
have committed to notify the Company promptly of any change in such
information.
If at any time the representations and warranties of the Company
contemplated in clause (A)(1) above cease to be true and correct, the
Company shall so advise the Initial Purchaser and the underwriter(s), if
any, and each selling Holder promptly and, if requested by such Persons,
shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or underwriter(s) may reasonably
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the Shelf Registration Statement; provided, however,
that the Company shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation, other
than as to matters and transactions relating to the Registration Statement,
in any jurisdiction where it is not now so subject;
(xiii) shall issue, upon the request of any Holder of Series A Notes
covered by the Shelf Registration Statement, Series B Notes, having an
aggregate principal amount equal to the aggregate principal amount of Series
A Notes surrendered to the Company by such Holder in exchange therefor or
being sold by such Holder; such Series B Notes to be registered in the name
of such Holder or in the name of the purchaser(s) of such Notes, as the case
may be; in return, the Series A Notes held by such Holder shall be
surrendered to the Company for cancellation;
(xiv) cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and enable such Transfer Restricted Securities to be in
such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two business days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);
(xv) use all commercially reasonable efforts to cause the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the underwriter(s),
if any, to consummate the disposition of such Transfer Restricted
Securities, subject to the proviso contained in clause (xii) above;
14
<PAGE> 17
(xvi) if any fact or event contemplated by clause (c)(iii)(D) above
shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Registration Statement and provide
the Trustee under the Indentures with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xviii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its commercially reasonable efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
(xix) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders, as soon as practicable, a consolidated earnings statement
meeting the requirements of Rule 158 (which need not be audited) for the
twelve-month period (A) commencing at the end of any fiscal quarter in which
Transfer Restricted Securities are sold to underwriters in a firm or best
efforts Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration Statement;
(xx) cause the Indentures to be qualified under the TIA not later
than the effective date of the first Registration Statement required by this
Agreement, and, in connection therewith, cooperate with the Trustee and the
Holders of Notes to effect such changes to the Indentures as may be required
for such Indentures to be so qualified in accordance with the terms of the
TIA; and execute and use all commercially reasonable efforts to cause the
Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indentures to be so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar debt securities issued by the
15
<PAGE> 18
Company are then listed if requested by the Holders of a majority in
aggregate principal amount of Series A Notes or the managing underwriter(s),
if any; and
(xxii) provide promptly to each Holder upon request each document filed
by the Company with the Commission pursuant to the requirements of Section
13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of any notice from the Company of the existence of any fact of the
kind described in Section 6(c)(iii)(C) or (D) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to
the applicable Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi)
hereof, or until it is advised in writing (the "Advice") by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of such notice.
In the event the Company shall give any such notice, the time period regarding
the effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(C) or (D) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the copies
of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi)
hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES (a) All expenses incident to the Company's
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses
(including filings made by any Initial Purchaser or Holder with the NASD (and,
if applicable, the fees and expenses of any "qualified independent underwriter"
and its counsel that may be required by the rules and regulations of the
NASD)); (ii) all fees and expenses of compliance with federal securities and
state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the Series B Notes to be issued in the Exchange Offer
and printing of Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company and, subject to
Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing Notes on a national
securities exchange or automated quotation system pursuant to the requirements
hereof; and (vi) all fees and disbursements of independent certified public
accountants of the Company (including the expenses of any special audit and
comfort letters required by or incident to such performance).
16
<PAGE> 19
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and
the fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Latham & Watkins or such other counsel as may be chosen by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities
for whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Subsidiaries (except Flexible Funding
Corporation) jointly and severally agree to indemnify and hold harmless i) each
Holder, ii) each person, if any, who controls (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) each such Holder (any of the
persons referred to in this clause (ii) being hereinafter referred to as a
"controlling person"), and iii) the respective officers, directors, partners,
employees, representatives and agents of each such Holder or any controlling
person (any person referred to in clause (i), (ii), or (iii) may hereinafter be
referred to as a "Company Indemnified Person") to the fullest extent lawful,
from and against any and all losses, claims, damages, liabilities, judgments,
actions and expenses (including without limitation and as incurred,
reimbursement of all reasonable costs of investigating, preparing or defending
any claim or action, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, including the reasonable fees and
expenses of counsel to any Indemnified Person) directly or indirectly (a)
caused by, related to, based upon, arising out of or in connection with any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or Prospectus (or any amendment or supplement
thereto) or the Prospectus (or any amendment or supplement thereto) or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in the light of the
circumstances under which they were made) not misleading, except insofar as
such losses, claims, damages, liabilities or expenses are caused by an untrue
statement or omission or alleged untrue statement or omission that is made in
reliance upon and in conformity with information relating to any of the Holders
furnished in writing to the Company by any of the Holders expressly for use
therein, provided, however, that the Company will not be liable in any such
case to the extent, but only to the extent,
17
<PAGE> 20
that any such losses, claims, damages, liabilities or expenses (A) arise out of
or are based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with information relating to any Holder furnished to the Company in writing by
or on behalf of such Holder expressly for use therein or (B) are caused by an
untrue statement or omission that was contained or made in any preliminary
prospectus and corrected in the related Prospectus or any supplement or
amendment thereto and (1) any such losses, claims, damages, liabilities or
expenses suffered or insured by any indemnified party resulted from an action,
claim or suit by any person who purchased Notes from a Holder in the offering
to which such Prospectus relates, (2) such Holder failed to deliver or provide
a copy of such Prospectus or any such supplement or amendment thereto to such
person at or prior to the confirmation of the sale of such Notes in any case
where such delivery is required by the Act and (3) such Prospectus (as so
amended and supplemented) would have cured the defect giving rise to such loss,
liability, claim, damage or expense. This indemnity agreement will be in
addition to any liability which the Company may otherwise have, including,
under this Agreement.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless i) the Company, ii) each controlling person, if any, with respect to
the Company and iii) the respective officers,directors, partners, employees,
representatives and agents of the Company and any controlling person with
respect to the foregoing persons (any person referred to in clause (i), (ii),
or (iii) may hereinafter be referred to as a "Holder Indemnified Person" and,
together with the Company Indemnified Persons, the "Indemnified Persons")
against any losses, liabilities, claims, damages, actions and expenses
whatsoever (including without limitation and as incurred, reimbursement of all
reasonable costs of investigating, preparing or defending any claim or action,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, including the reasonable fees and expenses of counsel
to the Company or such other such other person indemnified under this Section
8(b)), to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case to the extent, but
only to the extent, that any such loss, liability, claim, damage or expense
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in conformity
with information relating to any Holder furnished to the Company in writing by
or on behalf of such Holder expressly for use therein; provided, however, that
in no case shall any Holder be liable or responsible for any amount in excess
of the dollar amount of the proceeds received by such Holder upon the sale of
the Notes giving rise to such indemnification obligation. This indemnity will
be in addition to any liability which any Holder may otherwise have, including
under this Agreement.
18
<PAGE> 21
(c) Promptly after receipt by an Indemnified Person under subsection (a)
or (b) above of notice of the commencement of any action, such Indemnified
Person shall, if a claim in respect thereof is to be made against an
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that the
indemnifying party has been prejudiced in any material respect by such failure
or from any liability which it may otherwise have). In case any such action is
brought against any Indemnified Person, and it notifies an indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent it may elect by written notice delivered
to the Indemnified Person promptly after receiving the aforesaid notice from
such Indemnified Person, to assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Person. Notwithstanding the foregoing, the
Indemnified Person or persons shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person or persons unless (i) the employment of
such counsel shall have been authorized in writing by the Indemnifying Parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such Indemnified Person or persons shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the Indemnifying Parties (in
which case the indemnifying party or parties shall not have the right to direct
the defense of such action on behalf of the Indemnified Person or persons), in
any of which events such fees and expenses of counsel shall be borne by the
indemnifying parties; provided, however, that the indemnifying party under
subsection (a) or (b) above shall only be liable for the legal expenses of one
counsel (in addition to any local counsel) for all Indemnified Persons in each
jurisdiction in which any claim or action (and any separate but substantially
similar or related action arising out of the same general allegations or
circumstances) is brought. The indemnifying parties shall be liable for any
settlement of any such action or proceeding effected with the indemnifying
parties' prior written consent, which consent will not be unreasonably
withheld, and the indemnifying parties agree to indemnify and hold harmless any
Indemnified Person from and against any loss, claim, damage, liability or
expense by reason of any settlement of any action effected with the written
consent of the indemnifying parties. If at any time the Indemnified Person
shall have requested the indemnifying parties to reimburse the Indemnified
Person for fees and expenses of counsel as contemplated by the second sentence
of this paragraph in connection with any such action or proceeding, the
indemnifying parties agree that they shall be liable for any settlement of any
proceeding effected without their written consent so long as they receive
written notice of such settlement if (i) such settlement is entered into more
than ninety business days after receipt by such indemnifying parties of the
aforesaid request and (ii) such indemnifying parties shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of
such settlement. The indemnifying parties shall not, without the prior written
consent of each Indemnified Person, which will not be unreasonably withheld,
settle or compromise or consent to the entry of a judgment in or otherwise seek
to terminate any pending or threatened action, claim,
19
<PAGE> 22
litigation proceeding in respect of which indemnification or contribution may
be sought hereunder (whether or not any Indemnified Person is a party thereto),
unless such settlement, compromise, consent or termination includes an
unconditional release of each Indemnified Person from all liability arising
out of such action, claim, litigation or proceeding.
(d) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section 8 is for any reason held to be
unavailable from the Company or is insufficient to hold harmless a party
indemnified hereunder, the Company, on the one hand, and each Holder, on the
other hand, shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Holders, who
may also be liable for contribution, including controlling persons with respect
to the Company) to which the Company and such Holder may be subject, in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on one hand, and such Holder, on the other hand, if such allocation is
not permitted by applicable law or indemnification is not available as a result
of the indemnifying party not having received notice as provided in this
Section 8, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company,
on the one hand, and such Holder, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on one hand,
and each Holder, on the other hand, shall be deemed to be in the same
proportion as (i) the total proceeds from the offering of the Notes (net of
discounts but before deducting expenses) received by the Company and (ii) the
total proceeds received by such Holder upon the sale of the Notes giving rise
to such indemnification obligation. The relative fault of the Company, on the
one hand, and of each Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or such Holder and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the Holders
agree that it would not be just and equitable if contribution pursuant to this
Section 8(d) were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8(d), (i) in
no case shall any Holder be required to contribute any amount in excess of the
dollar amount by which the proceeds received by such Holder upon the sale of
the Notes exceeds the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8(d), (A) each controlling
person, if any, with respect to any Holder and
20
<PAGE> 23
(B) the respective officers, directors, partners, employees, representatives
and agents of each Holder or any controlling person shall have the same
rights to contribution as such Holder, and each controlling person, if any,
with respect to the Company and the respective officers, directors, partners,
employees, representatives and agents of the Company and any controlling
person shall have the same rights to contribution as the Company, subject
in each case to clauses (i) and (ii) of this Section 8(d). Any party entitled
to contribution will, promptly after receipt of notice of commencement of
any action, suit or proceeding against such party in respect of which a
claim for contribution may be made against another party or parties under this
Section 8(d), notify such party or parties from whom contribution may be
sought, but the failure to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation
it or they may have under this Section 8(d) or otherwise. No party shall be
liable for contribution with respect to any action or claim settled without its
prior written consent; provided, however, that such written consent was not
unreasonably withheld.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority
21
<PAGE> 24
in aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Company agrees that monetary damages (including the
liquidated damages contemplated hereby) would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. The Company has not
previously entered into any agreement granting any registration rights with
respect to its securities to any Person. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's securities under any agreement
in effect on the date hereof other than the Purchase Agreement with the Initial
Purchaser.
(c) Adjustments Affecting the Notes. The Company will not take any
action, or permit any change to occur, with respect to the terms of the Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount
of Transfer Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indentures, with a copy to the Registrar under the
Indentures; and
22
<PAGE> 25
(ii) if to the Company:
Printpack, Inc.
4335 Wendell Drive, S.W.
Atlanta, Georgia 30336
Telecopy No.: (404) 696-4868
Attention: R. Michael Hembree
With copies to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Telecopy No.: (404) 881-7777
Attention: Ralph F. MacDonald, III Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indentures.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign
acquired Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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<PAGE> 26
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement, together with the other Operative
Documents (as defined in the Purchase Agreement), is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred
to herein other than the Operative Documents with respect to the registration
rights granted by the Company with respect to the Transfer Restricted
Securities. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
----------------------------
Name: R. Michael Hembree
Title: Vice-President, Finance
and Administration
Accepted and agreed
DONALDSON, LUFKIN & JENRETTE
By: /s/ Robert Berry
--------------------------
Name: Robert Berry
Title: Vice-President
24
<PAGE> 1
EXHIBIT 10.7
Receivables Sale Agreement dated as of August 22,1996 by and between Printpack,
Inc. and Flexible Funding Corp.
<PAGE> 2
[INTERCOMPANY TRUE SALE AGREEMENT]
=========================================================
RECEIVABLES SALE AGREEMENT
DATED AS OF AUGUST 22, 1996
BETWEEN
PRINTPACK, INC.,
AS THE ORIGINATOR
AND
FLEXIBLE FUNDING CORP.,
AS THE BUYER
=========================================================
<PAGE> 3
<TABLE>
<S> <S>
ARTICLE I AMOUNTS AND TERMS OF THE PURCHASES 1
Section 1.1. Purchases of Receivables. 1
Section 1.2. Payment for the Purchases. 3
Section 1.3. Purchase Price Credit Adjustments 5
Section 1.4. Payments and Computations, Etc. 5
Section 1.5. Transfer of Records 6
Section 1.6. Characterization 6
ARTICLE II REPRESENTATIONS AND WARRANTIES 7
Section 2.1. Originator Representations and Warranties. 7
(a) Corporate Existence and Power. 7
(b) No Conflict. 7
(c) Governmental Authorization 7
(d) Binding Effect. 8
(e) Accuracy of Information. 8
(f) Use of Proceeds. 8
(g) Good Title; Perfection. 8
(h) Places of Business. 8
(i) Collection Banks; etc. 9
(j) Financial Statements; Material Adverse Effect 9
(k) Names 9
(l) Actions, Suits 10
(m) Credit and Collection Policy. 10
(n) Payments to Originator. 10
(o) Ownership of the Buyer. 10
(p) Not an Investment Company. 10
(q) Eligibility of Receivables 10
(r) Purpose. 10
(s) ERISA. 11
ARTICLE III CONDITIONS OF PURCHASES 11
Section 3.1. Conditions Precedent to Initial Purchase 11
</TABLE>
i
<PAGE> 4
<TABLE>
Page
<S> <C>
Section 3.2. Conditions Precedent to All Purchases 11
ARTICLE IV COVENANTS 12
Section 4.1. Affirmative Covenants of Originator 12
(a) Financial Reporting. 12
(i) Annual Reporting. 12
(ii) Quarterly Reporting. 12
(iii) Compliance Certificate. 13
(iv) Shareholders Statements and Reports. 13
(v) S.E.C. Filings 13
(vi) Notices under Transaction Documents 13
(vii) Change in Credit and Collection Policy 13
(viii) Other Information 13
(b) Notices. 13
(i) Events of Default or Potential Events of Default. 14
(ii) Litigation. 14
(iii) ERISA. 14
(iv) Downgrade. 14
(c) Compliance with Laws. 14
(d) Audits. 14
(e) Keeping and Marking of Records and Books. 15
(f) Compliance with Contracts and Credit and Collection Policy 15
(g) Ownership Interest. 15
(h) Purchasers' Reliance. 15
(i) Collections. 16
(j) ERISA. 17
(k) Lines of Business. 17
Section 4.2. Negative Covenants of Originator 17
(a) Name Change, Offices, Records and Books of Accounts. 17
(b) Change in Payment Instructions to Obligors. 17
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(c) Modifications to Credit and Collection Policy. 17
(d) Sales, Liens, Etc. 18
(e) Accounting for Purchases. 18
ARTICLE V ADMINISTRATION AND COLLECTION 18
Section 5.1. Designation of Sub-Servicer 18
Section 5.2. Duties of Sub-Servicer 19
Section 5.3. Collection Account Agreements 20
Section 5.4. Responsibilities of the Originator 20
Section 5.5. Receivables Reports. 20
Section 5.6. Sub-Servicer Fee. 21
ARTICLE VI EVENTS OF DEFAULT 21
Section 6.1. Events of Default. 21
Section 6.2. Remedies 22
ARTICLE VII INDEMNIFICATION 23
Section 7.1. Indemnities by the Originator 23
Section 7.2. Other Costs and Expenses 25
ARTICLE VIII MISCELLANEOUS 25
Section 8.1. Waivers and Amendments 25
Section 8.2. Notices. 25
Section 8.3. Protection of Buyer's Interests 26
Section 8.4. Confidentiality 26
Section 8.5. Bankruptcy Petition 27
Section 8.6. Limitation of Liability. 27
Section 8.7. CHOICE OF LAW. 28
Section 8.8. CONSENT TO JURISDICTION 28
Section 8.9. WAIVER OF JURY TRIAL 28
Section 8.10. Binding Effect; Assignability 29
Section 8.11. Subordination 29
Section 8.12. Integration; Survival of Terms. 30
Section 8.13. Counterparts; Severability. 30
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EXHIBIT I DEFINITIONS 32
EXHIBIT II CHIEF EXECUTIVE OFFICE OF THE ORIGINATOR;
LOCATIONS OF RECORDS; TRADE NAMES; FEDERAL EMPLOYER
IDENTIFICATION NUMBER 42
EXHIBIT III COLLECTION ACCOUNTS; LOCK-BOXES; CONCENTRATION
ACCOUNTS; AND DEPOSITARY ACCOUNTS 44
EXHIBIT IV FORM OF COMPLIANCE CERTIFICATE 45
EXHIBIT V FORM OF COLLECTION ACCOUNT AGREEMENT 46
EXHIBIT VI CREDIT AND COLLECTION POLICY 50
EXHIBIT VII FORM OF MONTHLY REPORT 51
EXHIBIT VIII FORM OF WEEKLY REPORT 52
EXHIBIT IX FORM OF SUBSCRIPTION AGREEMENT 53
Exhibit A to Stockholder and Subscription Agreement
Form of Certificate of Incorporation 60
Exhibit B to Stockholder and Subscription Agreement
Form of By-laws 71
EXHIBIT X FORM OF SUBORDINATED NOTE 87
SCHEDULE A DOCUMENTS AND RELATED ITEMS TO BE DELIVERED ON OR
PRIOR TO THE INITIAL PURCHASE 92
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THIS RECEIVABLES SALE AGREEMENT, dated as of August 22, 1996, is by and
between PRINTPACK, INC., a Georgia corporation (the "ORIGINATOR"), and FLEXIBLE
FUNDING CORP., a Delaware corporation (the "BUYER"). Unless defined elsewhere
herein, capitalized terms used in this Agreement shall have the meanings
assigned to such terms in EXHIBIT I hereto.
PRELIMINARY STATEMENTS
The Originator now owns, and from time to time hereafter will
own, Receivables. The Originator wishes to sell and assign to the
Buyer, and the Buyer wishes to purchase from the Originator, all
right, title and interest of the Originator in and to the
Receivables now and hereafter arising.
The Originator and the Buyer believe that it is in their
mutual best interests for the Originator to sell the Receivables
to the Buyer and for the Buyer to purchase the Receivables.
The Originator and the Buyer intend this transaction to be a
true sale of the Receivables from the Originator to the Buyer,
providing the Buyer with the full benefits of ownership of the
Receivables, and the Originator and the Buyer do not intend this
transaction to be, or for any purpose to be characterized as, a
loan from the Buyer to the Originator.
Upon purchasing the Receivables from the Originator, the
Buyer will sell interests in all or a portion of the Receivables
and certain related rights pursuant to that certain Receivables
Purchase Agreement dated as of August 22, 1996 (as the same may
from time to time hereafter be amended, supplemented, restated or
otherwise modified, the "PURCHASE AGREEMENT") among the Buyer,
Falcon Asset Securitization Corporation ("FALCON"), the financial
institutions parties thereto as "INVESTORS" and The First National
Bank of Chicago ("FIRST CHICAGO"), as agent for FALCON and such
Investors (in such capacity, the "AGENT").
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchases of Receivables.
(a) Effective on the date of the initial Purchase hereunder, in
consideration for the Purchase Price and upon the terms and subject to the
conditions set forth herein, the Originator does hereby sell, assign, transfer,
set-over and otherwise convey to the Buyer, without
<PAGE> 8
recourse (except to the extent expressly provided herein), and the Buyer does
hereby purchase from the Originator, on the term and subject to the conditions
set forth herein, all of the Originator's right, title and interest in
and to all Receivables existing as of the close of business on the date of such
initial Purchase and all Receivables thereafter arising, together, in each
case, with all Related Security relating there to and all Collections thereof;
PROVIDED, HOWEVER, that in no event shall the Buyer purchase, or the Originator
sell, any Receivable arising after the Termination Date. On the date of the
initial Purchase, the Buyer shall acquire all of the Originator's right, title
and interest in and to all Receivables existing as of the close of business on
such date (together with all Related Security relating thereto and all
Collections thereof). On each Business Day thereafter through and including
the Termination Date, the Buyer shall acquire all of the Originator's right,
title and interest in and to all Receivables which were not previously
purchased by the Buyer hereunder upon the creation of such Receivables
(together with all Related Security relating thereto and all Collections
thereof), PROVIDED THAT the acquisition by the Buyer of such right, title and
interest of the Originator in connection with each Purchase hereunder is
conditioned upon and subject to the Originator's receipt of the Purchase Price
therefor in accordance with SECTION 1.2 below. In connection with consummation
of any Purchase hereunder, the Buyer may request that the Originator deliver,
and the Originator shall deliver, such approvals, opinions, information,
reports or documents as the Buyer may reasonably request.
(b) It is the intention of the parties hereto that each Purchase of
Receivables made hereunder shall constitute a "sale of accounts," as such term
is used in Article 9 of the UCC, which sales are absolute and irrevocable and
provide the Buyer with the full benefits of ownership of the Receivables.
Except for the Purchase Price Credits owed pursuant to SECTION 1.3 hereof, each
sale of Receivables hereunder is made without recourse to the Originator;
PROVIDED, HOWEVER, that (i) the Originator shall be liable to the Buyer for all
representations, warranties and covenants made by the Originator pursuant to
the terms of the Transaction Documents, and (ii) such sale does not constitute
and is not intended to result in an assumption by the Buyer or any assignee
thereof of any obligation of the Originator or any other Person arising in
connection with the Receivables, the related Contracts and/or other Related
Security or any other obligations of the Originator. In view of the intention
of the parties hereto that the Purchases of Receivables made hereunder shall
constitute sales of such Receivables rather than loans secured by such
Receivables, the Originator agrees on or prior to the date hereof to mark its
master data processing records relating to the Receivables with a legend,
acceptable to the Buyer, evidencing that the Buyer has purchased such
Receivables as provided in this Agreement and to note in its financial
statements that its Receivables have been sold to the Buyer. Upon the request
of the Buyer or the Agent, the Originator will execute and file such financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or appropriate to
perfect and maintain the perfection of the Buyer's ownership interest in the
Receivables, the Related Security and the Collections, or as the Buyer or the
Agent may reasonably request.
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Section 1.2. Payment for the Purchases.
(a) The Purchase Price for the initial Purchase of Receivables shall
be payable in full by the Buyer to the Originator on the date of such initial
Purchase, and shall be paid to the Originator in the following manner:
(i) by delivery of immediately available funds, to the extent
of funds made available to the Buyer in connection with its
subsequent sale of an interest in such Receivables to the
Purchasers under the Purchase Agreement,
(ii) by the issuance of equity in the manner contemplated in
the Subscription Agreement and having a value of not less than
$100,000, and
(iii) the balance, with the proceeds of a Subordinated Loan.
The Purchase Price for each Purchase after the initial Purchase shall become
due and owing in full by the Buyer to the Originator or its designee on the
date of such Purchase (EXCEPT THAT the Buyer may, with respect to any such
Purchase, offset against such Purchase Price any amounts owed by the Originator
to the Buyer hereunder and which have become due but remain unpaid) and shall
be paid to the Originator in the manner provided in the following paragraphs
(b), (c) and (d).
(b) With respect to any Purchase hereunder, at the time of
settlement of the Purchase Price therefor pursuant to paragraph (d) below, the
Buyer may elect to pay all or any part of, the applicable Purchase Price by
borrowing from the Originator a subordinated revolving loan (each, a
"SUBORDINATED LOAN"), and the Originator, subject to the remaining provisions
of this paragraph, irrevocably agrees to advance such Subordinated Loan in the
amount so specified by the Buyer (which amount, unless otherwise specified by
the Buyer, shall be deemed to be the lesser of (i) the aggregate Purchase Price
which remains owing to the Originator in connection with such settlement after
giving effect to funds received by the Originator which have been applied
thereto, and (ii) the maximum Subordinated Loan which may then be borrowed
under the restrictions set forth in the following sentence). Notwithstanding
the foregoing, the Originator is not committed to make any Subordinated Loan
(and the Buyer's right to make the election described hereinabove shall not be
effective), if and to the extent that, as of the end of the last Business Day
of the Calculation Period to which such settlement relates (or such other date
of determination as may be applicable pursuant to the proviso in paragraph (c)
below) and as a result of making such loan, either: (1) the aggregate
outstanding amount of the Subordinated Loans would exceed an amount equal to
THE SUM OF (x) the aggregate Outstanding Balance of the "ELIGIBLE RECEIVABLES"
under and as defined in the Purchase Agreement at such time, PLUS (y) 97% of
the aggregate Outstanding Balance of Receivables which are not "ELIGIBLE
RECEIVABLES" under and as defined in the Purchase Agreement at such time, MINUS
(z) the aggregate Capital outstanding at such time under the Purchase
Agreement, or (2) the Buyer's Net Worth would be less than $100,000, or (3) the
amount of the Subordinated Loan then being made would exceed an amount equal to
the Purchase Price payable in connection with the Purchases during such
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<PAGE> 10
Calculation Period (or such other date or period as may be applicable pursuant
to the proviso in paragraph (c) below) MINUS funds then being made available
under the Purchase Agreement or otherwise then available to the Buyer during or
with respect to such Month Period (or such other date or period, if
applicable). The Subordinated Loans shall be evidenced by, and shall be
payable in accordance with the terms and provisions of, a promissory note in
the form of EXHIBIT X hereto (the "SUBORDINATED NOTE") and shall be payable
solely from funds which the Buyer is not required under the Purchase Agreement
to set aside for the benefit of, or otherwise pay over to, the Agent and/or the
Purchasers.
(c) In the case of any Purchase subsequent to the initial Purchase, if the
Buyer has insufficient funds to pay in full the applicable Purchase Price
(after taking account of the proceeds of Subordinated Loans available to the
Buyer), then the Originator shall be deemed to have contributed to the capital
of the Buyer Receivables having a Purchase Price equal to the otherwise unpaid
portion of the total Purchase Price owing for such Purchase, which capital
contributions shall be determined on an aggregate basis for the Calculation
Period in which such Purchase occurred in connection with the settlement for
such Calculation Period effected pursuant to paragraph (d) below; PROVIDED,
HOWEVER, that no such deemed capital contribution shall be made from and after
the date on which the Originator notifies the Buyer in writing that it has
designated a date as the Termination Date, and the Originator shall not be
obligated to convey Receivables to the Buyer or otherwise consummate Purchases
hereunder from and after such date unless the Originator reasonably determines
that the Purchase Price therefor will be satisfied with funds available to the
Buyer from Collections or otherwise or with the proceeds of Subordinated Loans.
(d) On each Business Day during a Calculation Period after the date of the
initial Purchase, all Collections available to the Buyer (after setting aside
amounts required to be set aside for the benefit of, or otherwise paid over to,
the Agent and/or the Purchasers in accordance with the Purchase Agreement)
shall be paid directly to the Originator and, subject to receipt by the
Originator of the sub-Servicer Fee payable by the Buyer pursuant to SECTION 5.6
hereof for the Calculation Period in which such Business Day occurs, shall be
applied as payments toward the Purchase Price of Receivables conveyed by the
Originator to the Buyer during such Calculation Period. Although amounts shall
be paid directly to the Originator on a daily basis in accordance with the
first sentence of this paragraph, settlement of the Purchase Price between the
Borrower and the Originator shall be effected on a fiscal monthly basis with
respect to all Purchases within the same Calculation Period concurrently with
the delivery of the Monthly Report relating to such Calculation Period
pursuant to SECTION 5.5 hereof and based on the information contained therein.
In addition to such other information as may be included therein, each Monthly
Report shall set forth the following with respect to the related Calculation
Period: (i) the aggregate Outstanding Balance of Receivables created and
conveyed in Purchases during such Calculation Period, (ii) the aggregate
Purchase Price payable to the Originator in respect of such Purchases,
specifying the Discount Factor in effect for such Calculation Period and the
aggregate Purchase Price Credits deducted in calculating such aggregate
Purchase Price, (iii) the
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aggregate amount of funds received by the Originator during such Calculation
Period which are to be applied toward the aggregate Purchase Price owing for
such Calculation Period pursuant to the first sentence of this paragraph, (iv)
the increase or decrease in the amount outstanding under the Subordinated Note
as of the end of such monthly Period after giving effect to the application of
funds toward the aggregate Purchase Price and the restrictions on Subordinated
Loans set forth in paragraph (b) above, and (v) the amount of any capital
contribution made by the Originator to the Buyer as of the end of such
Calculation Period pursuant to paragraph (c) above. Although settlement shall
be effected concurrently with the delivery of each Monthly Report, increases or
decreases in the amount owing under the Subordinated Note made pursuant to
paragraph (b) above and any contribution of capital by the Originator to the
Buyer made pursuant to paragraph (c) above shall be deemed to have occurred and
shall be effective as of the last Business Day of the Calculation Period to
which such settlement relates.
Section 1.3. Purchase Price Credit Adjustments. If on any day the
Outstanding Balance of a Receivable is either (x) reduced as a result of any
defective goods or services, any cash discount or any adjustment by the
Originator (whether individually or in its performance of duties as
Sub-Servicer), or (y) reduced or canceled as a result of a setoff in respect of
any claim by any Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction and whether such claim relates to the
Originator or any Affiliate thereof) or (z) is otherwise reduced as a result of
any of the factors set forth in the definition of Dilutions, then, in such
event, the Buyer shall be entitled to a credit (each, a "PURCHASE PRICE
CREDIT") against the Purchase Price otherwise payable hereunder equal to the
full amount of such reduction or cancellation. If such Purchase Price Credit
exceeds the Original Balance of the Receivables to be sold hereunder on any
date, then the Originator shall pay the remaining amount of such Purchase Price
Credit in cash on the next succeeding Business Day; PROVIDED THAT, if the
Termination Date has not occurred, the Originator shall be allowed to deduct
the remaining amount of such Purchase Price Credit from any indebtedness owed
to it under the Subordinated Note. Upon the payment (through offset or
otherwise) of any Purchase Price Credit relating to returned or repossessed
goods, all right, title and interest in and to such goods shall be re-vested in
the Originator and the Buyer shall have no further interest therein.
Section 1.4. Payments and Computations, Etc. All amounts to be paid or
deposited by the Buyer hereunder shall be paid or deposited in accordance with
the terms hereof on the day when due in immediately available funds to the
account of the Originator designated from time to time by the Originator or as
otherwise directed by the Originator. In the event that any payment owed by
any Person hereunder becomes due on a day which is not a Business Day, then
such payment shall be made on the next succeeding Business Day. Any amount due
hereunder which is not paid when due hereunder shall bear interest at the Base
Rate as in effect from time to time until paid in full; PROVIDED, HOWEVER, that
such interest rate shall not at any time exceed the maximum rate permitted by
applicable law. All computations of interest payable hereunder shall be made
on the basis of a year of 360 days for the actual number of days (including the
first but excluding the last day) elapsed.
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Section 1.5. Transfer of Records.
(a) In connection with the Purchases of Receivables hereunder, the
Originator hereby sells, transfers, assigns and otherwise conveys to the Buyer
all of the Originator's right and title to and interest in the Records relating
to all Receivables sold hereunder, without the need for any further
documentation in connection with any Purchase. In connection with such
transfer, the Originator hereby grants to each of the Buyer and the Servicer an
irrevocable, non-exclusive license to use, without royalty or payment of any
kind, all software used by the Originator to account for the Receivables, to
the extent necessary to administer the Receivables, whether such software is
owned by the Originator or is owned by others and used by the Originator under
license agreements with respect thereto, PROVIDED THAT should the consent of
any licensor of the Originator to such grant of the license described herein be
required, the Originator hereby agrees that upon the request of the Buyer (or
the Agent as the Buyer's assignee) it will use its reasonable efforts to obtain
the consent of such third-party licensor. The license granted hereby shall be
irrevocable, and shall terminate on the date this Agreement terminates in
accordance with its terms.
(b) The Originator (i) shall take such action requested by the Buyer
and/or the Agent, from time to time hereafter, that may be necessary or
appropriate to ensure that the Buyer and its assigns under the Purchase
Agreement have an enforceable ownership interest in the Records relating to the
Receivables purchased from the Originator hereunder and (ii) shall use its
reasonable efforts to ensure that the Buyer and the Servicer each has an
enforceable right (whether by license or sublicense or otherwise) to use all of
the computer software used to account for the Receivables and/or to recreate
such Records.
Section 1.6. Characterization. If, notwithstanding the intention of the
parties expressed in SECTION 1.1(B), the conveyance by the Originator to the
Buyer of Receivables hereunder shall be characterized as a secured loan and not
a sale, this Agreement shall constitute a security agreement under the UCC and
other applicable law. For this purpose, the Originator hereby grants to the
Buyer a duly perfected security interest in all of the Originator's right,
title and interest in, to and under the Receivables, the Collections, each
Collection Account, all Related Security, all payments on or with respect to
such Receivables, all other rights relating to and payments made in respect of
the Receivables, and all proceeds of any thereof which security interest shall
be prior to all other liens on and security interests therein. After an Event
of Default, the Buyer and its assignees shall have, in addition to the rights
and remedies which they may have under this Agreement, all other rights and
remedies provided to a secured creditor after default under the UCC and other
applicable law, which rights and remedies shall be cumulative.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Originator Representations and Warranties. The Originator
hereby represents and warrants, individually and in its capacity as
Sub-Servicer, to the Buyer and its assigns that:
(a) Corporate Existence and Power. The Originator is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on its business in
each jurisdiction in which it conducts its business and where the failure to
obtain such license, authorization, consent or approval would have a Material
Adverse Effect.
(b) No Conflict. The execution, delivery and performance by the
Originator of this Agreement and each other Transaction Document, and the
Originator's use of the proceeds of Purchases made hereunder, are within its
corporate powers, have been duly authorized by all necessary corporate action,
do not contravene or violate (i) its articles of incorporation or by-laws, (ii)
any law, rule or regulation applicable to it the contravention of which would or
could reasonably be expected to have a Material Adverse Effect, (iii) any
restrictions under any material agreement, contract or instrument to which it
is a party or by which it or any of its property is bound, or (iv) any material
order, writ, judgment, award, injunction or decree binding on or affecting it
or its property, and do not result in the creation or imposition of any Adverse
Claim on assets of the Originator or its Subsidiaries (except as created
hereunder); and no transaction contemplated hereby requires compliance with any
bulk sales act or similar law. This Agreement and each other Transaction
Document to which the Originator is a party have been duly authorized, executed
and delivered by the Originator.
(c) Governmental Authorization. Other than the filing of the financing
statements required hereunder, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the Originator
of the Transaction Documents.
(d) Binding Effect. The Transaction Documents constitute the legal, valid
and binding obligations of the Originator enforceable against the Originator in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally.
(e) Accuracy of Information. All information heretofore furnished by the
Originator or any of its Affiliates to the Buyer, the Agent or the Purchasers
for purposes of or in connection with this Agreement, any of the other
Transaction Documents or any transaction contemplated hereby or thereby is, and
all such information hereafter furnished by the Originator or any of its
Affiliates to the Buyer, the Agent and/or the Purchasers will be, true and
accurate in every material respect, on the date such information is stated or
certified and does not and will not
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contain any material misstatement of fact or omit to state a material fact or
any fact necessary to make the statements contained therein not misleading.
(f) Use of Proceeds. No proceeds of any Purchase hereunder will be
used (i) for a purpose which violates, or would be inconsistent with,
Regulation G, T, U or X promulgated by the Board of Governors of the Federal
Reserve System from time to time or (ii) to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange Act
of 1934, as amended.
(g) Good Title; Perfection. Immediately prior to each Purchase
hereunder, the Originator shall be the legal and beneficial owner of the
Receivables and Related Security with respect thereto, free and clear of any
Adverse Claim, except as created by the Transaction Documents and except for
the lien of the Bank Agent which will be automatically released simultaneously
with each such Purchase in accordance with the Intercreditor Agreement. This
Agreement is effective to, and shall, upon each Purchase hereunder, irrevocably
transfer to the Buyer legal and equitable title to, with the legal right to
sell and encumber, such Receivables and the Related Security, free and clear
of any Adverse Claim except as otherwise created by the Buyer under the
Purchase Agreement. Without limiting the foregoing, there has been duly filed
all financing statements or other similar instruments or documents necessary
under the UCC of all appropriate jurisdictions (or any comparable law) to
perfect the Buyer's ownership interest in such Receivables.
(h) Places of Business. The principal places of business and chief
executive office of the Originator and the offices where the Originator keeps
all its Records are located at the address(es) listed on EXHIBIT II or such
other locations notified to the Buyer in accordance with SECTION 4.2(A) in
jurisdictions where all action required by SECTION 4.2(A) has been taken and
completed. The Originator's Federal Employer Identification Number is
correctly set forth on EXHIBIT II.
(i) Collection Banks; etc. Except as otherwise notified to the
Buyer in accordance with SECTION 4.2(B):
(i) the Originator has instructed all Obligors (other than
the Obligors on Flexible Packaging Receivables) to pay all
Collections directly to a segregated lock-box identified on
EXHIBIT III hereto,
(ii) in the case of all proceeds remitted to any such
lock-box which is now or hereafter established, such proceeds will
be deposited directly by the applicable Collection Bank into a
concentration account or a depository account listed on EXHIBIT
III,
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(iii) the names and addresses of all Collection Banks,
together with the account numbers of the Collection Accounts of
the Originator at each Collection Bank, are listed on EXHIBIT III,
and
(iv) each lock-box and Collection Account to which
Collections are remitted shall be subject to a Collection Account
Agreement that is then in full force and effect.
In the case of lock-boxes and Collection Accounts identified on EXHIBIT III,
exclusive dominion and control thereof has been transferred to the Buyer. The
Originator has not granted any Person, other than the Buyer as contemplated by
this Agreement (and other than the Bank Agent, from and after termination of
the Collection Account Agreements), dominion and control of any lock-box or
other Collection Account, or the right to take dominion and control of any
lock-box or other Collection Account at a future time or upon the occurrence of
a future event.
(j) Financial Statements; Material Adverse Effect. The consolidated
financial statements of the Originator and its consolidated Subsidiaries dated
March 31, 1996 furnished by the Originator to the Buyer and the Agent are
complete and correct in all material respects, and such financial statements
have been prepared in accordance with generally accepted accounting principles
consistently applied and fairly present, in all material respects, the
consolidated financial condition and results of operations of the Originator
and its consolidated Subsidiaries as of such date and for the period ended on
such date. As of the date of the initial purchase hereunder, no event has
occurred since March 31, 1996 which would have a Material Adverse Effect.
(k) Names. In the past five years, the Originator has not used any
corporate names, trade names or assumed names other than those listed on
EXHIBIT II.
(l) Actions, Suits. There are no actions, suits or proceedings
pending, or to the best of the Originator's knowledge, threatened, against or
affecting the Originator, or any of the properties of the Originator, in or
before any court, arbitrator or other body, which are reasonably likely to (i)
adversely affect the collectibility of a material portion of the Receivables,
(ii) materially adversely affect the financial condition of the Originator or
(iii) materially adversely affect the ability of the Originator to perform its
obligations under the Transaction Documents. The Originator is not in default
with respect to any order of any court, arbitrator or governmental or
regulatory body.
(m) Credit and Collection Policy. With respect to each Receivable,
each of the Originator and the Sub-Servicer has complied in all material
respects with the Credit and Collection Policy.
(n) Payments to Originator. With respect to each Receivable sold to
the Buyer under this Agreement, the Buyer has given reasonably equivalent value
to the Originator in
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consideration for the transfer of such Receivable and the Related Security with
respect thereto under this Agreement and such transfer was not made for or on
account of an antecedent debt. No sale by the Originator to the Buyer of any
Receivable is or may be voidable under any Section of the Bankruptcy Reform Act
of 1978 (11 U.S.C. Section Section 101 et seq.), as amended.
(o) Ownership of the Buyer. The Originator owns one hundred percent
(100%) of the issued and outstanding capital stock of the Buyer. Such capital
stock is validly issued, fully paid and nonassessable and there are no options,
warrants or other rights to acquire securities of the Buyer other than the
pledge to the Bank Agent of the Buyer's stock. The management of the
Originator has determined that the organization of the Buyer and the limited
purposes of the Buyer are in the best interests of the Originator.
(p) Not an Investment Company. The Originator is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
from time to time, or any successor statute.
(q) Eligibility of Receivables. Each of the Receivables sold or
contributed by the Originator to the Buyer on each Business Day prior to the
Termination Date which is proposed to be included in Net Eligible Receivables
under the Purchase Agreement was an Eligible Receivable on the Business Day on
which it was sold or contributed by the Originator to the Buyer.
(r) Purpose. The Originator has determined that, from a business
viewpoint, the sale of the Receivables to the Buyer contemplated hereby is in
the best interests of the Originator.
(s) ERISA. No fact or circumstance, including but not limited to any
Reportable Event, exists in connection with any Plan which would constitute
grounds for the termination of any Plan by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate United States District
Court of a trustee to administer any such Plan and which would result in the
termination of a Plan and the incurrence of material liability by the
Originator or any ERISA Affiliate to the Plan, the PBGC, participants,
beneficiaries or a trustee. No Plan has an accumulated funding deficiency as
defined in Section 412(a) of the Code or Section 302(a) of ERISA, and no lien
exists with respect to any Plan for failure to make required contributions as
described under 412(n) of the Code or Section 302(f) of ERISA. For the
purposes of this representation and warranty, the Originator shall be deemed to
have knowledge of all facts attributable to the Plan administrator designated
pursuant to ERISA.
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ARTICLE III
CONDITIONS OF PURCHASES
Section 3.1. Conditions Precedent to Initial Purchase. The initial
Purchase under this Agreement is subject to the conditions precedent that (i)
the Buyer shall have received on or before the date of such Purchase those
documents listed on SCHEDULE A hereto and (ii) all conditions precedent to the
initial purchase under the Purchase Agreement shall have been satisfied and/or
waived.
Section 3.2. Conditions Precedent to All Purchases. Each Purchase shall
be subject to the further conditions precedent that (a) on the date of each
such Purchase, the following statements shall be true both before and after
giving effect to such Purchase (and acceptance of the proceeds of such Purchase
shall be deemed a representation and warranty by the Originator that such
statements are then true):
(i) the representations and warranties set forth in ARTICLE II are
correct on and as of the date of such Purchase as though made on and as of
such date;
(ii) no event has occurred, or would result from such Purchase, that
will constitute an Event of Default, and no event has occurred and is
continuing, or would result from such Purchase, that would constitute a
Potential Event of Default; and
(iii) the Termination Date shall not have occurred;
and (b) the Buyer shall have received such other approvals, opinions or
documents as it may reasonably request.
Notwithstanding the foregoing conditions precedent, upon payment of the
Purchase Price for any Purchase (whether by payment of cash, through an
increase in the amounts outstanding under the Subordinated Note, by offset of
amounts owed to the Buyer and/or by offset of capital contributions to be made
under the Subscription Agreement), title to the Receivables and related assets
included in such Purchase shall vest in the Buyer, whether or not the
conditions precedent to such Purchase were in fact satisfied.
ARTICLE IV
COVENANTS
Section 4.1. Affirmative Covenants of Originator. Until the date this
Agreement shall terminate in accordance with its terms, the Originator hereby
covenants, individually and in its capacity as Sub-Servicer, that:
(a) Financial Reporting. The Originator will maintain a system of
accounting established and administered in accordance with generally accepted
accounting principles, and furnish to the Buyer:
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(i) Annual Reporting. Within 90 days after the close of each of its
fiscal years, a complete copy of the Originator's audit report, which
shall include at least the Originator's and its consolidated
Subsidiaries' consolidated balance sheet, consolidated income statement
and consolidated statement of cash flow for such year, examined in
accordance with generally accepted auditing standards by an independent
public accountant of national reputation selected by the Originator and
reasonably acceptable to the Buyer, together with the certificate
described in clause (iii) below. Such auditor's report shall be free
from exceptions, reservations or qualifications as result of which the
auditor is unable to conclude that the financial statements fairly
present or adequately disclose, in all material respects, the financial
condition of the Originator and its consolidated Subsidiaries and shall
not be limited because of restricted or limited access by such accountant
to any material portion of the Originator's or any Subsidiary's records.
(ii) Quarterly Reporting. Within 45 days after the close of each
of the first three quarterly periods of each of its fiscal years, the
Originator's and its consolidated Subsidiaries' unaudited consolidated
balance sheet, consolidated income statement and consolidated statement
of cash flow for such quarter and that portion of the fiscal year ending
with such quarter, certified by the Chief Financial Officer of the
Originator as being complete and correct and fairly presenting, in all
material respects, the Originator's and its consolidated Subsidiaries'
financial condition and results of operations as of the end of such
quarter and for that portion of the fiscal year ending with such quarter,
together with the certificate described in clause (iii) below.
(iii) Compliance Certificate. Together with the financial
statements required to be delivered under clauses (i) and (ii) above, a
compliance certificate in substantially the form of EXHIBIT IV signed by
the Originator's Chief Financial Officer and dated the date of such
annual financial statement or such quarterly financial statement, as the
case may be.
(iv) Shareholders Statements and Reports. Promptly upon the
furnishing thereof generally to the shareholders of the Originator,
copies of all financial statements, reports and proxy statements so
furnished.
(v) S.E.C. Filings. Promptly upon the filing thereof, copies of all
registration statements, notices of securities issuance, annual,
quarterly, monthly or other regular reports which the Originator or any
of its Subsidiaries files with the Securities and Exchange Commission.
(vi) Notices under Transaction Documents. Forthwith upon its
receipt of any notice, request for consent, financial statements,
certification, report or other written communication under or in
connection with any Transaction Document from any Person other than the
Buyer, the Agent or any Purchaser, copies of the same.
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(vii) Change in Credit and Collection Policy. At least 30 days
prior to the effectiveness of any material change in or amendment to the
Credit and Collection Policy, a copy of the Credit and Collection Policy
then in effect and a notice indicating such change or amendment.
(viii) Other Information. Such other information (including
non-financial information) as the Buyer (or any of its assignees) may
from time to time reasonably request.
(b) Notices. The Originator will notify the Buyer and the Agent in
writing of any of the following immediately upon learning of the occurrence
thereof, describing the same and, if applicable, the steps being taken with
respect thereto:
(i) Events of Default or Potential Events of Default. The
occurrence of each Event of Default or each Potential Event of Default,
by a statement of the Chief Financial Officer of the Originator.
(ii) Litigation. The institution of any litigation, arbitration
proceeding or governmental proceeding against the Originator or any of
its Subsidiaries, or to which the Originator or any of its Subsidiaries
becomes party, in either case which the Originator reports to the
Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
(iii) ERISA. The occurrence of any Reportable Event under Section
4043(c) (5), (6) or (9) of ERISA with respect to any Plan, any decision
to terminate or withdraw from a Plan, any finding made with respect to a
Plan under Section 4041(c) or (e) of ERISA, the commencement of any
proceeding with respect to a Plan under Section 4042 of ERISA, the
failure to make any required installment or other required payment under
Section 412 of the Code or Section 302 of ERISA on or before the date for
such installment or payment, or any material increase in the actuarial
present value of unfunded vested benefits under all Plans over the
preceding year.
(iv) Downgrade. Any downgrading in the rating of any
Indebtedness of the Originator by Standard & Poor's Ratings
Group or by Moody's Investors Service, Inc., setting forth the
Indebtedness affected and the nature of such change.
(c) Compliance with Laws. The Originator will comply in all material
respects with all applicable laws, rules, regulations, orders writs, judgments,
injunctions, decrees or awards to which it may be subject the failure with
which to comply would or could reasonably be expected to have a Material
Adverse Effect.
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(d) Audits. The Originator will furnish to the Buyer (and/or the
Agent on behalf of the Buyer) from time to time such information with respect
to the Receivables as the Buyer or the Agent may reasonably request. The
Originator shall, from time to time during regular business hours as requested
by Buyer (or the Agent on its behalf) upon reasonable notice, permit the Buyer
or the Agent, or their respective agents or representatives (i) to examine and
make copies of and abstracts from all Records in the possession or under the
control of the Originator relating to Receivables and the Related Security,
including, without limitation, the related Contracts, and (ii) to visit the
offices and properties of the Originator for the purpose of examining such
materials described in clause (i) above, and to discuss matters relating to the
Originator's financial condition or the Receivables and the Related Security or
the Originator's performance hereunder or the Originator's performance under
the Contracts with any of the officers or employees of the Originator having
knowledge of such matters.
(e) Keeping and Marking of Records and Books.
(i) The Originator will maintain and implement administrative and
operating procedures (including, without limitation, an ability to
recreate records evidencing Receivables in the event of the destruction
of the originals thereof), and keep and maintain all documents, books,
records and other information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, records
adequate to permit the immediate identification of each new Receivable
and all Collections of and adjustments to each existing Receivable). The
Originator will give the Agent notice of any material change in the
administrative and operating procedures referred to in the previous
sentence.
(ii) The Originator will (a) on or prior to the date hereof, mark
its master data processing records and other books and records as
required by SECTION 1.1(B) and further describing the "RECEIVABLE
INTERESTS" sold by the Buyer to the Purchasers pursuant to the Purchase
Agreement and (b) upon the request of the Buyer or the Agent: (x) mark
each Contract with a legend describing Buyer's interest therein and
further describing the Receivable Interests of the Purchasers and (y)
deliver to the Buyer or its designee all Contracts (including, without
limitation, all multiple originals of any such Contract) relating to the
Receivables then in the Originator's possession.
(f) Compliance with Contracts and Credit and Collection Policy. The
Originator will (i) timely and fully perform and comply, in all material
respects, with all provisions, covenants and other promises required to be
observed by it under the Contracts related to the Receivables, and (ii) comply
in all material respects with the Credit and Collection Policy. The Originator
will pay when due any taxes payable in connection with the Receivables.
(g) Ownership Interest. The Originator shall take all necessary
action to establish and maintain in favor of the Buyer a valid and perfected
first priority ownership interest
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in the Receivables and the Related Security, Collections and Collection
Accounts with respect thereto, to the full extent contemplated herein,
including, without limitation, taking such action to perfect, protect or more
fully evidence the interest of the Buyer hereunder as the Buyer or its
assignees may reasonably request.
(h) Purchasers' Reliance. The Originator acknowledges that the Agent and
the Purchasers are entering into the transactions contemplated by the Purchase
Agreement in reliance upon the Buyer's identity as a separate legal entity from
the Originator. Therefore, from and after the date of execution and delivery
of this Agreement, the Originator shall take all reasonable steps including,
without limitation, all steps that the Buyer or any assignee of the Buyer may
from time to time reasonably request, to maintain the Buyer's identity as a
separate legal entity and to make it manifest to third parties that the Buyer
is an entity with assets and liabilities distinct from those of the Originator
and any Affiliates thereof and not just a division of the Originator. Without
limiting the generality of the foregoing and in addition to the other covenants
set forth herein, the Originator (i) shall not hold itself out to third parties
as liable for the debts of the Buyer nor purport to own the Receivables and
other assets acquired by the Buyer, (ii) shall take all other actions necessary
on its part to ensure that the Buyer is at all times in compliance with the
covenants set forth in SECTION 5.1(K) of the Purchase Agreement and (iii) shall
cause all tax liabilities arising in connection with the transactions
contemplated herein or otherwise to be allocated between the Originator and the
Buyer on an arm's-length basis and in a manner consistent with the procedures
set forth in U.S. Treasury Regulations Section Section 1.1502-33(d) and
1.1552-1.
(i) Collections. The Originator shall instruct all Obligors
(including, without limitation, from and after the time when the Originator
issues the first invoice with respect to each Flexible Packaging Receivable,
the Obligors on Flexible Packaging Receivables) to pay all Collections directly
to a segregated lock-box or other Collection Account listed on EXHIBIT III,
each of which is subject to a Collection Account Agreement. In the case of
payments remitted to any such lock-box, the Originator shall cause all proceeds
from such lock-box to be deposited directly by a Collection Bank into a
concentration account or a depositary account listed on EXHIBIT III. Pursuant
to SECTION 5.3 hereof and the Collection Account Agreements, the Originator has
transferred and assigned to the Buyer all of its right, title and interest in
and to, and exclusive ownership, dominion and control (subject to the terms of
this Agreement) to each such lock-box, concentration account and depositary
account. In the case of any Collections received by the Originator, the
Originator shall remit such Collections to a Collection Account not later than
the Business Day immediately following the date of receipt of such Collections,
and, at all times prior to such remittance, the Originator shall itself hold
such Collections in trust, for the exclusive benefit of the Buyer and its
assigns. In the case of any remittances received by the Originator in any such
lock-box, concentration account or depositary account that shall have been
identified, to the satisfaction of the Servicer, to not constitute Collections
or other proceeds of the Receivables or the Related Security, the Originator
shall promptly remit such items to the Person identified to it as being the
owner of such remittances. From and after the date the Agent delivers
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to any of the Collection Banks a Collection Notice pursuant to SECTION 6.3 of
the Purchase Agreement, the Agent, as assignee of the Buyer, may request
that the Originator, and the Originator thereupon promptly shall, direct all
Obligors on Receivables to remit all payments thereon to a new depositary
account (the "NEW CONCENTRATION ACCOUNT") specified by the Agent and, at all
times thereafter the Originator shall not deposit or otherwise credit to the
New Concentration Account any cash or payment item other than Collections.
Alternatively, the Agent may request that the Originator, and the Originator
thereupon promptly shall, direct all Persons then making remittances to any
account listed on EXHIBIT III which remittances are not payments on Receivables
to deliver such remittances to a location other than an account listed on
EXHIBIT III.
(j) ERISA. The Originator shall make all required installments or other
required payments under Section 412 of the Code or Section 302 of ERISA on or
before the due date for such installment or other payment.
(k) Lines of Business. The Originator shall continue to operate its
business in substantially the same fields of enterprise in which it is engaged
on the date of this Agreement.
Section 4.2. Negative Covenants of Originator. Until the date this
Agreement shall terminate in accordance with its terms, the Originator hereby
covenants, individually and in its capacity as Sub-Servicer, that:
(a) Name Change, Offices, Records and Books of Accounts. The Originator
will not change its name, identity or corporate structure (within the meaning
of Section 9-402(7) of any applicable enactment of the UCC) or relocate its
chief executive office or any office where Records are kept unless it shall
have: (i) given the Buyer and the Agent at least 45 days prior notice thereof
and (ii) delivered to the Buyer all financing statements, instruments and
other documents requested by the Buyer (or the Agent on behalf of the Buyer)
in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. The Originator will not
add or terminate any bank as a Collection Bank from those listed in EXHIBIT
III, or make any change in its instructions to Obligors regarding payments to
be made to the Originator or payments to be made to any lock-box, Collection
Account or Collection Bank, unless the Buyer and the Agent shall have received,
at least fifteen (15) Business Days before the proposed effective date
therefor:
(i) written notice of such addition, termination or change, and
(ii) with respect to the addition of a lock-box, Collection Account
or Collection Bank, an executed account agreement and an executed
Collection Account Agreement from such Collection Bank relating thereto;
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PROVIDED, HOWEVER, that the Originator may make changes in instructions to
Obligors regarding payments if such new instructions require such Obligor to
make payments to another existing lock-box or other Collection Account that is
subject to a Collection Account Agreement then in effect.
(c) Modifications to Credit and Collection Policy. The Originator will
not make any change to the Credit and Collection Policy which would be
reasonably likely to adversely affect the collectibility of any material
portion of the Receivables or decrease the credit quality of any newly created
Receivables. Except as provided in SECTION 5.2(C), the Originator, acting as
Sub-Servicer or otherwise, will not extend, amend or otherwise modify the terms
of any Receivable or any Contract related thereto other than in accordance with
the Credit and Collection Policy.
(d) Sales, Liens, Etc. The Originator shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, or create or suffer to exist any Adverse Claim upon
(including, without limitation, the filing of any financing statement) or with
respect to, any Receivable sold or purported to be sold hereunder on or prior
to the Termination Date or the Related Security or Collections in respect
thereof, or upon or with respect to any Contract under which any such
Receivable arises, or any lock-box or other Collection Account or assign any
right to receive income in respect thereof (other than, in each case, the
creation of the interests therein in favor of the Buyer provided for herein and
the Agent and the Purchasers provided for in the Purchase Agreement), and the
Originator shall defend the right, title and interest of the Buyer in, to and
under any of the foregoing property, against all claims of third parties
claiming through or under the Originator.
(e) Accounting for Purchases. The Originator will not, and shall not
permit any Affiliate to, account for or treat (whether in financial statements
or otherwise) the transactions contemplated hereby in any manner other than the
sale of the Receivables and Related Security by the Originator to the Buyer or
in any other respect account for or treat the transactions contemplated hereby
in any manner other than as a sale of the Receivables and Related Security by
the Originator to the Buyer except to the extent that such transactions are not
recognized on account of consolidated financial reporting in accordance with
generally accepted accounting principles.
ARTICLE V
ADMINISTRATION AND COLLECTION
Section 5.1. Designation of Sub-Servicer. (a) The servicing,
administration and collection of the Receivables shall be conducted by the
Servicer so designated from time to time in accordance with SECTION 6.1 of the
Purchase Agreement. The Originator is hereby designated as, and hereby agrees
to act as sub-servicer (the "SUB-SERVICER") for the Buyer in the
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Buyer's capacity as the initial Servicer designated pursuant to the terms of the
Purchase Agreement, and the Originator agrees in such capacity as Sub-Servicer
to perform all of the duties and obligations of the Servicer set forth herein
and in the Purchase Agreement with respect to the Receivables, Related Security
related thereto and Collections thereof.
(b) The Originator further agrees that it shall be directly liable to the
Agent and the Purchasers for the full and prompt performance of all such duties
and responsibilities of the Servicer PROVIDED THAT (i) nothing in this
Agreement shall eliminate the Buyer's primary liability to the Agent and the
Purchasers for its duties as Servicer, (ii) the Buyer and its assigns shall
retain sole responsibility and authority for withdrawing funds from the
Collection Accounts, and (iii) the Agent and the Purchasers shall be entitled
to deal exclusively with the Buyer in matters relating to the discharge by the
Servicer of its duties pursuant to SECTION 6.1 of the Purchase Agreement.
(c) Without the prior written consent of the Buyer and its assignees, the
Originator shall not be permitted to delegate any of its duties or
responsibilities as Sub-Servicer to any Person. If at any time the Agent
shall, as permitted under SECTION 6.1(A) of the Purchase Agreement, designate
as Servicer any Person other than the Buyer, all duties and responsibilities
theretofore delegated by the Buyer to the Originator may, at the discretion of
the Agent, be terminated forthwith on written notice given by the Buyer or the
Agent (as assignee of the Buyer) to the Originator.
Section 5.2. Duties of Sub-Servicer. (a) The Sub-Servicer shall take or
cause to be taken all such actions as may be necessary or advisable to collect
each Receivable from time to time, all in accordance with applicable laws,
rules and regulations, with reasonable care and diligence, and in accordance
with the Credit and Collection Policy.
(b) The Sub-Servicer shall use its best efforts to segregate, on each
Business Day, in a manner acceptable to the Buyer and the Agent, all cash,
checks and other instruments received by it from time to time constituting
Collections from the general funds of the Sub-Servicer prior to the remittance
thereof to the Buyer to be administered in accordance with the procedures
described herein and in Article I of the Purchase Agreement.
(c) The Sub-Servicer, may, in accordance with the Credit and Collection
Policy, extend the maturity of any Receivable or adjust the Outstanding Balance
of any Receivable as the Sub-Servicer may determine to be appropriate to
maximize Collections thereof; PROVIDED, HOWEVER, that such extension or
adjustment shall not alter the status of such Receivable as a Defaulted
Receivable or limit the rights of the Agent or the Purchasers under the
Purchase Agreement. Notwithstanding anything to the contrary contained herein,
from and after the occurrence of an Event of Default, the Buyer shall have the
absolute and unlimited right to direct the Sub-Servicer to commence or settle
any legal action with respect to any Receivable or to foreclose upon or
repossess any Related Security.
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(d) The Sub-Servicer shall hold in trust for the Buyer and its assignees,
in accordance with their respective interests, all Records that evidence or
relate to the Receivables, the related Contracts and Related Security or that
are otherwise necessary or desirable to collect the Receivables and shall, as
soon as practicable upon demand of the Buyer, deliver or make available to the
Buyer all such Records at the chief executive office of the Originator. The
Sub-Servicer shall, as soon as practicable following receipt thereof, turn over
to the Buyer all Collections of Receivables, less: (i) all reasonable
out-of-pocket costs and expenses of the Sub-Servicer of servicing,
administering and collecting the Receivables, and (ii) any cash collections or
other cash proceeds received with respect to indebtedness not constituting
Receivables.
(e) Any payment by an Obligor in respect of any indebtedness owed by it to
the Originator shall, except as otherwise specified by such Obligor or
otherwise required by contract or law and unless otherwise instructed by the
Buyer, be applied as a Collection of any Receivable of such Obligor (starting
with the oldest such Receivable) to the extent of any amounts then due and
payable thereunder before being applied to any other receivable or other
obligation of such Obligor.
Section 5.3. Collection Account Agreements. The Originator hereby
transfers to the Buyer, effective concurrently with the initial Purchase
hereunder (or, if any Collection Account is not in existence on such date,
concurrently with the opening of such account), the exclusive ownership and
control of the Collection Accounts, as evidenced by the Collection Account
Agreements, and the Originator shall claim no further right, title and/or
interest in and to any such Collection Accounts nor any rights to withdraw
funds therefrom. The Originator hereby authorizes the Buyer, and agrees that
the Buyer shall be entitled to (i) endorse the Originator's name on checks and
other instruments representing Collections, (ii) enforce the Receivables, the
related Contracts and the Related Security and (iii) take such action as shall
be necessary or desirable to cause all cash, checks and other instruments
constituting Collections of Receivables to come into the possession of the
Buyer and its designees rather than the Originator.
Section 5.4. Responsibilities of the Originator. Anything herein to the
contrary notwithstanding, the exercise by the Buyer (or its assignees) of its
rights hereunder shall not release the Sub-Servicer or the Originator from any
of their duties or obligations with respect to any Receivables or under the
related Contracts. Neither the Buyer nor any of its assignees (including any
Servicer) shall have any obligation or liability with respect to any
Receivables or related Contracts, nor shall any of them be obligated to perform
the obligations of the Originator.
Section 5.5. Receivables Reports.
(a) On Thursday of each week hereafter beginning September 5, 1996 (or, if
any such Thursday is not a Business Day, the next following Business Day), the
Sub-Servicer shall prepare and forward to the Buyer and the Agent a Weekly
Report.
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(b) On the 15th day of each month hereafter (or, if such date is not a
Business Day, the next following Business Day), and at such other times as the
Buyer or the Agent (as the Buyer's assignee) shall request, the Sub-Servicer
shall prepare and forward to the Buyer and the Agent a Monthly Report.
(c) Promptly following any request therefor by the Buyer or the Agent (as
the Buyer's assignee), the Sub-Servicer shall prepare and provide to the Buyer
and the Agent a listing by Obligor of all Receivables together with an aging of
such Receivables.
Section 5.6. Sub-Servicer Fee. In consideration of the Sub-Servicer's
agreement to perform the duties and obligations of the Servicer under the
Purchase Agreement, the Buyer hereby agrees that, so long as the Originator
shall continue to perform as Sub-Servicer hereunder, the Buyer shall pay over
to the Originator a monthly fee in an amount equal to (i) a per annum rate not
to exceed 1.25% agreed to by the Buyer and the Originator from time to time,
multiplied by (ii) the average Outstanding Balance of the Receivables held by
the Buyer (without taking account of any Receivable Interests held by the
Purchasers) during the preceding Calculation Period, such fee to be calculated
to provide the Servicer and the Sub-Servicer reasonable compensation for their
respective servicing activities.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default:
(a) The Sub-Servicer or the Originator shall fail to make any payment or
deposit when required hereunder and such failure shall remain unremedied for
one (1) Business Day following the occurrence thereof.
(b) The Sub-Servicer or the Originator shall fail to deliver any Weekly
Report or any Monthly Report within two (2) Business Days after the same is
due.
(c) The Sub-Servicer or the Originator shall fail to perform or observe
any term, covenant or agreement hereunder (other than as referred to in SECTION
6.1(A) or SECTION 6.1(B)) and such failure shall remain unremedied for five (5)
Business Days following occurrence thereof.
(d) Any representation, warranty, certification or statement made by the
Originator or the Sub-Servicer in this Agreement, any other Transaction
Document or in any other document delivered pursuant hereto shall prove to have
been incorrect in any material respect when made or deemed made.
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(e) (i) The Originator or the Sub-Servicer shall generally not pay its
debts as such debts become due; (ii) the Originator or the Sub-Servicer shall
admit in writing its inability to pay its debts generally or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Originator or the Sub-Servicer seeking to
adjudicate it bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official for
it or any substantial part of its property, unless any such proceeding or
action instituted by any Person other than the Originator is set aside or
withdrawn or ceases to be in effect within sixty (60) days from the date of the
filing of such action or making of any such appointment described in this
subsection (e); or (iii) the Originator or the Sub-Servicer shall take any
corporate action to authorize any of the actions set forth in clause (i) above
in this subsection (e).
(f) One or more final judgments shall be entered against the Originator or
any of its Subsidiaries for the payment of money in the aggregate amount of
$5,000,000, or the equivalent thereof in another currency, or more on claims
not covered by insurance or as to which the insurance carrier has denied its
responsibility, and such judgment shall continue unsatisfied and in effect for
sixty (60) consecutive days without a stay of execution.
(g) Any Plan of the Originator or any of its Subsidiaries shall be
terminated within the meaning of Title IV of ERISA except as permitted by
Section 4044(d) of ERISA, or a trustee shall be appointed by the appropriate
U.S. District Court to administer any Plan of the Originator or any of its
Subsidiaries, or the PBGC shall institute proceedings to terminate any Plan of
the Originator or any of its Subsidiaries or to appoint a trustee to administer
any such Plan and, upon the occurrence of any of the foregoing, the then
current value of guaranteed benefits and other benefit commitments (as such
terms are defined under Title IV of ERISA and determined in accordance with the
principles of Title IV of ERISA) for which the Originator or any Subsidiary
might be liable to any Person exceed the then current value of the assets
allocable to such benefits by more than $5,000,000.
(h) A Change of Control shall occur.
(i) A Servicer Default shall occur under the terms of the Purchase
Agreement and the Required Investors shall declare the Facility Termination
Date to have occurred.
Section 6.2. Remedies. Upon the occurrence and during the continuation of
an Event of Default, the Buyer may either (i) remove the Sub-Servicer as
Sub-Servicer (to the extent such Event of Default was cause by, or arose as a
result of the activities of, the Sub-Servicer), or (ii) declare the Termination
Date to have occurred, whereupon the Termination Date shall forthwith occur,
without demand, protest or further notice of any kind, all of which are hereby
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expressly waived by the Originator; PROVIDED, HOWEVER, that upon the occurrence
of an Event of Default described in SECTION 6.1(E)(II) OR (III) above or of an
actual or deemed entry of an order for relief with respect to the Originator
under the Federal Bankruptcy Code, the Termination Date shall automatically
occur, without demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Originator. Upon the occurrence of the
Termination Date for any reason whatsoever, the Buyer and its assigns shall
have, in addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC, which rights
shall be cumulative.
ARTICLE VII
INDEMNIFICATION
Section 7.1. Indemnities by the Originator. Without limiting any other
rights which the Buyer may have hereunder or under applicable law, the
Originator hereby agrees to indemnify the Buyer and its assignees (including
the Agent and each Purchaser) and their respective officers, directors, agents
and employees (each an "INDEMNIFIED PARTY") from and against any and all
damages, losses, claims, taxes, liabilities, costs, expenses and for all other
amounts payable, including reasonable attorneys' fees and disbursements (all of
the foregoing being collectively referred to as "INDEMNIFIED AMOUNTS") awarded
against or actually incurred by any of them arising out of any of the
following:
(i) any representation or warranty made by the Originator or the
Sub-Servicer (or any officers of the Originator or the Sub-Servicer)
under or in connection with this Agreement, any other Transaction
Document, any Monthly Report, any Weekly Report or any other written
information or report delivered by the Originator or the Sub-Servicer
pursuant hereto or thereto, which shall have been false or incorrect when
made or deemed made;
(ii) the failure by the Originator or the Sub-Servicer to comply
with any applicable law, rule or regulation with respect to any
Receivable or Contract related thereto, or the nonconformity of any
Receivable or Contract with any such applicable law, rule or regulation;
(iii) any failure of the Originator or the Sub-Servicer to perform
its duties or obligations in accordance with the provisions of this
Agreement or any other Transaction Document;
(iv) any products liability or similar claim arising out of or in
connection with merchandise, insurance or services which are the subject
of any Contract;
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(v) any dispute, claim, offset (other than discounts for prompt
payment granted in the ordinary course of the Originator's business) or
defense (other than discharge in bankruptcy of the Obligor) of any
Obligor to the payment of any Receivable (including, without limitation,
a defense based on such Receivable or the related Contract not being a
legal, valid and binding obligation of such Obligor enforceable against
it in accordance with its terms), or any other claim resulting from the
furnishing or failure to furnish the underlying goods and services;
(vi) the commingling of Collections of Receivables at any
time with other funds;
(vii) any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby or thereby, the use of the proceeds of a
Purchase, the ownership of the Receivables or any other investigation,
litigation or proceeding relating to the Originator in which any
Indemnified Party becomes involved as a result of any of the transactions
contemplated hereby or thereby;
(viii) any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being immune from
civil and commercial law and suit on the grounds of sovereignty or
otherwise from any legal action, suit or proceeding;
(ix) the sale to the Buyer of any Receivable other than an Eligible
Receivable (except for Receivables sold at closing in exchange for equity
issuances under SECTION 1.2(A)(II)); or
(x) the failure to vest and maintain vested in the Buyer, or to
transfer to the Buyer, legal and equitable title to, and ownership of, a
first priority perfected ownership interest in the Receivables sold or
purported to be sold hereunder, and the Related Security and the
Collections in respect thereof, free and clear of any Adverse Claim
(other than as created under the Purchase Agreement);
EXCLUDING, HOWEVER, the following:
(a) Indemnified Amounts to the extent final judgment of a court of
competent jurisdiction holds such Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(b) Indemnified Amounts to the extent the same includes losses in
respect of Eligible Receivables that prove to be uncollectible on account
of the insolvency, bankruptcy or lack of creditworthiness of the related
Obligor; or
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(c) taxes imposed by the jurisdiction in which such Indemnified
Party's principal executive office is located, on or measured by the
overall net income of such Indemnified Party to the extent that the
computation of such taxes is consistent with (i) the characterization of
the Purchases as true sales and (ii) the characterization of the
transactions under the Purchase Agreement as creating indebtedness of the
Buyer for purposes of taxation;
Section 7.2. Other Costs and Expenses. The Originator shall pay to the
Buyer on demand any and all costs and expenses of the Buyer, if any, including
reasonable counsel fees and expenses actually incurred in connection with the
enforcement of this Agreement and the other documents delivered hereunder and
in connection with any restructuring or workout of this Agreement or such
documents, or the amendment, waiver or other modification of this Agreement
following an Event of Default.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Waivers and Amendments.
(a) No failure or delay on the part of the Buyer (or any of its assignees)
or the Originator in exercising any power, right or remedy under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or remedy preclude any other further exercise thereof or
the exercise of any other power, right or remedy. The rights and remedies
herein provided shall be cumulative and nonexclusive of any rights or remedies
provided by law. Any waiver of this Agreement shall be effective only in the
specific instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented, modified
or waived except in writing signed by the Originator and the Buyer and, to the
extent required under the Purchase Agreement, the Agent, the Investors and/or
the Required Investors.
Section 8.2. Notices. Except as otherwise expressly provided herein, all
communications and notices provided for hereunder shall be in writing
(including bank wire, telecopy or electronic facsimile transmission or similar
writing) and shall be given to the other party hereto at its respective address
or telecopy number set forth on the signature pages hereof. All such
communications and notices shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective when received through the mails, transmitted
by telecopy, delivered to the telegraph company, confirmed by telex answerback
or delivered to the cable company, respectively.
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Section 8.3. Protection of Buyer's Interests.
(a) The Originator agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that the Buyer (or its
assignees) may reasonably request, to perfect, protect or more fully evidence
the Buyer's ownership of the Receivables, or to enable the Buyer (or its
assignees) to exercise and enforce their rights and remedies hereunder. The
Buyer may, or the Buyer may direct the Originator to, notify the Obligors of
Receivables, at any time following the replacement of the Originator as
Sub-Servicer and at the Originator's expense, of the Buyer's ownership of the
Receivables and may also direct that payments of all amounts due or that become
due under any or all Receivables be made directly to the Buyer or its designee.
(b) If the Originator or the Sub-Servicer fails to perform any of its
obligations hereunder, the Buyer (or any of its assignees) may (but shall not
be required to) perform, or cause the performance of, such obligation; and the
Buyer's (and any of its assignee's) reasonable costs and expenses actually
incurred in connection therewith shall be payable by the Originator or the
Sub-Servicer, as applicable, on demand. The Originator and the Sub-Servicer
each irrevocably authorizes the Buyer at any time and from time to time in the
sole discretion of the Buyer, and appoints the Buyer as its attorney-in-fact,
to act on behalf of the Originator and the Sub-Servicer (i) to execute on
behalf of the Originator as seller/debtor and to file financing statements
necessary or desirable in the Buyer's sole discretion to perfect and to
maintain the perfection and priority of the Buyer's ownership interest in the
Receivables and (ii) to file a carbon, photographic or other reproduction of
this Agreement or any financing statement with respect to the Receivables as a
financing statement in such offices as the Buyer in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and priority
of the Buyer's ownership interest in the Receivables. This appointment is
coupled with an interest and is irrevocable.
Section 8.4. Confidentiality.
(a) Each of the Originator, the Buyer and the Sub-Servicer shall
maintain and shall cause each of its employees and officers to maintain the
confidentiality of this Agreement and the Purchase Agreement and the other
confidential proprietary information with respect to the Agent and FALCON and
their respective businesses obtained by it or them in connection with the
structuring, negotiating and execution of the transactions contemplated herein
and therein, except that each of the Originator, the Buyer, the Sub-Servicer
and their respective officers and employees may disclose such information to
the Originator's, the Buyer's or the Sub-Servicer's external accountants and
attorneys and as required by any applicable law or order of any judicial or
administrative proceeding. In addition, each of the Originator, the Buyer and
the Sub-Servicer may disclose any such nonpublic information pursuant to any
law, rule, regulation, direction, request or order of any judicial,
administrative or regulatory authority or proceedings (whether or not having
the force or effect of law).
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(b) Anything herein to the contrary notwithstanding, each of the
Originator and the Sub-Servicer hereby consents to the disclosure of any
nonpublic information with respect to it (i) to the Buyer, the Agent, the
Investors or FALCON by each other, (ii) by the Buyer, the Agent or the
Purchasers to any prospective or actual assignee or participant of any of them
or (iii) by the Agent to any rating agency, Commercial Paper dealer or provider
of a surety, guaranty or credit or liquidity enhancement to FALCON or any
entity organized for the purpose of purchasing, or making loans secured by,
financial assets for which First Chicago acts as the administrative agent and
to any officers, directors, employees, outside accountants and attorneys of any
of the foregoing, provided each such Person is informed of the confidential
nature of such information in a manner consistent with the practice of the
Agent for the making of such disclosures generally to Persons of such types.
In addition, the Buyer, the Purchasers and the Agent may disclose any such
nonpublic information pursuant to any law, rule, regulation, direction, request
or order of any judicial, administrative or regulatory authority or proceedings
(whether or not having the force or effect of law).
Section 8.5. Bankruptcy Petition.
(a) Each of the Originator and the Sub-Servicer hereby covenants and
agrees that, prior to the date which is one year and one day after the payment
in full of all outstanding senior indebtedness of FALCON, it will not institute
against, or join any other Person in instituting against, FALCON any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the laws of the United States or any state of
the United States.
(b) Each of the Originator and the Sub-Servicer hereby covenants and
agrees that, prior to the date which is one year and one day after all
Aggregate Unpaids (under and as defined in the Purchase Agreement) have been
paid, it will not institute against, or join any other Person in instituting
against, the Buyer any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the
United States or any state of the United States.
Section 8.6. Limitation of Liability. Except with respect to any claim
arising out of the willful misconduct or gross negligence of FALCON, the Agent
or any Investor, no claim may be made by the Originator, the Sub-Servicer or any
other Person against FALCON, the Agent or any Investor or their respective
Affiliates, directors, officers, employees, attorneys or agents for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Originator hereby waives, releases,
and agrees not to sue upon any claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
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SECTION 8.7. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF ILLINOIS.
SECTION 8.8. CONSENT TO JURISDICTION. THE ORIGINATOR HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE ORIGINATOR
PURSUANT TO THIS AGREEMENT AND THE ORIGINATOR HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE BUYER (OR THE RIGHTS OF THE AGENT OR ANY PURCHASER AS THE
BUYER'S ASSIGNEES) TO BRING PROCEEDINGS AGAINST THE ORIGINATOR IN THE COURTS OF
ANY OTHER JURISDICTION WHEREIN ANY ASSETS OF THE ORIGINATOR MAY BE LOCATED.
ANY JUDICIAL PROCEEDING BY THE ORIGINATOR AGAINST THE BUYER, THE AGENT OR ANY
PURCHASER, ANY AFFILIATE OF THE AGENT OR A PURCHASER, OR ANY OTHER OF THE
BUYER'S ASSIGNEES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT
EXECUTED BY THE ORIGINATOR PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN
A COURT IN CHICAGO, ILLINOIS.
SECTION 8.9. WAIVER OF JURY TRIAL. EACH OF THE ORIGINATOR AND THE BUYER
HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT
EXECUTED BY THE ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER OR THEREUNDER.
Section 8.10. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the Originator, the Buyer and their
respective successors and permitted assigns (including any trustee in
bankruptcy). The Originator may not assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of the
Buyer. The Buyer may assign at any time its rights and obligations hereunder
and interests herein to any other Person without the consent of (but upon five
(5) Business Days prior written notice
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to) the Originator. Without limiting the foregoing, the Originator acknowledges
that the Buyer, pursuant to the Purchase Agreement, shall assign to the Agent,
for the benefit of the Purchasers, its rights, remedies, powers and privileges
hereunder and that the Agent may further assign such rights, remedies, powers
and privileges to the extent permitted in the Purchase Agreement, and the
Originator hereby waives the requirement for five (5) Business Days' prior
written notice of any such assignment. The Originator agrees that the Agent, as
the assignee of the Buyer, shall, subject to the terms of the Purchase
Agreement, have the right to enforce this Agreement and to exercise directly all
of the Buyer's rights and remedies under this Agreement (including, without
limitation, the right to give or withhold any consents or approvals of the Buyer
to be given or withheld hereunder) and the Originator agrees to cooperate fully
with the Agent and the Servicer in the exercise of such rights and remedies.
The Originator further agrees to give to the Agent copies of all notices it is
required to give to the Buyer hereunder. This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms and, subject to the proviso in SECTION 1.1(C), shall remain in full
force and effect until such time, after the Termination Date, as the Aggregate
Unpaids shall be equal to zero; PROVIDED, HOWEVER, that the rights and remedies
with respect to (i) any breach of any representation and warranty made by the
Originator pursuant to Article II, (ii) the indemnification and payment
provisions of Article VII, and (iii) SECTION 8.5 shall be continuing and shall
survive any termination of this Agreement.
Section 8.11. Subordination. The Originator agrees that any indebtedness,
obligation or claim, it may from time to time hold or otherwise have (other
than any obligation or claim with respect to the fees payable by the Buyer
under SECTION 5.6) against the Buyer or any assets or properties of the Buyer,
whether arising hereunder or otherwise existing, shall be subordinate in right
of payment to the prior payment in full of any indebtedness or obligation of
the Buyer owing to the Agent or any Purchaser under the Purchase Agreement.
The subordination provision contained herein is for the direct benefit of, and
may be enforced by, the Agent and the Purchasers and/or any of their assignees
under the Purchase Agreement.
Section 8.12. Integration; Survival of Terms. This Agreement, the
Subordinated Note, the Subscription Agreement, and the Collection Account
Agreements contain the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof superseding all prior oral or written understandings.
Section 8.13. Counterparts; Severability. This Agreement may be executed
in any number of counterparts and by each party hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any
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such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
ORIGINATOR: PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------------
Name:
Title:
Address for Notices:
Printpack, Inc.
4335 Wendell Drive, S.W.
Atlanta, GA 30336
Attention: R. Michael Hembree
Phone: (404) 691-2538 x7287
Fax: (404) 696-4868
BUYER: FLEXIBLE FUNDING CORP.
By: /s/ R. Michael Hembree
-----------------------------
Name:
Title:
Address for Notices:
Flexible Funding Corp.
500 Interchange Drive
Atlanta, GA 30336
Attention: David M. Donovan
Phone: (404) 691-5830
Fax: (404) 696-8526
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EXHIBIT I
DEFINITIONS
AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING
MEANINGS (SUCH MEANINGS TO BE EQUALLY APPLICABLE TO BOTH THE SINGULAR AND
PLURAL FORMS OF THE TERMS DEFINED):
"ADVERSE CLAIM" means a lien, security interest, charge or encumbrance, or
other right or claim in, of or on any Person's assets or properties in favor of
any other Person.
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling (including but not limited to all directors and
officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control another Person
if such Person possesses, directly or indirectly, the power to direct or cause
the direction of the management or policies of the other Person, whether
through ownership of voting securities, by contract or otherwise.
"AGENT" means First Chicago in its capacity as "AGENT" under the Purchase
Agreement, and any successor Agent appointed under Article IX of the Purchase
Agreement.
"AGREEMENT" means this Receivables Sale Agreement, as it may be amended or
modified and in effect from time to time.
"AGGREGATE UNPAIDS" has the meaning set forth in the Purchase Agreement.
"BANK AGENT" has the meaning set forth in the Intercreditor Agreement.
"BASE RATE" means a rate per annum equal to the corporate base rate, prime
rate or base rate of interest, as applicable, announced by the Reference Bank
from time to time, changing when and as such rate changes; PROVIDED, HOWEVER,
that from and after the occurrence of an Event of Default, the "BASE RATE"
shall equal the sum of the corporate base rate, prime rate or base rate of
interest, as applicable, announced by the Reference Bank from time to time,
plus 2.00% per annum, changing when and as such rate changes.
"BUSINESS DAY" means any day on which banks are not authorized or required
to close in New York, New York or Chicago, Illinois and The Depository Trust
Company of New York is open for business.
"CALCULATION PERIOD" means a period beginning on the first day and ending
on the last day of each fiscal month of the Originator commencing on or after
August 1, 1996.
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"CAPITAL" shall have the meaning set forth in the Purchase Agreement.
"CHANGE OF CONTROL" means (i) any Person or Persons (other than Printpack
Holdings, Inc., any of the Principals or their Related Parties) acting in
concert shall acquire beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934) of 20% or more of the outstanding shares of voting stock of Printpack,
Inc.; or (ii) during any period of twelve (12) consecutive months, commencing
before or after the date hereof, individuals who at the beginning of such
twelve-month period were directors of the Originator shall cease for any reason
to constitute a majority of the board of directors of the Originator; or (iv)
the Originator shall cease to own, free and clear of all Adverse Claims (other
than the pledge to the Bank Agent), all of the outstanding shares of voting
stock of the Seller on a fully diluted basis.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLECTION ACCOUNT" means each concentration account, depositary account,
lock-box account or similar account in which any Collections are collected or
deposited.
"COLLECTION ACCOUNT AGREEMENT" means, in the case of any actual or
proposed Collection Account, an agreement in substantially the form of EXHIBIT
V hereto.
"COLLECTION BANK" means, at any time, any of the banks or other financial
institutions holding one or more Collection Accounts.
"COLLECTION DATE" means that date following the Termination Date which is
one year and one day after the date which (i) the Outstanding Balance of all
Receivables sold hereunder has been reduced to zero and (ii) the Originator has
paid to the Buyer all indemnities, adjustments and other amounts which may be
owed hereunder in connection with the Purchases.
"COLLECTION NOTICE" means a notice, in substantially the form of the
Collection Notice contained in EXHIBIT V hereto, from the Agent to a Collection
Bank.
"COLLECTIONS" means, with respect to any Receivable, all cash collections
and other cash proceeds in respect of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable.
"CONTRACT" means, with respect to any Receivable, any and all instruments,
agreements, leases, bills of lading, invoices or other writings pursuant to
which such Receivable arises or which evidences such Receivable.
"CREDIT AND COLLECTION POLICY" means the Originator's credit and
collection policies and practices relating to Contracts and Receivables
existing on the date hereof and
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summarized in EXHIBIT VI hereto, as modified from time to time in accordance
with this Agreement.
"DEFAULTED RECEIVABLE" means a Receivable: (i) as to which any payment,
or part thereof, remains unpaid for 90 days or more from the original due date
for such payment; (ii) as to which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in SECTION 6.1(E) (as if
references to the Originator therein refer to such Obligor); (iii) as to which
the Obligor thereof, if a natural person, is deceased; or (iv) which has been
identified by the Originator or the Buyer as uncollectible.
"DILUTIONS" means, at any time, the aggregate amount of reductions in the
Outstanding Balances of the Receivables as a result of any setoff, discount
(other than discounts for prompt payment of up to 1% granted to customers in
the ordinary course of business), adjustment or otherwise, other than cash
Collections on account of the Receivables.
"DISCOUNT FACTOR" means a percentage calculated to provide the Buyer with
a reasonable return on its investment in the Receivables after taking account
of (i) the time value of money based upon the anticipated dates of collection
of the Receivables and the cost to the Buyer of financing its investment in the
Receivables during such period, (ii) the risk of nonpayment by the Obligors,
and (iii) the costs of sub-servicing performed by the Originator. The
Originator and the Buyer may agree from time to time to change the Discount
Factor based on changes in one or more of the items affecting the calculation
thereof, PROVIDED THAT any change to the Discount Factor shall take effect as
of the commencement of a Calculation Period, shall apply only prospectively and
shall not affect the Purchase Price payment in respect of Purchases which
occurred during any Calculation Period ending prior to the Calculation Period
during which the Originator and the Buyer agree to make such change.
"ELIGIBLE RECEIVABLE" means, at any time:
(1) a Receivable the Obligor of which (a) is not an Affiliate of any
of the parties hereto; and (b) is not a government or a governmental
subdivision or agency,
(2) a Receivable the Obligor of which is not the Obligor of
Receivables of which more than 50% of the aggregate Outstanding Balance
is more than 90 days past their respective due dates,
(3) a Receivable which is not a Defaulted Receivable,
(4) a Receivable which arises under a Contract that requires payment
within 30 days after the original invoice date therefor and has not had
its payment terms extended,
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(5) a Receivable which is an account receivable representing all or
part of the sales price of merchandise, insurance and services within the
meaning of Section 3(c)(5) of the Investment Company Act of 1940, as
amended,
(6) a Receivable which is an "account" within the meaning of Section
9-106 of the UCC of all applicable jurisdictions,
(7) a Receivable which is denominated and payable only in United
States dollars in the United States,
(8) a Receivable which arises under a non-executory Contract, which,
together with such Receivable, is in full force and effect and
constitutes the legal, valid and binding obligation of the related
Obligor enforceable by the Originator and its assignees against such
Obligor in accordance with its terms,
(9) a Receivable which arises under a Contract which (a) does not
require the Obligor under such Contract to consent to the transfer, sale
or assignment of the rights of the Originator or any of its assignees
under such Contract and (b) is not subject to a confidentiality provision
that would have the effect of restricting the ability of the Agent or any
Purchaser to exercise its rights under this Agreement, including, without
limitation, its right to review the Contract,
(10) a Receivable which arises under a Contract that contains an
obligation to pay a specified sum of money, contingent only upon the
manufacture of the underlying goods by the Originator,
(11) a Receivable which is not subject to any right of rescission,
set-off (in respect of all or any portion of the Outstanding Balance
thereof then being proposed for inclusion in Net Eligible Receivables as
of any date), counterclaim, any other defense (including defenses arising
out of violations of usury laws) of the applicable Obligor or the
Originator or any other Adverse Claim,
(12) a Receivable as to which the Originator has satisfied and fully
performed all obligations on its part with respect to such Receivable
required to be fulfilled by it, and no further action is required to be
performed by any Person with respect thereto other than payment thereon
by the applicable Obligor,
(13) a Receivable all right, title and interest to and in which has
been validly transferred by the Originator directly to the Buyer under
and in accordance with this Agreement and the Intercreditor Agreement,
and the Buyer has good and marketable title thereto free and clear of any
Adverse Claim,
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(14) a Receivable which, together with the Contract related thereto,
was created in compliance with each, and does not contravene any, law,
rule or regulation applicable thereto (including, without limitation, any
law, rule and regulation relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) in any material respect which would
limit the collectibility of such Receivable or give rise to a claim for
money damages against the Originator, the Buyer or any of the Buyer's
assignees and with respect to which no part of the Contract related
thereto is in violation of any such law, rule or regulation,
(15) a Receivable which satisfies all applicable requirements of the
Credit and Collection Policy,
(16) a Receivable which was generated in the ordinary course of the
Originator's business in connection with the sale and/or shipment of
flexible packaging products or other goods for the applicable Obligor by
the Originator, and
(17) a Receivable as to which the Buyer has not notified the
Originator that the Buyer or its assignees has reasonably determined that
such Receivable or class of Receivables is not acceptable as an Eligible
Receivable, including, without limitation, because such Receivable arises
under a Contract that is not acceptable to the Buyer or its assignees;
PROVIDED, HOWEVER, that Flexible Packaging Receivables shall not be considered
to be "ELIGIBLE RECEIVABLES" under this Agreement unless and until the
Originator has issued an invoice in respect thereof directing payments thereon
to be made to a Collection Account.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer with the Originator under
Section 414 of the Code.
"EVENT OF DEFAULT" has the meaning assigned to that term in SECTION 6.1.
"FACILITY TERMINATION DATE" has the meaning set forth in the Purchase
Agreement.
"FINANCE CHARGES" means, with respect to a Contract, any finance,
interest, late payment charges or similar charges owing by an Obligor pursuant
to such Contract.
"FIRST CHICAGO" means The First National Bank of Chicago in its individual
capacity and its successors.
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"FLEXIBLE PACKAGING" means The James River Flexible Packaging Group, a
division of James River Corporation of Virginia.
"FLEXIBLE PACKAGING RECEIVABLE" means any Receivable which was originated
by Flexible Packaging and as to which the Originator has not issued at least
one invoice.
"FOREIGN OBLIGOR" means any Obligor which (a) if a natural person, who is
not a resident of the United States or Puerto Rico or (b) if a corporation or
other business organization, is organized under the laws of a jurisdiction
other than the United States, any political subdivision thereof or Puerto Rico
or has its chief executive office outside of the United States or Puerto Rico.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement dated
as of August 22, 1996 by and between The First National Bank of Chicago in its
capacity as contractual representative for itself and the "Lenders" party to
the Credit Agreement referred to therein (in such capacity, together with its
successors in such capacity, the "BANK AGENT"), and The First National Bank of
Chicago as agent under the Purchase Agreement (in such capacity, the
"RECEIVABLES AGENT"), as the same may be amended, supplemented, restated and/or
otherwise modified from time to time.
"INVESTORS" has the meaning set forth in the Preliminary Statement of this
Agreement.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
financial condition, business or operations of the Originator and its
subsidiaries taken as a whole, (ii) the ability of the Originator to perform
its obligations under any Transaction Document, (iii) the legality, validity or
enforceability of this Agreement, any Transaction Document or any Collection
Account Agreement or Collection Notice relating to a Collection Account into
which a material portion of Collections are deposited, (iv) the Originator's,
the Buyer's, the Agent's or any Purchaser's interest in the Receivables
generally or in any significant portion of the Receivables, the Related
Security or the Collections with respect thereto, or (v) the collectibility of
the Receivables generally or of any material portion of the Receivables.
"MONTHLY REPORT" means a report, in substantially the form of EXHIBIT VII
hereto (appropriately completed), furnished by the Sub-Servicer to the Buyer
and the Agent (as the Buyer's assignee) pursuant to SECTION 5.5.
"NET ELIGIBLE RECEIVABLES" has the meaning set forth in the Purchase
Agreement.
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"NET WORTH" means, on any date of determination, the excess, if any, of
the Buyer's total assets (determined from the most recent Weekly Report
delivered) over the Buyer's total liabilities on such date.
"OBLIGOR" means a Person obligated to make payments pursuant to a
Contract.
"ORIGINAL BALANCE" means, with respect to any Receivable, the Outstanding
Balance of such Receivable on the date it was purchased by the Buyer.
"ORIGINATOR" means Printpack, Inc., a Georgia corporation, and shall
include, from and after its acquisition by Printpack, Inc., Flexible Packaging.
"OUTSTANDING BALANCE" of any Receivable at any time means the then
outstanding principal balance thereof, and shall exclude any interest or
finance charges thereon, without regard to whether any of the same shall have
been capitalized.
"PBGC" means the Pension Benefit Guaranty Corporation created under
Section 4002(a) of ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, association,
trust, or any other entity, or organization, including a government or
political subdivision or agent or instrumentality thereof.
"PLAN" means any defined benefit plan maintained or contributed to by the
Originator or any Subsidiary of the Originator or by any trade or business
(whether or not incorporated) under common control with the Originator or any
Subsidiary of the Originator as defined in Section 4001(b) of ERISA and insured
by the PBGC under Title IV of ERISA.
"POTENTIAL EVENT OF DEFAULT" means an event which, with the passage of
time or the giving of notice, or both, would constitute an Event of Default.
"PRINCIPALS" means Dennis M. Love, James E. Love, III, Carol Anne Love
Jennison, William J. Love, David M. Love, Charles Keith Love and Gay Love.
"PURCHASE" means a purchase by the Buyer of the Receivables and the
Related Security from the Originator pursuant to SECTION 1.1 of this Agreement.
"PURCHASE AGREEMENT" has the meaning set forth in the Preliminary
Statement of this Agreement.
"PURCHASE PRICE" means, with respect to any Purchase on any date, the
aggregate price to be paid to the Originator for such Purchase in accordance
with SECTION 1.2 of this
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<PAGE> 43
Agreement for the Receivables and Related Security being sold to the Buyer on
such date, which price shall equal (i) the product of (x) the Original Balance
of such Receivables TIMES (y) one minus the Discount Factor then in effect,
MINUS (ii) any Purchase Price Credits to be credited against the purchase
price otherwise payable in accordance with SECTION 1.3 hereof.
"PURCHASE PRICE CREDIT" has the meaning set forth in SECTION 1.3.
"PURCHASER" has the meaning set forth in the Purchase Agreement.
"RECEIVABLE" means the indebtedness and other obligations owed (at the
time it arises, and before giving effect to any transfer or conveyance
contemplated hereunder) to the Originator, whether constituting an account,
chattel paper, instrument or general intangible, arising in connection with the
manufacture and shipment of flexible packaging products or other goods by the
Originator and includes, without limitation, the obligation to pay any Finance
Charges with respect thereto. Indebtedness and other rights and obligations
arising from any one transaction, including, without limitation, indebtedness
and other rights and obligations represented by an individual invoice, shall
constitute a Receivable separate from a Receivable consisting of the
indebtedness and other rights and obligations arising from any other
transaction.
"RECORDS" means, with respect to any Receivable, all Contracts and other
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, punch cards, data processing software and
related property and rights) relating to such Receivable, any Related Security
therefor and the related Obligor.
"REFERENCE BANK" means The First National Bank of Chicago or such other
bank as the Agent shall designate with the consent of the Buyer.
"RELATED PARTY" means, with respect to any Principal: (a) any spouse or
immediate family member of such Principal, or (b) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons beneficially holding the outstanding equity interests of which
consist of such Principal and/or such other Persons referred to in the
immediately preceding clause (a).
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of the Originator's interest, if any, in the goods, the
financing of which gave rise to such Receivable, and any and all
insurance contracts with respect to such goods,
(ii) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to
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<PAGE> 44
the Contract related to such Receivable or otherwise, together with all
financing statements and security agreements describing any collateral
securing such Receivable,
(iii) all guaranties, insurance and other agreements or arrangements
of whatever character from time to time supporting or securing payment of
such Receivable whether pursuant to the Contract related to such
Receivable or otherwise,
(iv) all Records related to such Receivable,
(v) all of the Originator's right, title and interest in, to and
under each Contract executed in connection therewith in favor of or
otherwise for the benefit of the Originator; and
(vi) all proceeds of any of the foregoing.
"REPORTABLE EVENT" has the meaning set forth in Section 4043 of ERISA.
"REQUIRED INVESTORS" has the meaning set forth in the Purchase Agreement.
"SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.
"SERVICER" means at any time the Person then authorized pursuant to
ARTICLE VI of the Purchase Agreement to service, administer and collect
Receivables.
"SERVICER DEFAULT" has the meaning set forth in the Purchase Agreement.
"SUBORDINATED LOAN" has the meaning set forth in SECTION 1.2(B).
"SUBORDINATED NOTE" means a promissory note in substantially the form of
EXHIBIT X hereto as more fully described in SECTION 1.2, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"SUBSCRIPTION AGREEMENT" means the Stockholder and Subscription Agreement
in substantially the form of EXHIBIT IX hereto, as the same may be amended,
restated, supplemented or otherwise modified from time to time.
"SUB-SERVICER" means the Originator in its capacity as sub-servicer for
the Servicer as described in SECTION 5.1 hereof.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or
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<PAGE> 45
controlled, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any
partnership, association, joint venture or similar business organization
more than 50% of the ownership interests having ordinary voting power of which
shall at the time be so owned or controlled. Unless otherwise expressly
provided, all references herein to a "SUBSIDIARY" shall mean a Subsidiary of the
Originator.
"TERMINATION DATE" means, the earliest of (i) the Facility Termination
Date, (ii) the date of the declaration or automatic occurrence of the
Termination Date pursuant to SECTION 6.2 and (iii) the date designated by the
Originator as the Termination Date in a written notice delivered to the Buyer
not less than ten days prior to such designated date; PROVIDED, HOWEVER, that
the Originator shall only be entitled to deliver such a notice pursuant to this
clause (iii) if the Originator has received more than 20% of the Purchase Price
in respect of any Purchase by means of a capital contribution pursuant to
SECTION 1.2(C) hereof.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, each
Contract, the Subordinated Note, the Subscription Agreement, each Collection
Account Agreement and all other instruments, documents and agreements executed
and delivered by the Originator in connection herewith.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the specified jurisdiction.
"WEEKLY REPORT" means a report, in substantially the form of EXHIBIT VIII
hereto (appropriately completed), furnished by the Sub-Servicer to the Buyer
and the Agent pursuant to SECTION 5.5(A).
ALL ACCOUNTING TERMS NOT SPECIFICALLY DEFINED HEREIN SHALL BE CONSTRUED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. ALL TERMS USED IN
ARTICLE 9 OF THE UCC IN THE STATE OF ILLINOIS, AND NOT SPECIFICALLY DEFINED
HEREIN, ARE USED HEREIN AS DEFINED IN SUCH ARTICLE 9.
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EXHIBIT II
CHIEF EXECUTIVE OFFICE OF THE ORIGINATOR; LOCATIONS OF RECORDS;
TRADE NAMES; FEDERAL EMPLOYER IDENTIFICATION NUMBER
Chief Executive Office:
Printpack, Inc.
4335 Wendell Drive, S.W.
Atlanta, GA 30336
Location of Records:
Printpack, Inc.
4335 Wendell Drive, S.W.
Atlanta, GA 30336
Federal Employer Identification Number of Originator: 58-0673779
Trade Names: None, except:
Printpack, Inc. d/b/a Printpack Georgia, Inc. within the
State of Missouri.
Virtual Image Group
Applied Physics Research
Prior Corporate Names: None, except:
APR, Inc.
[The following result from the acquisition of Flexible Packaging]
James River Corporation of Virginia
James River Paper Company, Inc.
James River II, Inc.
JOHIO, Inc.
James River Norwalk, Inc.
Crown Zellerbach Corporation
Rampart Packaging, Inc.
The Specialty Paper Company
James River Corporation of Nevada
Assumed Names: None, except as noted above.
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EXHIBIT III
COLLECTION ACCOUNTS; LOCK-BOXES;
CONCENTRATION ACCOUNTS; AND DEPOSITARY ACCOUNTS
None, except P.O. Box 102430, Atlanta, Georgia 30368-2430 for which SunTrust
Bank, Atlanta, P.O. Box 4188, 25 Park Place, Atlanta, Georgia 30302, is the
Collection Bank. Proceeds of Collections remitted to such lock-box are
deposited by such Collection Bank into account #8801238646 maintained at such
bank.
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EXHIBIT IV
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is furnished pursuant to that certain
Receivables Sale Agreement dated as of August 22, 1996, between Printpack, Inc.
(the "ORIGINATOR") and Flexible Funding Corp. (the "AGREEMENT"). Capitalized
terms used and not otherwise defined herein are used with the meanings
attributed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected______________________ of the Originator;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Originator and its Subsidiaries during the accounting
period covered by the attached financial statements; and
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes an
Event of Default or a Potential Event of Default, as each such term is defined
under the Agreement, during or at the end of the accounting period covered by
the attached financial statements or as of the date of this Certificate, except
as set forth below.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Originator has taken, is taking, or proposes
to take with respect to each such condition or event:
The foregoing certifications, together with the computations set forth in
SCHEDULE I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ______ day of ____________,
19__.
______________________________
[Name]
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<PAGE> 49
EXHIBIT V
FORM OF COLLECTION ACCOUNT AGREEMENT
[On letterhead of Buyer]
________ 19__
[Lock-Box Bank/Concentration Bank/Depositary Bank]
Re: Flexible Funding Corp.
Printpack, Inc.
Ladies and Gentlemen:
You have exclusive control of P.O. Box #______________ in **[city, state,
zip code]** (the "LOCK-BOX") for the purpose of receiving mail and processing
payments therefrom pursuant to that certain **[name of lock-box agreement]**
between you and Printpack, Inc. dated (the "AGREEMENT"). You hereby confirm
your agreement to perform the services described therein. Among the services
you have agreed to perform therein, is to endorse all checks and other
evidences of payment, and credit such payments to checking account no._______
maintained with you in the name of Printpack, Inc. (the "LOCK-BOX ACCOUNT").
Printpack, Inc. ("PRINTPACK") hereby transfers and assigns all of its
right, title and interest in and to, and exclusive ownership and control over,
the Lock-Box and the Lock-Box Account to Flexible Funding Corp.
("FLEXIBLE-SPC"). Printpack and Flexible-SPC hereby request that the name of
the Lock-Box Account be changed to Flexible Funding Corp., as "COLLECTION
AGENT" for the benefit of The First National Bank of Chicago ("FNBC"), as agent
under that certain Receivables Purchase Agreement (the "RECEIVABLES PURCHASE
AGREEMENT") dated as of August 22, 1996 among Flexible-SPC, Falcon Asset
Securitization Corporation, certain financial institutions parties thereto and
FNBC.
Flexible-SPC hereby irrevocably instructs you, and you hereby agree, that
upon receiving notice from FNBC in the form attached hereto as Annex A: (i) the
name of the Lock-Box Account will be changed to FNBC for itself and as agent
(or any designee of FNBC) and FNBC will have exclusive ownership of and access
to such Lock-Box Account, and neither Printpack, Flexible-SPC nor any of their
respective affiliates will have any control of such Lock-Box Account or any
access thereto, (ii) you will either continue to send the funds from the
Lock-Box to the Lock-Box Account, or will redirect the funds as FNBC may
otherwise request, (iii) you will transfer monies on deposit in the Lock-Box
Account, at any time, as directed by FNBC, (iv) all services to be performed by
you under the Agreement will be performed on behalf
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of FNBC, and (v) all correspondence or other mail which you have agreed to
send to either Printpack or Flexible-SPC will be sent to FNBC at the following
address:
The First National Bank of Chicago
Suite 0079, 21st Floor
One First National Plaza
Chicago, Illinois 60670
Attention: Credit Manager, Asset-Backed Finance
Moreover, upon such notice, FNBC for itself and as agent will have all
rights and remedies given to Printpack or Flexible-SPC under the Agreement.
Each of Printpack and Flexible-SPC agrees, however, to continue to pay all fees
and other assessments due thereunder at any time.
You hereby acknowledge that monies deposited in the Lock-Box Account or
any other account established with you by FNBC for the purpose of receiving
funds from the Lock-Box are subject to the liens of FNBC for itself and as
agent under the Receivables Purchase Agreement, and will not be subject to
deduction, set-off, banker's lien or any other right you or any other party may
have against Printpack or Flexible-SPC, except that you may debit the Lock-Box
Account for any items deposited therein that are returned or otherwise not
collected and for all charges, fees, commissions and expenses incurred by you
in providing services hereunder, all in accordance with your customary
practices for the charge back of returned items and expenses.
This letter agreement and the rights and obligations of the parties
hereunder will be governed by and construed and interpreted in accordance with
the laws of the State of Illinois. This letter agreement may be executed in
any number of counterparts and all of such counterparts taken together will be
deemed to constitute one and the same instrument.
This letter agreement contains the entire agreement between the parties,
and may not be altered, modified, terminated or amended in any respect, nor may
any right, power or privilege of any party hereunder be waived or released or
discharged, except upon execution by all parties hereto of a written instrument
so providing. In the event that any provision in this letter agreement is in
conflict with, or inconsistent with, any provision of the Agreement, this
letter agreement will exclusively govern and control. Each party agrees to
take all actions reasonably requested by any other party to carry out the
purposes of this letter agreement or to preserve and protect the rights of each
party hereunder.
Please indicate your agreement to the terms of this letter agreement by
signing in the space provided below. This letter agreement will become
effective immediately upon execution of a counterpart of this letter agreement
by all parties hereto.
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Very truly yours,
PRINTPACK, INC.
By
------------------------------
Title
---------------------------
FLEXIBLE FUNDING CORP.
By
------------------------------
Title
---------------------------
Acknowledged and agreed to
this _____ day of ____________, 1996:
[COLLECTION BANK]
By:
----------------------------------
Title:
-------------------------------
Acknowledged and agreed to
this _____ day of ___________, 1996:
THE FIRST NATIONAL BANK OF CHICAGO (for itself and
as Agent)
By
-----------------------------------
Authorized Agent
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ANNEX A
FORM OF COLLECTION NOTICE
[On letterhead of FNBC]
________________, 19 ___
[Collection Bank/Depositary Bank/Concentration Bank]
Re: Flexible Funding Corp.
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights pursuant to that
certain letter agreement among Printpack, Inc., Flexible Funding Corp., you and
us, to have the name of, and to have exclusive ownership and control of,
account number ____________ (the "LOCK-BOX ACCOUNT") maintained with you,
transferred to us. Lock-Box Account will henceforth be a zero-balance account,
and funds deposited in the Lock-Box Account should be sent at the end of each
day to _________________. You have further agreed to perform all other
services you are performing under that certain agreement dated _____________
between you and Printpack, Inc. on our behalf.
We appreciate your cooperation in this matter.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
(for itself and as agent)
By:___________________________
Authorized Agent
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<PAGE> 53
EXHIBIT VI
CREDIT AND COLLECTION POLICY
[to be provided by the Originator]
47
<PAGE> 54
EXHIBIT VII
FORM OF MONTHLY REPORT
[to be provided by First Chicago]
48
<PAGE> 55
EXHIBIT VIII
FORM OF WEEKLY REPORT
[to be provided by First Chicago]
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<PAGE> 56
EXHIBIT IX
FORM OF SUBSCRIPTION AGREEMENT
---
STOCKHOLDER AND SUBSCRIPTION AGREEMENT
THIS STOCKHOLDER AND SUBSCRIPTION AGREEMENT (this "AGREEMENT"), dated as
of August ___, 1996, is entered into by and between Flexible Funding Corp., a
Delaware corporation ("FLEXIBLE-SPC"), and Printpack, Inc., a Georgia
corporation ("PRINTPACK"). Except as otherwise specifically provided herein,
capitalized terms used in this Agreement have the meanings ascribed thereto in
the Receivables Sale Agreement dated as of even date herewith between
Flexible-SPC and Printpack (as amended, restated, supplemented or otherwise
modified from time to time, the "SALE AGREEMENT").
R E C I T A L S
A. Flexible-SPC has been organized under the laws of the State of Delaware
for the purpose of, among other things, purchasing, holding, financing,
receiving and transferring accounts receivable and related assets originated or
otherwise held by Printpack.
B. Contemporaneously with the execution and delivery of this Agreement:
(i) Printpack and Flexible-SPC have entered into the Sale Agreement pursuant to
which Printpack has, from and after the initial purchase date thereunder and
prior to the termination date specified therein, sold all of its Receivables,
Collections and Related Security to Flexible-SPC and (ii) Flexible-SPC, certain
financial institutions party thereto as "PURCHASERS," and The First National
Bank of Chicago, as the "AGENT," have entered into a Receivables Purchase
Agreement (as amended, restated, supplemented or otherwise modified from time
to time, the "PURCHASE AGREEMENT") pursuant to which Flexible-SPC will sell
"RECEIVABLE INTERESTS" to the Agent for the benefit of the Purchasers.
C. Flexible-SPC desires to sell shares of its capital stock to Printpack,
and Printpack desires to purchase such shares, on the terms set forth in this
Agreement.
NOW, THEREFORE, Flexible-SPC and Printpack agree as follows:
1. Purchase and Sale of Capital Stock.
Printpack hereby purchases from Flexible-SPC, and Flexible-SPC hereby
sells to Printpack, 1,000 shares of common stock, par value $.01 per share, of
Flexible-SPC (the
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"COMMON STOCK") for the Stock Purchase Price set forth in SECTION 2.1. The
shares of Common Stock being purchased under this Agreement are referred to
herein as the "SHARES."
Within three (3) Business Days from the date hereof, Flexible-SPC shall
deliver to Printpack a certificate registered in Printpack's name representing
the Shares.
2. Consideration for Shares and Capital Contributions.
2.1 Consideration for Shares.
To induce Flexible-SPC to enter into the Sale Agreement and to enable
Flexible-SPC to fund its obligations thereunder by consummating the
transactions contemplated by the Purchase Agreement, and in reliance upon the
representations and warranties set forth herein, Printpack hereby pays to
Flexible-SPC on the date hereof $25,000 (the "STOCK PURCHASE PRICE") in
consideration of the purchase of the Shares. The Stock Purchase Price shall
take the form of a transfer of cash, except that Printpack may, in lieu of cash
payment of the Stock Purchase Price, offset the amount of the Stock Purchase
Price against the purchase price otherwise payable by Flexible-SPC to Printpack
on the initial purchase date pursuant to the Sale Agreement.
2.2 Contributions After Initial Closing Date.
From time to time Printpack may make additional capital contributions to
Flexible-SPC. All such contributions shall take the form of a cash transfer,
except that Flexible-SPC agrees to, in lieu of cash payment thereof, offset the
amount of such contributions against the purchase price for Receivables
otherwise payable by Flexible-SPC to Printpack on the date of such capital
contributions. All of the Receivables so paid for through such offset shall
constitute purchased Receivables within the meaning of the Sale Agreement and
shall be subject to all of the representations, warranties and indemnities
otherwise made hereunder. It is expressly understood and agreed that Printpack
has no obligations under this Agreement or otherwise to make any capital
contributions from and after payment of the Stock Purchase Price.
3. Representations and Warranties of Flexible-SPC.
Flexible-SPC represents and warrants to Printpack as follows:
(a) Flexible-SPC is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to carry on its
business as proposed to be conducted on the date hereof.
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(b) Flexible-SPC has all requisite legal and corporate power to
enter into this Agreement, to issue the Shares and to perform its other
obligations under this Agreement.
(c) Upon receipt by Flexible-SPC of the Stock Purchase Price and the
issuance of the Shares to Printpack, the Shares will be duly authorized,
validly issued, fully paid and nonassessable.
(d) Flexible-SPC has taken all corporate action necessary for its
authorization, execution and delivery of, and, its performance under,
this Agreement.
(e) This Agreement constitutes a legally valid and binding
obligation of Flexible-SPC, enforceable against Flexible-SPC in
accordance with its terms, except that enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and by general principles
of equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(f) Flexible-SPC has filed its Certificate of Incorporation in the
form attached hereto as Exhibit A with the Secretary of State of Delaware
and (ii) adopted By-laws in the form attached hereto as Exhibit B.
(g) The issuance of the Shares by Flexible-SPC hereunder is legally
permitted by all laws and regulations to which Flexible-SPC is subject.
4. Representations and Warranties of Printpack.
Printpack represents and warrants to Flexible-SPC as follows:
(a) Printpack is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Georgia, and has all
requisite corporate power and authority to carry on its business as
conducted on the date hereof.
(b) Printpack has all requisite legal and corporate power to enter
into this Agreement, to purchase the Shares and to perform its other
obligations under this Agreement.
(c) Printpack has taken all corporate action necessary for its
authorization, execution and delivery of, and its performance under, this
Agreement.
(d) This Agreement constitutes a legally valid and binding
obligation of Printpack, enforceable against Printpack in accordance with
its terms, except that
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enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(e) Printpack is purchasing the Shares for investment for its own
account, not as a nominee or agent, and not with a view to any
distribution of any part thereof; and except for a pledge of all the
Shares to Printpack's senior secured lenders, Printpack has no current
intention of selling, granting a participation in, or otherwise
distributing, the same.
(f) Printpack understands that the Shares have not been registered
under the Securities Act of 1933, as amended, or under any other Federal
or state law, and that Flexible-SPC does not contemplate such a
registration.
(g) Printpack has such knowledge, sophistication and experience in
financial and business matters that it is capable of evaluating the
merits and risks of the transactions contemplated by this Agreement, and
has made such investigations in connection herewith as have been deemed
necessary or desirable to make such evaluation.
(h) The purchase of the Shares by Printpack is legally permitted by
all laws and regulations to which Printpack is subject.
5. Restrictions on Transfer Imposed by the Act; Legend.
5.1 Legend. Each certificate representing any Shares shall be
endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE NOT REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES ACT. SUCH SECURITIES SHALL NOT BE SOLD, PLEDGED,
HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED OR DISPOSED OF
ABSENT SUCH REGISTRATION, UNLESS, IN THE OPINION OF THE
CORPORATION'S COUNSEL, SUCH REGISTRATION IS NOT REQUIRED. IN ADDITION,
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13)
OF SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973, AS
AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER SUCH ACT;
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5.2 Registration of Transfers. Flexible-SPC need not register a transfer
of any Shares unless the conditions specified in the legend set forth in
SECTION 5.1 hereof are satisfied. Flexible-SPC may also instruct its transfer
agent (which may be Flexible-SPC) not to register the transfer of any Shares
unless the conditions specified in the legend set forth in SECTION 5.1 hereof
are satisfied.
6. Agreement to Vote. Printpack hereby agrees and covenants to vote all
of the shares of Common Stock now or hereafter owned by it, whether
beneficially or otherwise, as is necessary at a meeting of stockholders of
Flexible-SPC, or by written consent in lieu of any such meeting, to cause to be
elected to, and maintained on, Flexible-SPC's board of directors at least one
(1) person (an "INDEPENDENT DIRECTOR") meeting the qualifications and selected
in accordance with the provisions of the Certificate of Incorporation and
By-laws of Flexible-SPC.
7. Successors and Assigns.
Each party agrees that it will not assign, sell, transfer, delegate, or
otherwise dispose of, whether voluntarily or involuntarily, or by operation of
law, any right or obligation under this Agreement except in connection with a
transfer of Shares in compliance with the terms and conditions hereof, as
contemplated by Section 5.2 above, or otherwise in accordance with the terms
hereof. Any purported assignment, transfer or delegation in violation of this
SECTION 7 shall be null and void AB INITIO. Subject to the foregoing limits on
assignment and delegation and except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their respective heirs, legatees, executors, administrators, assignees and
legal successors.
8. Amendments and Waivers.
Any term hereof may be amended and the observance of any term hereof may
be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of Flexible-SPC
and Printpack. Any amendment or waiver so effected shall be binding upon
Flexible-SPC and Printpack.
9. Further Acts.
Each party agrees to perform any further acts and execute and deliver any
document which may be reasonably necessary to carry out the provisions of this
Agreement.
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10. Counterparts.
This Agreement may be executed in any number of counterparts, and all of
such counterparts together will be deemed one instrument.
11. Notices.
Any and all notices, acceptances, statements and other communications to
Printpack in connection herewith shall be in writing, delivered personally, by
facsimile or certified mail, return receipt requested, and shall be addressed
to the address of Printpack indicated on the stock transfer register of
Flexible-SPC or, if no address is so indicated, to the address provided to
Flexible-SPC pursuant to the Sale Agreement unless changed by written notice to
Flexible-SPC or its successor.
12. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAWS OF THE STATE OF GEORGIA, EXCEPT AND TO THE EXTENT THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE IS APPLICABLE.
13. Entire Agreement.
This Agreement, together with the Sale Agreement and the other documents
expressly to be delivered in connection therewith, constitute the full and
entire understanding and agreement between the parties hereto with regard to
the subject matter hereof and thereof.
14. Severability of this Agreement.
In case any provision of this Agreement 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.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused their respective
officers thereunto duly authorized to execute this Agreement as of the date
first written above.
PRINTPACK, INC.
By:
---------------------------
Name:
Title:
FLEXIBLE FUNDING CORP.
By:
---------------------------
Name:
Title:
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EXHIBIT A
TO
STOCKHOLDER AND SUBSCRIPTION AGREEMENT
Form of Certificate of Incorporation
______________________________________
CERTIFICATE OF INCORPORATION
OF
FLEXIBLE FUNDING CORP.
______________________________________
ARTICLE ONE
NAME
The name of the corporation (the "Corporation") is: "Flexible Funding Corp."
ARTICLE TWO
REGISTERED OFFICE AND AGENT
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle. Its registered agent at such address is The Corporation
Trust Company.
ARTICLE THREE
OBJECTS AND POWERS
The nature of the Corporation's business, and its objects, purposes and
powers are as follows:
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(1) to enter into any agreement to purchase, make loans secured by
or otherwise acquire, own, hold, sell, transfer, exchange or dispose of
interests in, or undivided interests in, pools of accounts, securities,
general intangibles, chattel paper, instruments, or other financial
assets of Printpack, Inc. or any Affiliate thereof (all such assets,
"Permitted Assets");
(2) to enter into any agreement providing for (i) the sale of
Permitted Assets or undivided interests therein or (ii) borrowing by the
Corporation to facilitate any activity authorized herein, either on an
unsecured basis or secured by a pledge of all or any portion of the
Corporation's assets (all of the foregoing, "Permitted Financings");
(3) to loan or otherwise invest proceeds from the Permitted
Financings, the issuance of the Corporation's equity securities and any
other income as determined by the Corporation's Board of Directors or any
officer or agent exercising authority delegated by the Corporation's
Board of Directors;
(4) to enter into any agreement providing for the management and
administration of the activities of the Corporation; and
(5) To transact any business, to engage in any act or activity, and
to exercise all powers permitted to corporations by the General
Corporation Law of Delaware that are incident or necessary to the
foregoing or to the accomplishment of such objects, purposes and powers.
ARTICLE FOUR
CAPITAL STOCK
4.01 TOTAL NUMBER OF SHARES. The total number of shares of all
classes of capital stock ("Shares") which the Corporation shall have the
authority to issue is 10,000, consisting of 10,000 Shares of common stock,
$.01 par value per share ("Common Stock").
4.02 DIVIDENDS. Dividends upon all classes and series of Shares
shall be payable only when, as and if declared by the Board of Directors from
funds lawfully available therefor, which funds shall include, without
limitation, the Corporation's capital surplus. Dividends upon any class or
series of Shares may be paid in cash, property, or Shares of any class or
series of or other securities or evidences of indebtedness of the Corporation
or any other issuer, as may be determined by resolution or resolutions of the
Board of Directors.
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ARTICLE FIVE
DIRECTORS
5.01 NUMBER OF DIRECTORS. The Board of Directors of the Corporation shall
consist of not less than three nor more than five members, including at least
one person who is Independent, and who shall otherwise qualify as provided in
Section 8.06(1) hereof. A director who otherwise meets the description of
Independent Director as set forth herein shall not be disqualified from serving
as an Independent Director of this Corporation if he or she is also a director
of another corporation that is an Affiliate of Printpack, Inc., the
Corporation's sole shareholder, with a certificate of incorporation
substantially similar to the certificate of incorporation of the Corporation.
To the fullest extent permitted by applicable law, including the General
Corporation Law of the State of Delaware as in effect from time to time, each
Independent Director's fiduciary duty in respect of any decision on any matter
referred to in Article Eight shall be to the Corporation (including its
creditors) rather than solely to the Corporation's stockholders. In
furtherance of the foregoing, when voting on matters subject to the vote of the
Board of Directors, including those matters referred to in Article Eight,
notwithstanding that the Corporation is not then insolvent, each Independent
Director shall take into account the interests of the creditors of the
Corporation as well as the interests of the Corporation.
5.02 RELIANCE UPON RECORDS, ETC. A member of the Board of Directors, or a
member of any committee designated by the Board of Directors, shall, in the
performance of his or her duties, be fully protected in relying in good faith
upon the records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of the Corporation's
officers or employees or committees of the Board of Directors, or by any person
as to matters the member reasonably believes are within such other person's
professional, expert or other competence and who has been selected with
reasonable care by or on behalf of the Corporation.
ARTICLE SIX
INDEMNIFICATION
6.01 INDEMNIFICATION.
(1) 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, arbitral, governmental, administrative, investigative or otherwise
(hereinafter, a "Proceeding"), by reason of the fact that he or she, or a
Person of
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whom he or she is the legal representative, is or was a
director, officer or employee of the Corporation or is or was
serving at the request of the Corporation as a director, officer
or employee 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 or
employee or in any other capacity while serving as a director,
officer or employee, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment), against all
expenses, liability and loss (including penalties, fines,
judgments, reasonable attorneys' fees and charges, amounts paid or
to be paid in settlement and excise taxes imposed on fiduciaries
with respect to (i) employee benefit plans, (ii) charitable
organizations or (iii) similar matters) 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 or employee and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however,
that the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof)
initiated by such person (other than pursuant to subsection
6.01(2)) only if such proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation. The right to
indemnification conferred in this subsection 6.01(1) shall be a
contract right and shall include the right to be paid by the
Corporation the reasonable expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however,
that, if the Delaware General Corporation Law requires, the
payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and 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
subsection 6.01(1) or otherwise.
(2) If a claim which the Corporation is obligated to pay
under subsection 6.01(1) is not paid in full by the Corporation
within 60 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 reasonable expense of prosecuting
such claim. It shall be a defense to any
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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 has not met the standards
of conduct which make it permissible under the Delaware General
Corporation Law 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
of Directors, independent legal counsel or its shareholders) to have made
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
Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel
or its shareholders) 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.
(3) The provisions of this Section 6.01 shall cover claims,
actions, suits and proceedings, civil or criminal, whether now
pending or hereafter commenced, and shall be retroactive to cover
acts or omissions or alleged acts or omissions which heretofore
have taken place. If any part of this Section 6.01 should be
found to be invalid or ineffective in any proceeding, the validity
and effectiveness of the remaining provisions shall not be
affected.
(4) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final
disposition conferred in this Section 6.01 are non-exclusive of
any other right which any person may have or hereafter acquire
under any statute, provision of this Certificate of Incorporation,
or any Corporation By-Law, insurance policy or agreement, vote of
shareholders or disinterested directors or otherwise.
(5) 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 Delaware General Corporation Law.
(6) The Corporation may, to the extent authorized from time
to time by the Board of Directors, grant rights to
indemnification, and rights to be paid by the Corporation the
expenses incurred in defending any proceeding in advance of its
final disposition, to any agent of the Corporation to the fullest
extent of the
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provisions of this Section 6.01 with respect to the indemnification
and advancement of expenses of directors, officers and employees of the
Corporation.
6.02 LIMITATION OF MONETARY DAMAGES. A director shall not be
personally liable to the Corporation or its shareholders for monetary damages
for breach of fiduciary duty as a director, except this provision shall not
eliminate liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its shareholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for unlawful payment or dividend or unlawful stock purchase or
redemption under Delaware General Corporation Law, Section 174, or (iv) for any
transaction from which the director derived an improper personal benefit.
Any repeal or modification of this Section 6.02 by the Corporation's
shareholders shall not adversely affect any right of protection of a director
of the Corporation existing at the time of such repeal or modification with
respect to acts or omissions occurring prior to such repeal or modification. If
the Delaware General Corporation Law hereafter is amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation, in addition to the limitation on
personal liability provided herein, shall be limited to the fullest extent
permitted by the amended Delaware General Corporation Law.
6.03 SEVERABILITY. In the event that any of the provisions of this
Article Six (including any provision within a single sentence) are held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable,
the remaining provisions are severable and shall remain enforceable to the
fullest extent permitted by law.
ARTICLE SEVEN
INCORPORATOR
The name and mailing address of the incorporator is:
Name Mailing Address
---- ---------------
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ARTICLE EIGHT
SPECIAL PROVISIONS
In furtherance and not in limitation of the powers conferred herein and
by law, the following provisions for regulation of the Corporation, its
directors and shareholders are hereby established:
8.01 PURCHASE OF SHARES. The Corporation shall have the right to
purchase, take, receive or otherwise acquire, hold, own, pledge, transfer or
otherwise dispose of its own Shares to the full extent of undivided profits,
earned surplus, capital surplus or other surplus or any other funds lawfully
available therefor.
8.02 TRANSACTIONS WITH CERTAIN PERSONS. No contract or other
transaction between the Corporation and one or more of its directors or
officers or between the Corporation or any other person, corporation, firm,
association or entity in which one or more of its directors or officers are
directors or officers or are financially interested, shall be void or voidable
because of such relationship or interest, or because such director or officer
is present at or participates in a meeting of the Board of Directors or a
committee thereof which authorizes, approves or ratifies such contract or
transaction, or solely because his or their votes are counted for such purpose,
if such contract or transaction is permitted by the Delaware General
Corporation Law, Section 144, as now or hereafter in effect.
8.03 TRANSFER RESTRICTIONS, ETC. Written restrictions on the transfer
or registration of transfer of the Corporation's Shares, securities or
evidences of indebtedness or any interest therein may be imposed by the
Partnership, entered into as part of an agreement, adopted as By-Laws, or
recognized by the Corporation as the Corporation's Board of Directors may
determine by resolution or resolutions. Any such transfer restrictions shall
be noted conspicuously on the security or evidence of indebtedness. The
Corporation may from time to time enter into any agreement to which all, or
less than all, holders of record of the Corporation's issued and outstanding
Shares are parties, restricting the transfer or registration of transfer of any
or all of the Corporation's Shares, upon such reasonable terms and conditions
as may be approved by resolution or resolutions adopted by the Corporation's
Board of Directors.
8.04 NO LIABILITY OF SHAREHOLDERS. The holders of Corporation Shares
shall not be personally or otherwise liable to any extent whatsoever for the
payment of the Corporation's debts, liabilities and obligations, and the
private property of the holders of Corporation Shares shall not be subject to
the payment of the Corporation's debts, liabilities and obligations to any
extent whatsoever.
8.05 COMPROMISES AND ARRANGEMENTS WITH CREDITORS. Whenever a
compromise or arrangement is proposed between this Corporation and its
creditors or any class of them and/or between this Corporation and its
shareholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of
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this Corporation or of any creditor or shareholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the shareholders or class of shareholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the shareholders or class of shareholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which said application has been made, be
binding on all the creditors or class of creditors, and/or on all the
shareholders or class of shareholders, of this Corporation, as the case may be,
and also on this Corporation.
8.06 CORPORATE SEPARATENESS. At all times from and after the
establishment of the Corporation:
(1) At least one of the Corporation's directors and at least one of
the Corporation's officers shall be persons who are Independent (each
such director, an "Independent Director," and each such officer, an
"Independent Officer"). The same individual may serve as both an
Independent Officer and an Independent Director; and
(2) The Corporation's assets will not be commingled with those of
any other Person; and
(3) The Corporation will maintain separate corporate records and
books of account from those of any other Person; and
(4) The Corporation will conduct its business from an office
separate from any direct or ultimate parent of the Corporation.
8.07 ELECTION OF DIRECTORS. Elections of directors need not be
by written ballot unless the By-Laws of the Corporation shall so provide.
8.08 BANKRUPTCY, DISSOLUTION, ETC.
(1) Notwithstanding any other provision of this Certificate of
Incorporation, the unanimous approval of the Board of Directors is
required for the filing by the Corporation of a voluntary bankruptcy
petition under Section 301 of the Bankruptcy Code, 11 U.S.C. Section
301, or any successor thereto.
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(2) Notwithstanding any other provision of this Certificate of
Incorporation and any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, while any indebtedness of the
Corporation is outstanding, do any of the following:
(a) voluntarily dissolve the Corporation; or
(b) other than any indebtedness (i) in connection with a
Permitted Financing and (ii) in connection with the acquisition of
Permitted Assets and any agreements entered into in connection
therewith, incur any additional indebtedness of liability for
borrowed money, or assume or guaranty any indebtedness or
liability for borrowed money of any entity.
8.09 CERTAIN DEFINITIONS. As used herein, the following terms
shall have the following meanings:
"AFFILIATE" shall mean any Person other than the Corporation
(i) which owns beneficially, directly or indirectly, individually
or as a part of a "Group" as defined in Securities and Exchange
Commission ("SEC") Rule 13d-3, 10% or more of the outstanding
shares of the Corporation's Common Stock, (ii) which is in control
of the Corporation, as "control" is defined under SEC Rule 405, as
in effect on the date hereof, (iii) of which 10% or more of the
outstanding shares of Common Stock is owned beneficially, directly
or indirectly, by a Person, individual or as a part of a Group
described in clauses (i) or (ii) above, or (iv) which is
controlled by, or under common control with a Person, individually
or as part of a Group described in clauses (i) or (ii) above, as
"control" and "controlled by" are defined for purposes of such
Rule 405.
"INDEPENDENT" means, with respect to the Corporation, any
Person (i) who is not an officer or employee, or a beneficial
owner, directly or indirectly of 10% or more of any equity
interest in the Corporation or any Affiliate thereof, and who is
not related by blood, marriage or adoption with any of the
foregoing Persons; (ii) who has not been an employee of the
Corporation or any Affiliate in the last five years; (iii) who is
not affiliated with, or employed by, any Person providing services
to, any of the Corporation's significant customers or suppliers;
(iv) who is not affiliated with any tax exempt or other
organization that receives significant contributions from the
Corporation or any of its Affiliates; and (v) who has not provided
and is not providing directly or indirectly, whether or not
through any related corporation, partnership, limited liability
company, limited liability partnership or other Person, legal,
accounting or investment banking services for the Corporation or
any Affiliate. In the case of an accountant, an accountant will
only be Independent for purposes hereof only where he or she also
meets the
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criteria of independence described in SEC Regulation S-X, Rule
2-01(B) and does not otherwise provide any professional
services directly or indirectly to the Corporation or its
Affiliates and none of his or her professional affiliates having
managerial responsibilities participate in any such services. A
Person that is otherwise Independent of the Corporation shall not
be precluded from serving as an Independent Director by virtue of
his or her service as a director of any direct or indirect parent
of the Corporation.
"PERSON" means any individual, partnership, corporation,
trust, unincorporated association, joint venture or other entity,
or any government, or any government agency, authority or
political subdivision thereof, or any other form of entity.
8.10 The Corporation reserves the right to amend, alter, change or
repeal any provision (except Article Three and Sections 8.05, 8.06 and 8.08)
contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute or this Certificate, and all rights conferred upon
shareholders herein are granted subject to this reservation.
8.11 BY-LAWS. The Corporation's Board of Directors is authorized and
empowered to amend, alter, change or repeal the Corporation's By-Laws and to
adopt new By-Laws.
ARTICLE NINE
DURATION
The Corporation shall have perpetual duration and existence.
THE UNDERSIGNED, being the Incorporator named above, for the purpose
of forming a corporation pursuant to the General Corporation Law of the State of
Delaware, does make this Certificate, hereby declaring and certifying that this
is my act and deed and the facts herein stated are true, and accordingly have
hereunto set my hand as of this 19th day of August, 1996.
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- -------------------------------------------------------------------------------
EXHIBIT B
TO
STOCKHOLDER AND SUBSCRIPTION AGREEMENT
Form of By-laws
______________________________________
FLEXIBLE FUNDING CORP.
BY-LAWS
______________________________________
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL AND REGISTERED OFFICE. The Corporation's
principal office shall be in the City of Atlanta, County of Fulton, Georgia.
The Corporation's registered office in the State of Delaware shall be in the
City of Wilmington, County of New Castle.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at
such other places, both within and without the States of Georgia and Delaware,
as the Board of Directors may from time to time determine or the business of
the Corporation may require to the extent not prohibited by law.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. LOCATION. All meetings of shareholders shall be held at the
Corporation's principal office in Atlanta, Georgia, or at such other place
either within or without the States of Georgia or Delaware as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting.
SECTION 2. ANNUAL MEETINGS. Annual meetings of shareholders shall be
held on the date and time as shall be designated from time to time by the Board
of Directors and stated in the
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notice of the meeting. At the annual meeting, the shareholders shall
elect a Board of Directors by plurality vote, and shall transact any other
business as may properly come before the meeting.
SECTION 3. NOTICE OF ANNUAL MEETING. Written notice of the annual
meeting stating the place, day and hour of the meeting shall be given to each
shareholder of record entitled to vote at such meeting not less than 10 nor
more than 60 days before the date of the meeting.
SECTION 4. SPECIAL MEETINGS. Special meetings of shareholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman or the President,
or a majority of the Board of Directors, or upon the written request of
shareholders owning not less than 25% of all shares of capital stock of the
Corporation issued and outstanding and entitled to vote at such meeting. Such
request by the shareholders shall state specifically the purpose or purposes of
the proposed meeting.
SECTION 5. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given to each shareholder
entitled to vote at such meeting, not less than 10 nor more than 60 days before
the date of the meeting.
SECTION 6. BUSINESS OF SPECIAL MEETINGS. Business transacted at any
special meeting of shareholders shall be limited to the purposes stated in the
notice.
SECTION 7. SHAREHOLDER LIST. The officer who has charge of the
Corporation's stock ledger shall prepare and make at least 10 days before every
meeting of shareholders, a complete list of shareholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of each
shareholder. Such list shall be available for inspection by any shareholder
for any purpose germane to the meeting during ordinary business hours for a
period of at least 10 days prior to the meeting either at a place within the
city where the meeting is to be held, which place is specified in the notice of
the meeting or at the place where the meeting is to be held. The list of
shareholders entitled to vote also shall be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
shareholder who is present. The original stock transfer books shall be the
only evidence as to the shareholders entitled to examine the shareholder list
or stock transfer book, or to vote at any meeting of shareholders.
SECTION 8. QUORUM. The holders of a majority of the Corporation's shares
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of shareholders
for the transaction of business except as otherwise provided by the Delaware
General Corporation Law or the Certificate of Incorporation. If, however, such
quorum is not present or represented at any meeting of the shareholders, the
shareholders entitled to vote thereat, present in person or represented by
proxy, shall have the
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power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than 30
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, written notice of the adjourned meeting shall be given to the
shareholders entitled to vote at the meeting. Every meeting of the
shareholders may be adjourned from time to time until its business is
completed, and except as provided herein or by applicable law, no notice need
be given of such adjourned meeting.
SECTION 9. ACTION BY SHAREHOLDERS. When a quorum is present at any
meeting, the vote of the holders of a majority of the shares having voting
power present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which by express
provision of the Delaware General Corporation Law or 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 10. VOTING. Each shareholder shall at every meeting of the
shareholders be entitled to one vote in person or by proxy for each share
having voting power held by such shareholder, except as may otherwise be
provided in the Certificate of Incorporation or any Certificate of Designation
thereunder.
SECTION 11. WAIVER OF NOTICE. Whenever any notice is required to be
given to any shareholder, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be equivalent to the giving of such notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 12. ACTION WITHOUT A SHAREHOLDERS' MEETING. Any action
required to be taken at any annual or special meeting of shareholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such shareholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares entitled to vote on such
matters 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. Any such consent shall be
delivered to the Corporation at its registered office in the State of Delaware,
its principal place of business, or to an officer or agent of the Corporation
having custody of the minutes of the proceedings of the shareholders. Any
delivery made to the Corporation's registered office of corporate action by
less than unanimous written consent shall be given to those shareholders who
have not consented in writing.
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SECTION 13. FORM OF WRITTEN CONSENT. Every written consent by a
shareholder or shareholders shall bear the date of signature of each
shareholder who signs the consent. No written consent shall be effective with
respect to the action referred therein, unless, within 60 days of the earliest
date of consent delivered as required by these By-Laws and the Delaware General
Corporation Law, written consents signed by a sufficient number of shareholders
to take action are delivered to the Corporation by delivery as provided in
Section 12 of this Article II.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL, POWERS; NUMBER, TENURE AND QUALIFICATIONS. The
Corporation's business, properties and affairs shall be managed by its Board of
Directors (the "Board"), comprised of the number and type of directors
determined in the Certificate of Incorporation. Directors shall be elected at
each annual meeting of the shareholders, and shall hold office as provided in
the Certificate of Incorporation and until their successors are elected and
qualified. At all times, at least one member of the Board of Directors shall
be an "Independent Director" (as defined in Section 8.06 of the Certificate of
Incorporation and as further provided in Section 5.01 thereof.
SECTION 2. VACANCIES. Vacancies in the Board shall be filled by the
affirmative vote of a majority of the remaining directors even though such
remaining directors constitute less than a quorum of the Board. A director
elected to fill a vacancy shall serve a term as provided in the Certificate of
Incorporation. Any directorship to be filled by reason of an increase in the
number of directors shall be filled by election at an annual or special meeting
of shareholders. If there are no directors in office, then the shareholders
may hold a special meeting to elect directors, at least one of whom shall be an
Independent Director.
SECTION 3. LOCATION OF MEETINGS. Meetings of the Board, regular or
special, shall be held at the Corporation's principal office unless otherwise
specified in the notice thereof, in which event the meeting shall be held where
specified in the notice, either within or without the States of Georgia or
Delaware.
SECTION 4. ORGANIZATIONAL MEETINGS. The first meeting of each
newly-elected Board shall be held on the day and time specified by the
Corporation's Board. No notice of such meeting shall be necessary to the
newly-elected directors in order to legally constitute the meeting, provided a
quorum is present.
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SECTION 5. REGULAR MEETINGS. Regular meetings of the Board shall be
held at such times and places as the Board by resolution may determine.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board may be
called by the Chairman or President on 24 hours' personal, telephonic,
telegraphic or facsimile notice to each director, or on three days' written
notice to each director. Upon the written request of a majority of directors
constituting the whole Board, special meetings may be called by the Chairman or
President, and appropriate notice given. Any notice or waiver thereof of a
special meeting, whether personal, telephonic, telegraphic or written, need not
include a statement of the business to be transacted at, nor the purposes of,
such special meeting except as expressly required by statute, the Corporation's
Certificate of Incorporation or these By-Laws. Meetings of any committee of
the Board may be called by the Chairman, the President, or by the chairman of
the committee, at any time upon personal, telephonic, telegraphic or written
notice to each member of such committee and need not include a statement of the
business to be transacted at, nor the purposes of, such special meeting.
SECTION 7. MEETINGS BY CONFERENCE TELEPHONE, ETC. Meetings of the
Board, and of any committee thereof, may be held by means of a conference
telephone or equivalent communication equipment by which all persons
participating in the meeting can hear each other simultaneously. Participation
by such means shall constitute presence in person at any such meeting.
SECTION 8. QUORUM. At all meetings of the Board, a majority of the
directors then holding office shall constitute a quorum for the transaction of
business, and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board, except as may otherwise
specifically be provided by statute, the Certificate of Incorporation or these
By-Laws. If a quorum is not present at any meeting of the Board, the directors
present may adjourn the meeting from time to time, without notice other than
announcements at the meeting, until a quorum shall be present.
SECTION 9. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be
taken without a meeting or vote, if a written consent setting forth the action
taken is signed by all members of the Board or committee, as the case may be,
and such written consent or consents are filed with the minutes of proceedings
of the Board or of such committee. Such consents shall have the same effect on
a unanimous vote of the Board.
SECTION 10. COMMITTEES. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of two or more of the directors of the Corporation. Any such
committee, to the extent provided in the resolution or resolutions of the
Board, shall have and may exercise all the powers and authority of the Board in
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the management of the business and affairs of the Corporation during intervals
between meetings of the Board, and may authorize the seal of the Corporation to
be affixed to all papers which may require it; but no such committee shall have
any power or authority to declare a dividend or distribution from capital or
earned surplus, issue shares of the Corporation, amend the Certificate of
Incorporation, adopt an agreement of merger or consolidation, recommend to the
shareholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommend to the shareholders a dissolution
of the Corporation or a revocation thereof, fill vacancies in the Board, or
amend these By-Laws, authorize the issuance of stock or adopt a certificate of
ownership and merger pursuant to Delaware General Corporation Law, Section 253,
or adopt any plan of bankruptcy or reorganization under the United States
Bankruptcy Code, as amended (the "Bankruptcy Code") or any similar state laws,
or otherwise take any action described in Section 15 of this Article III. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board.
SECTION 11. COMMITTEE MINUTES AND REPORTS. Each committee shall keep
regular minutes of its meetings and report the same to the Board whenever
required or requested.
SECTION 12. COMPENSATION. The Board shall have the authority to fix
the compensation of directors. The directors may be paid a fixed sum for
attendance at each meeting of the Board and/or a stated salary as directors. No
such payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be compensated for attending committee meetings.
SECTION 13. TRANSACTIONS WITH DIRECTORS, ETC. Insofar as not
prohibited by applicable law, no contract or other transaction between the
Corporation and one or more of its directors or any other corporation,
partnership, association or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be either void or voidable because of such relationship or interest, or
because such director or directors are present at or participates in the
meeting of the Board or a committee thereof which authorizes, approves or
ratifies such contract or transaction or solely because his or their votes are
counted for such purpose, if the contract or transaction is fair and reasonable
to the Corporation and if either:
(a) The material facts as to such relationship or interest and as to
the contract or transaction are disclosed or are known to the Board or
committee which, in good faith, authorizes, approves or ratifies the
contract or transaction by the affirmative vote or consent of a majority
of the disinterested directors even though the disinterested directors
are less than a quorum; or
(b) The material facts as to his relationship or interest and as to
such contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon, and
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the contract or transaction is specifically approved in good
faith by vote or written consent of the shareholders; or
(c) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified by the Board or a
committee thereof or by the shareholders.
SECTION 14. REMOVAL OF DIRECTORS. Any director may be removed from
office only for cause, and the Independent Director may only be removed if a
successor Independent Director has been designated who is qualified under the
Certificate of Incorporation, and who is willing and able to serve as the
Independent Director effective immediately upon the removal of such Independent
Director.
SECTION 15. INSTITUTION OF INSOLVENCY PROCEEDINGS. Notwithstanding
anything to the contrary contained in the Delaware General Corporation Law, the
Certificate of Incorporation or these By-Laws, the unanimous approval of the
Board of Directors is required for the filing by the Corporation of a voluntary
bankruptcy petition under Section 301 of the Bankruptcy Code, 11 U.S.C. Section
301, or any successor thereto, or consent to the institution of bankruptcy or
insolvency proceedings against it, or the filing of a petition or consent to a
petition seeking reorganization or relief under any applicable federal or state
laws relating to bankruptcy or insolvency, or the consent to the appointment of
receiver, liquidation, assignee, trustee, sequestrator (or other similar
official) of the Corporation or a substantial part of its property, or the
making of any assignment for the benefit of creditors, or, except as required
by law, the admittance in writing of its inability to pay its debts generally
as they become due, or the taking of any corporate action in furtherance of any
such action. When voting on matters subject to the vote of the Board of
Directors, including those matters specified in this Section 15,
notwithstanding that the Corporation is not then insolvent, the Independent
Director shall take into account the interests of the creditors of the
Corporation as well as the interests of the Corporation.
ARTICLE IV
NOTICES
SECTION 1. MANNER OF GIVING NOTICE. Except as otherwise required by law,
whenever notice is required to be given to any director or shareholder, such
notice requirement can be satisfied by giving written notice by mail, postage
prepaid, addressed to such director or shareholder, at his address as it
appears on the records of the Corporation, and such notice shall be deemed to
be given at the time when the same is deposited in the United States mail.
Notice to directors may also be given in person, or by telegram, facsimile or
telephone.
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SECTION 2. WAIVER OF NOTICE. Whenever any notice is required to be
given to any shareholder or director of the Corporation, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS, ELECTION, TERMS. The officers of the Corporation
shall be a President, a Treasurer, and a Secretary. The Board may also elect a
Chairman of the Board, and one or more Vice Presidents, Assistant Treasurers,
Assistant Secretaries and such other officers as the Board may from time to
time deem proper. At all times, at least one of the officers shall be an
"Independent Officer" as defined in Section 8.06 of the Certificate of
Incorporation and who is not affiliated, associated or related by blood or
marriage to any other Corporation officer or director. Subject to paragraph
8.06(1) of the Certificate of Incorporation, the Corporation's officers shall
be elected annually by the Board at its regular annual organizational meeting
to serve for a term of one year and until their respective successors are
elected and qualified. If the officers or any of them for any reason should
not be elected at the regular annual meeting of the Board, they may be elected
at any regular or special meeting of the Board. Any person may hold two or
more of the offices in the Corporation except the same person may not serve as
President and Secretary (or Assistant Secretary). The Board may in is
discretion designate one or more of the Vice Presidents as Executive or Senior
Vice Presidents.
SECTION 2. DUTIES OF THE CHAIRMAN OF THE BOARD. The Chairman of the
Board, if one is elected and serving, shall preside at all meetings of the
shareholders and Board. He shall have authority to execute bonds, mortgages,
and other contracts requiring a seal, under the seal of the Corporation. He
shall have power to endorse, when sold, assigned, transferred or otherwise
disposed of by the Corporation, all certificates or shares of stock, bonds, or
other securities issued by other corporations, associations, trusts, whether
public or private, or by any government agency thereof, and owned or held by
the Corporation, and to make, execute and deliver all instruments or
assignments of transfer of any of such stocks, bonds or other securities. He
may, with the approval of the Board, or shall, at the Board's direction,
delegate any or all of such duties to the President.
SECTION 3. DUTIES OF THE PRESIDENT. The President shall be the
Corporation's chief executive officer and shall be responsible for all of the
operations of the Corporation and shall report to the Board.
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The President shall be responsible to the Chairman and to the Board and
shall see that all orders and resolutions of the Board are carried into effect.
He shall, under the direction of the Board, have general supervision and
direction of the other officers, employees and agents of the Corporation and
shall see that their duties, as assigned by the Board, are properly performed.
He shall designate and assign the duties of the officers under his supervision,
with the approval of the Board or at their direction.
The President shall have authority to execute bonds, mortgages and
other contracts requiring a seal, under the seal of the Corporation; he shall
have power to endorse, when sold, assigned, transferred or otherwise disposed
of by the Corporation, all certificates for shares, bonds, or other securities
or evidences of indebtedness issued by other corporations, associations,
trusts, whether public or private, or by any government or agency thereof, and
owned or held by the Corporation and to make, execute and deliver all
instruments or assignments or transfers of any such stocks, bonds, or other
securities. In the absence of the Chairman of the Board, or in the event a
Chairman is not elected, the President shall have authority to do any and all
things delegated to the Chairman of the Board by the Board or by any committee
of the Board having authority.
He shall have general authority over the Corporation's business, and if
the office of Chairman of the Board is vacant, shall exercise the duties and
have the powers of the Chairman of the Board, and shall have such other powers
and perform such other duties as the Board may from time to time prescribe.
SECTION 4. VICE PRESIDENTS. The Vice Presidents (in order of the
Executive Vice President, Senior Vice President and other Vice Presidents, each
class in order of the seniority of its respective members or as designated by
resolution of the Board) shall, in the absence or disability of the Chairman
and President, perform the duties and exercise the powers of said officers, and
shall perform such other duties and exercise such other powers as the Board,
the Chairman of the Board or the President may prescribe. One or more Vice
Presidents may be designated by the Board as either "Executive Vice President"
or "Senior Vice President."
SECTION 5. TREASURER. The Treasurer shall be the Corporation's chief
financial officer and shall have charge and custody of, and shall be
responsible for, all funds and securities of the Corporation, and shall deposit
all such funds in the name of the Corporation in such banks or other
depositories as shall be selected or authorized to be selected by the Board;
shall render or cause to be rendered a statement of the condition of the
finances of the Corporation at all regular meetings of the Board, and a full
financial report at the annual meeting of shareholders, if called upon so to
do; shall receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever; and, in general, shall perform or cause
to be performed all the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the Board.
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SECTION 6. ASSISTANT TREASURER. The Assistant Treasurers shall perform
such duties as from time to time may be assigned to them by the Chairman of the
Board, the President, the Treasurer or the Board. At the request of the
Treasurer, or in case of his absence or inability to act, any Assistant
Treasurer may act in his place.
SECTION 7. SECRETARY. The Secretary, if present, shall act as
secretary at all meetings of the Board and of the shareholders and keep the
minutes thereof in a book or books to be provided for that purpose; shall see
that all notices required to be given by the Corporation are duly given and
served; shall be custodian of the seal of the Corporation and shall affix the
seal or cause it or a facsimile thereof to be affixed to all certificates
representing shares of the Corporation and to all documents the execution of
which on behalf of the Corporation under its seal shall be duly authorized in
accordance with the provisions of these By-Laws; shall have charge of the stock
records of the Corporation; shall see that all reports, statements and other
documents required by law are properly kept and filed; may sign, with any other
proper officer of the Corporation thereunto authorized, certificates for
shares, securities or evidences of indebtedness of the Corporation; and, in
general, shall perform all the duties incident to the office of the Secretary
and such other duties as from time to time may be assigned to him by the
Chairman of the Board or the Board.
SECTION 8. ASSISTANT SECRETARIES. The Assistant Secretaries shall
perform such duties as from time to time may be assigned to them by the
Chairman of the Board, the President, the Secretary or the Board. At the
request of the Secretary, or in case of his absence or inability to act, any
Assistant Secretary may act in his place.
SECTION 9. COMPENSATION. The salaries of the Corporation's principal
officers shall be fixed from time to time by the Board, after taking account of
any recommendations by any committee to which the power to advise with respect
to salaries is delegated by the Board. The Board may from time to time
delegate to any principal officer or any committee power to fix the salaries of
other officers, agents, factors and employees. No officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the Corporation or a member of any committee contemplated by these By-Laws.
SECTION 10. OTHER OFFICERS. The other officers of the Corporation
shall perform such duties and shall exercise such powers as may be prescribed
by the Board, or by the Chairman or the President acting under authority
delegated them by the Board.
SECTION 11. VACANCIES. Vacancies in office arising from any cause may
be filled by action of the Board at any regular or special meeting of the Board,
provided that in the case of a vacancy in the office held by the Independent
Officer, such vacancy shall be filled with a person who, upon election to such
office, shall be an Independent Officer.
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SECTION 12. REMOVAL OF OFFICERS. The Board may remove any officer from
office at any time by a majority vote of the whole Board of Directors;
provided, however, if there is only one Independent Officer, the Independent
Officer may be removed only if a successor has been designated who is qualified
under the Certificate of Incorporation and who is willing and able to serve in
such capacity effective immediately upon the removal of the Independent
Officer.
ARTICLE VI
CONTRACTS, CHECKS, BANK ACCOUNTS, ETC.
SECTION 1. CONTRACTS, ETC., HOW EXECUTED. The Board may authorize any
officer or officers or agent or agents to enter into any contract or 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 and if the
Board so provides may be delegated by the person so authorized; and, unless so
authorized by the Board or these By-Laws, no officer, agent or employee shall
have any power or authority to bind the Corporation by any contract or
engagement or to pledge its credit or to render it liable pecuniarily for any
purpose or to any amount.
SECTION 2. LOANS. No loan shall be contracted on behalf of the
Corporation, and no negotiable paper shall be issued in its name, unless (i)
authorized by the Board and (ii) all necessary consents as are required under
the Certificate of Incorporation have been obtained. When so authorized, the
Chairman of the Board, the President or a Vice President or the Treasurer may
effect loans and advances at any time for the Corporation from any bank, trust
company or other institution or from any firm, corporation or individual, and
for such loans and advances the Chairman of the Board, the President or a Vice
President or the Treasurer shall make, execute and deliver, with the
counter-signature, unless otherwise authorized by the Board of Directors
including the affirmative vote of the Independent Director, of the Secretary or
an Assistant Secretary, bonds, debentures, promissory notes or other evidences
of indebtedness of the Corporation and, when authorized as aforesaid, as
security for the payment of any and all loans, advances, indebtedness and
liabilities of the Corporation, may mortgage, pledge, hypothecate or transfer
any real or personal property at any time held by the Corporation and to that
end execute and deliver instruments of mortgage or pledge or otherwise transfer
such property. Any authority so granted by the Board may be general or
confined to specific instances, and if the Board so provides, may be delegated
by the person so authorized.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be
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signed by such officer or officers, or agent or agents, as shall from
time to time be determined by resolution of the Board.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
or otherwise as the Chairman of the Board, the President or any other officer
or officers authorized by the Board shall direct in such banks, trust companies
or other depositories as may be selected by the Chairman of the Board, the
President or any other officer or officers or agents or agents to whom power in
that respect shall have been delegated by the Board. For the purpose of
deposit and for the purpose of collection for the account of the Corporation,
checks, drafts and other orders for the payment of money which are payable to
the order of the Corporation may be endorsed, assigned and delivered by such
officer or officers or agent or agents as shall be determined by the Chairman
of the Board, the President or any other officer or officers designated by the
Board.
SECTION 5. GENERAL AND SPECIAL BANK ACCOUNTS. The Board or the
Chairman of the Board, the President or any other officer or officers
designated by the Board may from time to time authorize the opening and keeping
of general and special bank accounts with such banks, trust companies or other
depositories as may be selected by the Board. The Board may make such special
rules and regulations with respect to such bank accounts, not inconsistent with
the provisions of these By-Laws, as it may deem expedient.
ARTICLE VII
SHARES
SECTION 1. CERTIFICATES FOR SHARES. Every holder of shares shall be
entitled to have a certificate, in such form as the Board shall prescribe,
certifying the number and class of Corporation shares owned by him. Each such
certificate shall be signed in the name of the Corporation by the Chairman or
Vice Chairman of the Board, the President or a Vice President, and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary.
The signature of any such officer may be a facsimile. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon, any such certificate shall cease to be such officer, transfer
agent or registrar, before such certificate shall have been issued by the
Corporation, such certificate may nevertheless be issued by the Corporation
with the same effect as if such person were such officer, transfer agent or
registrar at the date of issue. A record shall be kept of the respective names
of the persons, firms or corporations owning the shares represented by
certificates, respectively, and the respective dates thereof, and, in case of
cancellation, the respective dates of cancellation. Every certificate
surrendered to the Corporation for exchange or transfer shall be cancelled, and
a new certificate or certificates shall not be issued
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in exchange for any existing certificates until such existing
certificate shall have been so cancelled, except in cases otherwise provided
for in this Article VII.
SECTION 2. TRANSFER OF SHARES. Each transfer of Corporation shares
shall be made only on the books of the Corporation by the registered holder
thereof, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the Corporation, or with a transfer
agent appointed as provided in this Article VII, upon the payment of any taxes
thereon and the surrender of the certificate or certificates for such shares
properly endorsed and in good delivery form. The person in whose name
Corporation shares stand on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation; provided that
whenever any transfer of shares shall be made for collateral security and not
absolutely, such fact, if known to the Corporation or to any such transfer
agent, shall be so expressed in the entry of transfer if requested by both the
transferor and transferee.
SECTION 3. REGULATIONS. The Board may make such rules and regulations
as it may deem expedient, not inconsistent with these By-Laws, concerning the
issue, transfer and registration of certificates for Corporation shares. It
may appoint, or authorize the Chairman or President to appoint, one or more
transfer agents and one or more registrars, and may require all certificates
for shares of the Corporation to bear the signature or signatures of any such
transfer agents or registrars.
SECTION 4. DATE FOR DETERMINING SHAREHOLDERS OF RECORD.
(a) In order that the Corporation may determine the
shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof or entitled to receive
payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect to any change,
conversion or exchange of shares or for the purpose of any other
lawful action, the Board may fix in advance, a record date, which
record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which shall not be more than
60 nor less than 10 days before the date of such meeting. If no
record date is fixed by the Board, the record date shall be at the
close of business on the day next preceding the day on which notice
is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held. A
determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of
such meeting; provided, however, that the Board may fix a new record
date for the adjourned meeting.
(b) If no record date has been fixed by the Board, the record
date for determining shareholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the
Board is required under the Delaware General Corporation Law, shall
be the first date on which a signed written consent setting forth the
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action taken or proposed to be taken is delivered to the Corporation
by delivery to its registered or principal office. Delivery to the
Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested.
SECTION 5. LOST, DESTROYED AND MUTILATED CERTIFICATES. The holder of
any Corporation shares or other securities shall immediately notify the
Corporation of any loss, destruction or mutilation of the certificate(s)
therefor, and the Board may, in its discretion, and after the expiration of
such period of time as it may determine to be advisable, cause to be issued to
him a new certificate or certificates for shares, upon the surrender of the
mutilated certificate, or in case of loss or destruction of the certificate,
upon proof satisfactory to the Board of such loss or destruction, and the Board
or its delegee may, in its discretion, require the owner of the lost, destroyed
or mutilated certificate, or his legal representatives, to give the Corporation
a bond, in such sum and with such surety or sureties as it may direct, or to
indemnify the Corporation against any claim that may be made against it on
account of the alleged loss, destruction or mutilation of any such certificate
or the issuance of such new certificate.
SECTION 6. EXAMINATION OF BOOKS BY SHAREHOLDERS OR BONDHOLDERS. The
Board shall, subject to any applicable statutes, have the power to determine,
from time to time, whether and to what extent and at what times and places and
under what conditions and regulations the accounts and books and documents of
the Corporation, or any of them, shall be open to the inspection of the
shareholders or bondholders; and no shareholder or bondholder shall have any
right to inspect any account or book or document of the Corporation, except as
conferred by any such statute, unless and until authorized so to do by
resolution of the Board or of the shareholders of the Corporation.
ARTICLE VIII
WAIVER OF NOTICE
Whenever any notice whatsoever is required to be given by these By-Laws
or by statute, the person entitled thereto may in person, or in the case of a
shareholder by his attorney thereunto duly authorized, waive such notice in
writing (including, telegraph, cable, radio or wireless), whether before or
after the meeting, or other matter in respect of which such notice is to be
given, and in such event such notice, and any action to be taken after such
notice or after the lapse of a prescribed period of time, may be taken without
such notice and without the lapse of any period of time.
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ARTICLE IX
BUSINESS COMBINATIONS
The Corporation expressly elects not to be governed by Section 203 of
the Delaware General Corporation Law. Any "business combination" as defined in
such Section 203 shall be governed by the Corporation's Certificate of
Incorporation and by these By-Laws, without giving effect to said Section 203.
This Article IX shall not be amended, altered or repealed except as provided by
law, and by the Corporation's Certificate of Incorporation and these By-Laws.
ARTICLE X
SEAL
The seal of the Corporation shall be in the form of a circle and shall
bear the word "Delaware", and may also bear the name of the Corporation and the
year of its incorporation. It need not be affixed to contracts and other
agreements to which the Corporation is a party for such contracts and
agreements to be binding.
ARTICLE XI
FISCAL YEAR
The fiscal year of the Corporation shall be determined by resolution of
the Board of Directors.
ARTICLE XII
AMENDMENTS
These By-Laws (including, without limitation, this Article XIII) may be
altered, amended or repealed or new By-Laws may be adopted by (i) the Board
solely in the manner prescribed in the Corporation's Certificate of
Incorporation, or by (ii) the Corporation's shareholders only upon the
favorable vote of a majority of the voting shares and only at an annual or
special meeting of shareholders where the notice of such meeting specifically
described such action and contains a copy of the proposed alteration,
amendment, or new By-Laws. The foregoing notwithstanding, Article III,
Sections 1 and 15; and Article V, Sections 1, 11 and 12 may not be altered,
amended or repealed except as provided in this Article IX, and in the case of
Articles III and V, upon the unanimous vote of of the Board of Directors,
including the affirmative vote of the Independent Director.
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EXHIBIT X
FORM OF SUBORDINATED NOTE
---
SUBORDINATED NOTE
August 22, 1996
1. Note. FOR VALUE RECEIVED, the undersigned, FLEXIBLE FUNDING CORP.,
a Delaware corporation ("FLEXIBLE-SPC"), hereby unconditionally promises to pay
to the order of PRINTPACK, INC., a Georgia corporation ("PRINTPACK"), in lawful
money of the United States of America and in immediately available funds, on
the "COLLECTION DATE" (as defined in the "SALE AGREEMENT" referred to below)
the aggregate unpaid principal sum outstanding of all "SUBORDINATED LOANS" made
from time to time by Printpack to Flexible-SPC pursuant to and in accordance
with the terms of that certain Receivables Sale Agreement dated as of August
22, 1996 between Printpack and Flexible-SPC (as amended, restated, supplemented
or otherwise modified from time to time, the "SALE AGREEMENT"). Reference to
SECTION 1.2 of the Sale Agreement is hereby made for a statement of the terms
and conditions under which the loans evidenced hereby have been and will be
made. All terms which are capitalized and used herein and which are not
otherwise specifically defined herein shall have the meanings ascribed to such
terms in the Sale Agreement.
2. Interest. Flexible-SPC further promises to pay interest on the
outstanding unpaid principal amount hereof from the date hereof until payment
in full hereof at a rate equal to the Base Rate; PROVIDED, HOWEVER, that if
Flexible-SPC shall default in the payment of any principal hereof, Flexible-SPC
promises to, on demand, pay interest at the rate of the Base Rate plus 2.00% on
any such unpaid amounts, from the date such payment is due to the date of
actual payment. Interest shall be payable on the first Business Day of each
month in arrears; PROVIDED, HOWEVER, that Flexible-SPC may elect on the date
any interest payment is due hereunder to defer such payment and upon such
election the amount of interest due but unpaid on such date shall constitute
principal under this Subordinated Note. The outstanding principal of any loan
made under this Subordinated Note shall be due and payable on the Collection
Date and may be repaid or prepaid at any time without premium or penalty.
3. Principal Payments. Printpack is authorized and directed by
Flexible-SPC to enter on the grid attached hereto, or, at its option, in its
books and records, the date and amount of each loan made by it which is
evidenced by this Subordinated Note and the amount of each payment of principal
made by Flexible-SPC, and absent manifest error, such entries shall constitute
prima facie evidence of the accuracy of the information so entered; PROVIDED
THAT
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neither the failure of Printpack to make any such entry or any error therein
shall expand, limit or affect the obligations of Flexible-SPC hereunder.
4. Subordination. The indebtedness evidenced by this Subordinated Note
is subordinated to the prior payment in full of all of Flexible-SPC's recourse
obligations under that certain Receivables Purchase Agreement dated as of
August 22, 1996 by and among Flexible-SPC, Falcon Asset Securitization
Corporation, certain financial institutions party thereto as "PURCHASERS", and
The First National Bank of Chicago, as the "AGENT" (as amended, restated,
supplemented or otherwise modified from time to time, the "PURCHASE
AGREEMENT"). The subordination provisions contained herein are for the direct
benefit of, and may be enforced by, the Agent and the Purchasers and/or any of
their respective assignees (collectively, the "SENIOR CLAIMANTS") under the
Purchase Agreement. Until the date on which all "CAPITAL" outstanding under
the Purchase Agreement has been repaid in full and all other obligations of
Flexible-SPC and/or the Servicer thereunder and under the "FEE LETTER"
referenced therein (all such obligations, collectively, the "SENIOR CLAIM")
have been indefeasibly paid and satisfied in full, Printpack shall not demand,
accelerate, sue for, take, receive or accept from Flexible-SPC, directly or
indirectly, in cash or other property or by set-off or any other manner
(including, without limitation, from or by way of collateral) any payment or
security of all or any of the indebtedness under this Subordinated Note or
exercise any remedies or take any action or proceeding to enforce the same;
PROVIDED, HOWEVER, that (i) Printpack hereby agrees that it will not institute
against Flexible-SPC any proceeding of the type described in SECTION 6.1(E) of
the Sale Agreement unless and until the Collection Date has occurred and (ii)
nothing in this paragraph shall restrict Flexible-SPC from paying, or Printpack
from requesting, any payments under this Subordinated Note so long as
Flexible-SPC is not required under the Purchase Agreement to set aside for the
benefit of, or otherwise pay over to, the funds used for such payments to any
of the Senior Claimants and further provided that the making of such payment
would not otherwise violate the terms and provisions of the Purchase Agreement.
Should any payment, distribution or security or proceeds thereof be received by
Printpack in violation of the immediately preceding sentence, Printpack agrees
that such payment shall be segregated, received and held in trust for the
benefit of, and deemed to be the property of, and shall be immediately paid
over and delivered to the Agent for the benefit of the Senior Claimants.
5. Bankruptcy; Insolvency. Upon the occurrence of any Servicer Default
described in SECTION 7.1(C) of the Purchase Agreement involving Flexible-SPC as
debtor, then and in any such event the Senior Claimants shall receive payment
in full of all amounts due or to become due on or in respect of Capital and the
Senior Claim (including "DISCOUNT" accruing under the Purchase Agreement after
the commencement of any such proceeding, whether or not any or all of such
Discount is an allowable claim in any such proceeding) before Printpack is
entitled to receive payment on account of this Subordinated Note, and to that
end, any payment or distribution of assets of Flexible-SPC of any kind or
character, whether in cash, securities or other property, in any applicable
insolvency proceeding, which would otherwise be payable to or
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<PAGE> 90
deliverable upon or with respect to any or all indebtedness under this
Subordinated Note, is hereby assigned to and shall be paid or delivered by the
Person making such payment or delivery (whether a trustee in bankruptcy, a
receiver, custodian or liquidating trustee or otherwise) directly to the Agent
for application to, or as collateral for the payment of, the Senior Claim until
such Senior Claim shall have been paid in full and satisfied.
6. Amendments. This Subordinated Note shall not be amended or modified
except in accordance with SECTION 9.1 of the Sale Agreement. The terms of this
Subordinated Note may not be amended or otherwise modified without the prior
written consent of the Agent for the benefit of the Purchasers.
7. Governing Law. This Subordinated Note has been made and delivered
at Atlanta, Georgia, and shall be interpreted and the rights and liabilities of
the parties hereto determined in accordance with the laws and decisions of the
State of Georgia. Wherever possible each provision of this Subordinated Note
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Subordinated Note shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Subordinated Note.
8. Waivers. All parties hereto, whether as makers, endorsers, or
otherwise, severally waive presentment for payment, demand, protest and notice
of dishonor. Printpack additionally expressly waives all notice of the
acceptance by any Senior Claimant of the subordination and other provisions of
this Subordinated Note and expressly waives reliance by any Senior Claimant
upon the subordination and other provisions herein provided.
9. Assignment. This Subordinated Note may not be assigned, pledged or
otherwise transferred to any party other than Printpack without the prior
written consent of the Agent, and any such attempted transfer shall be void.
FLEXIBLE FUNDING CORP.
By:__________________________
Title:
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<PAGE> 91
SCHEDULE
TO
SUBORDINATED NOTE
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount of Amount Unpaid
Subordinated of Principal Notation
Date Loan Principal Paid Balance made by
- ---- ---- -------------- --------- --------
<S> <C> <C> <C> <C>
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
_______ ___________ ____________ ____________ __________
</TABLE>
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SCHEDULE A
DOCUMENTS AND RELATED ITEMS TO BE DELIVERED
ON OR PRIOR TO THE INITIAL PURCHASE
I. Receivables Sale Agreement
A. Receivables Sale Agreement dated as of August 22, 1996 (the "SALE
AGREEMENT") by and between Printpack, Inc., a Georgia corporation (the
"ORIGINATOR"), and Flexible Funding Corp., a Delaware corporation
("FLEXIBLE-SPC"), with the following exhibits:
<TABLE>
<S> <C> <C>
Exhibit I - Definitions
Exhibit II - Places of Business of Originator; Locations of Records;
Trade Names; Prior Names; Federal Employer I.D. Number
Exhibit III - Lockboxes; Collection Accounts; Concentration Accounts; and
Depositary Accounts
Exhibit IV - Compliance Certificate
Exhibit V - Collection Account Agreement
Exhibit VI - Credit and Collection Policy
Exhibit VII - Form of Monthly Report
Exhibit VIII - Form of Weekly Report
Exhibit IX - Stockholder and Subscription Agreement
Exhibit X - Subordinated Note
</TABLE>
B. Revolving Subordinated Note dated August 22, 1996 executed by
Flexible-SPC in favor of the Originator.
C. Stockholder and Subscription Agreement dated as of August 22, 1996 by
and between the Originator and Flexible-SPC.
D. Certificate of the Originator's [Assistant] Secretary certifying:
1. An attached copy of the Originator's Articles of Incorporation
(certified within 30 days prior to closing by the Georgia Secretary
of State)
2. An attached copy of the Originator's By-Laws
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3. An attached copy of resolutions of the Originator's Board of
Directors authorizing the Originator's execution, delivery and
performance of the Sale Agreement and related documents
87
<PAGE> 94
4. The names, titles and specimen signatures of the Originator's
officers authorized to execute and deliver the Sale Agreement and
related documents
E. Good standing certificates for the Originator from the following states
certified within 30 days prior to closing:
1. Georgia
2. Arizona (photocopy)
3. California (photocopy)
4. Delaware (photocopy)
5. Illinois (photocopy)
6. Indiana (photocopy)
7. Louisiana (photocopy)
8. Minnesota (photocopy)
9. Missouri (photocopy)
10. New Jersey (photocopy)
11. North Carolina (photocopy)
12. Ohio (photocopy)
13. Pennsylvania (photocopy)
14. Tennessee (photocopy)
15. Texas (photocopy)
16. Tennessee (photocopy)
17. Texas (photocopy)
18. Virginia (photocopy)
19. Wisconsin (photocopy)
F. Pre-filing state and federal tax lien, judgment lien and UCC lien
searches against the Originator.
G. UCC Financing Statements naming the Originator, as debtor,
Flexible-SPC, as secured party, and The First National Bank of Chicago, as
Agent, as assignee of secured party, for filing in the following jurisdictions:
1. Fulton County, Georgia.
H. Post-filing UCC lien searches against the Originator from the following
jurisdictions:
1. Fulton County, Georgia.
I. Collection Account Agreement
1. SunTrust
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<PAGE> 95
J. Opinions of Alston & Bird:
1. Corporate/UCC opinion
2. True sale opinion
3. Non-consolidation opinion
K. CFO's Certificate re no Servicer Default or Potential Servicer Default
and absence of Material Adverse Effect since March 31, 1996.
L. Intercreditor Agreement.
II. Receivables Purchase Agreement
A. Receivables Purchase Agreement dated as of August 22, 1996 (the
"INVESTOR AGREEMENT") by and among Flexible-SPC, Falcon Asset Securitization
Corporation ("FALCON"), various Investors, and The First National Bank of
Chicago, as Agent (in such capacity, the "AGENT") with the following exhibits:
<TABLE>
<S> <C> <C> <C>
Exhibit I - Definitions
Exhibit II - Places of Business of Flexible-SPC; Locations of Records;
Trade Names; Federal Employer I.D. Number
Exhibit III - Lockboxes; Collection Accounts; Concentration Accounts; and
Depositary Accounts
Exhibit IV - Compliance Certificate
Exhibit V - Collection Account Agreement
Exhibit VI - Credit and Collection Policy
Exhibit VII - Form of Monthly Report
Exhibit VIII - Form of Weekly Report
Exhibit IX - Form of Purchase Notice
</TABLE>
B. Fee Letter dated as of August 22, 1996 by and between Flexible-SPC and
the Agent.
C. Certificate of Flexible-SPC's [Assistant] Secretary certifying:
1. An attached copy of Flexible-SPC's Certificate of Incorporation
(certified within 30 days prior to closing by the Delaware
Secretary of State)
2. An attached copy of Flexible-SPC's By-Laws
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<PAGE> 96
3. An attached copy of resolutions of Flexible-SPC's Board of
Directors authorizing Flexible-SPC's execution, delivery and
performance of the Investor Agreement and related documents
4. The names, titles and specimen signatures of Flexible-SPC's
officers authorized to execute and deliver the Investor Agreement
and related documents
D. Good standing certificates for Flexible-SPC from the following states
certified within 30 days prior to closing:
1. Delaware
2. Georgia
E. UCC Financing Statements naming Flexible-SPC, as debtor, and the Agent,
as secured party, for filing in the following jurisdictions:
1. Fulton County, GA
F. Post-filing UCC lien searches against Flexible-SPC from the following
jurisdictions:
1. Fulton County, GA
G. Collection Account Agreement
1. SunTrust
H. Purchase Notice executed by Flexible-SPC.
I. Opinion of Flexible-SPC's counsel re corporate/UCC issues
J. CFO's Certificate re no Servicer Default or Potential Servicer Default
and absence of Material Adverse Effect since March 31, 1996.
K. Weekly Report.
L. Monthly Report.
90
<PAGE> 1
EXHIBIT 10.8
Receivables Purchase Agreement dated as of August 22, 1996 by and among
Flexible Funding Corp. as Seller, Falcon Asset Securitization Corporation and
the financial institutions party hereto as Investors and The First National
Bank of Chicago as Agent.
<PAGE> 2
[FALCON/INVESTORS' PURCHASE AGREEMENT]
================================================================================
================================================================================
$50,000,000
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF AUGUST 22, 1996
AMONG
FLEXIBLE FUNDING CORP.,
AS SELLER,
FALCON ASSET SECURITIZATION CORPORATION,
THE FINANCIAL INSTITUTIONS PARTY HERETO,
AS INVESTORS,
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS AGENT
================================================================================
================================================================================
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES................... 1
Section 1.1. Purchase Facility................................. 1
Section 1.2. Making Incremental Purchases ..................... 2
Section 1.3. Selection of Tranche Periods and Discount Rates... 2
Section 1.4. Percentage Evidenced by Receivable Interests...... 3
Section 1.5. Dividing or Combining Receivable Interests........ 3
Section 1.6. Reinvestment Purchases and Settlements............ 4
Section 1.7. Liquidation Settlement Procedures................. 4
Section 1.8. Recourse for Breach of Representation............. 5
Section 1.9. Discount; Payments and Computations, Etc.......... 5
Section 1.10. Maximum Aggregate Receivables Interest; Grant of.. 6
Security Interest................................. 6
Section 1.11. Seller's Extinguishment........................... 6
Section 1.12. Servicer Fee...................................... 7
ARTICLE II
LIQUIDITY FACILITY.................... 7
Section 2.1. Transfer to Investors............................. 7
Section 2.2. Transfer Price Reduction Discount................. 7
Section 2.3. Payments to FALCON................................ 7
Section 2.4. Limitation on Commitment to Purchase from FALCON.. 7
Section 2.5. Defaulting Investors.............................. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES................. 8
Section 3.1. Seller Representations and Warranties........ 8
(a) Corporate Existence and Power..................... 8
(b) No Conflict....................................... 9
(c) Governmental Authorization........................ 9
(d) Binding Effect.................................... 9
(e) Accuracy of Information........................... 9
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
(f) Use of Proceeds...................................... 9
(g) Title to Receivables................................. 9
(h) Good Title; Perfection............................... 10
(i) Places of Business................................... 10
(j) Collection Banks; etc................................ 10
(k) Material Adverse Effect.............................. 11
(l) Names................................................ 11
(m) Actions, Suits....................................... 11
(n) Credit and Collection Policy......................... 11
(o) Payments to Originator............................... 11
(p) Ownership of the Seller.............................. 11
(q) Not an Investment Company............................ 11
(r) Purpose.............................................. 11
(s) Net Eligible Receivables............................. 12
Section 3.2. Investor Representations and Warranties....... 12
(a) Existence and Power.................................. 12
(b) No Conflict.......................................... 12
(c) Governmental Authorization........................... 12
(d) Binding Effect....................................... 12
ARTICLE IV
CONDITIONS OF PURCHASES................. 12
Section 4.1. Conditions Precedent to Initial Purchase........ 12
Section 4.2. Conditions Precedent to All Purchases and
Reinvestments.................................. 12
ARTICLE V
COVENANTS......................... 13
Section 5.1. Affirmative Covenants of Seller................. 13
(a) Financial Reporting.................................. 13
(b) Notices.............................................. 14
(c) Compliance with Laws................................. 15
(d) Audits............................................... 15
(e) Keeping and Marking of Records and Books............. 15
(f) Compliance with Contracts and Credit and
Collection Policy................................... 15
(g) Purchase of Receivables from the Originator.......... 16
(h) Ownership Interest................................... 16
(i) Payment to the Originator............................ 16
(j) Performance and Enforcement of Sale Agreement........ 16
(k) Purchasers' Reliance................................. 16
(l) Collections.......................................... 18
(m) Minimum Net Worth.................................... 19
Section 5.2. Negative Covenants of Seller.................... 19
(a) Name Change, Offices, Records and Books of Accounts.. 19
(b) Change in Payment Instructions to Obligors........... 19
</TABLE>
ii
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<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
(c) Modifications to Contracts and Credit and
Collection Policy.................................. 19
(d) Sales, Liens, Etc................................... 20
(e) Nature of Business; Other Agreements; Other
Indebtedness....................................... 20
(f) Amendments to Sale Agreement........................ 20
(g) Amendments to Corporate Documents................... 21
(h) Merger.............................................. 21
(i) Restricted Junior Payments.......................... 21
ARTICLE VI
ADMINISTRATION AND COLLECTION.......... 21
Section 6.1. Designation of Servicer............................. 21
Section 6.2. Duties of Servicer.................................. 22
Section 6.3. Collection Notices.................................. 23
Section 6.4. Responsibilities of the Seller...................... 23
Section 6.5. Receivables Reports................................. 24
ARTICLE VII
SERVICER DEFAULTS..................... 24
Section 7.1. Servicer Default.................................... 24
ARTICLE VIII
INDEMNIFICATION.................... 25
Section 8.1. Indemnities by the Seller........................... 25
Section 8.2. Increased Cost and Reduced Return................... 27
Section 8.3. Costs and Expenses Relating to this Agreement....... 38
ARTICLE IX
THE AGENT....................... 29
Section 9.1. Authorization and Action............................ 29
Section 9.2. Delegation of Duties................................ 29
Section 9.3. Exculpatory Provisions.............................. 29
Section 9.4. Reliance by Agent................................... 30
Section 9.5. Non-Reliance on Agent and Other Purchasers.......... 30
Section 9.6. Reimbursement and Indemnification................... 30
Section 9.7. Agent in its Individual Capacity.................... 30
</TABLE>
iii
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<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 9.8. Successor Agent...................................... 31
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS............... 31
Section 10.1. Assignments......................................... 31
Section 10.2. Participations...................................... 32
ARTICLE XI
MISCELLANEOUS...................... 32
Section 11.1. Waivers and Amendments.............................. 32
Section 11.2. Notices............................................. 33
Section 11.3. Ratable Payments.................................... 34
Section 11.4. Protection of Ownership Interests of
the Purchasers..................................... 34
Section 11.5. Confidentiality..................................... 35
Section 11.6. Bankruptcy Petition................................. 35
Section 11.7. Limitation of Liability............................. 36
Section 11.8. CHOICE OF LAW....................................... 36
Section 11.9. CONSENT TO JURISDICTION............................. 36
Section 11.10. WAIVER OF JURY TRIAL................................ 36
Section 11.11. Integration; Survival of Terms...................... 37
Section 11.12. Counterparts; Severability.......................... 37
Section 11.13. First Chicago Roles................................. 37
Section 11.14. Characterization.................................... 37
EXHIBITS AND SCHEDULES
EXHIBIT I DEFINITIONS......................................... 41
EXHIBIT II CHIEF EXECUTIVE OFFICE OF THE SELLER;
LOCATIONS OF RECORDS; FEDERAL EMPLOYER
IDENTIFICATION NUMBER(S)............................ 60
EXHIBIT III COLLECTION ACCOUNTS; CONCENTRATION
ACCOUNTS; AND DEPOSITARY ACCOUNTS................... 61
EXHIBIT IV FORM OF COMPLIANCE CERTIFICATE...................... 62
</TABLE>
iv
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<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
EXHIBIT V FORM OF COLLECTION ACCOUNT AGREEMENT................ 64
EXHIBIT VI CREDIT AND COLLECTION POLICY........................ 68
EXHIBIT VII FORM OF MONTHLY REPORT.............................. 69
EXHIBIT VIII FORM OF WEEKLY REPORT............................... 70
EXHIBIT IX FORM OF PURCHASE NOTICE............................. 71
SCHEDULE A DOCUMENTS AND RELATED ITEMS TO BE DELIVERED
TO THE AGENT ON OR PRIOR TO THE INITIAL
PURCHASE............................................ 73
</TABLE>
v
<PAGE> 8
THIS RECEIVABLES PURCHASE AGREEMENT, dated as of August 22, 1996, is by
and among Flexible Funding Corp., a Delaware corporation (the "SELLER"), the
Investors (hereinafter defined), Falcon Asset Securitization Corporation
("FALCON") and The First National Bank of Chicago, as Agent. Unless defined
elsewhere herein, capitalized terms used in this Agreement shall have the
meanings assigned to such terms in EXHIBIT I hereto.
PRELIMINARY STATEMENTS
The Seller desires to transfer and assign Receivable Interests
to the Purchasers from time to time.
FALCON may, in its absolute and sole discretion, purchase
Receivable Interests from the Seller from time to time.
The Investors shall, at the request of the Seller, purchase
Receivable Interests from time to time. In addition, the Investors
have agreed to provide a liquidity facility to FALCON.
The First National Bank of Chicago has been requested and is
willing to act as Agent on behalf of FALCON and the Investors in
accordance with the terms hereof.
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility.
(a) Upon the terms and subject to the conditions hereof, the Seller
may, at its option, sell and assign Receivable Interests to the Agent for the
benefit of one or more of the Purchasers. FALCON may, at its option, instruct
the Agent to purchase on behalf of FALCON, or if FALCON shall decline to
purchase, unless the Seller cancels such purchase in accordance with SECTION
1.2, the Agent shall purchase on behalf of the Investors, Receivable Interests
from time to time during the period from the date hereof to but not including
the Facility Termination Date. The Seller hereby assigns, transfers and
conveys to the Agent for the benefit of the relevant Purchaser(s), and the
Agent hereby acquires, all of the Seller's now owned and existing and hereafter
arising or acquired right, title and interest in and to the Receivable
Interests.
(b) The Seller may, upon at least 30 days' notice to the Agent,
terminate in whole or reduce in part, ratably among the Investors, the unused
portion of the Purchase Limit;
<PAGE> 9
PROVIDED THAT each partial reduction of the Purchase Limit shall be in an
amount equal to $5,000,000 or an integral multiple thereof.
Section 1.2. Making Incremental Purchases. The Seller shall provide
the Agent with a purchase notice, in substantially the form of EXHIBIT IX
hereto (each, a "PURCHASE NOTICE"), at least one (1) Business Day prior to the
initial purchase of Receivable Interests hereunder (or two (2) Business Days
prior to such initial purchase if the Seller desires to select the Adjusted
LIBOR Rate with respect thereto) and at least two (2) Business Days prior to
each subsequent Incremental Purchase. Each Purchase Notice shall, except as
set forth below, be irrevocable and shall specify the requested Purchase Price
(which shall not be less than $3,000,000) and date of such Incremental
Purchase, together with the duration of the initial Tranche Period and the
initial Discount Rate related thereto. Following receipt of a Purchase Notice,
the Agent will determine whether FALCON agrees to make the purchase. If FALCON
declines to make a proposed purchase, the Agent shall promptly advise the
Seller and the Servicer of such fact, and (i) the Seller may thereupon cancel
the Purchase Notice or (ii) in the absence of such a cancellation, the
Incremental Purchase of the Receivable Interests will be made by the Investors.
On the date of each Incremental Purchase, upon satisfaction of the applicable
conditions precedent set forth in ARTICLE IV, FALCON or each Investor, as
applicable, shall deposit to the Facility Account, in immediately available
funds, no later than 12:00 noon (Chicago time), an amount equal to (i) in the
case of FALCON, the aggregate Purchase Price of each Receivable Interest FALCON
is then purchasing or (ii) in the case of an Investor, such Investor's Pro Rata
Share of the aggregate Purchase Price of each of the Receivable Interests the
Investors are purchasing.
Section 1.3. Selection of Tranche Periods and Discount Rates.
(a) Each Receivable Interest shall at all times have an associated amount
of Capital, a Discount Rate and Tranche Period applicable to it. Not less than
$3,000,000 of Capital may be allocated to any single Receivable Interest. The
Seller shall request Discount Rates and Tranche Periods for the Receivable
Interests of the Purchasers. The Seller may select the Adjusted LIBOR Rate or
the Base Rate to be applicable to each Receivable Interest; PROVIDED, HOWEVER,
that not more than 5 Tranche Periods with respect to Adjusted LIBOR Rates may
be outstanding at any one time. The Seller shall by 12:00 noon (Chicago time):
(i) at least two (2) Business Days prior to the expiration of
any then existing Tranche Period of FALCON with respect to which the
Adjusted LIBOR Rate is being requested as a new Discount Rate, and
(ii) at least three (3) Business Days prior to the expiration
of any then existing Tranche Period of the Investors with respect to
which the Adjusted LIBOR Rate is being requested as a new Discount
Rate, and
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(iii) at least one (1) Business Day prior to the expiration of
any Tranche Period of any of the Purchasers with respect to which
the Base Rate is being requested as a new Discount Rate,
give the Agent irrevocable notice of the new Tranche Period and Discount Rate
for the Receivable Interest associated with such expiring Tranche Period. If
the Seller fails to request timely a Discount Rate and/or a Tranche Period for
any Receivable Interest pursuant to the terms of this SECTION 1.3, the Discount
Rate shall be the Base Rate, and the applicable Tranche Period shall be a
period of one Business Day commencing on the day requested in the Purchase
Notice or the last day of the then expiring Tranche Period for such Receivable
Interest, as applicable. Until the Seller gives notice to the Agent of another
Discount Rate, the initial Discount Rate for any Receivable Interest
transferred to the Investors pursuant to SECTION 2.1 shall be the Base Rate.
(b) If any Investor notifies the Agent that it has determined that
funding its Pro Rata Share of the Receivable Interests of the Investors at an
Adjusted LIBOR Rate would violate any applicable law, rule, regulation, or
directive of any governmental or regulatory authority, whether or not having
the force of law, or that (i) deposits of a type and maturity appropriate to
match fund its Receivable Interests at such Adjusted LIBOR Rate are not
available or (ii) such Adjusted LIBOR Rate does not accurately reflect the cost
of acquiring or maintaining a Receivable Interest at such Adjusted LIBOR Rate,
then the Agent shall suspend the availability of such Adjusted LIBOR Rate and
require the Seller to select the Base Rate for any Receivable Interest accruing
Discount at such Adjusted LIBOR Rate.
Section 1.4. Percentage Evidenced by Receivable Interests. Each
Receivable Interest shall be initially computed on its date of purchase.
Thereafter, until its Liquidation Day, each Receivable Interest shall be
automatically recomputed (or deemed to be recomputed) on each day prior to its
Liquidation Day. The variable percentage represented by any Receivable
Interest as computed (or deemed recomputed) as of the close of business on the
day immediately preceding its Liquidation Day shall remain constant at all
times after such Liquidation Day.
Section 1.5. Dividing or Combining Receivable Interests. The Seller or
the Agent may, upon notice to and consent by the other received not later than
the applicable time required under SECTION 1.3(A) prior to the end of a Tranche
Period for any Receivable Interest, take any of the following actions with
respect to such Receivable Interest: (i) divide the Receivable Interest into
two or more Receivable Interests having aggregate Capital equal to the Capital
of such divided Receivable Interest, (ii) combine the Receivable Interest with
another Receivable Interest with a Tranche Period ending on the same day,
creating a new Receivable Interest having Capital equal to the Capital of the
two Receivable Interests combined or (iii) combine the Receivable Interest with
a Receivable Interest to be purchased on such day by such Purchaser, creating a
new Receivable Interest having Capital equal to the Capital of the two
Receivable Interests combined, PROVIDED THAT a Receivable Interest of FALCON
may not be combined with a Receivable Interest of the Investors.
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Section 1.6. Reinvestment Purchases and Settlements. At any time that
any Collection is received by the Servicer after the initial purchase, or any
other Incremental Purchase, of a Receivable Interest hereunder and on or prior
to the Liquidation Day of such Receivable Interest:
first, at any time the Servicer is not the Seller, the
Originator or an Affiliate thereof, the Servicer may retain a
portion of such Collection in payment of any Servicer Fee that is
then due and owing;
second, the Servicer is hereby directed to pay a portion of the
remainder, if any, of such Collection to the Agent in payment of any
accrued and unpaid Discount and Non-Use Fees that are then due and
owing;
third, except to the extent the Seller wishes to reduce the
outstanding amount of Capital of a Receivable Interest (in which
case the provisions of SECTION 1.7 shall be applicable to the
portion of such Receivable Interest represented by such reduction in
Capital), the Seller hereby requests and the Purchasers hereby agree
to make, simultaneously with such receipt, a reinvestment (each, a
"REINVESTMENT") with that portion of the remainder of such
Collection that is part of such Receivable Interest such that after
giving effect to such Reinvestment, the amount of the Capital of
such Receivable Interest immediately after any such receipt and
corresponding Reinvestment shall be equal to the amount of the
Capital immediately prior to such receipt;
fourth, if the Servicer is the Seller, the Originator or an
Affiliate thereof, the Servicer may retain a portion of the
remainder, if any, of such Collection in payment of any Servicer Fee
that is then due and owing; and
fifth, any remaining portion of such Collection may be applied
to making an additional Incremental Purchase in accordance with the
terms of this Agreement or paid to the Seller, in either case, as
the Seller may direct.
Section 1.7. Liquidation Settlement Procedures. On the Liquidation Day
of a Receivable Interest and on each day thereafter, the Servicer shall set
aside and hold in trust for the holder of such Receivable Interest, the
percentage evidenced by such Receivable Interest, of all Collections received
on such day. On the last day of each Tranche Period of a Receivable Interest
after the occurrence of its Liquidation Day, the Servicer shall remit to the
Agent's account the amounts set aside pursuant to the preceding sentence,
together with any remaining amounts set aside pursuant to SECTION 1.8 prior to
such day, but not to exceed the sum of: (i) the accrued Discount for such
Receivable Interest, (ii) the Capital of such Receivable Interest, (iii) the
aggregate of all other amounts then owed hereunder by Seller to the Purchasers,
and (iv) the accrued Servicer Fee for such Receivable Interest. If there shall
be insufficient funds on deposit for the Servicer to distribute funds in
payment in full of the aforementioned amounts, the Servicer shall distribute
funds:
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first, to reimbursement of the Agent's costs of collection and
enforcement of this Agreement,
second, to the Servicer (if the Servicer is not the Seller, the
Originator or an Affiliate thereof) in payment of all accrued
Servicer Fee in respect of such Receivable Interest,
third, in payment of all accrued and unpaid Discount and
Non-Use Fees for such Receivable Interest that are then due and
owing,
fourth, in reduction of the Capital of such Receivable
Interest,
fifth, in payment of all other amounts (including, without
limitation, Deemed Collections, Early Collection Fees and Default
Fees, if any), that are then due and owing to the Purchasers, and
sixth, to the Servicer (if the Seller, the Originator or an
Affiliate thereof is the Servicer) in payment of all accrued
Servicer Fee in respect of such Receivable Interest.
Collections allocated to the Receivable Interests of the Investors shall be
shared ratably by the Investors in accordance with their Pro Rata Shares.
Collections applied to the payment of fees, expenses, Discount and all other
amounts payable by the Seller to the Agent and the Purchasers hereunder shall
be allocated ratably among the Agent and the Purchasers in accordance with such
amounts owing to each of them. To the extent Collections are available for
such purpose in accordance with the foregoing, the accrued Servicer Fee in
respect of each Receivable Interest shall be remitted to the Servicer.
Following the date on which the Aggregate Unpaids are reduced to zero, the
Servicer shall pay to Seller any remaining Collections set aside and held by
the Servicer pursuant to this SECTION 1.7.
Section 1.8. Recourse for Breach of Representation. If on any day
any of the representations or warranties in SECTION 3.1 are no longer true with
respect to a Receivable, the Seller shall be deemed to have received on such
day a Collection of such Receivable in full. If the Seller is deemed to
receive any Collections pursuant to this SECTION 1.8, the Seller shall
immediately pay such deemed Collections to the Servicer and, at all times prior
to such payment, such Collections shall be held in trust by the Seller for the
exclusive benefit of the Purchasers and the Agent.
Section 1.9. Discount; Payments and Computations, Etc.
(a) Discount shall accrue for each Receivable Interest for each day
occurring during the Tranche Period for such Receivable Interest and shall be
payable on the 20th day of
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each month after the initial Purchase from Collections in accordance with the
priorities set forth in SECTIONS 1.6 and 1.7 above.
(b) Notwithstanding any limitation on recourse contained in this
Agreement, the Seller shall pay to the Agent, for the account of the relevant
Purchasers, the Closing Fee and Non-Use Fees set forth in the Fee Letter, all
amounts payable pursuant to ARTICLE VIII, if any, all Servicer costs, if any,
payable pursuant to SECTION 6.2 and on demand therefor, any Early Collection
Fee. If any Person fails to pay any amount when due hereunder, such Person
agrees to pay, on demand, the Default Fee.
(c) All amounts to be paid or deposited by any Person hereunder shall be
paid or deposited in accordance with the terms hereof no later than 12:00 noon
(Chicago time) on the day when due in immediately available funds; if such
amounts are payable to a Purchaser, they shall be paid to the Agent, for the
account of such Purchaser, at One First National Plaza, Chicago, Illinois 60670
until otherwise notified by the Agent. The Agent shall, in accordance with its
customary practice, provide invoices from time to time to the Seller in respect
of Discount and other fees and expenses payable by the Seller hereunder. In
the event the Seller shall at any time fail to pay any amount when due
hereunder, the Agent may, on notice to the Seller, debit the Facility Account
for such amount. All computations of Discount and per annum fees hereunder and
under the Fee Letter shall be made on the basis of a year of 360 days for the
actual number of days elapsed (including the first but excluding the last day).
All per annum fees shall be payable monthly in arrears on the 20th day of each
month. If any amount hereunder shall be payable on a day which is not a
Business Day, such amount shall be payable on the next succeeding Business Day.
Section 1.10. Maximum Aggregate Receivables Interest; Grant of Security
Interest. The Seller shall ensure that the aggregate Receivable Interests of
the Purchasers shall at no time exceed 100%. If, on any day, the aggregate
Receivable Interests of the Purchasers exceeds 100%, the Seller shall
immediately pay to the Agent an amount to be applied to reduce the Capital of
the Receivable Interests, such that after giving effect to such payment the
aggregate of the Receivable Interest equals or is less than 100%. Such amount
shall be applied to the reduction of the Capital of the Receivable Interests
ratably in accordance with the percentages of the Receivable Interests. Any
amounts received by the Investors pursuant to the preceding sentence shall be
applied ratably in accordance with their Pro Rata Shares. The Seller hereby
grants to the Agent for the ratable benefit of the Purchasers a security
interest in all of its now existing and hereafter arising or acquired right,
title and interest in and to the Receivables, the Related Security, the
Collection Accounts, the Collections and all proceeds of the foregoing
to secure payment of the Aggregate Unpaids, including its indemnity obligations
under ARTICLE VIII and all other obligations owed hereunder and under the Fee
Letter to the Agent and/or the Purchasers.
Section 1.11. Seller's Extinguishment. The Seller shall have the right,
on not less than thirty (30) Business Days' written notice to the Agent, at any
time following the reduction of the Capital to a level that is less than 5.0%
of the original Purchase Limit, to repurchase from the
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Purchasers all, but not less than all, of the then outstanding Receivable
Interests. The purchase price in respect thereof shall be an amount equal to
the Aggregate Unpaids through the date of such repurchase, payable in
immediately available funds. Such repurchase shall be without representation,
warranty or recourse of any kind by, on the part of, or against any Purchaser
or the Agent.
Section 1.12. Servicer Fee. To the extent of available Collections in
accordance with the priorities set forth in SECTIONS 1.6 and 1.7, on the 20th
day of each month hereafter commencing September 20, 1996, the Servicer shall
be paid the Servicer Fee in arrears for the preceding Calculation Period.
ARTICLE II
LIQUIDITY FACILITY
Section 2.1. Transfer to Investors. Each Investor hereby agrees,
subject to SECTION 2.4, that immediately upon written notice from FALCON
delivered on or prior to the Liquidity Termination Date, it shall acquire by
assignment from FALCON, without recourse or warranty, its Pro Rata Share of one
or more of the Receivable Interests of FALCON as specified by FALCON. Each
Investor shall promptly pay to the Agent at an account designated by the Agent,
for the benefit of FALCON, its Acquisition Amount. Unless an Investor has
notified the Agent that it does not intend to pay its Acquisition Amount, the
Agent may assume that such payment has been made and may, but shall not be
obligated to, make the amount of such payment available to FALCON in reliance
upon such assumption. FALCON hereby sells and assigns to the Agent for the
ratable benefit of the Investors, and the Agent hereby purchases and assumes
from FALCON, effective upon the receipt by FALCON of the FALCON Transfer Price,
the Receivable Interests of FALCON which are the subject of any transfer
pursuant to this ARTICLE II.
Section 2.2. Transfer Price Reduction Discount. If the Adjusted
Liquidity Price is included in the calculation of the FALCON Transfer Price for
any Receivable Interest, each Investor agrees that the Agent shall pay to
FALCON the Reduction Percentage of any Discount received by the Agent with
respect to such Receivable Interest.
Section 2.3. Payments to FALCON. In consideration for the reduction of
the FALCON Transfer Prices by the FALCON Transfer Price Reductions, effective
only at such time as the aggregate amount of the Capital of the Receivable
Interests of the Investors equals the FALCON Residual, each Investor hereby
agrees that the Agent shall not distribute to the Investors and shall
immediately remit to FALCON any Discount, Collections or other payments
received by it to be applied pursuant to the terms hereof or otherwise to
reduce the Capital of the Receivable Interests of the Investors.
Section 2.4. Limitation on Commitment to Purchase from FALCON.
Notwithstanding anything to the contrary in this Agreement, no Investor shall
have any obligation to purchase any Receivable Interest from FALCON, pursuant
to SECTION 2.1 or otherwise, if: (i)
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FALCON shall have voluntarily commenced any proceeding or filed any petition
under any bankruptcy, insolvency or similar law seeking the dissolution,
liquidation or reorganization of FALCON or taken any corporate action for the
purpose of effectuating any of the foregoing; or (ii) involuntary proceedings
or an involuntary petition shall have been commenced or filed against FALCON by
any Person under any bankruptcy, insolvency or similar law seeking the
dissolution, liquidation or reorganization of FALCON and such proceeding or
petition shall have not been dismissed.
Section 2.5. Defaulting Investors. If one or more Investors defaults
in its obligation to pay its Acquisition Amount pursuant to SECTION 2.1 (each
such Investor shall be called a "DEFAULTING INVESTOR" and the aggregate amount
of such defaulted obligations being herein called the "FALCON TRANSFER PRICE
DEFICIT"), then upon notice from the Agent, each Investor other than the
Defaulting Investors (a "NON-DEFAULTING INVESTOR") shall promptly pay to the
Agent, in immediately available funds, an amount equal to the lesser of (x)
such Non-Defaulting Investor's proportionate share (based upon the relative
Commitments of the Non-Defaulting Investors) of the FALCON Transfer Price
Deficit and (y) the unused portion of such Non-Defaulting Investor's
Commitment. A Defaulting Investor shall forthwith upon demand pay to the Agent
for the account of the Non-Defaulting Investors all amounts paid by each
Non-Defaulting Investor on behalf of such Defaulting Investor, together with
interest thereon, for each day from the date a payment was made by a
Non-Defaulting Investor until the date such Non-Defaulting Investor has been
paid such amounts in full, at a rate per annum equal to the Federal Funds
Effective Rate plus 0.5% for the first two Business Days and 2.0% per annum
thereafter. In addition, without prejudice to any other rights that FALCON may
have under applicable law, each Defaulting Investor shall pay to FALCON
forthwith upon demand, the difference between such Defaulting Investor's unpaid
Acquisition Amount and the amount paid with respect thereto by the
non-Defaulting Investors, together with interest thereon, for each day from the
date of the Agent's request for such Defaulting Investor's Acquisition Amount
pursuant to SECTION 2.1 until the date the requisite amount is paid to FALCON
in full, at a rate per annum equal to the Federal Funds Effective Rate plus
2.0%.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Seller Representations and Warranties. The Seller hereby
represents and warrants to the Agent and the Purchasers that:
(a) Corporate Existence and Power. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on its business in
each jurisdiction in which its business is conducted.
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(b) No Conflict. The execution, delivery and performance by the
Seller of this Agreement and each other Transaction Document, and the Seller's
use of the proceeds of purchases made hereunder, are within its corporate
powers, have been duly authorized by all necessary corporate action, do not
contravene or violate (i) its certificate or articles of incorporation or
by-laws, (ii) any law, rule or regulation applicable to it, (iii) any
restrictions under any agreement, contract or instrument to which it is a party
or by which it or any of its property is bound, or (iv) any order, writ,
judgment, award, injunction or decree binding on or affecting it or its
property, and do not result in the creation or imposition of any Adverse Claim
on assets of the Seller or its Subsidiaries (except created hereunder); and no
transaction contemplated hereby requires compliance with any bulk sales act or
similar law. This Agreement and each other Transaction Document to which the
Seller is a party has been duly authorized, executed and delivered by the
Seller.
(c) Governmental Authorization. Other than the filing of the financing
statements required hereunder, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the Seller of
the Transaction Documents.
(d) Binding Effect. The Transaction Documents constitute the legal,
valid and binding obligations of the Seller enforceable against the Seller in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally.
(e) Accuracy of Information. All information heretofore furnished by
the Seller or any of its Affiliates to the Agent or the Purchasers for purposes
of or in connection with this Agreement, any of the other Transaction Documents
or any transaction contemplated hereby or thereby is, and all such information
hereafter furnished by the Seller or any of its Affiliates to the Purchasers
will be, true and accurate in every material respect, on the date such
information is stated or certified and does not and will not contain any
material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(f) Use of Proceeds. No proceeds of any purchase hereunder will be used
(i) for a purpose which violates, or would be inconsistent with, Regulation G,
T, U or X promulgated by the Board of Governors of the Federal Reserve System
from time to time or (ii) to acquire any security in any transaction which is
subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(g) Title to Receivables. Each Receivable has been purchased by the
Seller from the Originator in accordance with the terms of the Sale Agreement,
and the Seller has thereby irrevocably obtained all legal and equitable title
to, and has the legal right to sell and encumber, such Receivable, its
Collections and the Related Security. Each such Receivable has been
transferred to the Seller free and clear of any Adverse Claim. Without
limiting the foregoing, there has been duly filed all financing statements or
other similar instruments or documents
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necessary under the UCC of all appropriate jurisdictions (or any comparable
law) to perfect the Seller's ownership interest in such Receivable.
(h) Good Title; Perfection. Immediately prior to each purchase
hereunder, the Seller shall be the legal and beneficial owner of the
Receivables and Related Security with respect thereto, free and clear of any
Adverse Claim, except as created by the Transaction Documents. This Agreement
is effective to, and shall, upon each purchase hereunder, transfer to the
relevant Purchaser or Purchasers (and such Purchaser or Purchasers shall
acquire from the Seller) a valid and perfected first priority undivided
percentage ownership interest in each Receivable existing or hereafter arising
and in the Related Security and Collections with respect thereto, free and
clear of any Adverse Claim, except as created by the Transactions Documents.
(i) Places of Business. The principal place of business and chief
executive office of the Seller and the offices where the Seller keeps all its
Records are located at the address(es) listed on EXHIBIT II or such other
locations notified to the Agent in accordance with SECTION 5.2(A) in
jurisdictions where all action required by SECTION 5.2(A) has been taken and
completed. The Seller's Federal Employer Identification Number is correctly
set forth on EXHIBIT II.
(j) Collection Banks; etc. Except as otherwise notified to the Agent in
accordance with SECTION 5.2(B):
(i) the Seller has instructed, or has required the Originator
to instruct, all Obligors (other than the Obligors on Flexible
Packaging Receivables) to pay all Collections directly to a
segregated lock-box identified on EXHIBIT III hereto,
(ii) in the case of all proceeds remitted to any such lock-box
which is now or hereafter established, such proceeds will be
deposited directly by the applicable Collection Bank into a
concentration account or a depository account listed on EXHIBIT III,
(iii) the names and addresses of all Collection Banks, together
with the account numbers of the Collection Accounts of the Seller at
each Collection Bank, are listed on EXHIBIT III, and
(iv) each lock-box and Collection Account to which Collections
are remitted shall be subject to a Collection Account Agreement that
is then in full force and effect.
In the case of lock-boxes and Collection Accounts identified on EXHIBIT III
which were established by the Originator or by any Person other than the Seller
(and other than the Bank Agent, from and after termination of the Collection
Account Agreements), exclusive dominion and control thereof has been
transferred to the Seller. The Seller has not granted any Person,
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other than the Agent as contemplated by this Agreement, dominion and control of
any lock-box or Collection Account, or the right to take dominion and control
of any lock-box or Collection Account at a future time or upon the occurrence
of a future event.
(k) Material Adverse Effect. Since March 31, 1996, no event has
occurred which would have a Material Adverse Effect.
(l) Names. In the past five years, the Seller has not used any
corporate names, trade names or assumed names other than the name in which it
has executed this Agreement.
(m) Actions, Suits. There are no actions, suits or proceedings pending,
or to the best of the Seller's knowledge, threatened, against or affecting the
Seller or the Originator, or any of the respective properties of the Seller or
the Originator, in or before any court, arbitrator or other body, which are
reasonably likely to (i) adversely affect the collectibility of a material
portion of the Receivables, (ii) materially adversely affect the financial
condition of the Seller or the Originator or (iii) materially adversely affect
the ability of the Seller or the Originator to perform its obligations under
the Transaction Documents. Neither the Seller nor the Originator is in default
with respect to any order of any court, arbitrator or governmental body.
(n) Credit and Collection Policy. With respect to each Receivable, each
of the Originator, the Seller and the Servicer has complied in all material
respects with the Credit and Collection Policy.
(o) Payments to Originator. With respect to each Receivable sold to the
Seller by the Originator, the Seller has given reasonably equivalent value to
the Originator in consideration for such Receivable and the Related Security
with respect thereto under the Sale Agreement and such transfer was not made
for or on account of an antecedent debt. No transfer by the Originator of any
Receivable is or may be voidable under any Section of the Bankruptcy Reform Act
of 1978 (11 U.S.C. Section Section 101 et seq.), as amended.
(p) Ownership of the Seller. The Originator owns, directly or
indirectly, 100% of the issued and outstanding capital stock of the Seller.
Such capital stock is validly issued, fully paid and nonassessable, and there
are no options, warrants or other rights to acquire securities of the Seller
other than the pledge by the Originator to the Bank Agent of the Seller's
stock.
(q) Not an Investment Company. The Seller is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
from time to time, or any successor statute.
(r) Purpose. The Seller has determined that, from a business viewpoint,
the purchase of Receivables and related interests from the Originator under the
Sale Agreement, and the sale of Receivable Interests to the Purchasers and the
other transactions contemplated herein, are in the best interest of the Seller.
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(s) Net Eligible Receivables. Both before and after giving effect to
each Incremental Purchase and Reinvestment, the product of (i) Net Eligible
Receivables times (ii) one minus the Minimum Reserve Ratio is greater than or
equal to the sum of (x) the aggregate Capital then outstanding, plus (y) the
Carrying Cost Reserve.
Section 3.2. Investor Representations and Warranties. Each Investor
hereby represents and warrants to the Agent and FALCON that:
(a) Existence and Power. Such Investor is a corporation or a banking
association duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, and has all
corporate power to perform its obligations hereunder.
(b) No Conflict. The execution, delivery and performance by such
Investor of this Agreement are within its corporate powers, have been duly
authorized by all necessary corporate action, do not contravene or violate (i)
its certificate or articles of incorporation or association or by-laws, (ii)
any law, rule or regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or any of its property
is bound, or (iv) any order, writ, judgment, award, injunction or decree
binding on or affecting it or its property, and do not result in the creation
or imposition of any Adverse Claim on its assets. This Agreement has been duly
authorized, executed and delivered by such Investor.
(c) Governmental Authorization. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
such Investor of this Agreement.
(d) Binding Effect. This Agreement constitutes the legal, valid and
binding obligation of such Investor enforceable against such Investor in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or limiting creditors' rights generally.
ARTICLE IV
CONDITIONS OF PURCHASES
Section 4.1. Conditions Precedent to Initial Purchase. The initial
purchase of a Receivable Interest under this Agreement is subject to the
conditions precedent that (a) the Agent shall have received on or before the
date of such purchase those documents listed on SCHEDULE A hereto, and (b) the
Agent shall have been paid all fees required to be paid on such date pursuant
to the terms of the Fee Letter.
Section 4.2. Conditions Precedent to All Purchases and Reinvestments.
Each purchase of a Receivable Interest (other than pursuant to SECTION 2.1) and
each Reinvestment shall be subject to the further conditions precedent that:
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(a) in the case of each such purchase, the Servicer shall have delivered
to the Agent on or prior to the date of such purchase, in form and substance
satisfactory to the Agent, all Weekly Reports and Monthly Reports as and when
due under SECTION 6.5;
(b) on the date of each such purchase or Reinvestment, the following
statements shall be true both before and after giving effect to such purchase
or Reinvestment (and acceptance of the proceeds of such purchase or
Reinvestment shall be deemed a representation and warranty by the Seller that
such statements are then true):
(i) the representations and warranties set forth in SECTION 3.1
are correct on and as of the date of such purchase or Reinvestment
as though made on and as of such date;
(ii) no event has occurred, or would result from such purchase
or Reinvestment, that will constitute a Servicer Default, and no
event has occurred and is continuing, or would result from such
purchase or Reinvestment, that would constitute a Potential Servicer
Default; and
(iii) the Liquidity Termination Date shall not have occurred,
the aggregate Capital of all Receivable Interests shall not exceed
the Purchase Limit and the aggregate Receivable Interests shall not
exceed 100%; and
(c) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request.
ARTICLE V
COVENANTS
Section 5.1. Affirmative Covenants of Seller. Until the date on which
the Aggregate Unpaids have been indefeasibly paid in full, the Seller hereby
covenants, individually and in its capacity as Servicer, that:
(a) Financial Reporting. The Seller will maintain a system of
accounting established and administered in accordance with generally accepted
accounting principles, and furnish to the Agent:
(i) Annual Reporting. Within 90 days after the close of each of its
fiscal years, financial statements for such fiscal year certified in a
manner acceptable to the Agent by the Chief Financial Officer of the
Seller.
(ii) Quarterly Reporting. Within 45 days after the close of the
first three quarterly periods of each of its fiscal years, balance sheets
as at the close of each such
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period and statements of income and retained earnings and a statement of
cash flows for the period from the beginning of such fiscal year to the
end of such quarter, all certified by its Chief Financial Officer.
(iii) Compliance Certificate. Together with the financial statements
required hereunder, a compliance certificate in substantially the form of
EXHIBIT IV signed by the Seller's Chief Financial Officer and dated the
date of such annual financial statement or such quarterly financial
statement, as the case may be.
(iv) Notices under Transaction Documents. Forthwith upon its receipt
of any notice, request for consent, financial statements, certification,
report or other communication under or in connection with any Transaction
Document from any Person other than the Agent or FALCON, copies of the
same.
(v) Change in Credit and Collection Policy. At least 30 days prior
to the effectiveness of any material change in or amendment to the Credit
and Collection Policy, a copy of the Credit and Collection Policy then in
effect and a notice indicating such change or amendment.
(vi) Other Information. Such other information (including
non-financial information) as the Agent or any Purchaser may from time to
time reasonably request.
(b) Notices. The Seller will notify the Agent in writing of any of the
following immediately upon learning of the occurrence thereof, describing the
same and, if applicable, the steps being taken with respect thereto:
(i) Servicer Defaults or Potential Servicer Defaults. The
occurrence of each Servicer Default or each Potential Servicer
Default, by a statement of the Chief Financial Officer of the
Seller.
(ii) Judgment. The entry of any judgment or decree against the
Seller.
(iii) Litigation. The institution of any litigation,
arbitration proceeding or governmental proceeding against the Seller
or to which the Seller becomes party in excess of $10,000.
(iv) Termination Date under Sale Agreement. The occurrence of
the "TERMINATION DATE" under the Sale Agreement.
(v) Downgrade. Any downgrade in the rating of any Indebtedness
of the Seller or the Originator by Standard & Poor's Ratings Group
or by Moody's Investors Service, Inc., setting forth the
Indebtedness affected and the nature of such change.
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(c) Compliance with Laws. The Seller will comply in all material respects
with all applicable laws, rules, regulations, orders writs, judgments,
injunctions, decrees or awards to which it may be subject.
(d) Audits. The Seller will furnish to the Agent from time to time such
information with respect to the Receivables as the Agent may reasonably
request. The Seller shall, from time to time during regular business hours as
requested by the Agent upon reasonable notice, permit the Agent, or its agents
or representatives (and shall require the Originator to permit the Agent or its
agents or representatives) (i) to examine and make copies of and abstracts from
all Records in the possession or under the control of the Seller or the
Originator relating to Receivables and the Related Security, including, without
limitation, the related Contracts, and (ii) to visit the offices and properties
of the Seller or the Originator for the purpose of examining such materials
described in clause (i) above, and to discuss matters relating to the Seller's
or the Originator's financial condition or the Receivables and the Related
Security or the Seller's performance hereunder, or the Originator's performance
under any of the other Transaction Documents, or the Seller's or the
Originator's performance under the Contracts with any of the officers or
employees of the Seller or the Originator having knowledge of such matters.
(e) Keeping and Marking of Records and Books.
(i) The Seller will, and will require the Originator to, maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in the
event of the destruction of the originals thereof), and keep and maintain
all documents, books, records and other information reasonably necessary
or advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the immediate identification of
each new Receivable and all Collections of and adjustments to each
existing Receivable). The Seller will, and will require the Originator
to, give the Agent notice of any material change in the administrative and
operating procedures referred to in the previous sentence.
(ii) The Seller will, and will require the Originator to, (a) on or
prior to the date hereof, mark its master data processing records and
other books and records relating to the Receivable Interests with a
legend, acceptable to the Agent, describing the Receivable Interests and
(b) upon the request of the Agent (A) mark each Contract with a legend
describing the Receivable Interests and (B) deliver to the Agent all
Contracts (including, without limitation, all multiple originals of any
such Contract) relating to the Receivables then in the Seller's
possession.
(f) Compliance with Contracts and Credit and Collection Policy. The
Seller will, and will require the Originator to, timely and fully (i) perform
and comply, in all material respects, with all provisions, covenants and other
promises required to be observed by it under the Contracts related to the
Receivables, and (ii) comply in all material respects with the Credit and
Collection Policy in regard to each Receivable and the related Contract. The
Seller will, and will require the Originator to, pay when due any taxes payable
in connection with the Receivables.
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(g) Purchase of Receivables from the Originator. With respect to each
Receivable purchased under the Sale Agreement, the Seller shall (or shall
require the Originator to) take all actions necessary to vest legal and
equitable title to such Receivable and the Related Security irrevocably in the
Seller, including, without limitation, the filing of all financing statements
or other similar instruments or documents necessary under the UCC of all
appropriate jurisdictions (or any comparable law) to perfect the Seller's
interest in such Receivable and such other action to perfect, protect or more
fully evidence the interest of the Seller as the Agent may reasonably request.
(h) Ownership Interest. The Seller shall take all necessary action to
establish and maintain a valid and perfected first priority undivided
percentage ownership interest in the Receivables and the Related Security and
Collections with respect thereto, to the full extent contemplated herein, in
favor of the Agent and the Purchasers, including, without limitation, taking
such action to perfect, protect or more fully evidence the interest of the
Agent and the Purchasers hereunder as the Agent may reasonably request.
(i) Payment to the Originator. With respect to any Receivable purchased
by the Seller from the Originator, such sale shall be effected under, and in
strict compliance with the terms of, the Sale Agreement, including, without
limitation, the terms relating to the amount and timing of payments to be made
to the Originator in respect of the purchase price for such Receivable.
(j) Performance and Enforcement of Sale Agreement. The Seller shall
timely perform the obligations required to be performed by the Seller, and
shall vigorously enforce the rights and remedies accorded to the Seller, under
the Sale Agreement. The Seller shall take all actions to perfect and enforce
its rights and interests (and the rights and interests of the Purchasers and
the Agents, as assignees of the Seller) under the Sale Agreement as the Agent
may from time to time reasonably request, including, without limitation, making
claims to which it may be entitled under any indemnity, reimbursement or
similar provision contained in the Sale Agreement.
(k) Purchasers' Reliance. The Seller acknowledges that the Purchasers are
entering into the transactions contemplated by this Agreement in reliance upon
the Seller's identity as a legal entity that is separate from the Originator.
Therefore, from and after the date of execution and delivery of this Agreement,
the Seller shall take all reasonable steps including, without limitation, all
steps that the Agent or any Purchaser may from time to time reasonably request
to maintain the Seller's identity as a separate legal entity and to make it
manifest to third parties that the Seller is an entity with assets and
liabilities distinct from those of the Originator and any Affiliates thereof
and not just a division of the Originator. Without limiting the generality of
the foregoing and in addition to the other covenants set forth herein, the
Seller shall:
(i) conduct its own business in its own name and require that all
full-time employees of the Seller, if any, identify themselves as such and
not as employees of the
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Originator (including, without limitation, by means of providing such
employees with business or identification cards identifying such
employees as the Seller's employees);
(ii) compensate all employees, consultants and agents directly, from
the Seller's bank accounts, for services provided to the Seller by such
employees, consultants and agents and, to the extent any employee,
consultant or agent of the Seller is also an employee, consultant or agent
of the Originator, allocate the compensation of such employee, consultant
or agent between the Seller and the Originator on a basis which reflects
the services rendered to the Seller and the Originator;
(iii) clearly identify its offices (by signage or otherwise) as its
offices and, if such office is located in the offices of the Originator,
the Seller shall lease such office at a fair market rent;
(iv) have a separate telephone number, which will be answered only in
its name and separate stationery, invoices and checks in its own name;
(v) conduct all transactions with the Originator (including, without
limitation, any delegation of its obligations hereunder as Servicer)
strictly on an arm's-length basis, allocate all overhead expenses
(including, without limitation, telephone and other utility charges) for
items shared between the Seller and the Originator on the basis of actual
use to the extent practicable and, to the extent such allocation is not
practicable, on a basis reasonably related to actual use;
(vi) at all times have at least one member of its Board of Directors
(an "INDEPENDENT DIRECTOR") who is "INDEPENDENT" as provided in the
Seller's Certificate of Incorporation as in effect on the date hereof;
(vii) observe all corporate formalities as a distinct entity, and
ensure that all corporate actions relating to (A) the selection,
maintenance or replacement of the Independent Director, (B) the
dissolution or liquidation of the Seller or (C) the initiation of
participation in, acquiescence in or consent to any bankruptcy,
insolvency, reorganization or similar proceeding involving the Seller, are
duly authorized by unanimous vote of its Board of Directors (including the
Independent Director);
(viii) maintain the Seller's books and records separate from those of
the Originator and otherwise readily identifiable as its own assets rather
than assets of the Originator;
(ix) prepare financial statements separate from those of the
Originator and insure that any consolidated financial statements of the
Originator or any Affiliate thereof that include the Seller have detailed
notes clearly stating that the Seller is a separate corporate entity and
that its assets will be available first and foremost to satisfy the claims
of the creditors of the Seller;
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(x) except as herein specifically otherwise provided, not commingle
funds or other assets of the Seller with those of the Originator and not
maintain bank accounts or other depository accounts to which the
Originator is an account party, into which the Originator makes deposits
or from which the Originator has the power to make withdrawals except in
its capacity as Sub-Servicer;
(xi) not permit the Originator to pay any of the Seller's operating
expenses (except pursuant to allocation arrangements that comply with the
requirements of this SECTION 5.1(K));
(xii) not permit the Seller to be named as an insured on the
insurance policy covering the property of the Originator or enter into an
agreement with the holder of such policy whereby in the event of a loss in
connection with such property, proceeds are paid to the Seller; and
(xiii) take such other actions as are necessary on its part to ensure
that the facts and assumptions set forth in the opinion issued by Alston &
Bird, as counsel for the Seller, in connection with the closing or initial
purchase under this Agreement and relating to substantive consolidation
issues, and in the certificates accompanying such opinion, remain true and
correct in all material respects at all times.
(l) Collections. The Seller shall instruct, or require the Originator to
instruct, all Obligors (including, without limitation, from and after the time
when the Originator issues the first invoice with respect to each Flexible
Packaging Receivable, the Obligors on Flexible Packaging Receivables) to pay
all Collections directly to a segregated lock-box or other Collection Account
listed on EXHIBIT III, each of which is subject to a Collection Account
Agreement. In the case of payments remitted to any such lock-box, the Seller
shall cause all proceeds from such lock-box to be deposited directly by a
Collection Bank into a Collection Account listed on EXHIBIT III, which is
subject to a Collection Account Agreement. The Seller shall maintain exclusive
dominion and control (subject to the terms of this Agreement) to each such
Collection Account. In the case of any Collections received by the Seller or
the Originator, the Seller shall remit (or shall require the Originator to
remit) such Collections to a Collection Account not later than the Business Day
immediately following the date of receipt of such Collections, and, at all
times prior to such remittance, the Seller shall itself hold (or, if
applicable, shall require the Originator to hold) such Collections in trust,
for the exclusive benefit of the Purchasers and the Agent. In the case of any
remittances received by the Seller in any such Collection Account that shall
have been identified, to the satisfaction of the Servicer, to not constitute
Collections or other proceeds of the Receivables or the Related Security, the
Seller shall promptly remit such items to the Person identified to it as being
the owner of such remittances. From and after the date the Agent delivers to
any of the Collection Banks a Collection Notice pursuant to SECTION 6.3, the
Agent may request that the Seller, and the Seller thereupon promptly shall and
shall direct the Originator to, direct all Obligors on Receivables to remit all
payments thereon to a new depositary account (the "NEW CONCENTRATION
ACCOUNT")
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specified by the Agent and, at all times thereafter the Seller shall
not deposit or otherwise credit, and shall not permit the Originator or any
other Person to deposit or otherwise credit to the New Concentration Account
any cash or payment item other than Collections. Alternatively, the Agent may
request that the Seller, and the Seller thereupon promptly shall, direct all
Persons then making remittances to any Collection Account listed on EXHIBIT III
which remittances are not payments on Receivables to deliver such remittances
to a location other than an account listed on EXHIBIT III.
(m) Minimum Net Worth. The Seller shall at all times maintain Net Worth
of not less than $100,000.
Section 5.2. Negative Covenants of Seller. Until the date on which the
Aggregate Unpaids have been indefeasibly paid in full, the Seller hereby
covenants, individually and in its capacity as Servicer, that:
(a) Name Change, Offices, Records and Books of Accounts. The Seller will
not change its name, identity or corporate structure (within the meaning of
Section 9-402(7) of any applicable enactment of the UCC) or relocate its chief
executive office or any office where Records are kept unless it shall have:
(i) given the Agent at least 45 days prior notice thereof and (ii) delivered to
the Agent all financing statements, instruments and other documents requested
by the Agent in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. The Seller will not add or
terminate any bank as a Collection Bank from those listed in EXHIBIT III, or
make any change in its instructions to Obligors regarding payments to be made
to the Seller or payments to be made to any lock-box, Collection Account or
Collection Bank, unless the Agent shall have received, at least fifteen (15)
Business Days before the proposed effective date therefor:
(i) written notice of such addition, termination or change, and
(ii) with respect to the addition of a lock-box, Collection
Account or Collection Bank, an executed account agreement and an
executed Collection Account Agreement from such Collection Bank
relating thereto;
PROVIDED, HOWEVER, that the Seller may make changes in instructions to Obligors
regarding payments if such new instructions require such Obligor to make
payments to another existing lock-box or Collection Account that is subject to
a Collection Account Agreement then in effect.
(c) Modifications to Contracts and Credit and Collection Policy. The
Seller will not make any change to the Credit and Collection Policy which would
be reasonably likely to adversely affect the collectibility of any material
portion of the Receivables or decrease the credit quality of any newly created
Receivables. Except as provided in SECTION 6.2(C), the Seller, acting
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as Servicer or otherwise, will not extend, amend or otherwise modify the terms
of any Receivable or any Contract related thereto other than in accordance with
the Credit and Collection Policy.
(d) Sales, Liens, Etc. Except as permitted by the Intercreditor
Agreement, the Seller shall not, and shall not authorize the Originator to,
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, or create or suffer to exist any Adverse
Claim upon (including, without limitation, the filing of any financing
statement) or with respect to, any Receivable or Related Security or
Collections in respect thereof, or upon or with respect to any Contract under
which any Receivable arises, or any lock-box or Collection Account or assign
any right to receive income in respect thereof (other than, in each case, the
creation of the interests therein in favor of the Agent and the Purchasers
provided for herein), and the Seller shall defend the right, title and interest
of the Agent and the Purchasers in, to and under any of the foregoing property,
against all claims of third parties claiming through or under the Seller or the
Originator.
(e) Nature of Business; Other Agreements; Other Indebtedness. The Seller
shall not engage in any business or activity of any kind or enter into any
transaction or indenture, mortgage, instrument, agreement, contract, lease or
other undertaking, in each case other than the transactions contemplated and
authorized by this Agreement and the Sale Agreement. Without limiting the
generality of the foregoing, the Seller shall not create, incur, guarantee,
assume or suffer to exist any indebtedness or other liabilities, whether direct
or contingent, other than:
(i) as a result of the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary
course of business,
(ii) the incurrence of obligations under this Agreement,
(iii) the incurrence of obligations, as expressly contemplated
in the Sale Agreement, to make payment to the Originator thereunder
for the purchase of Receivables from the Originator under the Sale
Agreement, and
(iv) the incurrence of operating expenses in the ordinary
course of business of the type otherwise contemplated in SECTION
5.1(K) of this Agreement.
In the event the Seller shall at any time borrow a "SUBORDINATED LOAN" under
the Sale Agreement, the obligations of the Seller in connection therewith shall
be subordinated to the obligations of the Seller to the Purchasers and the
Agent under this Agreement, on the terms provided for in the Subordinated Note
and the Sale Agreement.
(f) Amendments to Sale Agreement. The Seller shall not, without the prior
written consent of the Agent (which consent shall not be unreasonably withheld
or delayed):
(i) cancel or terminate the Sale Agreement,
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(ii) give any consent, waiver, directive or approval under the
Sale Agreement,
(iii) waive any default, action, omission or breach under the
Sale Agreement, or otherwise grant any indulgence thereunder, or
(iv) amend, supplement or otherwise modify any of the terms of
the Sale Agreement.
(g) Amendments to Corporate Documents. The Seller shall not amend its
Certificate of Incorporation or By-Laws in any respect that would impair its
ability to comply with the terms or provisions of any of the Transaction
Documents, including, without limitation, SECTION 5.1(K) of this Agreement.
(h) Merger. The Seller shall not merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions, and except as otherwise contemplated herein) all
or substantially all of its assets (whether now owned or hereafter acquired)
to, or acquire all or substantially all of the assets of, any Person.
(i) Restricted Junior Payments. The Seller shall not make any Restricted
Junior Payment if any Servicer Default or Potential Servicer Default exists or
would result therefrom.
ARTICLE VI
ADMINISTRATION AND COLLECTION
Section 6.1. Designation of Servicer.
(a) The servicing, administration and collection of the Receivables shall
be conducted by such Person (the "SERVICER") so designated from time to time in
accordance with this SECTION 6.1. The Seller is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Servicer pursuant
to the terms of this Agreement. The Agent may at any time following a Servicer
Default designate as Servicer any Person to succeed the Seller or any successor
Servicer.
(b) The Seller is permitted to delegate, and the Seller hereby advises the
Purchasers and the Agent that it has delegated, to the Originator, as
subservicer of the Servicer, certain of its duties and responsibilities as
Servicer hereunder in respect of the Receivables transferred by the Originator
to the Seller. Notwithstanding the foregoing, (i) the Seller shall be and
remain primarily liable to the Agent and the Purchasers for the full and prompt
performance of all duties and responsibilities of the Servicer hereunder and
(ii) the Agent and the Purchasers shall be entitled to deal exclusively with
the Seller in matters relating to the discharge by the Servicer of its duties
and responsibilities hereunder, and the Agent and the Purchasers shall not be
required to give notice, demand or other communication to any Person other than
the Seller in
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order for communication to the Servicer and its subservicer or other delegate
in respect thereof to be accomplished. The Seller, at all times that it is the
Servicer, shall be responsible for providing its subservicer or other delegate
with any notice given under this Agreement.
(c) Without the prior written consent of the Required Investors, (i) the
Seller shall not be permitted to delegate any of its duties or responsibilities
as Servicer to any Person other than the Originator, and then such delegation
shall be limited to the activities of Servicer hereunder as the same may relate
to the Receivables originated by the Originator, and (ii) the Originator shall
not be permitted to further delegate to any other Person any of the duties or
responsibilities of the Servicer delegated to it by the Seller. If at any time
the Agent shall designate as Servicer any Person other than the Seller, all
duties and responsibilities theretofore delegated by the Seller to the
Originator may, at the discretion of the Agent, be terminated forthwith on
notice given by the Agent to the Seller.
Section 6.2. Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such actions as may
be necessary or advisable to collect each Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the Credit and Collection Policy.
(b) The Servicer shall administer the Collections in accordance with the
procedures described herein and in ARTICLE I. The Servicer shall set aside and
hold in trust for the account of the Seller and the Purchasers their respective
shares of the Collections of Receivables in accordance with SECTIONS 1.6 and
1.7. The Servicer shall upon the request of the Agent after the occurrence of
a Liquidation Day, segregate, in a manner acceptable to the Agent, all cash,
checks and other instruments received by it from time to time constituting
Collections from the general funds of the Servicer or the Seller prior to the
remittance thereof in accordance with SECTION 1.7. If the Servicer shall be
required to segregate Collections pursuant to the preceding sentence, the
Servicer shall segregate and deposit with a bank designated by the Agent such
allocable share of Collections of Receivables set aside for the Purchasers on
the first Business Day following receipt by the Servicer of such Collections,
duly endorsed or with duly executed instruments of transfer.
(c) The Servicer, may, in accordance with the Credit and Collection
Policy, extend the maturity of any Receivable or adjust the Outstanding Balance
of any Receivable as the Servicer may determine to be appropriate to maximize
Collections thereof; PROVIDED, HOWEVER, that such extension or adjustment shall
not alter the status of such Receivable as a Defaulted Receivable or limit the
rights of the Agent or the Purchasers under this Agreement. Notwithstanding
anything to the contrary contained herein, from and after the occurrence of a
Servicer Default, the Agent shall have the absolute and unlimited right to
direct the Servicer to commence or settle any legal action with respect to any
Receivable or to foreclose upon or repossess any Related Security.
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(d) The Servicer shall hold in trust for the Seller and the Purchasers, in
accordance with their respective interests in the Receivables, all Records that
evidence or relate to the Receivables, the related Contracts and Related
Security or that are otherwise necessary or desirable to collect the
Receivables and shall, as soon as practicable upon demand of the Agent, deliver
or make available to the Agent all such Records, (x) if such demand is made at
any time prior to the replacement of the Seller as Servicer hereunder, at the
chief executive office of the Originator and (y) if such demand is made at any
time after the replacement of the Seller as Servicer hereunder, to such
location as the Agent may designate in writing. The Servicer shall, as soon as
practicable following receipt thereof, turn over to the Seller (i) that portion
of Collections of Receivables representing the Seller's undivided fractional
ownership interest therein, less, in the event the Seller is not the Servicer,
all reasonable out-of-pocket costs and expenses of the Servicer of servicing,
administering and collecting the Receivables, and (ii) any cash collections or
other cash proceeds received with respect to indebtedness not constituting
Receivables. The Servicer shall, from time to time at the request of any
Purchaser, furnish to the Purchasers (promptly after any such request) a
calculation of the amounts set aside for the Purchasers pursuant to SECTION
1.7.
(e) Any payment by an Obligor in respect of any indebtedness owed by it to
the Seller shall, except as otherwise specified by such Obligor or otherwise
required by contract or law and unless otherwise instructed by the Agent, be
applied as a Collection of any Receivable of such Obligor (starting with the
oldest such Receivable) to the extent of any amounts then due and payable
thereunder before being applied to any other receivable or other obligation of
such Obligor.
Section 6.3. Collection Notices. The Agent is authorized at any time
after the occurrence of a Servicer Default to date and to deliver to the
Collection Banks a Collection Notice under any Collection Account Agreement.
The Seller hereby transfers to the Agent for the benefit of the Purchasers,
effective when the Agent delivers such notice, the exclusive ownership and
control of the Collection Accounts. In case any authorized signatory of the
Seller whose signature appears on a Collection Account Agreement shall cease to
have such authority before the delivery of such notice, such Collection Notice
shall nevertheless be valid as if such authority had remained in force. The
Seller hereby authorizes the Agent, and agrees that the Agent shall be entitled
to (i) endorse the Seller's name on checks and other instruments representing
Collections, (ii) enforce the Receivables, the related Contracts and the
Related Security, and (iii) subject to the other provisions of this Agreement,
take such action as shall be necessary or desirable to cause all cash, checks
and other instruments constituting Collections of Receivables to come into the
possession of the Agent rather than the Seller.
Section 6.4. Responsibilities of the Seller. Anything herein to the
contrary notwithstanding, the exercise by the Agent and the Purchasers of their
rights hereunder shall not release the Servicer or the Seller from any of their
duties or obligations with respect to any Receivables or under the related
Contracts. The Purchasers shall have no obligation or liability with respect
to any Receivables or related Contracts, nor shall any of them be obligated to
perform the obligations of the Seller.
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Section 6.5. Receivables Reports.
(a) On Thursday of each week hereafter beginning September 5, 1996 (or, if
any such Thursday is not a Business Day, the next following Business Day), the
Servicer shall prepare and forward to the Agent a Weekly Report.
(b) On the 15th day of each month hereafter (or, if such date is not a
Business Day, the next following Business Day), and at such other times as the
Agent shall request, the Servicer shall prepare and forward to the Agent a
Monthly Report.
(c) Promptly following any request therefor by the Agent, the Seller shall
prepare and provide to the Agent a listing by Obligor of all Receivables
together with an aging of such Receivables.
ARTICLE VII
SERVICER DEFAULTS
Section 7.1. Servicer Default. The occurrence of any one or more of the
following events shall constitute a Servicer Default:
(a) The Servicer or the Seller shall fail to make any payment or deposit
when required hereunder and such failure shall remain unremedied for one (1)
Business Day following the occurrence thereof.
(b) The Servicer or the Seller shall fail to deliver any Weekly Report or
any Monthly Report within two (2) Business Days after the same is due.
(c) The Servicer or the Seller shall fail to perform or observe any other
term, covenant or agreement hereunder (other than as referred to in SECTION
7.1(A) or SECTION 7.1(B)) and such failure shall remain unremedied for five (5)
Business Days following written notice thereof to the Servicer or the Seller,
as applicable.
(d) Any representation, warranty, certification or statement made by the
Seller, the Servicer or the Originator in this Agreement, any other Transaction
Document or in any other document delivered pursuant hereto shall prove to have
been incorrect in any material respect when made or deemed made.
(e) (i) The Seller or the Servicer shall generally not pay its debts as
such debts become due; (ii) the Seller or the Servicer shall admit in writing
its inability to pay its debts generally or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
the Seller or the Servicer seeking to adjudicate it bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or
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composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official for
it or any substantial part of its property; or (iii) the Seller or any Servicer
shall take any corporate action to authorize any of the actions set forth in
above in clause (ii) of this subsection (e).
(f) (i) The Originator shall fail to perform or observe any term, covenant
or agreement contained in any other Transaction Document and such failure shall
continue unremedied beyond any applicable grace or cure period provided
therein, or (ii) the Originator shall for any reason cease to transfer, or
cease to have the legal capacity or otherwise be incapable of transferring,
Receivables to the Seller, as purchaser under the Sale Agreement, or (iii) any
"EVENT OF DEFAULT" shall occur under the Sale Agreement.
(g) The aggregate Receivable Interests hereunder shall at any time exceed
100%.
(h) A Change of Control shall occur.
(i) The Internal Revenue Service or the Pension Benefit Guaranty
Corporation files one or more tax or ERISA liens against the assets of the
Originator or the Seller and the same shall remain in effect for any period of
15 consecutive days.
(j) Any foreclosure or similar proceeding in respect of any Adverse Claim
on the Subordinated Note or the Seller's common stock shall have been comments,
or title to the Subordinated Note or any of the Seller's common stock shall
pass to the holder(s) of such Adverse Claim.
(k) The average of the Aged Receivables Ratios for any three (3)
consecutive Calculation Periods shall be greater than 1.6%.
(l) The average of the Dilution Ratios for any three (3) consecutive
Calculation Periods shall be greater than 8.0%.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Indemnities by the Seller. Without limiting any other
rights which the Agent or any Purchaser may have hereunder or under applicable
law, the Seller hereby agrees to indemnify the Agent and each Purchaser and
their respective officers, directors, agents and employees (each, an
"INDEMNIFIED PARTY") from and against any and all damages, losses, claims,
taxes, liabilities, costs, expenses and for all other amounts payable,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "INDEMNIFIED AMOUNTS") awarded against or
actually incurred by any of them arising out of or as a result of
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this Agreement or the acquisition, either directly or indirectly, by a
Purchaser of an interest in the Receivables, EXCLUDING, HOWEVER:
(a) Indemnified Amounts to the extent final judgment of a court of
competent jurisdiction holds such Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(b) Indemnified Amounts to the extent the same includes losses in
respect of Receivables which are uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related Obligor;
or
(c) taxes imposed by the jurisdiction in which such Indemnified
Party's principal executive office is located, on or measured by the
overall net income of such Indemnified Party to the extent that the
computation of such taxes is consistent with the Intended
Characterization;
PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the
liability of the Seller or the Servicer or limit the recourse of the Purchasers
to the Seller or Servicer for amounts otherwise specifically provided to be
paid by the Seller or the Servicer under the terms of this Agreement. Without
limiting the generality of the foregoing indemnification, the Seller shall
indemnify the Agent and the Purchasers for Indemnified Amounts (including,
without limitation, losses in respect of uncollectible receivables, regardless
of whether reimbursement therefor would constitute recourse to the Seller or
the Servicer) relating to or resulting from:
(i) any representation or warranty made by the Seller, the
Originator or the Servicer (or any officers of the Seller, the
Originator or the Servicer) under or in connection with this
Agreement, any other Transaction Document, any Monthly Report or any
other written information or report delivered by the Seller, the
Originator or the Servicer pursuant hereto or thereto, which shall
have been false or incorrect when made or deemed made;
(ii) the failure by the Seller, the Originator or the Servicer
to comply with any applicable law, rule or regulation with respect
to any Receivable or Contract related thereto, or the nonconformity
of any Receivable or Contract included therein with any such
applicable law, rule or regulation;
(iii) any failure of the Seller, the Originator or the Servicer
to perform its duties or obligations in accordance with the
provisions of this Agreement or any other Transaction Document;
(iv) any products liability or similar claim arising out of or
in connection with merchandise, insurance or services which are the
subject of any Contract;
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(v) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of any Obligor to the payment of any
Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the
sale of the merchandise or service related to such Receivable or the
furnishing or failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables at any time
with other funds;
(vii) any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby or thereby, the use of the proceeds
of a purchase, the ownership of the Receivable Interests or any
other investigation, litigation or proceeding relating to the Seller
or the Originator in which any Indemnified Party becomes involved as
a result of any of the transactions contemplated hereby or thereby;
(viii) any inability to litigate any claim against any Obligor
in respect of any Receivable as a result of such Obligor being
immune from civil and commercial law and suit on the grounds of
sovereignty or otherwise from any legal action, suit or proceeding;
(ix) a Servicer Default described in SECTION 7.1(E);
(x) the failure to vest and maintain vested in the Agent and
the Purchasers, or to transfer to the Agent and the Purchasers,
legal and equitable title to, and ownership of, a first priority
perfected undivided percentage ownership (to the extent of the
Receivable Interests contemplated hereunder) in the Receivables, the
Related Security and the Collections, free and clear of any Adverse
Claim; or
(xi) any failure of the Seller to give reasonably equivalent
value to the Originator under the Sale Agreement in consideration of
the transfer by the Originator of any Receivable, or any attempt by
any Person to void any such transfer under statutory provisions or
common law or equitable action, including, without limitation, any
provision of the Bankruptcy Code.
Section 8.2. Increased Cost and Reduced Return.
(a) If after the date hereof, any Funding Source shall be charged any fee,
expense or increased cost on account of the adoption of any applicable law,
rule or regulation (including any applicable law, rule or regulation regarding
capital adequacy) or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance
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with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency (a "REGULATORY CHANGE"): (i)
which subjects any Funding Source to any charge or withholding on or with
respect to any Funding Agreement or a Funding Source's obligations under a
Funding Agreement, or on or with respect to the Receivables, or changes the
basis of taxation of payments to any Funding Source of any amounts payable
under any Funding Agreement (except for changes in the rate of tax on the
overall net income of a Funding Source) or (ii) which imposes, modifies or
deems applicable any reserve, assessment, insurance charge, special deposit or
similar requirement against assets of, deposits with or for the account of a
Funding Source, or credit extended by a Funding Source pursuant to a Funding
Agreement or (iii) which imposes any other condition the result of which is to
increase the cost to a Funding Source of performing its obligations under a
Funding Agreement, or to reduce the rate of return on a Funding Source's
capital as a consequence of its obligations under a Funding Agreement, or to
reduce the amount of any sum received or receivable by a Funding Source under a
Funding Agreement or to require any payment calculated by reference to the
amount of interests or loans held or interest received by it, then, upon demand
by the Agent, the Seller shall pay to the Agent, for the benefit of the
relevant Funding Source, such amounts charged to such Funding Source or
compensate such Funding Source for such reduction.
(b) Payment of any sum pursuant to SECTION 8.2(A) shall be made by the
Seller to the Agent, for the benefit of the relevant Funding Source, not later
than ten (10) days after any such demand is made, and no payment of any such
sum shall be due or owing unless demand therefor is made within ninety (90)
days after the occurrence of the Regulatory Change giving rise thereto. A
certificate of any Funding Source, signed by an authorized officer claiming
compensation under this SECTION 8.2 and setting forth the additional amount to
be paid for its benefit and explaining the manner in which such amount was
determined shall constitute prima facie evidence of the amount to be paid.
Section 8.3. Costs and Expenses Relating to this Agreement. In addition
to the Closing Fee specified in the Fee Letter, the Seller shall pay to the
Agent and FALCON on demand all out-of-pocket expenses (other than audit fees
and time charges of outside counsel for the Agent and the Purchasers) actually
incurred in connection with the preparation, execution, delivery, amendments
and waivers of this Agreement, the transactions contemplated hereby and the
other documents to be delivered hereunder. The Seller shall pay to the Agent
on demand any and all costs and expenses of the Agent and the Purchasers, if
any, including reasonable counsel fees and expenses actually incurred in
connection with the enforcement of this Agreement and the other documents
delivered hereunder and in connection with any restructuring or workout of this
Agreement or such documents, or the administration of this Agreement following
a Servicer Default.
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ARTICLE IX
THE AGENT
Section 9.1. Authorization and Action. Each Purchaser hereby designates
and appoints First Chicago to act as its agent hereunder and under each other
Transaction Document, and authorizes the Agent to take such actions as agent on
its behalf and to exercise such powers as are delegated to the Agent by the
terms of this Agreement and the other Transaction Documents together with such
powers as are reasonably incidental thereto. The Agent shall not have any
duties or responsibilities, except those expressly set forth herein or in any
other Transaction Document, or any fiduciary relationship with any Purchaser,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Agent shall be read into this Agreement or any
other Transaction Document or otherwise exist for the Agent. In performing its
functions and duties hereunder and under the other Transaction Documents, the
Agent shall act solely as agent for the Purchasers and does not assume nor
shall be deemed to have assumed any obligation or relationship of trust or
agency with or for the Seller or any of its successors or assigns. The Agent
shall not be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement, any other Transaction
Document or applicable law. The appointment and authority of the Agent
hereunder shall terminate upon the indefeasible payment in full of all
Aggregate Unpaids. Each Purchaser hereby authorizes the Agent to execute on
behalf of such Purchaser (the terms of which shall be binding on such
Purchaser) each of the Uniform Commercial Code financing statements, together
with such other instruments or documents determined by the Agent to be
necessary or desirable in order to perfect, evidence or more fully protect the
interest of the Purchasers contemplated hereunder.
Section 9.2. Delegation of Duties. The Agent may execute any of its
duties under this Agreement and each other Transaction Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
Section 9.3. Exculpatory Provisions. Neither the Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in
any manner to any of the Purchasers for any recitals, statements,
representations or warranties made by the Seller contained in this Agreement,
any other Transaction Document or any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement, or any other Transaction Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, or any other Transaction Document or any other document furnished in
connection herewith or therewith, or for any failure of the Seller to perform
its obligations hereunder or thereunder, or for the satisfaction of any
condition specified in ARTICLE IV, or for the perfection, priority, condition,
value or sufficiency or any collateral pledged in connection herewith. The
Agent shall not be under any obligation to any Purchaser to ascertain or to
inquire as to the observance or performance of any of the agreements or
covenants contained in, or conditions of, this Agreement or any other
Transaction Document, or to inspect the properties, books or records of the
Seller.
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The Agent shall not be deemed to have knowledge of a Servicer Default
or Potential Servicer Default unless the Agent has received notice from the
Seller or a Purchaser.
Section 9.4. Reliance by Agent. The Agent shall in all cases be entitled
to rely, and shall be fully protected in relying, upon any document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Seller),
independent accountants and other experts selected by the Agent. The Agent
shall in all cases be fully justified in failing or refusing to take any action
under this Agreement or any other Transaction Document unless it shall first
receive such advice or concurrence of FALCON or the Required Investors or all
of the Purchasers, as applicable, as it deems appropriate and it shall first be
indemnified to its satisfaction by the Purchasers, PROVIDED THAT unless and
until the Agent shall have received such advice, the Agent may take or refrain
from taking any action, as the Agent shall deem advisable and in the best
interests of the Purchasers. The Agent shall in all cases be fully protected
in acting, or in refraining from acting, in accordance with a request of FALCON
or the Required Investors or all of the Purchasers, as applicable, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Purchasers.
Section 9.5. Non-Reliance on Agent and Other Purchasers. Each Purchaser
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of the Seller,
shall be deemed to constitute any representation or warranty by the Agent.
Each Purchaser represents and warrants to the Agent that it has and will,
independently and without reliance upon the Agent or any other Purchaser and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Seller
and made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
Section 9.6. Reimbursement and Indemnification. The Investors agree to
reimburse and indemnify the Agent and its officers, directors, employees,
representatives and agents ratably according to their Pro Rata Shares, to the
extent not paid or reimbursed by the Seller (i) for any amounts for which the
Agent, acting in its capacity as Agent, is entitled to reimbursement by the
Seller hereunder and (ii) for any other expenses actually incurred by the
Agent, in its capacity as Agent and acting on behalf of the Purchasers, in
connection with the administration and enforcement of this Agreement and the
other Transaction Documents.
Section 9.7. Agent in its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Seller or any Affiliate of the Seller as though the
Agent were not the Agent hereunder. With respect to the acquisition of
Receivable Interests pursuant to this Agreement, the Agent shall have the same
rights and powers under this Agreement as any Purchaser and may exercise the
same as though it
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were not the Agent, and the terms "Investor," "Purchaser," "Investors" and
"Purchasers" shall include the Agent in its individual capacity.
Section 9.8. Successor Agent. The Agent may, upon five days' notice to
the Seller and the Purchasers, and the Agent will, upon the direction of all of
the Purchasers (other than the Agent, in its individual capacity) resign as
Agent. If the Agent shall resign, then the Required Investors during such
five-day period shall appoint from among the Purchasers a successor agent. If
for any reason no successor Agent is appointed by the Required Investors during
such five-day period, then effective upon the termination of such five day
period, the Purchasers shall perform all of the duties of the Agent hereunder
and under the other Transaction Documents and the Seller shall make all
payments in respect of the Aggregate Unpaids directly to the applicable
Purchasers and for all purposes shall deal directly with the Purchasers. After
the effectiveness of any retiring Agent's resignation hereunder as Agent, the
retiring Agent shall be discharged from its duties and obligations hereunder
and under the other Transaction Documents and the provisions of this ARTICLE IX
and ARTICLE VIII shall continue in effect for its benefit with respect to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and under the other Transaction Documents.
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
Section 10.1. Assignments. (a) The Seller and each Investor hereby (i)
agree and consent to the complete or partial assignment by FALCON of all of its
rights under, interest in, title to and obligations under this Agreement to the
Agent for the benefit of the Investors pursuant to SECTION 2.1, and (ii) agree
that they will not unreasonably withhold or delay their consent to the complete
or partial assignment by FALCON of all of its rights under, interest in, title
to and obligations under this Agreement to any other special purpose
receivables funding or purchasing conduit for which The First National Bank of
Chicago performs administrative functions. Upon any complete or partial
assignment made in accordance with the preceding sentence, FALCON shall be
released from its obligations so assigned. Further, the Seller and each
Investor hereby agree that any assignee of FALCON of this Agreement or all or
any of the Receivable Interests of FALCON shall have all of the rights and
benefits under this Agreement as if the term "FALCON" explicitly referred to
such party, and no such assignment shall in any way impair the rights and
benefits of FALCON hereunder. The Seller shall not have the right to assign
its rights or obligations under this Agreement.
(b) With the prior written consent of FALCON and the Seller, which consent
shall not be unreasonably withheld or delayed, any Investor may at any time and
from time to time assign to one or more Persons (each, a "PURCHASING INVESTOR")
all or any part of its rights and obligations under this Agreement pursuant to
an assignment agreement, in a form and substance satisfactory to the Agent (the
"ASSIGNMENT AGREEMENT"), executed by such Purchasing Investor and such selling
Investor. Each assignee of an Investor must have a short-term debt rating of
A-1
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or better by Standard & Poor's Ratings Group and P-1 by Moody's Investors
Service, Inc. and must agree to deliver to the Agent, promptly following any
request therefor by the Agent or FALCON, an enforceability opinion in form and
substance satisfactory to the Agent and FALCON. Upon delivery of the executed
Assignment Agreement to the Agent, such selling Investor shall be released from
its obligations hereunder to the extent of such assignment. Thereafter, the
Purchasing Investor shall for all purposes be an Investor party to this
Agreement and shall have all the rights and obligations of an Investor under
this Agreement to the same extent as if it were an original party hereto and no
further consent or action by the Seller, the Purchasers or the Agent shall be
required.
(c) Each of the Investors agrees that in the event that it shall cease to
have a short-term debt rating of A-1 or better by Standard & Poor's Corporation
and P-1 by Moody's Investors Service, Inc. (an "AFFECTED INVESTOR"), such
request of FALCON or the Agent, to assign all of its rights and obligations
hereunder to (i) another Investor or (ii) another financial institution
nominated by the Agent and acceptable to FALCON, and willing to participate in
this Agreement through the Liquidity Termination Date in the place of such
Affected Investor; PROVIDED THAT the Affected Investor receives payment in
full, pursuant to an Assignment Agreement, of an amount equal to such
Investor's Pro Rata Share of the Capital and Discount owing to the Investors
and all accruing but unpaid fees and other costs and expenses payable in
respect of its Pro Rata Share of the Receivable Interests.
Section 10.2. Participations. Any Investor may, in the ordinary course
of its business at any time sell to one or more Persons (each, a "PARTICIPANT")
participating interests in its Pro Rata Share of the Receivable Interests of
the Investors, its obligation to pay FALCON its Acquisition Amounts or any
other interest of such Investor hereunder. Notwithstanding any such sale by an
Investor of a participating interest to a Participant, such Investor's rights
and obligations under this Agreement shall remain unchanged, such Investor
shall remain solely responsible for the performance of its obligations
hereunder, and the Seller, FALCON and the Agent shall continue to deal solely
and directly with such Investor in connection with such Investor's rights and
obligations under this Agreement. Each Investor agrees that any agreement
between such Investor and any such Participant in respect of such participating
interest shall not restrict such Investor's right to agree to any amendment,
supplement, waiver or modification to this Agreement, except for any amendment,
supplement, waiver or modification described in SECTION 11.1(B)(I).
ARTICLE XI
MISCELLANEOUS
Section 11.1. Waivers and Amendments. (a) No failure or delay on the part
of any party hereto in exercising any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other further exercise
thereof or the exercise of any other power, right or remedy. The rights and
remedies herein provided shall be cumulative and nonexclusive of any rights or
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remedies provided by law. Any waiver of this Agreement shall be effective only
in the specific instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented, modified
or waived except in writing in accordance with the provisions of this SECTION
11.1(B). FALCON, the Seller and the Agent, at the direction of the Required
Investors, may enter into written modifications or waivers of any provisions of
this Agreement, PROVIDED, HOWEVER, that no such modification or waiver shall:
(i) without the consent of each affected Purchaser, (A) extend the
Liquidity Termination Date or the date of any payment or deposit of
Collections by the Seller or the Servicer, (B) reduce the rate or extend
the time of payment of Discount (or any component thereof), (C) reduce any
fee payable to the Agent for the benefit of the Purchasers, (D) except
pursuant to ARTICLE X hereof, change the amount of the Capital of any
Purchaser, an Investor's Pro Rata Share or an Investor's Commitment, (E)
amend, modify or waive any provision of the definition of Required
Investors or this SECTION 11.1(B), (F) consent to or permit the assignment
or transfer by the Seller of any of its rights and obligations under this
Agreement, (G) change the definition of "ELIGIBLE RECEIVABLE," "ALLOWANCE
FOR ESTIMATED FUTURE DISCOUNT", "ALLOWANCE FOR ESTIMATED FUTURE
SERVICING", "DILUTION RATIO," "DILUTION RESERVE RATIO," "AGED RECEIVABLES
RATIO," "LOSS RESERVE RATIO" OR "NET ELIGIBLE RECEIVABLES", or (H) amend
or modify any defined term (or any defined term used directly or
indirectly in such defined term) used in clauses (A) through (G) above in
a manner which would circumvent the intention of the restrictions set
forth in such clauses; or
(ii) without the written consent of the then Agent, amend, modify or
waive any provision of this Agreement if the effect thereof is to affect
the rights or duties of such Agent.
Notwithstanding the foregoing, (i) without the consent of the Investors, the
Agent may, with the consent of the Seller, amend this Agreement solely to add
additional Persons as Investors hereunder and (ii) without the consent of the
Seller, the Agent, the Required Investors and FALCON may enter into amendments
to modify any of the terms or provisions of ARTICLE II, ARTICLE IX, ARTICLE X
or SECTION 11.13, PROVIDED THAT such amendment has no negative impact upon the
Seller. Any modification or waiver made in accordance with this SECTION 11.1
shall apply to each of the Purchasers equally and shall be binding upon the
Seller, the Purchasers and the Agent.
Section 11.2. Notices.
(a) Except as provided in subsection (b) below, all communications and
notices provided for hereunder shall be in writing (including bank wire,
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other parties hereto at their respective
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addresses or telecopy numbers set forth on the signature pages hereof. All
such communications and notices shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective when received through the mails, transmitted by
telecopy, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively, except that communications and
notices to the Agent or any Purchaser pursuant to ARTICLE I or II shall not be
effective until received by the intended recipient.
(b) The Seller hereby authorizes the Agent to effect purchases and
Tranche Period and Discount Rate selections based on telephonic notices made by
any Person whom the Agent in good faith believes to be acting on behalf of the
Seller. The Seller agrees to deliver promptly to the Agent, upon request, a
written confirmation of each telephonic notice signed by an authorized officer
of the Seller. However, the absence of such confirmation shall not affect the
validity of such notice. If the written confirmation differs from the action
taken by the Agent, the records of the Agent shall govern absent manifest
error.
Section 11.3. Ratable Payments. If any Purchaser, whether by setoff or
otherwise, has payment made to it with respect to any portion of the Aggregate
Unpaids owing to such Purchaser (other than payments received pursuant to
SECTION 8.2 or 8.3) in a greater proportion than that received by any other
Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse
or warranty a portion of the Aggregate Unpaids held by the other Purchasers so
that after such purchase each Purchaser will hold its ratable proportion of the
Aggregate Unpaids; PROVIDED THAT if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
Section 11.4. Protection of Ownership Interests of the Purchasers. (a)
The Seller agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents, and take all actions, that
may be necessary or desirable, or that the Agent may reasonably request, to
perfect, protect or more fully evidence the Receivable Interests, or to enable
the Agent or the Purchasers to exercise and enforce their rights and remedies
hereunder. At any time after the occurrence of a Servicer Default, the Agent
may, or the Agent may direct the Seller to, notify the Obligors of Receivables,
at any time following the replacement of the Seller as Servicer and at the
Seller's expense, of the ownership interests of the Purchasers under this
Agreement and may also direct that payments of all amounts due or that become
due under any or all Receivables be made directly to the Agent or its designee.
The Seller shall, at any Purchaser's written request, withhold the identity
of such Purchaser in any such notification.
(b) If the Seller or the Servicer fails to perform any of its obligations
hereunder, the Agent or any Purchaser may (but shall not be required to)
perform, or cause performance of, such obligation; and the Agent's or such
Purchaser's reasonable costs and expenses actually incurred in connection
therewith shall be payable by the Seller (if the Servicer that fails to so
perform is the Seller or an Affiliate thereof) as provided in SECTION 8.3, as
applicable. The Seller and the Servicer each irrevocably authorizes the Agent
at any time and from time to time in the
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sole discretion of the Agent, and appoints the Agent as its attorney-in-fact,
to act on behalf of the Seller and the Servicer (i) to execute on behalf of the
Seller as debtor and to file financing statements necessary or desirable in the
Agent's sole discretion to perfect and to maintain the perfection and priority
of the interest of the Purchasers in the Receivables and (ii) to file a carbon,
photographic or other reproduction of this Agreement or any financing statement
with respect to the Receivables as a financing statement in such offices as the
Agent in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the interests of the Purchasers in the
Receivables. This appointment is coupled with an interest and is irrevocable.
Section 11.5. Confidentiality.
(a) The Seller shall maintain and shall cause each of its employees and
officers to maintain the confidentiality of this Agreement and the other
confidential proprietary information with respect to the Agent and FALCON and
their respective businesses obtained by it or them in connection with the
structuring, negotiating and execution of the transactions contemplated herein,
except that the Seller and its officers and employees may disclose such
information to the Bank Agent (and the lenders represented by it) and to the
Seller's external accountants and attorneys and as required by any applicable
law or order of any judicial or administrative proceeding. In addition, the
Seller may disclose any such nonpublic information pursuant to any law, rule,
regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law).
(b) Each of the Agent and the Purchasers shall maintain and shall cause
each of its employees and officers to maintain the confidentiality of this
Agreement and the Sale Agreement and the other confidential proprietary
information with respect to the Seller and the Originator and their respective
businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein. Anything
herein to the contrary notwithstanding, the Seller hereby consents to the
disclosure of any nonpublic information with respect to it and the Originator:
(i) to the Agent, the Investors, FALCON and the Bank Agent (and the lenders
represented by the Bank Agent), (ii) by the Agent or the Purchasers to any
prospective or actual assignee or participant of any of them or (iii) by the
Agent to any rating agency, Commercial Paper dealer or provider of a surety,
guaranty or credit or liquidity enhancement to FALCON or any entity organized
for the purpose of purchasing, or making loans secured by, financial assets for
which First Chicago acts as the administrative agent and to any officers,
directors, employees, outside accountants and attorneys of any of the
foregoing, PROVIDED THAT each such Person is informed of the confidential
nature of such information in a manner consistent with the practice of the
Agent for the making of such disclosures generally to Persons of such type. In
addition, the Purchasers and the Agent may disclose any such nonpublic
information pursuant to any law, rule, regulation, direction, request or order
of any judicial, administrative or regulatory authority or proceedings (whether
or not having the force or effect of law).
Section 11.6. Bankruptcy Petition. The Seller, the Agent and each
Investor hereby covenants and agrees that, prior to the date which is one year
and one day after the
35
<PAGE> 43
payment in full of all outstanding senior indebtedness of FALCON, it will not
institute against, or join any other Person in instituting against, FALCON any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the laws of the United States or any state of
the United States.
Section 11.7. Limitation of Liability. Except with respect to any claim
arising out of the willful misconduct or gross negligence of FALCON, the Agent
or any Investor, no claim may be made by the Seller, the Servicer or any other
Person against FALCON, the Agent or any Investor or their respective
Affiliates, directors, officers, employees, attorneys or agents for any
special, indirect, consequential or punitive damages in respect of any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, or any act,
omission or event occurring in connection therewith; and the Seller hereby
waives, releases, and agrees not to sue upon any claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.
Section 11.8. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF ILLINOIS.
Section 11.9. CONSENT TO JURISDICTION. THE SELLER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE SELLER
PURSUANT TO THIS AGREEMENT AND THE SELLER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST THE SELLER
IN THE COURTS OF ANY OTHER JURISDICTION WHEREIN ANY ASSETS OF THE SELLER OR THE
ORIGINATOR MAY BE LOCATED. ANY JUDICIAL PROCEEDING BY THE SELLER AGAINST THE
AGENT OR ANY PURCHASER OR ANY AFFILIATE OF THE AGENT OR A PURCHASER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE SELLER PURSUANT
TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
Section 11.10. WAIVER OF JURY TRIAL. THE AGENT, THE SELLER AND EACH
PURCHASER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER
36
<PAGE> 44
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY THE
SELLER PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR
THEREUNDER.
Section 11.11. Integration; Survival of Terms. This Agreement, the
Collection Account Agreements, and the Fee Letter contain the final and
complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire agreement
among the parties hereto with respect to the subject matter hereof superseding
all prior oral or written understandings. The provisions of ARTICLE VIII and
SECTION 11.6 shall survive any termination of this Agreement.
Section 11.12. Counterparts; Severability. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 11.13. First Chicago Roles. Each of the Investors acknowledges
that First Chicago and certain of its Affiliates including (First Chicago
Capital Markets, Inc.) act, or may in the future act, (i) as administrative
agent for FALCON, (ii) as issuing and paying agent for the Commercial Paper,
(iii) to provide credit or liquidity enhancement for the timely payment for the
Commercial Paper and (iv) to provide other services from time to time for
FALCON (collectively, the "FIRST CHICAGO ROLES"). Without limiting the
generality of this SECTION 11.13, each Investor hereby acknowledges and
consents to any and all First Chicago Roles and agrees that in connection with
any First Chicago Role, First Chicago may take, or refrain from taking, any
action which it, in its discretion, deems appropriate, including, without
limitation, in its role as administrative agent for FALCON, the giving of
notice to the Agent of a mandatory purchase pursuant to SECTION 2.1.
Section 11.14. Characterization.
(a) It is the intention of the parties hereto that each purchase hereunder
shall constitute an absolute and irrevocable sale, which purchase shall provide
the applicable Purchaser with the full benefits of ownership of the applicable
Receivable Interest. Except as specifically provided in this Agreement, each
sale of a Receivable Interest hereunder is made without recourse to the Seller;
PROVIDED, HOWEVER, that (i) the Seller shall be liable to each Purchaser and
the Agent for all representations, warranties and covenants made by the Seller
pursuant to the terms of this Agreement, and (ii) such sale does not constitute
and is not intended to result in an assumption by any Purchaser or the Agent or
any assignee thereof of any obligation of the Seller or the
37
<PAGE> 45
Originator or any other person arising in connection with the Receivables, the
Related Security, or the related Contracts, or any other obligations of the
Seller or the Originator.
(b) If the conveyance by the Seller to the Purchasers of interests in
Receivables hereunder shall be characterized as a secured loan and not a sale,
it is the intention of the parties hereto that this Agreement shall constitute
a security agreement under applicable law, and that the Seller shall be deemed
to have granted to the Agent for the ratable benefit of the Purchasers a duly
perfected security interest in all of the Seller's right, title and interest
in, to and under the Receivables, the Collections, each Collection Account, all
Related Security, all payments on or with respect to such Receivables, all
other rights relating to and payments made in respect of the Receivables, and
all proceeds of any thereof prior to all other liens on and security interests
therein. After a Servicer Default, the Agent and the Purchasers shall have, in
addition to the rights and remedies which they may have under this Agreement,
all other rights and remedies provided to a secured creditor after default
under the UCC and other applicable law, which rights and remedies shall be
cumulative.
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<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
FLEXIBLE FUNDING CORP.
By: /s/
-------------------------------------
Name:
Title:
Flexible Funding Corp.
500 Interchange Drive
Atlanta, GA 30336
Attention: David M. Donovan
Phone: (404) 691-5830
Fax: (404) 696-8526
FALCON ASSET SECURITIZATION CORPORATION
By: /s/
-------------------------------------
Authorized Signatory
c/o The First National Bank
of Chicago
Asset-Backed Finance
Suite 0079, 1-21
One First National Plaza
Chicago, Illinois 60670-0079
Attention: Deborah A. Toennies
Fax:(312) 732-4487
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<PAGE> 47
INVESTORS:
<TABLE>
<CAPTION>
Commitment
- -----------
<S> <C>
$50,000,000 THE FIRST NATIONAL BANK OF CHICAGO, as
an Investor and as Agent
By: /s/
-------------------------------
Authorized Agent
The First National Bank of Chicago
Suite 0079, 1-21
One First National Plaza
Chicago, Illinois 60670-0079
Attention: Deborah A. Toennies
Fax: (312) 732-4487
============
$50,000,000 PURCHASE LIMIT
</TABLE>
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<PAGE> 48
EXHIBIT I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"ACQUISITION AMOUNT" means, on the date of any purchase from FALCON of
Receivable Interests pursuant to SECTION 2.1, (i) with respect to each Investor
other than First Chicago, the lesser of (a) such Investor's Pro Rata Share of
the FALCON Transfer Price and (b) such Investor's unused Commitment and (ii)
with respect to First Chicago, the difference between (a) the FALCON Transfer
Price and (b) the aggregate amount payable by all other Investors on such date
pursuant to clause (i) above.
"ADJUSTED LIBOR RATE" means, on any date of determination with respect to
any Receivable Interest: the sum of (a) the applicable LIBOR Rate, plus (b)
0.50% per annum.
"ADJUSTED LIQUIDITY PRICE" means, in determining the FALCON Transfer Price
for any Receivable Interest, an amount equal to:
<TABLE>
<S> <C>
(i) DC (ii) RI x [ NDR ]
-----------------
1 + (.50 x MRR)
where:
RI = the undivided percentage interest evidenced by such Receivable
Interest.
DC = the Deemed Collections.
NDR = the Outstanding Balance of all non-Defaulted Receivables.
MRR = the Minimum Reserve Ratio.
</TABLE>
Each of the foregoing shall be determined from the most recent Monthly Report
received from the Servicer.
"ADVERSE CLAIM" means a lien, security interest, charge or encumbrance, or
other right or claim in, of or on any Person's assets or properties in favor of
any other Person.
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling (including but not limited to all directors and
officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be
41
<PAGE> 49
deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the other Person, whether through ownership of voting securities,
by contract or otherwise. In addition, for purposes of the definitions of
"EXCESS CONCENTRATION BALANCES," "ELIGIBLE RECEIVABLE" and "NET ELIGIBLE
RECEIVABLES," a Person shall be deemed to control another Person if such Person
owns more than 50% of any class of voting securities (or corresponding interest
in the case of non-corporate entities) of the other Person.
"AGED RECEIVABLES RATIO" means, as calculated in each Monthly Report as of
the Cut-Off Date for each Calculation Period, a fraction (expressed as a
percentage) having (a) a numerator that is the sum of (i) the incremental
increase, if any, in Receivables outstanding more than 90 days after their
respective due dates during such Calculation Period, plus (ii) the aggregate
Outstanding Balance of Receivables that were written off as uncollectible
during the most recently ended Calculation Period and (b) a denominator that is
the aggregate amount payable pursuant to invoices giving rise to Receivables
that were generated by the Originator during the Calculation Period that
occurred five (5) fiscal months prior to the most recently ended Calculation
Period.
"AGENT" means First Chicago in its capacity as agent for the Purchasers
pursuant to ARTICLE IX, and not in its individual capacity as an Investor, and
any successor Agent appointed pursuant to ARTICLE IX.
"AGGREGATE UNPAIDS" means, at any time, an amount equal to the sum of all
accrued and unpaid Discount, Capital and all other amounts owed (whether due or
accrued) hereunder or under the Fee Letter to the Agent and the Purchasers at
such time, plus all accrued and unpaid Servicer Fees owed hereunder to the
Servicer.
"AGREEMENT" means this Receivables Purchase Agreement, as it may be
amended or modified and in effect from time to time.
"ALLOWANCE FOR ESTIMATED FUTURE DISCOUNT" means, on any date of
determination, the amount determined pursuant to the following formula:
<TABLE>
<S> <C> <C>
[ (C x 1.5 x DR) x 2 x TD ]
---------
360
where:
C = the aggregate Capital outstanding as of the date of
determination;
DR = the highest Discount Rate applicable on the date of
determination; and
TD = Turnover Days.
</TABLE>
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<PAGE> 50
"ALLOWANCE FOR ESTIMATED FUTURE SERVICING" means, on any date of
determination, the amount determined pursuant to the following formula:
<TABLE>
<CAPTION>
<S> <C> <C>
[ (AOB x SFP) x 2 x TD ]
-------
360
where:
AOB = the aggregate Outstanding Balance of Receivables as of the
Cut-Off Date immediately prior to the date of determination;
SFP = the Servicer Fee Percentage applicable on the date of
determination; and
TD = Turnover Days.
</TABLE>
"BASE RATE" means a rate per annum equal to the corporate base rate, prime
rate or base rate of interest, as applicable, announced by the Reference Bank
from time to time, changing when and as such rate changes; PROVIDED, HOWEVER,
that from and after the occurrence of a Servicer Default (other than a Servicer
Default giving rise to the obligation to pay a Default Fee), and during the
continuation thereof, the "BASE RATE" shall mean a rate per annum equal to the
sum of 2% per annum PLUS the corporate base rate, prime rate or base rate of
interest, as applicable, announced by the Reference Bank from time to time,
changing when and as such rate changes.
"BILL AND HOLD" means an arrangement in which the Originator, pursuant to
an outstanding order from one of its customers, invoices the customer for goods
but retains possession of such goods for a period of time; PROVIDED THAT all of
the following requirements are satisfied:
(a) title to, and the risk of loss of, the goods is transferred
to the customer, and the Originator's inventory records are marked
to indicate that title has passed;
(b) the Originator's records are adequate to enable the
Originator or a third-party to identify the goods subject to such
arrangement as separate from the Originator's own inventory at any
time; and
(c) the related invoice is payable on the normal due date for
similar Receivables that do not arise from Bill and Hold
arrangements.
"BUSINESS DAY" means any day on which banks are not authorized or required
to close in New York, New York or Chicago, Illinois and The Depository Trust
Company of New York is open for business, and, if the applicable Business Day
relates to any computation or
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<PAGE> 51
payment to be made with respect to the Adjusted LIBOR Rate, any day on which
dealings in dollar deposits are carried on in the London interbank market.
"CALCULATION PERIOD" means a period beginning on the first day and ending
on the last day of each fiscal month of the Originator commencing on or after
August 1, 1996.
"CAPITAL" of any Receivable Interest means, at any time, the Purchase
Price of such Receivable Interest (and after giving effect to any adjustments
contemplated in SECTION 1.5), minus the sum of the aggregate amount of
Collections and other payments received by the Agent which in each case are
applied to reduce such Capital; PROVIDED THAT such Capital shall be restored in
the amount of any Collections or payments so received and applied if at any
time the distribution of such Collections or payments are rescinded or must
otherwise be returned for any reason.
"CARRYING COST RESERVE" means, on any Business Day, the sum of (a) the
Current Carrying Costs; plus (b) the Allowance for Estimated Future Discount;
plus (c) the Allowance for Estimated Future Servicing.
"CHANGE OF CONTROL" means (i) any Person or Persons (other than Printpack
Holdings, Inc., any of the Principals or their Related Parties) acting in
concert shall acquire beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934) of 20% or more of the outstanding shares of voting stock of Printpack,
Inc.; or (ii) during any period of twelve (12) consecutive months, commencing
before or after the date hereof, individuals who at the beginning of such
twelve-month period were directors of the Originator shall cease for any reason
to constitute a majority of the board of directors of the Originator; or (iv)
the Originator shall cease to own, free and clear of all Adverse Claims (other
than the pledge to the Bank Agent), all of the outstanding shares of voting
stock of the Seller on a fully diluted basis.
"CLOSING FEE" shall have the meaning specified in the Fee Letter.
"COLLECTION ACCOUNT" means each concentration account, depositary account,
lock-box account or similar account in which any Collections are collected or
deposited.
"COLLECTION ACCOUNT AGREEMENT" means, in the case of any actual or
proposed Collection Account, an agreement in substantially the form of EXHIBIT
V hereto.
"COLLECTION BANK" means, at any time, any of the banks or other financial
institutions holding one or more Collection Accounts.
"COLLECTION NOTICE" means a notice, in substantially the form of the
Collection Notice contained in EXHIBIT V hereto, from the Agent to a Collection
Bank.
44
<PAGE> 52
"COLLECTIONS" means, with respect to any Receivable, all cash collections
and other cash proceeds in respect of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable and all amounts payable to the Purchasers by the Seller pursuant to
SECTION 1.8.
"COMMERCIAL PAPER" means promissory notes of FALCON issued by FALCON in
the commercial paper market.
"COMMITMENT" means, for each Investor, the commitment of such Investor to
purchase its Pro Rata Share of Receivable Interests from (i) the Seller and
(ii) FALCON, such Pro Rata Share not to exceed, in the aggregate, the amount
set forth opposite such Investor's name on the signature pages of this
Agreement, as such amount may be modified in accordance with the terms hereof.
"CONTRACT" means, collectively, with respect to any Receivable, any and
all instruments, bills of lading, invoices or other writings which evidence
such Receivable or the goods underlying such Receivable.
"CREDIT AND COLLECTION POLICY" means the Seller's credit and collection
policies and practices relating to Contracts and Receivables existing on the
date hereof and summarized in EXHIBIT VI hereto, as modified from time to time
in accordance with this Agreement. It is understood that the Credit and
Collection Policy of the Seller in respect of any Receivable shall be the
credit and collection policies of the Originator thereof. To the extent the
Originator shall not have comprehensively reduced to writing its credit and
collection policies, the Credit and Collection Policy in respect of Receivables
originated by the Originator shall be those credit and collection policies of
the Originator in effect on the date hereof and disclosed to the Agent on or
prior to the date hereof.
"CURRENT CARRYING COSTS" means, on any date of determination, an amount
determined by reference to the following formula:
<TABLE>
<S> <C> <C>
[C x DR x (30/360)]
where:
C = the aggregate outstanding amount of Capital on such date; and
DR = the weighted average of the Discount Rates then applicable to
all Receivable Interests.
</TABLE>
"CUT-OFF DATE" means the last day of each fiscal month after the date of
this Agreement commencing with the fiscal month of August, 1996.
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<PAGE> 53
"DEEMED COLLECTIONS" means the aggregate of all amounts owing to FALCON
pursuant to SECTIONS 1.8 and 8.1.
"DEFAULT FEE" means with respect to any amount due and payable by the
Seller hereunder or under the Fee Letter, an amount equal to interest on any
such amount at a rate per annum equal to 2% above the Base Rate; PROVIDED,
HOWEVER, that such interest rate will not at any time exceed the maximum rate
permitted by applicable law.
"DEFAULTED RECEIVABLE" means a Receivable: (i) as to which any payment,
or part thereof, remains unpaid for 90 days or more from the original due date
for such payment; (ii) as to which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in SECTION 7.1(E) (as if
references to the Seller therein refer to such Obligor); (iii) as to which the
Obligor thereof, if a natural person, is deceased; or (iv) which has been
identified by the Seller as uncollectible.
"DILUTION HORIZON VARIABLE" means, at any time, a fraction having (a) a
numerator equal to the aggregate amounts payable pursuant to invoices giving
rise to Receivables that were generated by the Originator during the 2-1/2
Calculation Periods ending on the most recent Cut-Off Date, and (b) a
denominator equal to the aggregate Outstanding Balance of all Receivables as of
the most recent Cut-Off Date.
"DILUTION RATIO" means, as calculated in each Monthly Report as of the
Cut-Off Date for the most recently-ended Calculation Period, a fraction
(expressed as a percentage) having (a) a numerator equal to the aggregate
amount of Dilutions occurring during such Calculation Period, and (b) a
denominator equal to the aggregate amounts payable pursuant to invoices giving
rise to Receivables that were generated by the Originator during the third
preceding Calculation Period (so that, for example, if the Calculation Period
specified in clause (a) corresponded to the May fiscal month, the Calculation
Period in this clause (b) would be the one corresponding to the February fiscal
month).
"DILUTION RESERVE RATIO" means, as calculated in each Monthly Report, the
result (expressed as a percentage) calculated in accordance with the following
formula; PROVIDED, HOWEVER, that in the event such formula results in a
Dilution Reserve Ratio greater than 20% for any Calculation Period, the
Dilution Reserve Ratio will be adjusted by subtracting up to 5% (so long as the
resulting Dilution Reserve Ratio is not less than 20%):
<TABLE>
<S> <C>
(2 x ADR) + { [(HDR - ADR) x (HDR/ADR)] x DHV } + 1%
where:
ADR = average Dilution Ratio for the prior 12 Calculation Periods;
</TABLE>
46
<PAGE> 54
<TABLE>
<S> <C>
HDR = highest rolling average of the Dilution Ratio for any 3
consecutive Calculation Periods during the prior 12
Calculation Periods; and
DHV = the Dilution Horizon Variable.
</TABLE>
"DILUTIONS" means, at any time, the aggregate amount of reductions in the
Outstanding Balances of the Receivables as a result of any setoff, discount
(other than discounts for prompt payment of up to 1% granted to customers in
the ordinary course of business), adjustment or otherwise, other than cash
Collections on account of the Receivables.
"DISCOUNT" means, for each Receivable Interest for any Tranche Period:
<TABLE>
<S> <C> <C>
[ DR x C x (AD/360) ]
where:
DR = the Discount Rate for such Receivable Interest for such
Tranche Period;
C = the Capital of such Receivable Interest during such Tranche
Period; and
AD = the actual number of days elapsed during such Tranche Period;
</TABLE>
PROVIDED, THAT no provision of this Agreement shall require the payment or
permit the collection of Discount in excess of the maximum permitted by
applicable law; and PROVIDED, FURTHER, that Discount for any Tranche Period
shall not be considered paid by any distribution to the extent that at any time
all or a portion of such distribution is rescinded or must otherwise be
returned for any reason.
"DISCOUNT RATE" means the Adjusted LIBOR Rate or the Base Rate, as
applicable; PROVIDED THAT from and after the occurrence of a Servicer Default,
the Discount Rate in respect of each Receivable Interest and Tranche Period
shall be the Base Rate.
"EARLY COLLECTION FEE" means, for any Receivable Interest which has its
Capital reduced, or its Tranche Period terminated prior to the date on which it
was originally scheduled to end, the excess, if any, of (i) the Discount that
would have accrued during the remainder of the Tranche Period subsequent to the
date of such reduction or termination on the Capital of such Receivable
Interest if such reduction or termination had not occurred, over (ii) the sum
of (a) to the extent all or a portion of such Capital is allocated to another
Receivable Interest, the Discount actually accrued during such period on such
Capital for the new Receivable Interest, and (b) to the extent such Capital is
not allocated to another Receivable Interest, the income, if any, actually
received during such period by the holder of such Receivable Interest from
investing the portion of such Capital not so allocated. In the event that the
amount referred to in clause (ii) exceeds the
47
<PAGE> 55
amount referred to in clause (i), the relevant Purchaser or Purchasers agree to
pay to the Seller the amount of such excess.
"ELIGIBLE RECEIVABLE" means, at any time:
(1) a Receivable the Obligor of which (a) is not an Affiliate of any
of the parties to the Transaction Documents; and (b) is not a government
or a governmental subdivision or agency,
(2) a Receivable the Obligor of which is not the Obligor of
Receivables of which more than 50% of the aggregate Outstanding Balance is
more than 90 days past their respective due dates,
(3) a Receivable which is not a Defaulted Receivable,
(4) a Receivable which arises under a Contract that requires payment
within 30 days after the original invoice date therefor and has not had
its payment terms extended,
(5) a Receivable which is an account receivable representing all or
part of the sales price of merchandise, insurance and services within the
meaning of Section 3(c)(5) of the Investment Company Act of 1940, as
amended,
(6) a Receivable which is an "account" within the meaning of Section
9-106 of the UCC of all applicable jurisdictions,
(7) a Receivable which is denominated and payable only in United
States dollars in the United States,
(8) a Receivable which arises under a non-executory Contract, which,
together with such Receivable, is in full force and effect and constitutes
the legal, valid and binding obligation of the related Obligor enforceable
by the Seller and its assignees against such Obligor in accordance with
its terms,
(9) a Receivable which arises under a Contract which (a) does not
require the Obligor under such Contract to consent to the transfer, sale
or assignment of the rights of the Originator or any of its assignees
under such Contract and (b) is not subject to a confidentiality provision
that would have the effect of restricting the ability of the Agent or any
Purchaser to exercise its rights under this Agreement, including, without
limitation, its right to review the Contract,
(10) a Receivable which arises under a Contract that contains an
obligation to pay a specified sum of money, contingent only upon the
manufacture of the underlying goods by the Originator,
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<PAGE> 56
(11) a Receivable which is not subject to any right of rescission,
set-off (in respect of all or any portion of the Outstanding Balance
thereof then being proposed for inclusion in Net Eligible Receivables as
of any date), counterclaim, any other defense (including defenses arising
out of violations of usury laws) of the applicable Obligor or the
Originator or any other Adverse Claim,
(12) a Receivable as to which the Originator has satisfied and fully
performed all obligations on its part with respect to such Receivable
required to be fulfilled by it, and no further action is required to be
performed by any Person with respect thereto other than payment thereon by
the applicable Obligor,
(13) a Receivable all right, title and interest to and in which has
been validly transferred by the Originator directly to the Seller under
and in accordance with the Sale Agreement, and the Seller has good and
marketable title thereto free and clear of any Adverse Claim,
(14) a Receivable which, together with the Contract related thereto,
was created in compliance with each, and does not contravene any, law,
rule or regulation applicable thereto (including, without limitation, any
law, rule and regulation relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) in any material respect which would
limit the collectibility of such Receivable or give rise to a claim for
money damages against the Originator, the Seller or any of the Seller's
assignees and with respect to which no part of the Contract related
thereto is in violation of any such law, rule or regulation,
(15) a Receivable which satisfies all applicable requirements of the
Credit and Collection Policy,
(16) a Receivable which was generated in the ordinary course of the
Originator's business in connection with the sale and/or shipment of
flexible packaging products or other goods for the applicable Obligor by
the Originator, and
(17) a Receivable as to which the Agent has not notified the Seller
that the Agent has reasonably determined that such Receivable or class of
Receivables is not acceptable as an Eligible Receivable, including,
without limitation, because such Receivable arises under a Contract that
is not acceptable to the Agent;
PROVIDED, HOWEVER, that Flexible Packaging Receivables shall not be considered
to be "ELIGIBLE RECEIVABLES" under this Agreement unless and until Printpack,
Inc. has issued an invoice in respect thereof directing payments thereon to be
made to a Collection Account.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
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<PAGE> 57
"EXCESS CONCENTRATION BALANCES" means, on any day, the portion of the
aggregate Outstanding Balance of Receivables in the following classes which
exceeds the applicable limitation set forth below, as shown on the most recent
Weekly Report:
(a) with respect to Receivables owing from any Investment Grade
Obligor (other than a Foreign Obligor or Special Obligor): (i)
33.33%, times (ii) the Minimum Reserve Ratio, times (iii) the
aggregate Outstanding Balance of all Eligible Receivables;
(b) with respect to Receivables owing from any Non-Investment
Grade Obligor (other than a Foreign Obligor or Special Obligor):
(i) 25%, times (ii) the Minimum Reserve Ratio, times (iii) the
aggregate Outstanding Balance of all Eligible Receivables;
(c) with respect to Receivables owing from all Foreign
Obligors, 5% of the aggregate Outstanding Balance of all Eligible
Receivables;
(d) with respect to Receivables owing from PepsiCo, 20% of
Facility Limit, and with respect to any other Special Obligor, such
amount or percentage limitation as the Agent and the Seller may
agree to from time to time; and
(e) with respect to all Receivables arising under Bill and Hold
arrangements, 5% of the aggregate Outstanding Balance of all
Eligible Receivables.
For purposes of placing Obligors in each of the tiers or categories specified
above, (1) all Obligors that are Affiliates of each other shall be treated as a
single Obligor, and (2) if an Obligor does not have either a commercial paper
rating or a senior actual or implied debt rating from Standard & Poor's Ratings
Group or Moody's Investors Services, Inc., but is the wholly-owned direct or
indirect Subsidiary of a Person that has either such rating, such Obligor shall
be placed in the same tier as such Person would be placed if it was an Obligor.
"FACILITY ACCOUNT" means the Seller's Account No. 55-66541 at First
Chicago.
"FACILITY TERMINATION DATE" means the earliest of (i) the Liquidity
Termination Date, (ii) the date the Seller shall exercise its right to
repurchase the outstanding Receivable Interests pursuant to SECTION 1.11, (iii)
any date selected by the Seller on not less than fifteen (15) Business Days'
prior written notice to the Agent; PROVIDED THAT if any Person then acting as
Agent hereunder shall have elected or been required to resign as Agent pursuant
to SECTION 9.8, the Seller may elect, by written notice to the Agent given
promptly following notice to the Seller of such resignation, to have the
Facility Termination Date occur on the effective date of such resignation, (iv)
the date of the occurrence of a Servicer Default involving the Seller and of
the type described in SECTION 7.1(E), and (v) any date following the
occurrence, and during the
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<PAGE> 58
continuance, of a Servicer Default which the Required Investors declare in
writing to be the Facility Termination Date.
"FALCON RESIDUAL" means the sum of the FALCON Transfer Price Reductions.
"FALCON TRANSFER PRICE" means, with respect to the assignment by FALCON of
one or more Receivable Interests to the Agent for the benefit of the Investors
pursuant to SECTION 2.1, the sum of (i) the lesser of (a) the Capital of each
Receivable Interest and (b) the Adjusted Liquidity Price of each Receivable
Interest and (ii) all accrued and unpaid Discount for such Receivable
Interests.
"FALCON TRANSFER PRICE REDUCTION" means in connection with the assignment
of a Receivable Interest by FALCON to the Agent for the benefit of the
Investors, the positive difference between (i) the Capital of such Receivable
Interest and (ii) the Adjusted Liquidity Price for such Receivable Interest.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period equal to (i) 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
preceding Business Day) by the Federal Reserve Bank of New York in the
Composite Closing Quotations for U.S. Governments Securities; or (ii) if such
rate is not so published for any day which is a Business Day, the average of
the quotations at approximately 10:30 a.m. (Chicago time) for such day on such
transactions received by the Reference Bank from three federal funds brokers of
recognized standing selected by it.
"FEE LETTER" means that certain letter agreement dated as of the date
hereof between the Seller and the Agent, as it may be amended or modified and
in effect from time to time.
"FINANCE CHARGES" means, with respect to a Contract, any finance,
interest, late payment charges or similar charges owing by an Obligor pursuant
to such Contract.
"FIRST CHICAGO" means The First National Bank of Chicago in its individual
capacity and its successors.
"FLEXIBLE PACKAGING" means The James River Flexible Packaging Group, a
division of James River Corporation of Virginia.
"FLEXIBLE PACKAGING RECEIVABLE" means any Receivable which was originated
by Flexible Packaging and as to which the Originator has not issued at least
one invoice.
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"FOREIGN OBLIGOR" means any Obligor which (a) if a natural person, who is
not a resident of the United States or Puerto Rico, or (b) if a corporation or
other business organization, is organized under the laws of a jurisdiction
other than the United States, any political subdivision thereof or Puerto Rico
or has its chief executive office outside of the United States or Puerto Rico.
"FUNDING AGREEMENT" means this Agreement and any agreement or instrument
executed by any Funding Source with or for the benefit of FALCON (to the extent
that such agreement or instrument is available as liquidity, credit enhancement
or back-up purchase support or facilities available to support its Commercial
Paper issued in connection with this Agreement).
"FUNDING SOURCE" means (i) any Investor or (ii) any insurance company,
bank or other financial institution providing liquidity, credit enhancement or
back-up purchase support or facilities to FALCON in respect of its purchase of
Receivable Interests hereunder.
"INCREMENTAL PURCHASE" means a purchase of one or more Receivable
Interests which increases the total outstanding Capital hereunder.
"INTENDED CHARACTERIZATION" means, for income tax purposes, the
characterization of the acquisition by the Agent for the benefit of the
Purchasers of Receivable Interests as a loan or loans by the Purchasers to the
Seller secured by the Receivables, the Related Security, the Collection
Accounts and the Collections.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement dated
as of August 22, 1996 by and between The First National Bank of Chicago in its
capacity as contractual representative for itself and the "Lenders" party to
the Credit Agreement referred to therein (in such capacity, together with its
successors in such capacity, the "BANK AGENT"), and The First National Bank of
Chicago as agent hereunder, as the same may be amended, supplemented, restated
and/or otherwise modified from time to time.
"INVESTMENT GRADE OBLIGOR" means any Obligor that has (a) a commercial
paper rating from Standard & Poor's Ratings Group or Moody's Investors
Services, Inc. of at least "A-3" (or its equivalent) or (b) a senior actual or
implied debt rating from Standard & Poor's Ratings Group or Moody's Investors
Services, Inc. of at least "BBB-" (or its equivalent), PROVIDED THAT if such
Obligor has both a commercial paper rating from Standard & Poor's Ratings Group
or Moody's Investors Services, Inc. and a senior actual or implied debt rating
from Standard & Poor's Ratings Group or Moody's Investors Services, Inc., such
Obligor must have a commercial paper rating from Standard & Poor's Ratings
Group or Moody's Investors Services, Inc. of at least "A-3" (or its equivalent)
and a senior actual or implied debt rating from Standard & Poor's Ratings Group
or Moody's Investors Services, Inc. of at least "BBB-" (or its equivalent) to
be an Investment Grade Obligor.
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"INVESTORS" means the financial institutions listed on the signature pages
of this Agreement under the heading "INVESTORS" and their respective successors
and assigns.
"LIBOR RATE" means, on any date of determination with respect to any
Receivable Interest: (a) the offered rate for 1, 2 or 3-month U.S. Dollar
deposits appearing on Telerate Screen Page 3750 (or successor page) at 11:30
a.m. (Chicago time) two Business Days prior to the first day of a Tranche
Period and in an amount comparable to the Capital of the Receivable Interest
that is to be funded at the LIBOR Rate, or if such Telerate Screen Page 3750
shall not exist on such day, the rate (rounded, if necessary, to the next
higher 1/16 of 1%) at which deposits in U.S. Dollars are offered by the
Reference Bank to first-class banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of the applicable Tranche Period, such deposits being in the approximate amount
of the Capital of such Receivable Interest.
"LIQUIDATION DAY" means, for any Receivable Interest, the earliest to
occur of (i) any Business Day so designated by the Agent on or at any time
following any day on which the conditions precedent set forth in SECTION 4.2
are not satisfied, (ii) any Business Day so designated by the Seller or FALCON
after the occurrence of the Termination Date, and (iii) the Business Day
immediately prior to the occurrence of a Servicer Default set forth in SECTION
7.1(E).
"LIQUIDITY TERMINATION DATE" means August 20, 2001.
"LOSS RESERVE RATIO" means, as calculated in each Monthly Report, the
percentage equal to the following:
<TABLE>
<S> <C> <C>
(2 x ARR) x (TR/NER)
where:
ARR = highest rolling average of the Aged Receivables Ratio for any
3 consecutive Calculation Periods during the past 12
Calculation Periods;
TR = total Receivables generated during the prior 3 Calculation
Periods; and
NER = Net Eligible Receivables as of most recent Cut-Off Date.
</TABLE>
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
financial condition, business or operations of the Seller or the Originator,
(ii) the ability of the Seller or the Originator to perform its obligations
under any Transaction Document, (iii) the legality, validity or enforceability
of this Agreement, any Transaction Document or any Collection Account Agreement
or Collection Notice relating to a Collection Account into which a material
portion of
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Collections are deposited, (iv) the Seller's or any Purchaser's interest in the
Receivables generally or in any significant portion of the Receivables, the
Related Security or the Collections with respect thereto, or (v) the
collectibility of the Receivables generally or of any material portion of the
Receivables.
"MINIMUM RESERVE RATIO" means, on any date of determination, the greater
of (a) 20% or (b) the percentage equal to the sum of the Loss Reserve Ratio and
the Dilution Reserve Ratio.
"MONTHLY REPORT" means a report, in substantially the form of EXHIBIT VII
hereto (appropriately completed), furnished by the Servicer to the Agent
pursuant to SECTION 6.5(B).
"NET ELIGIBLE RECEIVABLES" means, at any time, (a) the aggregate
Outstanding Balance of all Eligible Receivables, minus (b) the then aggregate
amount of all Excess Concentration Balances.
"NET WORTH" means, on any date of determination, the excess, if any, of
the Seller's total assets (determined from the most recent Weekly Report
delivered to the Agent) over the Seller's total liabilities on such date.
"NEW CONCENTRATION ACCOUNT" has the meaning set forth in SECTION 5.1(L).
"NON-INVESTMENT GRADE OBLIGOR" means any Obligor (other than an Investment
Grade Obligor).
"NON-USE FEE" shall have the meaning specified in the Fee Letter.
"OBLIGOR" means a Person obligated to make payments pursuant to a
Contract.
"ORIGINATOR" means Printpack, Inc., a Georgia corporation, and shall
include, from and after its acquisition by Printpack, Inc., Flexible Packaging.
"OUTSTANDING BALANCE" of any Receivable at any time means the then
outstanding principal balance thereof, and shall exclude any interest or
finance charges thereon, without regard to whether any of the same shall have
been capitalized.
"PERSON" means an individual, partnership, corporation, association,
trust, or any other entity, or organization, including a government or
political subdivision or agent or instrumentality thereof.
"POTENTIAL SERVICER DEFAULT" means an event which, with the passage of
time or the giving of notice, or both, would constitute a Servicer Default.
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"PRINCIPALS" means Dennis M. Love, James E. Love, III, Carol Anne Love
Jennison, William J. Love, David M. Love, Charles Keith Love and Gay Love.
"PRO RATA SHARE" means, for each Investor, the Commitment of such Investor
divided by the Purchase Limit, adjusted as necessary to give affect to the
application of the terms of SECTION 2.5.
"PURCHASE LIMIT" means the aggregate of the Commitments of the Investors
hereunder (which aggregate amount is $50,000,000 as of the date of this
Agreement).
"PURCHASE PRICE" means, with respect to any Purchase, the least of:
(a) the amount of Capital requested by the Seller,
(b) the remaining unused portion of the Purchase Limit on the
date of such Purchase, and
(c) the excess, if any, of (i) Net Eligible Receivables on the
date of such Purchase multiplied by 1 minus the then applicable
Minimum Reserve Ratio, over (ii) the Carrying Cost Reserve
applicable on the date of such Purchase.
"PURCHASER" means FALCON or an Investor, as applicable.
"RECEIVABLE" means the indebtedness and other obligations owed (at the
time it arises, and before giving effect to any transfer or conveyance
contemplated under the Sale Agreement or hereunder) to the Originator, whether
constituting an account, chattel paper, instrument or general intangible,
arising in connection with the manufacture and sale of flexible packaging
products or other goods by the Originator or Flexible Packaging and includes,
without limitation, the obligation to pay any Finance Charges with respect
thereto. Indebtedness and other rights and obligations arising from any one
transaction, including, without limitation, indebtedness and other rights and
obligations represented by an individual invoice, shall constitute a Receivable
separate from a Receivable consisting of the indebtedness and other rights and
obligations arising from any other transaction.
"RECEIVABLE INTEREST" means, at any time, an undivided percentage
ownership interest associated with a designated amount of Capital, Discount
Rate and Tranche Period selected pursuant to SECTION 1.3 in (i) all Receivables
transferred to or otherwise acquired or held by the Seller and arising prior to
the time of the most recent computation or recomputation of such undivided
interest pursuant to SECTION 1.4, (ii) all Related Security with respect to
such Receivables, and (iii) all Collections with respect to, and other proceeds
of, such Receivables. Such undivided percentage interest shall equal:
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<TABLE>
<S> <C> <C> <C>
C
-----------------------
[NER x (1 - MRR)] - CCR
where:
C = the Capital of such Receivable Interest.
MRR = the Minimum Reserve Ratio.
NER = the Net Eligible Receivables.
CCR = the Carrying Cost Reserve.
</TABLE>
"RECORDS" means, with respect to any Receivable, all Contracts and other
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, punch cards, data processing software and
related property and rights) relating to such Receivable, any Related Security
therefor and the related Obligor.
"REDUCTION PERCENTAGE" means, for any Receivable Interest acquired by the
Investors from FALCON for less than the Capital of such Receivable Interest, a
percentage equal to a fraction the numerator of which is the FALCON Transfer
Price Reduction for such Receivable Interest and the denominator of which is
the Capital of such Receivable Interest.
"REFERENCE BANK" means First Chicago or such other bank as the Agent shall
designate with the consent of the Seller.
"RELATED PARTY" means, with respect to any Principal: (a) any spouse or
immediate family member of such Principal, or (b) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons beneficially holding the outstanding equity interests of which
consist of such Principal and/or such other Persons referred to in the
immediately preceding clause (a).
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of the Seller's interest in the goods, the sale of which gave
rise to such Receivable, and any and all insurance contracts with respect
thereto,
(ii) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements and security agreements
describing any collateral securing such Receivable,
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(iii) all guaranties, insurance and other agreements or arrangements
of whatever character from time to time supporting or securing payment of
such Receivable whether pursuant to the Contract related to such
Receivable or otherwise,
(iv) all Records related to such Receivable,
(v) all of the Seller's right, title and interest in, to and under
the Sale Agreement; and
(vi) all proceeds of any of the foregoing.
"REQUIRED INVESTORS" means, at any time, Investors with Commitments in
excess of 66-2/3% of the Purchase Limit.
"RESERVE REQUIREMENT" means the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed against the Reference Bank in respect of Eurocurrency liabilities, as
defined in Regulation D of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of capital stock of
the Seller now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock or in any junior class of stock to the
Originator, (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 capital stock of the Seller now or hereafter outstanding, (iii)
any payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of capital stock of the Seller now or hereafter
outstanding, and (iv) any payment of management fees by the Seller.
"SALE AGREEMENT" means that certain Receivables Sale Agreement of even
date herewith between the Seller, as purchaser, and the Originator, as seller,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
"SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.
"SERVICER" means at any time the Person (which may be the Agent) then
authorized pursuant to ARTICLE VI to service, administer and collect
Receivables.
"SERVICER DEFAULT" has the meaning specified in SECTION 7.1.
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"SERVICER FEE" means, for any Calculation Period, a servicing and
collection fee computed pursuant to the following formula:
<TABLE>
<S> <C> <C>
SFP x C x [AD/360]
where:
SFP = the Servicer Fee Percentage;
C = the average daily Capital outstanding during such Calculation
Period; and
AD = the actual number of days in such Calculation Period.
</TABLE>
"SERVICER FEE PERCENTAGE" means 1.25% or such other percentage as may be
agreed upon between the Agent and the Servicer as an arms-length rate for the
Servicer Fee.
"SPECIAL OBLIGOR" means (i) PepsiCo and (ii) any other Obligor that the
Agent and the Seller from time to time agree shall be treated as a "SPECIAL
OBLIGOR".
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "SUBSIDIARY" shall mean a
Subsidiary of the Seller.
"TERMINATION DATE" means, for any Receivable Interest, the Facility
Termination Date, and, solely with respect to a Receivable Interest of FALCON,
that Business Day so designated by the Seller or FALCON by notice to the other.
"TRANCHE PERIOD" means, with respect to any Receivable Interest:
(i) if Discount for such Receivable Interest is calculated on the
basis of the Adjusted LIBOR Rate, a period of one, two or three months, or
such other period as may be mutually agreeable to the Agent and the
Seller, commencing on a Business Day selected by the Seller or the Agent
pursuant to this Agreement. Such Tranche Period shall end on the day
in the applicable succeeding calendar month which corresponds numerically
to the beginning day of such Tranche Period, PROVIDED, HOWEVER, that if
there is no such numerically corresponding day in such succeeding month,
such Tranche Period shall end on the last Business Day of such succeeding
month; and
(ii) if Discount for such Receivable Interest is calculated on the
basis of the Base Rate, a period of at least one Business Day.
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<PAGE> 66
If any Tranche Period would end on a day which is not a Business Day, such
Tranche Period shall end on the next succeeding Business Day, PROVIDED,
HOWEVER, that in the case of Tranche Periods corresponding to the Adjusted
LIBOR Rate, if such next succeeding Business Day falls in a new month, such
Tranche Period shall end on the immediately preceding Business Day. In the
case of any Tranche Period for any Receivable Interest of which commences
before the Termination Date and would otherwise end on a date occurring after
the Termination Date, such Tranche Period shall end on the Termination Date.
The duration of each Tranche Period which commences after the Termination Date
shall be of such duration as selected by the Agent.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the Sale
Agreement, the Fee Letter, each Collections Notice and all other instruments,
documents and agreements executed and delivered by the Seller or the Originator
in connection herewith or with the Sale Agreement.
"TURNOVER DAYS" means, at any time: (a) one-half of the sum of the
beginning and ending Outstanding Balances of all Receivables during the
Calculation Period most recently ended, multiplied by (b) the number of days in
the Calculation Period most recently ended divided by the aggregate amount
payable pursuant to invoices generated during that Calculation Period.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the specified jurisdiction.
"WEEKLY REPORT" means a report, in substantially the form of EXHIBIT VIII
hereto (appropriately completed), furnished by the Servicer to the Agent
pursuant to SECTION 6.5(A).
ALL ACCOUNTING TERMS NOT SPECIFICALLY DEFINED HEREIN SHALL BE CONSTRUED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. ALL TERMS USED IN
ARTICLE 9 OF THE UCC IN THE STATE OF ILLINOIS, AND NOT SPECIFICALLY DEFINED
HEREIN, ARE USED HEREIN AS DEFINED IN SUCH ARTICLE 9.
CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN ARE USED WITH THE
MEANINGS ATTRIBUTED THERETO IN THE SALE AGREEMENT.
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EXHIBIT II
CHIEF EXECUTIVE OFFICE OF THE SELLER; LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER(S)
Chief Executive Office:
Flexible Funding Corp.
500 Interchange Drive
Atlanta, GA 30336
Location of Records:
Flexible Funding Corp.
500 Interchange Drive
Atlanta, GA 30336
Federal Employer Identification Number of the Seller: 58-2254047
Trade Names: None
Prior Corporate Names: None
Assumed Names: None
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EXHIBIT III
COLLECTION ACCOUNTS;
CONCENTRATION ACCOUNTS; AND DEPOSITARY ACCOUNTS
None, except P.O. Box 102430, Atlanta, Georgia 30368-2430 for which SunTrust
Bank, Atlanta, P.O. Box 4188, 25 Park Place, Atlanta, Georgia 30302, is the
Collection Bank. Proceeds of Collections remitted to such lock-box are
deposited by such Collection Bank into account #8801238646 maintained at such
bank.
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EXHIBIT IV
FORM OF COMPLIANCE CERTIFICATE
To: The First National Bank of Chicago, as Agent
This Compliance Certificate is furnished pursuant to that certain
Receivables Purchase Agreement dated as of August 22, 1996, among Flexible
Funding Corp. (the "SELLER"), the Purchasers party thereto, and The First
National Bank of Chicago, as agent for such Purchasers (the "AGREEMENT").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ________________________of the Seller;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Seller and its Subsidiaries during the accounting period
covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Servicer Default or Potential Servicer Default, as each such term is defined
under the Agreement, during or at the end of the accounting period covered by
the attached financial statements or as of the date of this Certificate, except
as set forth below.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Seller has taken, is taking, or proposes to
take with respect to each such condition or event:
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this ___ day of ______________, 19__.
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SCHEDULE I TO COMPLIANCE REPORT
A. Schedule of Compliance of Flexible Funding Corp. with Sections 7.1(k) and
(l) of the Agreement. Unless otherwise defined herein, the terms used in
this Compliance Certificate have the meanings ascribed thereto in the
Purchase Agreement.
This schedule relates to the month ended:
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EXHIBIT V
FORM OF COLLECTION ACCOUNT AGREEMENT
[On letterhead of Seller]
_________ 19 ___
[Lock-Box Bank/Concentration Bank/Depositary Bank]
Re: Flexible Funding Corp.
Printpack, Inc.
Ladies and Gentlemen:
You have exclusive control of P.O. Box #______________in **[city, state,
zip code]** (the "LOCK-BOX") for the purpose of receiving mail and processing
payments therefrom pursuant to that certain **[name of lock-box agreement]**
between you and Printpack, Inc. dated ___________(the "AGREEMENT"). You hereby
confirm your agreement to perform the services described therein. Among the
services you have agreed to perform therein, is to endorse all checks and other
evidences of payment, and credit such payments to checking account no._________
maintained with you in the name of Printpack, Inc. (the "LOCK-BOX ACCOUNT").
Printpack, Inc. ("PRINTPACK") hereby transfers and assigns all of its
right, title and interest in and to, and exclusive ownership and control over,
the Lock-Box and the Lock-Box Account to Flexible Funding Corp.
("FLEXIBLE-SPC"). Printpack and Flexible-SPC hereby request that the name of
the Lock-Box Account be changed to Flexible Funding Corp., as "COLLECTION
AGENT" for the benefit of The First National Bank of Chicago ("FNBC"), as agent
under that certain Receivables Purchase Agreement (the "RECEIVABLES PURCHASE
AGREEMENT") dated as of August 22, 1996 among Flexible-SPC, Falcon Asset
Securitization Corporation, certain financial institutions parties thereto and
FNBC.
Flexible-SPC hereby irrevocably instructs you, and you hereby agree, that
upon receiving notice from FNBC in the form attached hereto as Annex A: (i) the
name of the Lock-Box Account will be changed to FNBC for itself and as agent
(or any designee of FNBC) and FNBC will have exclusive ownership of and access
to such Lock-Box Account, and neither Printpack, Flexible-SPC nor any of their
respective affiliates will have any control of such Lock-Box Account or any
access thereto, (ii) you will either continue to send the funds from the
Lock-Box to the Lock-Box Account, or will redirect the funds as FNBC may
otherwise request, (iii) you will transfer monies on deposit in the Lock-Box
Account, at any time, as directed by FNBC, (iv) all services to be performed by
you under the Agreement will be performed on behalf
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of FNBC, and (v) all correspondence or other mail which you have agreed to send
to either Printpack or Flexible-SPC will be sent to FNBC at the following
address:
The First National Bank of Chicago
Suite 0079, 21st Floor
One First National Plaza
Chicago, Illinois 60670
Attention: Credit Manager, Asset-Backed Finance
Moreover, upon such notice, FNBC for itself and as agent will have all
rights and remedies given to Printpack or Flexible-SPC under the Agreement.
Each of Printpack and Flexible-SPC agrees, however, to continue to pay all fees
and other assessments due thereunder at any time.
You hereby acknowledge that monies deposited in the Lock-Box Account or
any other account established with you by FNBC for the purpose of receiving
funds from the Lock-Box are subject to the liens of FNBC for itself and as
agent under the Receivables Purchase Agreement, and will not be subject to
deduction, set-off, banker's lien or any other right you or any other party may
have against Printpack or Flexible-SPC, except that you may debit the Lock-Box
Account for any items deposited therein that are returned or otherwise not
collected and for all charges, fees, commissions and expenses incurred by you
in providing services hereunder, all in accordance with your customary
practices for the charge back of returned items and expenses.
This letter agreement and the rights and obligations of the parties
hereunder will be governed by and construed and interpreted in accordance with
the laws of the State of Illinois. This letter agreement may be executed in
any number of counterparts and all of such counterparts taken together will be
deemed to constitute one and the same instrument.
This letter agreement contains the entire agreement between the parties,
and may not be altered, modified, terminated or amended in any respect, nor may
any right, power or privilege of any party hereunder be waived or released or
discharged, except upon execution by all parties hereto of a written instrument
so providing. In the event that any provision in this letter agreement is in
conflict with, or inconsistent with, any provision of the Agreement, this
letter agreement will exclusively govern and control. Each party agrees to
take all actions reasonably requested by any other party to carry out the
purposes of this letter agreement or to preserve and protect the rights of each
party hereunder.
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Please indicate your agreement to the terms of this letter agreement by
signing in the space provided below. This letter agreement will become
effective immediately upon execution of a counterpart of this letter agreement
by all parties hereto.
Very truly yours,
PRINTPACK, INC.
By ______________________________
Title ___________________________
FLEXIBLE FUNDING CORP.
By ______________________________
Title ___________________________
Acknowledged and agreed to
this ____ day of ____________, 1996:
[COLLECTION BANK]
By:
--------------------------------
Title:
------------------------------
Acknowledged and agreed to
this _____day of ___________, 1996:
THE FIRST NATIONAL BANK OF CHICAGO (for itself and
as Agent)
By ___________________________________
Authorized Agent
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ANNEX A
FORM OF COLLECTION NOTICE
[On letterhead of FNBC]
________, 19__
[Collection Bank/Depositary Bank/Concentration Bank]
Re: Flexible Funding Corp.
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights pursuant to that
certain letter agreement among Printpack, Inc., Flexible Funding Corp., you and
us, to have the name of, and to have exclusive ownership and control of,
account number _____________(the "LOCK-BOX ACCOUNT") maintained with you,
transferred to us. Lock-Box Account will henceforth be a zero-balance account,
and funds deposited in the Lock-Box Account should be sent at the end of each
day to _________________. You have further agreed to perform all other
services you are performing under that certain agreement dated
between you and Printpack, Inc. on our behalf.
We appreciate your cooperation in this matter.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
(for itself and as agent)
By:
Authorized Agent
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EXHIBIT VI
CREDIT AND COLLECTION POLICY
[to be provided by the Seller]
68
<PAGE> 76
EXHIBIT VII
FORM OF MONTHLY REPORT
[to be provided by First Chicago]
69
<PAGE> 77
EXHIBIT VIII
FORM OF WEEKLY REPORT
[to be provided by First Chicago]
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EXHIBIT IX
FORM OF PURCHASE NOTICE
[Date]
The First National Bank of Chicago,
as Agent for the Purchasers parties
to the Receivables Purchase Agreement
referred to below
Suite 0079, 1-21
One First National Plaza
Chicago, Illinois 60670
Attention: Asset-Backed Finance
Gentlemen:
The undersigned, Flexible Funding Corp., refers to the Receivables
Purchase Agreement, dated as of August 22, 1996 (the "RECEIVABLES PURCHASE
AGREEMENT", the terms defined therein being used herein as therein defined),
among the undersigned, Falcon Asset Securitization Corporation ("FALCON"),
certain Investors parties thereto and The First National Bank of Chicago, as
Agent for FALCON and such Investors, and hereby gives you notice, irrevocably,
pursuant to SECTION 1.2 of the Receivables Purchase Agreement that the
undersigned hereby requests a Purchase under the Receivables Purchase
Agreement, and in that connection sets forth below the information relating to
such Purchase (the "PROPOSED PURCHASE") as required by SECTION 1.2 of the
Receivables Purchase Agreement:
(i) The Business Day of the Proposed Purchase is _________, 19__.
(ii) The requested Purchase Price in respect of the Proposed Purchase
is $___________________.
(iii) The requested Purchaser[s] in respect of the Proposed Purchase
[is FALCON] [are the Investors].
(iv) The duration of the initial Tranche Period for
the Proposed Purchase is ____________ [days] [months].
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(v) The Discount Rate related to such initial Tranche
Period is requested to be the [Adjusted LIBOR] [Base] Rate.
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Purchase (before
and after giving effect to the Proposed Purchase):
(A) the representations and warranties set forth in SECTION
3.1 of the Receivables Purchase Agreement are correct on and as
of such date, as though made on and as of such date;
(B) no event has occurred, or would result from the
Proposed Purchase that will constitute a Servicer Default, and no
event has occurred and is continuing, or would result from such
Proposed Purchase, that would constitute a Potential Servicer
Default; and
(C) the Liquidity Termination Date shall not have occurred,
the aggregate Capital of all Receivable Interests shall not
exceed the Purchase Limit and the aggregate Receivable Interests
shall not exceed 100%.
Very truly yours,
FLEXIBLE FUNDING CORP.
By:____________________________________
Title:
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<PAGE> 80
SCHEDULE A
DOCUMENTS AND RELATED ITEMS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE INITIAL PURCHASE
I. Receivables Sale Agreement
A. Receivables Sale Agreement dated as of August 22, 1996 (the "SALE
AGREEMENT") by and between Printpack, Inc., a Georgia corporation (the
"ORIGINATOR"), and Flexible Funding Corp., a Delaware corporation
("FLEXIBLE-SPC"), with the following exhibits:
<TABLE>
<S> <C> <C>
Exhibit I - Definitions
Exhibit II - Places of Business of Originator; Locations of Records;
Trade Names; Prior Names; Federal Employer I.D. Number
Exhibit III - Lockboxes; Collection Accounts; Concentration Accounts; and
Depositary Accounts
Exhibit IV - Compliance Certificate
Exhibit V - Collection Account Agreement
Exhibit VI - Credit and Collection Policy
Exhibit VII - Form of Monthly Report
Exhibit VIII - Form of Weekly Report
Exhibit IX - Stockholder and Subscription Agreement
Exhibit X - Subordinated Note
</TABLE>
B. Revolving Subordinated Note dated August 22, 1996 executed by
Flexible-SPC in favor of the Originator.
C. Stockholder and Subscription Agreement dated as of August 22, 1996 by
and between the Originator and Flexible-SPC.
D. Certificate of the Originator's [Assistant] Secretary certifying:
1. An attached copy of the Originator's Articles of Incorporation
(certified within 30 days prior to closing by the Georgia Secretary
of State)
2. An attached copy of the Originator's By-Laws
3. An attached copy of resolutions of the Originator's Board of
Directors authorizing the Originator's execution, delivery and
performance of the Sale Agreement and related documents
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<PAGE> 81
4. The names, titles and specimen signatures of the Originator's
officers authorized to execute and deliver the Sale Agreement and
related documents
E. Good standing certificates for the Originator from the following states
certified within 30 days prior to closing:
1. Georgia
2. Arizona (photocopy)
3. California (photocopy)
4. Delaware (photocopy)
5. Illinois (photocopy)
6. Indiana (photocopy)
7. Louisiana (photocopy)
8. Minnesota (photocopy)
9. Missouri (photocopy)
10. New Jersey (photocopy)
11. North Carolina (photocopy)
12. Ohio (photocopy)
13. Pennsylvania (photocopy)
14. Tennessee (photocopy)
15. Texas (photocopy)
16. Tennessee (photocopy)
17. Texas (photocopy)
18. Virginia (photocopy)
19. Wisconsin (photocopy)
F. Pre-filing state and federal tax lien, judgment lien and UCC lien
searches against the Originator.
G. UCC Financing Statements naming the Originator, as debtor,
Flexible-SPC, as secured party, and The First National Bank of Chicago, as
Agent, as assignee of secured party, for filing in the following jurisdictions:
1. Fulton County, Georgia.
H. Post-filing UCC lien searches against the Originator from the following
jurisdictions:
1. Fulton County, Georgia.
I. Collection Account Agreement
1. SunTrust
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<PAGE> 82
J. Opinions of Alston & Bird:
1. Corporate/UCC opinion
2. True sale opinion
3. Non-consolidation opinion
K. CFO's Certificate re no Servicer Default or Potential Servicer Default
and absence of Material Adverse Effect since March 31, 1996.
L. Intercreditor Agreement.
II. Receivables Purchase Agreement
A. Receivables Purchase Agreement dated as of August 22, 1996 (the
"INVESTOR AGREEMENT") by and among Flexible-SPC, Falcon Asset Securitization
Corporation ("FALCON"), various Investors, and The First National Bank of
Chicago, as Agent (in such capacity, the "AGENT") with the following exhibits:
<TABLE>
<S> <C> <C>
Exhibit I - Definitions
Exhibit II - Places of Business of Flexible-SPC; Locations of
Records;
Trade Names; Federal Employer I.D. Number
Exhibit III - Lockboxes; Collection Accounts; Concentration
Accounts; and
Depositary Accounts
Exhibit IV - Compliance Certificate
Exhibit V - Collection Account Agreement
Exhibit VI - Credit and Collection Policy
Exhibit VII - Form of Monthly Report
Exhibit VIII - Form of Weekly Report
Exhibit IX - Form of Purchase Notice
</TABLE>
B. Fee Letter dated as of August 22, 1996 by and between Flexible-SPC and
the Agent.
C. Certificate of Flexible-SPC's [Assistant] Secretary certifying:
1. An attached copy of Flexible-SPC's Certificate of Incorporation
(certified within 30 days prior to closing by the Delaware
Secretary of State)
2. An attached copy of Flexible-SPC's By-Laws
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<PAGE> 83
3. An attached copy of resolutions of Flexible-SPC's Board of
Directors authorizing Flexible-SPC's execution, delivery and
performance of the Investor Agreement and related documents
4. The names, titles and specimen signatures of Flexible-SPC's
officers authorized to execute and deliver the Investor Agreement
and related documents
D. Good standing certificates for Flexible-SPC from the following states
certified within 30 days prior to closing:
1. Delaware
2. Georgia
E. UCC Financing Statements naming Flexible-SPC, as debtor, and the Agent,
as secured party, for filing in the following jurisdictions:
1. Fulton County, GA
F. Post-filing UCC lien searches against Flexible-SPC from the following
jurisdictions:
1. Fulton County, GA
G. Collection Account Agreement
1. SunTrust
H. Purchase Notice executed by Flexible-SPC.
I. Opinion of Flexible-SPC's counsel re corporate/UCC issues
J. CFO's Certificate re no Servicer Default or Potential Servicer Default
and absence of Material Adverse Effect since March 31, 1996.
K. Weekly Report.
L. Monthly Report.
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<PAGE> 1
EXHIBIT 10.9
Intercreditor Agreement, dated August 22, 1996, by and between The First
National Bank of Chicago as Contractual Representative and The First National
Bank of Chicago as Agent.
<PAGE> 2
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT, dated as of August 22, 1996 (this
"AGREEMENT"), is executed and delivered by The First National Bank of Chicago
in its capacity as contractual representative for itself and the "Lenders"
party to the Credit Agreement referred to below (in such capacity, together
with its successors in such capacity, the "BANK AGENT"), and The First National
Bank of Chicago as agent under the Purchase Agreement referred to below (in
such capacity, the "RECEIVABLES AGENT").
BACKGROUND
A. Printpack, Inc., a Georgia corporation (the "COMPANY"), and the Bank
Agent are parties to that certain Security Agreement dated as of August 22,
1996 (as amended, modified, supplemented or restated and in effect from time to
time, the "SECURITY AGREEMENT") for the benefit of certain creditors of the
Company party to the credit agreement referred to therein (as amended,
modified, supplemented or restated and in effect from time to time, the "CREDIT
AGREEMENT").
B. The Company is entering into that certain Receivables Sales Agreement
(as amended, modified, supplemented or restated and in effect from time to
time, the "RSA"), dated as of August 22, 1996, by and between the Company and
Flexible Funding Corp., a limited purpose Delaware corporation (the
"RECEIVABLES SUBSIDIARY"), pursuant to which the Company will sell to the
Receivables Subsidiary substantially all Receivables that it now owns and from
time to time hereafter will own, and the Company and the Receivables Subsidiary
are entering into a Stockholder and Subscription Agreement dated as of August
22, 1996 (as amended, modified, supplemented or restated and in effect from
time to time, the "SUBSCRIPTION AGREEMENT") with the Receivables Subsidiary,
pursuant to which the Company will contribute to the Receivables Subsidiary
some or all of its existing and hereafter arising Receivables.
C. Contemporaneously with the sale or contribution of Receivables to the
Receivables Subsidiary pursuant to the RSA and the Subscription Agreement, the
Receivables Subsidiary will transfer the Receivables and the other Specified
Assets (as defined below) to the Receivables Agent pursuant to that certain
Receivables Purchase Agreement (as amended, supplemented, modified or restated
and in effect from time to time, the "PURCHASE AGREEMENT") dated as of August
22, 1996 among the Receivables Subsidiary, Falcon Asset Securitization
Corporation ("FALCON"), various investors (together with Falcon, the
"PURCHASERS"), and the Receivables Agent.
D. To induce the Company, the Receivables Subsidiary, the Purchasers and
the Receivables Agent to enter into the Transaction Documents, the requisite
parties to the Credit Agreement have authorized the Bank Agent to execute and
deliver this Agreement.
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<PAGE> 3
E. The execution and delivery of this Agreement is a condition precedent
to the effectiveness of the RSA, the Subscription Agreement, the Purchase
Agreement and the other Transaction Documents.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. As used herein, the following terms shall have the
meanings specified below:
"AGGREGATE UNPAIDS" means, at any time, an amount equal to the sum of all
accrued and unpaid Discount and Capital (each as defined in the Purchase
Agreement) and all other amounts owed (whether due or accrued) under the
Purchase Agreement, the Fee Letter or any other Transaction Document to the
Receivables Agent and/or the Purchasers at such time.
"AUTHORIZED OFFICER" means, with respect to the Receivables Agent, any
Vice President or higher of the Receivables Agent's Asset-Backed Finance
Division.
"BANK COLLATERAL" means all property and interests in property (other than
Specified Assets) now or hereafter acquired by the Company in or upon which a
security interest, lien or mortgage is granted by the Company to the Bank under
the Security Agreement or any other collateral document executed in connection
with the Credit Agreement, including the "EXCLUDED RECEIVABLES ASSETS," as
defined below.
"COLLECTION ACCOUNT" means each concentration account, depositary account,
lock-box, lock-box account or similar account in which any Collections are
collected or deposited.
"COLLECTIONS" means, with respect to any Receivable, all cash collections
and other cash proceeds in respect of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable.
"COMMERCIAL PAPER" means promissory notes of Falcon issued by Falcon in
the commercial paper market.
"CONTRACT" means, with respect to any Receivable, any and all instruments,
agreements, leases, bills of lading, invoices or other writings pursuant to
which such Receivable arises or which evidences such Receivable.
"EXCLUDED RECEIVABLES ASSETS" means: (i) all "INVENTORY" (as that term is
defined in the Security Agreement referred to in the Credit Agreement), other
than returned goods, if any, relating to the sale that gave rise to any
Receivables which are included in the Specified Assets ("SPECIFIED RETURNED
GOODS"); (ii) any Receivables or other proceeds of Inventory created or arising
(A) after a Bankruptcy Event in which the
2
<PAGE> 4
Company is the debtor (other than proceeds of Specified Returned Goods), (B)
after termination of purchases under the Purchase Agreement or (C) from the
sale or other disposition of any of the Inventory (other than Specified
Returned Goods) by the Bank Agent, as a secured party under the UCC (in each
case, together with all Related Security and Collections in respect thereof);
and (iii) any Specified Returned Goods which have been re-acquired by the
Company from the Receivables Subsidiary in accordance with the terms of the
RSA.
"FINANCE CHARGES" means, with respect to a Contract, any finance,
interest, late payment charges or similar charges owing by an Obligor pursuant
to such Contract.
"OBLIGOR" means a Person obligated to make payments pursuant to a
Contract.
"PERSON" means an individual, partnership, corporation, association,
trust, or any other entity, or organization, including a government or
political subdivision or agency or instrumentality thereof.
"RECEIVABLE" means the indebtedness and other obligations owed (at the
time it arises, and before giving effect to any transfer or conveyance
contemplated under the Purchase Agreement or the RSA) to the Company, whether
constituting an account, chattel paper, instrument, document or general
intangible, arising in connection with the sale of goods or insurance or
rendition of services by the Company and includes, without limitation, the
obligation to pay any Finance Charges with respect thereto. Indebtedness and
other rights and obligations arising from any one transaction, including,
without limitation, indebtedness and other rights and obligations represented
by an individual invoice, shall constitute a Receivable separate from a
Receivable consisting of the indebtedness and other rights and obligations
arising from any other transaction.
"RECORDS" means, with respect to any Receivable, all Contracts and other
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, punch cards, data processing software and
related property and rights) relating to such Receivable, any Related Security
therefor and the related Obligor.
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of the Company's and the Receivables Subsidiary's interest in the
goods (including returned goods), if any, the sale of which by the Company gave
rise to such Receivable, and all insurance contracts with respect to such
goods,
(ii) all other security interests or liens and property subject thereto
from time to time, if any, purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise,
together with
3
<PAGE> 5
all financing statements and security agreements describing any collateral
securing such Receivable,
(iii) all guaranties, insurance and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise,
(iv) all Records related to such Receivables, and
(v) all proceeds of any of the foregoing.
"SPECIFIED ASSETS" means the Receivables, the Collections, the Collection
Accounts and the Related Security, as more fully described in the Purchase
Agreement; PROVIDED, HOWEVER, that, notwithstanding anything to the contrary in
the Purchase Agreement, Exhibit I to the Purchase Agreement or any other
Transaction Documents, the term "SPECIFIED ASSETS" shall not include any of the
Excluded Receivables Assets (including any proceeds thereof which may be
deposited in the Collection Accounts), which shall constitute Bank Collateral.
"TRANSACTION DOCUMENTS" means, collectively, (a) the RSA and the
Subordinated Note referred to therein, (b) the Purchase Agreement, (c) any
agreement entered into pursuant to the Purchase Agreement or the RSA with
respect to any Collection Account, (d) the Subscription Agreement, and (e) the
fee letter dated August 22, 1996 by and between the Receivables Subsidiary and
the Receivables Agent (as amended, modified, supplemented or restated and in
effect from time to time, the "FEE LETTER").
2. Authorization. The Bank Agent confirms that the terms of the Credit
Agreement (a) authorize the Bank Agent to execute, deliver and perform this
Agreement, and (b) provide for all of the existing and future parties to the
Credit Agreement to be bound by the terms of this Agreement.
3. Release of Specified Assets. The Bank Agent hereby releases all liens
and security interests of any kind whatsoever which the Bank Agent (or any
trustee or agent acting on its behalf) holds in Specified Assets, to the extent
that such Specified Assets would otherwise constitute Bank Collateral. It is
understood and agreed that the Bank Agent shall have no rights to or in any
proceeds of the Bank Collateral that constitute Specified Assets, except to the
extent such proceeds constitute Excluded Receivables Assets. The Bank Agent
agrees, upon the reasonable request of the Receivables Agent, to execute and
deliver to the Receivables Agent such UCC partial release statements and other
documents and instruments, and do such other acts and things, as the
Receivables Agent may reasonably request in order to evidence the release
provided for in this Section 3; PROVIDED, HOWEVER, that failure to execute and
deliver any such partial release statements, documents or instruments, or to do
such acts and things, shall not affect or impair the release provided for in
this Section 3.
4
<PAGE> 6
4. Separation of Collateral.
(a) The Receivables Agent hereby agrees promptly to return to the Company
funds or other property other than Specified Assets (or proceeds thereof, other
than proceeds constituting Excluded Receivables Assets) which constitute Bank
Collateral (or proceeds thereof); PROVIDED THAT the Company or the Bank Agent
shall have identified such Bank Collateral or proceeds in writing to the
Receivables Agent or an Authorized Officer of the Receivables Agent otherwise
has actual knowledge of the identity of such Bank Collateral or proceeds; and
PROVIDED FURTHER that if the Bank Agent shall so request in a written notice to
the Receivables Agent, the Receivables Agent shall return such funds and
property to the Bank Agent instead of to the Company. For purposes of
maintaining the perfection of the Bank Agent's lien thereon, the Bank Agent
hereby appoints the Receivables Agent as its agent in respect of such funds or
other property.
(b) The Bank Agent hereby agrees to promptly return to the Receivables
Agent any funds or other property which constitute Specified Assets (or
proceeds thereof); PROVIDED THAT the Receivables Agent shall have identified
such Specified Assets or proceeds in writing to the Bank Agent or an officer of
the Bank Agent otherwise has actual knowledge of the identity of such Specified
Assets or proceeds. For purposes of maintaining the perfection of the
Receivables Agent's interests therein, the Receivables Agent hereby appoints
the Bank Agent as its agent with respect to such Specified Assets and proceeds.
(c) All payments made by an Obligor that is obligated to make payment with
respect to both Specified Assets and other Receivables shall be applied against
the Receivables, if any, that are designated by such Obligor. In the absence
of such designation, such payment shall be applied against the oldest
outstanding Receivables owed by such Obligor.
(d) Unless the Receivables Agent and the Bank Agent agree otherwise in
writing, neither the Receivables Agent nor the Bank Agent shall send any notice
to an Obligor directing it to remit payments in respect of any Receivable to
any account other than the Collection Accounts.
(e) In the event that any of the Specified Assets (or proceeds thereof,
other than proceeds constituting Excluded Receivables Assets) become commingled
with any Bank Collateral (or proceeds thereof), then the Bank Agent and the
Receivables Agent shall, in good faith, cooperate with each other to separate
the Specified Assets (and proceeds thereof) from such Bank Collateral (and
proceeds thereof); PROVIDED, HOWEVER, that in the case of any assets, if such
separation is not possible, the parties hereto agree to share the proceeds of
such property proportionately according to the interests of the Bank Agent and
the Receivables Agent therein; PROVIDED, FURTHER, that each party shall bear
its own out-of-pocket costs and expenses incurred to effect such separation
and/or sharing (including without limitation fees and expenses of auditors and
attorneys) to the extent
5
<PAGE> 7
that such costs and expenses are not reimbursed or otherwise borne by the
Company (it being understood that nothing in this Agreement shall limit the
obligation of the Company to make such reimbursement or bear such costs and
expenses in accordance with the terms of the Credit Agreement, the Security
Agreement and the Transaction Documents); and PROVIDED, FURTHER, that this
Section 4(e) shall not require any party to this Agreement to take any action
which it believes, in good faith, may prejudice its ability to realize the
value of, or to otherwise protect, its interests (and the interests of the
parties for which it acts).
(f) The Receivables Agent hereby acknowledges that Collections of Excluded
Receivables Assets may from time to time be deposited in the Collection
Accounts. In the event that the Receivables Agent gives notice to any bank
maintaining a Collection Account that the Receivables Agent is asserting
exclusive dominion and control over the Collection Accounts, the Receivables
Agent agrees, upon the Bank Agent's request from and after the date on which
purchases have terminated under the Purchase Agreement, to notify any banks
maintaining a Collection Account of the Bank Agent's interest in and to such
Collection Account to the extent that such notice may be reasonably necessary
to perfect or preserve the Bank Agent's interest in any Collections of Excluded
Receivables Assets as against the applicable banks. The Receivables Agent
further agrees, upon the payment in full of the Aggregate Unpaids or, if
earlier, the date on which all Specified Assets have been collected and/or
written off as uncollectible, to transfer its ownership and control over the
Collection Accounts to the Bank Agent in order to assist the Bank Agent in
realizing its interest in and to the Excluded Receivables Assets. Any such
transfer shall be without representation, recourse or warranty of any kind on
the part of the Receivables Agent. If such transfer occurs prior to the date
on which the Aggregate Unpaids have been paid and collected in full, then, (i)
notwithstanding any such transfer, all Collections and other proceeds
subsequently deposited into the Collection accounts on account of the Specified
Assets shall be delivered to the Receivables Agent as provided in paragraph (e)
above and (ii) the Bank Agent shall, if the Receivables Agent so requests,
notify any bank maintaining a Collection Account of the Receivables Agent's
continuing interest, if any, in the Collections of such Specified Assets as may
be reasonably necessary to maintain perfection of or otherwise preserve the
Receivables Agent's interest in any Collections of Specified Assets as against
the banks maintaining the Collection Accounts.
5. Additional Agreements with Bank Parties. The Bank Agent agrees,
represents and warrants, on behalf of itself and the other existing and future
parties to the Credit Agreement (excluding the Company; the Bank Agent and such
other parties being herein called the "BANK PARTIES") as follows:
(a) The Bank Parties shall not (i) challenge the transfers of Specified
Assets from the Company to the Receivables Subsidiary, whether on the grounds
that such transfers were disguised financings or fraudulent conveyances or
otherwise, so long as such transfers are carried out in all material respects
in accordance with the Transaction Documents, (ii) assert that the Company and
the Receivables Subsidiary should be substantively consolidated, or (iii) agree
to any amendment of Section 7.1(r) the effect of
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<PAGE> 8
which would be to provide that a "Default" under the Credit Agreement will
arise upon the occurrence of an event that would permit, but does not cause,
the Receivables Agent or the Purchasers to cease making purchases or advances
thereunder.
(b) Notwithstanding any prior termination of this Agreement, the Bank
Parties shall not, with respect to the Receivables Subsidiary, institute or
join any other Person in instituting a proceeding of the type referred in the
definition of "EVENT OF BANKRUPTCY", so long as any Aggregate Unpaids shall be
outstanding or there shall not have lapsed one year plus one day since the last
day on any such Commercial Paper of Falcon shall have been outstanding. The
foregoing will not limit the rights of Bank Parties to file any claim or
otherwise take any action with respect to any such insolvency proceedings that
may be instituted against the Receivables Subsidiary by a Person other than a
Bank Party.
(c) No Bank Party shall assign its rights or obligations under the Credit
Agreement to any other Person unless such Person shall have agreed in writing
to be bound by the terms of this Agreement as if it were a party hereto.
(d) Subject to any applicable restrictions in the Transaction Documents,
the Receivables Agent may (but shall not be required to) enter into one or more
premises of the Company, whether leased or owned, at any time during reasonable
business hours, without force or process of law and without obligation to pay
rent or compensation to the Company, the Receivables Subsidiary or the Bank
Parties and may use any equipment (including data processing equipment) located
thereon relating to Records and may have access and use of such Records and any
other property (including software) to which such access and use are granted
under the Transaction Documents, in each case provided that such uses are for
the purposes of enforcing the Receivables Agent's rights with respect to the
Specified Assets.
6. Additional Agreements of Receivables Agent. The Receivables Agent
agrees, represents and warrants as follows:
(a) The Receivables Agent shall not (i) challenge the transfers of the
Bank Collateral (other than Specified Assets) from the Company to the Bank
Agent, whether on the grounds that such transfers were fraudulent conveyances
or otherwise, so long as such transfers are carried out in all material
respects in accordance with the Credit Agreement, the Security Agreement and
related documents, or (ii) assert that the Company and the Receivables
Subsidiary should be substantively consolidated.
(b) The Receivables Agent shall not assign its rights or obligations under
the Transaction Documents to any other Person unless such Person shall have
agreed in writing to be bound by the terms of this Agreement as if it were a
party hereto.
7
<PAGE> 9
(c) The Receivables Agent does not have any security or other interest in
any portion of the Bank Collateral (including, without limitation, Receivables)
that do not constitute Specified Assets.
(d) The Receivables Agent shall use commercially reasonable efforts to
notify the Bank Agent of any termination of the Purchase Agreement, but failure
to give such notice shall not create any liability on the part of the
Receivables Agent or affect its rights hereunder.
(e) Subject to any applicable restrictions in the Credit Agreement and/or
the Security Agreement, the Bank Agent may (but shall not be required to) enter
into one or more premises of the Company, whether leased or owned, at any time
during reasonable business hours, without force or process of law and without
obligation to pay rent or compensation to the Company, the Receivables
Subsidiary, the Receivables Agent or any of the Purchasers and may have access
to and use of all Records located thereon and may have access and use of any
other property (including software) to which such access and use are granted
under the Transaction Documents, in each case provided that such access and
uses are for the purposes of enforcing the Bank Agent's rights with respect to
the Excluded Receivables Assets.
7. Reliance. Each of the Receivables Subsidiary, the Receivables Agent,
all Lenders, all Investors and all Bank Parties may rely on this Agreement as
if such Person were a party hereto. This Agreement shall remain in effect
until the termination of the Trust in accordance with the terms of the Pooling
Agreement.
8. Miscellaneous.
(a) No delay upon the part of any party to this Agreement in the exercise
of any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by any such party of any right, power or remedy
preclude other or further exercise thereof, or the exercise of any other right,
power or remedy. No waiver, amendment or other modification, or consent with
respect to, any provision of this Agreement shall be effective unless the same
shall be in writing and shall be signed by the Bank Agent and the Receivables
Agent.
(b) This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of one which so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
(c) This Agreement shall be governed by and construed in accordance with
the internal laws (as opposed to conflicts of law provisions) of the State of
Illinois.
(d) This Agreement shall be binding upon and inure to the benefit of each
of the parties hereto and their respective successors and assigns.
8
<PAGE> 10
(e) All notices and other communications for hereunder shall, unless
otherwise stated herein, be in writing (including communications by facsimile
copy) and mailed, transmitted or delivered, as to each party hereto at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto. All such notices and communications shall be effective upon
receipt or (i) in the case of notice by mail, three business days after being
deposited in the mails, postage prepaid, and (ii) in the case of notice by
facsimile copy, upon the earlier to occur of (A) completion of transmission and
telephone confirmation of receipt or (B) the recipient's close of business on
the date of transmission.
IN WITNESS WHEREOF, the Bank Agent and the Receivables Agent have caused
this Agreement to be executed and delivered as of the day first above written.
THE FIRST NATIONAL BANK OF CHICAGO, as
Bank Agent
By: /s/
-------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: One First National Plaza
Chicago, Illinois 60670-0234
Attn: Brett C. Neubert
Phone: (312) 732-2752
Fax: (312) 732-3885
THE FIRST NATIONAL BANK OF CHICAGO, as
Receivables Agent
By: /s/
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address: One First National Plaza
21st Floor
Chicago, Illinois 60670-0079
Attn: Asset-Backed Finance
Credit Manager
Phone: (312) 732-9678
Fax: (312) 732-4487
9
<PAGE> 11
ACKNOWLEDGED AND AGREED:
FLEXIBLE FUNDING CORP.
By: /s/
----------------------------
Name:
--------------------------
Title:
------------------------
PRINTPACK, INC.
By: /s/
----------------------------
Name:
--------------------------
Title:
------------------------
10
<PAGE> 1
EXHIBIT 11
EXHIBIT 11. COMPUTATION OF NET INCOME PER COMMON SHARE
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
JUNE 25, JUNE 24, JUNE 29,
1994 1995 1996
PRINTPACK, INC.
<S> <C> <C> <C>
Net income for net income per common share 17,110 $ 16,824 $ 13,236
========== ========== ==========
Weighted average number of common shares outstanding
during the year - used in calculation of net income
per common share (1) 4,218,560 4,218,560 4,218,560
========== ========== ==========
Net income per common share $ 4.06 $ 3.99 $ 3.14
========== ========== ==========
</TABLE>
(1) The Company had no common stock equivalents outstanding during any of the
years presented.
<PAGE> 1
EXHIBIT 12.
Computation of Ratio of Earnings to Fixed Charges - Printpack, Inc.
<PAGE> 2
\ EXHIBIT 12
PRINTPACK, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE(1) Pro Forma
1992 1993 1994 1995 1996 Combined(2)
<S> <C> <C> <C> <C> <C> <C>
Pre-tax income from
continuing operations $ 12,521 $16,788 $21,649 $18,345 $17,427 $ (7,665)
Minority interest in the
income of subsidiary
with fixed charges - - - (316) (1,111) (1,111)
Plus: Capitalized interest
amortized during the period 620 567 546 546 584 584
Less: Capitalized interest (648) (163) (414) (579) (887) (887)
-------- ------- ------- ------- ------- ---------
12,493 17,192 21,781 17,996 16,013 (9,079)
-------- ------- ------- ------- ------- ---------
Fixed charges:
Interest expense and
amortization of debt
discount and premium
on all indebtedness 8,976 9,006 10,016 10,975 12,411 56,948
Rentals - 33% 1,114 1,131 655 581 573 1,497
-------- ------- ------- ------- ------- ---------
Total fixed charges 10,090 10,137 10,671 11,556 12,984 58,445
-------- ------- ------- ------- ------- ---------
Earnings before income
taxes, minority interest
and fixed charges $ 22,583 $27,329 $32,452 $29,552 $28,997 $ 49,366
======== ======= ======= ======= ======= =========
Ratio of earnings
to fixed charges 2.2 2.7 3.0 2.6 2.2 0.8(3)
======== ======= ======= ======= ======= =========
</TABLE>
(1) The Company's fiscal year ends on the last Saturday of June.
(2) The Pro Forma Combined computation of ratio of earnings to fixed charges
relates to the 12 months ended June 29, 1996 as if the Transactions had
occurred on July 1, 1995.
(3) Earnings were approximately $9.1 million less than fixed charges in this
period.
<PAGE> 1
EXHIBIT 21
List of Subsidiaries.
List of Subsidiaries
1. Printpack Illinois, Inc., an Illinois corporation
2. Flexible Funding Corp., a Delaware corporation
3. Empaques Printpack de Mexico, S.A. De C.V., a Mexican corporation
4. James River de Mexico, S.E. De C.V., a Mexican corporation
5. Servicios James River de Mexico, S.A. De C.V., a Mexican corporation
6. James River Packaging de Mexico, S.A. De C.V., a Mexican corporation
<PAGE> 1
EXHIBIT 23.1
Consent of Price Waterhouse LLP. - Printpack, Inc.
<PAGE> 2
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated July 26, 1996, except as
to the information described in Note 17 with respect to the acquisition of The
Flexible Packaging Group of James River Corporation, an interest rate lock
agreement and an additional $700,000 advance to an equity investee which is as
of August 22, 1996, relating to the financial statements of Printpack, Inc,
which appears in such Prospectus. We also consent to the application of
such report to the Financial Statement Schedule for the three years in the
period ended June 29, 1996 listed under Item 16(b) of this Registration
Statement when such schedule is read in conjunction with the financial
statements referred to in our report. The audits referred to in such report
also included this schedule. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
/s/ Price Waterhouse LLP
Atlanta, GA
October 7, 1996
<PAGE> 1
EXHIBIT 23.2
Consent of Price Waterhouse LLP - JR Flexible.
<PAGE> 2
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated August 22, 1996,
relating to the financial statements of The Flexible Packaging Group of James
River Corporation, which appears in such Prospectus. We also consent to the
application of such report to the Financial Statement Schedule for the
three years in the period ended December 31, 1995 listed under Item 16(b) of
this Registration Statement when such schedule is read in conjunction with the
financial statements referred to in our report. The audits referred to in such
report also included this schedule. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
/s/ Price Waterhouse LLP
Atlanta, GA
October 7, 1996
<PAGE> 1
EXHIBIT 25
Statement of Eligibility of Fleet National Bank, Trustee on Form T-1 in
connection with the Exchange Senior Notes and Exchange Senior Subordinated
Notes.
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
----------
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
----------
/ / CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
FLEET NATIONAL BANK
---------------------------------------------------------
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
Not applicable 04-317415
- ------------------------------- -----------------------------
(State of incorporation (I.R.S. Employer
if not a national bank) Identification No.)
One Monarch Place, Springfield, MA 01102
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Pat Beaudry, 777 Main Street, Hartford, CT 06115 (203) 728-2065
--------------------------------------------------------------
(Name, address and telephone number of agent for service)
Printpack, Inc.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Georgia 58-0673779
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4335 Wendell Drive, S.W.
Atlanta, Georgia 30336
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
9 7/8% Senior Notes due 2004
10 5/8% Senior Surbordinated Notes due 2006
------------------------------------------------------------------
(Title of the indenture securities)
<PAGE> 3
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject,
The Comptroller of the Currency,
Washington, D.C.
Federal Reserve Bank of Boston
Boston, Massachusetts
Federal Deposit Insurance Corporation
Washington, D.C.
(b) Whether it is authorized to exercise
corporate trust powers:
The trustee is so authorized.
Item 2. Affiliations with obligor and underwriter. If the obligor or
any underwriter for the obligor is an affiliate of the trustee,
describe each such affiliation.
None with respect to the trustee.
Item 16. List of exhibits.
List below all exhibits filed as a part of this statement of
eligibility and qualification.
(1) A copy of the Articles of Association of the trustee as
now in effect.
(2) A copy of the Certificate of Authority of the trustee
to do business.
(3) A copy of the Certification of Fiduciary Powers of the
trustee.
(4) A copy of the By-Laws of the trustee as now in effect.
(5) Consent of the trustee required by Section 321(b)
of the Act.
(6) A copy of the latest Consolidated Reports of Condition
and Income of the trustee published pursuant to law or
the requirements of its supervising or examining authority.
NOTES
In as much as this Form T-1 is filed prior to the ascertainment by the trustee
of all facts on which to base answers to Item 2, the answers to said Items are
based upon imcomplete information. Said Items may, however, be considered
correct unless amended by an amendment to this Form T-1.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
the trustee, Fleet National Bank, a national banking association organized and
existing under the laws of the United States, has duly caused this statement of
of eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Hartford, and State of
Connecticut, on the 19th day of September, 1996.
FLEET NATIONAL BANK,
AS TRUSTEE
By: /s/
-------------------------
Elizabeth C. Hammer
Its Vice President
<PAGE> 5
EXHIBIT 1
ARTICLES OF ASSOCIATION
OF
FLEET NATIONAL BANK
FIRST. The title of this Association, which shall carry on the business of
banking under the laws of the United States, shall be "Fleet National Bank."
SECOND. The main office of the Association shall be in Springfield, Hampden
County Commonwealth of Massachusetts. The general business of the Association
shall be conducted at its main office and its branches.
THIRD. The board of directors of this Association shall consist of not less
than five (5) nor more than twenty-five (25) shareholders, the exact number of
directors within such minimum and maximum limits to be fixed and determined
from time to time by resolution of a majority of the full board of directors or
by resolution of the shareholders at any annual or special meeting thereof.
Unless otherwise provided by the laws of the United States, any vacancy in the
board of directors for any reason, including an increase in the number thereof,
may be filled by action of the board of directors.
FOURTH. The annual meeting of the shareholders for the election of directors
and the transaction of whatever other business may be brought before said
meeting shall be held at the main office or such other place as the board of
directors may designate, on the day of each year specified therefore in the
bylaws, but if no election is held on that day, it may be held on any
subsequent day according to the provisions of law; and all elections shall be
held according to such lawful regulations as may be prescribed by the board of
directors.
FIFTH. The authorized amount of capital stock of this Association shall be
eight million five hundred thousand (8,500,000) shares of which three million
five hundred thousand (3,500,000) shares shall be common stock with a
par value of six and 25/100 dollars ($6.25) each, and of which five million
(5,000,000) shares without par value shall be preferred stock. The capital
stock may be increased or decreased from time to time, in accordance with
the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the Association shall
have any pre-emptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued or sold, nor
any right of subscription to any thereof other than such, if any, as the board
of directors, in its discretion, may from time to time determine and at such
price as the board of directors may from time to time fix.
<PAGE> 6
The board of directors of the Association is authorized, subject to limitations
prescribed by law and the provisions of this Article, to provide for the
issuance from time to time in one or more series of any number of the preferred
shares, and to establish the number of shares be included in each series, and
to fix the designation, relative rights, preferences, qualifications and
limitations of the shares of each such series. The authority of the board of
directors with respect to each series shall include, but not be limited to,
determination of the following:
a. The number of shares constituting that series and the distinctive
designation of that series;
b. The dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, from which date or dates, and whether they shall be
payable in preference to, or in another relation to, the dividends payable
to any other class or classes or series of stock;
c. Whether that series shall have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights;
d. Whether that series shall have conversion or exchange privileges, and,
if so, the terms and conditions of such conversion or exchange, including
provision for the adjustment of the conversion or exchange rate in such
events as the board of directors shall determine;
e. Whether or not the shares of that series shall be redeemable, and, if so,
the terms and conditions of such redemption, including the manner of
selecting shares for redemption if less than all shares are to be redeemed,
the date or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
f. Whether that series shall be entitled to the benefit of a sinking fund to
be applied to the purchase or redemption of shares of that series, and, if
so, the terms and amounts of such sinking fund;
g. The right of the shares of that series to the benefit of conditions and
restrictions upon the creation of indebtedness of the Association or any
subsidiary, upon the issue of any additional stock (including additional
shares of such series or of any other series) and upon the payment of
dividends or the making of other distributions on, and the purchase,
redemption or other acquisition by the Association or any subsidiary of
any outstanding stock of the Association;
h. The right of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Association and
whether such rights shall be in preference to, or in another relation to,
the comparable rights of any other class or classes or series of stock; and
i. Any other relative, participating, optional or other special rights,
qualifications, limitations or restrictions of that series.
Shares of any series of preferred stock which have been redeemed (whether
through the operation of a sinking fund or otherwise) or which, if convertible
or exchangeable, have been converted into or exchanged for shares of stock of
any other class or classes shall have the status of authorized and unissued
shares of preferred stock of the same series and may be reissued as a part of
the series of which they were originally a part or may be reclassified and
reissued as part of a new series of preferred stock to be created by resolution
or resolutions of the board of directors or as part of any other series or
preferred stock, all subject to the conditions and the restrictions adopted by
the board of directors providing for the issue of any series of preferred
stock and by the provisions of any applicable law.
Subject to the provisions of any applicable law, or except as otherwise
provided by the resolution or resolutions providing for the issue of any series
of preferred stock, the holders of outstanding shares of common stock shall
exclusively possess voting power for the election of directors and for all
purposes, each holder of record of shares of common stock being entitled to one
vote for each share of common stock standing in his name on the books of the
Association.
Except as otherwise provided by the resolution or resolutions providing for the
issue of any series of preferred stock, after payment shall have been made to
the holders of preferred stock of the full amount of dividends to which they
shall be entitled pursuant to the resolution or resolutions providing for the
issue of any other series of preferred stock, the holders of common stock shall
be entitled, to the exclusion of the holders of preferred stock of any and all
series, to receive such dividends as from time to time may be declared by the
board of directors.
Except as otherwise provided by the resolution or resolutions for the issue
of any series of preferred stock, in the event of any liquidation, dissolution
or winding up of the Association, whether voluntary or involuntary, after
payment shall have been made to the holders of preferred stock of the full
amount to which they shall be entitled pursuant to the resolution or
resolutions providing for the issue of any series of preferred stock the
holders of common stock shall be entitled, to the exclusion of the holders of
preferred stock of any and all series, to share, ratable according to the
number of shares of common stock held by them, in all remaining assets of the
Association available for distribution to its shareholders.
The number of authorized shares of any class may be increased or decreased by
the affirmative vote of the holders of a majority of the stock of the
Association entitled to vote.
<PAGE> 7
SIXTH. The board of directors shall appoint one of its members president of
this Association, who shall be chairman of the board, unless the board appoints
another director to be the chairman. The board of directors shall have the
power to appoint one or more vice presidents; and to appoint a secretary and
such other officers and employees as may be required to transact the business
of this Association.
The board of directors shall have the power to define the duties of the
officers and employees of the Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all bylaws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a board of
directors to do and perform.
SEVENTH. The board of directors shall have the power to change the location of
the main office to any other place within the limits of the City of Hartford,
Connecticut, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The board of directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than ten percent (10%) of the
stock of this Association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place and purpose of every annual and special meeting of the
shareholders shall be given by first class mail, postage prepaid, mailed at
least ten (10) days prior to the date of such meeting to each shareholder of
record at his address as shown upon the books of this Association.
TENTH. (a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director, officer or employee of the Association or is or was
serving at the request of the Association as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, limited
liability company, trust, or other enterprise, including service with respect
to an employee benefit plan, shall be indemnified and held harmless by the
Association to the fullest extent authorized by the law of the state in which
the Association's ultimate parent company is incorporated, except as provided
in subsection (b). The aforesaid indemnity shall protect the indemnified
person against all expense, liability and loss (including attorney's fees,
judgements, fines ERISA excise taxes or penalties, and amounts paid in
settlement) reasonably incurred by such person in connection with such a
proceeding. Such indemnification shall continue as to a person who has ceased
to be a director, officer or employee and shall inure to the benefit of his or
her heirs, executors, and administrators, but shall only cover such person's
period of service with the Association. The Association may, by action of its
Board of Directors, grant rights to indemnification to agents of the
Association and to any director, officer, employee or agent of any of its
subsidiaries with the same scope and effect as the foregoing indemnification
of directors and officers.
(b) Restrictions on Indemnification. Notwithstanding the foregoing, (i) no
person shall be indemnified hereunder by the Association against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by a federal bank regulatory agency which proceeding or action
results in a final order assessing civil money penalties against that person,
requiring affirmative action by that person in the form of payments to the
Association, or removing or prohibiting that person from service with the
Association, and any advancement of expenses to that person in that proceeding
must be repaid; and (ii) no person shall be indemnified hereunder by the
Association and no advancement of expenses shall be made to any person
hereunder to the extent such indemnification or advancement of expenses would
violate or conflict with any applicable federal statute now or hereafter in
force or any applicable final regulation or interpretation now or hereafter
adopted by the Office of the Comptroller of the Currency ("OCC") or the Federal
Deposit Insurance Corporation ("FDIC"). The Association shall comply with any
requirements imposed on it by any such statue or regulation in connection with
any indemnification or advancement of expenses hereunder by the Association.
With respect to proceedings to enforce a claimant's rights to indemnification,
the Association shall indemnify any such claimant in connection with such a
proceeding only as provided in subsection (d) hereof.
(c) Advancement of Expenses. The conditional right to indemnification
conferred in this section shall be a contract right and shall include the
right to be paid by the Association the reasonable expenses (including
attorney's fees) incurred in defending a proceeding in advance of its final
disposition (an "advancement of expenses"); provided, however, that an
advancement of expenses shall be made only upon (i) delivery to the Association
of a binding written undertaking by or on behalf of the person receiving the
advancement to repay all amounts so advanced if it is ultimately determined
that such person is not entitled to be indemnified in such proceeding,
including if such proceeding results in a final order assessing civil money
penalties against that person, requiring affirmative action by that person
in the form of payments to the Association, or removing or prohibiting that
person from service with the Association, and (ii) compliance with any other
actions or determinations required by applicable law, regulation or OCC or FDIC
interpretation to be taken or made by the Board of Directors of the Association
or other persons prior to an advancement of expenses. The Association shall
cease advancing expenses at any time its Board of Directors believes that any
of the prerequisites for advancement of expenses are no longer being met.
(d) Right of Claimant to Bring Suit. If a claim under subsection (a) of the
section is not paid in full by the Association within thirty (30) days after
written claim has been received by the Association, the claimant may at any time
thereafter bring suit against the Association to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a
suit brought by the Association to recover an advancement of expenses pursuant
to the terms of an undertaking, the claimant shall be entitled to be paid also
the expense of prosecuting or defending such claim. It shall be a defense to
any such action brought by the claimant to enforce a right to indemnification
hereunder (other than an action brought to enforce a claim for an advancement
of expenses where the required undertaking, if any, has been tendered to the
Association) that the claimant has not met any applicable standard for
indemnification under the law of the state in which the Association's ultimate
parent company is incorporated. In any suit brought by the Association to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Association shall be entitled to recover such expenses upon a final
adjudication that the claimant has not met any applicable standard for
indemnification standard for indemnification under the law of the state in
which the Association's ultimate parent company is incorporated.
(e) Non-Exclusivity of Rights. The rights to indemnification and the
advancement of expenses conferred in this section shall not be exclusive of any
other right which any person may have or hereafter acquired under any statute,
agreement, vote of stockholders or disinterested directors or otherwise.
(f) Insurance. The Association may purchase, maintain, and make payment or
reimbursement for reasonable premiums on, insurance to protect itself and any
director, officer, employee or agent of the Association or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Association would have the power to
indemnify such person against such expense, liability or loss under the law of
the state in which the Association's ultimate parent company is incorporated;
provided however, that such insurance shall explicitly exclude insurance
coverage for a final order of a federal bank regulatory agency assessing civil
money penalties against an Association director, officer, employee or agent.
ELEVENTH. These articles of association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount. The notice of any shareholders' meeting at
which an amendment to the articles of association of this Association is to be
considered shall be given as hereinabove set forth.
I hereby certify that the articles of association of this Association, in their
entirety, are listed above in items first through eleventh.
/s/ Secretary/Assistant Secretary
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Dated at , as of .
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Revision of February 15, 1996
<PAGE> 8
EXHIBIT 2
[LOGO]
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COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
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Washington, D.C. 20219
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
that:
(1) The Comptroller of the Currency, pursuant to Revised Statutes
324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession,
custody and control of all records pertaining to the chartering, regulation and
supervision of all National Banking Associations.
(2) "Fleet National Bank", Springfield, Massachusetts
(Charter No. 1338), is a National Banking Association formed under the
laws of the United States and is authorized thereunder to transact the
business of banking on the date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at
the Treasury Department, in the City of
Washington and District of Columbia, this
14th day of August, 1996.
/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency
<PAGE> 9
EXHIBIT 3
[LOGO]
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COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
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Washington, D.C. 20219
Certification of Fiduciary Powers
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
the records in this Office evidence "Fleet National Bank",
Springfield, Massachusetts, (Charter No. 1338), was granted, under the hand
and seal of the Comptroller, the right to act in all fiduciary capacities
authorized under the provisions of The Act of Congress approved
September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a. I further certify the
authority so granted remains in full force and effect.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
Office of the Comptroller of the Currency
to be affixed to these presents at the
Treasury Department, in the City of
Washington and District of Columbia, this
14th day of August, 1996.
/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency
<PAGE> 10
EXHIBIT 4
AMENDED AND RESTATED BY-LAWS OF
FLEET NATIONAL BANK
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The regular annual meeting of the shareholders for
the election of Directors and the transaction of any other business that may
properly come before the meeting shall be held at the Main Office of the
Association, or such other place as the Board of Directors may designate, on
the fourth Thursday of April in each year at 1:15 o'clock in the afternoon
unless some other hour of such day is fixed by the Board of Directors.
If, from any cause, an election of Directors is not made on such day, the Board
of Directors shall order the election to be held on some subsequent day, of
which special notice shall be given in accordance with the provisions of law,
and of these bylaws.
Section 2. Special Meetings. Special meetings of the shareholders may be called
at any time by the Board of Directors, the President, or any shareholders
owning not less than twenty-five percent (25%) of the stock of the Association.
Section 3. Notice of Meetings of Shareholders. Except as otherwise provided
by law, notice of the time and place of annual or special meetings of the
shareholders shall be mailed, postage prepaid, at least ten (10) days before
the date of the meeting to each shareholder of record entitled to vote thereat
at his address as shown upon the books of the Association; but any failure to
mail such notice to any shareholder or any irregularity therein, shall not
affect the validity of such meeting or of any of the proceedings thereat.
Notice of a special meeting shall also state the purpose of the meeting.
Section 4. Quorum; Adjourned Meetings. Unless otherwise provided by law, a
quorum for the transaction of business at every meeting of the shareholders
shall consist of not less than two-fifths (2/5) of the outstanding capital
stock represented in person or by proxy; less than such quorum may adjourn the
meeting to a future time. No notice need be given of an adjourned annual or
special meeting of the shareholders if the adjournment be to a definite place
and time.
Section 5. Votes and Proxies. At every meeting of the shareholders, each
share of the capital stock shall be entitled to one vote except as otherwise
provided by law. A majority of the votes cast shall decide every question
or matter submitted to the shareholder at any meeting, unless otherwise
provided by law or by the Articles of Association or these By-laws. Share-
holders may vote by proxies duly authorized in writing and filed with the
Cashier, but no officer, clerk, teller or bookeeper of the Association may act
as a proxy.
<PAGE> 11
Section 6. Nominations to Board of Directors. At any meeting of shareholders
held for the election of Directors, nominations for election to the Board of
Directors may be made, subject to the provisions of this section, by any share-
holder of record of any outstanding class of stock of the Association entitled
to vote for the election of Directors. No person other than those whose names
are stated as proposed nominees in the proxy statement accompanying the notice
of the meeting may be nominated as such meeting unless a shareholder shall have
given to the President of the Association and to the Comptroller of the
Currency, Washington, DC written notice of intention to nominate such other
person mailed by certified mail or delivered not less than fourteen (14) days
nor more than fifty (50) days prior to the meeting of shareholders at which
such nomination is to be made; provided, however, that if less than twenty-one
(21) days' notice of such meeting is given to shareholders, such notice of
intention to nominate shall be mailed by certified mail or delivered to said
President and said Comptroller on or before the seventh day following the day
on which the notice of such meeting was mailed. Such notice of intention to
nominate shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the Association that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the Association owned by the
notifying shareholder. In the event such notice is given, the proposed nominee
may be nominated either by the shareholder giving such notice or by any other
shareholder present at the meeting at which such nomination is to be made.
Such notice may contain the names of more than one proposed nominee, and if
more than one is named, any one or more of those named may be nominated.
Section 7. Action Taken Without a Shareholder Meeting. Any action requiring
shareholder approval or consent may be taken without a meeting and without
notice of such meeting by written consent of the shareholders.
ARTICLE II
DIRECTORS
Section 1. Number. The Board of Directors shall consist of such number of
shareholders, not less than five (5) nor more than twenty-five (25), as from
time to time shall be determined by a majority of the votes to which all of its
shareholders are at the time entitled, or by the Board of Directors as
hereinafter provided.
Section 2. Mandatory Retirement for Directors. No person shall be elected a
director who has attained the age of 68 and no person shall continue to serve
as a director after the date of the first meeting of the stockholders of the
Association held on or after the date on which such person attains the age of
68; provided, however, that any director serving on the Board as of December
15, 1995 who has attanined the age of 65 on or prior to such date shall be
permitted to continue to serve as a director until the date of the first
meeting of the stockholders of the Association held on or after the date on
which such person attains the age of 70.
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<PAGE> 12
Section 3. General Powers. The Board of Directors shall exercise all the
coporate powers of the Association, except as expressly limited by law, and
shall have the control, management, direction and dispositon of all its
property and affairs.
Section 4. Annual Meeting. Immediately following a meeting of shareholders
held for the election of Directors, the Cashier shall notify the directors-
elect who may be present of their election and they shall then hold a meeting
at the Main Office of the Association, or such other place as the Board of
Directors may designate, for the purpose of taking their oaths, organizing the
new Board, electing officers and transacting any other business that may come
before such meeting.
Section 5. Regular Meeting. Regular meetings of the Board of Directors shall
be held without notice at the Main Office of the Association, or such other
place as the Board of Directors may designate, at such dates and times as the
Board shall determine. If the day designated for a regular meeting falls on a
legal holiday, the meeting shall be held on the next business day.
Section 6. Special Meetings. A special meeting of the Board of Directors may
be called at anytime upon the written request of the Chairman of the Board, the
President, or of two Directors, stating the purpose of the meeting. Notice of
the time and place shall be given not later than the day before the date of the
meeting, by mailing a notice to each Director at his last known address, by
delivering such notice to him personally, or by telephoning.
Section 7. Quorum; Votes. A majority of the Board of Directors at the time
holding office shall constitute a quorum for the transaction of all business,
except when otherwise provided by law, but less than a quorum may adjourn
a meeting from time to time, and the meeting may be held, as adjourned, without
further notice. If a quorum is present when a vote is taken, the affirmative
vote of a majority of Directors present is the act of the Board of Directors.
Section 8. Action by Directors Without a Meeting. Any action requiring
Director approval or consent may be taken without a meeting and without notice
of such meeting by written consent of all the Directors.
Section 9. Telephonic Participation in Directors' Meetings. A Director or
member of a Committee of the Board of Directors may participate in a meeting of
the Board or of such Committee may participate in a meeting of the Board or of
such Committee by means of a conference telephone or similar communications
equipment enabling all Directors participating in the meeting to hear one
another, and participation in such a meeting shall constitute presence in person
at such a meeting.
Section 10. Vacancies. Vacancies in the Board of Directors may be filled by
the remaining members of the Board at any regular or special meeting of the
Board.
Section 11. Interim Appointments. The Board of Directors shall, if the share-
holders at any meeting for the election of Directors have determined a number
of Directors less than twenty-five (25), have the power, by affirmative vote of
the majority of all the Directors, to increase such number of Directors to not
more than twenty-five (25) and to elect Directors to fill the resulting
vacancies and to serve until the next annual meeting of shareholders or the
next election of Directors; provided, however, that the number of Directors
shall not be so increased by more than two (2) if the number last determined
by shareholders was fifteen (15) or less, or increased by more than four (4) if
the number last determined by shareholders was sixteen (16) or more.
Section 12. Fees. The Board of Directors shall fix the amount and direct the
payment of fees which shall be paid to each Director for attendance at any
meeting of the Board of Directors or of any Committees of the Board.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Executive Committee. The Board of Directors shall appoint from its
members an Executive Committee which shall consist of such number of persons as
the Board of Directors shall determine; the Chairman of the Board and the
President shall be members ex-officio of the Executive Committee with full
voting power. The Chairman of the Board or the President may from time to time
appoint from the Board of Directors as temporary additional members of the
Executive Committee, with full voting powers, not more than two members to serve
for such periods as the Chairman of the Board or the President may determine.
The Board of Directors shall designate a member of the Executive Committee to
serve as Chairman thereof. A meeting of the Executive Committee may be called
at any time upon the written request of the Chairman of the Board, the President
or the Chairman of the Executive Committee, stating the purpose of the meeting.
Not less than twenty four hours' notice of said meeting shall be given to each
member of the Committee personally, by telephoning, or by mail. The Chairman of
the Executive Committee or, in his absence, a member of the Committee chosen by
a majority of the members present shall preside at meetings of the Executive
Committee.
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<PAGE> 13
The Executive Committee shall possess and may exercise all the powers of the
Board when the Board is not in session except such as the Board, only, by law,
is authorized to exercise; it shall keep minutes of its acts and proceedings
and cause same to be presented and reported at every regular meeting and at any
special meeting of the Board including specifically, all its actions relating
to loans and discounts.
All acts done and powers and authority conferred by the Executive Committee,
from time to time, within the scope of its authority, shall be deemed to be,
and may be certified as being, the acts of and under the authority of the
Board.
Section 2. Risk Management Committee. The Board shall appoint from its
members a Risk Management Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Risk
Management Committee to serve as Chairman thereof. It shall be the duty of the
Risk Management Committee to (a) serve as the channel of communication with
management and the Board of Directors of Fleet Financial Group, Inc. to assure
that formal processes supported by management information systems are in place
for the identification, evaluation and management of significant risks inherent
in or associated with lending activities, the loan portfolio, asset-liablity
management, the investment portfolio, trust and investment advisory activities,
the sale of nondeposit investment products and new products and services and
such additional activities or functions as the Board may determine from time
to time; (b) assure the formulation and adoption of policies approved by the
Risk Management Committee or Board governing lending activities, management of
the loan portfolio, the maintenance of an adequate allowance for loan and lease
losses, asset-liability management, the investment portfolio, the retail
sale of non-deposit investment products, new products and services and such
additional activities or functions as the Board may determine from time to time
(c) assure that a comprehensive independent loan review program is in place for
the early detection of problem loans and review significant reports of the loan
review department, management's responses to those reports and the risk
attributed to unresolved issues; (d) subject to control of the Board, exercise
general supervision over trust activities, the investment of trust funds, the
disposition of trust investments and the acceptance of new trusts and the terms
of such acceptance, and (e) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 3. Audit Committee. The Board shall appoint from its members and
Audit Committee which shall consist of such number as the Board shall determine
no one of whom shall be an active officer or employee of the Association or
Fleet Financial Group, Inc. or any of its affiliates. In addition, members of
the Audit Committee must not (i) have served as an officer or employee of the
Association or any of its affiliates at any time during the year prior to their
appointment; or (ii) own, control, or have owned or controlled at any time
during the year prior to appointment, ten percent (10%) or more of any
outstanding class of voting securities of the Association. At least two (2)
members of the Audit Committee must have significant executive, professional,
educational or regulatory experience in financial, auditing, accounting,
or banking matters. No member of the Audit Commitee may have significant
direct or indirect credit or other relationships with the Association, the
termination of which would materially adversely affect the Association's
financial condition or results of operations.
The Board shall designate a member of the Audit Committee to serve as Chairman
thereof. It shall be the duty of the Audit Committee to (a) cause a continuous
audit and examination to be made on its behalf into the affairs of the
Association and to review the results of such examination; (b) review
significant reports of the internal auditing department, management's responses
to those reports and the risk attributed to unresolved issues; (c) review the
basis for the reports issued under Section 112 of The Federal Deposit Insurance
Corporation Improvement Act of 1991; (d) consider, in consultation with the
independent auditor and an internal auditing executive, the adequacy of the
Association's internal controls, including the resolution of identified material
weakness and reportable conditions; (e) review regulatory communications
received from any federal or state agency with supervisory jurisdiction or
other examining authority and monitor any needed corrective action by
management; (f) ensure that a formal system of internal controls is in place
for maintaining compliance with laws and regulations; (g) cause an audit of the
Trust Department at least once during each calendar year and within 15 months
of the last such audit or, in liew thereof, adopt a continuous audit system and
report to the Board each calendar year and within 15 months of the previous
report on the performance of such audit function; and (h) perform such
additional duties and exercise such additional powers of the Board as the Board
may determine from time to time.
The Audit Committee may consult with internal counsel and retain its own
outside counsel without approval (prior or otherwise) from the Board or
management and obligate the Association to pay the fees of such counsel.
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<PAGE> 14
Section 4. Community Affairs Committee. The Board shall appoint from its
members a Community Affairs Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Community
Affairs Committee to serve as Chairman thereof. It shall be the duty of the
Commmunity Affairs Committee to (a) oversee compliance by the Association with
the Community Reinvestment Act of 1977, as amended, and the regulations
promulgated thereunder; and (b) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 5. Regular Meetings. Except for the Executive Committee which shall
meet on an ad hoc basis as set forth in Section 1 of this Article, regular
meetings of the Committees of the Board of Directors shall be held, without
notice, at such time and place as the Committee or the Board of Directors may
appoint and as often as the business of the Association may require.
Section 6. Special Meetings. A Special Meeting of any of the Committees of
the Board of Directors may be called upon the written request of the Chairman
of the Board or the President, or of any two members of the respective
Committee, stating the purpose of the meeting. Not less than twenty-four
hours' notice of such special meeting shall be given to each member of the
Committee personally, by telephoning, or by mail.
Section 7. Emergency Meetings. An Emergency Meeting of any of the Committees
of the Board of Directors may be called at the request of the Chairman of the
Board or the President, who shall state that an emergency exists, upon not
less than one hour's notice to each member of the Committee personally or by
telephoning.
Section 8. Action Taken Without a Committee Meeting. Any Committee of the
Board of Directors may take action without a meeting and without notice of such
meeting by resolution assented to in writing by all members of such Committee.
Section 9. Quorum. A majority of a Committee of the Board of Directors shall
constitute a quorum for the transaction of any business at any meeting of such
Committee. If a quorum is not available, the Chairman of the Board or the
President shall have power to make temporary appointments to a Committee of-
members of the Board of Directors, to act in the place and stead of members who
temporarily cannot attend any such meeting; provided, however, that any
temporary appointment to the Audit Committee must meet the requirements for
members of that Committee set forth in Section 3 of this Article.
Section 10. Record. The committes of the Board of Directors shall keep a
record of their respective meetings and proceedings which shall be presented
at the regular meeting of the Board of Directors held in the calendar month
next following the meetings of the Committees. If there is no regular Board
of Directors meeting held in the calendar month next following the meeting of
a Committee, then such Committee's records shall be presented at the next
regular Board of Directors meeting held in a month subsequent to such Committee
meeting.
Section 11. Changes and Vacancies. The Board of Directors shall have power
to change the members of any Committee at any time and to fill vacancies on any
Committee; provided, however, that any newly appointed member of the Audit
Committee must meet the requirements for members of that Committee set forth in
Section 3 of this Article.
Section 12. Other Committees. The Board of Directors may appoint, from time
to time, other committees of one or more persons, for such purposes and with
such powers as the Board may determine.
ARTICLE IV
WAIVER OF NOTICE OF MEETINGS
Section 1. Waiver. Whenever notice is required to be given to any shareholder,
Director, or member of a Committee of the Board of Directors, such notice may
be waived in writing either before or after such meeting by any shareholder,
Director or Committee member respectively, as the case may be, who may be
entitled to such notice; and such notice will be deemed to be waived by
attendance at any such meeting.
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<PAGE> 15
ARTICLE V
OFFICERS AND AGENTS
Section 1. Officers. The Board shall appoint a Chairman of the Board and a
President, and shall have the power to appoint one or more Executive Vice
Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a
Cashier, a Secretary, an Auditor, a Controller, one or more Trust Officers and-
such other officers as are deemed necessary or desirable for the proper
transaction of business of the Association. The Chairman of the Board and the
President shall be appointed from members of the Board of Directors. Any two
or more offices, except those of President and Cashier, or Secretary, may be
held by the same person. The Board may, from time to time, by resolution
passed by a majority of the entire Board, designate one or more officers of the
Association or of an affiliate or of Fleet Financial Group, Inc. with power to
appoint one or more Vice Presidents and such other officers of the Association
below the level of Vice President as the officer or officers designated in such
resolution deem necessary or desirable for the proper transaction of the
business of the Association.
Section 2. Chairman of the Board. The chairman of the Board shall preside at
all meetings of the Board of Directors. Subject to definition by the Board of
Directors, he shall have general executive powers and such specific powers and
duties as from time to time may be conferred upon or assigned to him by the
Board of Directors.
Section 3. President. The President shall preside at all meetings of the
Board of Directors if there be no Chairman or if the Chairman be absent.
Subject to definition by the Board of Directors, he shall have general
executive powers and such specific powers and duties as from time to time may
be conferred upon or assigned to him by the Board of Directors.
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<PAGE> 16
Section 4. Cashier and Secretary. The Cashier shall be the Secretary of the
Board and of the Executive Committee, and shall keep accurate minutes of their
meetings and of all meetings of the shareholders. He shall attend to the
giving of all notices required by these By-laws. He shall be custodian of the
corporate seal, records, documents and papers of the Association. He shall
have such powers and perform such duties as pertain by law or regulation to the
office of Cashier, or as are imposed by these By-laws, or as may be delegated
to him from time to time by the Board of Directors, the Chairman of the Board
or the President.
Section 5. Auditor. The Auditor shall be the chief auditing officer of the
Association. He shall continuously examine the affairs of the Association and
from time to time shall report to the Board of Directors. He shall have such
powers and perform such duties as are conferred upon, or assigned to him by
these By-laws, or as may be delegated to him from time to time by the Board
of Directors.
Section 6. Officers Seriatim. The Board of Directors shall designate from
time to time not less than two officers who shall in the absence or disability
of the Chairman or President or both, succeed seriatim to the duties and
responsibilities of the Chairman and President respectively.
Section 7. Clerks and Agents. The Board of Directors may appoint, from time
to time, such clerks, agents and employees as it may deem advisable for the
prompt and orderly transaction of the business of the Association, define
their duties, fix the salaries to be paid them and dismiss them. Subject to
the authority of the Board of Directors, the Chairman of the Board or the
President, or any other officer of the Association authorized by either of them
may appoint and dismiss all or any clerks, agents and employees and prescribe
their duties and the conditions of their employment, and from time to time
fix their compensation.
Section 8. Tenure. The Chairman of the Board of Directors and the President
shall, except in the case of death, resignation, retirement or disqualification
under these By-laws, or unless removed by the affirmative vote of at least two-
thirds of all of the members of the Board of Directors, hold office for the
term of one year or until their respective successors are appointed. Either
of such officers appointed to fill a vacancy occurring in an unexpired term
shall serve for such unexpired term of such vacancy. All other officers,
clerks, agents, attorneys-in-fact and employees of the Association shall hold
office during the pleasure of the Board of Directors or of the officer or
committee appointing them respectively.
ARTICLE VI
TRUST DEPARTMENT
Section 1. General Powers and Duties. All fiduciary powers of the Association
shall be exercised through the Trust Department, subject to such regulations as
the Comptroller of the Currency shall from time to time establish. The Trust
Department shall be to placed under the management and immediate supervision
of an officer or officers appointed by the Board of Directors. The duties of
all officers of the Trust Department shall be to cause the policies and
instructions of the Board and the Risk Management Committee with respect to the
trusts under their supervision to be carried out, and to supervise the due
performance of the trusts and agencies entrusted to the Association and under
their supervision, in accordance with law and in accordance with the terms of
such trusts and agencies.
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<PAGE> 17
ARTICLE VII
BRANCH OFFICES
Section 1. Establishment. The Board of Directors shall have full power to
establish, to discontinue, or, from time to time, to change the location of any
branch office, subject to such limitations as may be provided by law.
Section 2. Supervision and Control. Subject to the general supervision and
control of the Board of Directors, the affairs of branch offices shall be
under the immediate supervision and control of the President or of such other
officer or officers, employee or employees, or other individuals as the Board
of Directors may from time to time determine, with such powers and duties as
the Board of Directors may confer upon or assign to him or them.
ARTICLE VIII
SIGNATURE POWERS
Section 1. Authorization. The power of officers, employees, agents and
attorneys to sign on behalf of and to affix the seal of the Association shall
be prescribed by the Board of Directors or by the Executive Committee or by
both; provided that the President is authorized to restrict such power of any
officer, employee, agent or attorney to the business of a specific department
or departments, or to a specific branch office or branch offices. Facsimile
signatures may be authorized.
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<PAGE> 18
ARTICLE IX
STOCK CERTIFICATES AND TRANSFERS
Section 1. Stock Records. The Trust Department shall have custody of the
stock certificate books and stock ledgers of the Association, and shall make
all transfers of stock, issue certificates thereof and disburse dividends
declared thereon.
Section 2. Form of Certificate. Every shareholder shall be entitled to a
certificate conforming to the requirements of law and otherwise in such form
as the Board of Directors may approve. The certificates shall state on the
face thereof that the stock is transferable only on the books of the
Association and shall be signed by such officers as may be prescribed from time
to time by the Board of Directors or Executive Committee. Facsimile signatures
may be authorized.
Section 3. Transfers of Stock. Transfers of stock shall be made only on the
books of the Association by the holder in person, or by attorney duly
authorized in writing, upon surrender of the certificate therefor properly
endorsed, or upon the surrender of such certificate accompanied by a properly
executed written assignment of the same, or a written power of attorney to
sell, assign or transfer the same or the shares represented thereby.
Section 4. Lost Certificate. The Board of Directors or Executive Committee
may order a new certificate to be issued in place of a certificate lost or
destroyed, upon proof of such loss or destruction and upon tender to the
Association by the shareholder, of a bond in such amount and with or without
surety, as may be ordered, indemnifying the Association against all liability,
loss, cost and damage by reason of such loss or destruction and the issuance
of a new certificate.
Section 5. Closing Transfer Books. The Board of Directors may close the
transfer books for a period not exceeding thirty days preceding any regular
or special meeting of the shareholders, or the day designated for the payment
of a dividend or the allotment of rights. In lieu of closing the transfer
books the Board of Directors may fix a day and hour not more than thirty days
prior to the day of holding any meeting of the shareholders, or the day
designated for the payment of a dividend, or the day designated for the
allotment of rights, or the day when any change of conversion or exchange of
capital stock is to go into effect, as the day as of which shareholders
entitled to notice of and to vote at such meetings or entitled to such dividend
or to such allotment of rights or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, shall be determined, and
only such shareholders as shall be shareholders of record on the day and hour
so fixed shall be entitled to notice of and to vote at such meeting or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights, as the case may be.
ARTICLE X
THE CORPORATE SEAL
Section 1. Seal. The following is an impression of the seal of the
Association adopted by the Board of Directors.
ARTICLE XI
BUSINESS HOURS
Section 1. Business Hours. The main office of this Association and each
branch office thereof shall be open for business on such days, and for such
hours as the Chairman, or the President, or any Executive Vice President, or
such other officer as the Board of Directors shall from time to time
designate, may determine as to each office to conform to local custom and
convenience, provided that any one or more of the main and branch offices or
certain departments thereof may be open for such hours as the President, or
such other officer as the Board of Directors shall from time to time designate,
may determine as to each office or department on any legal holiday on which
work is not prohibited by law, and provided further that any one or more of
the main and branch offices or certain departments thereof may be ordered
closed or open on any day for such hours as to each office or department as
the President, or such other officer as the Board of Directors shall from time
to time designate, subject to applicable laws regulations, may determine when
such action may be required by reason of disaster or other emergency condition.
ARTICLE IX
CHANGES IN BY-LAWS
Section 1. Amendments. These By-laws may be amended upon vote of a majority
of the entire Board of Directors at any meeting of the Board, provided ten (10)
day's notice of the proposed amendment has been given to each member of the
Board of Directors. No amendment may be made unless the By-law, as amended, is
consistent with the requirements of law and of the Articles of Association.
These By-laws may also be amended by the Association's shareholders.
A true copy
Attest:
/s/ Secretary/Assistant Secretary
- ---------------------------------------
Dated at , as of .
--------------------------------------- ----------------------
Revision of January 11, 1993
-9-
<PAGE> 19
EXHIBIT 5
CONSENT OF THE TRUSTEE
REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939
The undersigned, as Trustee under the Indenture to be entered into between
Printpack, Inc. and Fleet National Bank, as Trustee,
does hereby consent that, pursuant to Section 321(b) of the Trust Indenture
Act of 1939, reports of examinations with respect to the undersigned by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
FLEET NATIONAL BANK,
AS TRUSTEE
By /s/ Elizabeth C. Hammer
-------------------------------
Elizabeth C. Hammer
Its: Vice President
Dated:
<PAGE> 20
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 1999
Federal Financial Institutions Examination Council
- --------------------------------------------------------------------------------
[FEDERAL FINANCIAL Please refer to page i, [1]
INSTITUTIONS EXAMINATION Table of Contents, for
COUNCIL LOGO] the required disclosure
of estimated burden.
- --------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(960630)
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 -----------
(RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State member banks);
12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, Giro S. DeRosa, Vice President
-----------------------------------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and
Income (including the supporting schedules) have been prepared in conformance
with the instructions issued by the appropriate Federal regulatory authority
and are true to the best of my knowledge and belief.
/s/ Giro DeRosa
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
July 25, 1996
- --------------------------------------------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in
some cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/
- --------------------------------------------------------------------------------
Director (Trustee)
/s/
- --------------------------------------------------------------------------------
Director (Trustee)
/s/
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
For Banks Submitting Hard Copy Report Forms:
State Member Banks: Return the original and one copy to the appropriate Federal
Reserve District Bank.
State Nonmember Banks: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
National Banks: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- --------------------------------------------------------------------------------
FDIC Certificate Number | 0 | 2 | 4 | 9 | 9 | Banks should affix
--------------------- the address label
(RCRI 90150) in this space.
CALL NO. 196 31 06-30-96
STAR: 25-0590 00327 STCERT: 25-02490
FLEET NATIONAL BANK
ONE MONARCH PLACE
SPRINGFIELD, MA 01102
Board of Governors of the Federal Reserve System, Federal Deposit
Insurance Corporation, Office of the Comptroller of the Currency
<PAGE> 21
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal
Reserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
NATIONAL BANKS: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
___ ___
FDIC Certificate Number | 0 | 2 | 4 | 9 | 9 | | Banks should affix the address label in this space. |
______________________
(RCRI 9050) CALL NO. 196 31 06-30-96
STBK: 25-0590 00327 STCERT: 25-02499
FLEET NATIONAL BANK
ONE MONARCH PLACE
SPRINGFIELD, MA 01102
|___ ___|
</TABLE>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE> 22
FFIEC 031
Page i
/2/
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
________________________________________________________________________________
TABLE OF CONTENTS
SIGNATURE PAGE Cover
REPORT OF INCOME
Schedule RI--Income Statement...........................................RI-1,2,3
Schedule RI-A--Changes in Equity Capital....................................RI-4
Schedule RI-B--Charge-offs and Recoveries and
Changes in Allowance for Loan and Lease
Losses..................................................................RI-4,5
Schedule RI-C--Applicable Income Taxes by
Taxing Authority..........................................................RI-5
Schedule RI-D--Income from
International Operations..................................................RI-6
Schedule RI-E--Explanations...............................................RI-7,8
REPORT OF CONDITION
Schedule RC--Balance Sheet................................................RC-1,2
Schedule RC-A--Cash and Balances Due
From Depository Institutions..............................................RC-3
Schedule RC-B--Securities...............................................RC-3,4,5
Schedule RC-C--Loans and Lease Financing
Receivables:
Part I. Loans and Leases..............................................RC-6,7
Part II. Loans to Small Businesses and
Small Farms (included in the forms for
June 30 only).....................................................RC-7a,7b
Schedule RC-D--Trading Assets and Liabilities
(to be completed only by selected banks)..................................RC-8
Schedule RC-E--Deposit Liabilities....................................RC-9,10,11
Schedule RC-F--Other Assets................................................RC-11
Schedule RC-G--Other Liabilities...........................................RC-11
Schedule RC-H--Selected Balance Sheet Items for
Domestic Offices.........................................................RC-12
Schedule RC-I--Selected Assets and Liabilities
of IBFs..................................................................RC-13
Schedule RC-K--Quarterly Averages..........................................RC-13
Schedule RC-L--Off-Balance Sheet Items...............................RC-14,15,16
Schedule RC-M--Memoranda................................................RC-17,18
Schedule RC-N--Past Due and Nonaccrual Loans,
Leases, and Other Assets..............................................RC-19,20
Schedule RC-O--Other Data for Deposit
Insurance Assessments.................................................RC-21,22
Schedule RC-R--Regulatory Capital.......................................RC-23,24
Optional Narrative Statement Concerning the
Amounts Reported in the Reports of
Condition and Income.....................................................RC-25
Special Report (TO BE COMPLETED BY ALL BANKS)
Schedule RC-J--Repricing Opportunities (sent only to
and to be completed only by savings banks)
DISCLOSURE OF ESTIMATED BURDEN
The estimated average burden associated with this information collection is
32.2 hours per respondent and is estimated to vary from 15 to 230 hours per
response, depending on individual circumstances. Burden estimates include the
time for reviewing instructions, gathering and maintaining data in the required
form, and completing the information collection, but exclude the time for
compiling and maintaining business records in the normal course of a
respondent's activities. Comments concerning the accuracy of this burden
estimate and suggestions for reducing this burden should be directed to the
Office of Information and Regulatory Affairs, Office of Management and Budget,
Washington, D.C. 20503, and to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
For information or assistance, National and State nonmember banks should
contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington,
D.C. 20429, toll free on (800) 688-FDIC (3342), Monday through Friday between
8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<PAGE> 23
<TABLE>
<CAPTION>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-1
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
Consolidated Report of Income
for the period January 1, 1996 - June 30, 1996
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
<TABLE>
<CAPTION>
Schedule RI--Income Statement _________
| I480 |
______________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________|_____________________|
<S> <C> <C>
1. Interest income: | ////////////////// |
a. Interest and fee income on loans: | ////////////////// |
(1) In domestic offices: | ////////////////// |
(a) Loans secured by real estate .................................................. | 4011 616,395 | 1.a.(1)(a)
(b) Loans to depository institutions .............................................. | 4019 588 | 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers ........... | 4024 286 | 1.a.(1)(c)
(d) Commercial and industrial loans ............................................... | 4012 562,807 | 1.a.(1)(d)
(e) Acceptances of other banks .................................................... | 4026 261 | 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expenditures: | ////////////////// |
(1) Credit cards and related plans ............................................ | 4054 9,643 | 1.a.(1)(f)(1)
(2) Other ..................................................................... | 4055 97,346 | 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions ........................ | 4056 0 | 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political | ////////////////// |
subdivisions in the U.S.: | ////////////////// |
(1) Taxable obligations ....................................................... | 4503 0 | 1.a.(1)(h)(1)
(2) Tax-exempt obligations .................................................... | 4504 5,232 | 1.a.(1)(h)(2)
(i) All other loans in domestic offices ........................................... | 4058 84,576 | 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 4059 1,981 | 1.a.(2)
b. Income from lease financing receivables: | ////////////////// |
(1) Taxable leases .................................................................... | 4505 75,341 | 1.b.(1)
(2) Tax-exempt leases ................................................................. | 4307 791 | 1.b.(2)
c. Interest income on balances due from depository institutions:(1) | ////////////////// |
(1) In domestic offices ............................................................... | 4105 914 | 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 4106 142 | 1.c.(2)
d. Interest and dividend income on securities: | ////////////////// |
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations ... | 4027 209,142 | 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: | ////////////////// |
(a) Taxable securities ............................................................ | 4506 0 | 1.d.(2)(a)
(b) Tax-exempt securities ......................................................... | 4507 2,953 | 1.d.(2)(b)
(3) Other domestic debt securities .................................................... | 3657 12,164 | 1.d.(3)
(4) Foreign debt securities ........................................................... | 3658 3,348 | 1.d.(4)
(5) Equity securities (including investments in mutual funds) ......................... | 3659 10,212 | 1.d.(5)
e. Interest income from trading assets.................................................... | 4069 360 | 1.e.
______________________
</TABLE>
____________
(1) Includes interest income on time certificates of deposit not held for
trading.
3
<PAGE> 24
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-2
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
Dollar Amounts in Thousands | Year-to-date |
___________________________________________________________________________________ ______________
<S> <C> <C>
1. Interest income (continued) | RIAD Bil Mil Thou |
f. Interest income on federal funds sold and securities purchased | ////////////////// |
under agreements to resell in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4020 24,925 | 1.f.
g. Total interest income (sum of items 1.a through 1.f) ................ | 4107 1,719,407 | 1.g.
2. Interest expense: | ////////////////// |
a. Interest on deposits: | ////////////////// |
(1) Interest on deposits in domestic offices: | ////////////////// |
(a) Transaction accounts (NOW accounts, ATS accounts, and | ////////////////// |
telephone and preauthorized transfer accounts) .............. | 4508 8,583 | 2.a.(1)(a)
(b) Nontransaction accounts: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................... | 4509 133,915 | 2.a.(1)(b)(1)
(2) Other savings deposits .................................. | 4511 26,678 | 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more ........ | 4174 88,690 | 2.a.(1)(b)(3)
(4) All other time deposits ................................. | 4512 214,225 | 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement | ////////////////// |
subsidiaries, and IBFs .......................................... | 4172 50,022 | 2.a.(2)
b. Expense of federal funds purchased and securities sold under | ////////////////// |
agreements to repurchase in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4180 152,094 | 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading | ////////////////// |
liabilities, and other borrowed money ............................... | 4185 121,525 | 2.c.
d. Interest on mortgage indebtedness and obligations under | ////////////////// |
capitalized leases .................................................. | 4072 361 | 2.d.
e. Interest on subordinated notes and debentures ....................... | 4200 26,110 | 2.e.
f. Total interest expense (sum of items 2.a through 2.e) ............... | 4073 822,203 | 2.f.
___________________________
3. Net interest income (item 1.g minus 2.f) ............................... | ////////////////// | RIAD 4074 | 897,204 | 3.
___________________________
4. Provisions: | ////////////////// |
___________________________
a. Provision for loan and lease losses ................................. | ////////////////// | RIAD 4230 | 21,672 | 4.a.
b. Provision for allocated transfer risk ............................... | ////////////////// | RIAD 4243 | 0 | 4.b.
___________________________
5. Noninterest income: | ////////////////// |
a. Income from fiduciary activities .................................... | 4070 144,614 | 5.a.
b. Service charges on deposit accounts in domestic offices ............. | 4080 111,736 | 5.b.
c. Trading revenue (must equal Schedule RI, sum of Memorandum | ////////////////// |
items 8.a through 8.d)............................................... A220 10,646 5.c.
d. Other foreign transaction gains (losses) ............................ | 4076 247 | 5.d.
e. Not applicable | ////////////////// |
f. Other noninterest income: | ////////////////// |
(1) Other fee income ................................................ | 5407 372,950 | 5.f.(1)
(2) All other noninterest income* ................................... | 5408 211,593 | 5.f.(2)
___________________________
g. Total noninterest income (sum of items 5.a through 5.f) ............. | ////////////////// | RIAD 4079 | 851,786 | 5.g.
6. a. Realized gains (losses) on held-to-maturity securities .............. | ////////////////// | RIAD 3521 | 1 | 6.a.
b. Realized gains (losses) on available-for-sale securities ............ | ////////////////// | RIAD 3196 | 16,126 | 6.b.
___________________________
7. Noninterest expense: | ////////////////// |
a. Salaries and employee benefits ...................................... | 4135 322,146 | 7.a.
b. Expenses of premises and fixed assets (net of rental income) | ////////////////// |
(excluding salaries and employee benefits and mortgage interest) .... | 4217 114,912 | 7.b.
c. Other noninterest expense* .......................................... | 4092 631,554 | 7.c.
___________________________
d. Total noninterest expense (sum of items 7.a through 7.c) ............ | ////////////////// | RIAD 4093 | 1,068,612 | 7.d.
___________________________
8. Income (loss) before income taxes and extraordinary items and other | ////////////////// |
___________________________
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d)| ////////////////// | RIAD 4301 | 674,833 | 8.
9. Applicable income taxes (on item 8) .................................... | ////////////////// | RIAD 4302 | 280,303 | 9.
___________________________
10. Income (loss) before extraordinary items and other adjustments | ////////////////// |
___________________________
(item 8 minus 9) ....................................................... | ////////////////// | RIAD 4300 | 394,530 | 10.
_________________________________________________
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
4
<PAGE> 25
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-3
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________ ______________
<S> <C> <C>
11. Extraordinary items and other adjustments: | ////////////////// |
a. Extraordinary items and other adjustments, gross of income taxes* . | 4310 0 | 11.a.
b. Applicable income taxes (on item 11.a)* ........................... | 4315 0 | 11.b.
c. Extraordinary items and other adjustments, net of income taxes | ////////////////// |__________________________
(item 11.a minus 11.b) ............................................ | ////////////////// | RIAD 4320 | 0 | 11.c.
12. Net income (loss) (sum of items 10 and 11.c) ......................... | ////////////////// | RIAD 4340 | 394,530 | 12.
_________________________________________________
</TABLE>
<TABLE>
<CAPTION>
__________
| I481 |
_______________
Memoranda | Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after | ////////////////// |
August 7, 1986, that is not deductible for federal income tax purposes .......................... | 4513 1,798 | M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices | ////////////////// |
(included in Schedule RI, item 8) ............................................................... | 8431 20,910 | M.2.
3.-4. Not applicable | ////////////////// |
5. Number of full-time equivalent employees on payroll at end of current period (round to | //// Number |
nearest whole number) ........................................................................... | 4150 9,852 | M.5.
6. Not applicable | ////////////////// |
7. If the reporting bank has restated its balance sheet as a result of applying push down | //// MM DD YY |
accounting this calendar year, report the date of the bank's acquisition ........................ | 9106 00/00/00 | M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) | ////////////////// |
(sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): | //// Bil Mil Thou |
a. Interest rate exposures ...................................................................... | 8757 1,428 | M.8.a.
b. Foreign exchange exposures ................................................................... | 8758 9,218 | M.8.b.
c. Equity security and index exposures .......................................................... | 8759 0 | M.8.c.
d. Commodity and other exposures ................................................................ | 8760 0 | M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: | ////////////////// |
a. Net increase (decrease) to interest income.....................................................| 8761 (5,575)| M.9.a.
b. Net (increase) decrease to interest expense ...................................................| 8762 (5,752)| M.9.b.
c. Other (noninterest) allocations ...............................................................| 8763 (172)| M.9.c.
10. Credit losses on off-balance sheet derivatives (see instructions).................................| A251 0 | M.10.
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
5
<PAGE> 26
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-4
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-A--Changes in Equity Capital
Indicate decreases and losses in parentheses. _________
| I483 |
_____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________|____________________|
<S> <C> <C>
1. Total equity capital originally reported in the December 31, 1995, Reports of Condition | ////////////////// |
and Income ...................................................................................... | 3215 1,342,473 | 1.
2. Equity capital adjustments from amended Reports of Income, net* ................................. | 3216 0 | 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) ............................ | 3217 1,342,473 | 3.
4. Net income (loss) (must equal Schedule RI, item 12) ............................................. | 4340 394,530 | 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net .............................. | 4346 0 | 5.
6. Changes incident to business combinations, net .................................................. | 4356 4,161,079 | 6.
7. LESS: Cash dividends declared on preferred stock ................................................ | 4470 0 | 7.
8. LESS: Cash dividends declared on common stock ................................................... | 4460 490,634 | 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions | ////////////////// |
for this schedule) .............................................................................. | 4411 0 | 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule) | 4412 0 | 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities ................ | 8433 (46,607)| 11.
12. Foreign currency translation adjustments ........................................................ | 4414 0 | 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ........ | 4415 (1,003,722)| 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, | ////////////////// |
item 28) ........................................................................................ | 3210 4,357,119 | 14.
______________________
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
<TABLE>
<CAPTION>
Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance for Loan and Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases
Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.
__________
| I486 |
__________________________________________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4651 35,701 | 4661 8,412 | 1.a.
b. To non-U.S. addressees (domicile) ..................................... | 4652 0 | 4662 0 | 1.b.
2. Loans to depository institutions and acceptances of other banks: | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository institutions .................. | 4653 0 | 4663 0 | 2.a.
b. To foreign banks ...................................................... | 4654 0 | 4664 0 | 2.b.
3. Loans to finance agricultural production and other loans to farmers ...... | 4655 2 | 4665 22 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4645 38,139 | 4617 19,005 | 4.a.
b. To non-U.S. addressees (domicile) ..................................... | 4646 0 | 4618 102 | 4.b.
5. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures: | ////////////////// | ////////////////// |
a. Credit cards and related plans ........................................ | 4656 1,137 | 4666 733 | 5.a.
b. Other (includes single payment, installment, and all student loans) ... | 4657 7,864 | 4667 2,681 | 5.b.
6. Loans to foreign governments and official institutions ................... | 4643 0 | 4627 0 | 6.
7. All other loans .......................................................... | 4644 826 | 4628 541 | 7.
8. Lease financing receivables: | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ......................................... | 4658 3,729 | 4668 3,241 | 8.a.
b. Of non-U.S. addressees (domicile) ..................................... | 4659 0 | 4669 0 | 8.b.
9. Total (sum of items 1 through 8) ......................................... | 4635 87,398 | 4605 34,737 | 9.
___________________________________________
</TABLE>
6
<PAGE> 27
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-5
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-B--Continued
Part I. Continued
Memoranda
__________________________________________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1-3. Not applicable | ////////////////// | ////////////////// |
4. Loans to finance commercial real estate, construction, and land | ////////////////// | ////////////////// |
development activities (not secured by real estate) included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, items 4 and 7, above .............................. | 5409 383 | 5410 1,374 | M.4.
5. Loans secured by real estate in domestic offices (included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, item 1, above): | ////////////////// | ////////////////// |
a. Construction and land development ..................................... | 3582 189 | 3583 253 | M.5.a.
b. Secured by farmland ................................................... | 3584 145 | 3585 131 | M.5.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ..................... | 5411 2,650 | 5412 108 | M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties ...... | 5413 13,892 | 5414 1,231 | M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties ............. | 3588 837 | 3589 395 | M.5.d.
e. Secured by nonfarm nonresidential properties .......................... | 3590 17,988 | 3591 6,294 | M.5.e.
|_________________________________________|
</TABLE>
Part II. Changes in Allowance for Loan and Lease Losses
<TABLE>
<CAPTION>
_____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Balance originally reported in the December 31, 1995, Reports of Condition and Income.......... | 3124 266,943 | 1.
2. Recoveries (must equal part I, item 9, column B above) ........................................ | 4605 34,737 | 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above) ................................. | 4635 87,398 | 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a)......................... | 4230 21,672 | 4.
5. Adjustments* (see instructions for this schedule) ................................ ............ | 4815 636,497 | 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, | ////////////////// |
item 4.b) ..................................................................................... | 3123 872,451 | 6.
|____________________|
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
Schedule RI-C--Applicable Income Taxes by Taxing Authority
Schedule RI-C is to be reported with the December Report of Income.
<TABLE>
<CAPTION>
| I489 | <-
____________ ________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Federal ....................................................................................... | 4780 N/A | 1.
2. State and local................................................................................ | 4790 N/A | 2.
3. Foreign ....................................................................................... | 4795 N/A | 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) ............ | 4770 N/A | 4.
____________________________| |
5. Deferred portion of item 4 ........................................ | RIAD 4772 | N/A | ////////////////// | 5.
__________________________________________________
</TABLE>
7
<PAGE> 28
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RI-6
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-D--Income from International Operations
For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations
account for more than 10 percent of total revenues, total assets, or net income.
Part I. Estimated Income from International Operations
__________
| I492 | <-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, | ////////////////// |
and IBFs: | ////////////////// |
a. Interest income booked ................................................................... | 4837 N/A | 1.a.
b. Interest expense booked .................................................................. | 4838 N/A | 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs | ////////////////// |
(item 1.a minus 1.b) ..................................................................... | 4839 N/A | 1.c.
2. Adjustments for booking location of international operations: | ////////////////// |
a. Net interest income attributable to international operations booked at domestic offices .. | 4840 N/A | 2.a.
b. Net interest income attributable to domestic business booked at foreign offices .......... | 4841 N/A | 2.b.
c. Net booking location adjustment (item 2.a minus 2.b) ..................................... | 4842 N/A | 2.c.
3. Noninterest income and expense attributable to international operations: | ////////////////// |
a. Noninterest income attributable to international operations .............................. | 4097 N/A | 3.a.
b. Provision for loan and lease losses attributable to international operations ............. | 4235 N/A | 3.b.
c. Other noninterest expense attributable to international operations ....................... | 4239 N/A | 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a | ////////////////// |
minus 3.b and 3.c) ....................................................................... | 4843 N/A | 3.d.
4. Estimated pretax income attributable to international operations before capital allocation | ////////////////// |
adjustment (sum of items 1.c, 2.c, and 3.d) ................................................. | 4844 N/A | 4.
5. Adjustment to pretax income for internal allocations to international operations to reflect | ////////////////// |
the effects of equity capital on overall bank funding costs ................................. | 4845 N/A | 5.
6. Estimated pretax income attributable to international operations after capital allocation | ////////////////// |
adjustment (sum of items 4 and 5) ........................................................... | 4846 N/A | 6.
7. Income taxes attributable to income from international operations as estimated in item 6 .... | 4797 N/A | 7.
8. Estimated net income attributable to international operations (item 6 minus 7) .............. | 4341 N/A | 8.
______________________
<CAPTION>
Memoranda ______________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Intracompany interest income included in item 1.a above ..................................... | 4847 N/A | M.1.
2. Intracompany interest expense included in item 1.b above .................................... | 4848 N/A | M.2.
______________________
</TABLE>
<TABLE>
<CAPTION>
Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income booked at IBFs .............................................................. | 4849 N/A | 1.
2. Interest expense booked at IBFs ............................................................. | 4850 N/A | 2.
3. Noninterest income attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs): | ////////////////// |
a. Gains (losses) and extraordinary items ................................................... | 5491 N/A | 3.a.
b. Fees and other noninterest income ........................................................ | 5492 N/A | 3.b.
4. Provision for loan and lease losses attributable to international operations booked at | ////////////////// |
domestic offices (excluding IBFs) ........................................................... | 4852 N/A | 4.
5. Other noninterest expense attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs) ............................................................................ | 4853 N/A | 5.
______________________
</TABLE>
8
<PAGE> 29
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RI-7
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all
significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.)
__________
| I495 | <-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) | ////////////////// |
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): | ////////////////// |
a. Net gains on other real estate owned ..................................................... | 5415 0 | 1.a.
b. Net gains on sales of loans .............................................................. | 5416 0 | 1.b.
c. Net gains on sales of premises and fixed assets .......................................... | 5417 0 | 1.c.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 5.f.(2): | ////////////////// |
_____________
d. | TEXT 4461 | Income on Mortgages Held for Resale | 4461 81,194 | 1.d.
e. | TEXT 4462 | Gain From Branch Divestitures | 4462 77,976 | 1.e.
___________
f. | TEXT 4463 |______________________________________________________________________________| 4463 | 1.f.
_____________
2. Other noninterest expense (from Schedule RI, item 7.c): | ////////////////// |
a. Amortization expense of intangible assets ................................................ | 4531 135,939 | 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: | ////////////////// |
b. Net losses on other real estate owned .................................................... | 5418 0 | 2.b.
c. Net losses on sales of loans ............................................................. | 5419 0 | 2.c.
d. Net losses on sales of premises and fixed assets ......................................... | 5420 0 | 2.d.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 7.c: | ////////////////// |
_____________
e. | TEXT 4464 | Intercompany Corporate Support Function Charges | 4464 143,184 | 2.e.
___________
f. | TEXT 4467 | Intercompany Data Processing & Programming Charges | 4467 158,034 | 2.f.
___________
g. | TEXT 4468 |______________________________________________________________________________| 4468 | 2.g.
_____________
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and | ////////////////// |
applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe | ////////////////// |
all extraordinary items and other adjustments): | ////////////////// |
_____________
a. (1) | TEXT 4469 |__________________________________________________________________________| 4469 | 3.a.(1)
_____________
(2) Applicable income tax effect | RIAD 4486 | | ////////////////// | 3.a.(2)
_____________ ____________________________
b. (1) | TEXT 4487 |__________________________________________________________________________| 4487 | 3.b.(1)
_____________
(2) Applicable income tax effect | RIAD 4488 | | ////////////////// | 3.b.(2)
_____________ ____________________________
c. (1) | TEXT 4489 |__________________________________________________________________________| 4489 | 3.c.(1)
_____________
(2) Applicable income tax effect | RIAD 4491 | | ////////////////// | 3.c.(2)
____________________________
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, | ////////////////// |
item 2) (itemize and describe all adjustments): | ////////////////// |
_____________
a. | TEXT 4492 |______________________________________________________________________________| 4492 | 4.a.
___________
b. | TEXT 4493 |______________________________________________________________________________| 4493 | 4.b.
_____________
5. Cumulative effect of changes in accounting principles from prior years (from | ////////////////// |
Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): | ////////////////// |
_____________
a. | TEXT 4494 |______________________________________________________________________________| 4494 | 5.a.
___________
b. | TEXT 4495 |______________________________________________________________________________| 4495 | 5.b.
_____________
6. Corrections of material accounting errors from prior years (from Schedule RI-A, | ////////////////// |
item 10) (itemize and describe all corrections): | ////////////////// |
_____________
a. | TEXT 4496 | 4496 | 6.a.
___________|______________________________________________________________________________
b. | TEXT 4497 4497 | 6.b.
____________|____________________________________________________________________________________________________
</TABLE>
9
<PAGE> 30
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RI-8
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13) | ////////////////// |
(itemize and describe all such transactions): | ////////////////// |
_____________
a. | TEXT 4498 | Fleet National Bank Surplus Distribution to FFG | 4498 (1,003,722) | 7.a.
__________________________________________________________________________________________| |
b. | TEXT 4499 | | 4499 | 7.b.
___________________________________________________________________________________________
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, | ////////////////// |
item 5) (itemize and describe all adjustments): | ////////////////// |
_____________ | |
a. | TEXT 4521 | 12/31/95 Ending Balance of Pooled Entities | 4521 | 8.a.
___________________________________________________________________________________________| |
b. | TEXT 4522 | | 4522 | 8.b.
___________________________________________________________________________________________| |
____________________
9. Other explanations (the space below is provided for the bank to briefly describe, | I498 | I499 | <-
______________________
at its option, any other significant items affecting the Report of Income):
___
No comment |X| (RIAD 4769)
___
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE> 31
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RC-1
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for June 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
Schedule RC--Balance Sheet
__________
| C400 | <-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Noninterest-bearing balances and currency and coin(1) ................................... | 0081 4,130,928 | 1.a.
b. Interest-bearing balances(2) ............................................................ | 0071 46,521 | 1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A) .............................. | 1754 257,441 | 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ............................ | 1773 7,250,067 | 2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices | ////////////////// |
of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// |
a. Federal funds sold ...................................................................... | 0276 17,428 | 3.a.
b. Securities purchased under agreements to resell ......................................... | 0277 0 | 3.b.
4. Loans and lease financing receivables: ____________________________| ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) | RCFD 2122 | 31,278,251 | ////////////////// | 4.a.
b. LESS: Allowance for loan and lease losses ................... | RCFD 3123 | 872,451 | ////////////////// | 4.b.
c. LESS: Allocated transfer risk reserve ....................... | RCFD 3128 | 0 | ////////////////// | 4.c.
____________________________
d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b and 4.c) ..................................... | 2125 30,405,800 | 4.d.
5. Trading assets (from schedule RC-D )........................................................ | 3545 71,354 | 5.
6. Premises and fixed assets (including capitalized leases) ................................... | 2145 534,844 | 6.
7. Other real estate owned (from Schedule RC-M) ............................................... | 2150 34,546 | 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ... | 2130 0 | 8.
9. Customers' liability to this bank on acceptances outstanding ............................... | 2155 16,634 | 9.
10. Intangible assets (from Schedule RC-M) ..................................................... | 2143 2,283,414 | 10.
11. Other assets (from Schedule RC-F) .......................................................... | 2160 3,978,638 | 11.
12. Total assets (sum of items 1 through 11) ................................................... | 2170 49,027,615 | 12.
______________________
</TABLE>
____________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
11
<PAGE> 32
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-2
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC--Continued
___________________________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
<S> <C> <C>
LIABILITIES | /////////////////////// |
13. Deposits: | /////////////////////// |
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, | /////////////////////// |
part I) ............................................................................... | RCON 2200 34,110,580 | 13.a.
____________________________
(1) Noninterest-bearing(1) ................................ | RCON 6631 10,202,036 | /////////////////////// | 13.a.(1)
(2) Interest-bearing ...................................... | RCON 6636 23,908,544 | /////////////////////// | 13.a.(2)
____________________________
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, | /////////////////////// |
part II) .............................................................................. | RCFN 2200 1,745,663 | 13.b.
____________________________
(1) Noninterest-bearing ................................... | RCFN 6631 400 | /////////////////////// | 13.b.(1)
(2) Interest-bearing ...................................... | RCFN 6636 1,745,263 | /////////////////////// | 13.b.(2)
____________________________
14. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | /////////////////////// |
a. Federal funds purchased ............................................................... | RCFD 0278 4,302,800 | 14.a.
b. Securities sold under agreements to repurchase ........................................ | RCFD 0279 566,036 | 14.b.
15. a. Demand notes issued to the U.S. Treasury .............................................. | RCON 2840 14,411 | 15.a.
b. Trading liabilities (from Schedule RC-D) .............................................. | RCFD 3548 57,446 | 15.b.
16. Other borrowed money: | /////////////////////// |
a. With a remaining maturity of one year or less.......................................... | RCFD 2332 487,435 | 16.a.
b. With a remaining maturity of more than one year........................................ | RCFD 2333 893,259 | 16.b.
17. Mortgage indebtedness and obligations under capitalized leases ........................... | RCFD 2910 11,561 | 17.
18. Bank's liability on acceptances executed and outstanding ................................. | RCFD 2920 16,634 | 18.
19. Subordinated notes and debentures ........................................................ | RCFD 3200 1,213,219 | 19.
20. Other liabilities (from Schedule RC-G) ................................................... | RCFD 2930 1,251,452 | 20.
21. Total liabilities (sum of items 13 through 20) ........................................... | RCFD 2948 44,670,496 | 21.
| /////////////////////// |
22. Limited-life preferred stock and related surplus ......................................... | RCFD 3282 0 | 22.
EQUITY CAPITAL | /////////////////////// |
23. Perpetual preferred stock and related surplus ............................................ | RCFD 3838 125,000 | 23.
24. Common stock ............................................................................. | RCFD 3230 19,487 | 24.
25. Surplus (exclude all surplus related to preferred stock).................................. | RCFD 3839 2,551,927 | 25.
26. a. Undivided profits and capital reserves ................................................ | RCFD 3632 1,693,408 | 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ................ | RCFD 8434 (32,703)| 26.b.
27. Cumulative foreign currency translation adjustments ...................................... | RCFD 3284 0 | 27.
28. Total equity capital (sum of items 23 through 27) ........................................ | RCFD 3210 4,357,119 | 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, | /////////////////////// |
and 28) .................................................................................. | RCFD 3300 49,027,615 | 29.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external __________________
auditors as of any date during 1995 ............................................................... | RCFD 6724 N/A | M.1.
__________________
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
____________
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
12
<PAGE> 33
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-3
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-A--Cash and Balances Due From Depository Institutions
Exclude assets held for trading.
__________
| C405 | <-
_________________________________ ________
| (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and | ////////////////// | ////////////////// |
coin .................................................................... | 0022 3,402,522 | ////////////////// | 1.
a. Cash items in process of collection and unposted debits .............. | ////////////////// | 0020 2,655,163 | 1.a.
b. Currency and coin .................................................... | ////////////////// | 0080 747,539 | 1.b.
2. Balances due from depository institutions in the U.S. ................... | ////////////////// | 0082 500,301 | 2.
a. U.S. branches and agencies of foreign banks (including their IBFs) ... | 0083 0 | ////////////////// | 2.a.
b. Other commercial banks in the U.S. and other depository institutions | ////////////////// | ////////////////// |
in the U.S. (including their IBFs) ................................... | 0085 500,373 | ////////////////// | 2.b.
3. Balances due from banks in foreign countries and foreign central banks .. | ////////////////// | 0070 7,902 | 3.
a. Foreign branches of other U.S. banks ................................. | 0073 690 | ////////////////// | 3.a.
b. Other banks in foreign countries and foreign central banks ........... | 0074 7,948 | ////////////////// | 3.b.
4. Balances due from Federal Reserve Banks ................................. | 0090 265,916 | 0090 0 | 4.
5. Total (sum of items 1 through 4) (total of column A must equal | ////////////////// | ////////////////// |
Schedule RC, sum of items 1.a and 1.b) .................................. | 0010 4,177,449 | 0010 4,176,641 | 5.
___________________________________________
<CAPTION>
______________________
Memorandum Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, | ////////////////// |
column B above) .............................................................................. | 0050 453,780 | M.1.
______________________
</TABLE>
Schedule RC-B--Securities
Exclude assets held for trading.
<TABLE>
<CAPTION>
_______
| C410 | <-
___________________________________________________________________________ ________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________ ____________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C> <C>
1. U.S. Treasury securities ......... | 0211 250 | 0213 250 | 1286 1,274,624 | 1287 1,252,546 | 1.
2. U.S. Government agency | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and corporation obligations | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
(exclude mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
securities): | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Issued by U.S. Govern- | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
ment agencies(2) .............. | 1289 0 | 1290 0 | 1291 0 | 1293 0 | 2.a.
b. Issued by U.S. | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
Government-sponsored | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
agencies(3) ................... | 1294 0 | 1295 0 | 1297 498 | 1298 505 | 2.b.
_____________________________________________________________________________________
</TABLE>
_____________
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates,"
U.S. Maritime Administration obligations, and Export-Import Bank
participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage Association, the
Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
13
<PAGE> 34
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-4
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued
_____________________________________________________________________________________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________________________ ____________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
3. Securities issued by states | ////////////////// |/ //////////////// | ////////////////// | ///////////////// |
and political subdivisions | ////////////////// |////////////////// | ////////////////// | ///////////////// |
in the U.S.: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. General obligations ......... | 1676 150,357 |1677 150,242 | 1678 0 | 1679 0 | 3.a.
b. Revenue obligations ......... | 1681 8,887 |1686 8,889 | 1690 0 | 1691 0 | 3.b.
c. Industrial development | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and similiar obligations .....| 1694 0 |1695 0 | 1696 0 | 1697 0 | 3.c.
4. Mortgage-backed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Pass-through securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Guaranteed by | ////////////////// |////////////////// | ////////////////// | ///////////////// |
GNMA ....................... | 1698 0 |1699 0 | 1701 861,176 | 1702 852,929 | 4.a.(1)
(2) Issued by FNMA | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and FHLMC ................. | 1703 908 |1705 908 | 1706 4,854,605 | 1707 4,831,023 | 4.a.(2)
(3) Other pass-through | ////////////////// |////////////////// | ///////////////////| ///////////////// |
secruities ................. | 1709 4 |1710 4 | 1711 0 | 1713 0 | 4.a.(3)
b. Other mortgage-backed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (include CMO's, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
REMICs, and stripped | ////////////////// |////////////////// | ////////////////// | ///////////////// |
MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Issued or guaranteed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by FNMA, FHLMC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
or GNMA ............... | 1714 0 |1715 0 | 1716 0 | 1717 0 | 4.b.(1)
(2) Collateralized | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by MBS issued or | ////////////////// |////////////////// | ////////////////// | ///////////////// |
guaranteed by FNMA, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
FHLMC, or GNMA ........ | 1718 0 |1719 0 | 1731 0 | 1732 0 | 4.b.(2)
(3) All other mortgage- | ////////////////// |////////////////// | ////////////////// | //////////////// |
backed securities ..... | 1733 0 |1734 0 | 1735 518 | 1736 518 | 4.b.(3)
5. Other debt securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Other domestic debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities.................. | 1737 0 |1738 0 | 1739 817 | 1741 812 | 5.a.
b. Foreign debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities ................. | 1742 97,035 |1743 78,878 | 1744 0 | 1746 0 | 5.b.
6. Equity securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Investments in mutual | ////////////////// |////////////////// | ////////////////// | ///////////////// |
funds ...................... | ////////////////// |////////////////// | 1747 0 | 1748 0 | 6.a.
b. Other equity securities | ////////////////// |////////////////// | ////////////////// | ///////////////// |
with readily determin- | ////////////////// |////////////////// | ////////////////// | ///////////////// |
able fair values ........... | ////////////////// |////////////////// | 1749 0 | 1751 0 | 6.b.
c. All other equity | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (1) ............. | ////////////////// |////////////////// | 1752 311,734 | 1753 311,734 | 6.c.
7. Total (sum of items 1 | ////////////////// |////////////////// | ////////////////// | ///////////////// |
through 6) (total of | ////////////////// |////////////////// | ////////////////// | ///////////////// |
column A must equal | ////////////////// |////////////////// | ////////////////// | ///////////////// |
Schedule RC, item 2.a) | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(total of column D must | ////////////////// |////////////////// | ////////////////// | ///////////////// |
equal Schedule RC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
item 2.b) ..................... | 1754 257,441 | 1771 239,171 | 1772 7,303,972 | 1773 7,250,067 | 7.
|__________________________________________________________________________________|
</TABLE>
____________
1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
14
<PAGE> 35
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-5
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued
<CAPTION>
___________
Memoranda | C412 | <-
___________ _________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Pledged securities(2) ......................................................................... | 0416 2,308,912 | M.1.
2. Maturity and repricing data for debt securities(2),(3),(4) (excluding those in | ////////////////// |
nonaccrual status): | ////////////////// |
a. Fixed rate debt securities with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | 0343 72,490 | M.2.a.(1)
(2) Over three months through 12 months .................................................... | 0344 77,125 | M.2.a.(2)
(3) Over one year through five years ....................................................... | 0345 2,734,577 | M.2.a.(3)
(4) Over five years ........................................................................ | 0346 2,925,207 | M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)) ..... | 0347 5,809,399 | M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ........................................................... | 4544 531,365 | M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | 4545 855,010 | M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | 4551 0 | M.2.b.(3)
(4) Less frequently than every five years .................................................. | 4552 0 | M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)) .. | 4553 1,386,375 | M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total debt | ////////////////// |
securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus nonaccrual | ////////////////// |
debt securities included in Schedule RC-N, item 9, column C) ............................... | 0393 7,195,774 | M.2.c.
3. Not applicable | ////////////////// |
4. Held-to-maturity debt securities restructured and in compliance with modified terms (included | ////////////////// |
in Schedule RC-B, items 3 through 5, column A, above) ......................................... | 5365 0 | M.4.
5. Not applicable | ////////////////// |
6. Floating rate debt securities with a remaining maturity of one year or less(2),(4) (included in | ////////////////// |
Memorandum items 2.b(1) through 2.b.(4) above)................................................. | 5519 3,700 | M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or | ////////////////// |
trading securities during the calendar year-to-date (report the amortized cost at date of sale | ////////////////// |
or transfer ................................................................................... | 1778 0 | m.7.
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale | ////////////////// |
accounts in Schedule RC-B, item 4.b): | ////////////////// |
a. Amortized cost ............................................................................. | 8780 0 | M.8.a.
b. Fair Value ................................................................................. | 8781 0 | M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale accounts in | ////////////////// |
Schedule RC-B, items 2, 3, and 5): | ////////////////// |
a. Amortized cost ............................................................................. | 8782 0 | M.9.a.
b. Fair Value ................................................................................. | 8783 0 | M.9.b.
----------------------
</TABLE>
____________
(2) Includes held-to-maturity securities at amortized cost and
available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(4) Memorandum items 2 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
15
<PAGE> 36
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-6
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
Schedule RC-C--Loans and Lease Financing Receivables
Part I. Loans and Leases
_________
Do not deduct the allowance for loan and lease losses from amounts | C415 | <-
reported in this schedule. Report total loans and leases, net of unearned _________________________________|________|
income. Exclude assets held for trading. | (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Loans secured by real estate ........................................... | 1410 11,754,916 | ////////////////// | 1.
a. Construction and land development ................................... | ////////////////// | 1415 433,880 | 1.a.
b. Secured by farmland (including farm residential and other | ////////////////// | ////////////////// |
improvements) ....................................................... | ////////////////// | 1420 2,172 | 1.b
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ................... | ////////////////// | 1797 2,022,596 | 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(a) Secured by first liens ...................................... | ////////////////// | 5367 4,418,239 | 1.c.(2)(a)
(b) Secured by junior liens ..................................... | ////////////////// | 5368 492,952 | 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties ........... | ////////////////// | 1460 559,373 | 1.d.
e. Secured by nonfarm nonresidential properties ........................ | ////////////////// | 1480 3,825,704 | 1.e.
2. Loans to depository institutions: | ////////////////// | ////////////////// |
a. To commercial banks in the U.S. ..................................... | ////////////////// | 1505 143,682 | 2.a.
(1) To U.S. branches and agencies of foreign banks .................. | 1506 0 | ////////////////// | 2.a.(1)
(2) To other commercial banks in the U.S. ........................... | 1507 143,682 | ////////////////// | 2.a.(2)
b. To other depository institutions in the U.S. ........................ | 1517 0 | 1517 12,345 | 2.b.
c. To banks in foreign countries ....................................... | ////////////////// | 1510 672 | 2.c.
(1) To foreign branches of other U.S. banks ......................... | 1513 149 | ////////////////// | 2.c.(1)
(2) To other banks in foreign countries ............................. | 1516 523 | ////////////////// | 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers .... | 1590 5,889 | 1590 5,889 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ....................................... | 1763 12,446,547 | 1763 12,402,858 | 4.a.
b. To non-U.S. addressees (domicile) ................................... | 1764 83,521 | 1764 54,074 | 4.b.
5. Acceptances of other banks: | ////////////////// | ////////////////// |
a. Of U.S. banks ....................................................... | 1756 0 | 1756 0 | 5.a.
b. Of foreign banks .................................................... | 1757 0 | 1757 0 | 5.b.
6. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures (i.e., consumer loans) (includes purchased paper) ......... | ////////////////// | 1975 2,217,352 | 6.
a. Credit cards and related plans (includes check credit and other | ////////////////// | ////////////////// |
revolving credit plans) ............................................. | 2008 161,652 | ////////////////// | 6.a.
b. Other (includes single payment, installment, and all student loans).. | 2011 2,055,700 | ////////////////// | 6.b.
7. Loans to foreign governments and official institutions (including | ////////////////// | ////////////////// |
foreign central banks) ................................................. | 2081 0 | 2081 0 | 7.
8. Obligations (other than securities and leases) of states and political | ////////////////// | ////////////////// |
subdivisions in the U.S. (includes nonrated industrial development | ////////////////// | ////////////////// |
obligations) ........................................................... | 2107 167,100 | 2107 167,100 | 8.
9. Other loans ............................................................ | 1563 2,146,172 | ////////////////// | 9.
a. Loans for purchasing or carrying securities (secured and unsecured).. | ////////////////// | 1545 156,275 | 9.a.
b. All other loans (exclude consumer loans) ............................ | ////////////////// | 1564 1,989,897 | 9.b.
10. Lease financing receivables (net of unearned income) ................... | ////////////////// | 2165 2,300,055 | 10.
a. Of U.S. addressees (domicile) ....................................... | 2182 2,300,055 | ////////////////// | 10.a.
b. Of non-U.S. addressees (domicile) ................................... | 2183 0 | ////////////////// | 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above ........ | 2123 0 | 2123 0 | 11.
12. Total loans and leases, net of unearned income (sum of items 1 through | ////////////////// | ////////////////// |
10 minus item 11) (total of column A must equal Schedule RC, item 4.a).. | 2122 31,278,251 | 2122 31,205,115 | 12.
___________________________________________
</TABLE>
16
<PAGE> 37
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page: RC-7
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-C--Continued
Part I. Continued
___________________________________________
| (Column A) | (Column B) |
| Consolidated | Domestic |
Memoranda | Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above .............. | 1496 0 | 1496 0 | M.1.
2. Loans and leases restructured and in compliance with modified terms | ////////////////// | ////////////////// |
(included in Schedule RC-C, part I, above and not reported as past due | ////////////////// | ////////////////// |
or nonaccrual in Schedule RC-N, Memorandum item 1): | ////////////////// | ////////////////// |
a. Loans secured by real estate: | ////////////////// | ////////////////// |
(1) To U.S. addressees (domicile) ................................... | 1687 511 | M.2.a.(1)
(2) To non-U.S. addressees (domicile) ............................... | 1689 0 | M.2.a.(2)
b. All other loans and all lease financing receivables (exclude loans | ////////////////// |
to individuals for household, family, and other personal expenditures)| 8691 0 | M.2.b.
c. Commercial and industrial loans to and lease financing receivables | ////////////////// |
of non-U.S. addressees (domicile) included in Memorandum item 2.b | ////////////////// |
above ............................................................... | 8692 0 | M.2.c.
3. Maturity and repricing data for loans and leases(1) (excluding those | ////////////////// |
in nonaccrual status): | ////////////////// |
a. Fixed rate loans and leases with a remaining maturity of: | ////////////////// |
(1) Three months or less ............................................ | 0348 10,215,575 | M.3.a.(1)
(2) Over three months through 12 months ............................. | 0349 369,421 | M.3.a.(2)
(3) Over one year through five years ................................ | 0356 3,479,742 | M.3.a.(3)
(4) Over five years ................................................. | 0357 5,791,166 | M.3.a.(4)
(5) Total fixed rate loans and leases (sum of | ////////////////// |
Memorandum items 3.a.(1) through 3.a.(4)) ....................... | 0358 19,855,904 | M.3.a.(5)
b. Floating rate loans with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently .................................... | 4554 8,960,876 | M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly . | 4555 1,848,295 | M.3.b.(2)
(3) Every five years or more frequently, but less frequently than | ////////////////// |
annually ........................................................ | 4561 250,031 | M.3.b.(3)
(4) Less frequently than every five years ........................... | 4564 12,721 | M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) | ////////////////// |
through 3.b.(4)) ................................................ | 4567 11,071,923 | M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) | ////////////////// |
(must equal the sum of total loans and leases, net, from | ////////////////// |
Schedule RC-C, part I, item 12, plus unearned income from | ////////////////// |
Schedule RC-C, part I, item 11, minus total nonaccrual loans and | ////////////////// |
leases from Schedule RC-N, sum of items 1 through 8, column C) ...... | 1479 30,927,827 | M.3.c.
d. FLOATING RATE LOANS WITH A REMAINING MATURITY OF ONE YEAR OR LESS | ////////////////// |
(INCLUDED IN MEMORANDUM ITEMS 3.b.(1) THROUGH 3.b.(4) ABOVE)......... | A246 1,543,411 | M.3.d.
4. Loans to finance commercial real estate, construction, and land | ////////////////// |
development activities (NOT SECURED BY REAL ESTATE) included in | ////////////////// |
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) ........... | 2746 271,706 | M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, | ////////////////// |
above .................................................................. | 5369 0 | M.5.
| ////////////////// |_____________________
6. Adjustable rate closed-end loans secured by first liens on 1-4 family | ////////////////// | RCON Bil Mil Thou |
residential properties (included in Schedule RC-C, part I, item | ////////////////// | ___________________|
1.c.(2)(a), column B, page RC-6) ....................................... | ////////////////// | 5370 1.655.898 | M.6.
|_________________________________________|
</TABLE>
_____________________________
(1) Memorandum item 3 is not applicable to savings banks that must complete
supplememtal Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C,
part I, item 1, column A.
17
<PAGE> 38
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-7a
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<S> <C>
Schedule RC-C--Continued
Part II. Loans to Small Businesses and Small Farms
Schedule RC-C, Part II is to be reported only with the June Report of Condition.
Report the number and amount currently outstanding as of June 30 of business loans with "original amounts" of $1,000,000 or less
and farm loans with "original amounts" of $500,000 or less. The following guidelines should be used to determine the "original
amount" of a loan: (1) For loans drawn down under lines of credit or loan commitments, the "original amount" of the loan is the
size of the line of credit or loan commitment when the line of credit or loan commitment was most recently approved, extended, or
renewed prior to the report date. However, if the amount currently outstanding as of the report date exceeds this size, the
"original amount" is the amount currently outstanding on the report date. (2) For loan participations and syndications, the
"original amount" of the loan participation or syndication is the entire amount of the credit originated by the lead lender.
(3) For all other loans, the "original amount" is the total amount of the loan at origination or the amount currently
outstanding as of the report date, whichever is larger.
Loans to Small Businesses
</TABLE>
<TABLE>
<S> <C>
1. Indicate in the appropriate box at the right whether all or substantially all of the dollar volume of your
bank's "Loans secured by nonfarm nonresidential properties" in domestic offices reported in Schedule RC-C,
part I, item 1.e, column B, and all or substantially all of the dollar volume of your bank's
"Commercial and industrial loans to U.S. addressees" in domestic offices reported in Schedule RC-C, __________
part I, item 4.a, column B, have original amounts of $100,000 or less (If your bank has no loans ________| C415 | <-
outstanding in both of these two loan categories, place an "X" in the box marked "NO" and go to | RCON YES NO|
Item 5; otherwise, see instructions for further information.).................................. | 6999 | |///| x | 1.
___________________
If YES, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5.
If NO and your bank has loans outstanding in either loan category, skip items 2.a and 2.b,
complete items 3 and 4 below, and go to item 5. _____________________
| Number of Loans |
2. Report the total number of loans currently outstanding for each of the |____________________|
following Schedule RC-C, part I, loan categories: | RCON |/////////// |
a. "Loans secured by nonfarm nonresidential properties" in domestic | ////////////////// |
offices reported in Schedule RC-C, part I, item 1.e, column B....... | 5562 N/A | 2.a.
b. "Commercial and industrial loans to U.S. addressees" in domestic | ////////////////// |
offices reported in Schedule RC-C, part I, item 4.a, column B ...... | 5563 N/A | 2.b.
______________________
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
| | Amount |
| | Currently |
| Number of Loans | Outstanding |
____________________ ____________________
Dollar Amounts in Thousands | RCON | ///////////| RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
3. Number and amount currently outstanding of "Loans secured by nonfarm | /////////////////////////////////////// | 1.
nonresidential properties" in domestic offices reported in Schedule RC-C | /////////////////////////////////////// | 1.a.
part I item 1.e, column B (sum of items 3.a through 3.c must be less | /////////////////////////////////////// |
or equal to Schedule RC-C, part I, item 1.e, column B): | /////////////////////////////////////// | 1.b
a. With original amounts of $100,000 or less ........................... | 5564 1,988 | 5565 76,370 | 3.a.
b. With original amounts of more than $100,000 through $250,000 ........ | 5566 2,805 | 5567 332,639 | 3.b.
c. With original amounts of more than $250,000 through $1,000,000 ...... | 5568 2,736 | 5569 952,476 | 3.c.
4. Number and amount currently outstanding of "Commercial and industrial | /////////////////////////////////////// |
loans to U.S. addressees" in domestic offices reported in Schedule RC-C, | /////////////////////////////////////// |
part I, item 4.a, column B (sum of items 4.a through 4.c must be less | /////////////////////////////////////// |
than or equal to Schedule RC-C, part I, item 4.a, column B): | /////////////////////////////////////// |
a. With original amounts of $100,000 or less ........................... | 5570 11,433 | 5571 337,759 | 4.a.
b. With original amounts of more than $100,000 through $250,000 ........ | 5572 2,127 | 5573 228,713 | 4.b.
c. With original amounts of more than $250,000 through $1,000,000 ...... | 5574 1,968 | 5575 601,126 | 4.c.
___________________________________________
</TABLE>
17a
<PAGE> 39
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-7b
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
Schedule RC-C -- Continued
Part II. Continued
Agricultural Loans to Small Farms
<TABLE>
<S> <C> <C>
5. Indicate in the appropriate box at the right whether all or substantially all of the
dollar volume of your bank's "Loans secured by farmland (including farm residential
and other improvements)" in domestic offices reported in Schedule RC-C, part I, item
1.b, column B, and all or substantially all of the dollar volume of your bank's
"Loans to finance agricultural production and other loans to farmers" in domestic
offices reported in Schedule RC-C, part I, item 3, column B, have original amounts
of $100,000 or less (If your bank has no loans outstanding in both of these two YES NO
loan categories, place an "X" in the box marked "NO" and do not complete items 7 _______________________
and 8; otherwise, see instructions for further information.)................................... | 6860 | | /// | X | 5.
|_____________________|
If YES, complete items 6.a and 6.b below and do not complete items 7 and 8.
If NO and your bank has loans outstanding in either loan category, skip items 6.a and 6.b
and complete items 7 and 8 below.
</TABLE>
<TABLE>
<S> <C>
______________________
| Number of Loans |
6. Report the total number of loans currently outstanding for each of the |____________________|
following Schedule RC-C, part I, loan categories: | RCON |//////////// |
a. "Loans secured by farmland (including farm residential and other |______| |
improvements)" in domestic offices reported in Schedule RC-C, part I, | ////////////////// |
item 1.b, column B........................................................ | 5576 N/A | 6.a.
b. "Loans to finance agricultural production and other loans to farmers" in | ////////////////// |
domestic offices reported in Schedule RC-C, part I, item 3, column B...... | 5577 N/A | 6.b.
|____________________|
</TABLE>
<TABLE>
<S> <C> <C>
_____________________________________________
| (Column A) | (Column B) |
| | Amount |
| | Currently |
| Number of Loans | Outstanding |
|_____________________|______________________|
Dollar Amounts in Thousands | RCON |/////////////| RCON Bil Mil Thou |
________________________________________________________________________________| ______| |_____________________ |
7. Number and amount currently outstanding of "Loans secured by farmland | ////////////////////////////////////////// |
(including farm residential and other improvements)" in domestic offices | ////////////////////////////////////////// |
reported in Schedule RC-C, part I, item 1.b, column B (sum of items 7.a | ////////////////////////////////////////// |
through 7.c must be less than or equal to Schedule RC-C, part I, item 1.b, | ////////////////////////////////////////// |
column B): | ////////////////////////////////////////// |
a. With original amounts of $100,000 or less............................... | 5578 18 | 5579 292 | 7.a.
b. With original amounts of more than $100,000 through $250,000............ | 5580 8 | 5581 850 | 7.b.
c. With original amounts of more than $250,000 through $500,000............ | 5582 4 | 5583 1,030 | 7.c.
8. Number and amount currently outstanding of "Loans to finance agricultural | ////////////////////////////////////////// |
production and other loans to farmers" in domestic offices reported in | ////////////////////////////////////////// |
Schedule RC-C, part I, item 3, column B (sum of items 8.a through 8.c | ////////////////////////////////////////// |
must be less than or equal to Schedule RC-C, part I, item 3, column B): | ////////////////////////////////////////// |
a. With original amounts of $100,000 or less............................... | 5584 46 | 5585 992 | 8.a.
b. With original amounts of more than $100,000 through $250,000............ | 5586 17 | 5587 1,877 | 8.b.
c. With original amounts of more than $250,000 through $500,000............ | 5588 4 | 5589 1,054 | 8.c.
|_____________________|______________________|
</TABLE>
17b
<PAGE> 40
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-8
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
Schedule RC-D--Trading Assets and Liabilities
Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2 billion or more in par/notional
amount of off-balance sheet derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e, columns A through D).
__________
| C420 |
__________________________
Dollar Amounts in Thousands | ////////// Bil Mil Thou|
__________________________________________________________________________________________________| ________________________|
<S> <C> <C>
ASSETS | /////////////////////// |
1. U.S. Treasury securities in domestic offices ................................................ | RCON 3531 0 | 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- | /////////////////////// |
backed securities) .......................................................................... | RCON 3532 0 | 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices ...... | RCON 3533 0 | 3.
4. Mortgage-backed securities (MBS) in domestic offices: | /////////////////////// |
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA ..................... | RCON 3534 0 | 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA | /////////////////////// |
(include CMOs, REMICs, and stripped MBS) ................................................. | RCON 3535 0 | 4.b.
c. All other mortgage-backed securities ......................................................| RCON 3536 0 | 4.c.
5. Other debt securities in domestic offices ................................................... | RCON 3537 0 | 5.
6. Certificates of deposit in domestic offices ................................................. | RCON 3538 0 | 6.
7. Commercial paper in domestic offices ........................................................ | RCON 3539 0 | 7.
8. Bankers acceptances in domestic offices ..................................................... | RCON 3540 0 | 8.
9. Other trading assets in domestic offices .................................................... | RCON 3541 0 | 9.
10. Trading assets in foreign offices ........................................................... | RCFN 3542 0 | 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts: | /////////////////////// |
a. In domestic offices ...................................................................... | RCON 3543 66,696 | 11.a.
b. In foreign offices ....................................................................... | RCFN 3544 4,658 | 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) ........... | RCFD 3545 71,354 | 12.
<CAPTION>
___________________________
___________________________
| ///////// Bil Mil Thou |
LIABILITIES | ________________________|_
<S> <C> <C>
13. Liability for short positions ............................................................... | RCFD 3546 0 | 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts ................................................................................... | RCFD 3547 57,446 | 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ...... | RCFD 3548 57,446 | 15.
___________________________
</TABLE>
18
<PAGE> 41
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-9
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Deposit Liabilities
Part I. Deposits in Domestic Offices
__________
| C425 | <-
______________________________________________________ ________
| | Nontransaction |
| Transaction Accounts | Accounts |
_________________________________________ ____________________
| (Column A) | (Column B) | (Column C) |
| Total transaction | Memo: Total | Total |
| accounts (including| demand deposits | nontransaction |
| total demand | (included in | accounts |
| deposits) | column A) | (including MMDAs) |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou |
__________________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
Deposits of: | ////////////////// | ////////////////// | ////////////////// |
1. Individuals, partnerships, and corporations .......... | 2201 8,615,650 | 2240 8,158,203 | 2346 22,594,478 | 1.
2. U.S. Government ...................................... | 2202 58,650 | 2280 58,605 | 2520 42,512 | 2.
3. States and political subdivisions in the U.S. ........ | 2203 818,151 | 2290 706,072 | 2530 702,686 | 3.
4. Commercial banks in the U.S. ......................... | 2206 836,005 | 2310 836,005 | 2550 771 | 4.
5. Other depository institutions in the U.S. ............ | 2207 221,571 | 2312 221,571 | 2349 2,968 | 5.
6. Banks in foreign countries ........................... | 2213 18,445 | 2320 18,445 | 2236 0 | 6.
7. Foreign governments and official institutions | ////////////////// | ////////////////// | ////////////////// |
(including foreign central banks) .................... | 2216 108 | 2300 108 | 2377 0 | 7.
8. Certified and official checks ........................ | 2330 198,585 | 2330 198,585 | ////////////////// | 8.
9. Total (sum of items 1 through 8) (sum of | ////////////////// | ////////////////// | ////////////////// |
columns A and C must equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// |
item 13.a) ........................................... | 2215 10,767,165 | 2210 10,197,594 | 2385 23,343,415 | 9.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Memoranda Dollar Amounts in Thousands | RCON Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): | ////////////////// |
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ......................... | 6835 2,735,425 | M.1.a.
b. Total brokered deposits ..................................................................... | 2365 1,636,611 | M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): | ////////////////// |
(1) Issued in denominations of less than $100,000 ........................................... | 2343 2,350 | M.1.c.(1)
(2) Issued EITHER in denominations of $100,000 OR in denominations greater than $100,000 | ////////////////// |
and participated out by the broker in shares of $100,000 or less ........................ | 2344 1,634,261 | M.1.c.(2)
d. MATURITY DATA FOR BROKERED DEPOSITS: | ////////////////// |
(1) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF LESS THAN $100,000 WITH A REMAINING | ////////////////// |
MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.c.(1) ABOVE)................. | A243 171 | M.1.d.(1)
(2) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF $100,000 OR MORE WITH A REMAINING | ////////////////// |
MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.b ABOVE)..................... | A244 509,265 | M.1.d.(2)
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. | ////////////////// |
reported in item 3 above which are secured or collateralized as required under state law) ... | 5590 457,587 | M.1.e.
2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d must | ////////////////// |
equal item 9, column C above): | ////////////////// |
a. Savings deposits: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................................................... | 6810 10,738,339 | M.2.a.(1)
(2) Other savings deposits (excludes MMDAs) ................................................. | 0352 2,655,659 | M.2.a.(2)
b. Total time deposits of less than $100,000 ................................................... | 6648 7,247,099 | M.2.b.
c. Time certificates of deposit of $100,000 or more ............................................ | 6645 2,702,318 | M.2.c.
d. Open-account time deposits of $100,000 or more .............................................. | 6646 0 | M.2.d.
3. All NOW accounts (included in column A above) .................................................. | 2398 569,571 | M.3.
4. Not applicable
______________________
</TABLE>
19
<PAGE> 42
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-10
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
Schedule RC-E--Continued
Part I. Continued
Memoranda (continued)
_________________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
5. Maturity and repricing data for time deposits of less than $100,000 (sum of | ////////////////// |
Memorandum items 5.a.(1) through 5.b.(3) must equal Memorandum item 2.b above):(1) | ////////////////// |
a. Fixed rate time deposits of less than $100,000 with a remaining maturity of: | ////////////////// |
(1) Three months or less.................................................................... | A225 1,684,248 | M.5.a.(1)
(2) Over three months through 12 months..................................................... | A226 3,493,722 | M.5.a.(2)
(3) Over one year........................................................................... | A227 2,002,999 | M.5.a.(3)
b. Floating rate time deposits of less than $100,000 with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently............................................................ | A228 66,130 | M.5.b.(1)
(2) Annually or more frequently, but less frequently than quarterly......................... | A229 0 | M.5.b.(2)
(3) Less frequently than annually........................................................... | A230 0 | M.5.b.(3)
c. Floating rate time deposits of less than $100,000 with a remaining maturity of | ////////////////// |
one year or less (included in Memorandum items 5.b.(1) through 5.b.(3) above)............... | A231 45,084 | M.5.c.
6. Maturity and repricing data for time deposits of $100,000 or more (i.e., time certificates | ////////////////// |
of deposit of $100,000 or more and open-account time deposits of $100,000 or more) | ////////////////// |
(sum of Memorandum items 6.a.(1) through 6.b.(4) must equal the sum of Memorandum | ////////////////// |
items 2.c and 2.d above):(1) | ////////////////// |
a. Fixed rate time deposits of $100,000 or more with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | A232 534,657 | M.6.a.(1)
(2) Over three months through 12 months .................................................... | A233 754,429 | M.6.a.(2)
(3) Over one year through five years ....................................................... | A234 1,282,541 | M.6.a.(3)
(4) Over five years ........................................................................ | A235 36,761 | M.6.a.(4)
b. Floating rate time deposits of $100,000 or more with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ........................................................... | A236 31,182 | M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | A237 37,950 | M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | A238 24,798 | M.6.b.(3)
(4) Less frequently than every five years .................................................. | A239 0 | M.6.b.(4)
c. Floating rate time deposits of $100,000 or more with a remaining maturity of | ////////////////// |
one year or less (included in Memorandum items 6.b.(1) through 6.b.(4) above)............... | A240 19,186 | M.6.c.
______________________
</TABLE>
_______________
(1) Memorandum items 5 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
20
<PAGE> 43
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-11
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Continued
Part II. Deposits in Foreign Offices (including Edge and
Agreement subsidiaries and IBFs)
______________________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
Deposits of: | ////////////////// |
1. Individuals, partnerships, and corporations ................................................... | 2621 1,730,162 | 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks) ................................ | 2623 0 | 2.
3. Foreign banks (including U.S. branches and agencies of foreign banks, including their IBFs).... | 2625 0 | 3.
4. Foreign governments and official institutions (including foreign central banks) ............... | 2650 0 | 4.
5. Certified and official checks ................................................................. | 2330 0 | 5.
6. All other deposits ............................................................................ | 2668 15,501 | 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) .......................... | 2200 1,745,663 | 7.
Memorandum
Dollar Amounts in Thousands |RCFN Bil Mil Thou |
________________________________________________________________________________________________________________________
1. Time deposits with a remaining maturity of one year or less (included in Part II, item 7 above) |A245 1,745,263 | M.1.
______________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-F--Other Assets
__________
| C430 | <-
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Income earned, not collected on loans ........................................................ | RCFD 2164 167,538 | 1.
2. Net deferred tax assets(1) ................................................................... | RCFD 2148 0 | 2.
3. Excess residential mortgage servicing fees receivable ........................................ | RCFD 5371 134,288 | 3.
4. Other (itemize and describe amounts that exceed 25% of this item)............................. | RCFD 2168 3,676,812 | 4.
_____________ ___________________________
a. | TEXT 3549 | Mortgages held for Resale | RCFD 3549 | 1,858,683 | /////////////////////// | 4.a.
_________________________________________________________________| | | |
___________
b. | TEXT 3550 |____________________________________________________| RCFD 3550 | | /////////////////////// | 4.b.
___________
c. | TEXT 3551 |____________________________________________________| RCFD 3551 | | /////////////////////// | 4.c.
_____________
___________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) ........................... | RCFD 2160 3,978,638 | 5.
___________________________
<CAPTION>
Memorandum ___________________________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes ............................... | RCFD 5610 0 | M.1.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-G--Other Liabilities
__________
| C435 | <-
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices(2) ............................ | RCON 3645 58,011 | 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable) ................. | RCFD 3646 594,954 | 1.b.
2. Net deferred tax liabilities(1) .............................................................. | RCFD 3049 119,644 | 2.
3. Minority interest in consolidated subsidiaries ............................................... | RCFD 3000 0 | 3.
4. Other (itemize and describe amounts that exceed 25% of this item)............................. | RCFD 2938 478,843 | 4.
_____________ ___________________________
a. | TEXT 3552 |____________________________________________________| RCFD 3552 | | /////////////////////// | 4.a.
___________
b. | TEXT 3553 |____________________________________________________| RCFD 3553 | | /////////////////////// | 4.b.
___________
c. | TEXT 3554 |____________________________________________________| RCFD 3554 | | /////////////////////// | 4.c.
_____________
___________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) ........................... | RCFD 2930 1,251,452 | 5.
</TABLE>
____________
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
21
<PAGE> 44
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-12
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices
__________
| C440 | <-
____________ ________
| Domestic Offices |
____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Customers' liability to this bank on acceptances outstanding .................................... | 2155 16,634 | 1.
2. Bank's liability on acceptances executed and outstanding ........................................ | 2920 16,634 | 2.
3. Federal funds sold and securities purchased under agreements to resell .......................... | 1350 17,428 | 3.
4. Federal funds purchased and securities sold under agreements to repurchase ...................... | 2800 4,868,836 | 4.
5. Other borrowed money ............................................................................ | 3190 1,380,694 | 5.
EITHER | ////////////////// |
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 2163 N/A | 6.
OR | ////////////////// |
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs ....................... | 2941 1,669,058 | 7.
| ////////////////// |
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs) . | 2192 48,946,123 | 8.
| ////////////////// |
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs)| 3129 42,919,946 | 9.
______________________
</TABLE>
<TABLE>
<CAPTION>
Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices. ______________________
| RCON Bil Mil Thou |
____________________
<S> <C> <C>
10. U.S. Treasury securities ....................................................................... | 1779 1,252,796 | 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed | ////////////////// |
securities) .................................................................................... | 1785 505 | 11.
12. Securities issued by states and political subdivisions in the U.S. ............................. | 1786 159,244 | 12.
13. Mortgage-backed securities (MBS): | ////////////////// |
a. Pass-through securities: | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1787 5,684,860 | 13.a.(1)
(2) Other pass-through securities ........................................................... | 1869 4 | 13.a.(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1877 0 | 13.b.(1)
(2) All other mortgage-backed securities..................................................... | 2253 518 | 13.b.(2)
14. Other domestic debt securities ................................................................. | 3159 812 | 14.
15. Foreign debt securities ........................................................................ | 3160 97,035 | 15.
16. Equity securities: | ////////////////// |
a. Investments in mutual funds ................................................................. | 3161 0 | 16.a.
b. Other equity securities with readily determinable fair values ............................... | 3162 0 | 16.b.
c. All other equity securities ................................................................. | 3169 311,734 | 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) .......... | 3170 7,507,508 | 17.
______________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
EITHER | ////////////////// |
1. Net due from the IBF of the domestic offices of the reporting bank .............................. | 3051 0 | M.1.
OR | ////////////////// |
2. Net due to the IBF of the domestic offices of the reporting bank ................................ | 3059 N/A | M.2.
______________________
</TABLE>
22
<PAGE> 45
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-13
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Schedule RC-I--Selected Assets and Liabilities of IBFs
To be completed only by banks with IBFs and other "foreign" offices. __________
| C445 | <-
____________ ________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) ................. | 2133 0 | 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, | ////////////////// |
column A) ..................................................................................... | 2076 0 | 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A) .... | 2077 0 | 3.
4. Total IBF liabilities (component of Schedule RC, item 21) ..................................... | 2898 0 | 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, | ////////////////// |
part II, items 2 and 3) ....................................................................... | 2379 0 | 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ..... | 2381 0 | 6.
______________________
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Schedule RC-K--Quarterly Averages (1)
__________
| C455 | <-
_________________ ________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
ASSETS | /////////////////////// |
1. Interest-bearing balances due from depository institutions .............................. | RCFD 3381 10,737 | 1.
2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2) ...... | RCFD 3382 6,349,267 | 2.
3. Securities issued by states and political subdivisions in the U.S.(2) ................... | RCFD 3383 155,938 | 3.
4. a. Other debt securities(2) ............................................................. | RCFD 3647 98,458 | 4.a.
b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock). | RCFD 3648 347,675 | 4.b.
5. Federal funds sold and securities purchased under agreements to resell in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ............. | RCFD 3365 812,114 | 5.
6. Loans: | ///////////////////// // |
a. Loans in domestic offices: | /////////////////////// |
(1) Total loans ...................................................................... | RCON 3360 31,884,320 | 6.a.(1)
(2) Loans secured by real estate ..................................................... | RCON 3385 14,940,513 | 6.a.(2)
(3) Loans to finance agricultural production and other loans to farmers .............. | RCON 3386 5,935 | 6.a.(3)
(4) Commercial and industrial loans .................................................. | RCON 3387 12,923,362 | 6.a.(4)
(5) Loans to individuals for household, family, and other personal expenditures ...... | RCON 3388 2,224,980 | 6.a.(5)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............ | RCFN 3360 70,458 | 6.b.
7. Trading assets .......................................................................... | RCFD 3401 105,824 | 7.
8. Lease financing receivables (net of unearned income) .................................... | RCFD 3484 2,231,479 | 8.
9. Total assets (4) ........................................................................ | RCFD 3368 52,282,230 | 9.
LIABILITIES | /////////////////////// |
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, | /////////////////////// |
and telephone and preauthorized transfer accounts) (exclude demand deposits) ............ | RCON 3485 965,535 | 10.
11. Nontransaction accounts in domestic offices: | /////////////////////// |
a. Money market deposit accounts (MMDAs) ................................................ | RCON 3486 9,210,475 | 11.a.
b. Other savings deposits ............................................................... | RCON 3487 3,907,216 | 11.b.
c. Time certificates of deposit of $100,000 or more ..................................... | RCON 3345 2,653,452 | 11.c.
d. All other time deposits .............................................................. | RCON 3469 7,513,443 | 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs.. | RCFN 3404 1,765,593 | 12.
13. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ............. | RCFD 3353 6,363,286 | 13.
14. Other borrowed money .................................................................... | RCFD 3355 2,670,145 | 14.
___________________________
</TABLE>
_______________
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter, or
(2) an average of weekly figures (i.e., the Wednesday of each week of the
quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on historical
cost.
(4) The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
23
<PAGE> 46
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-14
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-L--Off-Balance Sheet Items
Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts
reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk. __________
| C460 | <-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unused commitments: | ////////////////// |
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home | ////////////////// |
equity lines ............................................................................... | 3814 1,637,875 | 1.a.
b. Credit card lines .......................................................................... | 3815 32,940 | 1.b.
c. Commercial real estate, construction, and land development: | ////////////////// |
(1) Commitments to fund loans secured by real estate ....................................... | 3816 648,369 | 1.c.(1)
(2) Commitments to fund loans not secured by real estate ................................... | 6550 383,022 | 1.c.(2)
d. Securities underwriting .................................................................... | 3817 0 | 1.d.
e. Other unused commitments ................................................................... | 3818 18,626,522 | 1.e.
2. Financial standby letters of credit and foreign office guarantees ............................. | 3819 2,337,268 | 2.
___________________________
a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 158,029 | ////////////////// | 2.a.
___________________________
3. Performance standby letters of credit and foreign office guarantees ........................... | 3821 175,703 | 3.
a. Amount of performance standby letters of credit conveyed to | ////////////////// |
___________________________
others .......................................................... | RCFD 3822 | 12,580 | ////////////////// | 3.a.
___________________________
4. Commercial and similar letters of credit ...................................................... | 3411 176,335 | 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by | ////////////////// |
the reporting bank ............................................................................ | 3428 16,524 | 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting | ////////////////// |
(nonaccepting) bank ........................................................................... | 3429 7,409 | 6.
7. Securities borrowed ........................................................................... | 3432 0 | 7.
8. Securities lent (including customers' securities lent where the customer is indemnified | ////////////////// |
against loss by the reporting bank) ........................................................... | 3433 0 | 8.
9. Loans transferred (i.e., sold or swapped) with recourse that have been treated as sold for | ////////////////// |
Call Report purposes: | ////////////////// |
a. FNMA and FHLMC residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3650 246,244 | 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3651 246,244 | 9.a.(2)
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3652 33,550 | 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3653 33,550 | 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3654 0 | 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3655 0 | 9.c.(2)
d. Small business obligations transferred with recourse under Section 208 of the | ////////////////// |
Riegle Community Development and Regulatory Improvement Act of 1994: | ////////////////// |
(1) Outstanding principal balance of small business obligations transferred | ////////////////// |
as of the report date................................................................... | A249 0 | 9.d.(1)
(2) Amount of retained recourse on these obligations as of the report date.................. | A250 0 | 9.d.(2)
10. When-issued securities: | ////////////////// |
a. Gross commitments to purchase .............................................................. | 3434 0 | 10.a.
b. Gross commitments to sell .................................................................. | 3435 0 | 10.b.
11. Spot foreign exchange contracts ............................................................... | 8765 622,366 | 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") | 3430 0 | 12.
a. | TEXT 3555 |______________________________________________________| RCFD 3555 | | ////////////////// | 12.a.
b. | TEXT 3556 |______________________________________________________| RCFD 3556 | | ////////////////// | 12.b.
___________
c. | TEXT 3557 |______________________________________________________| RCFD 3557 | | ////////////////// | 12.c.
_____________
d. | TEXT 3558 |______________________________________________________| RCFD 3558 | | ////////////////// | 12.d.
_____________ _______________________________________________
Dollar Amounts in Thousands RCFD Bil Mil Thou
_________________________________________________________________________________________________________________________
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC,item 28,"Total equity capital") | 5591 0 | 13.
_____________ __________________________
a. | TEXT 5592 |______________________________________________________| RCFD 5592 | | ////////////////// | 13.a.
___________
b. | TEXT 5593 |______________________________________________________| RCFD 5593 | | ////////////////// | 13.b.
___________
c. | TEXT 5594 |______________________________________________________| RCFD 5594 | | ////////////////// | 13.c.
_____________
d. | TEXT 5595 |______________________________________________________| RCFD 5595 | | ////////////////// | 13.d.
_____________
________________________________________________
</TABLE>
24
<PAGE> 47
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-15
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L -- Continued
_____________
| C461 | <-
_________________________________________ ____________________________|___________|
| (Column A) | (Column B) | (Column C) | (Column D) |
| Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other|
| Contracts | Contracts | Contracts | Contracts |
|___________________|____________________|____________________|____________________|
Dollar Amounts in Thousands |Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou |
_______________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
| Off-balance Sheet Derivatives | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
| Position Indicators | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
____________________________________| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
14. Gross amounts (e.g., notional | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
amounts) (for each column, sum of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
items 14.a through 14.e must equal | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
sum of items 15, 16.a, and 16.b): |___________________|____________________|___________________ |____________________|
a. Futures contracts ............. | 1,229,392 | 0 | 0 | 36,486 | 14.a.
|___________________|____________________|____________________|____________________|
| RCFD 8693 | RCFD 8694 | RCFD 8695 | RCFD 8696 |
|___________________|____________________|____________________|____________________|
b. Forward contracts ............. | 2,576,500 | 1,931,682 | 0 | 21,832 | 14.b.
|___________________|____________________|____________________|____________________|
| RCFD 8697 | RCFD 8698 | RCFD 8699 | RCFD 8700 |
|___________________|____________________|____________________|____________________|
c. Exchange-traded option contracts:| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
|___________________|____________________|____________________|____________________|
(1) Written options .......... | 0 | 0 | 0 | 0 | 14.c.(1)
|___________________|____________________|____________________|____________________|
| RCFD 8701 | RCFD 8702 | RCFD 8703 | RCFD 8704 |
|___________________|____________________|____________________|____________________|
(2) Purchased options ........ | 450,000 | 0 | 0 | 2,206 | 14.c.(2)
|___________________|____________________|____________________|____________________|
| RCFD 8705 | RCFD 8706 | RCFD 8707 | RCFD 8708 |
|___________________|____________________|____________________|____________________|
d. Over-the-counter option contracts: | //////////////////| ///////////////// | ///////////////// | //////////////// |
(1) Written options .......... | 1,324,980 | 3,887 | 0 | 0 | 14.d.(1)
|___________________|____________________|____________________|____________________|
| RCFD 8709 | RCFD 8710 | RCFD 8711 | RCFD 8712 |
|___________________|____________________|____________________|____________________|
(2) Purchased options ........ | 10,131,934 | 3,887 | 0 | 0 | 14.d.(2)
|___________________|____________________|____________________|____________________|
| RCFD 8713 | RCFD 8714 | RCFD 8715 | RCFD 8716 |
|___________________|____________________|____________________|____________________|
e. Swaps ............................ | 19,502,262 | 0 | 0 | 0 | 14.e.
|___________________|____________________|____________________|____________________|
| RCFD 3450 | RCFD 3826 | RCFD 8719 | RCFD 8720 |
|___________________|____________________|____________________|____________________|
15. Total gross notional amount of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
derivative contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading ......................... | 3,386,305 | 1,939,456 | 0 | 2,206 | 15.
|___________________|____________________|____________________|____________________|
| RCFD A126 | RFD A127 | RCFD 8723 | RCFD 8724 |
|___________________|____________________|____________________|____________________|
16. Total gross notional amount of | ///////////////// | //////////////// | ///////////////// | ////////////////// |
derivative contracts held for | ///////////////// | ///////////////// | ///////////////// | ////////////////// |
purposes other than trading: | ///////////////// | ///////////////// | ///////////////// | ////////////////// |
|___________________|____________________|____________________|____________________|
a. Contracts marked to market ... | 4,202,500 | 0 | 0 | 36,486 | 16.a.
|___________________|____________________|____________________|____________________|
| RCFD 8725 | RCFD 8726 | RCF 8727 | RCFD 8728 |
|___________________|____________________|____________________|____________________|
b. Contracts not marked to market | 27,626,263 | 0 | 0 | 21,832 | 16.b.
|___________________|____________________|____________________|____________________|
| RCFD 8729 | RCFD 8730 | RFD 8731 | RCFD 8732 |
|___________________|____________________|____________________|____________________|
</TABLE>
25
<PAGE> 48
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-16
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L -- Continued
<CAPTION>
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
Dollar Amounts in Thousands | Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other|
___________________________________| Contracts | Contracts | Contracts | Contracts |
| Off-balance Sheet Derivatives |___________________|____________________|____________________|____________________|
| Position Indicators |RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
|_____________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
17. Gross fair values of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
derivative contracts: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8733 29,782 | 8734 41,523 | 8735 0 | 8736 58 | 17.a.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8737 20,932 | 8738 36,511 | 8739 0 | 8740 0 | 17.a.(2)
b. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading that are marked | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8741 524 | 8742 0 | 8743 0 | 8744 1,452 | 17.b.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8745 2,834 | 8746 0 | 8747 0 | 8748 0 | 17.b.(2)
c. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading that are not | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
marked to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value .................. | 8749 64,085 | 8750 0 | 8751 0 | 8752 100 | 17.c.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8753 111,703 | 8754 0 | 8755 0 | 8756 0 | 17.c.(2)
|__________________________________________________________________________________|
</TABLE>
<TABLE>
<CAPTION>
______________________
Memoranda Dollar Amounts in Thousands | RCFD Bil Mil Thou |
_________________________________________________________________________________________________________________________
<S> <C> <C>
1. -2. Not applicable | ////////////////// |
3. Unused commitments with an original maturity exceeding one year that are reported in | ////////////////// |
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments | ////////////////// |
that are fee paid or otherwise legally binding) ................................................ | 3833 16,829,602 | M.3.
a. Participations in commitments with an original maturity | ////////////////// |
exceeding one year conveyed to others ................................|RCFD 3834 | 1,310,691 | ////////////////// | M.3.a.
________________________
4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Standby letters of credit and foreign office guarantees (both financial and performance) issued | ////////////////// |
to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above .............. | 3377 341,139 | M.4.
5. Installment loans to individuals for household, family, and other personal expenditures that | ////////////////// |
have been securitized and sold without recourse (with servicing retained), amounts outstanding | ////////////////// |
by type of loan: | ////////////////// |
a. Loans to purchase private passenger automobiles (to be completed for the | ////////////////// |
September report only)....................................................................... | 2741 N/A | M.5.a.
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY)................................... | 2742 0 | M.5.b.
c. All other consumer installment credit (including mobile home loans)(to be completed for the | ////////////////// |
September report only........................................................................ | 2743 N/A | M.5.c
|____________________|
</TABLE>
26
<PAGE> 49
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-17
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9| _____________
| C465 |
_________|___________|
Schedule RC-M--Memoranda | |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
______________________________________________________________________________________________________|____________________|
<S> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal | ////////////////// |
shareholders, and their related interests as of the report date: | ////////////////// |
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal | ////////////////// |
shareholders and their related interests ..................................................... | 6164 605,294 | 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of all | ////////////////// |
extensions of credit by the reporting bank (including extensions of credit to | ////////////////// |
related interests) equals or exceeds the lesser of $500,000 or 5 percent Number | ////////////////// |
___________________________| ////////////////// |
of total capital as defined for this purpose in agency regulations. | RCFD 6165 | 24 | ////////////////// |
___________________________| ////////////////// | 1.b.
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches | ////////////////// |
and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b) .................... | 3405 0 | 2.
3. Not applicable. | ////////////////// |
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others | ////////////////// |
(include both retained servicing and purchased servicing): | ////////////////// |
a. Mortgages serviced under a GNMA contract ...................................................... | 5500 28,855,729 | 4.a.
b. Mortgages serviced under a FHLMC contract: | ////////////////// |
(1) Serviced with recourse to servicer ........................................................ | 5501 55,604 | 4.b.(1)
(2) Serviced without recourse to servicer ..................................................... | 5502 32,340,522 | 4.b.(2)
c. Mortgages serviced under a FNMA contract: | ////////////////// |
(1) Serviced under a regular option contract .................................................. | 5503 190,640 | 4.c.(1)
(2) Serviced under a special option contract .................................................. | 5504 38,282,672 | 4.c.(2)
d. Mortgages serviced under other servicing contracts ............................................ | 5505 8,508,320 | 4.d.
5. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must | ////////////////// |
equal Schedule RC, item 9): | ////////////////// |
a. U.S. addressees (domicile) .................................................................... | 2103 16,297 | 5.a.
b. Non-U.S. addressees (domicile) ................................................................ | 2104 337 | 5.b.
6. Intangible assets: | ////////////////// |
a. Mortgage servicing rights ..................................................................... | 3164 1,483,959 | 6.a.
b. Other identifiable intangible assets: | ////////////////// |
(1) Purchased credit card relationships ....................................................... | 5506 0 | 6.b.(1)
(2) All other identifiable intangible assets .................................................. | 5507 126,463 | 6.b.(2)
c. Goodwill ...................................................................................... | 3163 672,992 | 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) ........................ | 2143 2,283,414 | 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or | ////////////////// |
are otherwise qualifying for regulatory capital purposes ...................................... | 6442 0 | 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to | ////////////////// |
redeem the debt ...................................................................................| 3295 75,000 | 7.
______________________
</TABLE>
- ------------
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
27
<PAGE> 50
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-18
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-M--Continued ________________________
Dollar Amounts in Thousands | Bil Mil Thou|
_____________________________________________________________________________________________ |_______________________|
<S> <C> <C>
8. a. Other real estate owned: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5372 0 | 8.a.(1)
(2) All other real estate owned: | /////////////////////// |
(a) Construction and land development in domestic offices ....................... | RCON 5508 4,537 | 8.a.(2)(a)
(b) Farmland in domestic offices ................................................ | RCON 5509 0 | 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices ....................... | RCON 5510 8,067 | 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices .......... | RCON 5511 740 | 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices ....................... | RCON 5512 21,202 | 8.a.(2)(e)
(f) In foreign offices .......................................................... | RCFN 5513 0 | 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ....... | RCFD 2150 34,546 | 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5374 0 | 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies ... | RCFD 5375 0 | 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ....... | RCFD 2130 0 | 8.b.(3)
c. Total assets of unconsolidated subsidiaries and associated companies ................ | RCFD 5376 0 | 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, | /////////////////////// |
item 23, "Perpetual preferred stock and related surplus" ............................... | RCFD 3778 125,000 | 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include | /////////////////////// |
proprietary, private label, and third party products): | /////////////////////// |
a. Money market funds .................................................................. | RCON 6441 55,245 | 10.a.
b. Equity securities funds ............................................................. | RCON 8427 108,359 | 10.b.
c. Debt securities funds ............................................................... | RCON 8428 13,250 | 10.c.
d. Other mutual funds .................................................................. | RCON 8429 0 | 10.d.
e. Annuities ........................................................................... | RCON 8430 102,292 | 10.e.
f. Sales of proprietary mutual funds and annuities (included in items 10.a through | /////////////////////// |
10.e. above) ........................................................................... | RCON 8784 150,100 | 10.f.
_________________________
</TABLE>
<TABLE>
<CAPTION>
_________________________________________________________________________________________________________________________________
| |
______________________
|Memorandum Dollar Amounts in Thousands | RCFD Bil Mil Thou | |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
|1. Interbank holdings of capital instruments (to be completed for the December report only): | ////////////////// | |
| a. Reciprocal holdings of banking organizations' capital instruments ........................ | 3836 N/A | M.1.a. |
| b. Nonreciprocal holdings of banking organizations' capital instruments ..................... | 3837 N/A | M.1.b. |
______________________
| |
_________________________________________________________________________________________________________________________________
</TABLE>
28
<PAGE> 51
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-19
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Past Due and Nonaccrual Loans, Leases,
and Other Assets
The FFIEC regards the information reported in __________
all of Memorandum item 1, in items 1 through 10, | C470 | <-
column A, and in Memorandum items 2 through 4, ______________________________________________________ ________
column A, as confidential. | (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
| accruing | accruing | |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | 1245 | 1246 71,390 | 1247 223,962 | 1.a.
b. To non-U.S. addressees (domicile) ............ | 1248 | 1249 0 | 1250 0 | 1.b.
2. Loans to depository institutions and | ///// | ////////////////// | ////////////////// |
acceptances of other banks: | ///// | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository | ///// | ////////////////// | ////////////////// |
institutions ................................. | 5377 | 5378 0 | 5379 0 | 2.a.
b. To foreign banks ............................. | 5380 | 5381 0 | 5382 0 | 2.b.
3. Loans to finance agricultural production and | ///// | ////////////////// | ////////////////// |
other loans to farmers .......................... | 1594 | 1597 385 | 1583 531 | 3.
4. Commercial and industrial loans: | ///// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | 1251 | 1252 11,945 | 1253 108,334 | 4.a.
b. To non-U.S. addressees (domicile) ............ | 1254 | 1255 0 | 1256 0 | 4.b.
5. Loans to individuals for household, family, and | ///// | ////////////////// | ////////////////// |
other personal expenditures: | ///// | ////////////////// | ///////////////// |
a. Credit cards and related plans ............... | 5383 | 5384 1,187 | 5385 669 | 5.a.
b. Other (includes single payment, installment, | ///// | ////////////////// | ////////////////// |
and all student loans) ....................... | 5386 | 5387 22,600 | 5388 8,465 | 5.b.
6. Loans to foreign governments and official | ///// | ////////////////// | ////////////////// |
institutions .................................... | 5389 | 5390 0 | 5391 0 | 6.
7. All other loans ................................. | 5459 | 5460 14,909 | 5461 1,919 | 7.
8. Lease financing receivables: | ///// | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ................ | 1257 | 1258 95 | 1259 6,544 | 8.a.
b. Of non-U.S. addressees (domicile) ............ | 1271 | 1272 0 | 1791 0 | 8.b.
9. Debt securities and other assets (exclude other | ///// | ////////////////// | ////////////////// |
real estate owned and other repossessed assets) . | 3505 | 3506 0 | 3507 85,778 | 9.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
________________________________________________________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
10. Loans and leases reported in items 1 | | | |
through 8 above which are wholly or partially | ///// | ////////////////// | ////////////////// |
guaranteed by the U.S. Government ............... | 5612 | 5613 18,447 | 5614 21,415 | 10.
a. Guaranteed portion of loans and leases | ///// | ////////////////// | ////////////////// |
included in item 10 above .................... | 5615 | 5616 18,250 | 5617 16,952 | 10.a.
________________________________________________________________
</TABLE>
29
<PAGE> 52
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-20
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Continued
__________
| C473 | <-
______________________________________________________ ________
| (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
Memoranda | accruing | accruing | |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
1. Restructured loans and leases included in | ///// | /////////////////// | ///////////////// |
Schedule RC-N, items 1 through 8, above (and not | ///// | //// | |
reported in Schedule RC-C, part I, Memorandum | ///// | //// | |
item 2) ......................................... | 1658 | 1659 | | M.1.
2. Loans to finance commercial real estate, | ///// | //// | |
construction, and land development activities | ///// | //// | |
(not secured by real estate) included in | ///// | /////////////////// | ///////////////// |
Schedule RC-N, items 4 and 7, above ............. | 6558 | 6559 826 | 6560 7,043 | M.2.
|____________________|____________________ |___________________
3. Loans secured by real estate in domestic offices | RCON | RCON Bil Mil Thou | RCON Bil Mil Thou|
|___________________ |____________________ ____________________
(included in Schedule RC-N, item 1, above): | ///// | ////////////////// | ////////////////// |
a. Construction and land development ............ | 2759 | 2769 1,100 | 3492 26,422 | M.3.a.
b. Secured by farmland .......................... | 3493 | 3494 161 | 3495 0 | M.3.b.
c. Secured by 1-4 family residential properties: | ///// | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by | ///// | ////////////////// | ////////////////// |
1-4 family residential properties and | ///// | ////////////////// | ////////////////// |
extended under lines of credit ........... | 5398 | 5399 5,114 | 5400 17,374 | M.3.c.(1)
(2) All other loans secured by 1-4 family | ///// | ////////////////// | ////////////////// |
residential properties ................... | 5401 | 5402 58,079 | 5403 75,430 | M.3.c.(2)
d. Secured by multifamily (5 or more) | ///// | ////////////////// | ////////////////// |
residential properties ....................... | 3499 | 3500 521 | 3501 12,491 | M.3.d.
e. Secured by nonfarm nonresidential properties . | 3502 | 3503 6,415 | 3504 92,245 | M.3.e.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
| Past due 30 | Past due 90 |
| through 89 days | days or more |
____________________ ____________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
<S> <C> <C> <C>
4. Interest rate, foreign exchange rate, and other | ///// | ////////////////// |
commodity and equity contracts: | ///// | ////////////////// |
a. Book value of amounts carried as assets ...... | 3522 | 3528 0 | M.4.a.
b. Replacement cost of contracts with a | ///// | ////////////////// |
positive replacement cost .................... | 3529 | 3530 0 | M.4.b.
___________________________________________
</TABLE>
30
<PAGE> 53
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-21
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
______________________
Schedule RC-O--Other Data for Deposit Insurance Assessments | C475 |
|____________________|
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unposted debits (see instructions): | ////////////////// |
a. Actual amount of all unposted debits ...................................................... | 0030 216 | 1.a.
OR | ////////////////// |
b. Separate amount of unposted debits: | ////////////////// |
(1) Actual amount of unposted debits to demand deposits ................................... | 0031 N/A | 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1) ...................... | 0032 N/A | 1.b.(2)
2. Unposted credits (see instructions): | ////////////////// |
a. Actual amount of all unposted credits ..................................................... | 3510 216 | 2.a.
OR | ////////////////// |
b. Separate amount of unposted credits: | ////////////////// |
(1) Actual amount of unposted credits to demand deposits .................................. | 3512 N/A | 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1) ..................... | 3514 N/A | 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 3520 101,763 | 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in | ////////////////// |
Puerto Rico and U.S. territories and possessions (not included in total deposits): | ////////////////// |
a. Demand deposits of consolidated subsidiaries .............................................. | 2211 206,111 | 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries ................................. | 2351 20,089 | 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries ...................... | 5514 8 | 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: | ////////////////// |
a. Demand deposits in insured branches (included in Schedule RC-E, Part II) .................. | 2229 0 | 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II) ..... | 2383 0 | 5.b.
c. Interest accrued and unpaid on deposits in insured branches | ////////////////// |
(included in Schedule RC-G, item 1.b) ..................................................... | 5515 0 | 5.c.
______________________
______________________
Item 6 is not applicable to state nonmember banks that have not been authorized by the | ////////////////// |
Federal Reserve to act as pass-through correspondents. | ////////////////// |
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on | ////////////////// |
behalf of its respondent depository institutions that are also reflected as deposit liabilities| ////////////////// |
of the reporting bank: | ////////////////// |
a. Amount reflected in demand deposits (included in Schedule RC-E, item 4 or 5, column B)..... | 2314 0 | 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, | ////////////////// |
item 4 or 5, column A or C, but not column B).............................................. | 2315 0 | 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1) | ////////////////// |
a. Unamortized premiums ...................................................................... | 5516 769 | 7.a.
b. Unamortized discounts ..................................................................... | 5517 0 | 7.b.
______________________
_______________________________________________________________________________________________________________________________
| |
|8. To be completed by banks with "Oakar deposits." |
______________________
| Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of | ////////////////// | |
| the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)) .... | 5518 2,188,589 | 8. |
______________________
| |
_______________________________________________________________________________________________________________________________
______________________
9. Deposits in lifeline accounts ................................................................ | 5596 ///////////// | 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 8432 0 | 10.
______________________
______________
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction
accounts and all transaction accounts other than demand deposits.
</TABLE>
31
<PAGE> 54
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-22
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-O--Continued
Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
11. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for | ////////////////// |
certain reciprocal demand balances: | ////////////////// |
a. Amount by which demand deposits would be reduced if reciprocal demand balances | ////////////////// |
between the reporting bank and savings associations were reported on a net basis | ////////////////// |
rather than a gross basis in Schedule RC-E .................................................. | 8785 0 | 11.a.
b. Amount by which demand deposits would be increased if reciprocal demand balances | ////////////////// |
between the reporting bank and U.S. branches and agencies of foreign banks were | ////////////////// |
reported on a gross basis rather than a net basis in Schedule RC-E .......................... | A181 0 | 11.b.
c. Amount by which demand deposits would be reduced if cash items in process of | ////////////////// |
collection were included in the calculation of net reciprocal demand balances between | ////////////////// |
the reporting bank and the domestic offices of U.S. banks and savings associations | ////////////////// |
in Schedule RC-E ............................................................................ | A182 0 | 11.c.
____________________
Memoranda (to be completed each quarter except as noted) Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________ ___________________________|____________________|
1. Total deposits in domestic offices of the bank (sum of Memorandum it ems 1.a. (1) and | ////////////////// |
1.b.(1) must equal Schedule RC, item 13.a): | ////////////////// |
a. Deposits accounts of $100,000 or less: | ////////////////// |
(1) amount of deposit accounts of $100,000 or less ....................................... | 2702 19,755,631 | M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number | ////////////////// |
completed for the June report only) .............................|RCON 3779 3,742,107 | ////////////////// | M.1.a.(2)
b. Deposit accounts of more than $100,000: | ////////////////// |
(1) Amount of deposit accounts of more than $100,000 ..................................... | 2710 14,354,949 | M.1.b.(1)
Number | ////////////////// |
(2) Number of deposit accounts of more than $100,000 ................|RCON 2722 27,062 | ////////////////// | M.1.b.(2)
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by mutiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or
procedure for determining a better estimate of uninsured deposits than the ____________YES_______NO__
estimated described above .................................................................. | 6861| |///| x | M.2.a.
____________________
b. If the box marked YES has been checked, report the estimate of uninsured deposits |RCON Bil Mil Thou|
determined by using your bank's method or procedure .................................... | 5597 N/A | M.2.b.
_____________________________________________________________________________________________________________________________
| C477 | <-
Person to whom questions about the Reports of Condition and Income should be directed: __________
PAMELA S. FLYNN, VICE PRESIDENT (401) 278-5194
___________________________________________________________________________________ ______________________________________
Name and Title (TEXT 8901) Area code and phone number (TEXT 8902)
</TABLE>
32
<PAGE> 55
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-23
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Regulatory Capital
This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC,
item 12, for June 30, 1995, must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets of less than
$1 billion must complete items 1 through 3 below or Schedule RC-R in its entirety, depending on their response to item 1 below.
<S> <C>
____________
| C480 | <-
1. Test for determining the extent to which Schedule RC-R must be completed. To be completed _____|__________|
only by banks with total assets of less than $1 billion. Indicate in the appropriate | YES NO |
box at the right whether the bank has total capital greater than or equal to eight percent___________ _______________
of adjusted total assets ............................................................... | RCFD 6056 | |////| | 1.
_____________________________
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government
agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan
and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked
NO has been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight
percent or that the bank is not in compliance with the risk-based capital guidelines.
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
|Subordinated Debt(1)| Other |
_________________________________________________________________ | and Intermediate | Limited- |
| NOTE: All banks are required to complete items 2 and 3 below | | Term Preferred | Life Capital |
| See optional worksheet for items 3.a through 3.f. | | Stock | Instruments |
|________________________________________________________________| ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
2. Subordinated debt(1) and other limited-life capital instruments (original | | |
weighted average maturity of at least five years) with a remaining | | |
maturity of: | | |
a. One year or less ...................................................... | 3780 25,737 | 3786 0 | 2.a.
b. Over one year through two years ....................................... | 3781 737 | 3787 0 | 2.b.
c. Over two years through three years .................................... | 3782 10,745 | 3788 0 | 2.c.
d. Over three years through four years ................................... | 3783 0 | 3789 0 | 2.d.
e. Over four years through five years .................................... | 3784 0 | 3790 0 | 2.e.
f. Over five years ....................................................... | 3785 1,101,000 | 3791 0 | 2.f.
3. Amounts used in calculating regulatory capital ratios (report amounts | ////////////////// | ////////////////// |
determined by the bank for its own internal regulatory capital analyses): | ////////////////// | RCFD Bil Mil Thou |
a. Tier 1 capital......................................................... | ////////////////// | 8274 3,590,367 | 3.a.
b. Tier 2 capital......................................................... | ////////////////// | 8275 1,755,646 | 3.b.
c. Total risk-based capital............................................... | ////////////////// | 3792 5,346,013 | 3.c.
d. Excess allowance for loan and lease losses............................. | ////////////////// | A222 297,250 | 3.d.
e. Risk-weighted assets................................................... | ////////////////// | A223 45,718,856 | 3.e.
f. "Average total assets"................................................. | ////////////////// | A224 51,482,775 | 3.f.
___________________________________________
| (Column A) | (Column B) |
Items 4-9 and Memoranda items 1 and 2 are to be completed | Assets | Credit Equiv- |
by banks that answered NO to item 1 above and | Recorded | alent Amount |
by banks with total assets of $1 billion or more. | on the | of Off-Balance |
| Balance Sheet | Sheet Items(2) |
____________________ ____________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
<S> <C> <C> <C>
4. Assets and credit equivalent amounts of off-balance sheet items assigned | | |
to the Zero percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Securities issued by, other claims on, and claims unconditionally | ////////////////// | ////////////////// |
guaranteed by, the U.S. Government and its agencies and other | ////////////////// | ////////////////// |
OECD central governments .......................................... | 3794 2,147,648 | ////////////////// | 4.a.(1)
(2) All other ......................................................... | 3795 1,115,265 | ////////////////// | 4.a.(2)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3796 101,488 | 4.b.
___________________________________________
</TABLE>
_____
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported in
column A.
33
<PAGE> 56
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-24
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Continued
___________________________________________
| (Column A) | (Column B) |
| Assets | Credit Equiv- |
| Recorded | alent Amount |
| on the | of Off-Balance |
| Balance Sheet | Sheet Items(1) |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 20 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Claims conditionally guaranteed by the U.S. Government and its | ////////////////// | ////////////////// |
agencies and other OECD central governments ....................... | 3798 714,375 | ////////////////// | 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. Govern- | ////////////////// | ////////////////// |
ment and its agencies and other OECD central governments; by | ////////////////// | ////////////////// |
securities issued by U.S. Government-sponsored agencies; and | ////////////////// | ////////////////// |
by cash on deposit ................................................ | 3799 0 | ////////////////// | 5.a.(2)
(3) All other ......................................................... | 3800 8,774,345 | ////////////////// | 5.a.(3)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3801 791,065 | 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 50 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3802 5,265,173 | ////////////////// | 6.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3803 409,680 | 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 100 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3804 31,799,547 | ////////////////// | 7.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3805 10,122,631 | 7.b.
8. On-balance sheet asset values excluded from the calculation of the | ////////////////// | ////////////////// |
risk-based capital ratio(2) .............................................. | 3806 83,713 | ////////////////// | 8.
9. Total assets recorded on the balance sheet (sum of | ////////////////// | ////////////////// |
items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, | ////////////////// | ////////////////// |
item 12 plus items 4.b and 4.c) .......................................... | 3807 49,900,066 | ////////////////// | 9.
___________________________________________
Memoranda
______________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
1.Current credit exposure across all off-balance sheet derivative contracts covered by the | ///////////////// |
risked-based capital standards .................................................................| 8764 135,825| M.1.
|___________________|
_____________________________________________________________________
| With a remaining maturity of |
|____________________________________________________________________|
| (Column A) | (Column B) | (Column C) |
| | | |
| One year or less | Over one year | Over five years |
| | through five years | |
|______________________|______________________|______________________|
|RCFD Tril Bil Mil Thou|RCFD Tril Bil Mil Thou|RCFD Tril Bil Mil Thou|
|______________________|______________________|______________________|
2. Notional principal amounts of | | | |
off-balance sheet derivative contracts(3):| | | |
a. Interest rate contracts ................. | 3809 8,320,956 | 8766 18,597,686 | 8767 801,055 | M.2.a.
b. Foreign exchange contracts .............. | 3812 1,578,420 | 8769 101,907 | 8770 0 | M.2.b.
c. Gold contracts .......................... | 8771 15,291 | 8772 0 | 8773 0 | M.2.c.
d. Other precious metals contracts ......... | 8774 8,748 | 8775 0 | 8776 0 | M.2.d.
e. Other commodity contracts ............... | 8777 0 | 8778 0 | 8779 0 | M.2.e.
f. Equity derivative contracts ............. | A000 0 | A001 0 | A002 0 | M.2.f.
|____________________________________________________________________|
</TABLE>
_________________
1) Do not report in column B the risk-weighted amount of
assets reported in column A.
2) Include the difference between the fair value and the amortized cost of
available-for-sale securities in item 8 and report the amortized cost of these
securities in items 4 through 7 above. Item 8 also includes on-balance sheet
asset values (or portions thereof) of off-balance sheet interest rate, foreign
exchange rate, and commodity contracts and those contracts (e.g., futures
contracts) not subject to risk-based capital. Exclude from item 8 margin
accounts and accrued receivables as well as any portion of the allowance for
loan and lease losses in excess of the amount that may be included in Tier 2
capital. 3) Exclude foreign exchange contracts with an original maturity of 14
days or less and all futures contracts.
34
<PAGE> 57
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK
Address: ONE MONARCH PLACE Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
City, State, Zip: SPRINGFIELD, MA 01102 Page RC-25
FDIC Certificate No.: 02499
</TABLE>
Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on June 30, 1996
FLEET NATIONAL BANK SPRINGFIELD , MASSACHUSETTS
- ------------------- ----------------- -------------
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief
narrative statement on the amounts reported in the Reports of Condition and
Income. This optional statement will be made available to the public, along
with the publicly available data in the Reports of Condition and Income, in
response to any request for individual bank report data. However, the
information reported in column A and in all of Memorandum item 1 of Schedule
RC-N is regarded as confidential and will not be released to the public.
BANKS CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE
STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL
BANK CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS
IN SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE
MADE PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks
choosing not to make a statement may check the "No comment" box below and
should make no entries of any kind in the space provided for the narrative
statement; i.e., DO NOT enter in this space such phrases as "No statement,"
"Not applicable," "N/A," "No comment," and "None."
The optional statement must be entered on this sheet. The statement should
not exceed 100 words. Further, regardless of the number of words, the
statement must not exceed 750 characters, including punctuation, indentation,
and standard spacing between words and sentences. If any submission should
exceed 750 characters, as defined, it will be truncated at 750 characters with
no notice to the submitting bank and the truncated statement will appear as the
bank's statement both on agency computerized records and in computer-file
releases to the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who
thereby attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing
narrative statement will be deleted from the files, and from disclosure; the
bank, at its option, may replace it with a statement, under signature,
appropriate to the amended data.
The optional narrative statement will appear in agency records and in release
to the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
__________________________________________________________________________
No comment |X| (RCON 6979) | c471 | C472 |<-
BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)
/s/__Gero DeRosa_______________________________ ___7/25/96________
Signature of Executive Officer of Bank Date of Signature
35
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF PRINTPACK FOR THE PERIOD ENDED JUNE 29, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-START> JUN-25-1995
<PERIOD-END> JUN-29-1996
<CASH> 242,000
<SECURITIES> 0
<RECEIVABLES> 37,728,000
<ALLOWANCES> 286,000
<INVENTORY> 34,831,000
<CURRENT-ASSETS> 84,707,000
<PP&E> 298,070,000
<DEPRECIATION> 160,442,000
<TOTAL-ASSETS> 231,269,000
<CURRENT-LIABILITIES> 75,621,000
<BONDS> 121,009,000
0
0
<COMMON> 0
<OTHER-SE> 13,460,000
<TOTAL-LIABILITY-AND-EQUITY> 231,269,000
<SALES> 442,931,000
<TOTAL-REVENUES> 442,931,000
<CGS> 363,091,000
<TOTAL-COSTS> 415,742,000
<OTHER-EXPENSES> 10,873,000
<LOSS-PROVISION> 560,000
<INTEREST-EXPENSE> 10,814,000
<INCOME-PRETAX> 16,316,000
<INCOME-TAX> 3,080,000
<INCOME-CONTINUING> 13,236,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,236,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
Contribution Agreement dated as of January 5, 1995 by and between Printpack,
Inc. and Orflex Ltd.
<PAGE> 2
This Contribution Agreement (the "Agreement") is made as of the 5th day of
January, 1995 by and between Printpack, Inc., a Georgia corporation
("Printpack"), and ORFLEX Ltd, an Ohio limited liability company, ("Orflex").
WHEREAS, Printpack desires to contribute to the capital of Orflex certain
assets, business and operations of Printpack relating to Printpack's flexible
packaging converting plant located at 470 West Northland Boulevard in
Cincinnati, Ohio (the "Cincinnati Plant") as a capital contribution in
connection with Printpack's forty-nine percent (49%) membership interest in
Orflex and Orflex desires to acquire the Cincinnati Plant on such basis, all as
provided in this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, terms, conditions and covenants contained herein, the parties agree
as follows:
ARTICLE I
CAPITAL CONTRIBUTION
1.1 CONTRIBUTION OF ASSETS.
(a) On the terms and subject to the conditions of this Agreement, except
for the Excluded Assets (defined hereinafter), Printpack hereby contributes to
Orflex and Orflex hereby accepts all of Printpack's tangible and intangible
assets, properties and rights used as of the date of this Agreement in the
ordinary course of operations of the Cincinnati Plant (the "Assets"), including
without limitation the following:
(i) all of Printpack's inventories, supplies and parts relating to
the Cincinnati Plant, either on hand or in transit (the "Inventories");
(ii) all of Printpack's right, title and interest in all machinery,
equipment and furniture located at the Cincinnati Plant, including
without limitation the machinery, equipment and furniture listed on
Exhibit 1.1(a)(ii) attached hereto except for that included in Excluded
Assets;
(iii) all of Printpack's fee simple interest in real property
located at 470 West Northland Boulevard, Cincinnati, Hamilton County,
Ohio 45246, as more fully described on Exhibit 1.1(a)(iii) attached
hereto, including all buildings,
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structures, fixtures and improvements located thereon or related thereto
(the "Real Property");
(iv) all rights of Printpack with respect to its contracts with the
customers identified on Exhibit 1.1(a)(iv) attached hereto including all
rights relating to unfilled or partially-filled purchase orders and
commitments of such customers except for those contracts included in
Excluded Assets;
(v) all rights of Printpack with respect to purchase orders for raw
materials, supplies, and inventories for the Cincinnati Plant to the
extent necessary or desirable to satisfy the unfilled or partially-filled
purchase orders and commitments of the customers identified on Exhibit
1.1(a)(iv) attached hereto;
(vi) all rights of Printpack with respect to the leases, contracts,
and commitments listed on Exhibit 1.1(a)(vi) attached hereto;
(vii) all books, records, files, data and other information of
Printpack relating solely to the assets, business and operations of the
Cincinnati Plant (except to the extent such information relates to the
Excluded Assets); and
(viii) all rights in and to all licenses, permits, franchises,
approvals, authorizations, consents, and registrations issued by any
governmental agency (collectively, "Authorities"), issued or granted to
or held by Printpack relating solely to the Cincinnati Plant, including
but not limited to all Authorities listed on Exhibit 1.1(a)(viii)
attached hereto but only to the extent that such Authorities can be
transferred by Printpack.
(b) Printpack is retaining and not contributing, transferring, conveying
or assigning to Orflex any of the following assets (the "Excluded Assets"):
(i) any cash of Printpack relating to the Cincinnati Plant;
(ii) any accounts receivable of Printpack relating to the Cincinnati
Plant and arising from goods shipped prior to the Closing Date (defined
hereinafter);
(iii) any of the machinery and equipment listed on Exhibit
1.1(b)(iii) attached hereto;
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(iv) any rights of Printpack relating to its contracts with
customers of the Cincinnati Plant other than the customers identified on
Exhibit 1.1(a)(iv) attached hereto;
(v) any rights of Printpack relating to the contracts listed on
Exhibit 1.1(b)(v) attached hereto (the "Excluded Contracts");
(vi) any rights in the name "Printpack" or any variation thereof or
any other trademark or name used by Printpack;
(vii) any assets, properties or rights of Printpack relating to
Printpack's businesses and operations other than the Cincinnati Plant; or
(viii) any raw materials related to the Cincinnati Plant; or
(ix) any work-in-process or finished goods inventories relating to
the Cincinnati Plant.
1.2 ASSUMPTION OF CERTAIN LIABILITIES.
(a) In connection with the contribution of the Assets to Orflex, Orflex
hereby assumes only the following liabilities and obligations of Printpack (the
"Assumed Liabilities"):
(i) obligations of Printpack due after the Closing Date and incurred
in the ordinary course for the sale and delivery of products to the
customers identified on Exhibit 1.1(a)(iv) attached hereto (but excluding
any obligation or liability for non-performance, default or breach prior
to the Closing); and
(ii) obligations of Printpack under the leases, contracts and
commitments listed on Exhibit 1.1(a)(vi) attached hereto.
(b) Except for the Assumed Liabilities, Orflex is not assuming any
liability or obligation of Printpack whatsoever, including without limitation
any liabilities or obligations with respect to the following (the "Nonassumed
Liabilities"):
(i) any customers of the Cincinnati Plant other than the customers
identified on Exhibit 1.1(a)(iv) attached hereto;
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(ii) any federal, state or local taxes, imposts, levies or other charges;
(iii) employee benefits (including, without limitation, COBRA rights),
wage or benefit increases, pension, welfare, benefit or retirement plans or
arrangements, severance pay, accrued vacation, sick pay or other paid timeoff;
(iv) any claim, litigation, obligation, liability, judgment or expense
regarding any product or good sold or shipped by Printpack prior to the Closing
Date, whether based on contract, tort, or breach of warranty, express or
implied; or
(v) damage or injury to person or property, or otherwise.
1.3 CAPITAL ACCOUNT. In recognition of the contribution of the Assets to
Orflex by Printpack, and the covenant not to compete set forth in Section 4.2
hereof Printpack shall have a credit to its capital account equal to $5,300,000
in Orflex which the members of Orflex have agreed is the fair value of
Printpack's contribution.
1.4 THE CLOSING. The closing of the contribution of the Assets and
Printpack's acquisition of its forty-nine percent (49%) membership interest in
Orflex (the "Closing") is taking place simultaneously with the execution of
this Agreement on January 5, 1995 and shall be deemed effective as of the close
of business this day (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PRINTPACK
Except as disclosed by Printpack to Orflex in writing in the Disclosure
Schedule attached hereto (the "Disclosure Schedule") (which disclosure with
respect to any warranty or repreesnation shall be considered disclosure with
respect to all warranties and representations), Printpack hereby represents and
warrants to Orflex as follows:
2.1 ORGANIZATION. Printpack is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia with all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted and is
duly licensed and qualified to do business in and is in good standing in Ohio
and all other jurisdictions in which the conduct of its business or the
ownership or leasing of its properties requires it to be licensed or qualified
to do business
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and where the failure to be so qualified would materially adversely affect the
Cincinnati Plant or the Assets.
2.2 AUTHORITY. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by Printpack's Board of Directors. No other corporate proceedings
on the part of Printpack or its shareholders are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement and each other agreement executed by Printpack and contemplated
hereby are valid and binding obligations of Printpack, enforceable in
accordance with their terms, except as may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally or by equitable principles.
2.3 NO CONFLICT. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) violate or
conflict with, or require any consent under, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
Assets under any of the terms, conditions or provisions of the Articles of
Incorporation or Bylaws of Printpack, or of any note, bond, mortgage,
indenture, deed of trust, license, agreement or other instrument or obligation
to which Printpack is a party, or by which Printpack, the Assets or the
Cincinnati Plant may be bound or affected, or (ii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Printpack, the
Assets or the Cincinnati Plant, except in either event for such breaches or
violations that would not have a material adverse effect on Printpack, the
Assets or the Cincinnati Plant. No consent or approval by, notice to or
registration with any governmental authority is required on the part of
Printpack prior to the Closing in connection with the execution and delivery by
Printpack of this Agreement or the consummation by Printpack of any of the
transactions contemplated hereby.
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<PAGE> 7
2.4 FINANCIAL STATEMENTS.
(a) Printpack has previously delivered to Orflex (i) the unaudited balance
sheets of the Cincinnati Plant at June 25, 1994 and June 26, 1993 and the
related unaudited statements of income for each of the two fiscal years then
ended, and (ii) the unaudited balance sheet of the Cincinnati Plant at November
18, 1994 and the related unaudited statement of income for the five month
period then ended (the financial statements referred to in clauses (i) and (ii)
are collectively referred to as the "Financial Statements"). Except as set
forth in the Disclosure Schedule, the Financial Statements fairly present in
all material respects, respectively, the financial condition and results of
operations of the Cincinnati Plant at such dates and for such periods then
ending and have been prepared in accordance with and accurately reflect the
books and records of the Cincinnati Plant.
(b) Except as and to the extent reflected or disclosed in the balance
sheet of the Cincinnati Plant at November 18, 1994, except as set forth on the
Disclosure Schedule, Printpack did not have any material liability or
obligation relating to the Cincinnati Plant of any nature (whether accrued,
absolute, contingent or otherwise and whether due or to become due) as of such
date.
2.5 ASSETS NECESSARY TO THE BUSINESS. Except for the Excluded Assets, the
Assets being sold hereunder are all of the assets and rights that are being
used in or are reasonably necessary to carry on the business and operations of
the Cincinnati Plant as presently conducted.
2.6 TITLE TO PROPERTIES AND CONDITION.
(a) Printpack has good and marketable title to the Assets free and clear
of all mortgages, liens, pledges, charges, claims or encumbrances.
(b) The buildings, improvements, furniture, fixtures, leaseholds and
equipment of Printpack as a whole are in structural and operating condition
sufficient for Printpack's present operations and use, reasonable wear and tear
excepted and are in conformity in all material respects with all applicable
laws, ordinances and regulations, including without limitation all building and
zoning laws, ordinances and regulations,
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except with respect to environmental matters for which representations are set
forth in Section 2.8.
2.7 INVENTORIES. The Inventories of Printpack are accounted for on a
first-in/first-out basis, lower of cost or market. The Inventories of
Printpack are merchantable, readily usable and salable in the ordinary and
usual course of business and are written down to net realizable market value.
Any unsalable, excess or slow-moving inventory has been written down to net
realizable value.
2.8 ENVIRONMENTAL MATTERS.
(a) Except as set forth on the Disclosure Schedule, (i) Printpack has not
received any claim, notice, order, directive, or information request relating
to the Cincinnati Plant from the United States Environmental Protection Agency
(the "EPA"), or any state environmental protection authority or agency ("State
EPA") or from any other agency or branch of local, state or federal government
("Environmental Agency" and "Environmental Agencies") alleging any violation of
any federal or state environmental law, ordinance, regulation or order
applicable to the facilities or operations of the Cincinnati Plant
("Environmental Laws"), or any claim or notice from any private corporation or
person alleging any violation of any Environmental Laws, within the five years
immediately preceding the date hereof; (ii) to the knowledge of Printpack, no
investigation, administrative order, consent order, agreement, litigation or
settlement with respect to any release of hazardous substances to the
environment (as defined by the Comprehensive Environment Response, Compensation
and Liability Act, 42 U.S.C. Section Section 9601 et seq.) is proposed,
threatened, or anticipated, with respect to the facilities or operations of the
Cincinnati Plant; (iii) all environmental facility, operating and other
permits, registrations and authorizations ("Environmental Permits") required
for the Cincinnati Plant by any Environmental Agency have been obtained and are
in effect; (iv) to the knowledge of Printpack, Printpack has complied with and
is not in material default under any Environmental Law with respect to the
Cincinnati Plant and (v) to the knowledge of Printpack, none of the facilities
or operations of the Cincinnati Plant have been contaminated by hazardous waste
(as defined by the Resource Conservation and
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<PAGE> 9
Recovery Act 42 U.S.S. Section Section 6901 et seq.), nor has the Cincinnati
Plant been used for solid or hazardous waste storage or disposal, and none of
the facilities or operations of the Cincinnati Plant have contaminated
neighboring real estate or waters with hazardous substances. To the knowledge
of Printpack, there are no underground storage tanks or asbestos materials in
or upon any of the properties or facilities of the Cincinnati Plant, whether
owned or leased.
2.9 LICENSES, PERMITS, ETC. All Authorities are valid and in full force
and effect. No proceeding or action with respect to the suspension,
cancellation or any other aspect of any Authority is pending or, to the
knowledge of Printpack, threatened; and, to the knowledge of Printpack, no
basis exists therefor. None of the operations, processes or products of
Printpack infringe or violate the rights of any third party. Printpack does
not know of any operations or processes conducted or products sold by any third
party that infringe or violate the rights of Printpack with respect to the
operations, processes or products of the Cincinnati Plant. No license for any
technology, patent, process or other similar intangible right is required for
the operation of the Cincinnati Plant as it is currently being operated by
Printpack.
2.10 EMPLOYEE BENEFIT PLANS.
(a) For purposes of this Section 2.10 the term "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended, the term "Code" means the
Internal Revenue Code of 1986, as amended, the terms "employee welfare benefit
plan" and "employee pension benefit plan" have the meanings set forth in ERISA
Sections 3(1) and 3(2), respectively, and the term "employee fringe benefit
plan" means any plan, program or arrangement under which one or more employees
or former employees of Printpack receive benefits (other than regular salary or
wages) and which is not considered an employee pension benefit plan or employee
welfare benefit plan under ERISA.
(b) Notwithstanding any other provision or implication herein to the
contrary, Orflex does not assume (i) any employee pension benefit plan,
employee welfare benefit plan, or employee fringe benefit plan maintained by
Printpack or in which any employee of the Cincinnati Plant has ever
participated, (ii) any obligation or liability
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<PAGE> 10
(whether current or contingent) of Printpack under any such plan, or (iii)
any obligation or liability (whether current or contingent) of Printpack or
any affiliate employer of Printpack with respect to any employee pension
benefit plan, employee welfare benefit plan, or employee fringe benefit plan
maintained by such an affiliated employer or in which any employee of such an
affiliated employer has ever participated; and there is no material obligation
or liability under any such employee pension benefit plan, employee welfare
benefit plan, or employee fringe benefit plan for which Orflex could become
responsible as a result of this Agreement or the transactions contemplated
hereby.
2.11 TAX MATTERS. Printpack has timely filed all federal, state and local
tax returns required to be filed by Printpack with respect to the Cincinnati
Plant and all such returns are complete and correct in all material respects.
Printpack has made timely payment of all such taxes, levies, imposts or other
charges when due and payable and has paid all interest, penalties, deficiencies
and assessments, if any, heretofore levied or assessed against it. To the
knowledge of Printpack, Printpack has duly withheld, collected and timely paid
over or held for payment to the proper governmental authorities all taxes and
other amounts required to be withheld or collected by it with respect to the
Cincinnati Plant.
2.12 LITIGATION. Except as set forth on the Disclosure Schedule, there is
no action, dispute, claim, litigation, arbitration, investigation or other
proceeding, at law or in equity or by or before any court or governmental or
administrative body (U.S. or foreign), pending or, to the knowledge of
Printpack, threatened against Printpack with respect to its business,
properties, operations or personnel of the Cincinnati Plant or the transactions
contemplated by this Agreement. The Cincinnati Plant is not subject to (i) any
judicial, governmental or agency judgment, decree or order in which Printpack
is or was a named party, or (ii) any other such judgment, decree or order that
materially affects the Cincinnati Plant or the Assets.
2.13 CONTRACTS, AGREEMENTS, ETC. Together, Exhibit 1.1(a)(vi) and Exhibit
1.1.(b)(v) list all leases, contracts and commitments (written or oral) of
Printpack relating to the Cincinnati Plant, under which there are remaining
obligations or duties, contingent
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or otherwise (except those leases, contracts and commitments that are
terminable pursuant to the terms thereof and without penalty, on 30 days or
less notice and involve payments or obligations of Printpack of $5,000 or less
in the aggregate). All such leases, contracts and commitments that are listed
on Exhibit 1.1(a)(vi) are valid and in full force and effect with respect to
Printpack and, to the best of Printpack's knowledge, with respect to each other
party thereto, and no breach or default (or event or condition, which after
notice or lapse of time, or both would constitute a breach or default) by
Printpack or, to the knowledge of Printpack, by any other party thereto, exists
with respect thereto.
2.14 COMPLIANCE WITH LAWS. Printpack has complied with and is currently
complying with all laws, statutes, orders, rules and judgments and, to the best
of Printpack's knowledge, all regulations, policies, and guidelines of any
federal, state, local or applicable foreign court or governmental or
administrative body or agency relating to the Cincinnati Plant or the Assets,
except for such non-compliance that would not have a material adverse effect on
Assets or the Cincinnati Plant, and except with respect to environmental
matters for which representations are made in Section 2.8.
2.15 INSURANCE. The Disclosure Scheduled sets forth a correct and
complete list of all policies of insurance in effect with respect to the
Cincinnati Plant and which have been in effect during the three-year period
prior to the Closing Date. The Disclosure Schedule also sets forth a list of
all claims for any insured loss in excess of $5,000 per occurrence filed by
Printpack with respect to the Cincinnati Plant during the three-year period
prior to the Closing Date, including but not limited to workers' compensation,
automobile and general product liability claims. Printpack has not been denied
any insurance or indemnity bond and no insurance carrier has cancelled or
reduced any insurance coverage of Printpack with respect to the Cincinnati
Plant. Printpack has not received any notice from any insurer or agent of any
intent to cancel or reduce any insurance coverage or that any substantial
improvement or other expenditure with respect to the Cincinnati Plant is
necessary in order to continue such insurance.
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2.16 FEES OR COMMISSIONS. Printpack has not employed any broker, agent or
finder or incurred any liability for any brokerage fees, agent's commissions or
finder's fees or other similar obligations in connection with the transactions
contemplated hereby.
2.17 CERTAIN CUSTOMERS. During the last twelve months, the aggregate
amount of all invoices issued to the customers identified on Exhibit 1.1(a)(iv)
attached hereto was not less than $1,500,000.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ORFLEX
3.1 ORGANIZATION. Orflex is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Ohio.
Orflex is duly licensed and qualified to do business and is in good standing in
Ohio and all other jurisdictions in which Orflex's operation of the Cincinnati
Plant as of the day immediately following the Closing Date will require it to
be licensed or registered and where the failure to be so licensed or qualified
would materially adversely affect the Cincinnati Plant or the Assets.
3.2 AUTHORITY. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Members of Orflex. No other company proceedings on the part
of Orflex are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement and each other agreement
executed by Orflex and contemplated hereby are valid and binding obligations of
Orflex enforceable in accordance with their terms, except as may be affected by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally or by equitable principles.
3.3 FEES OR COMMISSIONS. Orflex has not employed any broker, agent or
finder or incurred any liability for any brokerage fees, agent's commissions or
finder's fees or similar obligation in connection with the transactions
contemplated hereby.
3.4 NO CONFLICT. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) violate or
conflict with, or require any consent under, or result in a breach of any
provision of, or constitute a default
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<PAGE> 13
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, the terms, conditions or provisions of the Articles of
Organization, Bylaws or Operating Agreement of Orflex, or of any note, bond,
mortgage, indenture, deed of trust, license, agreement or other instrument or
obligation to which Orflex is a party, or by which Orflex may be bound or
affected, or (ii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Orflex, except in either event for such breaches or
violations that would not have a material adverse effect on Orflex, the Assets
or the Cincinnati Plant. No consent or approval by, notice to or registration
with any governmental authority is required on the part of Orflex prior to
Closing in connection with the execution and delivery by Orflex of this
Agreement or the consummation by Orflex of any of the transactions contemplated
hereby.
3.5 LITIGATION. There is no action, dispute, claim, litigation,
arbitration, investigation or other proceeding, at law or in equity or by or
before any court of governmental or administrative body (U.S. or foreign),
pending or, to the knowledge of Orflex, threatened against Orflex with respect
to its business, properties, operations or personnel or the transactions
contemplated by this Agreement. Orflex is not subject to any judicial,
governmental or agency judgment, decree or order.
ARTICLE IV CERTAIN
UNDERSTANDINGS AND AGREEMENTS
4.1 NONCOMPETITION. In connection with the contribution of Assets to
Orflex, for a period of five years from and after the Closing Date, without the
prior written consent of Orflex, Printpack will not in any manner, directly or
indirectly, engage in or operate, own, manage, control, join or participate in
the ownership, management, operation or control of:
(i) any manufacturing plant or facility engaged in the manufacture
of flexible packaging located within a 100 mile radius of the Cincinnati
Plant, or
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(ii) any minority owned business that engages in the manufacture,
sale, distribution, marketing or promotion of flexible packaging in the
continental United States or such other geographic area as is found by a
court of competent jurisdiction to be reasonably necessary for the
protection of Orflex.
Printpack agrees that the remedy at law for any breach by it of any of the
foregoing will be inadequate, and that Orflex will be entitled to injunctive
relief for any such breach.
4.2 TRANSITION OF CERTAIN CUSTOMERS. Printpack agrees to cooperate with
Orflex and to take all action reasonably requested by Orflex to insure a smooth
and orderly transition, from Printpack to Orflex, of each of the customers
identified on Exhibit 1.1(a)(iv) attached hereto.
4.3 VALUE OF ASSETS. The parties agree that the fair value of the Assets
and the covenant not to compete set forth in Section 4.1 hereof is $5,300,000
in the aggregate and the parties agree to mutually agree as to the values of
the various categories of assets as soon as practicable.
4.4 FURTHER ASSURANCES. From time to time after the Closing, at Orflex's
request and without further consideration, Printpack will execute and deliver
such other instruments of conveyance and transfer and take such other action as
Orflex may reasonably request to effectively convey, transfer to and vest in
Orflex and to put Orflex in possession and operating control of all or any part
of the Assets and operations of the Cincinnati Plant.
ARTICLE V
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES INDEMNIFICATION
5.1 NATURE AND SURVIVAL OF REPRESENTATIONS; COVENANTS. The
representations and warranties of Printpack contained in Article II of this
Agreement shall survive the Closing Date and shall expire as follows:
(a) the representations and warranties in Sections 2.6(a) and 2.11
shall not expire until the expiration of the applicable statute of
limitations; and
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(b) the representations and warranties contained in all other Sections
shall expire on the second anniversary of the Closing Date;
provided, however, that any representation and warranty which is the subject of
a claim asserted in writing by Orflex prior to such expiration date shall
survive with respect to such claim until the final resolution thereof. The
covenants of the parties contained herein shall survive the Closing Date and
shall not expire until the expiration of the longest applicable statute of
limitations. The representations and warranties of Orflex made in Article III
of this Agreement shall survive the Closing Date and shall not expire until the
second anniversary of the Closing Date.
5.2 INDEMNIFICATION.
(a) Printpack will indemnify and hold harmless Orflex from, against and in
respect of (i) the Nonassumed Liabilities, and (ii) any and all actions, suits,
proceedings, claims, demands, assessments, losses, liabilities, damages,
deficiencies, judgments, costs and expenses (including the reasonable fees and
expenses of Orflex's legal counsel in connection therewith or in connection
with enforcement of this indemnification) arising out of any misrepresentation
or breach of warranty or any default in the due observance of any agreement by
Printpack hereunder or the Nonassumed Liabilities.
(b) Orflex agrees to indemnify and hold harmless Printpack from, against
and in respect of (i) the Assumed Liabilities, and (ii) any and all actions,
suits, proceedings, claims, demands, assessments, losses, liabilities, damages,
deficiencies, judgments, costs and expenses (including the reasonable fees and
expenses of Printpack's legal counsel in connection therewith or in connection
with the enforcement of this indemnification) arising out of any
misrepresentation or breach of warranty or any default in the due observance of
any agreement of Orflex hereunder or the Assumed Liabilities.
5.3 PROCEDURES.
(a) Any party seeking indemnification hereunder (an "Indemnified Party")
agrees to give the party from which indemnification is sought hereunder (the
"Indemnifying Party") prompt written notice of any action, claim, demand,
discovery of fact, proceeding, suit or other facts or circumstances for which
such Indemnified Party
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intends to assert a right to indemnification under this Agreement (a "Claim").
The failure to give timely notice hereunder will not relieve the Indemnifying
Party from its obligations hereunder except that the Indemnifying Party will
not be obligated to pay any costs incurred solely as a result of such notice
not being so given.
(b) The Indemnifying Party shall be entitled to assume the control or
defense of any Claim or matter asserted by a third party or settle or
compromise any Claim by a third party for which the Indemnified Party is
entitled to indemnification hereunder.
(c) Any legal counsel employed by an Indemnifying Party shall be
reasonably acceptable to the Indemnified Party.
(d) The Indemnified Party shall be entitled to participate in the defense
of any such action with its own counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such Claim or matter
resulting therefrom in accordance with the terms hereof, (i) the Indemnified
Party may defend such Claim in such a manner as it may deem appropriate,
including settling such Claim on such terms as the Indemnified Party may deem
appropriate after giving at least five (5) days' notice of the same to the
Indemnifying Party (provided, however, that the right to receive such notice
does not include or imply any right to approve or object thereto), and (ii) in
any action by the Indemnified Party seeking indemnification from the
Indemnifying Party in accordance with the provisions of this Section, the
Indemnifying Party shall not be entitled to contest or raise any defense to the
amount or nature of any such settlement or judgment.
(e) The Indemnifying Party shall not be required to indemnify the
Indemnified Party unless the amount of any Claim, when aggregated with all
other such Claims of such Indemnified Party, shall exceed $50,000 (the
"Minimum Aggregate Liability Amount"), at which time Claims may be asserted for
all amounts including amounts below the Minimum Aggregate Liability. In no
event shall the Indemnifying Party be obligated to pay Claims asserted by the
Indemnified Party exceeding in the aggregate $5,300,000.
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ARTICLE VI
MISCELLANEOUS
6.1 EXPENSES; TRANSFER TAXES, ETC. Orflex and Printpack each shall pay
their respective costs, fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including without
limitation all fees of legal counsel and accountants.
6.2 PUBLICITY. Neither party shall issue any press release or public
announcement of any of the transactions contemplated by this Agreement, except
as may be mutually agreed to in writing by the parties.
6.3 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given, if
delivered in person, telegraphed, telexed or mailed by certified or registered
mail, return receipt requested and postage prepaid as follows:
If to Orflex: ORFLEX LTD
470 West Northland Boulevard
Cincinnati, Ohio 45246
Attn: Oscar Robertson
with a copy to: Dinsmore & Shohl
1900 Chemed Center
255 E. Fifth Street
Cincinnati, Ohio 45202
Attn: Calvin D. Buford, Esq.
If to Printpack: Printpack, Inc.
4335 Wendell Drive, S.W.
Atlanta, Georgia 30336
Attn: Vice President-Finance
with a copy to: Alston & Bird
1201 West Peachtree Street
Atlanta, Georgia 30309
Attn: William H. Avery
- 16 -
<PAGE> 18
6.4 GENERAL.
(a) This Agreement and the attached exhibits and schedules constitute the
entire agreement and understanding of the parties in respect of the
transactions contemplated hereby and supersede all prior agreements,
arrangements and understandings. This Agreement may be amended or modified
only in a writing signed by the parties hereto.
(b) This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.
(d) Any of the terms and conditions of this Agreement may be waived at any
time and from time to time in writing by the party entitled to the benefit
thereof without affecting any other terms and conditions of this Agreement.
The waiver by either party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
(e) The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and permitted assignees of the
parties hereto. Except as otherwise expressly provided herein, nothing
expressed or implied herein is intended or shall be construed to confer upon or
give any person, firm or corporation, other than the parties hereto, any right
or remedy hereunder or by reason hereof.
(g) The invalidity or unenforceability of any term or provision of this
Agreement shall not affect the validity or enforceability of any of the
remaining terms or provisions hereof.
(h) This Agreement may not be assigned by either party, whether by
operation of law or otherwise, without the written consent of the other party
hereto.
- 17 -
<PAGE> 19
IN WITNESS WHEREOF, Orflex and Printpack have caused this Agreement to be
duly executed and delivered on the day and year first written above.
ORFLEX LTD
Witness: /s/ Christopher Che By: /s/ Oscar Robertson
------------------------ ---------------------------
Name: Christopher Che Title: President
-------------------------- -------------------------
PRINTPACK, INC.
Witness: /s/ W.H. Avery By: /s/ R. Michael Hembree
------------------------ ---------------------------
Name: William H. Avery Title: Vice President - Finance
-------------------------- -------------------------
- 18 -
<PAGE> 20
EXHIBIT 1.1(a)(ii)
<PAGE> 21
EXHIBIT 1.1(a)(iii)
That land situated in the City of Forest Park, County of Hamilton, State of
Ohio, Springfield Township, and being more particularly described as follows:
Being all of Lots Numbered Five (5), Six (6) and Seven (7) of Northland Park
Subdivision, Block "A", Part 1, as recorded in Plat Book 107, pages 15 through
18, of the Plat Records of Hamilton County, Ohio Recorder's Office.
<PAGE> 22
EXHIBIT 1.1(a)(iv)
Classic Games Coronet Foods
Dixon Paper Farmers Cheese
Grecian Delight Gulf States Paper
Hercon Labs Hill & Brooks
Marx Bros. MPI Labels
Mrs. Allison's Cookies Myers Foods
Old Fashion Meats Safeway Stores (Carthage, MO; Lawrence, KS)
Stanford Seed Sureco
3 Sigma Voxcom
Wallingford Coffee National Oats
Conwood Tobacco OLMARK Packaging
Fugi Foods Pet Specialties
Ansell Enforcer Products
McKee Baking Farley Candy
Byron, Inc. Coronet Foods
Kapak Corp Trigon Packaging Corp.
Becharas Coffee Coffee Bean, Inc.
Caruthers Raisins Indian Harvest
Savannah Foods Sunwest Foods
Comet Rice BK Plastics
Gilster Mary Lee Pacific Bag/Vipco Coffee
John R. Daily Enjoy Foods International
Country Coffee Benham & Co.
Westlan Foods Kobos Coffee
Quoin Industrial Griffin Foods Co.
Salt Creek Bar S Foods
Doneli Foods Loveland Foods
Pillsbury Brown & Haley Candy
Cain's Coffee Packaging Corp of America
Tillamook Country Smoker
Gray & Co.
American Candy
Eastern Foods
Tolbert Packaging
Sony Magnetic Products
Michael Angelo's Gourmet
Nitritte
Maxell
Package Services
<PAGE> 23
EXHIBIT 1.1(a)(vi)
<TABLE>
<S> <C> <C> <C>
Zee Medical 1-614-771-5555 4401 A Lyman Drive Vern Turner
1-800-272-3389 Hilliard, OH 43026
CG&E 632-3622 Acct. # 1194620220 Walt Anderson
Ron Bollinger
Wells Fargo System #s 1608125-1 513-224-0613
1608126-1 1-800-256-1053
Pitney Bowes 1-800-228-1067 Acct # 18803520206
UPS 241-51-61 Shipper # 484-071
Professional Maint. 579-1152 Acct # 0989-2
Marathon 1-800-537-9580 Acct # 62 011 55 774
FED EX 1-800-622-1147 Acct # 0452-1469-9
Chemical Waste 1-800-843-3604 Acct # 615 615 5004382
Mgmt.
BP Oil 1-800-883-5527 Acct # 029-152-269-6
Compensation 1-614-764-7600 See Attached
Consultants
3S Systems 772-1301 Vender # 20040
Stites Scale 591-1335 No Acct. #
Applied Process 489-9831
Tech (H2O Treatment)
Armstrong Vending See Attached
Workers Comp
Unemployment
Terminix 851-4800 Acct. # 100591-2
Cintas Acct # 001-00596
</TABLE>
<PAGE> 24
<TABLE>
<S> <C> <C>
AGA Gas 563-9400 Acct # 001-00596
Aramark 731-1500 Acct # 714764000
BCIS 829-1950 Acct # PRI0270
Cinti Bell 566-5050 Acct # 513 825 4800 800
AT&T 1-800-543-1342 Acct # 131 053-0245-723
(800 Service)
Rumpke Acct # 5565
EKCC (Copier) 1-800-356-3251 Acct # 9547456-001
Omnifax Service 621-9931
Cinti Water Works 352-1999 Acct # 5521-7660-14
591-7700 470 Northland
AT&T 1-800-557-2455 Acct # 8016-021-2520
(Long Distance)
</TABLE>
Outstanding purchase orders placed by Printpack in the ordinary course of
business.
Lease of duPont readymount mounter.
<PAGE> 25
EXHIBIT 1.1(a)(viii)
Hazardous Waste Generator Number 0HD004239703
Worker's Compensation Identification Number [Orflex will need it's own Worker's
Compensation Identification Number]
Permit Numbers:
<TABLE>
<S> <C>
1431170674K009 - Extrusion Laminator & Coater, #31 Egan
1431170674K010 - Extrusion Laminator & Coater, #32 Egan
1431170674K004 - Flexigraphic Press w/ incinerator, #3 CI Press
1431170674K005 - Flexigraphic Press & Laminator w/ incinerator, #4 CI Press
1431170674K006 - Flexigraphic Press & Coater Laminator w/ incinerator, #5 CI Press
1431170674K007 - Flexigraphic Press & Laminator w/ incinerator, #6 CI Press
1431170674K011 - Six Color Flexigraphic Printing Press, #8 CI Press
1431170674L001 - Parts Washer
431170674T001-T004 - Wash Up Tanks
</TABLE>
[Business License?] [OrfFlex will need it own business license.]
Federal Employer Identification Number [Orflex will need its own FEIN.]
General Permit for Stormwater Discharge.
<PAGE> 26
EXHIBIT 1.1(b)(iii)
1. VSAT satellite dish and related controls at the Cincinnati Plant.
2. All IBM data processing terminals and related peripheral equipment
located at the Cincinnati Plant.
3. Cameron slitter, model GP-1004, surface wind, razor & shear, rubber draw
roller, 1000 fpm, S/N N4468.
4. Chairs, desks and other office furnishings transferred to the Cincinnati
sales office prior to September 1, 1994.
<PAGE> 27
EXHIBIT 1.1(b)(v)
[Outstanding Contracts for sales of product to Marx Bros., Cains Coffee, Gulf
States Paper, Sureco, and Farley Candy]
<PAGE> 28
DISCLOSURE SCHEDULE TO CONTRIBUTION AGREEMENT
DATED AS OF JANUARY 5, 1995
BY AND BETWEEN PRINTPACK INC.
AND ORFLEX LTD
Section 2.4
1. Accrued bonuses: $30,000 at November 18, 1994.
2. Accrued shut-down expense: $2,186,000 at November 18, 1994.
Section 2.5
1. Hewlett-Packard computers used at the Cincinnati Plant are leased and the
leases will continue to be paid by Printpack.
2. The duPont readymount mounter is leased by Printpack from duPont on a trial
basis. Orflex will be required to make its own arrangements with duPont with
regard to this equipment.
Section 2.6
1. Facts which would be disclosed by a comprehensive survey of the premises.
2. Taxes for the first half of 1994 and thereafter. Additions or abatements,
if any, which may be made by legally constituted authorities on account of
errors, omissions, or changes in valuation.
3. Easements and rights-of-way for utility purposes granted to Cincinnati Gas
and Electric Company as set forth in Deed Book 4400, page 1027, Deed Book 4006,
Page 938, Deed Book 3726, Page 770 and in Deed Book 3272, Page 213, Hamilton
County, Ohio Records. NOTE: There is a partial release of easement set forth
in Deed Book 3726, Page 770, as recorded in Deed Book 4411, Page 1314, Hamilton
County, Ohio Records.
4. The following easements are set forth on Plat Book 107, Pages 15-18:
A. Part of an existing ten (10) foot sewer easement along the panhandle of
Lot 7; and
B. Part of a forty (40) foot drainage easement located at the northwestern
most corner of Lot 7.
<PAGE> 29
5. The following restrictions are set forth on Plat Book 107, Pages 15-18:
A. The Village of Forest Park and the Village of Springdale do not accept
any private drainage easements shown on this plat and the Village of Forest
Park and the Village of Springdale are not obligated to maintain or repair any
channels or installations in said easements. The easement area of each lot and
all improvements in it shall be maintained continuously by the owner of the
lot. Within these easements no structure, planting or other material shall be
placed or permitted to remain which may obstruct, retard or change the
directions of the flow of water through the drainage channel in the easement;
and
B. No part of any driveway or driveway approach within the road
right-of-way shall be installed closer than two (2) feet from any inlet, fire
hydrant, utility pole or guy wire anchor.
6. Matters described in memorandum dated 1/4/95 from Philip J. Schworer,
Charles Dyas and Theodore Schneider to Calvin Buford, Paul Ose.
Section 2.8
Printpack has been named as a possible responsible party with respect to
the following superfund sites. This liability was acquired when the Cincinnati
plant was purchased by Printpack.
Distler superfund site; New Albany, Indiana
Seymour superfund site; Seymour, Indiana
Enviro-Chem superfund site; Zionsville, Indiana
Great Lakes sites; Zionsville, Indiana (this is a former asphalt plant site and
is essentially co-located with the Enviro-Chem site. Waste material from
Enviro-Chem was stored here at one time).
"Third site"; Zionsville, Indiana (this site is essentially co-located with the
Enviro-Chem site and is an outgrowth of general contamination in the area).
All environmental matters disclosed in the written report dated December 27,
1994 of a Phase I Evironmental Assessment of the Cincinnati Plant conducted by
Civil & Environmental Consultants, Inc., environmental engineers.
All matters disclosed in memorandum dated 1/4/95 from Philip J. Schworer,
Charles Dyas and Theodore Schneider to Calvin Buford, Paul Ose.
<PAGE> 30
Section 2.9
1. The authorities listed on Exhibit 1.1(a)(viii) may not be transferable to
Orflex and may terminate when Printpack no longer operates the Cincinnati
Plant.
All matters disclosed in memorandum dated 1/4/95 from Philip J. Schworer,
Charles Dyas and Theodore Schneider to Calvin Buford, Paul Ose.
Section 2.15
1. The property, general liability, umbrella liability, manufacturing errors
liability, automobile liability and physical damage, inland marine and crime
and fiduciary liability coverage described on the seven (7) attached sheets.
2. No claims in excess of $5,000 per occurrence were filed during the last
three years.
<PAGE> 1
EXHIBIT 99.2
Lease dated September 11, 1980 by and between Gulf Oil Corporation and Crown
Zellerbach Corporation relating to the Orange, Texas Plant (the rights and
obligations of the lessee under the foregoing Lease have been assigned
ultimately to Printpack, Inc.).
<PAGE> 2
L E A S E
PARTIES
THIS INDENTURE OF LEASE made and entered into this 11th day of September,
1980, but effective as of January 1, 1981, by and between GULF OIL CORPORATION,
a Pennsylvania corporation, having offices in the Two Houston Center, Ninth and
Fannin, Houston, Texas (hereinafter called "Landlord"), and CROWN ZELLERBACH
CORPORATION, a Nevada corporation, of One Bush Street, San Francisco,
California (hereinafter called "Tenant").
W I T N E S S E T H:
WHEREAS, the parties on July 1, 1966, entered into a certain lease
relating to the leasing and construction by the Landlord for the Tenant of a
plant located adjacent to the Landlord's plant at Orange, Texas; and
WHEREAS, on October 26, 1973, the parties extended said lease effective as
of January 2, 1975; and
WHEREAS, the parties now desire to enter into a new lease effective as of
January 1, 1981;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
of the parties herein set forth, the parties hereto agree as follows:
ARTICLE I
PREMISES
That the Landlord for and in consideration of the rents, covenants,
agreements and conditions hereinafter mentioned, to be kept and performed by
the Tenant, agrees to rent, lease and let, and by these presents does rent,
lease and let unto the Tenant a tract of land, and the improvements thereon, in
close proximity to Landlord's plant facility at Orange, Texas, which land is
described as follows:
Commencing at the point of intersection of the center lines of F.M.
1006 Road and Foreman Road; thence South 564.0 feet to a point; thence
West 20.0 Feet to the Westerly boundary of said Foreman Road and the True
Point of Beginning; thence West 270.0 feet to a point; thence South 60.0
feet to a point; thence West 98.0 feet to a point; thence South 560.0
feet to a point; thence East 368.0 feet to a point on the Westerly line
of Foremen Road; thence North 620.0 feet to the point of beginning,
containing approximately 5.10 acres.
- 1 -
<PAGE> 3
ARTICLE II
TERM
TO HAVE AND TO HOLD THE SAID PREMISES, together with all and singular the
improvements, appurtenances, rights, privileges and easements thereunto
belonging in any ways appertaining, unto the Tenant for a term of five (5)
years, beginning upon January 1, 1981, and ending five (5) years thereafter.
The term may be extended by Tenant pursuant to the options granted Tenant under
Article III herein.
ARTICLE III
OPTION TERMS
Tenant may extend the term of this lease for three successive option terms
of five years (5) each with the first of such terms commencing January 1, 1986.
Each successive option shall be exercised by Tenant by written notice to
Landlord given no later than sixty (60) days prior to the expiration of the
preceding term. During any of the option terms Tenant may terminate this lease
by giving six month's written notice to Landlord. Rental during the option
term shall be as set forth in Article IV.
ARTICLE IV
RENTAL
(a) Tenant covenants, stipulates and agrees to pay Landlord as rental for
said demised premises during the primary term set forth in Article II a rental
of sixteen thousand, seven hundred sixty three dollars and sixty cents
($16,763.60) per month payable on the first day of each month.
Until the Tenant receives other instructions in writing from Landlord,
Tenant shall pay all rentals under this lease to Landlord at the office of
Landlord heretofore stated.
(b) Rent during each option term shall be determined after exercise of the
option by Tenant and prior to the commencement of the term and shall be the
fair market rental value of the
- 2 -
<PAGE> 4
premises based on comparable properties with comparable leases. If the parties
are unable to agree on a fair market rental value the issue shall be settled by
arbitration pursuant to Article XX.
(c) During both the primary terms and any option term Tenant shall pay as
additional rent the full amount of any taxes or assessments, general or
special, paid by or charged to the Landlord in each year on the land,
improvements and appurtenances leased hereunder, together with the cost to
Landlord of fire and extended coverage insurance on the improvements as
provided for in Article XI, provided, however, that Tenant shall have the right
to contest the amount or method of valuation of any such tax or assessment in
sufficient time to permit Tenant to contest the same if Tenant so desires.
Landlord shall cooperate in any such contest by Tenant provided that Tenant
shall bear the entire expense and shall reimburse Landlord for any cost it
incurs because of such contest.
ARTICLE V
QUIET POSSESSION
Landlord further covenants and warrants that if Tenant shall discharge the
obligations herein set forth to be performed by Tenant, Tenant shall have and
enjoy the quiet and undisturbed possession of the demised premises, together
with all appurtenances appertaining or appendant thereto, subject to Landlord's
termination rights as hereinafter set forth.
ARTICLE VI
USE OF PREMISES
The Tenant agrees, and it is a condition hereof, that the leased premises
shall be used by Tenant only for manufacturing, storage and distribution of
products manufactured, stored or distributed by Tenant and its subsidiaries and
any related activities. In the event of an assignment of this lease pursuant
to Article XIV, this clause shall be modified to correspond to the business of
the assignee so long as the assignee's projected use is compatible with the
premises.
- 3 -
<PAGE> 5
ARTICLE VII
FIXTURES
The Tenant may, on the termination of this lease, remove from said
premises any fixtures, furnishings and other equipment which Tenant may have
installed at its own expense or otherwise supplied during the Tenants occupancy
of said premises. Landlord may at his option require removal of fixtures on
termination where Tenant would not otherwise remove fixtures. Tenant agrees to
repair any damage that may be done to the demised premises resulting from the
removal of such furnishings, fixtures and other equipment.
ARTICLE VIII
UTILITIES
Tenant shall pay all charges for gas, electricity and other utilities used
on said premises during this lease. However, where Landlord is able so to do,
Landlord shall have the right to furnish any such utilities to Tenant and
Tenant shall reimburse Landlord monthly, for Landlord's cost in providing such
utilities.
ARTICLE IX
REPAIR CLAUSE
Except as otherwise specifically provided in Article X, Tenant shall
maintain in good condition and repair the entire leased premises during the
term of this lease. In the event, however, that any loss or damage not
included under the provisions of Article X is insured under the terms of
Landlord's fire and extended coverage insurance, then the repairs shall be made
by Landlord only to the extent of the actual insurance recovery by the
Landlord. Tenant agrees and covenants that it will not permit waste in or on
the premises, that it will not load the floors or other structural supports in
the building in excess of the loading capacity for which the building
was designed, and Tenant shall keep the entire premises in good and safe
condition and clear of rubbish and fire hazards.
- 4 -
<PAGE> 6
ARTICLE X
FIRE AND CASUALTY
In the event the premises shall during the term of this lease be damaged
or destroyed by fire or other casualty, the peril of which is reasonably
insurable by Landlord, Landlord shall and will forthwith proceed with due
diligence to repair and/or rebuild the same, to substantially the same
condition as prior to such damage.
In the event the premises are damaged by a casualty not reasonably
insurable by Landlord, and the cost of repair thereof is $50,000 or less, then
Landlord shall repair and restore the premises, in which event this lease shall
remain in full force and effect; provided that Landlord shall not be required
to effect such repair and restoration if such casualty shall occur during the
last year of the lease. It is further provided that in the event the premises
are damaged by a casualty not reasonably insurable, and the cost of repair
thereof exceeds $50,000.00, then either party hereto shall have the right to
require that the premises be repaired and restored and the cost thereof shall
be equally shared by both landlord and Tenant, in which event this lease shall
remain in full force and effect. In such event the party hereto desiring that
such repair and restoration be made shall give written notice thereof to the
other party within thirty (30) days after the casualty. The actual repair and
restoration, in such event, shall be made by Landlord, and Tenant shall advance
its share thereof to Landlord as repair and restoration progresses. If during
the last year of this lease the premises are "totally destroyed" by a casualty
not reasonably insurable by the Landlord, and the total cost of restoring the
same is in excess of $1,000,000, then the Tenant, at its option, either may
cancel by such written notice the lease without penalty or pay one-half (1/2)
of the cost to rebuild the facility, in which event Landlord shall be required
to restore and repair the premises, and the lease shall remain in full force
and effect. "Totally destroyed" as used in this paragraph shall mean damage,
the repair or restoration of which shall cost eighty percent (80%) or more of
the original cost of the leased premises exclusive of land.
- 5 -
<PAGE> 7
During any period of restoration provided for herein and until the
premises are put in good and tenantable order, the rentals or a fair and just
proportion thereof, according to the nature and extent of the damage sustained,
and the tenantability of the premises, shall, until said premises are restored,
be suspended and cease, and if Tenant shall have paid rent in advance, Landlord
shall immediately pay to Tenant an amount equal to that portion of the rent so
paid in advance, payment of which is suspended.
All casualties, and only such, for which coverage is available in normal
fire and extended coverage insurance policies in the area where the demised
premises are located shall be deemed "reasonably insurable casualties,"
including but not by way of limitation, fire, explosion (other than nuclear
explosions), tornado or other windstorm, hail, lightning, riot and civil
commotion, vandalism, malicious mischief, falling aircraft, items falling from
aircraft, and excluding flood, earthquake, nuclear explosion, war or war-like
action in time of peace, including action in combating or defending against
actual, impending or expected attack.
ARTICLE XI
LANDLORD'S INSURANCE
Landlord shall keep, during the term or extended term of the lease, the
building on the demised premises insured against loss or damage by fire and
extended coverage insurance insuring Landlord against loss from reasonably
insurable casualties as above defined in Article V, to the extent of at least
ninety percent (90%) of the replacement cost value thereof including a
deductible per occurrence of not more than $1,000,000. All such policies of
insurance shall waive right of subrogation in favor of Tenant. Landlord shall
have the exclusive right to make all settlements thereunder and to receive and
receipt for all payments made thereunder, and all such payments shall belong
solely to Landlord. Tenant shall not be responsible or liable for
damage to the leased premises caused by a reasonably insurable casualty as
above defined even though occasioned by the negligence of Tenant.
- 6 -
<PAGE> 8
ARTICLE XII
ALTERATIONS
Tenant shall make no significant changes, alterations or additions in and
to the leased premises without the written consent of the Landlord, which
consent will not be unreasonably withheld. Any change, alteration or addition
made by the Tenant to the leased premises shall become the property of the
Landlord and shall be considered as a part of the herein demised premises.
ARTICLE XIII
SIGNS
Tenant shall have the right to place a sign or signs on the exterior of
the building or in the landscaped area of the premises providing such sign
shall be a designation or advertisement pertaining only to the general business
of Tenant.
ARTICLE XIV
ASSIGNMENT OR SUBLETTING
This lease may not be assigned or sublet by the Tenant without the consent
of the Landlord. In the event of such assignment or subletting, the Tenant
shall be responsible for the terms and conditions of this lease and the
performance thereof, and shall not be released therefrom. Lessor shall have
the right to refuse any sublease or assignment without cause provided that in
the event of such refusal Tenant may terminate this lease without any further
liability on its part.
ARTICLE XV
DEFAULT CLAUSE
If the Tenant should default in the payment of any rent herein reserved or
in the performance of any of its obligations under this lease, and if the
Landlord should give to the Tenant notice in writing of such default and the
Tenant should fail to cure the default with thirty (30) days after the date of
receipt of such notice, or if the default should be of such a character as to
require more than thirty (30) days to cure and the Tenant should fail to use
reasonable diligence in curing
- 7 -
<PAGE> 9
such default, then and in an such event, the Landlord may, at Landlord's
option, terminate this lease. In the event (a) Tenant should cease its
operations on the leased premises for a period of six (6) months, or (b) Tenant
should abandon the leased premises, then Landlord may, at its election
terminate this lease by written notice thereof to Tenant; provided, however,
should Tenant's cessation of operations be due to Acts of God, strikes, war,
force majeure, or other causes beyond the control of Tenant, then unless said
termination is authorized by other provisions of this lease) during such period
of cessation, so caused, Landlord may not cancel this lease. Upon such
termination hereinabove described, Landlord may re-enter the leased premises
without further notice or demand without being in any manner liable therefor,
and Landlord may hold the leased premises free from any further liability on
the part of Landlord hereunder, except such liability as may have arisen
theretofore, or Landlord may enter the leased premises as aforesaid and, as
agent of tenant, re-let the same for the balance of the term of this lease, or
for a shorter or a longer term, and may receive the rent therefore, applying
the same, first to the payment of the expense of such re-letting and second to
the payment of rent due and to become due by these presents, tenant remaining
liable for and agreeing hereby to pay any deficiency. The filing of any
petition in bankruptcy or insolvency, or for reorganization under the
Bankruptcy Act, either by or against Tenant or anyone claiming under Tenant, or
an assignment for the benefit of creditors by Tenant or anyone claiming under
Tenant, unless the foregoing events be vacated, canceled or nullified within a
period of sixty (60) days, shall constitute a breach of this lease, and
Landlord shall forthwith on such breach be entitled to collect damages therefor
as provided by law, and, in addition thereto, Landlord shall have the rights of
termination and re-entry as hereinbefore set forth. If the Landlord should
default in the performance of any of its obligations under this lease, and if
Tenant should give to the Landlord notice in writing of such default and the
Landlord should fail to cure the default within thirty (30) days after the date
of receipt of such notice, or if the default should be of such character as to
require more than thirty (30) days to cure and the Landlord should fail to use
- 8 -
<PAGE> 10
reasonable diligence in curing such default, then and in any such event, the
Tenant may, at Tenant's option, terminate this lease without any penalty.
ARTICLE XVI
HOLD HARMLESS AND LIABILITY
Tenant agrees to indemnify and hold harmless the Landlord from all claims
and causes of action for damage to property or injury to person or persons
occurring in, on or about the leased premises or arising out of the use and
operation of the leased premises by the Tenant.
TENANT'S INSURANCE
Tenant agrees to maintain in effect during the term of This lease the
following insurance:
Workers Compensation as required by the laws of the State of Texas. Such
Insurance shall contain a waiver of subrogation in favor of Landlord.
Comprehensive General Liability Insurance naming the Landlord as an
additional insured for limits not less than $500,000 each person and $1,000,000
each occurrence as respects Property Damage.
Should Tenant maintain physical damage insurance on its machinery,
equipment, supplies and inventories as well as all other property on the leased
premises, such insurance shall include a waiver of subrogation in favor of
Landlord.
Certificates evidencing the above insurance shall be furnished Landlord
and shall provide for at least ten (10) days' prior written notice as respects
cancellation or material change therein.
Tenant may comply with the provisions of this paragraph by providing
Landlord with evidence satisfactory to Landlord of Tenant's capacity to self
insure.
ARTICLE XVII
NOTICES
All notices under this lease shall be in writing and shall be sent to the
respective party by registered United States Mail, postage prepaid, and notice
to the Landlord shall be addressed to Landlord at the address heretofore stated
and to Tenant at the address heretofore stated. The
- 9 -
<PAGE> 11
respective parties may change the address to which they desire notices be sent
by written notice to the other party. Notices shall be deemed to have been
delivered as of the time they are deposited in the United States Mail as
aforesaid.
ARTICLE XVIII
INSPECTION
Landlord reserves the right to enter into and upon the leased premises at
all times for the purpose of inspection, compliance with government regulations
or requests, preservation of the property, and for any other reason not
unreasonably in conflict with Tenant's use of the premises. Tenant shall
comply with all federal, state, and local statutes, regulations, ordinances,
and other laws.
ARTICLE XIX
UTILITIES AND ADDITIONAL USE THEREOF
Landlord has caused to be constructed and brought into the leased premises
railroad trackage, the necessary water and stream lines, sewer pipes, gas
mains, and other necessary utilities. Tenant's right to the use thereof shall
be in common with Landlord or any other tenant or customer of Landlord and
Landlord reserves the right to itself, its agents and employees to connect into
or attach to or extend and utilize any of the aforesaid utilities and
facilities, together with the right to enter into and upon the leased premises
for such purposes and the maintenance or relocation thereof.
The repair and maintenance of such utilities shall be done by Landlord at
its cost, and Tenant expressly waives any liability on the part of Landlord for
the manner or means of making any repairs or maintenance thereof; provided that
no additional use thereof shall be commenced after the commencement of the term
of this lease which will under normal conditions interfere with the use thereof
by the Tenant reasonably foreseeable at such date, and in no event shall
Landlord be liable to Tenant for the failure of the operation of any of such
utilities. All cost of repair and maintenance shall be borne by Tenant, except
in the event the utility is being utilized by others
- 10 -
<PAGE> 12
including Landlord, whose continued use thereof requires such maintenance and
repairs, then Tenant shall bear such part of the costs as Tenant's use of such
utility bears to the combined usage of Tenant and such other user or users.
ARTICLE XX
ARBITRATION
It is further agreed by and between the parties that any dispute or
difference arising between the parties relative to the determination of the
rents, the obligations hereunder or the terms hereof, shall be settled by
arbitration. When such arises, either party shall have the right to notify the
other party in writing of its desire for arbitration and the nature of the
question to be arbitrated, and within ten (10) days after the receipt by such
other party of the notice of arbitration, each party shall appoint an
arbitrator qualified in the field to be arbitrated, and notice of such
appointment shall be given the respective party by the party making the
appointment. The arbitrators so appointed shall select a third similarly
qualified arbitrator, and the three arbitrators shall thereafter determine and
decide the question in dispute. A majority decision shall be final and binding
upon the respective parties hereto. In the event either party fails to appoint
an arbitrator as herein provided for, then the decision of the arbitrator
appointed shall be binding upon the parties.
ARTICLE XXI
It is further hereby expressly agreed and understood that all covenants,
agreements, provisions and conditions of this lease shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. The lease agreement shall be governed by and construed under the laws
of Texas.
ARTICLE XXII
HAZARDOUS WASTE ACTIVITIES
Tenant shall at all times during the term of this lease, comply with all
of the requirements of the Resource Conservation and Recovery Act and all
regulations derived therefrom relating to the storage, treatment or disposal of
hazardous waste on the premises. Tenant agrees to indemnify
- 11 -
<PAGE> 13
Landlord for all claims and suits, of whatever nature associated with the
storage, treatment, disposal or use of any hazardous chemical or substance by
Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have caused this lease to be duly
executed the day and year first above written.
GULF OIL CORPORATION
ATTEST: By: /s/
-------------------------------------
- ---------------------------------- President, Gulf Oil Chemicals Company
ATTEST: CROWN ZELLERBACH CORPORATION
/s/ J.K. Cadagan By: /s/ A.G. Resnick
- ---------------------------------- -------------------------------------
J. K. Cadagan, Assistant Secretary A. G. Resnick, Vice President
- 12 -
<PAGE> 1
EXHIBIT 99.3
Ground Lease dated September 11, 1980 by and between Gulf Oil Corporation and
Crown Zellerbach Corporation relating to the Orange, Texas Plant (the rights
and obligations of the lessee under the foregoing Lease have been assigned
ultimately to Printpack, Inc.).
<PAGE> 2
GROUND LEASE
THIS LEASE is made and executed on Sept. 11, 1980 by and between GULF OIL
CORPORATION, a Pennsylvania corporation, having offices in the 2 Houston
Center, 9th & Fannin, Houston, Texas (hereinafter called "Lessor"), and CROWN
ZELLERBACH CORPORATION, a Nevada corporation, having its offices at One Bush
Street, San Francisco, California (hereinafter called "Lessee").
I.
DESCRIPTION AND USE OF PREMISES
Lessor leases to Lessee and Lessee hires from Lessor, for the purpose of
conducting thereon any lawful business and for no other purpose, those premises
located in the County of Orange, State of Texas, more particularly described as
follows:
Commencing at the point of intersection of the center lines
of FM 1006 Road and Foreman Road; thence South 1,184.0 feet to a
point; thence West 20-0 Feet to the True Point of Beginning;
thence West 268.0 Feet to a point; thence South 220.0 Feet to a
point; thence East 368.0 Feet to a point on the Westerly line of
Foreman Road; thence North along the Westerly line of Foreman Road
220.0 Feet to the point of beginning, containing 1.86 acres more
or less.
As used herein, the term "Premises" refers to the real property above
described and to any improvements located thereon from time to time during the
term of this lease.
II.
TERM
The term of this lease shall commence on the date it is signed and shall
end on December 31, 2000; provided, that Lessee may terminate this lease
effective at the end of any lease
- 1 -
<PAGE> 3
year upon six months written notice to Lessor. A "lease year" for the
purpose of this paragraph shall correspond to a calendar year with the first
lease year ending on December 31, 1981.
III.
RENT
(a) Lessee covenants, stipulates, and agrees to pay Lessor as rental for
the demised premises the sum of one dollar $1.00 per year during the term of
this lease. Until Lessee receives other instructions in writing from Lessor,
Lessee should pay all rentals under this lease to Lessor at the office of
Lessor above stated.
(b) As additional rent Lessee agrees to pay all taxes or assessments,
general or special, paid or charged to Lessor in any lease year on the
premises, provided, that Lessee shall have the right to contest the amount or
valuation method of any such tax or assessment. Lessor shall notify Lessee of
any such tax or assessment in sufficient time to permit Lessee to contest the
same if Lessee so desires. Lessor shall cooperate in any such contest by
Lessor, provided, that Lessee shall bear the entire expense and shall reimburse
Lessor for any cost it incurs because of such contest.
IV.
WARRANTIES OF TITLE AND QUIET POSSESSION
Lessor warrants that it owns the premises in fee simple and has full right
to make this lease and that Lessee shall have quiet peaceable possession of the
premises during the term of this lease so long as Lessee is not in default
hereunder.
V.
ENCUMBRANCE OF PREMISES
At the request of Lessee, at any time during the term of this lease,
Lessor agrees to promptly execute and deliver one or more mortgages, deeds of
trust, or other instruments deemed necessary by Lessee to create a valid
security interest in the premises. The security instrument shall be used to
secure one or more loans or other advances made to Lessee the proceeds of which
- 2 -
<PAGE> 4
shall be used solely for the construction of the facilities referred to in
paragraph VI. The total amount secured by the encumbrance or encumbrances
shall at no time be in excess of Two Million Dollars ($2,000,000). Nothing
herein shall prevent Lessor from further encumbering the premises for its own
benefit, provided that any such encumbrance shall be subordinate to existing or
future encumbrances made pursuant to this paragraph. Lessor's only obligation
hereunder shall be to consent to the creation of a security interest in the
premises. Lessor shall not be liable on any promissory note or other
instrument which is secured by the encumbrances provided for herein.
VI.
CONSTRUCTION OF NEW FACILITY
Lessee shall have the right, to construct on the premises at any time
during the term of this lease, a warehouse facility of approximately 30,000
square feet together with any other facility, appurtenance, or improvement
necessary or desirable to support the warehouse facility. All construction
hereunder shall be in conformance with all building codes and other applicable
laws and regulations. Lessee shall use licensed contractors to do all of the
construction hereunder and the facilities shall be constructed in a workmanlike
manner.
VII.
FURTHER CONSTRUCTION AND ENCUMBRANCE
Lessee shall have the right to repair, demolish, remove, alter or modify
the facility constructed pursuant to the preceding paragraph and any other
facility it constructs on the premises so long as any such change does not
diminish the market value of the premises immediately prior to such alteration.
Lessor further agrees to grant any easement or right-of-way necessary to
provide utility or other essential services to the warehouse facility operated
by Lessee hereunder.
VIII.
UTILITIES AND ADDITIONAL USE THEREOF
Lessor has caused to be constructed and brought into the leased premises
railroad trackage, the necessary water and stream lines, sewer pipes, gas
mains, and other necessary
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<PAGE> 5
utilities. Lessee's right to the use thereof shall be in common with Lessor or
any other tenant or customer of Lessor and Lessor reserves the right to itself,
its agents and employees to connect into or attach to or extend and utilize any
of the aforesaid utilities and facilities, together with the right to enter
into and upon the leased premises for such purposes and the maintenance or
relocation thereof.
The repair and maintenance of such utilities shall be done by Lessor at
its cost, and Lessee expressly waives any liability on the part of Lessor for
the manner or means of making any repairs or maintenance thereof; provided that
no additional use thereof shall be commenced after the commencement of the term
of this lease which will under normal conditions interfere with the use thereof
by the Lessee reasonably foreseeable at such date, and in no event shall Lessor
be liable to Lessee for the failure of operation of any of such utilities. All
cost of repair and maintenance shall be borne by Lessee, except in the event
the utility is being utilized by others including Landlord, whose continued use
thereof requires such maintenance and repairs, then Lessee shall bear such part
of the costs as Lessee's use of such utility bears to the combined usage of
Tenant and such other user or users.
IX.
REPAIRS
(a) Lessee shall, throughout the term of this lease, at its own cost,
without any expense to Lessor, keep and maintain the premises, including all
buildings and improvements of every kind which may a part thereof, and all
appurtenances thereto, including adjacent sidewalks, in good, sanitary, and
neat order, condition or repair and, except as specifically provided herein,
restore and rehabilitate any improvements of any kind which may be destroyed or
damaged by fire, casualty, or any other cause whatsoever. Lessor shall not be
obligated to make any repairs, replacements, or any renewals of any kind, to
the premises or any buildings or improvements thereon. Lessee shall comply
with and abide by all Federal, state, county, municipal and other
- 4 -
<PAGE> 6
governmental statutes, ordinances, laws and regulations affecting the
premises, the improvements thereon or any activity or condition on or in such
premises.
(b) The damage, destruction or partial destruction of any building or
other improvement which is a part of the premises shall not release Lessee from
any obligation hereunder, except as hereafter expressly provided.
(c) Anything to the contrary in subparagraph (a) of this paragraph
notwithstanding, in case of destruction of the warehouse building to be
constructed on the premises or damage thereto from any cause so as to make it
untenantable, occurring at any time during the term of this lease, Lessee, if
not then in default hereunder, may elect to terminate this lease by written
notice served on Lessor within thirty (30) days after occurrence of such damage
or destruction. In the event of such termination there shall be no obligation
on the part of Lessee to repair or restore the improvements or any right on the
part of Lessee to receive any proceeds collected under the insurance covering
such building or any part thereof. Upon such termination, rent, taxes,
assessments, and any other sums payable by Lessee to Lessor hereunder shall be
prorated as of the termination date, and in the event any rent, taxes, or
assessments shall have been paid in advance, Lessor shall rebate the same for
the unexpired period for which payment shall be made.
X.
LIENS
(a) Lessee shall keep the premises and every part thereof and all
buildings and other improvements at any time located thereon free and clear of
any and all mechanics', materialmens', and other liens arising out of or in
connection with work or labor done, services performed, or materials or
appliances used or furnished for or in connection with any operations of
Lessee, any alteration improvement or repairs or additions which Lessee may
make or permit or cause to be made, or any work or construction, by, for, or
permitted by Lessee on or about the premises or any obligations of any kind
incurred by Lessee, and Lessee agrees at all times, promptly to pay and
- 5 -
<PAGE> 7
discharge any and all claims on which any such lien may or could be based, and
indemnify Lessor against all such liens and claims of liens and suits or other
proceedings pertaining thereto.
(b) If Lessee desires to contest any such lien it shall notify Lessor of
its intention to do so within twenty (20) days after it receives notice of the
filing of such lien. In such case and provided that Lessee shall, on demand,
protect Lessor by good and sufficient surety bond against any such lien and any
cost, liability or damage arising out of such contest, Lessee shall not be in
default hereunder unless Lessee shall fail to discharge such lien to the extent
held valid within thirty (30) days after the final determination of the
validity thereof. In the event of any such contest Lessee shall protect and
indemnify Lessor against all costs, expenses, and damages resulting therefrom.
XI.
FIXTURES
Lessee may, at its own expense, upon termination of this lease, remove
from said premises any structures, fixtures, furnishings, or equipment which
Lessee may have constructed, installed or otherwise supplied during its
occupancy of the premises. Lessee agrees to repair any damage that may be done
to the premises resulting from the removal of such structures, fixtures,
furnishings and equipment.
XII.
INDEMNIFICATION
Lessee agrees to indemnify and hold Lessor harmless from all claims and
causes of action for damage to the property or injury to a person or persons
occurring, on or about the premises or arising out of the use and operation of
the leased premises by Lessee except where such claims result from the
negligence or actions of Lessor, its agents, contractors, or employees.
XIII.
ASSIGNMENT OR SUBLETTING
- 6 -
<PAGE> 8
This lease may not be assigned or sublet by Lessee in whole or in part
without the written consent of Lessor. In the event of such assignment or
subletting Lessee shall remain responsible for performance of the terms and
conditions of this lease, and shall not be released therefrom. Lessor shall
have the right to refuse any sublease or assignment without cause provided that
in the event of such refusal Lessee may terminate this lease without any
further liability on its part. Lessee may assign this lease without Lessor's
consent where such assignment is necessary to obtain financing to complete the
improvements referred to in paragraph XI and where Lessee continues to operate
the facility after such assignment.
XIV.
DEFAULTS
If Lessee shall default in the payment of any rent herein reserved or in
the performance of any of its obligations under this lease, and if the Lessor
shall give the Lessee notice in writing of such default and Lessee shall fail
to cure the default within thirty (30) days after the date of receipt of such
notice or if the default should be of such character as to require more than
thirty (30) days to cure and Lessee shall fail to use reasonable diligence in
curing such default, then and in any such event the Lessor may at Lessor's
option, terminate this lease. In the event (a) Lessee shall cease its
operations on the leased premises for a period of six (6) months, or (b) Lessee
should abandon the leased premises, then Lessor may, at its election terminate
this lease by written notice thereof to Lessee; provided, however, should
Lessee's cessation of operations be due to acts of God, strikes, war, force
majeure, or other causes beyond the reasonable control of Lessee, then (unless
such termination is authorized by other provisions of this lease) during such
period or cessation, Lessor may not cancel this lease. Upon such termination
hereinabove described, Lessor may reenter the leased premises without further
notice or demand without being in any matter liable therefore, and Lessor may
hold the leased premises free from any further liability as may be have arisen
theretofore, or Lessor may enter the leased premises as aforesaid and, as agent
of Lessee, relet the same for the balance of the term of this lease or for a
shorter or longer term and may receive the
- 7 -
<PAGE> 9
rent therefore, and apply the same first to the payment of the expense of such
reletting and second to the payment of rent due and to become due by this
lease, Lessee remaining liable for and agreeing to pay any deficiency. The
filing of any petition of bankruptcy or insolvency, or for reorganization under
the Bankruptcy Act, or an assignment for the benefit of the creditors by Lessee
unless the foregoing events be vacated, cancelled or nullified within a period
of sixty (60) days, shall constitute a default by Lessee under the terms of
this Lease.
XV.
PAYMENT UPON TERMINATION
[See Exhibit A]
XVI.
LIABILITY INSURANCE
Lessee agrees to carry liability insurance naming the Lessor as an
additional insured in an amount of at least $500,000.00 coverage as to injury
or death of any one person, $1,000,000.00 coverage as to injury or death
arising out of any occurrence and property damage coverage in at least the sum
of $500,000.00 arising out of any occurrence. Such insurance shall protect the
Lessor from any injury and damage as aforesaid, and occurring in, on or about
the leased premises during the term of this lease. Lessee shall further carry
Workmen's Compensation covering its employees. All such policies will include
a waiver of subrogation in favor of Lessor. Should Lessee maintain physical
damage insurance on its machinery, equipment, supplies and inventories as well
as all other property on the based premises, such policy or policies shall
include a waiver of subrogation in favor of Lessor. During the term of the
lease Lessee shall keep the premises (including the facilities constructed
pursuant to paragraph VI) covered by fire and extended coverage insurance in an
amount equal to ninety percent (90%) of the replacement cost of the premises.
Certificates of such insurance shall be furnished Lessor with provision for at
least ten (10) days notice to Lessor before cancellation or material change
therein. Lessee may satisfy the
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<PAGE> 10
provisions of this paragraph by providing evidence, satisfactory to Lessor, of
provisions for self-insurance.
XVII.
NOTICES
All notices under this lease shall be in writing and shall be sent to the
respective party by registered United States Mail, postage prepaid, and notice
to the Lessor shall be addressed to Lessor at the address heretofore stated and
to Lessee at the address heretofore stated. The respective parties may change
the address to which they desire notices be sent by written notice to other
party. Notices shall be deemed to have been delivered as of the time they are
deposited in the United States Mail as aforesaid.
XVIII.
INSPECTION
Lessor reserves the right to enter into and upon the leased premises at
all times for the purpose of inspection, compliance with government regulations
or requests, preservation of the property, and for any other reason not
unreasonably in conflict with Tenant's use of the premises.
XIX.
HAZARDOUS WASTE ACTIVITIES
Lessee shall at all times during the term of this lease, comply with all
of the requirements of the Resource Conservation and Recovery Act and all
regulations derived therefrom relating to the storage, treatment or disposal of
hazardous waste on the premises. Lessee agrees to indemnify Lessor for all
claims and suits, of whatever nature associated with the storage, treatment,
disposal or use of and hazardous chemical or substance by Lessee.
- 9 -
<PAGE> 11
IN WITNESS WHEREOF, Lessor and Lessee have caused this lease to be duly
executed the day and year first above written.
GULF OIL CORPORATION
ATTEST: By: /s/
-------------------------------------
- ----------------------------------
ATTEST: CROWN ZELLERBACH CORPORATION
/s/ J.K. Cadagan By: /s/ A.G. Resnick
- ---------------------------------- -------------------------------------
J. K. Cadagan, Assistant Secretary A. G. Resnick, Vice President
- 10 -
<PAGE> 12
EXHIBIT A
XV
Payment Upon Termination
Upon termination of this lease for any reason except the default of lessee,
lessor shall pay to lessee an amount equal to one hundred percent (100%) of the
original cost of the structural improvements (not including any of lessee's
process equipment or machinery) added by lessee and which was not intended to
be removed by lessee and was not removed by lessee. Lessee shall notify lessor
in writing of the cost of any such structural improvements immediately upon
their completion. If lessor makes no objection to the accuracy of such written
statement within 30 days of its receipt, the statement shall be conclusive for
purposes of this paragraph. Lessee shall at lessor's request, provide lessor
with copies of invoices, contracts, and other documents upon which any
statement is based. Notwithstanding any other provision of this paragraph,
lessor shall not have any obligation to lessee in the event the premises are
damaged and the ground lease is terminated pursuant to paragraph IX(c) or the
premises are otherwise unfit for commercial use upon termination.
<PAGE> 1
EXHIBIT 99.4
Ground Lease Agreement Amendment dated January 1, 1981 by and between Gulf Oil
Corporation and Crown Zellerbach Corporation relating to the Orange, Texas
Plant (the rights and obligations of the lessee under the foregoing Lease have
been assigned ultimately to Printpack, Inc.).
<PAGE> 2
GROUND LEASE AGREEMENT AMENDMENT
Crown Zellerbach Corporation and Gulf Oil Corporation have a Ground Lease
Agreement dated January 1, 1981, whereby Crown Zellerbach leases certain real
property from Gulf at Gulf's Orange, Texas, facility. The parties have
discovered an error in the property description appearing in Part I of that
Ground Lease Agreement. As a result, Crown Zellerbach and Gulf hereby agree to
amend the property description appearing in Part I of the Ground Lease
Agreement as set forth in Exhibit A.
In addition to the above-described Ground Lease Agreement, Crown
Zellerbach and Gulf have a Lease Agreement for a second parcel of real property
located at Gulf's Orange facility which Crown Zellerbach leases from Gulf. The
Lease Agreement is being amended by a separate contract simultaneous to the
execution of this document.
CROWN ZELLERBACH CORPORATION GULF OIL CORPORATION
BY /s/ BY /s/
-------------------------------- -------------------------------
TITLE V.P. and Gen. Mgr. FPD TITLE V.P. Olefins and Derivatives
----------------------------- ----------------------------
DATE 18 March 82 DATE 12 April 82
------------------------------ -----------------------------
<PAGE> 3
GROUND LEASE AGREEMENT AMENDMENT - EXHIBIT A
CROWN ZELLERBACH INDUSTRIAL AREA (CZ TRACT 2)
All that certain tract or parcel of land lying and being situated in
Orange County, Texas, a part of the STEPHEN JETT SURVEY, ABSTRACT NO. 16 and
being a part of that certain tract of land described in instrument from Spencer
Chemical Company to Gulf Oil Corporation dated April 30, 1964 and recorded in
Volume 320, Page 119 of the Deed Records of Orange County, Texas, said tract
herein described being more particularly described as follows:
COMMENCING at a 2-inch bronze plate set in a 4-inch by 4-inch concrete
monument for an angle point in the east line of the above referenced Gulf Oil
Corporation tract and the northeast corner of that certain tract of land
described as "First Tract" in instrument from H. J. L. Stark to Spencer
Chemical Company dated May 22, 1953 and recorded in Volume 155, Page 270 of the
Deed Records of Orange County, Texas, said corner being in the west line of a
250-foot wide access strip of land formerly retained by the above said H. J. L.
Stark;
THENCE North 1 deg. 54 min. 30 sec. West along and with the said west line
of the 250-foot wide access strip a distance of 2,413.04 feet to a point for
corner;
THENCE South 87 deg. 59 min. 12 sec. West a distance of 46.83 feet to an
existing chain link fence corner post for the southeast corner and POINT OF
BEGINNING of the tract herein described;
THENCE continuing South 87 deg. 59 min. 12 sec. West along and with an
existing chain link fence a distance of 386.73 feet to an existing chain link
fence corner post for the southwest corner of the tract therein described;
THENCE North 1 deg. 46 min. 18 sec. West continuing along and with an
existing chain link fence a distance of 105.00 feet to the northwest corner of
the tract herein described;
THENCE North 81 deg. 47 min. 19 sec. East a distance of 389.02 feet to a
point in an existing chain link fence for the northeast corner of the tract
herein described;
THENCE South 1 deg. 50 min. 05 sec. East continuing along and with an
existing chain link fence a distance of 147.00 feet to the POINT OF BEGINNING
and
Containing 1.119 acres of land, more or less.
Prepared by:
VERRETT & ASSOCIATES, INC.
by /s/ E. James Verrett
E. James Verrett
Reg. Public Surveyor No. 1781
November 6, 1981
:jv
<PAGE> 1
EXHIBIT 99.5
Ground Lease dated September 9, 1985 by and between Chevron Chemical Company
and Crown Zellerbach Corporation relating to the Orange, Texas Plant (the
rights and obligations of the lessee under the foregoing Lease have been
assigned ultimately to Printpack, Inc.).
<PAGE> 2
GROUND LEASE
THIS LEASE is made and executed on September 9, 1985 by and between
CHEVRON CHEMICAL COMPANY, a Delaware corporation, 1301 McKinney, Houston, TX
77010 (hereinafter called "Lessor") , and CROWN ZELLERBACH CORPORATION, a
Nevada corporation, One Bush Street, San Francisco, California 94104
(hereinafter called "Lessee").
I.
DESCRIPTION AND USE OF PREMISES
Lessor leases to Lessee and Lessee hires from Lessor, for, the purpose of
conducting thereon any lawful business and for no other purpose, those premises
located in the County of Orange, State of Texas, more particularly described as
CZ Tracts 3 through 6 on Exhibit A attached hereto. As used herein, the term
"Premises" refers to the real property described on Exhibit A and to any
improvements located thereon from time to time during the term of this lease.
II.
TERM
The term of this lease shall commence on the date it is signed and shall
end on December 31, 2000; provided, that either party may terminate this lease
effective at the end of any lease year upon three years' prior written notice
to the other party. A "lease year" for the purposes of this paragraph shall
correspond to a calendar year with the first lease year ending on December 31,
1985.
III.
RENT
(a) Lessee covenants, stipulates, and agrees to pay Lessor as rental for
the demised premises the sum of one dollar ($1.00) per year during the term of
this lease. Until Lessee receives other instructions in writing from Lessor,
Lessee should pay all rentals under this lease to Lessor at the office of
Lessor above stated.
- 1 -
<PAGE> 3
(b) As additional rent Lessee agrees to pay all taxes or assessments,
general or special, paid or charged to Lessor in any lease year on the
premises, provided, that Lessee shall have the right to contest the amount or
valuation method of any such tax or assessment. Lessor shall notify Lessee of
any such tax or assessment in sufficient time to permit Lessee to contest the
same if Lessee so desires. Lessor shall cooperate in any such contest by
Lessee, provided, that Lessee shall bear the entire expense and shall reimburse
Lessor for any cost it incurs because of such contest.
IV.
CONSTRUCTION OF IMPROVEMENTS
Lessee shall have the right, to construct on the premises at any time
during the term of this lease, the improvements described in Exhibit B together
with any other facility, appurtenance, or improvement necessary or desirable to
support such improvements. All construction hereunder shall be in conformance
with all building codes and other applicable laws and regulations. Lessee
shall use licensed contractors to do all of the construction hereunder and the
facilities shall be constructed in a workmanlike manner.
V.
FURTHER CONSTRUCTION AND ENCUMBRANCE
Lessee shall have the right to repair, demolish, remove, alter or modify
the improvements constructed pursuant to the preceding paragraph so long as any
such change does not diminish the market value of the premises immediately
prior to such alteration. Lessor further agrees to grant any easement or
right-of-way reasonably necessary to provide utility or other essential
services to the improvements operated by Lessee hereunder.
- 2 -
<PAGE> 4
VI.
UTILITIES AND ADDITIONAL USE THEREOF
Lessor has caused to be constructed and brought into premises occupied by
Lessee that are adjacent to the leased premises railroad trackage, water and
steam lines, sewer pipes, gas mains, and other necessary utilities. Lessee's
right to the use thereof on the leased premises shall be in common with Lessor
or any other tenant or customer of Lessor and Lessor reserves the right to
itself, its agents and employees to connect into or attach to or extend and
utilize any of the aforesaid utilities and facilities, together with the right
to enter into and upon the leased premises for such purposes and the
maintenance or relocation thereof.
The repair and maintenance of such utilities shall be done by Lessor at
its cost, and Lessee expressly waives any liability on the part of Lessor for
the manner or means of making any repairs or maintenance thereof; provided that
no additional use thereof shall be commenced after the commencement of the term
of this lease which will under normal conditions interfere with the use thereof
by the Lessee reasonably foreseeable at such date, and in no event shall Lessor
be liable to Lessee for the failure of the operation of any of such utilities.
All cost of repair and maintenance shall be borne by Lessee, except in the
event the utility is being utilized by others including Landlord, whose
continued use thereof requires such maintenance and repairs, then Lessee shall
bear such part of the costs as Lessee's use of such utility bears to the
combined usage of Lessee and such other user or users.
VII.
REPAIRS
(a) Lessee shall, throughout the term of this lease, at its own cost,
without any expense to Lessor, keep and maintain the premises, including all
buildings and improvements of every kind which may be a part thereof, and all
appurtenances thereto,
- 3 -
<PAGE> 5
including adjacent sidewalks, in good, sanitary, and neat order, condition or
repair and, except as specifically provided herein, restore and rehabilitate
any improvements of any kind which may be destroyed or damaged by fire,
casualty, or any other cause whatsoever. Lessor shall not be obligated to make
any repairs, replacements, or any renewals of any kind, to the premises or any
buildings or improvements thereon. Lessee shall comply with and abide by all
Federal, state, county, municipal and other governmental statutes, ordinances,
laws and regulations affecting the premises, the improvements thereon or any
activity or condition on or in such premises.
(b) The damage, destruction or partial destruction of any building or
other improvement which is a part of the premises shall not release Lessee from
any obligation hereunder, except as hereafter expressly provided.
(c) Anything to the contrary in subparagraph (a) of this paragraph
notwithstanding, in case of destruction of the improvements to be constructed
on the premises or damage thereto from any cause so as to make it untenantable,
occurring at any time during the term of this lease, Lessee, if not then in
default hereunder, may elect to terminate this lease by written notice served
on Lessor within thirty (30) days after occurrence of such damage or
destruction. In the event of such termination Lessee shall restore the
premises to their original condition as they existed at the commencement of
this lease. Upon such termination, rent, taxes, assessments, and any other
sums payable by Lessee to Lessor hereunder shall be prorated as of the
termination date, and in the event any rent, taxes, or assessments shall have
been paid in advance, Lessor shall rebate the same for the unexpired period for
which payment shall be made.
VIII.
LIENS
(a) Lessee shall keep the premises and every part thereof and all
buildings and other improvements at any time located thereon free and clear of
any and all mechanics',
- 4 -
<PAGE> 6
materialmens', and other liens arising out of or in connection with work or
labor done, services performed, or materials or appliances used or furnished
for or in connection with any operations of Lessee, any alteration, improvement
or repairs or additions which Lessee may make or permit or cause to be made, or
any work or construction, by, for, or permitted by Lessee on or about the
premises or any obligations of any kind incurred by Lessee, and Lessee agrees
at all times, promptly to pay and discharge any and all claims on which any
such lien may or could be based, and indemnify Lessor against all such liens
and claims of liens and suits or other proceedings pertaining thereto.
(b) If Lessee desires to contest any such lien it shall notify Lessor of
its intention to do so within twenty (20) days after it receives notice of the
filing of such lien. In such case and provided that Lessee shall, on demand,
protect Lessor by good and sufficient surety bond against any such lien and any
cost, liability or damage arising out of such contest, Lessee shall not be in
default hereunder unless Lessee shall fail to discharge such lien to the extent
held valid within thirty (30) days after the final determination of the
validity thereof. In the event of any such contest Lessee shall protect and
indemnify Lessor against all costs, expenses, and damages resulting therefrom.
IX.
FIXTURES
Lessee may, at its own expense, upon termination of this lease, remove
from said premises any structures, fixtures, furnishings, or equipment which
Lessee may have constructed, installed or otherwise supplied, during its
occupancy of the premises. Lessee agrees to repair any damage that may be done
to the premises resulting from the removal of such structures, fixtures,
furnishings and equipment.
- 5 -
<PAGE> 7
X.
INDEMNIFICATION
Lessee agrees to indemnify and hold Lessor harmless form all claims and
causes of action for damage to the property or injury to a person or persons
occurring, on or about the premises or arising out of the use and operation of
the leased premises by Lessee except to the extent such claims result from the
negligence or actions of Lessor, its agents, contractors, or employees.
XI.
ASSIGNMENT OR SUBLETTING
This lease may not be assigned or sublet by Lessee in whole or in part
without the written consent of Lessor, In the event of such assignment or
subletting Lessee shall remain responsible for performance of the terms and
conditions of this lease, and shall not be released therefrom. Lessor shall
have the right to refuse any sublease or assignment without cause provided that
in the event of such refusal Lessee may terminate this lease.
XII.
DEFAULTS
If Lessee shall default in the payment of any rent herein reserved or in
the performance of any of its obligations under this lease, and if the Lessor
shall give the Lessee notice in writing of such default and Lessee shall fail
to cure the default within thirty (30) days after the date of receipt of such
notice or if the default should be of such character as to require more than
thirty (30) days to cure and Lessee shall fail to use reasonable diligence in
curing such default, then and in any such event the Lessor may at Lessor's
option, terminate this lease. In the event (a) Lessee shall cease its
operations on the leased premises for a period of six (6) months, or (b) Lessee
should abandon the leased premises, then Lessor may, at its election terminate
this lease by written notice thereof to Lessee; provided, however, should
Lessee's cessation of operations be due to acts of God,
- 6 -
<PAGE> 8
strikes, war, force majeure, or other causes beyond the reasonable control of
Lessee, then (unless such termination is authorized by other provisions of this
lease) during such period or cessation, Lessor may not cancel this lease. Upon
such termination hereinabove described, Lessor may reenter the leased premises
without further notice or demand without being in any matter liable therefor,
and Lessor may hold the leased premises free from any further liability as may
have arisen theretofore, or Lessor may enter the leased premises as aforesaid
and, as agent of Lessee, relet the same for the balance of the term of this
lease or for a shorter or longer term and may receive the rent therefor, and
apply the same first to the payment of the expense of such reletting and second
to the payment of rent due and to become due by this lease, Lessee remaining
liable for and agreeing to pay any deficiency. The filing of any petition of
bankruptcy or insolvency, or for reorganization under the Bankruptcy Act, or an
assignment for the benefit of the creditors by Lessee unless the foregoing
events be vacated, cancelled or nullified within a period of sixty (60) days,
shall constitute a default by Lessee under the terms of this lease.
XIII.
LIABILITY INSURANCE
Lessee agrees to carry liability insurance naming the Lessor as an
additional insured in an amount of at least $500,000.00 coverage as to injury
to death of any one person, $1,000,000.00 coverage as to injury or death
arising out of any occurrence. Such insurance shall protect the Lessor from
any injury and damage as aforesaid, and occurring in, on or about the leased
premises during the term of this lease. Lessee shall further carry Worker's
Compensation covering its employees. All such policies will include a waiver
of subrogation in favor of Lessor. Should Lessee maintain physical damage
insurance on its machinery, equipment, supplies and inventories as well as all
other property on the based premises, such policy or policies shall include a
waiver of subrogation in favor of Lessor.
- 7 -
<PAGE> 9
In addition, Lessor agrees to provide Lessee with a similar waiver of
subrogation from any insurer providing coverage to property of Lessor adjacent
or proximate to the premises.
XIV.
NOTICES
All notices under this lease shall be in writing and shall be sent to the
respective party by telex or by registered United States Mail, postage prepaid,
return receipt requested, and notice to the Lessor shall be addressed to Lessor
at the address heretofore stated and to Lessee at the address heretofore
stated. The respective parties may change the address to which they desire
notices be sent by written notice to other party. Notices shall be deemed to
have been delivered as of the time they are secured.
XV.
INSPECTION
Lessor reserves the right to enter into and upon the leased premises at
all times for the purpose of inspection, compliance with governmental
regulations or requests, preservation of the property, and for any other reason
not unreasonably in conflict with Tenant's use of the premises.
XVI.
HAZARDOUS WASTE ACTIVITIES
Lessee shall at all times during the term of this lease, comply with all
federal, state and local laws, regulations, standards and orders, including the
Resource Conservation and Recovery Act and the Comprehensive Environmental
Response, Compensation and Liability Act and all regulations derived therefrom
relating to the storage, treatment or disposal of hazardous substances and of
wastes on the premises. Lessee agrees to defend and indemnify Lessor from and
against all claims, proceedings and suits, of whatever nature associated with
the storage, treatment, disposal or use of waste materials and any hazardous
chemical or substance by Lessee.
- 8 -
<PAGE> 10
IN WITNESS WHEREOF, Lessor and Lessee have caused this lease to be duly
executed the day and year first above written.
WITNESS: CHEVRON CHEMICAL COMPANY
/s/ By: /s/
- ----------------------------- ---------------------------
WITNESS: CROWN ZELLERBACH CORPORATION
/s/ By: /s/
- ----------------------------- ----------------------------
Vice President
- 9 -
<PAGE> 11
EXHIBIT A
Page 1 of 6
CROWN ZELLERBACH 1985 ADDITIONAL AREA (CZ TRACT 3)
All that certain tract or parcel of land lying and being situated in
Orange County, Texas, a part of the STEPHEN JETT SURVEY, ABSTRACT NO. 16 and
being a part of that certain tract of land described in instrument from Spencer
Chemical Company to Gulf Oil Corporation dated April 30, 1964 and recorded in
Volume 320, Page 119 of the Deed Records of Orange County, Texas, said tract
herein described being more particularly described as follows:
COMMENCING at a 2-inch bronze plate set in a 4-inch by 4-inch concrete
monument for an angle point in the east line of the above referenced Gulf Oil
Corporation tract and the northeast corner of that certain tract of land
described as "First Tract" in instrument from H. J. L. Stark to Spencer
Chemical Company dated May 22, 1953 and recorded in Volume 155, Page 270 of the
Deed Records of Orange County, Texas, said corner being in the west line of a
250-foot wide access strip of land formerly retained by the above said H. J. L.
Stark;
THENCE North 1 deg. 54 min. 30 sec. West along and with the said west line
of the 250-foot wide access strip a distance of 2,413.04 feet to a point for
corner;
THENCE South 87 deg. 59 min. 12 sec. West a distance of 46.83 feet to an
existing chain link fence corner post for the northeast corner and POINT OF
BEGINNING of the tract herein described;
THENCE South 1 deg. 50 min. 05 sec. East along and with a southerly
extension of an existing chain link fence a distance of 100.00 feet to the
southeast corner of the tract herein described;
THENCE South 87 deg. 59 min. 12 sec. West a distance of 386.84 feet to the
southwest corner of the tract herein described;
THENCE North 1 deg. 46 min. 18 sec. West along and with a southerly
extension of an existing chain link fence a distance of 100.00 feet to an
existing chain link fence corner post for the northwest corner of the tract
herein described;
THENCE North 87 deg. 59 min. 12 sec. East along and with an existing chain
link fence a distance of 386.73 feet to the POINT OF BEGINNING and
Containing 0.888 acre of land, more or less.
- 10 -
<PAGE> 12
EXHIBIT A
Page 2 of 6
CROWN ZELLERBACH 1985 ADDITIONAL AREA (CZ TRACT 4)
All that certain tract or parcel of land lying and being situated in
Orange County, Texas, a part of the STEPHEN JETT SURVEY, ABSTRACT NO. 16 and
being a part of that certain tract of land described in instrument from Spencer
Chemical Company to Gulf Oil Corporation dated April 30, 1964 and recorded in
Volume 320, Page 119 of the Deed Records of Orange County, Texas, said tract
herein described being more particularly described as follows:
COMMENCING at a 2-inch bronze plate set in a 4-inch by 4-inch concrete
monument for an angle point in the east line of the above referenced Gulf Oil
Corporation tract and the northeast corner of that certain tract of land
described as "First Tract" in instrument from H. J. L. Stark to Spencer
Chemical Company dated May 22, 1953 and recorded in Volume 155, Page 270 of the
Deed Records of Orange County, Texas, said corner being in the west line of a
250-foot wide access strip of land formerly retained by the above said H. J. L.
Stark;
THENCE North 1 deg. 54 min. 30 sec. West along and with the said west line
of the 250-foot wide access strip a distance of 2,413.04 feet to a point for
corner;
THENCE South 87 deg. 59 min. 12 sec. West passing at a distance of 46.83
feet an existing chain link fence corner post, and continuing (South 87 deg. 59
min. 12 sec. West) along and with an existing chain link fence a total distance
of 433.56 feet to an existing chain link fence corner post for corner;
THENCE North 1 deg. 46 min. 18 sec. West continuing along and with an
existing chain link fence a distance of 137.72 feet to the southeast corner and
POINT OF BEGINNING of the tract herein described;
THENCE South 88 deg. 13 min. 42 sec. West along and with a line which is
perpendicular to the above said existing chain link fence a distance of 150.00
feet to the southwest corner of the tract herein described;
THENCE North 1 deg. 46 min. 18 sec. West parallel with the above said
existing chain link fence a distance of 150.00 feet to the northwest corner of
the tract herein described;
THENCE North 88 deg. 13 min. 42 sec. East along and with a line which is
perpendicular to the above said existing chain link fence a distance of 150.00
feet to the said existing chain link fence for the northeast corner of the
tract herein described;
THENCE South 1 deg. 46 min. 18 sec. East along and with the said existing
chain link fence a distance of 150.00 feet to the POINT OF BEGINNING and
Containing 0.517 acre of land, more or less.
- 11 -
<PAGE> 13
EXHIBIT A
Page 3 of 6
CROWN ZELLERBACH 1985 ADDITIONAL AREA (CZ TRACT 5)
All that certain tract or parcel of land lying and being situated in
Orange County, Texas, a part of the STEPHEN JETT SURVEY, ABSTRACT NO. 16 and
being a part of that certain tract of land described in instrument from Spencer
Chemical Company to Gulf Oil Corporation dated April 30, 1964 and recorded in
Volume 320, Page 119 of the Deed Records of Orange County, Texas, said tract
herein described being more particularly described as follows:
COMMENCING at a 2-inch bronze plate set in a 4-inch by 4-inch concrete
monument for an angle point in the east line of the above referenced Gulf Oil
Corporation tract and the northeast corner of that certain tract of land
described as "First Tract" in instrument from H. J. L. Stark to Spencer
Chemical Company dated May 22, 1953 and recorded in Volume 155, Page 270 of the
Deed Records of Orange County, Texas, said corner being in the west line of a
250-foot wide access strip of land formerly retained by the above said H. J. L.
Stark;
THENCE North 1 deg. 54 min. 30 sec. West along and with the said west line
of the 250-foot wide access strip a distance of 2,413.04 feet to a point for
corner;
THENCE South 87 deg. 59 min. 12 sec. West passing at a distance of 46.83
feet an existing chain link fence corner post, and continuing (South 87 deg. 59
min. 12 sec. West) along and with an existing chain link fence a total distance
of 433.56 feet to an existing chain link fence corner post for corner;
THENCE North 1 deg. 46 min. 18 sec. West continuing along and with an
existing chain link fence a distance of 466.22 feet to the southeast corner and
POINT OF BEGINNING of the tract herein described;
THENCE South 68 deg. 13 min. 42 sec. West along and with a line which is
approximately parallel with and 10 feet northeasterly from an existing drainage
ditch a distance of 76.36 feet to the southwest corner of the tract herein
described;
THENCE North 1 deg. 46 min., 18 sec. West parallel with the above said
existing chain link fence a distance of 137.05 feet to the northwest corner of
the tract herein described;
THENCE North 88 deg. 13 min. 42 sec. East along and with a line which is
perpendicular to the above said chain link fence a distance of 70.00 feet to
the said existing chain link fence for the northeast corner of the tract herein
described;
THENCE South 1 deg. 46 min. 18 sec. East along and with the above said
existing chain link fence a distance of 167.55 feet to the POINT OF BEGINNING
and
Containing 0.245 acre of land, more or less.
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<PAGE> 14
EXHIBIT A
Page 4 of 6
CROWN ZELLERBACH 1985 ADDITIONAL AREA (CZ TRACT 6)
All that certain tract or parcel of land lying and being situated in
Orange County, Texas, a part of the STEPHEN JETT SURVEY, ABSTRACT NO. 16 and
being a part of that certain tract of land described in instrument from Spencer
Chemical Company to Gulf Oil Corporation dated April 30, 1964 and recorded in
Volume 320, Page 119 of the Deed Records of Orange County, Texas, said tract
herein described being more particularly described as follows:
COMMENCING at a 2-inch bronze plate set in a 4-inch by 4-inch concrete
monument for an angle point in the east line of the above referenced Gulf Oil
Corporation tract and the northeast corner of that certain tract of land
described as "First Tract" in instrument from H. J. L. Stark to Spencer
Chemical Company dated May 22, 1953 and recorded in Volume 155, Page 270 of the
Deed Records of Orange County, Texas, said corner being in the west line of a
250-foot wide access strip of land formerly retained by the above said H. J. L.
Stark;
THENCE North 1 deg. 54 min. 30 sec. West along and with the said west line
of the 250-foot wide access strip a distance of 2,413.04 feet to a point for
corner;
THENCE South 87 deg. 59 min. 12 sec. West passing at a distance of 46.83
feet an existing chain link fence corner post, and continuing (South 87 deg. 59
min. 12 sec. West) along and with an existing chain link fence a total distance
of 433.56 feet to an existing chain link fence corner post for corner;
THENCE North 1 deg. 46 min. 18 sec. West continuing along and with an
existing chain link fence a distance of 822.77 feet to an existing chain link
fence corner post for corner;
THENCE North 87 deg. 51 min. 15 sec. East continuing along and with and
existing chain link fence a distance of 121.80 feet to an existing chain link
fence corner post for corner;
THENCE North 3 deg. 39 min. 20 sec. West continuing along and with an
existing chain link fence a distance of 79.59 feet to an existing chain link
fence corner post for the southwest corner and POINT OF BEGINNING of the tract
herein described;
THENCE continuing North 3 deg. 39 min. 20 sec. West along and with a
northerly extension of the said existing chain link fence a distance of 75.00
feet to the northwest corner of the tract herein described;
- 13 -
<PAGE> 15
EXHIBIT A
Page 5 of 6
CROWN ZELLERBACH 1985 ADDITIONAL AREA (CZ TRACT 6)
THENCE North 87 deg. 44 min. 21 sec. East a distance of 201.13 feet to the
Northeast corner of the tract herein described;
THENCE South 1 deg. 05 min. 16 sec. East along a northerly extension of an
existing chain link fence a distance of 75.00 feet to an existing chain link
fence corner post for the southeast corner of the tract herein described;
THENCE South 87 deg. 44 min. 28 sec. West along and with an existing chain
link fence a distance of 197.77 feet to the POINT OF BEGINNING and
Containing 0.343 acre of land, more or less.
- 14 -
<PAGE> 16
EXHIBIT A
Page 6 of 6
[Diagram]
- 15 -
<PAGE> 17
EXHIBIT B
Purposes for Which Premises May Be Used
<TABLE>
<CAPTION>
Tract Purpose
- ----- -------
<S> <C>
CZ Tract 3 Space to rear of plant - short range plans contemplate an expansion
of the present warehouse which will result in a loss of yard, and
truck access and parking area; additional area will be paved and/or
blacktopped.
CZ Tract 4 Parking Lot - minor grading and black topping.
CZ Tract 5 Refrigeration Expansion - a metal walled structure on a concrete
pad to house additional compressors serving expanded plant
capacity; will be similar to present refrigeration installation.
CZ Tract 6 Parking Lot - minor grading and blacktopping.
</TABLE>
<PAGE> 1
EXHIBIT 99.6
Lease dated July 25, 1990 by and between The Lawson Group, LTD. and Shell Oil
Company relating to the Williamsburg, Virginia Plant (the rights and
obligations of the lessee under the foregoing Lease have been assigned
ultimately to Printpack, Inc.).
<PAGE> 2
LEASE
1. Parties. This Lease, dated, for reference purposes only, July 25, 1990 is
made by and between THE LAWSON GROUP, LTD. (herein called "Lessor") and SHELL
OIL COMPANY, a Delaware corporation (herein called "Lessee").
2. Premises. Lessor hereby leases to Lessee and Lessee leases from Lessor
for the term at the rental, and upon all of the conditions set forth herein,
that certain real property situated in the County of James City, Commonwealth
of Virginia commonly known as 400 Packets Court, Williamsburg, Virginia and
described as:
All those two parcels of land situated in James City County
containing 4.59 acres +/- ("Site 18-A") and 3.07 acres +/- ("Site
18-B") as shown on a certain plat recorded in the Clerk's office
of the Circuit Court of James City County, Virginia in Plat Book
37, Page 63. Including two primary existing buildings containing
76,800 square feet on Site A ("Site A Building") and 55,175 square
feet on Site B ("Site B Building") all of which are shown on
Exhibit A attached hereto.
Said real property including the land and all improvements thereon, is herein
called "the Premises".
3. Term. The term of this Lease shall be for ten (10) years commencing on
March 1, 1990, and ending on February 29, 2000, unless sooner terminated
pursuant to any provision hereof.
4. Rent. Lessee shall pay to Lessor as rent for the Premises, in advance on
the first day of each month of the term hereof in accordance with the following
schedule.
(a) March 1, 1990, through February 28, 1991 -
$4.05 per square foot
$311,040.00 annually for Site 18-A
$223,458.75 annually for Site 18-B
$44,541.56 monthly for both Sites
(b) March 1, 1991, through February 29, 1992 -
$4.15 per square foot
$318,720.00 annually for Site 18-A
$228,976.25 annually for Site 18-B
$45,641.35 monthly for both Sites
(c) March 1, 1992, through February 28, 1997 -
$4.25 per square foot
$326,400.00 annually for Site 18-A
- 1 -
<PAGE> 3
$234,493.75 annually for Site 18-B
$46,741.15 monthly for both Sites
(d) March 1, 1997, through February 28, 1998 -
$4.50 per square foot
$345,600.00 annually for Site 18-A
$248,287.50 annually for Site 18-B
$49,490.63 monthly for both Sites
(e) March 1, 1998, through February 29, 2000 -
$4.65 per square foot
$357,120.00 annually for Site 18-A
$256,563.75 annually for Site 18-B
$51,140.31 monthly for both Sites
(f) Lessee shall pay to Lessor upon the execution hereof by Lessee
the sum of $9,600.00 in satisfaction of Lessee's rental obligations for the
period ending February 28, 1990.
(g) Rent for any period during the term hereof which is less than one
month shall be a pro rata portion of the monthly installment. Rent shall be
payable in lawful money of the United States to Lessor at 2551 Almeda Avenue,
Post Office Box 10266, Norfolk, Virginia 23513, or to such other persons or at
such other places as Lessor may designate in writing.
5. Use.
5.1 Use. The Premises shall be used and occupied only for light
industrial operations including office, manufacturing and warehouse facilities
for plastic containers industry and for no other purpose, without consent of
Landlord in writing.
5.2 Compliance with Law.
(a) Lessor warrants to Lessee that the Premises, in its existing state,
but without regard to the use for which Lessee will use the Premises, does not
violate any applicable building code, regulation or ordinance at the time that
this Lease is executed. In the event that it is determined that this warranty
has been violated, then it shall be the obligation of the Lessor, after written
notice from Lessee, to promptly, at Lessor's sole cost and expense to rectify
any such violation. Since Lessee did not give to Lessor written notice of the
violation of this warranty within one (1) year from the original commencement
of the term, it shall be conclusively deemed that such violation did not exist
and the correction of the same shall be the obligation of the Lessee.
(b) Except as provided in Paragraph 5.2(a) , Lessee shall, at Lessee's
expense, comply promptly, with all applicable statutes, ordinances, rules,
regulations, order,
- 2 -
<PAGE> 4
restrictions of record, and requirements in effect during the term or any part
of the term hereof regulating the use by Lessee of the Premises. Lessee shall
not use or permit the use of the Premises in any manner that will tend to
create waste or a nuisance or, if there shall be more than one tenant in the
building containing the Premises, shall tend to disturb such other tenants.
(c) Environmental Indemnification. Lessee shall use its best efforts to
prevent the release or discharge of any hazardous wastes or constituents on, in
or under the Premises. In the event of such release or discharge during the
term hereof, as the same may be extended, Lessee shall indemnify and hold
harmless Lessor from and against all losses and damages, suffered by Lessor as
a result of any claims, liabilities, damages, penalties, costs and expenses
incurred by Lessor, relating to, or arising as a result of any releases or
discharges of hazardous wastes, constituents or pollutants on, in or under the
Premises caused by Lessee or its agents, and occurring during the term hereof,
including, without limitation, governmental ordered remedial investigations and
feasibility study costs, clean up costs and other response costs under the
Comprehensive Environmental Response Compensation and Liability Act, as
modified by the Superfund Amendments and Reauthorization Act of 1986, or any
other environmental legislation or regulation, whether Federal, state or local
currently in existence or which may be enacted in the future (herein called the
"Acts"). At the expiration of the initial term or any extension of this Lease,
an environmental study will be prepared at Lessor's expense. If such study
indicates the presence of environmental damages, hazardous wastes, construction
pollutants, etc., Lessee shall (at Lessee's expense) clean up all such hazards,
returning the Premises to an environmentally clean state, if such clean up is
ordered by any Federal, state or local environmental agency pursuant to the
Acts. If the environmental study concludes that the Premises has been
maintained in an environmentally clean state or if Lessee is required to clean
up the Premises and after the completion of the clean up Lessee provides Lessor
with an environmental study certifying that the Premises is in compliance with
the requirements of the Acts, then Lessor will indemnify Lessee of all
environmental responsibility arising after the receipt of the latest
environmental study by indicating such in writing to Lessee or its agent.
(d) Warranty of restrictive covenants. Lessor warrants to Lessee that
Lessor and its predecessors in title have not violated any of the protective
covenants and restrictions for Busch Corporate Center-Williamsburg appearing of
record of Deed Book 169, page 135 of the James City County, Virginia public
records, that all required permits and authorizations have been obtained and
that improvements upon the premises property are in full compliance with the
restrictions.
5.3 Condition of Premises. Except as provided in Paragraph 5.2(a) Lessee
hereby accepts that Premises in their condition existing as of the date of the
execution hereof, subject to all applicable zoning, municipal, county and state
laws, ordinances and regulations governing and regulating the use of the
Premises, and accepts this Lease subject thereto and to all matters disclosed
thereby and by any exhibits attached hereto.
- 3 -
<PAGE> 5
Lessee acknowledges that neither Lessor nor Lessor's agent has made any
representation or warranty as to the suitability of the Premises for the
conduct of Lessee's business.
6. Maintenance Repairs and Alterations.
6.1 Lessor's Obligations. Subject to the provisions of Paragraphs 5.2(a)
and 8 and except for damage caused by any negligent or intentional act or
omission of Lessee, Lessee's agents, employees, or invitees in which event
Lessee shall repair the damage, Lessor, at Lessor's expense, shall keep in good
order, condition and repair the foundations, exterior walls and the exterior
roof of the Premises. Lessor shall not, however, be obligated to paint such
exterior, nor shall Lessor be required to maintain the interior surface of
exterior walls, windows, doors or plate glass. Lessor shall have no obligation
to make repairs under this Paragraph 6.1 until a reasonable time after receipt
of written notice of the need for such repairs.
6.2 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 5.2(a), 6 and 8, Lessee, at
Lessee's expense, shall keep in good order, condition and repair the Premises
and every part thereof (whether or not the damaged portion of the Premises or
the means of repairing the same are reasonably or readily accessible to Lessee)
including, without limiting the generality of the foregoing, all plumbing,
heating, air conditioning, ventilating, electrical and lighting facilities and
equipment within the Premises, fixtures, interior walls and interior surface of
exterior walls, ceilings, windows, doors, plate glass, and skylights, located
within the Premises, and all landscaping, driveways, parking lots, fences and
signs located in the Premises and all sidewalks and parkways adjacent to the
Premises.
(b) If Lessee fails to perform Lessee's obligations under this Paragraph
6.2, Lessor may at Lessor's option enter upon the Premises after 10 days prior
written notice to Lessee, and put the same in good order, condition and repair,
and the cost thereof together with interest thereon at the rate of 10% per
annum shall be due and payable as additional rent to Lessor together with
Lessee's next rental installment.
(c) On the last day of the term hereof, or on any sooner termination,
Lessee shall surrender the Premises to Lessor in the same condition as
received, broom clean, ordinary wear and tear excepted. Lessee shall repair
any damage to the Premises occasioned by the removal of its trade fixtures,
furnishings and equipment pursuant to Paragraph 6.3, which repair shall include
the patching and filling of holes and repair of structural damage.
6.3 Alterations and Additions.
(a) Lessee shall not, without Lessor's prior written consent make any
alterations, improvements, additions, or Utility Installations in, on or about
the Premises, except for nonstructural alterations not exceeding $10,000.00 in
cost. As used in this
- 4 -
<PAGE> 6
Paragraph 6.3, the term "Utility Installation" shall mean bus ducting, power
panels, wiring, fluorescent fixtures, space heaters, conduits, air-conditioning
equipment and plumbing. Lessee shall have the right to remove any or all of
said alterations, improvements, additions or Utility Installations at the
expiration of the term, and restore the Premises to their prior condition. The
aforesaid shall not apply to any alterations, improvements, additions or
Utility Installations provided at Lessor's expense.
(b) Lessee shall pay, when due, all proper claims for labor or materials
furnished to or for Lessee at or for use in the Premises, which claims are or
may be secured by any mechanic's or materialmen's lien against the Premises or
any interest therein. Lessee shall give Lessor not less than ten (10) days'
written notice prior to the commencement of any work in the Premises, and
Lessor shall have the right to post notices of non-responsibility in or on the
Premises as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend itself and Lessor against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises.
(c) Any alterations, improvements, additions or Utility Installations in,
or about the Premises that Lessee shall desire to make and which requires the
consent of the Lessor shall be presented to Lessor in written form, with
proposed detailed plans. If Lessor shall give its consent the consent shall be
deemed conditioned upon Lessee acquiring a permit to do so from appropriate
governmental agencies, the furnishing of a copy thereof to Lessor prior to the
commencement of the work and the compliance by Lessee of all conditions of said
permit in a prompt and expeditious manner. Lessor approval not to be
unreasonably withheld.
(d) Lessee's machinery and equipment, other than that which is affixed to
the Premises so that it cannot be removed without material damage to the
Premises, shall remain the property of Lessee and may be removed by Lessee
subject to the provisions of Paragraph 6.2(c).
7. Insurance Indemnity.
7.1 Liability Insurance.
(a) Lessee Liability Insurance. Lessee shall, at Lessee's expense obtain
and keep in force during the term of this Lease a policy of Combined Single
Limit, Bodily Injury and Property Damage insurance insuring Lessee against any
liability arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be combined
single limit policy in an amount of not less than Five Hundred Thousand Dollars
and 00/100 ($500,000.00). The policy shall insure performance by Lessee of the
indemnity provisions of this Paragraph 7. The limits of said insurance shall
not, however, limit the liability of Lessee hereunder. If Lessee shall fail to
procure and maintain said insurance Lessor may, but shall not be required to,
procure and
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maintain the same, but at the expense of Lessee. Not more frequently than each
five (5) years, if, in the reasonable opinion of Lessor, the amount of
liability insurance required hereunder is not adequate, Lessee shall increase
said insurance coverage as required by Lessor, provided, however, that in no
event shall the amount of the liability insurance increase by more than fifty
percent (50%) greater than the amount thereof during the preceding five (5)
years of the term of this Lease. However, the failure of Lessor to require any
additional insurance coverage shall not be deemed to relieve Lessee from any
obligations under the Lease.
(b) Lessor Liability Insurance. Lessor, for Lessor's sole protection,
shall likewise, at all time during the term of this Lease and any extensions or
renewals thereof, and at its expense, maintain a policy or policies of
comprehensive general liability insurance, issued by and binding upon some
solvent insurance company, such insurance to afford minimum protection of not
less than Three Hundred Thousand Dollars and 00/100 ($300,000.00) in respect of
personal injury or death to any one person, and of not less than Five Hundred
Thousand Dollars and 00/100 ($500,000.00) in respect of any one occurrence, and
of not less than one Hundred Fifty Thousand Dollars and 00/100 ($150,000.00)
for property damage for liabilities of Lessor as set forth in this Lease
agreement.
7.2 Property Insurance.
(a) Lessor shall obtain and keep in force during the term of this Lease a
policy or policies of insurance covering loss or damage to the Premises, but
not Lessee's fixtures, equipment or tenant improvements in the amount of the
full replacement value thereof, providing protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk) but not plate glass
insurance. If the Premises contains sprinklers, then the insurance coverage
shall include sprinkler leakage insurance. In addition, Lessor shall obtain
and keep in force, during the term of this Lease, a policy of rental income
insurance covering a period of six months, with loss payable to Lessor, which
insurance shall also cover all real estate taxes and insurance costs for said
period for which Lessee is obligated to pay.
(b) Lessee shall pay to Lessor, during the term hereof, in addition to the
rent, the amount of any increase in premiums for the insurance required under
Paragraph 7.2(a) over and above the premiums paid during calendar year 1988,
whether such increase shall be the result of the nature of Lessee's occupancy,
any act or omission of Lessee, requirements of the holder of a mortgage or deed
of trust covering the Premises, increased valuation of the Premises, or general
rate increases. In lieu of reimbursing Lessor for the cost of rental income
insurance, Lessee may obtain at its sole cost and provide to Lessor an
unconditional and irrevocable letter of credit, issued by a Bank acceptable to
Lessor, in an amount equal to rent for six months plus the amount of all real
estate taxes and insurance which Lessee is obligated to pay. Said letter of
credit shall be for a minimum of one (1) year and the issuing Bank shall give
Lessor not less than fourteen (14) days written notice of the expiration or
nonrenewal of the letter of credit.
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(c) Lessee shall pay any such premium increases to Lessor within thirty
(30) days after receipt by Lessee of a copy of the premium statement or other
satisfactory evidence of the amount due. If the insurance policies maintained
hereunder cover other improvements or other properties of the Lessor in
addition to the Premises, Lessor shall also deliver to Lessee a statement of
the amount of such increase attributable to the Premises and showing in
reasonable detail the manner in which such amount was computed. If the term of
this Lease shall not end concurrently with the expiration of the period covered
by such insurance, Lessee's liability for premium increases shall be prorated
on an annual basis and shall end as of the expiration or termination of this
Lease.
7.3 Insurance Policies. Insurance required hereunder shall be in
companies holding a "General Policyholders Rating" of B plus or better as set
forth in the most current issue of "Best Insurance Guide". Lessee shall
deliver to Lessor copies of policies of liability insurance required under
Paragraph 7.1 or certificates evidencing the existence and amounts of such
insurance with loss payable clauses satisfactory to Lessor. No such policy
shall be cancellable or subject to reduction of coverage or other modification
except after ten (10) days prior written notice to Lessor. Lessee shall,
within ten (10) days prior to the expiration of such policies, furnish Lessor
with renewals or "binders" thereof, or Lessor may order such insurance and
charge the cost thereof to Lessee, which amount shall be payable by Lessee upon
demand. Lessee shall not do or permit to be done anything which shall
invalidate the insurance policies referred to in Paragraph 7.2.
7.4 Waiver of Subrogation. Lessee and Lessor each hereby waive any and
all rights of recovery against the other, or against the officers, employees,
agents and representatives of the other, for loss of or damage to such waiving
party or its property or the property of the others under its control, where
such loss or damage is insured against under any insurance policy in force at
the time of such loss or damages. Lessee and Lessor shall, upon obtaining the
policies of insurance required hereunder, give notice to the insurance carrier
or carriers that the foregoing mutual waiver of subrogation is contained in
this Lease.
7.5 Mutual Release and Indemnity. Lessor shall not be liable to Lessee or
the Lessee's agents, servants, employees, customer, or invitees for any damage
to person or property caused by any act, omission or neglect of Lessee, its
agents, employees or representatives, and Lessee agrees to hold Lessor harmless
from all claims for any such damage. Lessee shall not be liable to Lessor or
Lessor's agents, servants, employees, customers or invitees for any damage to
persons or property caused by any act, omission or neglect of Lessor, its
agents, representatives, or employees, and Lessor agrees to hold Lessee
harmless from all claims for any such damage.
8. Damage or Destruction.
8.1 Partial Damage-Insured. Subject to the provisions of Paragraphs 8.3
and 8.4, if the Premises are damaged and such damage was caused by a casualty
covered under
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an insurance policy required to be maintained pursuant to Paragraph 7.2, Lessor
shall at Lessor's expense repair such damage as soon as reasonably possible and
this Lease shall continue in full force and effect but Lessor shall not repair
or replace Lessee's fixtures, equipment or tenant improvements.
8.2 Partial Damage-Uninsured. Subject to the provisions in Paragraphs 8.3
and 8.4, if at any time during the term hereof the Premises are damaged, except
by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs, at its expense) and such damage was caused by a casualty not covered
under an insurance policy required to be maintained by Lessor pursuant to
Paragraph 7.2, Lessor may at Lessor's option either (i) repair such damage as
soon as reasonably possible at Lessor's expense, in which event this Lease
shall continue in full force and effect, or (ii) give written notice to Lessee
within thirty (30) days after the date of the occurrence of such damage of
Lessor's intention to cancel and terminate this Lease as of the date of the
occurrence of such damage. In the event Lessor elects to give such notice of
Lessor's intention to cancel and terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give written
notice to Lessor of Lessee's intention to repair such damage at Lessee's
expense, without reimbursement from Lessor, in which event this Lease shall
continue in full force and effect, and Lessee shall proceed to make such
repairs as soon as reasonably possible. If Lessee does not give such written
notice within such 10-day period this Lease shall be cancelled and terminated
as of the date of the occurrence of such damage.
8.3 Total Destruction. If at any time during the term hereof the Premises
are totally destroyed from any cause whether or not covered by the insurance
required to be maintained by Lessor pursuant to Paragraph 7.2 (including any
total destruction required by any authorized public authority) this Lease shall
automatically terminate as of the date of such total destruction.
8.4 Damage Near End of Term. If the Premises are partially destroyed or
damaged during the last six months of the term of this Lease, Lessor may at
Lessor's option cancel and terminate this Lease as of the date of occurrence or
such damage by giving written notice to Lessee of Lessor's election to do so
within thirty (30) days after the date of occurrence of such damage.
8.5 Abatement of Rent; Lessee's Remedies.
(a) If the Premises are partially destroyed or damaged and Lessor or
Lessee repairs or restores them pursuant to the provisions of this Paragraph 8,
the rent payable hereunder for the period during which such damage, repair or
restoration continues shall be abated in proportion to the degree to which
Lessee's use of the Premises is impaired. Except for abatement of rent, if
any, Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair or restoration.
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<PAGE> 10
(b) If Lessor shall be obligated to repair or restore the Premises under
the provisions of this Paragraph 8 and shall not commence such repair or
restoration within 90 days after such obligations shall accrue, Lessee may at
Lessee's option cancel and terminate this Lease by giving Lessor written notice
of Lessee's election to do so at any time prior to the commencement of such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice.
8.6 Termination - Advanced Payments. Upon termination of this Lease
pursuant to this Paragraph 8, an equitable adjustment shall be made concerning
advance rent and any advance payments made by Lessee to Lessor.
9. Real Property Taxes.
9.1 Payment of Tax Increase. Lessor shall pay all real property taxes
applicable to the Premises; provided, however, that Lessee shall pay, in
addition to rent, the amount, if any, by which real property taxes applicable
to the Premises increase over the taxes paid for calendar year 1988. Such
payment shall be made by Lessee to Lessor within thirty (30) days after receipt
of Lessor's written statement setting forth the amount of such increase and the
computation thereof. If the term of this Lease shall not expire concurrently
with the expiration of the tax fiscal year, Lessee's liability for increased
taxes for the last partial lease year shall be prorated on an annual basis and
shall survive the expiration of this Lease.
9.2 Definition of "Real Property" Tax. As used herein, the term "real
property tax" shall include any form of assessment, license fee, commercial
rental tax, levy, penalty, or tax (other than inheritance or estate taxes),
imposed by any authority having the direct or indirect power to tax, including
any city, county, state or federal government, or any school, agricultural,
lighting, drainage or other improvement district thereof, as against any legal
or equitable interest of Lessor in the Premises or in the real property of
which the Premises are a part, as against Lessor's right to rent or other
income therefrom, or as against Lessor's business of leasing the Premises or
any tax imposed in substitution, partially or totally, of any tax previously
included within the definition of real property tax, or any additional tax the
nature of which was previously included within the definition of real property
tax.
9.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the real property taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.
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<PAGE> 11
9.4 Personal Property Taxes.
(a) Lessee shall pay prior to delinquency all taxes assessed against and
levied upon trade fixtures, furnishings, equipment and all other personal
property of the Lessee contained in the Premises or elsewhere. When possible,
Lessee shall cause said trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property
of Lessor.
(b) If any of Lessee's said personal property shall be assessed with
Lessor's real property, Lessee shall pay Lessor the taxes attributable to
Lessee within ten (10) days after receipt of a written statement setting forth
the taxes applicable to Lessee's property.
10. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately metered to
Lessee, Lessee shall pay a reasonable proportion to be determined by Lessor of
all charges jointly metered with other premises. Lessee assumes responsibility
for any excess or debt service involved in providing electrical service to the
facility in excess of 400 amp service, 277/480, volt/3 phase/4 wire.
11. Assignment, Rent and Subletting.
11.1 Lessor's Consent Required. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in this Lease or in the Premises,
without Lessor's prior written consent, which Lessor shall not unreasonably
withhold. Any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a breach of
this Lease.
11.2 Lessee Affiliate. Notwithstanding the provisions of Paragraph 11.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any wholly owned subsidiary, affiliate, or
corporation which controls, is controlled by or is under common control with
Lessee, or to any corporation resulting from the merger or consolidation with
Lessee, or to any person or entity which acquires all the assets of Lessee as a
going concern of the business that is being conducted on the Premises, provided
that said assignee assumes, in full, the obligations of Lessee under this
Lease. Any such assignment shall not, in any way, affect or limit the
liability of Lessee under the terms of this Lease even if after such assignment
or subletting the terms of this Lease are materially changed or altered without
the consent of lessee, the consent of whom shall not be necessary.
11.3 No Release of Lessee. Regardless of Lessor's consent, no subletting
or assignment shall release Lessee of Lessee's obligations or alter the primary
liability of Lessee to pay the rent and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of rent by Lessor from any other
person shall not be deemed to be a waiver by Lessor of any provision hereof.
Consent to one assignment or subletting
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shall not be deemed consent to any subsequent assignment or subletting. In the
event of default by any assignee of Lessee or any successor of Lessee, in the
performance of any of the terms hereof, Lessor may proceed directly against
Lessee without the necessity of exhausting remedies against said assignee.
Lessor may consent to subsequent assignments or subletting of this Lease or
amendments or modifications to this Lease with assignees of Lessee without
notifying Lessee, or any successor of Lessee, and without obtaining its or
their consent thereto and such action shall not relieve Lessee of liability
under this Lease.
12. Defaults; Remedies.
12.1 Defaults. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee:
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any other payment
required to be made by Lessee hereunder, as and when due, where such failure
shall continue for a period of fifteen (15) days after written notice thereof
from Lessor to Lessee.
(c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee
other than described in paragraph (b) above, where such failure shall continue
for a period of thirty (30) days after written notice hereof from Lessor to
Lessee, provided, however, that if the nature of Lessee's default is such that
more than thirty (30) days are reasonably required for its cure, then Lessee
shall not be deemed to be in default if Lessee commenced such cure within said
30-day period and thereafter diligently pursues such cure to completion.
(d) (i) The making by Lessee of any general arrangement for the benefit of
creditors; (ii) the filing by or against Lessee of a petition to have Lessee
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Lessee, the same is dismissed within 60 days) ; (iii) the appointment of a
trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease where such
seizure is not discharged with thirty (30) days.
(e) The discovery by Lessor that any financial statement given to Lessor
by Lessee, any assignee of Lessee, any subtenant of Lessee, any successor in
interest of Lessee or any guarantor of Lessee's obligations hereunder, and any
of them, was materially false.
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<PAGE> 13
12.2 Remedies. In the event of any such material default or breach by
Lessee, Lessor may at any time thereafter, with or without notice or demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default or breach;
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Lessee shall immediately
surrender possession of the Premises to Lessor. In such event Lessor shall be
entitled to recover from Lessee all damages incurred by Lessor by reason of
Lessee's default including, but not limited to, the cost of recovering
possession of the Premises; expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorney's fees, and any
real estate commission actually paid, the worth at the time of award by the
court having jurisdiction thereof of the amount by which the unpaid rent for
the balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Lessee proves could be reasonably avoided,
that portion of the leasing commission paid by Lessor applicable to the
unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease shall
continue in effect whether or not Lessee shall have abandoned the Premises in
such event Lessor shall be entitled to enforce all of Lessor's rights and
remedies under this Lease, including the right to recover the rent as it
becomes due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under the
laws or judicial decisions of the State.
12.3 Default by Lessor. Lessor shall not be in default unless Lessor
fails to perform obligations required of Lessor within a reasonable time, but
in no event later than thirty (30) days after written notice by Lessee to
Lessor and to the holder of any first mortgage or deed of trust covering the
Premises whose name and address shall have theretofore been furnished to Lessee
in writing, specifying wherein Lessor has failed to perform such obligations;
provided, however, that if the nature of Lessor's obligation is such that more
than thirty (30) days are required for performance then Lessor shall not be in
default if Lessor commences performance within such 30-day period and
thereafter diligently prosecutes the same to completion. In the event of a
default by Lessor of its obligation to maintain the portion of the Premises
defined as the roof area of Site 18-A (the "Roof") as set forth in Paragraph
6.1, then the Lessee may, at any time after Lessee has given Lessor notice of
the Roof default and Lessor has failed either to correct the Roof or commence
the correction of the Roof within ten (10) working days of said notice, retain
a reputable contractor to perform the needed Roof maintenance and repairs in a
good and workmanlike manner and to provide the Roof free of defects and leaks.
The Lessor shall reimburse Lessee for the reasonable cost of said contractor
for performing the Roof work within thirty (30) days after the presentation to
Lessor of the invoice for the contractor's services.
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12.4 Late Charges. Lessee hereby acknowledged that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Lessor by the
terms of any mortgage or trust deed covering the Premises. Accordingly, if any
installment of rent or any other sum due from Lessee shall not be received by
Lessor or Lessor's designee within ten (10) days after such amount shall be
due, Lessee shall pay to Lessor a late charge equal to six percent (6%) of such
overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs Lessor will incur by reason of late
payment by Lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's default with respect to such overdue amount,
nor prevent Lessor from exercising any of the other rights and remedies granted
hereunder.
13. Condemnation. If more than twenty-five percent (25%) of the Premises shall
be taken or appropriated to any public or quasipublic authority under the power
of eminent domain, either party hereto shall have the right, at it's option, to
terminate this Lease, and Lessee shall have no claim against Lessor for the
value of any unexpired term of this Lease. If any percentage of the Premises
is taken, and neither party elects to terminate as herein provided, the rental
thereafter to paid shall be equitably reduced. Nothing contained herein shall
be construed as a waiver by Lessee of any claim which it may have against the
condemnor for the taking of all or part of the Premises and Lessee shall have
the right to appear and file its claim for damages in any such condemnation
proceedings, to participate in any and all hearing, trials, and appeals thereon
and to receive the share of any such award so adjudicated due it.
14. General Provisions.
14.1 Estoppel Certificate.
(a) Lessee shall at any time upon not less than ten (10) days prior
written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and
the date to which the rent and other charges are paid in advance, if any, and
(ii) acknowledging that there are not, to Lessee's knowledge, any uncured
defaults on the part of Lessor hereunder, or specifying such defaults if any
are claimed. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer of the Premises.
(b) Lessee's failure to deliver such statement within such time shall be
conclusive upon Lessee (i) that this Lease is in full force and effect, without
modification except as may be represented by Lessor, (ii) that there are no
uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance or such failure may be considered by
Lessor as a default by Lessee under this Lease.
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<PAGE> 15
(c) If Lessor desired to finance or refinance the Premises, or any part
thereof, Lessee hereby agrees to deliver to any lender designated by Lessor
such financial statements of Lessee as may be reasonably required by such
lender. Such statements shall include the past three years financial
statements of Lessee. All such financial statements shall be received in
confidence and shall be used only for the purposes herein set forth.
14.2 Lessor's Liability. The term "Lessor" as used herein shall mean only
the owner or owners at the time in question of the fee title or a lessee's
interest in a group lease of the Premises. In the event of any transfer of
such title or interest, Lessor herein named (and in case of any subsequent
transfers the then grantor) shall be relieved from and after the date of such
transfer of all liability as respects Lessor's obligations thereafter to be
performed, provided that any funds in the hands of Lessor or the then grantor
at the time of such transfer, in which Lessee has an interest, shall be
delivered to the grantee. The obligations contained in this Lease to be
performed by Lessor shall, subject as aforesaid, be binding on Lessor's
successors and assigns, only during their respective periods of ownership.
14.3 Severability. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
14.4 Interest on Past-Due Obligations. Except as expressly herein
provided, any amount due Lessor not paid when due shall bear interest at 10%
per annum from the date due. Payment of such interest shall not excuse or cure
any default by Lessee under this Lease, provided, however, that interest shall
not be payable on late charges incurred by Lessee nor on any amounts upon which
late charges are paid by Lessee.
14.5 Time of Essence. Time is of the essence.
14.6 Captions. Article and paragraph captions are not a part hereof.
14.7 Incorporation of Prior Agreements; Amendments. This Lease contains
all agreements of the parties with respect to any matter mentioned herein. No
prior agreement or understanding pertaining to any such matter shall be
effective. This Lease may be modified in writing only, signed by the parties
in interest at the time of the modification. Except as otherwise stated in
this Lease, Lessee hereby acknowledges that the Lessor or any employees or
agents of any of said persons has made any oral or written warranties or
representations to Lessee relative to the condition or use by Lessee of said
Premises and Lessee acknowledges that Lessee assumes all responsibility
regarding the Occupational Safety Health Act, or the legal use of adaptability
of the Premises and the compliance thereof with all applicable laws and
regulations in effect during the term of this Lease except as otherwise
specifically stated in this Lease.
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<PAGE> 16
14.8 Notices. Any notice, communication, request, reply or advice
(hereinafter severally and collectively for convenience called "notice") in
this instrument required or permitted to be given, by either party to the
other, must be in writing and shall be given by depositing the same in the
United States Mail, postpaid, certified, or registered, and addressed to the
party to be notified, with return receipt requested. Notice shall be deemed
given as of the time of mailing. For the purpose of notice, the addresses to
the parties, shall, until changed as hereinafter provided, be as follows:
Lessor: David Harris
2551 Almeda Avenue
Norfolk, Virginia 23513
Lessee: Shell Oil Company AND Rampart Packaging, Inc.
Attn: Manager Office Leasing Attn: Dennis M. Parker
P. O. Box 2463 Vice President Finance
One Shell Plaza 400 Packets Court
Houston, Texas 77252 Williamsburg, VA 23185
The parties hereto, their respective heirs, successors, legal representatives
and assigns shall have the right, from time to time and any time, to change
their respective addresses and each shall have the right to specify as its
address any other address by giving written notice to the other party in the
manner and form above mentioned.
14.9 Waivers. No waiver by Lessor of any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. Lessor's consent to or approval of any act
shall not be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act by Lessee. The acceptance of rent hereunder
by Lessor shall not be a waiver of any preceding breach by Lessee of any
provision hereof, other than the failure of Lessee to pay the particular rent
so accepted, regardless of Lessor's knowledge of such preceding breach at the
time of acceptance of such rent.
14.10 Recording. Lessee shall not record this Lease without Lessor's
prior written consent, and such recordation shall, at the option of Lessor,
constitute a non-curable default of Lessee hereunder. Either party shall, upon
request of the other, execute, acknowledge and deliver to the other a "short
form" memorandum of this Lease for recording purposes.
14.11 Holding Over. If Lessee remains in possession of the Premises or
any part thereof after the expiration of the term hereof without the express
written consent of Lessor, such occupancy shall be a tenancy from month to
month at a rental in the amount of the last monthly rental plus all other
charges payable hereunder, and upon all the terms hereof applicable to a
month-to-month tenancy.
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<PAGE> 17
14.12 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
14.13 Covenants and Conditions. Each provision of this Lease performable
by Lessee or Lessor shall be deemed both a covenant and a condition.
14.14 Binding Effect; Choice of Law. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions of
Paragraph 14.2, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State of Virginia.
14.15 Subordination.
(a) This Lease, at Lessor's option, shall be subordinate to any ground
lease, mortgage, deed of trust, or any other hypothecation for security now or
hereafter placed upon the real property of which the Premises are a part and to
any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall give written
notice thereof to Lessee, this Lease shall be deemed prior to such mortgage,
deed of trust, or ground lease, whether this Lease is dated prior or subsequent
to the date of said mortgage, deed of trust or ground lease or the date of
recording thereof.
(b) Lessee agrees to execute any documents required to effectuate such
subordination or to make this Lease prior to the lien of any mortgage, deed of
trust or ground lease, as the case may be, and failing to do so within ten (10)
days after written demand.
(c) This Lease shall not be subordinate to any ground lease, mortgage,
deed of trust or any other hypothecation for security as described in
subparagraph (a) unless the secured party enters into an agreement of non
disturbance and attornment with Lessee, satisfactory to Lessee, which protects
Lessee's rights to the Premises under the terms of the Lease.
14.16 Attorney's Fees. If either party herein brings an action to enforce
the terms hereof or declare rights hereunder, the prevailing party in any such
action, on trial or appeal, shall be entitled to his reasonable attorney's'
fees to be paid by the losing party as fixed by the court.
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<PAGE> 18
14.17 Lessor's Access. Lessor and Lessor's agents shall have the right to
enter the Premises at reasonable times for the purposes of inspecting the same,
showing the same to prospective purchasers, or lenders, or lessees, and making
such alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises any ordinary "For Sale"
signs and Lessor may at any time during the last 120 days of the term place on
or about the Premises any ordinary "For Lease" signs, all without rebate of
rent or liability to Lessee.
14.18 Signs and Auctions. Lessee shall not place any sign upon the
Premises or conduct any auction thereon without Lessor's prior written consent
except that Lessee shall have the right, without prior permission of Lessor to
place ordinary and usual for rent or sublet signs thereon.
14.19 Merger. The voluntary or other surrender of this Lease by Lessee,
or a mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing
subtenancies or may, at the option of Lessor, operate as an assignment to
Lessor of any or all of such subtenancies.
14.20 Corporate Authority. If Lessee is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation, in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the Bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms. If Lessee is a corporation Lessee shall, within thirty (30)
days after execution of this Lease, deliver to Lessor a certified copy of a
resolution of the Board of Directors of said corporation authorizing or
ratifying the execution of this Lease.
14.21 Consents. Whenever the consent of either party is required under
the terms of this Lease, such party shall not withhold the giving of such
consent except for reasonable cause and shall not unreasonably delay the giving
of such consent.
14.22 Quiet Possession. Upon Lessee paying the fixed rent reserved
hereunder and observing and performing all of the covenants, conditions and
provisions on Lessee's part to be observed and performed hereunder, Lessee
shall have quiet possession of the Premises for the entire term hereof subject
to all of the provisions of this Lease.
14.23 Options. In the event that the Lessee, under the terms of this
Lease, has any option to extend the term of this Lease, or any option to
purchase the Premises or any right of first refusal to purchase the Premises or
other property of Lessor, then each of such options and rights are personal to
Lessee and may not be exercised or be assigned, voluntarily or involuntarily,
by or to any one other than Lessee except that it may be exercised by or
assigned to any of the entities described in Paragraph 11.2 hereof for whom
Lessee does not need the consent of Lessor or assign this Lease. In the event
that Lessee hereunder has any multiple options to extend this Lease a later
option to extend the
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<PAGE> 19
Lease cannot be exercised unless the prior option has been so exercised. No
option may be exercised at a time when the Lessee is in default under its
obligations under this Lease.
14.24 Additional Provisions. Additional provisions may be added at time
to time via addendum provided they are in writing and signed by both parties.
14.25 Purchase Option. At the expiration of the initial ten (10) year
term or at the expiration of any renewal term which Lessee has properly
exercised, Lessee shall have the option to purchase the Premises for the price
and upon the terms set forth herein. For the purpose of this purchase option,
the Premises shall include both Site 18-A and Site 18-B and the buildings and
improvements located thereon; Lessee not having an option to purchase either
Site 18-A or Site 18-B without purchasing both Sites. In order to initiate the
procedure for establishing the option price, Lessee shall give notice to Lessor
not more than 210 days and not less than 180 days prior to the expiration of
the initial lease term or any extension thereof requiring that the appraised
value of the Premises be determined in accordance with following procedure. In
its notice to Lessor, Lessee shall name an appraiser who shall be instructed to
appraise the Premises (including the buildings and improvements) solely as
131,975 square feet of warehouse (excluding all offices and tenant
improvements). Within fifteen (15) days of receipt of Lessee's notice, Lessor
shall give notice to Lessee containing the name of the appraiser selected by
Lessor. The appraiser selected by Lessor shall be instructed to appraise the
Premises (including the buildings and improvements) solely as 131,975 square
feet of warehouse (excluding all offices and tenant improvements). Both
appraisers shall be qualified members in good standing of the Society of Real
Estate Appraisers or the American Institute of Real Estate Appraisers with the
designation of SREA or MAI and who are familiar with properties in the Hampton
Roads area of Virginia. The appraisers selected by Lessee and Lessor shall
complete and submit their written reports of the appraised value of the
Premises, in accordance with established practice and the instructions set
forth herein, to the respective parties within forty-five (45) days after
receiving notice of their selection. Lessor and Lessee shall notify each other
of the appraised values so determined and provide copies of the appraisers'
reports. Upon compliance with the foregoing procedure and if there is a
difference in the appraised values as determined by the two (2) initial
appraisers equal to the ten percent (10%) or less of the lower appraised value,
then the two (2) appraised values as determined by the initial appraisers shall
be added together and then divided by two (2) and the resulting sum shall be
the appraised value. If there is a difference in the appraised values as
determined by the initial appraisers in excess of ten percent (10%) of the
lower appraised value, then Lessor and Lessee shall attempt to establish an
appraised value by mutual agreement. Upon their failure to reach an agreement
within thirty (30) days after receipt of the last notification of the initial
appraisers' reports as required herein, Lessor and Lessee, within the next
following twenty (20) days, shall request the initial appraisers to appoint a
third appraiser with the same qualifications as the initial appraisers. The
third appraiser shall be instructed to determine the appraised value of the
Premises on the same basis as the initial appraisers and, within forty-five
(45) days after being requested to do so, shall report in writing to Lessor and
Lessee, his opinion of the appraised value of the Premises. Whereupon, the
appraised value of the Premises shall be
- 18 -
<PAGE> 20
the value determined by the third appraiser. Within thirty (30) days after the
appraised value of the Premises has been determined as set forth herein, Lessee
shall give Lessor notice of its decision whether or not it opts to purchase the
Premises for that price. If Lessee opts to purchase the Premises, the purchase
price shall be paid by immediately available funds at settlement and the
procedure set forth in Paragraph 14.26 shall be followed, time being of the
essence. Lessee shall bear all fees and costs of the appraiser it selects,
Lessor shall bear all fees and costs of the appraiser it selects, and Lessee
and Lessor shall share equally the fees and costs of the third appraiser if one
is needed, if Lessee exercises its option. However, all fees and costs shall
be paid solely by Lessee if Lessee fails to exercise its option. Lessee's
failure to exercise its option in any one instance shall not terminate this
option as to any other instance, provided Lessee has extended the term hereof
as provided in Paragraph 14.27 hereof.
14.26 Purchase Procedure. In Lessee's notice exercising any purchase
option herein, Lessee shall designate an Escrow Agent. Within thirty (30) days
after receipt of such notice, Lessor shall deposit with Escrow Agent Lessor's
recordable deed to Lessee, in form satisfactory to it. Promptly thereafter,
Lessee shall order from the Title Company which Lessee shall also have
designated in its exercise notice, a report on Lessor's title to the Premises,
looking to Title Company's issuance to Lessee of any owner's policy of title
insurance. Lessor shall clear the title of all liens, encumbrances,
restrictions and other defects specified in that report which are not
acceptable to Lessee. Upon receipt from Lessee of the purchase price and
notice that title is acceptable, which shall occur within ninety (90) days of
Lessee's notice exercising its purchase option, Escrow Agent shall deliver to
Lessee the deed and to Lessor the purchase price, less the amounts of any liens
subject to which Lessee elected to accept title, and the Virginia Grantor's tax
which shall be paid by Lessor. Taxes and rent shall be prorated as of the date
of delivery of the deed. Upon receipt from Lessee of notice that the title, is
not acceptable, Escrow Agent shall return to Lessor the deed; and this Lease
shall continue in effect, if Lessee exercises an option to extend the term of
the Lease. All costs of the Escrow Agent shall be borne by Lessee.
14.27 Renewals. Provided Lessee is not in default of the terms hereof,
Lessee shall have the option to renew the term hereof for three (3) additional
periods of five (5) years, on and subject to all of the terms, covenants and
conditions set forth in this Lease, except that the rent shall be renegotiated
to market rates in accordance with the provisions of this Paragraph 14.27.
Twelve (12) months prior to the expiration of the initial term or any renewal
term, Lessee shall give Lessor notice of Lessee's option to extend the term
hereof and Lessee shall state in said notice what it proposes the market rent
to be for said additional five (5) year term. Within thirty (30) days of
receipt of Lessee's notice, Lessor shall give notice to Lessee stating whether
the rent proposed by Lessee is acceptable to Lessor or what rental Lessor would
be willing to accept for the additional five (5) year term. Lessor and Lessee
shall have twenty (20) days after the date of Lessor's notice to agree upon the
market rental for the additional five (5) year term. If no agreement is
reached, then the procedures for securing two (2) appraisers and the remaining
procedures set forth in Paragraph 14.25 above shall be used to determine the
fair market rent for the
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<PAGE> 21
applicable renewal term. The fair market rent and Lessee's decision whether to
renew this Lease must be finalized at least six (6) months prior to the
expiration of the initial term or any renewal term.
14.28 Warranty of Title. Lessor covenants that Lessor is well seized of
and has good right to lease the Premises, will warrant and defend title
thereto, and will indemnify Lessee against any damage, expenses or disruption
of Lessee's quiet enjoyment of the Premises which Lessee may suffer by reason
of any lien, encumbrance, restriction or defect in the title to or description
herein of the Premises. If at any time Lessor's title or right to receive rent
hereunder is disputed, or there is a change of ownership of Lessor's estate by
act of the parties or operation of law, Lessee may withhold rent thereafter
accruing until Lessee is furnished proof satisfactory to it as to the party
entitled thereto.
14.29 Entire Agreement. This Lease constitutes the entire agreement among
the parties, and it may not be modified or changed except by written instrument
executed by Lessor and Lessee.
THE LAWSON GROUP, LTD.
By: /s/ David F. Harris
----------------------------
Title: President
------------------------
SHELL OIL COMPANY
By: /s/ F.M. Parrow
---------------------------
Title: Manager Office Leasing
----------------------
Corporate Real Estate
Business Services
In accordance with Paragraph 11.2 hereof, Shell Oil Company hereby assigns
all of its right, title interest and obligations under the aforesaid Lease to
Rampart Packaging, Inc. subject to the terms, covenants and conditions set
forth therein, which are accepted by Rampart Packaging, Inc.
SHELL OIL COMPANY
By: /s/ F.M. Parrow
----------------------------
Title: Manager Office Leasing
------------------------
Corporate Real Estate
Business Services
RAMPART PACKAGING, INC.
By: (s) Jack L. Fraley, Jr.
-----------------------------
Title: President and CEO
------------------------
- 20 -
<PAGE> 1
EXHIBIT 99.7
Note Purchase Agreement, dated as of August 15, 1996, by and between Printpack,
Inc. and Donaldson, Lufkin & Jenrette Securities Corporation relating to the
9-7/8% Senior Notes due 2004 and the 10-7/8% Senior Subordinated Notes due
2006.
<PAGE> 2
EXECUTION COPY
================================================================================
PURCHASE AGREEMENT
$300,000,000
9 7/8% Series A Senior Notes due 2004
10 5/8% Series A Senior Subordinated Notes due 2006
of
PRINTPACK, INC.
August 15, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
================================================================================
<PAGE> 3
PRINTPACK, INC.
$100,000,000
9-7/8% Series A Senior Notes due 2004
and
$200,000,000
10 5/8% Series A Senior Subordinated Notes due 2006
of
Printpack, Inc.
<PAGE> 4
PURCHASE AGREEMENT
August 15, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
1201 West Peachtree Street,
Suite 3650
Atlanta, Georgia 30309-3400
Ladies and Gentlemen:
Printpack, Inc., a Georgia corporation (the "Company"), agrees with you as
follows:
1. ISSUANCE OF SECURITIES. The Company proposes to issue and sell to
Donaldson, Lufkin & Jenrette Securities Corporation (the "INITIAL PURCHASER")
$100,000,000 in aggregate principal amount of 9 7/8% Series A Senior Notes due
2004 (the "SERIES A SENIOR NOTES") and $200,000,000 in aggregate principal
amount of 10 5/8% Series A Senior Subordinated Notes due 2006 (the "SERIES A
SENIOR SUBORDINATED NOTES" and, together with the Series A Senior Notes, the
"SERIES A NOTES"). The Series A Senior Notes are to be issued pursuant to the
provisions of an indenture (the "SENIOR NOTE INDENTURE") to be dated August 22,
1996, between the Company and Fleet National Bank, as trustee (the "TRUSTEE").
The Series A Senior Subordinated Notes are to be issued pursuant to the
provisions of an indenture (the "SENIOR SUBORDINATED NOTE INDENTURE") to be
dated August 22, 1996, between the Company and the Trustee (the "SENIOR
SUBORDINATED NOTE INDENTURE" and, together with the Senior Note Indenture, the
"INDENTURES"). Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Indentures.
The Series A Notes will be offered and sold to you pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the "ACT"). The Company has prepared a preliminary offering
memorandum, dated July 30, 1996 (the "PRELIMINARY OFFERING MEMORANDUM") and a
final offering memorandum, dated August 15, 1996 (the "OFFERING MEMORANDUM"),
relating to the Company and the Series A Notes. The Series A Notes will be
offered and sold to you in connection with the Offering Memorandum pursuant to
an exemption from the registration requirements under the Act.
1
<PAGE> 5
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Series A
Notes (and all securities issued in exchange therefor or in substitution
thereof shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 OR (c) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
You have advised the Company that you will make offers (the "EXEMPT
RESALES") of the Series A Notes purchased by you hereunder on the terms set
forth in the Offering Memorandum, as amended or supplemented, solely to (i)
persons (each, a "144A PURCHASER") whom you reasonably believe to be "qualified
institutional buyers", as defined in Rule 144A under the Act ("QIBS"), and (ii)
a limited number of other "accredited investors," as defined in Rule 501(a)
(1), (2), (3) or (7) under the Act, that make certain representations and
agreements to the Company (each, an "ACCREDITED
2
<PAGE> 6
INVESTOR") (such persons specified in clauses (i) and (ii) being referred to
herein as the "ELIGIBLE PURCHASERS").
Holders (including subsequent transferees) of the Series A Notes will have
the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in
substantially the form of Exhibit A hereto, for so long as such Series A Notes
constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
will agree to file with the Securities and Exchange Commission (the
"COMMISSION") (i) within 60 days of the Closing Date and under the
circumstances set forth therein, a registration statement under the Act (the
"EXCHANGE OFFER REGISTRATION STATEMENT") relating to (A) the Company's 9 7/8%
Series B Senior Notes due 2004 (the "SERIES B SENIOR NOTES" and, together with
the Series A Senior Notes, the "SENIOR NOTES") to be offered in exchange for
the Series A Senior Notes and (B) the Company's 10 5/8% Series B Senior
Subordinated Notes due 2006 (the "SERIES B SENIOR SUBORDINATED NOTES" and,
together with the Series A Senior Subordinated Notes, the "SENIOR SUBORDINATED
NOTES") to be offered in exchange for the Series A Senior Subordinated Notes,
(the Senior Notes and the Senior Subordinated Notes, together, the "NOTES")
(such offer to exchange being referred to as the "REGISTERED EXCHANGE OFFER")
and (ii) under the circumstances set forth in the Registration Rights
Agreement, a shelf registration statement pursuant to Rule 415 under the Act
(the "SHELF REGISTRATION STATEMENT") relating to the resale by certain holders
of the Series A Notes, and to use all commercially reasonable efforts to cause
such Registration Statements to be declared effective in accordance with the
terms of the Registration Rights Agreement. This Agreement, the Indentures and
the Registration Rights Agreement are hereinafter referred to collectively as
the "OPERATIVE DOCUMENTS." Herein the Series B Senior Notes and the Series B
Senior Subordinated Notes are sometimes collectively referred to as the "Series
B Notes".
The Offering of the Series A Notes is being made in connection with an
acquisition (the "ACQUISITION") of substantially all of the assets of the
Flexible Packaging Group of James River Corporation of Virginia ("JR FLEXIBLE")
from James River Corporation of Virginia ("JAMES RIVER") pursuant to that
certain Asset Purchase Agreement and certain other agreements referred to
therein, dated April 10, 1996, between James River and the Company, as amended
(the "ACQUISITION AGREEMENT"). In order to facilitate the Acquisition and the
financing thereof, the Company and its affiliate, Printpack Enterprises, Inc.,
were reorganized into a holding company structure (the "REORGANIZATION").
Concurrently with the Offering, the Company will enter into a credit agreement
with a syndicate of banks and other financial institutions, agented by The
First National Bank of Chicago, ("FIRST CHICAGO") providing for a revolving
credit facility and a term loan (collectively, the "NEW CREDIT FACILITY"). The
Company also expects to enter into an asset-backed accounts receivable
financing arrangement, through a new subsidiary, with First Chicago or an
entity sponsored by it (the "RECEIVABLES FACILITY").
3
<PAGE> 7
The Acquisition Agreement, the Operative Documents, the documentation effecting
the Reorganization, the New Credit Facility and the Receivables Facility are
hereinafter referred to collectively as the "TRANSACTION DOCUMENTS," and the
transactions contemplated by the Transaction Documents are hereinafter referred
to collectively as the "TRANSACTIONS." The consummation of the Transactions is
herein referred to as the "Closing."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations
and warranties contained in this Agreement, and subject to the terms and
conditions contained herein, the Company agrees to issue and sell to you, and
you agree to purchase from the Company, $100,000,000 in aggregate principal
amount of Series A Senior Notes at a purchase price equal to $1,000 per Series
A Senior Note and $200,000,000 in aggregate principal amount of Series A Senior
Subordinated Notes at a purchase price equal to $1,000 per Series A Senior
Subordinated Note (the purchase price of the Series A Senior Notes and the
Series A Senior Subordinated Notes is hereinafter referred to collectively as
the "PURCHASE PRICE").
3. DELIVERY AND PAYMENT. Delivery to you of and payment for the Series A
Notes shall be made at 9:00 A.M., New York City time, on August 22, 1996 (the
"CLOSING DATE") at the offices of Latham & Watkins, 885 Third Avenue, New York,
New York 10022, or such other time or place as you shall reasonably designate.
One or more Series A Senior Notes in definitive form, registered in the
name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), having
an aggregate amount corresponding to the aggregate amount of the Series A
Senior Notes sold pursuant to Exempt Resales to QIBs and Accredited Investors
(collectively, the "SENIOR GLOBAL NOTE") and one or more Series A Senior
Subordinated Notes in definitive form, registered in the name of Cede & Co., as
nominee of DTC, having an aggregate amount corresponding to the aggregate
amount of the Series A Senior Subordinated Notes sold pursuant to Exempt
Resales to QIBs and Accredited Investors (collectively, the "SENIOR
SUBORDINATED GLOBAL NOTE" and, together with the Senior Global Note, the
"GLOBAL NOTES"), registered in the name of Cede & Co., as nominee of DTC, shall
be delivered by the Company to the Initial Purchaser (or as the Initial
Purchaser directs), against payment by the Initial Purchaser of the Purchase
Price therefor, by wire transfer of immediately available funds to the
Company's account, provided that the Company shall give at least two business
days' prior written notice to the Initial Purchaser of the information required
to effect such wire transfers. The Global Notes shall be made available to the
Initial Purchaser for inspection not later than 9:30 A.M. on the business day
immediately preceding the Closing Date.
4. AGREEMENTS OF THE COMPANY. The Company hereby agrees with you as
follows:
4
<PAGE> 8
(a) To advise you promptly and, if requested by you, confirm such
advice in writing, (i) of the issuance by any state securities commission
of any stop order suspending the qualification or exemption from
qualification of any Series A Notes for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by the
Commission or any state securities commission or other regulatory
authority, and (ii) of the happening of any event which makes any
statement of a material fact made in the Preliminary Offering Memorandum
or the Offering Memorandum untrue or which requires the making of any
additions to or changes in the Preliminary Offering Memorandum or the
Offering Memorandum in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
Company shall use all reasonable efforts to prevent the issuance of any
stop order or order suspending the qualification or exemption of the
Series A Notes, under any state securities or Blue Sky laws, by any state
securities commission and the Company shall use every reasonable effort
to obtain the withdrawal or lifting of any such order at the earliest
possible time.
(b) To furnish to you without charge as many copies of the
Preliminary Offering Memorandum and Offering Memorandum, and any
amendments or supplements thereto, as you may reasonably request. The
Company consents to the use of the Preliminary Offering Memorandum and
the Offering Memorandum, and any amendments and supplements thereto,
required pursuant to this Agreement by you in connection with the Exempt
Resales.
(c) Not to amend or supplement the Offering Memorandum prior to the
Closing Date unless you shall previously have been advised of, and shall
not have reasonably objected to, such amendment or supplement within a
reasonable time, but in any event not longer than five business days
after being furnished with a copy of such amendment or supplement. The
Company shall promptly prepare, upon any reasonable request by you, any
amendment or supplement to the Offering Memorandum that may be necessary
or advisable in connection with Exempt Resales.
(d) If, in connection with any Exempt Resales or market making
transactions after the date of this Agreement and prior to the
consummation of the Registered Exchange Offer, any event shall occur
that, in the judgment of the Company or in the judgment of counsel to
you, makes any statement of a material fact in the Offering Memorandum
untrue or that requires the making of any additions to or changes in the
Offering Memorandum in order to make the statements in the Offering
Memorandum, in the light of the circumstances at the time that the
Offering Memorandum is delivered to prospective Eligible Purchasers, not
misleading, or if the Company knows that it is necessary to amend or
supplement the Offering Memorandum to comply with all United States laws
applicable to Offering Memorandum, the Company shall promptly notify you
of
5
<PAGE> 9
such event and prepare an appropriate amendment or supplement to the
Offering Memorandum so that (i) the statements in the Offering Memorandum
as amended or supplemented will, in the light of the circumstances at the
time that the Offering Memorandum is delivered to prospective Eligible
Purchasers, not be misleading and (ii) the Offering Memorandum will
comply with such applicable United States law. Nothing contained herein
shall require the Company to monitor state securities or Blue Sky laws,
or to make any changes not required by federal securities laws where such
changes are not commercially reasonable.
(e) To cooperate with you and your counsel in connection with the
qualification of the Series A Notes for offer and sale by you and by
dealers under the state securities or Blue Sky laws of such jurisdictions
as you may request (provided, however, that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would subject
it to general consent to service of process in any jurisdiction in which
it is not now so subject). The Company will continue such qualification
in effect so long as required by law for distribution of the Series A
Notes and will file such consents to service of process or other
documents as may be necessary in order to effect such qualification.
(f) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, to
pay all costs, expenses, fees and taxes incident to and in connection
with: (i) the preparation, printing, filing and distribution of the
Preliminary Offering Memorandum and the Offering Memorandum (including,
without limitation, financial statements and exhibits) and all amendments
and supplements thereto, (ii) the preparation, printing (including,
without limitation, word processing and duplication costs) and delivery
of this Agreement, the Indentures, the Registration Rights Agreement, the
Transaction Documents, all preliminary and final Blue Sky Memoranda and
all other agreements, memoranda, correspondence and other documents
printed and delivered in connection herewith and with the Exempt Resales,
(iii) the issuance and delivery by the Company of the Notes, (iv) the
qualification of the Notes for offer and sale under the securities or
Blue Sky laws of the several states (including, without limitation, the
reasonable fees and disbursements of your counsel relating to such
registration or qualification), (v) furnishing such copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and all
amendments and supplements thereto, as may be reasonably requested for
use in connection with the Exempt Resales, (vi) the preparation of
certificates for the Notes (including, without limitation, printing and
engraving thereof), (vii) the fees, disbursements and expenses of the
Company's counsel and accountants, (viii) all expenses and listing fees
in connection with the application for quotation of the Series A Notes in
the National Association of Securities Dealers, Inc. Automated Quotation
System - PORTAL ("PORTAL"), (ix) the
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<PAGE> 10
rating of the Notes by rating agencies, (x) all fees and expenses
(including fees and expenses of counsel) of the Company in connection
with approval of the Series A Notes by DTC for "book-entry" transfer, and
(xi) the performance by the Company of its other obligations under this
Agreement and the Transaction Documents.
(g) To use the proceeds from the sale of the Series A Notes in the
manner described in the Offering Memorandum under the caption "USE OF
PROCEEDS."
(h) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of the Series A
Notes.
(i) Prior to the Closing Date, to furnish to you, as soon as they
have been prepared, a copy of any unaudited interim consolidated
financial statements of the Company for any month subsequent to the
period covered by the financial statements appearing in the Offering
Memorandum.
(j) To use commercially reasonable efforts to do and perform all
things required to be done and performed under this agreement by it prior
to or after the Closing Date and to satisfy all conditions precedent on
its part to the delivery of the Series A Notes.
(k) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Series A Notes in a manner
that would require the registration under the Act of the sale to you or
the Eligible Purchasers of the Series A Notes.
(l) Not to use any form of general solicitation or general
advertising, neither by the Company nor by any of its representatives, in
connection with the offer and sale of the Series A Notes, including, but
not limited to, articles, notices or other communications published in
any newspaper, magazine, or similar medium or broadcast over television
or radio, or any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising.
(m) For so long as any of the Notes remain outstanding and during
any period in which the Company is not subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to
make available to any Eligible Purchaser or beneficial owner of Series A
Notes in connection with any sale thereof and any prospective purchaser
of such Series A Notes from such Eligible Purchaser or beneficial owner,
the information required by Rule 144A(d)(4) under the Act.
7
<PAGE> 11
(n) To comply with its agreements in the Registration Rights
Agreement, and all agreements set forth in the representation letters of
the Company to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer.
(o) To cause the Registered Exchange Offer to be made in the
appropriate form, as contemplated by the Registration Rights Agreement,
to permit registration of the Series B Notes to be offered in exchange
for the Series A Notes and to comply with all applicable federal and
state securities laws in connection with the Registered Exchange Offer.
(p) To use all reasonable efforts to effect the inclusion of the
Notes in PORTAL.
(q) For so long as any of the Notes are outstanding, to deliver
without charge to the Initial Purchaser, promptly upon their becoming
available, copies of (i) all reports or other publicly available
information that the Company shall mail or otherwise make available to
its holders and (ii) all reports, financial statements and proxy or
information statements filed by the Company with the Commission or any
national securities exchange and such other publicly available
information concerning the Company or its subsidiaries, including without
limitation, press releases.
(r) Neither the Company nor any of its Subsidiaries will take,
directly or indirectly, any action designed to, or that might reasonably
be expected to, cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Notes. Except as permitted by the Act and as contemplated herein,
the Company will not distribute any preliminary offering memorandum,
offering memorandum or other offering material in connection with the
offering and sale of the Notes.
(s) To comply with the agreements in the Operative Documents.
(t) To use commercially reasonable efforts to consummate the
Transactions.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to you that:
(a) All the representations and warranties of the Company contained
in the Operative Documents and the Acquisition Agreement as in effect at
the Closing (except to the extent waived by James River) shall be true and
correct on
8
<PAGE> 12
the Closing Date with the same force and effect as if made on and as
of the date hereof and the Closing Date. The Company shall have
performed or complied with all of its obligations and agreements therein
contained and required to be performed or complied with by it in all
material respects at or prior to the Closing Date.
(b) The Preliminary Offering Memorandum, and the Offering Memorandum
(and each supplement and amendment thereto) have been prepared in
connection with the Exempt Resales. The Preliminary Offering Memorandum
and the Offering Memorandum do not, and any supplement or amendment
thereto will not, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties contained
in this paragraph (a) shall not apply to statements in or omissions from
the Preliminary Offering Memorandum or Offering Memorandum (or any
supplement or amendment to them) made in reliance upon and in conformity
with information relating to you furnished to the Company in writing by
you expressly for use therein. The Company acknowledges for all purposes
under this Agreement that the statements set forth in the last paragraph
on the cover page and the third paragraph under the caption "Plan of
Distribution" in the Offering Memorandum (or any amendment or supplement
thereto) constitute the only written information furnished to the Company
by you expressly for use in the Offering Memorandum (or any amendment or
supplement thereto).
(c) Each of the Company and the Subsidiaries is a duly organized and
validly existing corporation in good standing under the laws of its
jurisdiction of incorporation, has the requisite corporate power and
authority to own, lease and operate its properties and to conduct its
business as it is currently being conducted and described in the Offering
Memorandum, and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction where the ownership, leasing or operation
of property or the conduct of its business requires such qualification,
except where the failure to be so qualified would not, singly or in the
aggregate, have a material adverse effect on the properties, business,
results of operations, condition (financial or otherwise), affairs or
prospects of the Company and the Subsidiaries taken as a whole (a
"MATERIAL ADVERSE EFFECT").
(d) The Company has all necessary corporate power and authority to
execute and deliver the Transaction Documents and the Notes, to perform
its obligations under the Transaction Documents and the Notes and to
authorize, issue, sell and deliver the Notes as contemplated by this
Agreement.
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<PAGE> 13
(e) This Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes a legally valid and binding
agreement of the Company, enforceable against it in accordance with its
terms (assuming the due execution and delivery hereof by you), subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws in effect from time to time with respect to
creditors' rights generally and to principles of equity, whether at law
or in equity and except as rights to indemnity and contribution
thereunder may be limited by federal and state securities laws and public
policy considerations underlying such laws.
(f) The issuance and sale of the Series A Notes has been duly
authorized by the Company, and all legally required corporate proceedings
by the Company in connection with the issuance and sale of the Series A
Notes have been taken; each of the Series A Notes, when issued and
delivered to and paid for by the Initial Purchaser in accordance with
this Agreement (assuming the due authentication thereof by the Trustee),
will be the legally valid and binding obligations of the Company entitled
to the benefits of the Indentures, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws in effect from
time to time with respect to creditors' rights generally and to
principles of equity, whether at law or in equity and except as rights to
indemnity and contribution thereunder may be limited by federal and state
securities laws and public policy considerations underlying such laws.
(g) The issuance of the Series B Notes has been duly authorized by
the Company and all legally required corporate proceedings by the Company
in connection with the issuance of the Series B Notes have been taken;
each of the Series B Notes, when issued and delivered in accordance with
the terms of the Registered Exchange Offer and the Indentures, will be
validly executed, issued and delivered and (assuming the due
authentication thereof by the Trustee) will be the legally valid and
binding obligations of the Company entitled to the benefits of the
Indentures, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws in effect from time to time with respect to
creditors' rights generally and to principles of equity, whether at law
or in equity and except as rights to indemnity and contribution
thereunder may be limited by federal and state securities laws and public
policy considerations underlying such laws.
(h) The Indentures have been duly authorized by the Company and, on
the Closing Date, will have been duly executed by the Company and will
conform in all material respects to the description thereof in the
Offering Memorandum. When the Indentures have been duly executed and
delivered, the Indentures will be the legally valid and binding
agreements of the Company, enforceable against it in
10
<PAGE> 14
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws in effect from time to time with respect to creditors'
rights generally and to principles of equity, whether at law or in equity
and except as rights to indemnity and contribution thereunder may be
limited by federal and state securities laws and public policy
considerations underlying such laws.
(i) The Registration Rights Agreement has been duly authorized by
the Company and, on the Closing Date, will have been duly executed by the
Company and will conform in all material respects to the description
thereof in the Offering Memorandum. When the Registration Rights
Agreement has been duly executed and delivered, the Registration Rights
Agreement will be the legally valid and binding agreement of the Company,
enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws in effect from time to time with respect to
creditors' rights generally and to principles of equity, whether at law
or in equity and except as rights to indemnity and contribution
thereunder may be limited by federal and state securities laws and public
policy considerations underlying such laws.
(j) The New Credit Facility has been duly authorized by the Company
and, on the Closing Date, will have been duly executed by the Company and
will conform in all material respects to the description thereof in the
Offering Memorandum. When the New Credit Facility has been duly executed
and delivered, the New Credit Facility will be the legally valid and
binding agreement of the Company, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws in effect from
time to time with respect to creditors' rights generally and to
principles of equity, whether at law or in equity.
(k) The Receivables Facility has been duly authorized by the
Company, and if executed, will conform in all material respects to the
description thereof in the Offering Memorandum.
(l) The Acquisition Agreement has been duly authorized by the
Company and, on the Closing Date, will have been duly executed by the
Company and will conform in all material respects to the description
thereof in the Offering Memorandum. Upon due execution and delivery, the
Acquisition Agreement will be the legally valid and binding agreement of
the Company, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws in effect from time to time
with respect to creditors' rights generally and to principles of equity,
whether at law or in equity.
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<PAGE> 15
(m) The Reorganization has been consummated, or will have been
consummated as of the Closing Date, and conforms or will conform in all
material respects to the description thereof in the Offering Memorandum.
(n) The entities listed on Schedule A hereto are the only
Subsidiaries, direct or indirect, of the Company. The Subsidiaries
(excluding Printpack Illinois, Inc. and Flexible Funding Corp.) as of
June 29, 1996 do not collectively own more than 10% of the Company's
consolidated assets and for the latest fiscal year are not responsible
for more than 10% of the Company's consolidated revenues or profits. All
of the issued and outstanding shares of capital stock of, or other
ownership interests in, each Subsidiary have been duly and validly
authorized and issued. All of the shares of capital stock of, or other
ownership interests in, each Subsidiary are owned, directly or through
Subsidiaries, by the Company. All such shares of capital stock are fully
paid and nonassessable, and are owned free and clear of any security
interest, mortgage, pledge, claim, lien or encumbrance (each, a "LIEN"),
except for such Liens (i) created pursuant to the New Credit Facility and
the Receivables Facility, (ii) permitted by the Indentures and/or (iii)
that will be released on the Closing Date in connection with the closing
of the Transactions. There are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities or commitments of sale
related to or entitling any person to purchase or otherwise to acquire
any shares of the capital stock of, or other ownership interest in, any
Subsidiary.
(o) Neither the Company nor any of the Subsidiaries is (i) in
violation of its respective charter or bylaws, (ii) in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or any
indenture, mortgage, deed of trust or other contract, lease or other
instrument to which the Company or any of the Subsidiaries is a party or
by which any of them is bound, or to which any of the property or assets
of the Company or any of the Subsidiaries is subject or (iii) in
violation of any law, statute, rule, regulation, or judgment or court
decree applicable to the Company or any Subsidiary, or any of their
respective properties, except for any such violation or default, in the
case of clauses (ii) and (iii), that would not result, singly or in the
aggregate, in a Material Adverse Effect. To the knowledge of the Company
and the Subsidiaries, there exists no condition which, with notice, the
passage of time or otherwise, would constitute a default under any such
document or instrument.
(p) None of (i) the execution and delivery of the Transaction
Documents, (ii) the performance by the Company of its obligations under
the Transaction Documents or (iii) the consummation of the Transactions
contemplated by the Transaction Documents, including the issuance and
sale of the
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<PAGE> 16
Notes, will result in (A) a breach or violation of the respective
charters or bylaws of the Company or any of the Subsidiaries, (B) a
breach or violation of any of the terms or provisions of, or constitute a
default or cause an acceleration of any obligation under, or result in
the imposition or creation of (or the obligation to create or impose) a
Lien with respect to, any bond, note, debenture or other evidence of
indebtedness (other than Liens (i) created pursuant to the New Credit
Facility and the Receivables Facility, (ii) permitted by the Indentures
and/or (iii) that will be released on the Closing Date in connection with
the closing of the Transactions) or any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which it or any of them is bound, or to
which any properties of the Company or any of the Subsidiaries is or may
be subject, (C) contravene any order of any court or governmental agency
or body having jurisdiction over the Company or any of the Subsidiaries
or any of their respective properties, or any judgment, order or decree
of any court or governmental agency or authority having jurisdiction over
the Company or any of the Subsidiaries, or any of their respective
properties or (D) violate or conflict with any statute, rule or
regulation applicable to the Company or any of the Subsidiaries, or their
respective properties, or administrative or court decree applicable to
the Company or any of the Subsidiaries, or any of their respective
properties, except for any such breach, violation, default, acceleration,
imposition of a Lien or contravention that would not result, in the case
of clauses (B), (C) and (D), singly or in the aggregate, in a Material
Adverse Effect.
(q) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, pending against or
affecting the Company or any of the Subsidiaries, or any of their
respective properties, which is required to be disclosed and is not so
disclosed, in the Preliminary Offering Memorandum or Offering Memorandum,
or which would result, singly or in the aggregate, in a Material Adverse
Effect or which would materially and adversely affect the consummation of
this Agreement or the transactions contemplated hereby, and to the best
knowledge of the Company and the Subsidiaries, no such proceedings are
contemplated or threatened.
(r) To the knowledge of the Company and the Subsidiaries, no action
has been taken and no statute, rule or regulation or order has been
enacted, adopted or issued by any governmental agency or body which
prevents the issuance of the Notes, prevents or suspends the use of any
Preliminary Offering Memorandum or Offering Memorandum or suspends the
sale of the Notes, in any jurisdiction referred to in Section 4(e)
hereof; no injunction, restraining order or order of any nature by a
federal or state court of competent jurisdiction has been issued with
respect to the Company or any of the Subsidiaries which would
prevent or suspend the issuance or sale of the Notes, or the use of any
Preliminary Offering Memorandum or Offering Memorandum in any
jurisdiction referred to in
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<PAGE> 17
Section 4(e) hereof; no action, suit or proceeding is pending against
or, to the best knowledge of the Company, threatened against or affecting
the Company or any of the Subsidiaries before any court or arbitrator or
any governmental body, agency or official, domestic or foreign, which, if
adversely determined, would materially interfere with or adversely affect
the issuance of the Notes, or in any manner draw into question the
validity of this Agreement, the Indentures, the Registration Rights
Agreement or the Notes; and every request of any securities authority or
agency of any jurisdiction for additional information (to be included in
the Preliminary Offering Memorandum or Offering Memorandum or otherwise)
has been complied with.
(s) Except as set forth in the Offering Memorandum, the Company and
the Subsidiaries are in compliance with all applicable existing federal,
state and local laws and regulations relating to protection of human
health or the environment or imposing liability or standards of conduct
concerning any Hazardous Material ("ENVIRONMENTAL LAWS"), except where
the failure to comply would not have a Material Adverse Effect. The term
"Hazardous Material" means (a) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, (b) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (c) any petroleum or petroleum
product, (d) any polychlorinated biphenyl and (e) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance.
(t) Neither the Company nor any of the Subsidiaries has violated any
federal, state or local law relating to discrimination in the hiring,
promotion or pay of employees or any applicable wage or hour laws, nor
any provisions of the Employee Retirement Income Security Act of 1974
("ERISA") or the rules and regulations promulgated thereunder, nor has
the Company or any of the Subsidiaries engaged in any unfair labor
practice, which in each case would result, singly or in the aggregate, in
a Material Adverse Effect. There is (i) no significant unfair labor
practice complaint pending against the Company or any of the Subsidiaries
or, to the best knowledge of the Company and the Subsidiaries, threatened
against any of them before the National Labor Relations Board or any
state or local Labor relations board, and no significant grievance or
significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of the
Subsidiaries or, to the best knowledge of the Company and the
Subsidiaries, threatened against any of them, (ii) no significant strike,
labor dispute, slowdown or stoppage pending against the Company, or any
of the Subsidiaries or, to the best knowledge of the Company and the
Subsidiaries, threatened against the Company or any of the Subsidiaries
and (iii) to the best knowledge of the Company and the Subsidiaries, no
union representation question exists with respect to the employees of the
Company or
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<PAGE> 18
any of the Subsidiaries and no union organizing activities are taking
place, except (with respect to any matter specified in clause (i), (ii)
or (iii) above, singly or in the aggregate) such as could not have a
Material Adverse Effect.
(u) Except (i) as would not result, singly or in the aggregate, in a
Material Adverse Effect, (ii) for the liens created pursuant to the New
Credit Facility and the Receivables Facility, (iii) for Liens permitted
by the Indentures and (iv) for Liens that will be released on the Closing
Date in connection with the closing of the Transactions, the Company and
each of the Subsidiaries has good and marketable title, free and clear of
all Liens (except Liens for taxes not yet due and payable), to all
property and assets reflected in the Company's consolidated financial
statements at and for the year ended June 29, 1996.
(v) The firm of accountants that has certified the applicable
financial statements of the Company and the Subsidiaries, included in the
Offering Memorandum are independent public accountants, as required by
the Act and the Exchange Act. The consolidated historical and pro forma
financial statements, together with related notes, included in the
Offering Memorandum comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the
Act. Such historical financial statements fairly present in all material
respects the consolidated financial position of the Company and the
Subsidiaries at the respective dates indicated and the results of
operations and cash flows for the respective periods indicated, in
accordance with generally accepted accounting principles in the United
States ("GAAP") consistently applied throughout such periods. Such pro
forma financial statements have been prepared on a basis consistent with
such historical statements, except for the pro forma adjustments
specified therein, and give effect to assumptions made on a reasonable
basis. The other financial and statistical information and data included
in the Offering Memorandum, historical and pro forma, are, in all
material respects, prepared on a basis consistent with such financial
statements and the books and records of the Company and the Subsidiaries,
as the case may be.
(w) The firms of accountants that has certified the applicable
financial statements of JR Flexible, and its subsidiaries, included in
the Offering Memorandum are independent public accountants, as required
by the Act and the Exchange Act. The consolidated historical and pro
forma financial statements, together with related notes, included in the
Offering Memorandum comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the
Act. To the Company's knowledge, such historical financial statements
fairly present in all material respects the consolidated financial
position of JR Flexible, and its subsidiaries, at the respective dates
indicated and the results of operations and cash flows for the
respective periods indicated, in accordance with GAAP consistently
applied throughout such periods.
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<PAGE> 19
To the Company's knowledge, such pro forma financial statements have
been prepared on a basis consistent with such historical statements,
except for the pro forma adjustments specified therein, and give effect
to assumptions made on a reasonable basis. To the Company's knowledge,
the other financial and statistical information and data included in the
Offering Memorandum, historical and pro forma, are, in all material
respects, prepared on a basis consistent with such financial statements
and the books and records of JR Flexible, and its subsidiaries, as the
case may be.
(x) Subsequent to the respective dates as of which information is
given in the Offering Memorandum and up to the Closing Date (except as
disclosed in the Offering Memorandum), neither the Company nor any of the
Subsidiaries has incurred (other than in connection with the
Transactions) any liabilities or obligations, direct or contingent, that
are material, individually or in the aggregate, to the Company and its
Subsidiaries, taken as a whole, nor entered into any material transaction
(other than in connection with the Transactions) not in the ordinary
course of business and there has not been, singly or in the aggregate,
any material adverse change, or any development which may reasonably be
expected to involve a material adverse change, in the properties,
business, results of operations, condition (financial or otherwise),
affairs or prospects of the Company and its Subsidiaries, taken as a
whole (each, a "MATERIAL ADVERSE CHANGE").
(y) All tax returns required to be filed by the Company or any of
the Subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other
charges due or claimed to be due from such entities have been paid, other
than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without penalty or
interest, except for any failure to file or pay that would not result,
singly or in the aggregate, in a Material Adverse Effect.
(z) No authorization, approval or consent or order of, or filing,
qualification, license or permit of or with, any court or governmental or
administrative body or agency (collectively, "CONSENTS") is necessary in
connection with the (i) execution, delivery and performance by the
Company and the Subsidiaries of this Agreement, the other Operative
Documents, the Acquisition Agreement, the New Credit Facility and the
Receivables Facility, (ii) the issuance and sale of the Series A Notes
and the Series B Notes or (iii) the consummation of the Reorganization,
except for Consents that (A) may be required by the NASD, (B) have been
obtained and made (or, in the case of the Registration Rights Agreement
and the issuance of the Series B Notes in accordance with the Registered
Exchange Offer, will be made) under the Act, the TIA, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
16
<PAGE> 20
"HSR ACT"), or (C) have been obtained or made (or, in the case of the
Registration Rights Agreement and the issuance of the Series B Notes in
accordance with the Registered Exchange Offer, will be made) under state
securities or Blue Sky laws or regulations and/or (D) except for any
Consent the lack of which would not result, singly or in the aggregate,
in a Material Adverse Effect. No consents or waivers from any person
under any bond, debenture, note, indenture, mortgage, deed of trust or
other agreement or instrument are required to consummate the
Transactions, except for such consents or waivers which have been, or
will be, obtained prior to the Closing Date and except for such consent
or waivers the lack of which would not result, singly or in the
aggregate, in a Material Adverse Effect.
(aa) Neither the Company nor any of the Subsidiaries does business
with the Government of Cuba or with any person or any affiliate located
in Cuba.
(ab) (i) Each of the Company and the Subsidiaries has all
certificates, consents, exemptions, orders, permits, licenses,
authorizations, or other approvals (each, an "AUTHORIZATION") of and
from, and has made all declarations and filings with, all federal, state,
local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, necessary or required
to own, lease, license and use its properties and assets and to engage in
the business currently conducted by it, except as such are described in
the Offering Memorandum or to the extent that the failure to obtain or
file would not, singly or in the aggregate, have a Material Adverse
Effect, (ii) all such Authorizations are valid and in full force and
effect and (iii) the Company and the Subsidiaries are in compliance in
all material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory
authorities and governing bodies having jurisdiction with respect
thereto. Neither the Company nor any Subsidiary believes that any
governmental body or agency is considering limiting, suspending or
revoking any such material license, certificate, permit, authorization,
approval, franchise or right.
(ac) Neither the Company nor any of the Subsidiaries is (a) an
"investment company" or a company "controlled" by an investment company
within the meaning of the Investment Company Act of 1940, as amended, or
(b) a "holding company" or a "subsidiary company" of a holding company or
an "affiliate" thereof within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(ad) No holder of any security (other than the holders of Series A
Notes) of the Company or any of the Subsidiaries has or will have any
right to require the registration under the Act of such security by
virtue of the consummation of the Transactions.
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<PAGE> 21
(ae) Except for this Agreement, there are no contracts, agreements
or understandings between the Company or any of the Subsidiaries and any
person that would give rise to a valid claim against the Company, the
Subsidiaries or the Initial Purchaser for a brokerage commission,
finder's fee or like payment solely as a result of the issuance, purchase
and sale of the Notes.
(af) The Company and the Subsidiaries possess all material patents,
patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names (collectively, "INTELLECTUAL PROPERTY") presently
employed by them in connection with the businesses now operated by them,
and, except as set forth in the Offering Memorandum, neither the Company
nor any Subsidiary has received any notice of infringement of or conflict
with asserted rights of others with respect to the foregoing, which
notice of infringement of or conflict with asserted rights of others is
reasonably likely to result in a Material Adverse Effect.
(ag) The Company and the Subsidiaries each maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(ah) The present fair value of the assets of each of the Company and
the Subsidiaries exceeds the amount that will be required to be paid on
or in respect of the existing debts and other liabilities (including
contingent liabilities) of each such person as they become absolute and
matured. The assets of each of the Company and the Subsidiaries do not
constitute unreasonably small capital to carry out their businesses as
conducted or as proposed to be conducted. Neither the Company or the
Subsidiaries intends to, nor does it believe that it will, incur debts
beyond its ability to pay such debts as they mature. Upon the issuance
of the Series A Notes, the present fair value of the assets of each of
the Company and the Subsidiaries will exceed the amount that will be
required to be paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of such person as they
become absolute and matured. The assets of the Company and the
Subsidiaries, upon the issuance of the Series A Notes, will not
constitute unreasonably small capital to carry out their businesses as
now conducted, including the capital needs of each of the Company and
the Subsidiaries, taking
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<PAGE> 22
into account the projected capital requirements and capital availability
of each of the Company and the Subsidiaries.
(ai) None of the Company, the Subsidiaries or any agent thereof
acting on the behalf of any of them has taken, and none of them will
take, any action that might cause this Agreement, any of the Transaction
Documents, including the Operative Documents, the consummation of the
Acquisition or the issuance or sale of the Notes to violate Regulation G
(12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12
C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of
Governors of the Federal Reserve System.
(aj) The Company and each Subsidiary maintains insurance covering
their properties, operations, personnel and businesses. Such insurance
insures against such losses and risks as are adequate in accordance with
customary industry practice to protect the Company and the Subsidiaries
and their businesses. Neither the Company nor any Subsidiary has
received notice from any insurer or agent of such insurer that
substantial capital improvements or other expenditures will have to be
made in order to continue such insurance. All such insurance is
outstanding and duly in force on the date hereof and will be outstanding
and duly in force on the Closing Date.
(ak) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning
of Rule 144A under the Act) as securities of the Company that are listed
on a national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States automated inter-dealer
quotation system.
(al) Assuming (i) that your representations and warranties in
Section 6 are true, (ii) that the representations of the Accredited
Investors set forth in the certificates of such Accredited Investors in
the form set forth in Annex A to the Offering Memorandum are true, (ii)
compliance by you with your covenants set forth in Section 8 and (iii)
that each of the Eligible Purchasers is a QIB or an Accredited Investor,
the purchase and resale of the Series A Notes pursuant hereto (including
pursuant to the Exempt Resales) is exempt from the registration
requirements of the Act. No form of general solicitation or general
advertising was used by the Company or any of its representatives (other
than you, as to whom the Company makes no representation) in connection
with the offer and sale of the Series A Notes, including, but not limited
to, articles, notices or other communications published in any newspaper,
magazine, or similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. No securities of the same class as
the Series A Notes have been issued and sold by the Company within the
six-month period immediately prior to the date hereof.
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<PAGE> 23
(am) The execution and delivery of the Operative Documents,
including the issuance and sale of the Series A Notes to be purchased by
Eligible Purchasers will not involve any prohibited transaction within
the meaning of Section 406 of ERISA or Section 4975 of the Code. The
representation made by the Company in the preceding sentence is made in
reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible
Purchasers as set forth in the Offering Memorandum under the Section
entitled "Notice to Investors."
(an) Each of the Preliminary Offering Memorandum and the Offering
Memorandum as of their respective dates, and each amendment or supplement
thereto, as of its date, contains the information specified in, and meets
the requirements of Rule 144A(d)(4) of the Act.
(ao) Except as disclosed in the Offering Memorandum, there are no
business relationships or related party transactions required to be
disclosed therein pursuant to Item 404 of Regulation S-K of the
Commission (assuming for purposes of this paragraph 5(ao) that Regulation
S-K is applicable to the Offering Memorandum).
All of the foregoing representations and warranties are made as if the
Acquisition had been consummated and the assets to be acquired thereby had
already been acquired.
6. INITIAL PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Initial
Purchaser represents and warrants to the Company that:
(a) The Initial Purchaser is a QIB with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Series A Notes.
(b) The Initial Purchaser (i) is not acquiring the Series A Notes
with a view to any distribution thereof or with any present intention
of offering or selling any of the Series A Notes in a transaction that
would violate the Act or the securities laws of any State of the United
States or any other applicable jurisdiction and (ii) will be reoffering
and reselling the Series A Notes only to QIBs in reliance on the
exemption from the registration requirements of the Act provided by Rule
144A and to a limited number of Accredited Investors that execute and
deliver a
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<PAGE> 24
letter containing certain representations and agreements in the form
attached as Annex A to the Offering Memorandum.
The Initial Purchaser also understands that the Company and, for
purposes of the opinions to be delivered to you pursuant to Sections 8(f)
and 8(g) hereof, each of Alston & Bird and Latham & Watkins, will rely
upon the accuracy and truth of the foregoing representations and you
hereby consent to such reliance.
The Initial Purchaser further agrees that, in connection with the
Exempt Resales, the Initial Purchaser will solicit offers to buy the
Series A Notes only from, and will offer to sell the Series A Notes only
to, the Eligible Purchasers. The Initial Purchaser further agrees that
it will offer to sell the Series A Notes only to, and will solicit offers
to buy the Series A Notes only from, persons who in purchasing such
Series A Notes will be deemed to have represented and agreed (1) if such
Eligible Purchaser is a QIB, that they are purchasing the Series A Notes
for their own account or an account with respect to which they exercise
sole investment discretion and that they or each of such accounts are
QIBs, (2) that such Series A Note will not have been registered under the
Act and may be resold, pledged or otherwise transferred, only (A) (I) to
a person who the seller reasonably believes is a "qualified institutional
buyer" within the meaning of Rule 144A under the Act in a transaction
meeting the requirements of Rule 144A, or in accordance with Rule 144
under the Act, or pursuant to another exemption from the registration
requirements of the Act (and based upon an opinion of counsel if the
Company so requests) or (II) to the Company and (B) in each case, in
accordance with any applicable securities laws of any State of the United
States or any other applicable jurisdiction, (3) that the holder will,
and each subsequent holder is required to, notify any purchaser from it
of the security evidenced thereby of the resale restrictions set forth in
(2) above.
7. INDEMNIFICATION.
(a) The Company and the Subsidiaries (the "INDEMNIFYING PARTIES")
jointly and severally agree to indemnify and hold harmless (i) the
Initial Purchaser, (ii) each person, if any, who controls (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the
Initial Purchaser (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "CONTROLLING PERSON"), and (iii) the
respective officers, directors, partners, employees, representatives and
agents of the Initial Purchaser or any controlling person (any person
referred to in clause (i), (ii), or (iii) may hereinafter be referred to
as an "INDEMNIFIED PERSON") to the fullest extent lawful, from and
against any and all losses, claims, damages, liabilities, judgments,
actions and expenses (including without limitation and as incurred,
reimbursement of all reasonable costs of investigating, preparing or
defending any claim or action, or any investigation or
21
<PAGE> 25
proceeding by any governmental agency or body, commenced or threatened,
including the reasonable fees and expenses of counsel to any Indemnified
Person) directly or indirectly (a) caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum (or any amendment or supplement thereto) or the Offering
Memorandum (or any amendment or supplement thereto) or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein in the light of the
circumstances under which they were made) not misleading, except insofar
as such losses, claims, damages, liabilities or expenses are caused by an
untrue statement or omission or alleged untrue statement or omission that
is made in reliance upon and in conformity with information relating to
the Initial Purchaser furnished in writing to the Company by the Initial
Purchaser expressly for use in the Preliminary Offering Memorandum (or
any amendment or supplement thereto) or the Offering Memorandum (or any
amendment or supplement thereto) provided, however, that the foregoing
indemnity shall not inure to the benefit of the Initial Purchaser from
whom the person asserting any such losses, claims, damages, liabilities,
judgments, actions or expenses purchased Notes, or any controlling person
of the Initial Purchaser, if a copy of the Preliminary Offering
Memorandum or Offering Memorandum (including any amendment or supplement
thereto delivered to the Initial Purchaser prior to the date such
Preliminary Offering Memorandum or Offering Memorandum was sent or given
to such purchaser) was not sent or given by or on behalf of the Initial
Purchaser to such person at or prior to the written confirmation of the
sale of Notes to such person, and if the Preliminary Offering Memorandum
or Offering Memorandum (including any amendment or supplement thereto
delivered to the Initial Purchaser prior to the date such Preliminary
Offering Memorandum or Offering Memorandum was sent or given to such
purchaser) cured the defect giving rise to such losses, claims, damages,
liabilities, judgments, actions or expenses. The Company shall notify
you promptly of the institution, threat or assertion of any claim,
proceeding (including any governmental investigation) or litigation in
connection with the matters addressed by this Agreement which involves
the Company or an Indemnified Person.
(b) In case any action or proceeding (including any governmental
investigation) shall be brought or asserted against any of the
Indemnified Persons with respect to which indemnity may be sought against
the Company, such Person (or the entity controlled by such controlling
person) shall promptly notify the Company, in writing (provided, that the
failure to give such notice shall not relieve the Company of their
obligations pursuant to this Agreement unless such failure to notify has
materially prejudiced the ability of the Company to defend any such
claim) and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Persons
and
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<PAGE> 26
payment of all reasonable fees and expenses. Such Indemnified Person
shall have the right to employ its own counsel in any such action and
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the Indemnified Person's expense unless (i) the
employment of such counsel has been specifically authorized in writing by
the Company, (ii) the Company has not assumed the defense and employed
counsel reasonably satisfactory to such Indemnified Person within a
reasonable time after notice of commencement of such action or proceeding
or (iii) the named parties to any such action or proceeding (including
any impleaded parties) include both an Indemnified Person and the Company
or any such Indemnified Person shall have been advised by such counsel
that there may be one or more legal defenses available to it which are
different from or additional to those available to the Company (in which
case the Company shall not have the right to assume the defense of such
action on behalf of the Indemnified Persons, it being understood,
however, that the Company shall not, in connection with any one such
action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) at
any time for such Indemnified Persons, which firm shall be designated by
the Initial Purchaser).
(c) No indemnifying parties (whether the persons described in
subparagraphs (a) and (b) above or in subparagraph (d) below) shall be
liable for any settlement of any such action or proceeding effected with
the such indemnifying parties' prior written consent, which consent will
not be unreasonably withheld, and the indemnifying parties agree to
indemnify and hold harmless any indemnified person from and against any
loss, claim, damage, liability or expense by reason of any settlement of
any action effected with the written consent of the indemnifying parties.
If at any time the indemnified person shall have requested the
indemnifying parties to reimburse the indemnified person for fees and
expenses of counsel as contemplated by the second sentence of
subparagraph (b) in connection with any such action or proceeding, the
indemnifying parties agree that they shall be liable for any settlement
of any proceeding effected without their written consent so long as they
receive written notice of such settlement if (i) such settlement is
entered into more than ninety business days after receipt by such
indemnifying parties of the aforesaid request and (ii) such indemnifying
parties shall not have reimbursed the indemnified person in accordance
with such request prior to the date of such settlement. The indemnifying
parties shall not, without the prior written consent of each indemnified
person, which will not be unreasonably withheld, settle or compromise or
consent to the entry of a judgment in or otherwise seek to terminate any
pending or threatened action, claim, litigation proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or
not any indemnified person is a party thereto), unless such settlement,
compromise, consent or termination includes an unconditional release
23
<PAGE> 27
of each indemnified person from all liability arising out of such
action, claim, litigation or proceeding.
(d) The Initial Purchaser agrees to indemnify and hold harmless the
Company and its directors, their officers who sign the Offering
Memorandum, any person controlling (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act) the Company, and the officers,
directors, partners, employees, representatives and agents of each such
person to the same extent as the foregoing indemnity from the
Indemnifying Parties to each of the Indemnified Persons, but only with
respect to claims and actions based on information relating to the
Initial Purchaser furnished in writing by the Initial Purchaser expressly
for use in the Preliminary Offering Memorandum or Offering Memorandum.
(e) If the indemnification provided for in this Section 7 is
unavailable to a party entitled to indemnification pursuant to Section
7(b), (c) or (d) in respect of any losses, claims, damages, liabilities
or expenses referred to herein, then each indemnifying party, in lieu of
indemnifying such indemnified person, shall contribute to the amount paid
or payable by such indemnified person as a result of such losses, claims,
damages, liabilities, expenses and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
party (or parties, as applicable) on the one hand and the indemnified
person (or persons, as applicable) on the other hand from the offering of
the Series A Notes or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the indemnifying party (or parties, as
applicable) and the indemnified person (or persons, as applicable), as
well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Initial
Purchaser, on the other hand, shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received
by the Initial Purchaser, in each case as set forth in the table on the
cover page of the Offering Memorandum. The relative fault of the
Company, on the one hand, and the Initial Purchaser, on the other hand,
shall be determined by reference to, among other things whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact related to information supplied
by the Company, on the one hand, or the Initial Purchaser, on the other
hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
indemnity and contribution obligations of the Company set forth herein
shall be in addition to any liability or obligation the Company may
otherwise have to any Indemnified Person.
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<PAGE> 28
The Company and the Initial Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in this paragraph 7(d). The amount paid or payable by an indemnified
person as a result of the losses, claims, damages, liabilities, expenses
or judgments referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by such indemnified person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), the Initial
Purchaser (and its related Indemnified Persons) shall not be required to
contribute, in the aggregate, any amount in excess of the amount by which
the total underwriting discount applicable to the Notes purchased by the
Initial Purchaser exceeds the amount of any damages which the Initial
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
8. CONDITIONS OF THE INITIAL PURCHASER'S OBLIGATIONS. The
obligations of the Initial Purchaser to purchase the Notes under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained
in this Agreement shall be true and correct on the Closing Date with the
same force and effect as if made on and as of the date hereof and the
Closing Date, respectively. The Company shall have performed or complied
with all of their obligations and agreements herein contained and
required to be performed or complied with by them at or prior to the
Closing Date.
(b) No stop order suspending the sale of the Notes in any
jurisdiction referred to in Section 4(e) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending
or threatened.
(c) (i) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the
issuance of the Series A Notes; (ii) no injunction, restraining order or
order of any nature by a federal or state court of competent jurisdiction
shall have been issued as of the Closing Date which would prevent the
issuance of the Series A Notes; and (iii) on the Closing Date no action,
suit or proceeding shall be pending against or affecting or, to the
knowledge of the Company, threatened against, the Company or any
Subsidiary before any court or arbitrator or any governmental body,
agency or official which,
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<PAGE> 29
if adversely determined, would prohibit the issuance of the Series A
Notes except as disclosed in the Offering Memorandum.
(d) (i) Since the date hereof or since the dates as of which
information is given in the Preliminary Offering Memorandum or Offering
Memorandum, there shall not have been any Material Adverse Change, (ii)
since the date of the latest balance sheet included in the Preliminary
Offering Memorandum or Offering Memorandum, and except as described or
contemplated in the Offering Memorandum there shall not have been any
material change in the capital stock or long-term debt, or material
increase in short-term debt, of the Company or any of the Subsidiaries
and (iii) the Company and the Subsidiaries shall have no liability or
obligation, direct or contingent, that is material to the Company and the
Subsidiaries taken as a whole and is required to be disclosed on a
balance sheet in accordance with GAAP and is not disclosed on the latest
balance sheet included in the Offering Memorandum.
(e) You shall have received certificates, dated the Closing Date,
signed by (i) the President or any Vice President or any other executive
officer and (ii) a principal financial or accounting officer of the
Company confirming, as of the Closing Date, the matters set forth in
paragraphs (a), (b), (c) and (d) of this Section 8.
(f) On the Closing Date, you shall have received an, opinion
(satisfactory to you and your counsel), dated the Closing Date, of Alston
& Bird, counsel for the Company, to the effect that:
(i) The Company and each of the Subsidiaries (other
than those Subsidiaries organized under laws other than
the United States or its political subdivisions and
Printpack Illinois, Inc.) is a duly organized and validly
existing corporation in good standing under the laws of its
jurisdiction of incorporation, has the requisite corporate
power and authority to own, lease and operate its
properties and to conduct its business as it is currently
being conducted and described in the Offering Memorandum,
and is duly qualified as a foreign corporation and is in
good standing in each jurisdiction where the ownership,
leasing or operation of property or the conduct of its
business requires such qualification, except where the
failure to be so qualified would not, singly or in the
aggregate, have a Material Adverse Effect;
(ii) The Company has all necessary corporate power
and authority to execute and deliver the Transaction
26
<PAGE> 30
Documents and the Notes, and to perform its obligations
under the Transaction Documents and the Notes and to
authorize issue, sell and deliver the Notes as contemplated
by the Purchase Agreement;
(iii) The Purchase Agreement has been duly authorized
and validly executed and delivered by the Company and
constitutes a legally valid and binding agreement of the
Company, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights generally and to
principles of equity, whether at law or in equity and
except as rights to indemnity and contribution thereunder
may be limited by federal and state securities laws and
public policy considerations underlying such laws;
(iv) The issuance and sale of the Series A Notes has
been duly authorized by the Company, and all legally
required corporate proceedings by the Company in connection
with the issuance and sale of the Series A Notes have been
taken; when authenticated in accordance with the terms of
the Indentures and delivered to and paid for by the you in
accordance with the terms of the Purchase Agreement, the
Series A Notes will be legally valid and binding agreements
of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of
the Indentures, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity,
whether at law or in equity;
(v) The issuance of the Series B Notes has been duly
authorized by the Company and all legally required
corporate proceedings by the Company in connection with the
issuance of the Series B Notes have been taken; when
authenticated in accordance with the terms of the
Indentures and delivered to and paid for by you in
accordance with the terms of the Registered Exchange Offer
and the Indentures, the Series B Notes will be the legally
valid and binding agreements of the Company, enforceable
against the Company in accordance with their terms and
entitled to the benefits of the Indentures, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general
principles of equity, whether at law or in equity;
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<PAGE> 31
(vi) The Indentures have been duly authorized by the
Company and conform in all material respects to the
description thereof in the Offering Memorandum; assuming
due authorization, execution and delivery thereof by the
Trustee, the Indentures constitute the legally valid and
binding agreements of the Company, enforceable against it
in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is
sought at law or in equity);
(vii) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and is
the legally valid and binding agreement of the Company,
enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws
affecting creditors' rights generally and to principles of
equity, whether at law or in equity and except as rights to
indemnity and contribution thereunder may be limited by
federal and state securities laws and public policy
considerations underlying such laws and except as rights to
indemnity and contribution thereunder may be limited by
federal and state securities laws and public policy
considerations underlying such laws;
(viii) To such counsel's knowledge, all of the
outstanding shares of capital stock of the Company have
been duly authorized, validly issued, and are fully paid
and nonassessable and were not issued in violation of any
preemptive rights or similar rights;
(ix) The Reorganization has been consummated and
conforms in all material respects to the description
thereof in the Offering Memorandum;
(x) All of the issued and outstanding shares of
capital stock of, or other ownership interests in, each
Subsidiary have been duly and validly authorized and
issued. Based solely upon a review of the stock records of
each Subsidiary, all of the shares of capital stock of, or
other ownership interests in, each Subsidiary are owned,
directly or through Subsidiaries, by the Company. To the
best knowledge of such counsel, all shares of capital stock
are fully paid and nonassessable, and are owned free and
clear of all Liens, except for Liens (i) created pursuant
to the New Credit Facility and
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<PAGE> 32
the Receivables Facility, (ii) permitted by the
Indentures or (iii) that will be released on the Closing
Date in connection with the closing of the Transactions.
Such opinion need not cover Subsidiaries organized under
laws other than the United States and its political
subdivision or the authorization and issuance of capital
stock of Printpack Illinois, Inc.;
(xi) To such counsel's knowledge, there are no
outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or Liens
(except for Liens (i) created pursuant to the New Credit
Facility and the Receivables Facility and Liens,
subscriptions and other rights and commitments in
connection with the organization and operation of Flexible
Funding Corp. as contemplated in the Receivables Facility,
(ii) permitted by the Indentures and/or (iii) that will be
released on the Closing Date in connection with the closing
of the Transactions) related to or entitling any person to
purchase or otherwise to acquire any shares of the capital
stock of, or other ownership interest in, any Subsidiary;
(xii) Neither of the Company or any of the
Subsidiaries is (a) an "investment company" or a company
"controlled" by an investment company within the meaning of
the Investment Company Act of 1940, as amended, or (b) a
"holding company" or a "subsidiary company" of a holding
company or an "affiliate" thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended;
(xiii) The descriptions in the Offering Memorandum,
as of its date and on the Closing Date, under the
captions "Prospectus Summary The Reorganization"; the
description of the registration of the "Printpack"
trademark under "Business Patents and Trademarks";
Environmental Matters and Government Regulation"; "Legal
"Proceedings"; and "Management Incentive and Deferred
Compensation" insofar as such statements constitute a
summary of legal matters, documents or proceedings referred
to therein, to such counsel's knowledge with respect to
factual matters, fairly and accurately present or summarize
in all material respects such legal matters, documents and
proceedings; and to such counsel's knowledge, there is no
action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, pending
against or affecting the Company or any of the
Subsidiaries, or any of their respective properties, which
is required
29
<PAGE> 33
to be disclosed and is not so disclosed, in the
Offering Memorandum, or which would result, singly or in
the aggregate, in a Material Adverse Effect or which would
materially and adversely affect the consummation of this
Agreement or the transactions contemplated hereby, and to
the best knowledge of the Company and the Subsidiaries, no
such proceedings are contemplated or threatened.
(xiv) To the knowledge of such counsel, no action has
been taken and no statute, rule or regulation or order has
been enacted, adopted or issued by any governmental agency
or body which prevents the issuance of the Notes, and such
counsel have received no notice which suspends the sale of
the Notes, in any jurisdiction referred to in Section 4(e)
hereof; no injunction, restraining order or order of any
nature by a federal or state court of competent
jurisdiction has been issued with respect to the Company or
any of the Subsidiaries which would prevent or suspend the
issuance or sale of the Notes, and such counsel have not
received notice which prevents or suspends the use of the
Offering Memorandum in any jurisdiction referred to in
Section 4(e) hereof; no action, suit or proceeding is
pending against or threatened against or affecting the
Company or any of the Subsidiaries before any court or
arbitrator or any governmental body, agency or official,
domestic or foreign, which, if adversely determined, would
prevent the issuance of the Notes; and every request of any
securities authority or agency of any jurisdiction for
additional information (to be included in the Preliminary
Offering Memorandum or Offering Memorandum or otherwise)
has been complied with or otherwise addressed with the
Commission;
(xv) No authorization, approval or consent or order
of, or filing, qualification, license or permit of or
with, any court or governmental or administrative body or
agency (collectively, "CONSENTS") is necessary in
connection with the (i) execution, delivery and performance
by the Company and the Subsidiaries of this Agreement and
the other Transaction Documents, (ii) the issuance and sale
of the Series A Notes and the Series B Notes or (iii) the
consummation of the Reorganization, except for Consents
that (A) that may be required by the NASD or under state
securities or Blue Sky laws or regulation, (B) may be
necessary in connection with the performance of the
Registered Exchange Offer and the Registration Rights
Agreement and/or (C) except for any Consent the lack of
which would not result, singly or in the aggregate, in a
30
<PAGE> 34
Material Adverse Effect. No consents or waivers from
any person under any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or instrument
are required to consummate the Transactions, except for
such consents or waivers which have been, or will be,
obtained prior to the Closing Date and except for such
consent or waivers the lack of which would not result,
singly or in the aggregate, in a Material Adverse Effect;
(xvi) On the Closing Date, the Offering Memorandum
(except for financial statements, the notes thereto, the
pro forma financial information, and the related schedules
and other financial data included therein, as to which no
opinion need be expressed) complied as to form in all
material respects with applicable provisions of the Act and
the applicable rules and regulations of the Commission;
(xvii) None of (i) the execution and delivery of the
Transaction Documents, (ii) the performance by the Company
of its obligations under the Transactions Documents or
(iii) the consummation of the Transactions contemplated by
the Transaction Documents, including the issuance and sale
of the Notes, will result in (A) a breach or violation of
the respective charters or bylaws of the Company or any of
the Subsidiaries, (B) to such counsel's knowledge a breach
or violation of any of the terms or provisions of, or
constitute a default or cause an acceleration of any
obligation under, or result in the imposition or creation
of (or the obligation to create or impose) a Lien (other
than Liens that will be released on the Closing Date in
connection with the closing of the Transactions) with
respect to, any bond, note, debenture or other evidence of
indebtedness (except for Liens (i) created pursuant to the
New Credit Facility and the Receivables Facility, (ii)
permitted by the Indentures and/or (iii) that will be
released on the Closing Date in connection with the closing
of the Transactions) or any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company
or any of the Subsidiaries is a party or by which it or any
of them is bound, or to which any properties of the Company
or any of the Subsidiaries is or may be subject, (C) to
such counsel's knowledge, contravene any order of any court
or governmental agency or body having jurisdiction over the
Company or any of the Subsidiaries or any of their
respective properties, or any judgment, order or decree of
any court or governmental agency or authority having
jurisdiction over the Company or any of the Subsidiaries,
or any of their respective properties or (D) to such
counsel's
31
<PAGE> 35
knowledge, violate or conflict with any statute, rule
or regulation applicable to the Company or any of the
Subsidiaries, or their respective properties, or
administrative or court decree applicable to the Company or
any of the Subsidiaries, or any of their respective
properties, except for any such breach, violation, default,
acceleration, imposition of a Lien or contravention that
would not result, in the case of clauses (B), (C) and (D),
singly or in the aggregate, in a Material Adverse Effect.
(xviii) When the Series A Notes are issued and
delivered pursuant to the Purchase Agreement, such Series A
Notes will not be of the same class (within the meaning of
Rule 144A under the Act) as securities of the Company that
are listed on a national securities exchange registered
under Section 6 of the Exchange Act or that are quoted in a
United States automated inter-dealer quotation system;
(xix) Assuming (i) that your representations and
warranties in Section 6 are true, (ii) that the
representations of the Accredited Investors set forth in
the certificates of such Accredited Investors in the form
set forth in Annex A to the Offering Memorandum are true,
(iii) compliance by you with your covenants set forth in
Section 8 and (iv) that each of the Eligible Purchasers is
a QIB or an Accredited Investor, the purchase and resale of
the Series A Notes pursuant hereto (including pursuant to
the Exempt Resales) is exempt from the registration
requirements of the Act. To such counsel's knowledge, no
form of general solicitation or general advertising was
used by the Company or any of its representatives (other
than you, as to whom the Company makes no representation)
in connection with the offer and sale of the Series A
Notes, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine,
or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising. To such
counsel's knowledge, no securities of the same class as the
Series A Notes have been issued and sold by the Company
within the six-month period immediately prior to the date
hereof;
(xx) Prior to the Registered Exchange Offer or the
effectiveness of the Shelf Registration Statement, the
Indentures are not required to be qualified under the TIA;
32
<PAGE> 36
(xxi) The Offering Memorandum as of their respective
dates, and each amendment or supplement thereto, as of its
date, contained the information specified in, and meets the
requirements of Rule 144A(d)(4) of the Act;
(xxii) Except as provided in the Operative Documents,
no holder of any security of the Company or any of the
Subsidiaries has or will have any right to require the
registration under the Act of such security by virtue of
the consummation of the Transactions.
(xxiii) To such counsel's knowledge, none of the
Company, the Subsidiaries or any duly authorized agent
thereof acting on the behalf of any of them has taken any
action that will cause this Agreement or the issuance or
sale of the Notes to violate Regulation G (12 C.F.R. Part
207), Regulation T (12 C.F.R. Part 220), Regulation U (12
C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of
the Board of Governors of the Federal Reserve System.
In giving their opinion required by this subsection 8(f), Alston &
Bird shall additionally state that such counsel have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
your representatives and your counsel at which the contents of the
Offering Memorandum and related matters were discussed and, although such
counsel have not undertaken to investigate or independently verify, and
do not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Offering Memorandum (except
as indicated in clause (xvi) above); on the basis of the foregoing, no
facts came to such counsel's attention that caused such counsel to
believe that the Offering Memorandum, as of its date or as of the Closing
Date, contained an untrue statement of a material fact or omitted to
state any fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel need
express no opinion nor express any statement or belief with respect to
the financial statements, schedules and other historical and pro forma
financial and statistical data contained therein).
Alston & Bird shall not be required to opine as to any matters of
foreign or Illinois law. Alston & Bird may deliver to the Initial
Purchaser in respect of the matters to be opined hereon, reliance letters
as to the opinions delivered in connection with the New Credit Facility,
the Acquisition and the Receivables Facility, if consummated, by the
Closing (except it shall not be required to deliver the true
sale/nonconsolidation opinion).
33
<PAGE> 37
(g) You shall have received an opinion, dated the Closing Date, of
Latham & Watkins, counsel for the Initial Purchaser, in form and
substance reasonably satisfactory to you.
(h) You shall have received letters on and as of the date hereof as
well as on and as of the Closing Date (in the latter case constituting an
affirmation of the statements set forth in the former), in form and
substance satisfactory to you, from Price Waterhouse, L.L.P., independent
auditors, with respect to the financial statements and certain financial
information contained in the Offering Memorandum relating to the Company
and the Subsidiaries.
(i) You shall have received letters on and as of the date hereof as
well as on and as of the Closing Date (in the latter case constituting an
affirmation of the statements set forth in the former), in form and
substance satisfactory to you, from Price Waterhouse, L.L.P., independent
auditors, with respect to the financial statements and certain financial
information contained in the Offering Memorandum relating to JR Flexible,
and its subsidiaries.
(j) Latham & Watkins shall have been furnished with such documents
and opinions, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass
upon the matters referred to in this Section 8 and in order to evidence
the accuracy, completeness or satisfaction in all material respects of
any of the representations, warranties or conditions herein contained.
(k) The Reorganization and the transactions contemplated by the
Acquisition Agreement and the New Credit Facility shall be consummated
prior to, or simultaneously with, the Closing Date on terms as described
in the Offering Memorandum and if the Receivables Facility is
consummated, it will be on terms as described in the Offering Memorandum.
The Initial Purchaser shall have received certificates or such other
documentation as it deems reasonably necessary evidencing the closing of
the Acquisition Agreement, the New Credit Facility and, if consummated,
the Receivables Facility, and the consummation of the Transactions
contemplated thereby and of the Reorganization.
(l) Prior to the Closing Date, the Company shall have furnished to
you such further information, certificates and documents as you may
reasonably request.
(m) The Company and the Trustee shall have entered into the
Indentures and you shall have received counterparts, conformed as
executed, thereof.
34
<PAGE> 38
(n) The Initial Purchaser shall have received a certificate, dated
the Closing Date, of the Chief Financial Officer of the Company as to the
solvency of the Company and the Subsidiaries following consummation of
the Transactions.
(o) The Offering Memorandum shall have been printed and copies
distributed to you not later than 9:00 A.M., New York City time, on
August 20, 1996, or at such later date and time as you may approve in
writing.
All opinions, certificates, letters and other documents required by
this Section 8 to be delivered by the Company will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and
substance to you. The Company will furnish the Initial Purchaser with such
conformed copies of such opinions, certificates, letters and other documents as
it shall reasonably request.
9. Effective Date of Agreement and Termination.
(a) This Agreement shall become effective upon the execution and
delivery of this Agreement by the parties hereto.
(b) This Agreement may be terminated at any time on or prior to the
Closing Date by you by notice to the Company if any of the following has
occurred: (i) subsequent to the date of the Offering Memorandum or of this
Agreement, any Material Adverse Change which, in the judgment of the Initial
Purchaser, materially impairs the investment quality of the Series A Notes;
(ii) any outbreak or escalation of hostilities or other national or
international calamity or crisis or material adverse change in the financial
markets of the United States, or any other substantial national or
international calamity or emergency if the effect of such outbreak, escalation,
calamity, crisis or emergency would, in the judgment of the Initial Purchaser,
make it impracticable or inadvisable to market the Series A Notes or to enforce
contracts for the sale of the Series A Notes; (iii) any suspension or
limitation of trading generally in securities on the New York Stock Exchange,
the American Stock Exchange or in the over-the-counter markets or any setting
of minimum prices for trading on such exchange or markets; (iv) any declaration
of a general banking moratorium by either federal or New York authorities; (v)
the taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs that, in the judgment of the Initial
Purchaser, has a material adverse effect on the financial markets in the United
States and would, in the judgment of the Initial Purchaser, make it
impracticable or inadvisable to market the Series A Notes or to enforce
contracts for the sale of the Series A Notes; or (vi) the enactment,
publication, decree, or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which,
in the judgment of the Initial Purchaser, materially and adversely affect, or
will materially and adversely affect, the business or operations of the
Company.
35
<PAGE> 39
(c) The indemnities and contribution provisions and other agreements,
representations and warranties of the Company, its respective officers and
directors and of the Initial Purchaser set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
delivery of and payment for the Series A Notes, regardless, of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
the Initial Purchaser or by or on behalf of the Company, the officers or
directors of the Company or any controlling person of the Company, (ii)
acceptance of the Series A Notes and payment for them hereunder and (iii)
termination of this Agreement.
(d) If this Agreement shall be terminated by the Initial Purchaser
pursuant to clause (i) of paragraph (b) of this Section 9 or because of the
failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company agrees to
reimburse you for all out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by you. Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has
agreed to pay pursuant to Section 4(f) hereof.
(e) Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Initial
Purchaser, any Indemnified Person referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The terms "successors and assigns" shall not include a purchaser of
any of the Series A Notes from the Initial Purchaser merely because of such
purchase.
10. NOTICES. Notices given pursuant to any provision of this Agreement
shall be addressed as follows: (a) if to the Company, to Printpack, Inc., 4335
Wendell Drive, S.W., Atlanta, Georgia, 30336, Attention: R. Michael Hembree,
with a copy to Alston & Bird, One Atlantic Center, 1201 West Peachtree Street,
Atlanta, Georgia, 30309-3424, Attention: Ralph F. MacDonald, III, and (b) if to
the Initial Purchaser, to 1201 West Peachtree Street, Suite 3650, Atlanta,
Georgia 30309-3400, Attention: William S. Oglesby, with a copy to Latham &
Watkins, 885 Third Avenue, New York, New York 10022, Attention: Kirk A.
Davenport, or in any case to such other address as the person to be notified
may have requested in writing.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
36
<PAGE> 40
12. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and other persons referred to in Section 5, and no other
person will have any right or obligation hereunder.
[signatures on next page]
37
<PAGE> 41
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument. Please confirm that the foregoing
correctly sets forth the agreement among the Company and you.
Very truly yours,
PRINTPACK, INC.
By: /s/ R. Michael Hembree
-----------------------
Name R. Michael Hembree
Title: Vice President, Finance
and Administration
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Robert Berry
--------------------------------
Name Robert Berry
Title: Vice President
38
<PAGE> 1
EXHIBIT 99.8
Deferred Income Agreement dated December 17, 1984 with Edward Hilbert, Jr.
<PAGE> 2
DEFERRED INCOME AGREEMENT
This DEFERRED INCOME AGREEMENT is made and entered into by and between
Printpack, Inc., a Georgia corporation ("Printpack"), and the Employee
indicated on Schedule A attached hereto and made a part hereof (said Employee
and said Schedule hereafter referred to, respectively, as "Employee" and
"Schedule A").
W I T N E S S E T H
WHEREAS, to induce Employee to continue his employment with Printpack by
providing future financial security for Employee and his family, Printpack
elects to include Employee in its employee-benefit plan referred to as the
"Printpack Deferred Income Plan."
WHEREAS, Printpack and the Employee wish to facilitate Employee's
retirement at age 60.
NOW THEREFORE, in consideration of the convenants and conditions hereafter
set forth, Printpack and Employee agree as follows:
1. PAYMENT OF DEFERRED INCOME. In consideration of Employee's employment,
Printpack shall, subject to the following provisions of this Agreement, make
payments (as described below) in the event Employee shall::
(a) attain age sixty (60) years;
(b) die; or
(c) become disabled.
2. ADDITIONAL COMPENSATION. In addition to any compensation paid to, or
benefits provided for Employee, Employee shall receive the deferred benefits
provided for under this Agreement. Nothing in this Agreement shall be
construed as limiting, varying or reducing any provision or benefit to
Employee, Employee's
1
<PAGE> 3
beneficiaries or estate pursuant to any Employment Agreement, Retirement Plan
(including any qualified Profit Sharing Plan), any health, disability or life
insurance policies or any other agreement between Printpack and Employee.
3. DEFERRAL OF CQMPENSATION. Printpack shall defer from the compensation
otherwise payable to Employee, as a result of Employee's employment with
Printpack, the amounts specified in Schedule A for the years specified in
Schedule A.
4. BENEFITS AT AGE 60. Commencing with the date Employee shall attain the
age of sixty (60) years, Printpack shall pay to Employee the annual amount
indicated on Part A of Schedule A for fifteen (15) years. Each annual amount
shall be paid by Printpack in convenient installments, at least semi-annually.
5. DEATH. Anything in Paragraph 2 of this Agreement to the contrary
notwithstanding, in the event of Employee's death, Printpack shall make only
the following payments:
(a) DEATH BEFORE 60. If employee shall die prior
to attaining the age of sixty (60) years, Printpack shall pay
the annual amount indicated on Part B of Schedule A for
fifteen (15) years, commencing with the year of Employee's
death, to the beneficiary designated in Part C of Schedule A.
Each annual amount shall be paid by Printpack in convenient
installments at least semi-annually.
(b) DEATH AFTER 60. If employee shall die after
attaining the age of sixty (60) years, Printpack shall
continue to pay any portion of the benefits referred to in
Paragraph 4 of the Agreement unpaid at Employee's death (on
the terms and conditions of said Paragraph) to the
beneficiary designated in Part C of Schedule A.
6. DISABILITY. Anything in Paragraph 2 of this Agreement to the contrary
notwithstanding, in the event of Employee's disability, Printpack shall pay to
Employee the
2
<PAGE> 4
annual amount indicated on Part C of Schedule A for fifteen (15) years.
Disability means a physical or mental condition which, in Printpack's judgment,
based on medical reports or other evidence Printpack deems satisfactory,
totally and permanently prevents Employee from satisfactorily performing his
usual duties for Printpack or the duties of such other position or job which
Printpack or any other firm makes available to him and for which Employee is
qualified by reason of his training, education or experience.
7. TERMINATION OF EMPLOYMENT. In the event Employee's employment by
Printpack shall terminate (other than by reason of Employee's death, disability
or attainment of the age of sixty [60] years), Printpack must pay to Employee
or Employee's beneficiary or estate the total balance of all previous deferred
compensation, without interest. Such amounts shall be paid at Printpack's sole
discretion either in a lump sum or in five equal annual installments.
8. ACTIVITY HARMFUL TO THE BEST INTEREST OF PRINTPACK. Anything in this
Agreement to the contrary notwithstanding, no payment of any then unpaid
installment of deferred income or benefit shall be made, and all rights under
the Agreement of the Employee or Employee's beneficiary or estate shall be
forfeited if either of the following events occurs:
(a) The Employee shall engage in any activity or
conduct which in Printpack's opinion (determined in the sole
discretion of Printpack's Board of Directors) is harmful to
Printpack's best interests;
(b) After the Employee ceases to be employed by
Printpack he shall fail or refuse to provide advice and
counsel to Printpack when reasonably requested to do so.
Provided, however, that Employee or Employee's beneficiary or estate shall be
paid the total balance of all previous amounts of deferred compensation,
without interest. Such
3
<PAGE> 5
amounts shall be paid at Printpack's discretion either in a lump sum or in five
equal annual installments.
9. RIGHTS OF EMPLOYEE AND TITLE. The payments to be made by Printpack
under this Agreement are unsecured obligations of Printpack only, and Employee
is only a general creditor of Printpack in respect of them. Title to, and
beneficial ownership of, any asset, whether cash or investments which Printpack
may acquire or earmark to satisfy its obligations to Employee under this
Agreement, shall at all times remain with Printpack and neither the Employee
nor his designated beneficiary nor any other person shall have any property
interest whatsoever in any specific assets of Printpack. Nothing contained in
this Agreement, and no action taken pursuant to the provisions of this
Agreement, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between Printpack and Employee, his designated
beneficiary, or any other person. Any funds which may be invested under the
provisions of this Agreement shall continue for all purposes to be a part of
the general funds of Printpack and no person other than Printpack shall by
virtue of the provisions of this Agreement have any interest in such funds. To
the extent that any person acquires a right to receive payments from Printpack
under this Agreement, such right shall be no greater than the right of any
unsecured general creditor of Printpack.
10. DESIGNATION OF BENEFICIARIES. Any beneficiary designated on Schedule
A may be revoked or changed at any time and from time to time by Employee. Any
such revocation or change shall be in writing signed by Employee and shall
become effective only when approved by Printpack. If Employee shall not
designate a beneficiary to which payments are to be made after the death of
Employee, or if any designated beneficiary for payments does not survive
Employee, payments by Printpacksubsequent to the death of Employee or, as the
case may be, the death of such designated beneficiary shall be made as provided
in this Agreement to the designated successor beneficiary or, if
4
<PAGE> 6
none, to Employee's estate. If a designated beneficiary survives Employee but
dies prior to the completion of the payments contemplated to be made to that
designated beneficiary by Printpack in this Agreement, the unpaid portion of
those payments at the death of the designated beneficiary shall be paid by
Printpack as provided in this Agreement to the designated successor beneficiary
or, if none, to the designated beneficiary's estate.
11. PAYMENTS TO INCOMPETENTS. If Printpack shall determine that any
person to whom any payment is to be made pursuant to this Agreement is unable
to care for his affairs because of illness, incapacity, or accident, or is a
minor, any payment due (unless a prior claim therefore shall have been made by
a duly-appointed guardian, committee or other legal representative of such
person) may be paid by Printpack to the spouse, a child, a parent, or a brother
or sister, of such person, or to any person deemed by Printpack to have
incurred expense for such person otherwise entitled to payment, in such manner
and proportions as Printpack may determine. Any such payment shall be a
complete discharge of the liabilities of Printpack under this Agreement.
12. CONTINUING EMPLOYMENT. Nothing contained herein shall be construed as
conferring upon the Employee the right to continue in the employ of Printpack
in any capacity. Nor shall this Agreement or anything contained in this
Agreement be deemed to constitute an Employment Agreement between Printpack and
Employee. Nor shall any provision of this Agreement restrict Printpack's right
to discharge Employee or restrict Employee's right to terminate his employment.
13. BENEFITS. No benefits payable under this Agreement shall be deemed
salary or other compensation to Employee for the purpose of computing benefits
to which he may be entitled under any group life insurance, long-term
disability insurance, profit-sharing or pension plan or other arrangement of
Printpack for the benefit of its employees. To the extent required by law at
the time payment of benefits is made, Printpack shall withhold any taxes
required to be withheld by the federal or any state or local government
5
<PAGE> 7
from payments to be made under this Agreement. Employee has been advised to
consult his tax adviser concerning the income and estate tax consequences of
the payments provided for herein, and Printpack makes no representations or
warranties concerning such consequences.
14. IRREVOCABILITY AND BINDING EFFECT. This Agreement shall be
irrevocable. This Agreement shall be binding upon, and inure to the benefit
of, Printpack and its successors and assigns, and Employee and his heirs,
executors., administrators., beneficiaries, and legal representatives.
15. CONSTRUCTION. Printpack shall have full power and authority to
interpret, construe and administer this Agreement and Printpack's
interpretations and construction of this Agreement, and actions under this
Agreement, shall be binding and conclusive on all persons for all purposes. No
officer, employee or director of Printpack shall be liable to any person for
any action taken or omitted in connection with the interpretation and
administration of this Agreement unless attributable to such person's own
willful misconduct or lack of good faith.
16. OFFSET. If at the time payments or installments of payments are due
under this Agreement, Employee or Employee's beneficiary or estate is indebted
or obligated to Printpack, then remaining payments to Employee or Employee's
beneficiary or estate may at Printpack's discretion be reduced by the amount of
such indebtedness or obligation. Provided, however, that Printpack's election
not to reduce any such payments shall not constitute a waiver of its claim for
any such indebtedness or obligation.
17. NO ASSIGNMENT. The rights of the Employee (or any other persons) to
the payment of benefits under this Agreement shall not be assigned,
transferred, pledged or encumbered except by will or by the laws of descent and
distribution.
18. EMPLOYEE COOPERATION. Employee will cooperate with Printpack by
furnishing any and all information requested by Printpack, taking such physical
6
<PAGE> 8
examinations as Printpack may deem necessary and taking such other actions as
Printpack may request. If Employee refuses to cooperate in this regard,
Printpack shall have no further obligation to Employee under this Agreement.
In the event of Employee's suicide during the first two years of this Agreement
or if Employee makes any material misstatement of information or nondisclosure
of medical history, then and in that event, at Printpack's sole discretion no
benefits shall be payable to Employee or to Employee's beneficiary or estate
under this Agreement.
19. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed pursuant to the law of, the State of Georgia.
IN WITNESS WHEREOF, Printpack has caused this Agreement to be executed by
its duly-authorized officers and Employee has set his hand and seal as of this
17th day of December, 1984.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
--------------------------
R. Michael Hembree
Title: Vice President - Finance
/s/ Edward J. Hilbert, Jr.
--------------------------
Edward J. Hilbert, Jr.
Employee
7
<PAGE> 9
DEFERRED INCOME AGREEMENT
SCHEDULE A
<TABLE>
<S> <C> <C>
EMPLOYEE: Edward J. Hilbert, Jr.
Post Office Box 724892
Atlanta, Georgia 30339
Annual amount of compensation to be deferred $10,000
---------
Number of years compensation is to be deferred Eight (8)
---------
PART A: Annual Benefit Upon Attaining Age 60: $40,000
---------
PART B: Annual Benefit if Death Occurs Before
Attaining Age 60: $40,000
---------
PART C: Annual Benefit if Disability Occurs
Before Attaining Age 60: $40,000
---------
PART D: Beneficiary of Benefits and Relationship:
Primary: Name: Estate of E. J. Hilbert, Jr.
----------------------------
Relationship:
----------------------
Address:
---------------------------
Secondary: Name:
------------------------------
Relationship:
----------------------
Address:
---------------------------
</TABLE>
Approved as of December 17, 1984
By: PRINTPACK, INC.
By: /s/ R. Michael Hembree
---------------------------
Title: Vice President - Finance
------------------------
By: /s/ Edward J. Hilbert, Jr.
-------------------------------
Employee
8
<PAGE> 1
EXHIBIT 99.9
Deferred Income Agreement dated December 17, 1984 with Robert B. Paxton.
<PAGE> 2
DEFERRED INCOME AGREEMENT
This DEFERRED INCOME AGREEMENT is made and entered into by and between
Printpack, Inc., a Georgia corporation ("Printpack"), and the Employee
indicated on Schedule A attached hereto and made a part hereof (said Employee
and said Schedule hereafter referred to, respectively, as "Employee" and
"Schedule A").
W I T N E S S E T H
WHEREAS, to induce Employee to continue his employment with Printpack by
providing future financial security for Employee and his family, Printpack
elects to include Employee in its employee-benefit plan referred to as the
"Printpack Deferred Income Plan."
WHEREAS, Printpack and the Employee wish to facilitate Employee's
retirement at age 60.
NOW THEREFORE, in consideration of the convenants and conditions hereafter
set forth, Printpack and Employee agree as follows:
1. PAYMENT OF DEFERRED INCOME. In consideration of Employee's employment,
Printpack shall, subject to the following provisions of this Agreement, make
payments (as described below) in the event Employee shall:
(a) attain age sixty (60) years;
(b) die; or
(c) become disabled.
1
<PAGE> 3
2. ADDITIONAL COMPENSATION. In addition to any compensation paid to, or
benefits provided for Employee, Employee shall receive the deferred benefits
provided for under this Agreement. Nothing in this Agreement shall be
construed as limiting, varying or reducing any provision or benefit to
Employee, Employee's beneficiaries or estate pursuant to any Employment
Agreement, Retirement Plan (including any qualified Profit Sharing Plan), any
health, disability or life insurance policies or any other agreement between
Printpack and Employee.
3. DEFERRAL OF COMPENSATION. Printpack shall defer from the compensation
otherwise payable to Employee, as a result of Employee's employment with
Printpack, the amounts specified in Schedule A for the years specified in
Schedule A.
4. BENEFITS AT AGE 60. Commencing with the date Employee shall attain the
age of sixty (60) years, Printpack shall pay to Employee the annual amount
indicated on Part A of Schedule A for fifteen (15) years. Each annual amount
shall be paid by Printpack in convenient installments, at least semi-annually.
5. DEATH. Anything in Paragraph 2 of this Agreement to the contrary
notwithstanding, in the event of Employee's death, Printpack shall make only
the following payments:
(a) DEATH BEFORE 60. If employee shall die prior to attaining
the age of sixty (60) years, Printpack shall pay the annual
amount indicated on Part B of Schedule A for fifteen (15)
years, commencing with the year of Employee's death, to the
beneficiary designated in Part C of Schedule A. Each annual
amount shall be paid by Printpack in convenient
installments at least semi-annually.
(b) DEATH AFTER 60. If employee shall die after attaining the
age of sixty (60) years, Printpack shall continue to pay any
portion of the benefits referred to in Paragraph 4 of the
Agreement unpaid at Employee's death (on the terms and
conditions of said Paragraph) to the beneficiary designated
in Part C of Schedule A.
2
<PAGE> 4
6. DISABILITY. Anything in Paragraph 2 of this Agreement to the contrary
notwithstanding, in the event of Employee's disability, Printpack shall pay to
Employee the annual amount indicated on Part C of Schedule A for fifteen (15)
years. Disability means a physical or mental condition which, in Printpack's
judgment, based on medical reports or other evidence Printpack deems
satisfactory, totally and permanently prevents Employee from satisfactorily
performing his usual duties for Printpack or the duties of such other position
or job which Printpack or any other firm makes available to him and for which
Employee is qualified by reason of his training, education or experience.
7. TERMINATION OF EMPLOYMENT. In the event Employee's employment by
Printpack shall terminate (other than by reason of Employee's death, disability
or attainment of the age of sixty [60] years), Printpack must pay to Employee
or Employee's beneficiary or estate the total balance of all previous deferred
compensation, without interest. Such amounts shall be paid at Printpack's sole
discretion either in a lump sum or in five equal annual installments.
8. ACTIVITY HARMFUL TO THE BEST INTEREST OF PRINTPACK. Anything in this
Agreement to the contrary notwithstanding, no payment of any then unpaid
installment of deferred income or benefit shall be made, and all rights under
the Agreement of the Employee or Employee's beneficiary or estate shall be
forfeited if either of the following events occurs:
(a) The Employee shall engage in any activity or conduct which in
Printpack's opinion (determined in the sole Printpack's Board
of Directors) is harmful to Printpack's best interests;
(b) After the Employee ceases to be employed by
Printpack he shall fail or refuse to provide advice and
counsel to Printpack when reasonably requested to do so.
3
<PAGE> 5
Provided, however, that Employee or Employee's beneficiary or estate shall be
paid the total balance of all previous amounts of deferred compensation,
without interest. Such amounts shall be paid at Printpack's discretion either
in a lump sum or in five equal annual installments.
9. RIGHTS OF EMPLOYEE AND TITLE. The payments to be made by Printpack
under this Agreement are unsecured obligations of Printpack only, and Employee
is only a general creditor of Printpack in respect of them. Title to, and
beneficial ownership of, any asset, whether cash or investments which Printpack
may acquire or earmark to satisfy its obligations to Employee under this
Agreement, shall at all times remain with Printpack and neither the Employee
nor his designated beneficiary nor any other person shall have any property
interest whatsoever in any specific assets of Printpack. Nothing contained in
this Agreement, and no action taken pursuant to the provisions of this
Agreement, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between Printpack and Employee, his designated
beneficiary, or any other person. Any funds which may be invested under the
provisions of this Agreement shall continue for all purposes to be a part of
the general funds of Printpack and no person other than Printpack shall by
virtue of the provisions of this Agreement have any interest in such funds. To
the extent that any person acquires a right to receive payments from Printpack
under this Agreement, such right shall be no greater than the right of any
unsecured general creditor of Printpack.
10. DESIGNATION OF BENEFICIARIES. Any beneficiary designated on Schedule
A may be revoked or changed at any time and from time to time by Employee. Any
such revocation or change shall be in writing signed by Employee and shall
become
4
<PAGE> 6
effective only when approved by Printpack. If Employee shall not designate a
beneficiary to which payments are to be made after the death of Employee, or if
any designated beneficiary for payments does not survive Employee, payments by
Printpack subsequent to the death of Employee or, as the case may be, the death
of such designated beneficiary shall be made as provided in this Agreement to
the designated successor beneficiary or, if none, to Employee's estate. If a
designated beneficiary survives Employee but dies prior to the completion of
the payments contemplated to be made to that designated beneficiary by
Printpack in this Agreement, the unpaid portion of those payments at the death
of the designated beneficiary shall be paid by Printpack as provided in this
Agreement to the designated successor beneficiary or, if none, to the
designated beneficiary's estate.
11. PAYMENTS TO INCOMPETENTS. If Printpack shall determine that any
person to whom any payment is to be made pursuant to this Agreement is unable
to care for his affairs because of illness, incapacity, or accident, or is a
minor, any payment due (unless a prior claim therefore shall have been made by
a duly-appointed guardian, committee or other legal representative of such
person) may be paid by Printpack to the spouse, a child, a parent, or a brother
or sister, of such person, or to any person deemed by Printpack to have
incurred expense for such person otherwise entitled to payment, in such manner
and proportions as Printpack may determine. Any such payment shall be a
complete discharge of the liabilities of Printpack under this Agreement.
12. CONTINUING EMPLOYMENT. Nothing contained herein shall be construed as
conferring upon the Employee the right to continue in the employ of Printpack
in any capacity. Nor shall this Agreement or anything contained in this
Agreement be deemed to constitute an Employment Agreement between Printpack and
Employee. Nor shall any provision of this Agreement restrict Printpack's right
to discharge Employee or restrict Employee's right to terminate his employment.
5
<PAGE> 7
13. BENEFITS. No benefits payable under this Agreement shall be deemed
salary or other compensation to Employee for the purpose of computing benefits
to which he may be entitled under any group life insurance, long-term
disability insurance, profit-sharing or pension plan or other arrangement of
Printpack for the benefit of its employees. To the extent required by law at
the time payment of benefits is made, Printpack shall withhold any taxes
required to be withheld by the federal or any state or local government from
payments to be made under this Agreement. Employee has been advised to consult
his tax adviser concerning the income and estate tax consequences of the
payments provided for herein, and Printpack makes no representations or
warranties concerning such consequences.
14. IRREVOCABILITY AND BINDING EFFECT. This Agreement shall be
irrevocable. This Agreement shall be binding upon, and inure to the benefit
of, Printpack and its successors and assigns, and Employee and his heirs,
executors, administrators, beneficiaries, and legal representatives.
15. CONSTRUCTION. Printpack shall have full power and authority to
interpret, construe and administer this Agreement and Printpack's
interpretations and construction of this Agreement, and actions under this
Agreement, shall be binding and conclusive on all persons for all purposes. No
officer, employee or director of Printpack shall be liable to any person for
any action taken or omitted in connection with the interpretation and
administration of this Agreement unless attributable to such person's own
willful misconduct or lack of good faith.
16. OFFSET. If at the time payments or installments of payments are due
under this Agreement, Employee or Employee's beneficiary or estate is indebted
or obligated to Printpack, then remaining payments to Employee or Employee's
beneficiary or estate may at Printpack's discretion be reduced by the amount of
such indebtedness or
6
<PAGE> 8
obligation. Provided, however, that Printpack's election not to reduce any
such payments shall not constitute a waiver of its claim for any such
indebtedness or obligation.
17. NO ASSIGNMENT. The rights of the Employee (or any other persons) to
the payment of benefits under this Agreement shall not be assigned,
transferred, pledged or encumbered except by will or by the laws of descent and
distribution.
18. EMPLOYEE COOPERATION. Employee will cooperate with Printpack by
furnishing any and all information requested by Printpack, taking such physical
examinations as Printpack may deem necessary and taking such other actions as
Printpack may request. If Employee refuses to cooperate in this regard,
Printpack shall have no further obligation to Employee under this Agreement.
In the event of Employee's suicide during the first two years of this Agreement
or if Employee makes any material misstatement of information or nondisclosure
of medical history, then and in that event, at Printpack's sole discretion no
benefits shall be payable to Employee or to Employee's beneficiary or estate
under this Agreement.
19. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed pursuant to the law of, the State of Georgia.
IN WITNESS WHEREOF, Printpack has caused this Agreement to be executed by
its duly-authorized officers and Employee has set his hand and seal as of this
17th day of December, 1984.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
------------------------------
Title: Vice President - Finance
----------------------------
/s/ Robert B. Paxton
-------------------------------
Employee
7
<PAGE> 9
DEFERRED INCOME AGREEMENT
SCHEDULE A
EMPLOYEE: Robert B. Paxton
7600 Hall Road
Fairburn, Georgia 30213
<TABLE>
<S> <C>
Annual amount of compensation to be deferred $10,000
--------
Number of years compensation is to be deferred Nine (9)
--------
PART A: Annual Benefit Upon Attaining Age 60: $40,000
--------
PART B: Annual Benefit if Death Occurs Before
Attaining Age 60: $40,000
--------
PART C: Annual Benefit if Disability Occurs
Before Attaining Age 60: $40,000
--------
PART D: Beneficiary of Benefits and Relationship:
</TABLE>
Primary: Name: Mary E. Paxton
--------------------------------
Relationship: Wife
------------------------
Address: 7600 Hall Road
-----------------------------
Fairburn, GA 31213
-----------------------------
Secondary: Name: Equal Shares to Debra L. Paxton,
--------------------------------
Robert B. Paxton, Jr. and
--------------------------------
Cynthia L. Paxton
--------------------------------
Relationship: Children
------------------------
Address: 7600 Hall Road
-----------------------------
Fairburn, GA 31213
-----------------------------
Approved as of December 17, 1984
By: PRINTPACK, INC.
By: /s/ R. Michael Hembree
-------------------------------------
Title: Vice President - Finance
---------------------------------
By: /s/ Robert B. Paxton
-----------------------------------------
Employee
8
<PAGE> 1
EXHIBIT 99.10
Deferred Compensation Agreement dated July 10, 1996 with Neil Williams.
<PAGE> 2
DEFERRED COMPENSATION AGREEMENT
This DEFERRED CONDENSATION AGREEMENT is made and entered into by and
between Printpack, Inc., a Georgia corporation ("Printpack"), and NEIL
WILLIAMS, an individual resident of the State of Georgia ("Director").
WHEREAS, in connection with his service as a director and advisor of
Printpack, Printpack has previously agreed to pay Director certain deferred
benefits and, in connection therewith, Printpack has purchased a policy of
insurance on the life of the Director; and
WHEREAS, Printpack and Director wish to record in writing the agreement
between them with respect to this deferred benefit.
NOW THEREFORE, in consideration of the covenants and conditions hereafter
set forth Printpack and Director agree follows:
1. PAYMENT OF DEFERRED INCOME. In consideration of Director's service to
Printpack as a director, Printpack shall, subject to the following provisions
of this Agreement, make payments (as described below) in the event Director
shall:
(a) attain age sixty-five (65) years;
(b) die; or
(c) become disabled.
2. ADDITIONAL COMPENSATION. In addition to any compensation paid to, or
benefits provided for Director, Director shall receive the deferred benefits
provided for under this Agreement.
3. BENEFITS AT AGE 65. Commencing with the date Director shall attain the
age of sixty-five (65) years, Printpack shall pay to Director the annual amount
of Forty Thousand and No/100 Dollars ($40,000.00) for fifteen (15) years. Each
annual amount shall be paid by Printpack in convenient installments, at least
semi-annually.
1
<PAGE> 3
4. DEATH. Anything in Paragraph 3 of this Agreement to the contrary
notwithstanding, in the event of Director's death, Printpack shall make only
the following payments:
(a) DEATH BEFORE 65. If Director shall die prior to attaining the
age of sixty-five (65) years, Printpack shall pay the annual amount of
Forty Thousand and No/100 Dollars ($40,000.00) for fifteen (15) years,
commencing with the year of Director's death, to the beneficiary
designated in of Schedule A hereto. Each annual amount shall be paid by
Printpack in convenient installments at least semi-annually.
(b) DEATH AFTER 65. If Director shall die after attaining the age
of sixty-five (65) years, Printpack shall continue to pay any portion of
the benefits referred to in Paragraph 3 of the Agreement unpaid at
Director's death (on the terms and conditions of said Paragraph) to the
beneficiary designated in Schedule A.
5. DISABILITY. Anything in Paragraph 3 of this Agreement to the contrary
notwithstanding, in the event of Director's disability, Printpack shall pay to
Director the annual amount of Forty Thousand and No/100 for fifteen (15) years.
Disability means a physical or mental condition which, in Printpack's
judgment, based on medical reports or other evidence Printpack deems
satisfactory, totally and permanently prevents Director from satisfactorily
performing his usual duties as a director of Printpack.
6. RIGHTS OF DIRECTOR AND TITLE. The payments to be made by Printpack
under this Agreement are unsecured obligations of Printpack only, and Director
is only a general creditor of Printpack in respect of them. Title to, and
beneficial ownership of, any asset, whether cash or investments which Printpack
may acquire or earmark to satisfy its obligations to Director under this
Agreement shall at all times remain with Printpack and neither the Director nor
his designated beneficiary nor any other
2
<PAGE> 4
person shall have any property interest whatsoever in any specific assets of
Printpack. Nothing contained in this Agreement, and no action taken pursuant
to the provisions of this Agreement, shall create or be construed to create a
trust of any kind, or a fiduciary relationship between Printpack and Director,
his designated beneficiary, or any other person. Any funds which may be
invested under the provisions at this Agreement shall continue for all purposes
to be a part of the general funds of Printpack and no person other than
Printpack shall by virtue of the provisions of this Agreement have any interest
in such funds. To the extent that any person acquires a right to receive
payments from Printpack under this Agreement such right shall be no greater
than the right of any unsecured general creditor of Printpack.
7. MAINTENANCE OF INSURANCE. Printpack has previously purchased and paid
the premiums on a policy of insurance on the life of Director and is the owner
of that policy. Printpack may, but shall not be required to, continue to hold
that policy for its own benefit or as a source of funds for payment of
Prinptack's obligations under this Agreement.
8. DESIGNATION OF BENEFICIARIES. Any beneficiary designated on Schedule A
may be revoked or changed at any time and from time to time by Director. Any
such revocation or change shall be in writing signed by Director and shall
become effective only when approved by Printpack. If Director shall not
designate a beneficiary to which payments are to be made after the death of
Director, or if any designated beneficiary for payments does not survive
Director, payments by Printpack subsequent to the death of Director or, as the
case may be, the death of such designated beneficiary, shall be made as
provided in this Agreement to the designated successor beneficiary or, if none,
to Director's estate. If a designated beneficiary survives Director but dies
prior to the completion of the payments contemplated to be made to that
designated beneficiary by Printpack in this Agreement the unpaid portion of
those payments at the death of the
3
<PAGE> 5
designated beneficiary shall be paid by Printpack as provided in
this Agreement to the designated successor beneficiary or, if none, to the
designated beneficiary's estate.
9. PAYMENTS TO INCOMPETENTS. If Printpack shall determine that any
person to whom any payment is to be made pursuant to this Agreement is unable
to care for his affairs because of illness, incapacity, or accident, or is a
minor, any payment due (unless a prior claim therefore shall have been made by
a duly-appointed guardian, committee or other legal representative of such
person) may be paid by Printpack to the spouse, a child, a parents or a
brother or sister of such person, or to any person deemed by Printpack to have
incurred expense for such person otherwise entitled to payment, in such manner
and proportions as Printpack may determine. Any such payment shall be a
complete discharge of the liabilities of Printpack under this Agreement.
10. BENEFITS. No benefits payable under this Agreement shall be deemed
salary or other compensation to Director for the purpose of computing benefits
to which he may be entitled under any group life insurance, long-term
disability insurance, profit-sharing or pension plan or other arrangement of
Printpack for the benefit of its employees. To the extent required by law at
the time payment of benefits is made, Printpack shall withhold any taxes
required to be withhold by the federal or any state or local government from
payments to be made under this Agreement. Director has been advised to
consult his tax adviser concerning the income and estate tax consequences of
the payments provided for herein, and Printpack makes no representations or
warranties concerning such consequences
11. IRREVOCABILITY AND BINDING EFFECT. This Agreement shall be
irrevocable. This Agreement shall be binding upon, and inure to the benefit
of, Printpack and its successors and assigns, and Director and his heirs,
executors, administrators, beneficiaries, and legal representatives.
4
<PAGE> 6
12. CONSTRUCTION. Printpack shall have full power and authority to
interpret construe and administer this Agreement and Printpack's
interpretations and construction of this Agreement, and actions under this
Agreement, shall be binding and conclusive on all persons for all purposes.
No officers employee or director of Printpack shall be liable to any person
for any action taken or omitted in connection with the interpretation and
administration of this Agreement unless attributable to such person's own
willful misconduct or lack of good faith.
13. OFFSET. If at the time payments or installments of payments are due
under this Agreement, Director or Director's beneficiary or estate is indebted
or obligated to Printpack, then remaining payments to Director or Director's
beneficiary or estate may at Printpack's discretion be reduced by the amount of
such indebtedness or obligation; provided, however, that Printpack's election
not to reduce any such payments shall not constitute a waiver or its claim for
any such indebtedness or obligation.
14. NO ASSIGNMENT. The rights of the Director (or any other persons) to
the payment of benefits under this Agreement shall not be assigned,
transferred, pledged or encumbered except by will or by the laws of descent and
distribution.
15. COOPERATION. Director will cooperate with Printpack by furnishing any
and all information requested by Printpack, taking such physical examinations
as Printpack may deem necessary and taking such other actions as Printpack may
request.
16. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed pursuant to the law of, the State of Georgia.
IN WITNESS WHEREOF, Printpack has caused this Agreement to be executed by
its duly-authorized officers and Director has set his hand and seal this ___
day of July, 1996.
PRINTPACK, INC.
By: /s/ R. Michael Hembree
------------------------------
Title: VP-Finance
---------------------------
/s/ Neil Williams
---------------------------------
Neil Williams
5
<PAGE> 7
DEFERRED COMPENSATION AGREEMENT
NEIL WILLIAMS
SCHEDULE A
Primary: Name: Sue Williams
Relationship: Wife
Address: 3 Nacoochee Place
Atlanta, Georgia 30305
Approved as of July 10, 1996
PRINTPACK, INC.
By: /s/ R. Michael Hembree
----------------------------
/s/ Neil Williams
----------------------------
Neil Williams
<PAGE> 1
EXHIBIT 99.11
Family Security Agreement dated April 4, 1986 with Dennis M. Love.
<PAGE> 2
FAMILY SECURITY AGREEMENT
This FAMILY SECURITY AGREEMENT is made and entered into by and between
Printpack, Inc., a Georgia corporation ("Printpack"), and the Employee
indicated on Schedule A attached hereto and made a part hereof. (Such Employee
and Schedule are hereafter referred to, respectively, as "Employee" and
"Schedule A").
W I T N E S S E T H
WHEREAS, to induce Employee to continue his employment with Printpack by
providing future financial security for Employee and his family, Printpack
elects to include Employee in its employee benefit plan referred to as the
"Printpack Family Security Plan."
NOW THEREFORE, in consideration of the covenants and conditions hereafter
set forth, Printpack and Employee agree as follows:
1. PAYMENTS UNDER THE PLAN. Printpack shall, subject to the
conditions set forth in this Agreement, make payments (as and to the
extent specified below) in the event Employee shall die or become
disabled and in the event that Employee's children should elect to
pursue further education after graduation from high school.
2. ADDITIONAL COMPENSATION. The benefits to be provided under
this Agreement are in addition to any other compensation paid to, or
benefits provided by Printpack for Employee. Nothing in this
Agreement shall be construed as limiting, varying or reducing any
provision or benefit to Employee, Employee's spouse or children
pursuant to any employment agreement, retirement plan (including any
qualified profit sharing plan), any health, disability or life
insurance policies or any other agreement between Printpack and
Employee.
1
<PAGE> 3
3. DEATH. In the event of Employee's death, Printpack shall make
the following payments:
(a) SPOUSAL BENEFIT. Printpack shall pay to Employee's spouse
an amount equal to fifty percent (50%) of Employee's total
cash compensation during Printpack's most recent fiscal year
ending prior to the date of Employee's death. Such benefit
will be paid as long as Employee's spouse may live.
(b) CHILDREN'S BENEFIT. For Employee's oldest dependent child
under the age of twenty-three (23), Printpack shall pay to
Employee's spouse an amount equal to ten percent (10%) of
Employee's total cash compensation during Printpack's most
recent fiscal year ending prior to the date of employee's
death. For each additional dependent child under the age of
twenty-three (23), an amount equal to an additional five
percent (5%) of such cash compensation will be paid to
Employee's spouse. The benefit for each child will be paid
until such child reaches the age of twenty-three (23).
(c) INFLATION INDEXED. The benefits to be paid in (a) and
(b) above will be increased annually for inflation. Such
increases will be limited to the lower of (x) the annual
increase in the All Urban Consumer's Cost of Living Index
published by the U.S. Government or the successor to such
index or (y) six percent (6%).
(d) DEATH OR DIVORCE OF SPOUSE. If Employee's spouse should
not survive him, or if Employee should not be legally married
on the date of his death, then for each of Employee's
dependent children under the age of twenty-three (23),
Printpack
- 2 -
<PAGE> 4
shall pay to the guardian(s) of those children an amount
equal to fifteen percent (15%) of Employee's total cash
compensation during Printpack's most recent fiscal year
ending prior to the date of Employee's death. Such payment
shall not, however, exceed fifteen thousand dollars ($15,000)
per year for each child; provided, however, that the benefits
will be inflation indexed as in Section 3(c). Such benefit
will be paid until the child reaches the age of twenty-three
(23).
4. DISABILITY. In the event of Employee's disability while an
employee of Printpack, Printpack shall pay to Employee Forty
Thousand Dollars ($40,000) each year as long as Employee may live in
a disabled condition. Such benefits will not be inflation indexed
as in Section 3(c). At Employee's death, payments as specified in
paragraph 3 of this Agreement will be made, using as the applicable
cash compensation base per Employee such Employee's total cash
compensation during Printpack's fiscal year ending prior to the date
of Employee's disability. Disability means a physical or mental
condition which, in Printpack's sole and absolute judgment, based on
medical reports or other evidence Printpack deems satisfactory,
totally and permanently prevents Employee from satisfactorily
performing his usual duties for Printpack or the duties of such
other position or job which Printpack or any other firm makes
available to him and for which Employee is qualified by reason of
his training, education or experience.
5. METHOD OF PAYMENT. All of the benefits specified in
Paragraphs 3 and 4 of this Agreement will be paid on a monthly basis
by determining the annual amount due and dividing that by twelve.
At Printpack's option such
- 3 -
<PAGE> 5
amounts may either be paid directly by Printpack or through a third
party arranged by Printpack to handle the transactions.
6. COLLEGE EXPENSES OF DEPENDENT CHILDREN. In addition to the
benefits under Paragraph 3 or 4 of this Agreement, Printpack will
pay to each of Employee's dependent children under the age of
twenty-three (23) $10,000 per year for each year such child pursues
a course of higher education after graduation from high school.
Printpack reserves the right to require Employee's children to be
employed by Printpack as a condition to receiving such payments. No
more than $40,000 will be paid to each child. If the child does not
pursue a course of higher education, no payments will be made. If
the child should pursue such a course for less than the four year
maximum, then payments will be made only as long as the course is
pursued. These payments will be made only if the child maintains a
passing grade average and, in Printpack's sole discretion, may be
made directly to the institution of higher learning. These payments
will be made as long as Employee continues to be employed with
Printpack and will be made in the event of Employee's death or
disability. The method of these payments will be determined by
Printpack when the payments begin.
7. ACTIVITY HARMFUL TO THE BEST INTEREST OF PRINTPACK. Anything
in this Agreement to the contrary notwithstanding, no payment of any
benefit shall be made, and all rights under the Agreement of the
Employee or Employee's spouse or children shall be forfeited if
either of the following events occurs:
(a) The Employee shall engage in any activity or
conduct which in Printpack's opinion (determined in the sole
discretion of Printpack's Board of Directors) is harmful to
Printpack's best interests;
- 4 -
<PAGE> 6
(b) In the event of Employee's retirement with the
consent of Printpack, he shall fail or refuse to provide
advice and counsel to Printpack when reasonably requested to
do so.
8. RIGHTS OF EMPLOYEE AND TITLE. The payments to be made by
Printpack under this Agreement are unsecured obligations of
Printpack only, and Employee is only a general creditor of Printpack
in respect of them. Title to, and beneficial ownership of, any
asset, whether cash or investments which Printpack may acquire or
identify to satisfy its obligations to Employee under this
Agreement, shall at all times remain with Printpack and neither the
Employee nor his spouse or children nor any other person shall have
any property interest whatsoever in any specific assets of
Printpack. Nothing contained in this Agreement, and no action taken
pursuant to the provisions of this Agreement, shall create or be
construed to create a trust of any kind, or a fiduciary relationship
between Printpack and Employee, his spouse or children or any other
person. Any funds which may be invested under the provisions of
this Agreement shall continue for all purposes to be a part of the
general funds of Printpack, and no person other than Printpack shall
by virtue of the provisions of this Agreement have any interest in
such funds. To the extent that any person acquires a right to
receive payments from Printpack under this Agreement, such right
shall be no greater than the right of any unsecured general creditor
of Printpack.
9. DESIGNATION OF FAMILY MEMBER. Any family member designated
in Schedule A may be revoked or changed at any time and from time to
time by Employee. Any such revocation or change shall be in writing
signed by Employee and shall become effective only when approved by
- 5 -
<PAGE> 7
Printpack. Only in the case of a surviving spouse or children or of
Employee's disability is Printpack required to make the payments
contemplated herein.
10. PAYMENTS TO INCOMPETENTS. If Printpack shall determine that
any person to whom any payment is to be made pursuant to this
Agreement is unable to care for his affairs because of illness,
incapacity, or accident, or is a minor, any payment due (unless a
prior claim therefore shall have been made by a duly-appointed
guardian, committee or other legal representative of such person)
may be paid by Printpack to the spouse, a child, a parent, or a
brother or sister, of such person, or to any person deemed by
Printpack to have incurred expense for such person otherwise
entitled to payment, in such manner and proportions as Printpack may
determine. Any such payment shall be a complete discharge of
Printpack's liabilities under this Agreement.
11. CONTINUING EMPLOYMENT. Nothing contained herein shall be
construed as conferring upon the Employee the right to continue in
the employ of Printpack in any capacity. Nor shall this Agreement
or anything contained in this Agreement be deemed to constitute an
Employment Agreement between Printpack and Employee. Nor shall any
provision of this Agreement restrict Printpack's right to
discharge Employee or restrict Employee's right to terminate his
employment.
12. TERMINATION OF EMPLOYMENT, VESTING. Anything in this Agreement to
the contrary notwithstanding, if for any reason Employee voluntarily
terminates his employment with Printpack (except for retirement
with the consent of Printpack), no payment of any benefit shall
- 6 -
<PAGE> 8
be made, and all rights under the Agreement of the
Employee or Employee's spouse or children shall be forfeited.
If Printpack terminates Employee's employment because of
Employee's activity or conduct which in Printpack's opinion
(determined in the sole discretion of Printpack's Board of
Directors) is harmful to Printpack's best interests, then no
payment of any benefit shall be made, and all rights under the
Agreement of the Employee or Employee's spouse or children shall
be forfeited.
If Printpack terminates Employee's employment for any other
reason, then payments of all benefits described herein will be
paid according to the following vesting schedule:
<TABLE>
<CAPTION>
Percentage of
If Termination occurs within Benefits to be Paid
---------------------------- -------------------
<S> <C>
5 years from date of agreement 0
5-6 years from date of agreement 50%
6-7 years from date of agreement 60%
7-8 years from date of agreement 70%
8-9 years from date of agreement 80%
9-10 years from date of agreement 90%
More than 10 yrs from date of agreement 100%
Termination following "Merger" 100%
</TABLE>
- 7 -
<PAGE> 9
"Merger", as used in the above vesting schedule means (a) a merger
or consolidation to which Printpack is a party and of which
Printpack is not the surviving corporation or (b) the acquisition
of all or substantially all of Printpack's assets or a majority of
Printpack's outstanding voting stock by a corporation, person, or
entity (which is not a stockholder of Printpack on the date of
this Agreement) in a single transaction or a series of related
transactions. Acquisition of stock by an executor or trustee or
descendant of J. Erskine Love, Jr. or Gay M. Love shall not be
included within the definition of Merger.
If Printpack terminates Employee's employment for any reason other
than Employee's activity or conduct which is harmful to
Printpack's best interests, then, rather than accept reduced
benefits according to the above vesting schedule, Employee or
Employee's subsequent employer, has the option of purchasing
Printpack's mechanism it is using to fund the Plan. the selling
price of such funding mechanism shall be equal to Printpack's
total after tax investment in the funding mechanism, including its
cost of funds at twelve percent (12%) annually, or the
interpolated terminal reserve of any life insurance policies
purchased in connection with funding the Plan, whichever is
greater. If this option is exercised and Printpack sells the
funding mechanism, then Printpack shall be relieved of all
obligations to Employee under this Agreement.
13. BENEFITS. No benefits payable under this Agreement shall be
deemed salary or other compensation to Employee for the purpose of
computing benefits to which he may be entitled under any group life
insurance, long-
- 8 -
<PAGE> 10
term disability insurance, profit-sharing or pension plan or
other arrangement of Printpack for the benefit of its employees. To
the extent required by law at the time payment of benefits is made,
Printpack shall withhold any taxes required to be withheld by the
federal or any state or local government from payments to be made
under this Agreement. Employee has been advised to consult his tax
adviser concerning the estate tax consequences of the payments
provided for herein, and Printpack makes no representations or
warranties concerning such consequences.
14. BINDING EFFECT. This Agreement shall be binding upon, and
inure to the benefit of, Printpack and its successors and assigns,
and Employee and his heirs, executors, administrators,
beneficiaries, and legal representatives.
15. CONSTRUCTION. Printpack shall have full power and authority
to interpret, construe and administer this Agreement. Printpack's
interpretations and construction of this Agreement, and actions
under this Agreement, shall be binding and conclusive on all persons
for all purposes. No officer, employee or director of Printpack
shall be liable to any person for any action taken or omitted in
connection with the interpretation and administration of this
Agreement unless attributable to such person's own willful
misconduct.
15. OFFSET. If at the time payments or installments of payments are due
under this Agreement, Employee or Employees spouse or children is
indebted or obligated to Printpack, then remaining payments to
Employee or Employee's spouse or children may at Printpack's
discretion be reduced by the amount of such indebtedness or
obligation; provided, however, that Printpack's election not to
reduce any such payments shall not constitute a waiver of its claim
for any such indebtedness or obligation.
- 9 -
<PAGE> 11
17. NO ASSIGNMENT. The rights of the Employee (or any other
persons) to the payment of benefits under this Agreement shall not
be assigned, transferred, pledged or encumbered except by will or by
the laws of descent and distribution.
18. EMPLOYEE COOPERATION. Employee will cooperate with Printpack
by furnishing any and all information requested by Printpack, taking
such physical examinations as Printpack may deem necessary and
taking such other actions as Printpack may request. If Employee
refuses to cooperate in this regard, Printpack shall have no further
obligation to Employee under this Agreement. In the event of
Employee's suicide during the first two years of this Agreement or
if Employee makes any material misstatement of information or
nondisclosure of medical history, then and in that event, at
Printpack's sole discretion no benefits shall be payable to Employee
or to Employee's spouse or children under this Agreement.
19. GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed pursuant to the law of, the State of
Georgia.
20. CHANGES IN INCOME TAX LAW. At the time this plan and
Agreement were adopted, several changes to the United States Federal
Tax Code had been proposed. Such changes, if ultimately made law,
could have a significant adverse impact on the method Printpack
intends to use to fund its future payments to Employee and/or his
family. Printpack reserves the right to modify or revoke this
Agreement if, in its sole discretion, changes in the law made prior
to January 1, 1988, significantly and adversely affect Printpack's
cost of funding this Agreement.
- 10 -
<PAGE> 12
IN WITNESS WHEREOF, Printpack has caused this Agreement to be executed by
its duly authorized officer and Employee has set his hand and seal as of this
4th day of April, 1986.
PRINTPACK, INC.
By: /s/ J. Erskine Love, Jr.
------------------------------
Title: President
/s/ Dennis M. Love
----------------------------------
Employee
- 11 -
<PAGE> 13
FAMILY SECURITY AGREEMENT
SCHEDULE A
<TABLE>
<S> <C> <C> <C>
EMPLOYEE: (Name) Dennis M. Love
(Address) 45 Chatsworth Place, N.W.
Atlanta, Georgia 30327
FAMILY MEMBERS:
Spouse: Name: Betts Culp Love Age 35 (2/21/57)
Address: 45 Chatsworth Place, N.W.
Atlanta, Georgia 30327
Children: Name: Catherine Culp Love Age 8 (11/25/84)
Name: Dennis M. Love, Jr. Age 5 (1/8/87)
Name: Alison Love Age 4 (1/18/88)
Approved as of January 4, 1993
By: PRINTPACK, INC.
By: /s/ R. Michael Hembree
---------------------------------------------
Title: VP-Finance
By: /s/ Dennis M. Love
---------------------------------------------
Employee
</TABLE>
- 12 -
<PAGE> 1
EXHIBIT 99.12
Family Security Agreement dated February 24, 1986 with R. Michael Hembree.
<PAGE> 2
FAMILY SECURITY AGREEMENT
This FAMILY SECURITY AGREEMENT is made and entered into by and between
Printpack, Inc., a Georgia corporation ("Printpack"), and the Employee
indicated on Schedule A attached hereto and made a part hereof. (Such Employee
and Schedule are hereafter referred to, respectively, as "Employee" and
"Schedule A").
W I T N E S S E T H
WHEREAS, to induce Employee to continue his employment with Printpack by
providing future financial security for Employee and his family, Printpack
elects to include Employee in its employee benefit plan referred to as the
"Printpack Family Security Plan."
NOW THEREFORE, in consideration of the covenants and conditions hereafter
set forth, Printpack and Employee agree as follows:
1. PAYMENTS UNDER THE PLAN. Printpack shall, subject to the
conditions set forth in this Agreement, make payments (as and to the
extent specified below) in the event Employee shall die or become
disabled and in the event that Employee's children should elect to
pursue further education after graduation from high school.
2. ADDITIONAL COMPENSATION. The benefits to be provided under
this Agreement are in addition to any other compensation paid to, or
benefits provided by Printpack for Employee. Nothing in this
Agreement shall be construed as limiting, varying or reducing any
provision or benefit to Employee, Employee's spouse or children
pursuant to any employment agreement, retirement plan (including
any qualified profit sharing plan), any
1
<PAGE> 3
health, disability or life insurance policies or any other agreement
between Printpack and Employee.
3. DEATH. In the event of Employee's death, Printpack shall make the
following payments:
(a) SPOUSAL BENEFIT. Printpack shall pay to Employee's spouse an
amount equal to fifty percent (50%) of Employee's total cash
compensation during Printpack's most recent fiscal year
ending prior to the date of Employee's death. Such benefit
will be paid as long as Employee's spouse may live.
(b) CHILDREN'S BENEFIT. For Employee's oldest dependent child
under the age of twenty-three (23), Printpack shall pay to
Employee's spouse an amount equal to ten percent
(10%) of Employee's total cash compensation during
Printpack's most recent fiscal year ending prior to the date
of employee's death. For each additional dependent child
under the age of twenty-three (23), an amount equal to an
additional five percent (5%) of such cash compensation will
be paid to Employee's spouse. The benefit for each child
will be paid until such child reaches the age of twenty-three
(23).
(c) INFLATION INDEXED. The benefits to be paid in (a) and (b)
above will be increased annually for inflation. Such
increases will be limited to the lower of (x) the annual
increase in the All Urban Consumer's Cost of Living Index
published by the U.S. Government or the successor to such
index or (y) six percent (6%).
- 2 -
<PAGE> 4
(d) DEATH OR DIVORCE OF SPOUSE. If Employee's spouse should not
survive him, or if Employee should not be legally married on
the date of his death, then for each of Employee's dependent
children under the age of twenty-three (23), Printpack shall
pay to the guardians of those children an amount equal
to fifteen percent (15%) of Employee's total cash
compensation during Printpack's most recent fiscal year
ending prior to the date of Employee's death. Such payment
shall not, however, exceed fifteen thousand dollars ($15,000)
per year for each child; provided, however, that the benefits
will be inflation indexed as in Section 3(c). Such benefit
will be paid until the child reaches the age of twenty-three
(23).
4. DISABILITY. In the event of Employee's disability while an
employee of Printpack, Printpack shall pay to Employee Forty
Thousand Dollars ($40,000) each year as long as Employee may live in
a disabled condition. Such benefit will not be inflation indexed as
in Section 3(c). At Employee's death, payments as specified in
paragraph 3 of this Agreement will be made, using as the applicable
cash compensation base per Employee such Employee's total cash
compensation during Printpack's fiscal year ending prior to the date
of Employee's disability. Disability means a physical or mental
condition which, in Printpack's sole and absolute judgment, based on
medical reports or other evidence Printpack deems satisfactory,
totally and permanently prevents Employee from satisfactorily
performing his usual duties for Printpack or the duties of such
other position or job which
- 3 -
<PAGE> 5
Printpack or any other firm makes available to him and for which
Employee is qualified by reason of his training, education or
experience.
5. METHOD OF PAYMENT. All the benefits specified in Paragraphs
3 and 4 of this Agreement will be paid on a monthly basis by
determining the annual amount due and dividing that by twelve. At
Printpack's option such amounts may either be paid directly by
Printpack or through a third party arranged by Printpack to handle
the transactions.
6. COLLEGE EXPENSES OF DEPENDENT CHILDREN. In addition to the.
benefits under Paragraph 3 or 4 of this Agreement, Printpack will
pay to each of Employee's dependent children under the age of
twenty-three (23) $10,000 per year for each year such child pursues
a course of higher education after graduation from high school.
Printpack reserves the right to require Employee's children to be
employed by Printpack as a condition to receiving such payments. No
more than $40,000 will be paid to each child. If the child does not
pursue a course of higher education, no payments will be made. If
the child should pursue such a course for less than the four year
maximum, then payments will be made only as long as the course is
pursued. These payments will be made only if the child maintains a
passing grade average and, in Printpack's sole discretion, may be
made directly to the institution of higher learning. These payments
will be made as long as Employee continues to be employed with
Printpack and will be made in the event of Employee's death or
disability. The method of these payments will be determined by
Printpack when the payments begin.
7. ACTIVITY HARMFUL TO THE BEST INTEREST OF PRINTPACK. Anything
in this Agreement to the contrary notwithstanding, no payment of any
benefit shall be made, and all rights under the Agreement of the
- 4 -
<PAGE> 6
Employee or Employee's spouse or children shall be forfeited if
either of the following events occurs:
(a) The Employee shall engage in any activity or conduct which in
Printpack's opinion (determined in the sole discretion of
Printpack's Board of Directors) is harmful to Printpack's best
interests;
(b) In the event of Employee's retirement with the consent of
Printpack, he shall fail or refuse to provide advice and
counsel to Printpack when reasonably requested to do so.
8. RIGHTS OF EMPLOYEE AND TITLE. The payments to be made by
Printpack under this Agreement are unsecured obligations of
Printpack only, and Employee is only a general creditor of Printpack
in respect of them. Title to, and beneficial ownership of, any
asset, whether cash or investments which Printpack may acquire or
identify to satisfy its obligations to Employee under this
Agreement, shall at all times remain with Printpack and neither the
Employee nor his spouse or children nor any other persons shall have
any property interest whatsoever in any specific assets of
Printpack. Nothing contained in this Agreement, and no action taken
pursuant to the provisions of this Agreement, shall create or be
construed to create a trust of any kind, or a fiduciary relationship
between Printpack and Employee, his spouse or children or any other
person. Any funds which may be invested under the provisions of
this Agreement shall continue for all purposes to be a part of the
general funds of Printpack, and no person other than Printpack shall
by virtue of the provisions of this Agreement have any interest in
such funds. To the extent that any person acquires a right to
receive payments from Printpack under this Agreement,
- 5 -
<PAGE> 7
such right shall be no greater than the right of any unsecured
general creditor of Printpack.
9. DESIGNATION OF FAMILY MEMBER. Any family member designated
in Schedule A may be revoked or changed at any time and from time to
time by Employee. Any such revocation or change shall be in writing
signed by Employee and shall become effective only when approved by
Printpack. Only in the case of a surviving spouse or children or of
Employee's disability is Printpack required to make the payments
contemplated herein.
10. PAYMENTS TO INCOMPETENTS. If Printpack shall determine that
any person to whom any payment is to be made pursuant to this
Agreement is unable to care for his affairs because of illness,
incapacity, or accident, or is a minor, any payment due (unless a
prior claim therefore shall have been made by a duly-appointed
guardian, committee or other legal representative of such person)
may be paid by Printpack to the spouse, a child, a parent, or a
brother or sister, of such person, or to any person deemed by
Printpack to have incurred expense for such person otherwise
entitled to payment, in such manner and proportions as Printpack may
determine. Any such payment shall be a complete discharge of
Printpack's liabilities under this Agreement.
11. CONTINUING EMPLOYMENT. Nothing contained herein shall be
construed as conferring upon the Employee the right to continue in
theemploy of Printpack in any capacity. Nor shall this Agreement
or anything contained in this Agreement be deemed to constitute an
Employment Agreement between Printpack and Employee. Nor shall any
provision of
- 6 -
<PAGE> 8
this Agreement restrict Printpack's right to discharge Employee or
restrict Employee's right to terminate his employment.
12. TERMINATION OF EMPLOYMENT, VESTING. Anything in this
Agreement to the contrary notwithstanding, if for any reason
Employee voluntarily terminates his employment with Printpack
(except for retirement with the consent of Printpack), no payment of
any benefit shall be made, and all rights under the Agreement of the
Employee or Employee's spouse or children shall be forfeited.
If Printpack terminates Employee's employment because of
Employee's activity or conduct which in Printpack's opinion
(determined in the sole discretion of Printpack's Board of
Directors) is harmful to Printpack's best interests, then no
payment of any benefit shall be made, and all rights under the
Agreement of the Employee or Employee's spouse or children shall
be forfeited.
If Printpack terminates Employee's employment for any other
reason, then payments of all benefits described herein will be
paid according to the following vesting schedule:
<TABLE>
<CAPTION>
Percentage of
If Termination occurs within Benefits to be Paid
- ---------------------------- -------------------
<S> <C>
5 years from date of agreement 0
5-6 years from date of agreement 50%
6-7 years from date of agreement 60%
7-8 years from date of agreement 70%
8-9 years from date of agreement 80%
</TABLE>
- 7 -
<PAGE> 9
<TABLE>
<S> <C>
9-10 years from date of agreement 90%
More than 10 yrs from date of agreement 100%
Termination following "Merger" 100%
</TABLE>
"Merger", as used in the above vesting schedule means (a) a merger
or consolidation to which Printpack is a party and of which
Printpack is not the surviving corporation or (b) the acquisition
of all or substantially all of Printpack's assets or a majority of
Printpack's outstanding voting stock by a corporation, person, or
entity (which is not a stockholder of Printpack on the date of
this Agreement) in a single transaction or a series of related
transactions. Acquisition of stock by an executor or trustee or
descendant of J. Erskine Love, Jr. or Gay M. Love shall not be
included within the definition of Merger.
If Printpack terminates Employee's employment for any reason other
than Employee's activity or conduct which is harmful to
Printpack's best interests, then, rather than accept reduced
benefits according to the above vesting schedule, Employee or
Employee's subsequent employer, has the option of purchasing
Printpack's mechanism it is using to fund the Plan. The selling
price of such funding mechanism shall be equal to Printpack's
total after tax investment in the funding mechanism, including its
cost of funds at twelve percent (12%) annually, or the
interpolated terminal reserve of any life insurance policies
purchased in connection with funding the Plan, whichever is
greater. If this option is exercised and Printpack sells the
funding mechanism, then Printpack shall be relieved of all
obligations to Employee under this Agreement.
- 8 -
<PAGE> 10
13. BENEFITS. No benefits payable under this Agreement shall be
deemed salary or other compensation to Employee for the purpose of
computing benefits to which he may be entitled under any group life
insurance, long-term disability insurance, profit sharing or pension
plan or other arrangement of Printpack for the benefit of its
employees. To the extent required by law at the time payment of
benefits is made, Printpack shall withhold any taxes required to be
withheld by the federal or any state or local government from
payments to be made under this Agreement. Employee has been advised
to consult his tax adviser concerning the estate tax consequences of
the payments provided for herein, and Printpack makes no
representations or warranties concerning such consequences.
14. BINDING EFFECT. This Agreement shall be binding upon, and
inure to the benefit of, Printpack and its successors and assigns,
and Employee and his heirs, executors, administrators,
beneficiaries, and legal representatives.
15. CONSTRUCTION. Printpack shall have full power and authority
to interpret, construe and administer this Agreement. Printpack's
interpretations and construction of this Agreement, and actions
under this Agreement, shall be binding and conclusive on all persons
for all purposes. No officer, employee or director of Printpack
shall be liable to any person for any action taken or omitted in
connection with the interpretation and administration of this
Agreement unless attributable to such person's own willful
misconduct.
16. OFFSET. If at the time payments or installments of payments
are due under this Agreement, Employee or Employees spouse or
children is indebted or obligated to Printpack, then remaining
payments to Employee or Employee's spouse or children may at
Printpack's discretion be reduced
- 9 -
<PAGE> 11
by the amount of such indebtedness or obligation; provided, however,
that Printpack's election not to reduce any such payments shall not
constitute a waiver of its claim for any such indebtedness or
obligation.
17. NO ASSIGNMENT. The rights of the Employee (or any other
persons) to the payment of benefits under this Agreement shall not
be assigned, transferred, pledged or encumbered except by will or by
the laws of descent and distribution.
18. EMPLOYEE COOPERATION. Employee will cooperate with Printpack
by furnishing any and all information requested by Printpack, taking
such physical examinations as Printpack may deem necessary and
taking such other actions as Printpack may request. If Employee
refuses to cooperate in this regard, Printpack shall have no further
obligation to Employee under this Agreement. In the event of
Employee's suicide during the first two years of this Agreement or
if Employee makes any material misstatement of information or
nondisclosure of medical history, then and in that event, at
Printpack's sole discretion no benefits shall be payable to Employee
or to Employee's spouse or children under this Agreement.
19. GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed pursuant to the law of, the State of
Georgia.
20. CHANGES IN INCOME TAX LAW. At the time this plan and Agreement
were adopted, several changes to the United States Federal Tax Code
had been proposed. Such changes, if ultimately made law, could have
a significant adverse impact on the method Printpack intends to use
to fund its future payments to Employee and/or his family. Printpack
reserves the right to modify or revoke this Agreement if, in its
sole discretion, changes in the law made prior to January 1, 1988,
significantly and adversely affect Printpack's cost of funding this
Agreement.
- 10 -
<PAGE> 12
IN WITNESS WHEREOF, Printpack has caused this Agreement to be
executed by its duly authorized officer and Employee has set his
hand and seal as of the 24th day of February, 1986.
PRINTPACK, INC.
By: /s/ J. Erskine Love, Jr.
----------------------------
Title: President
--------------------------
/s/ R. Michael Hembree
--------------------------------
Employee
- 11 -
<PAGE> 13
FAMILY SECURITY AGREEMENT
SCHEDULE A
<TABLE>
<S> <C> <C>
EMPLOYEE: (Name) R. Michael Hembree
(Address) 314 Hertford Circle
Decatur, GA 30030
FAMILY MEMBERS:
Spouse: Name: Pamela Hembree Age 36
Address: 314 Hertford Circle
Decatur, GA 30033
Children: Name: Laura Kathleen Age 9
Name: Walter Chad Age 7
Name: Leslie Karen Age 5
Name: Kevin Michael Age 1
</TABLE>
Approved as of February 24, 1986
By: PRINTPACK, INC.
By: /s/ J. Erskine Love, Jr.
-----------------------------------
Title: President
---------------------------------
By: /s/ R. Michael Hembree
--------------------------------------
Employee
- 12 -
<PAGE> 1
EXHIBIT 99.13
Family Security Agreement dated February 24, 1986 with Thomas J. Dunn, Jr.
<PAGE> 2
FAMILY SECURITY AGREEMENT
This FAMILY SECURITY AGREEMENT is made and entered into by and between
Printpack, Inc., a Georgia corporation ("Printpack"), and the Employee
indicated on Schedule A attached hereto and made a part hereof. (Such Employee
and Schedule are hereafter referred to, respectively, as "Employee" and
"Schedule A").
W I T N E S S E T H
WHEREAS, to induce Employee to continue his employment with Printpack by
providing future financial security for Employee and his family, Printpack
elects to include Employee in its employee benefit plan referred to as the
"Printpack Family Security Plan."
NOW THEREFORE, in consideration of the covenants and conditions hereafter
set forth, Printpack and Employee agree as follows:
1. PAYMENTS UNDER THE PLAN. Printpack shall, subject to the
conditions set forth in this Agreement, make payments (as and to the
extent specified below) in the event Employee shall die or become
disabled and in the event that Employee's children should elect to
pursue further education after graduation from high school.
2. ADDITIONAL COMPENSATION. The benefits to be provided under
this Agreement are in addition to any other compensation paid to, or
benefits provided by Printpack for Employee. Nothing in this
Agreement shall be construed as limiting, varying or reducing any
provision or benefit to Employee, Employee's spouse or children
pursuant to any employment agreement, retirement plan (including any
qualified profit sharing plan), any health, disability or life
insurance policies or any other agreement between Printpack and
Employee.
1
<PAGE> 3
3. DEATH. In the event of Employee's death, Printpack shall make
the following payments:
(a) SPOUSAL BENEFIT. Printpack shall pay to Employee's spouse an
amount equal to fifty percent (50%) of Employee's total cash
compensation during Printpack's most recent fiscal year ending
prior to the date of Employee's death. Such benefit will be
paid as long as Employee's spouse may live.
(b) CHILDREN'S BENEFIT. For Employee's oldest dependent child
under the age of twenty-three (23), Printpack shall pay to
Employee's spouse an amount equal to ten percent (10%) of
Employee's total cash compensation during Printpack's most
recent fiscal year ending prior to the date of employee's death.
For each additional dependent child under the age of
twenty-three (23), an amount equal to an additional five percent
(5%) of such cash compensation will be paid to Employee's
spouse. The benefit for each child will be paid until such
child reaches the age of twenty-three (23).
(c) INFLATION INDEXED. The benefits to be paid in (a) and (b)
above will be increased annually for inflation. Such increases
will be limited to the lower of (x) the annual increase in the
All Urban Consumer's Cost of Living Index published by the U.S.
Government or the successor to such index or (y) six percent
(6%).
(d) DEATH OR DIVORCE OF SPOUSE. If Employee's spouse should
not survive him, or if Employee should not be legally married on
the date of his death, then for each of Employee's dependent
children under the age of twenty-three (23), Printpack
- 2 -
<PAGE> 4
shall pay to the guardian(s) of those children an amount
equal to fifteen percent (15%) of Employee's total cash compensation
during Printpack's most recent fiscal year ending prior to the date
of Employee's death. Such payment shall not, however, exceed
fifteen thousand dollars ($15,000) per year for each child;
provided, however, that the benefits will be inflation indexed as in
Section 3(c). Such benefit will be paid until the child reaches the
age of twenty-three (23).
4. DISABILITY. In the event of Employee's disability while an
employee of Printpack, Printpack shall pay to Employee Forty
Thousand Dollars ($40,000) each year as long as Employee may live in
a disabled condition. Such benefits will not be inflation indexed
as in Section 3(c). At Employee's death, payments as specified in
paragraph 3 of this Agreement will be made, using as the applicable
cash compensation base per Employee such Employee's total cash
compensation during Printpack's fiscal year ending prior to the date
of Employee's disability. Disability means a physical or mental
condition which, in Printpack's sole and absolute judgment, based on
medical reports or other evidence Printpack deems satisfactory,
totally and permanently prevents Employee from satisfactorily
performing his usual duties for Printpack or the duties of such
other position or job which Printpack or any other firm makes
available to him and for which Employee is qualified by reason of
his training, education or experience.
5. METHOD OF PAYMENT. All of the benefits specified in
Paragraphs 3 and 4 of this Agreement will be paid on a monthly basis
by determining the annual amount due and dividing that by twelve.
At Printpack's option such
- 3 -
<PAGE> 5
amounts may either be paid directly by Printpack or through a
third party arranged by Printpack to handle the transactions.
6. COLLEGE EXPENSES OF DEPENDENT CHILDREN. In addition to the
benefits under Paragraph 3 or 4 of this Agreement, Printpack will
pay to each of Employee's dependent children under the age of
twenty-three (23) $10,000 per year for each year such child pursues
a course of higher education after graduation from high school.
Printpack reserves the right to require Employee's children to be
employed by Printpack as a condition to receiving such payments. No
more than $40,000 will be paid to each child. If the child does not
pursue a course of higher education, no payments will be made. If
the child should pursue such a course for less than the four year
maximum, then payments will be made only as long as the course is
pursued. These payments will be made only if the child maintains a
passing grade average and, in Printpack's sole discretion, may be
made directly to the institution of higher learning. These payments
will be made as long as Employee continues to be employed with
Printpack and will be made in the event of Employee's death or
disability. The method of these payments will be determined by
Printpack when the payments begin.
7. ACTIVITY HARMFUL TO THE BEST INTEREST OF PRINTPACK. Anything
in this Agreement to the contrary notwithstanding, no payment of any
benefit shall be made, and all rights under the Agreement of the
Employee or Employee's spouse or children shall be forfeited if
either of the following events occurs:
(a) The Employee shall engage in any activity or conduct which in
Printpack's opinion (determined in the sole discretion of
Printpack's Board of Directors) is harmful to Printpack's best
interests;
- 4 -
<PAGE> 6
(b) In the event of Employee's retirement with the consent of
Printpack, he shall fail or refuse to provide advice and
counsel to Printpack when reasonably requested to do so.
8. RIGHTS OF EMPLOYEE AND TITLE. The payments to be made by
Printpack under this Agreement are unsecured obligations of
Printpack only, and Employee is only a general creditor of Printpack
in respect of them. Title to, and beneficial ownership of, any
asset, whether cash or investments which Printpack may acquire or
identify to satisfy its obligations to Employee under this
Agreement, shall at all times remain with Printpack and neither the
Employee nor his spouse or children nor any other person shall have
any property interest whatsoever in any specific assets of
Printpack. Nothing contained in this Agreement, and no action taken
pursuant to the provisions of this Agreement, shall create or be
construed to create a trust of any kind, or a fiduciary relationship
between Printpack and Employee, his spouse or children or any other
person. Any funds which may be invested under the provisions of
this Agreement shall continue for all purposes to be a part of the
general funds of Printpack, and no person other than Printpack shall
by virtue of the provisions of this Agreement have any interest in
such funds. To the extent that any person acquires a right to
receive payments from Printpack under this Agreement, such right
shall be no greater than the right of any unsecured general creditor
of Printpack.
9. DESIGNATION OF FAMILY MEMBER. Any family member designated
in Schedule A may be revoked or changed at any time and from time to
time by Employee. Any such revocation or change shall be in writing
signed by Employee and shall become effective only when approved by
- 5 -
<PAGE> 7
Printpack. Only in the case of a surviving spouse or children or of
Employee's disability is Printpack required to make the payments
contemplated herein.
10. PAYMENTS TO INCOMPETENTS. If Printpack shall determine that
any person to whom any payment is to be made pursuant to this
Agreement is unable to care for his affairs because of illness,
incapacity, or accident, or is a minor, any payment due (unless a
prior claim therefore shall have been made by a duly-appointed
guardian, committee or other legal representative of such person)
may be paid by Printpack to the spouse, a child, a parent, or a
brother or sister, of such person, or to any person deemed by
Printpack to have incurred expense for such person otherwise
entitled to payment, in such manner and proportions as Printpack may
determine. Any such payment shall be a complete discharge of
Printpack's liabilities under this Agreement.
11. CONTINUING EMPLOYMENT. Nothing contained herein shall be
construed as conferring upon the Employee the right to continue in
the employ of Printpack in any capacity. Nor shall this Agreement
or anything contained in this Agreement be deemed to constitute an
Employment Agreement between Printpack and Employee. Nor shall any
provision of this Agreement restrict Printpack's right to
discharge Employee or restrict Employee's right to terminate his
employment.
12. TERMINATION OF EMPLOYMENT, VESTING. Anything in this
Agreement to the contrary notwithstanding, if for any reason
Employee voluntarily terminates his employment with Printpack
(except for retirement with the consent of Printpack), no payment of
any benefit shall
- 6 -
<PAGE> 8
be made, and all rights under the Agreement of the
Employee or Employee's spouse or children shall be forfeited.
If Printpack terminates Employee's employment because of
Employee's activity or conduct which in Printpack's opinion
(determined in the sole discretion of Printpack's Board of
Directors) is harmful to Printpack's best interests, then no
payment of any benefit shall be made, and all rights under the
Agreement of the Employee or Employee's spouse or children shall
be forfeited.
If Printpack terminates Employee's employment for any other
reason, then payments of all benefits described herein will be
paid according to the following vesting schedule:
<TABLE>
<CAPTION>
Percentage of
If Termination occurs within Benefits to be Paid
---------------------------- --------------------
<S> <C>
5 years from date of agreement 0
5-6 years from date of agreement 50%
6-7 years from date of agreement 60%
7-8 years from date of agreement 70%
8-9 years from date of agreement 80%
9-10 years from date of agreement 90%
More than 10 yrs from date of agreement 100%
Termination following "Merger" 100%
</TABLE>
- 7 -
<PAGE> 9
"Merger", as used in the above vesting schedule means (a) a merger
or consolidation to which Printpack is a party and of which
Printpack is not the surviving corporation or (b) the acquisition
of all or substantially all of Printpack's assets or a majority of
Printpack's outstanding voting stock by a corporation, person, or
entity (which is not a stockholder of Printpack on the date of
this Agreement) in a single transaction or a series of related
transactions. Acquisition of stock by an executor or trustee or
descendant of J. Erskine Love, Jr. or Gay M. Love shall not be
included within the definition of Merger.
If Printpack terminates Employee's employment for any reason other
than Employee's activity or conduct which is harmful to
Printpack's best interests, then, rather than accept reduced
benefits according to the above vesting schedule, Employee or
Employee's subsequent employer, has the option of purchasing
Printpack's mechanism it is using to fund the Plan. the selling
price of such funding mechanism shall be equal to Printpack's
total after tax investment in the funding mechanism, including its
cost of funds at twelve percent (12%) annually, or the
interpolated terminal reserve of any life insurance policies
purchased in connection with funding the Plan, whichever is
greater. If this option is exercised and Printpack sells the
funding mechanism, then Printpack shall be relieved of all
obligations to Employee under this Agreement.
13. BENEFITS. No benefits payable under this Agreement shall be
deemed salary or other compensation to Employee for the purpose of
computing benefits to which he may be entitled under any group life
insurance, long-
- 8 -
<PAGE> 10
term disability insurance, profit-sharing or pension
plan or other arrangement of Printpack for the benefit of its
employees. To the extent required by law at the time payment of
benefits is made, Printpack shall withhold any taxes required to be
withheld by the federal or any state or local government from
payments to be made under this Agreement. Employee has been advised
to consult his tax adviser concerning the estate tax consequences of
the payments provided for herein, and Printpack makes no
representations or warranties concerning such consequences.
14. BINDING EFFECT. This Agreement shall be binding upon, and
inure to the benefit of, Printpack and its successors and assigns,
and Employee and his heirs, executors, administrators,
beneficiaries, and legal representatives.
15. CONSTRUCTION. Printpack shall have full power and authority
to interpret, construe and administer this Agreement. Printpack's
interpretations and construction of this Agreement, and actions
under this Agreement, shall be binding and conclusive on all persons
for all purposes. No officer, employee or director of Printpack
shall be liable to any person for any action taken or omitted in
connection with the interpretation and administration of this
Agreement unless attributable to such person's own willful
misconduct.
15. OFFSET. If at the time payments or installments of payments are due
under this Agreement, Employee or Employees spouse or children is
indebted or obligated to Printpack, then remaining payments to
Employee or Employee's spouse or children may at Printpack's
discretion be reduced by the amount of such indebtedness or
obligation; provided, however, that Printpack's election not to
reduce any such payments shall not constitute a waiver of its claim
for any such indebtedness or obligation.
- 9 -
<PAGE> 11
17. NO ASSIGNMENT. The rights of the Employee (or any other
persons) to the payment of benefits under this Agreement shall not
be assigned, transferred, pledged or encumbered except by will or by
the laws of descent and distribution.
18. EMPLOYEE COOPERATION. Employee will cooperate with Printpack
by furnishing any and all information requested by Printpack, taking
such physical examinations as Printpack may deem necessary and
taking such other actions as Printpack may request. If Employee
refuses to cooperate in this regard, Printpack shall have no further
obligation to Employee under this Agreement. In the event of
Employee's suicide during the first two years of this Agreement or
if Employee makes any material misstatement of information or
nondisclosure of medical history, then and in that event, at
Printpack's sole discretion no benefits shall be payable to Employee
or to Employee's spouse or children under this Agreement.
19. GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed pursuant to the law of, the State of
Georgia.
20. CHANGES IN INCOME TAX LAW. At the time this plan and
Agreement were adopted, several changes to the United States Federal
Tax Code had been proposed. Such changes, if ultimately made law,
could have a significant adverse impact on the method Printpack
intends to use to fund its future payments to Employee and/or his
family. Printpack reserves the right to modify or revoke this
Agreement if, in its sole discretion, changes in the law made prior
to January 1, 1988, significantly and adversely affect Printpack's
cost of funding this Agreement.
- 10 -
<PAGE> 12
IN WITNESS WHEREOF, Printpack has caused this Agreement to be executed by
its duly authorized officer and Employee has set his hand and seal as of this
24th day of February, 1986.
PRINTPACK, INC.
By: /s/ J. Erskine Love, Jr.
---------------------------------
Title: President
/s/ Thomas J. Dunn, Jr.
------------------------------------
Employee
- 11 -
<PAGE> 13
FAMILY SECURITY AGREEMENT
SCHEDULE A
<TABLE>
<S> <C> <C> <C>
EMPLOYEE: (Name) Thomas J. Dunn, Jr.
(Address) 1872 Olde Village Road
Dunwoody, Georgia 30338
FAMILY MEMBERS:
Spouse: Name: Marcia Ann Dunn Age 39
Address: 1872 Olde Village Road
Dunwoody, Georgia 30338
Children: Name: Meghan Renee Age 13
Name: Peter Thomas Age 5
Name: Mark Colby Age 2
Name: Ann Colleen Age 22 Mo.
</TABLE>
Approved as of February 24, 1986 (Amended 10/19/88)
By: PRINTPACK, INC.
By: /s/ Dennis M. Love
------------------------------
Title: President
By: /s/ Thomas J. Dunn. Jr.
------------------------------
Employee
Date: 11/16/88
- 12 -
<PAGE> 1
EXHIBIT 99.14
Family Security Agreement dated February 24, 1986 with Nicklas D. Stucky.
<PAGE> 2
FAMILY SECURITY AGREEMENT
This FAMILY SECURITY AGREEMENT is made and entered into by and between
Printpack, Inc., a Georgia corporation ("Printpack"), and the Employee
indicated on Schedule A attached hereto and made a part hereof. (Such Employee
and Schedule are hereafter referred to, respectively, as "Employee" and
"Schedule A").
W I T N E S S E T H
WHEREAS, to induce Employee to continue his employment with Printpack by
providing future financial security for Employee and his family, Printpack
elects to include Employee in its employee benefit plan referred to as the
"Printpack Family Security Plan."
NOW THEREFORE, in consideration of the covenants and conditions hereafter
set forth, Printpack and Employee agree as follows:
1. PAYMENTS UNDER THE PLAN. Printpack shall, subject to the
conditions set forth in this Agreement, make payments (as and to the
extent specified below) in the event Employee shall die or become
disabled and in the event that Employee's children should elect to
pursue further education after graduation from high school.
2. ADDITIONAL COMPENSATION. The benefits to be provided under
this Agreement are in addition to any other compensation paid to, or
benefits provided by Printpack for Employee. Nothing in this
Agreement shall be construed as limiting, varying or reducing any
provision or benefit to Employee, Employee's spouse or children
pursuant to any employment agreement, retirement plan (including any
qualified profit sharing plan), any health, disability or life
insurance policies or any other agreement between Printpack and
Employee.
- 1 -
<PAGE> 3
3. DEATH. In the event of Employee's death, Printpack shall make
the following payments:
(a) SPOUSAL BENEFIT. Printpack shall pay to Employee's spouse an
amount equal to fifty percent (50%) of Employee's
total cash compensation during Printpack's most recent fiscal
year ending prior to the date of Employee's death. Such
benefit will be paid as long as Employee's spouse may live.
(b) CHILDREN'S BENEFIT. For Employee's oldest dependent child
under the age of twenty-three (23), Printpack shall pay to
Employee's spouse an amount equal to ten percent (10%) of
Employee's total cash compensation during Printpack's most
recent fiscal year ending prior to the date of employee's
death. For each additional dependent child under the age of
twenty-three (23), an amount equal to an additional five
percent (5%) of such cash compensation will be paid to
Employee's spouse. The benefit for each child will be paid
until such child reaches the age of twenty-three (23).
(c) INFLATION INDEXED. The benefits to be paid in (a) and
(b) above will be increased annually for inflation. Such
increases will be limited to the lower of (x) the annual
increase in the All Urban Consumer's Cost of Living Index
published by the U.S. Government or the successor to such
index or (y) six percent (6%).
(d) DEATH OR DIVORCE OF SPOUSE. If Employee's spouse should
not survive him, or if Employee should not be legally
married on the date of his death, then for each of
Employee's dependent children under the age of twenty-three
(23), Printpack
- 2 -
<PAGE> 4
shall pay to the guardian(s) of those children an
amount equal to fifteen percent (15%) of Employee's total
cash compensation during Printpack's most recent fiscal
year ending prior to the date of Employee's death. Such
payment shall not, however, exceed fifteen thousand dollars
($15,000) per year for each child; provided, however, that
the benefits will be inflation indexed as in Section 3(c).
Such benefit will be paid until the child reaches the age
of twenty-three (23).
4. DISABILITY. In the event of Employee's disability while an
employee of Printpack, Printpack shall pay to Employee Forty
Thousand Dollars ($40,000) each year as long as Employee may live in
a disabled condition. Such benefits will not be inflation indexed
as in Section 3(c). At Employee's death, payments as specified in
paragraph 3 of this Agreement will be made, using as the applicable
cash compensation base per Employee such Employee's total cash
compensation during Printpack's fiscal year ending prior to the date
of Employee's disability. Disability means a physical or mental
condition which, in Printpack's sole and absolute judgment, based on
medical reports or other evidence Printpack deems satisfactory,
totally and permanently prevents Employee from satisfactorily
performing his usual duties for Printpack or the duties of such
other position or job which Printpack or any other firm makes
available to him and for which Employee is qualified by reason of
his training, education or experience.
5. METHOD OF PAYMENT. All of the benefits specified in
Paragraphs 3 and 4 of this Agreement will be paid on a monthly basis
by determining the annual amount due and dividing that by twelve.
At Printpack's option such
- 3 -
<PAGE> 5
amounts may either be paid directly by Printpack or through a third
party arranged by Printpack to handle the transactions.
6. COLLEGE EXPENSES OF DEPENDENT CHILDREN. In addition to the
benefits under Paragraph 3 or 4 of this Agreement, Printpack will
pay to each of Employee's dependent children under the age of
twenty-three (23) $10,000 per year for each year such child pursues
a course of higher education after graduation from high school.
Printpack reserves the right to require Employee's children to be
employed by Printpack as a condition to receiving such payments. No
more than $40,000 will be paid to each child. If the child does not
pursue a course of higher education, no payments will be made. If
the child should pursue such a course for less than the four year
maximum, then payments will be made only as long as the course is
pursued. These payments will be made only if the child maintains a
passing grade average and, in Printpack's sole discretion, may be
made directly to the institution of higher learning. These payments
will be made as long as Employee continues to be employed with
Printpack and will be made in the event of Employee's death or
disability. The method of these payments will be determined by
Printpack when the payments begin.
7. ACTIVITY HARMFUL TO THE BEST INTEREST OF PRINTPACK. Anything
in this Agreement to the contrary notwithstanding, no payment of any
benefit shall be made, and all rights under the Agreement of the
Employee or Employee's spouse or children shall be forfeited if
either of the following events occurs:
(a) The Employee shall engage in any activity or conduct which in
Printpack's opinion (determined in the sole discretion of
Printpack's Board of Directors) is harmful to Printpack's best
interests;
- 4 -
<PAGE> 6
(b) In the event of Employee's retirement with the
consent of Printpack, he shall fail or refuse to provide
advice and counsel to Printpack when reasonably requested to
do so.
8. RIGHTS OF EMPLOYEE AND TITLE. The payments to be made by
Printpack under this Agreement are unsecured obligations of
Printpack only, and Employee is only a general creditor of Printpack
in respect of them. Title to, and beneficial ownership of, any
asset, whether cash or investments which Printpack may acquire or
identify to satisfy its obligations to Employee under this
Agreement, shall at all times remain with Printpack and neither the
Employee nor his spouse or children nor any other person shall have
any property interest whatsoever in any specific assets of
Printpack. Nothing contained in this Agreement, and no action taken
pursuant to the provisions of this Agreement, shall create or be
construed to create a trust of any kind, or a fiduciary relationship
between Printpack and Employee, his spouse or children or any other
person. Any funds which may be invested under the provisions of
this Agreement shall continue for all purposes to be a part of the
general funds of Printpack, and no person other than Printpack shall
by virtue of the provisions of this Agreement have any interest in
such funds. To the extent that any person acquires a right to
receive payments from Printpack under this Agreement, such right
shall be no greater than the right of any unsecured general creditor
of Printpack.
9. DESIGNATION OF FAMILY MEMBER. Any family member designated
in Schedule A may be revoked or changed at any time and from time to
time by Employee. Any such revocation or change shall be in writing
signed by Employee and shall become effective only when approved by
- 5 -
<PAGE> 7
Printpack. Only in the case of a surviving spouse or children or of
Employee's disability is Printpack required to make the payments
contemplated herein.
10. PAYMENTS TO INCOMPETENTS. If Printpack shall determine that
any person to whom any payment is to be made pursuant to this
Agreement is unable to care for his affairs because of illness,
incapacity, or accident, or is a minor, any payment due (unless a
prior claim therefore shall have been made by a duly-appointed
guardian, committee or other legal representative of such person)
may be paid by Printpack to the spouse, a child, a parent, or a
brother or sister, of such person, or to any person deemed by
Printpack to have incurred expense for such person otherwise
entitled to payment, in such manner and proportions as Printpack may
determine. Any such payment shall be a complete discharge of
Printpack's liabilities under this Agreement.
11. CONTINUING EMPLOYMENT. Nothing contained herein shall be
construed as conferring upon the Employee the right to continue in
the employ of Printpack in any capacity. Nor shall this Agreement
or anything contained in this Agreement be deemed to constitute an
Employment Agreement between Printpack and Employee. Nor shall any
provision of this Agreement restrict Printpack's right to
discharge Employee or restrict Employee's right to terminate his
employment.
12. TERMINATION OF EMPLOYMENT, VESTING. Anything in this
Agreement to the contrary notwithstanding, if for any reason
Employee voluntarily terminates his employment with Printpack
(except for retirement with the consent of Printpack), no payment of
any benefit shall
- 6 -
<PAGE> 8
be made, and all rights under the Agreement of the
Employee or Employee's spouse or children shall be forfeited.
If Printpack terminates Employee's employment because of
Employee's activity or conduct which in Printpack's opinion
(determined in the sole discretion of Printpack's Board of
Directors) is harmful to Printpack's best interests, then no
payment of any benefit shall be made, and all rights under the
Agreement of the Employee or Employee's spouse or children shall
be forfeited.
If Printpack terminates Employee's employment for any other
reason, then payments of all benefits described herein will be
paid according to the following vesting schedule:
<TABLE>
<CAPTION>
Percentage of
If Termination occurs within Benefits to be Paid
---------------------------- -------------------
<S> <C>
5 years from date of agreement 0
5-6 years from date of agreement 50%
6-7 years from date of agreement 60%
7-8 years from date of agreement 70%
8-9 years from date of agreement 80%
9-10 years from date of agreement 90%
More than 10 yrs from date of agreement 100%
Termination following "Merger" 100%
</TABLE>
- 7 -
<PAGE> 9
"Merger", as used in the above vesting schedule means (a) a merger
or consolidation to which Printpack is a party and of which
Printpack is not the surviving corporation or (b) the acquisition
of all or substantially all of Printpack's assets or a majority of
Printpack's outstanding voting stock by a corporation, person, or
entity (which is not a stockholder of Printpack on the date of
this Agreement) in a single transaction or a series of related
transactions. Acquisition of stock by an executor or trustee or
descendant of J. Erskine Love, Jr. or Gay M. Love shall not be
included within the definition of Merger.
If Printpack terminates Employee's employment for any reason other
than Employee's activity or conduct which is harmful to
Printpack's best interests, then, rather than accept reduced
benefits according to the above vesting schedule, Employee or
Employee's subsequent employer, has the option of purchasing
Printpack's mechanism it is using to fund the Plan. the selling
price of such funding mechanism shall be equal to Printpack's
total after tax investment in the funding mechanism, including its
cost of funds at twelve percent (12%) annually, or the
interpolated terminal reserve of any life insurance policies
purchased in connection with funding the Plan, whichever is
greater. If this option is exercised and Printpack sells the
funding mechanism, then Printpack shall be relieved of all
obligations to Employee under this Agreement.
13. BENEFITS. No benefits payable under this Agreement shall be
deemed salary or other compensation to Employee for the purpose of
computing benefits to which he may be entitled under any group life
insurance, long-
- 8 -
<PAGE> 10
term disability insurance, profit-sharing or pension
plan or other arrangement of Printpack for the benefit of its
employees. To the extent required by law at the time payment of
benefits is made, Printpack shall withhold any taxes required to be
withheld by the federal or any state or local government from
payments to be made under this Agreement. Employee has been advised
to consult his tax adviser concerning the estate tax consequences of
the payments provided for herein, and Printpack makes no
representations or warranties concerning such consequences.
14. BINDING EFFECT. This Agreement shall be binding upon, and
inure to the benefit of, Printpack and its successors and assigns,
and Employee and his heirs, executors, administrators,
beneficiaries, and legal representatives.
15. CONSTRUCTION. Printpack shall have full power and authority
to interpret, construe and administer this Agreement. Printpack's
interpretations and construction of this Agreement, and actions
under this Agreement, shall be binding and conclusive on all persons
for all purposes. No officer, employee or director of Printpack
shall be liable to any person for any action taken or omitted in
connection with the interpretation and administration of this
Agreement unless attributable to such person's own willful
misconduct.
15. OFFSET. If at the time payments or installments of payments
are due under this Agreement, Employee or Employees spouse or
children is indebted or obligated to Printpack, then remaining
payments to Employee or Employee's spouse or children may at
Printpack's discretion be reduced by the amount of such indebtedness
or obligation; provided, however, that Printpack's election not to
reduce any such payments shall not constitute a waiver of its
claim for any such indebtedness or obligation.
- 9 -
<PAGE> 11
17. NO ASSIGNMENT. The rights of the Employee (or any other
persons) to the payment of benefits under this Agreement shall not
be assigned, transferred, pledged or encumbered except by will or by
the laws of descent and distribution.
18. EMPLOYEE COOPERATION. Employee will cooperate with Printpack
by furnishing any and all information requested by Printpack, taking
such physical examinations as Printpack may deem necessary and
taking such other actions as Printpack may request. If Employee
refuses to cooperate in this regard, Printpack shall have no further
obligation to Employee under this Agreement. In the event of
Employee's suicide during the first two years of this Agreement or
if Employee makes any material misstatement of information or
nondisclosure of medical history, then and in that event, at
Printpack's sole discretion no benefits shall be payable to Employee
or to Employee's spouse or children under this Agreement.
19. GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed pursuant to the law of, the State of
Georgia.
20. CHANGES IN INCOME TAX LAW. At the time this plan and
Agreement were adopted, several changes to the United States Federal
Tax Code had been proposed. Such changes, if ultimately made law,
could have a significant adverse impact on the method Printpack
intends to use to fund its future payments to Employee and/or his
family. Printpack reserves the right to modify or revoke this
Agreement if, in its sole discretion, changes in the law made prior
to January 1, 1988, significantly and adversely affect Printpack's
cost of funding this Agreement.
- 10 -
<PAGE> 12
IN WITNESS WHEREOF, Printpack has caused this Agreement to be executed by
its duly authorized officer and Employee has set his hand and seal as of this
24th day of February, 1986.
PRINTPACK, INC.
By: /s/ J. Erskine Love, Jr.
----------------------------
Title: President
/s/ Nicklas D. Stucky
-------------------------------
Employee
- 11 -
<PAGE> 13
FAMILY SECURITY AGREEMENT
SCHEDULE A
<TABLE>
<S> <C> <C> <C>
EMPLOYEE: (Name) Nick Stucky
(Address) 3016 Harold Dean Drive
Marietta, GA 30066
FAMILY MEMBERS:
Spouse: Name: Elizabeth H. Stucky Age 31
Address: 3016 Harold Dean Drive
Marietta, GA 30066
Children: Name: Lyle Edward Age 15
Name: Monica Dawn Age 13
Approved as of February 24, 1986
By: PRINTPACK, INC.
By: /s/ J. Erskine Love, Jr.
-------------------------------------------
Title: President
By: /s/ Nick Stucky
-------------------------------------------
Employee
</TABLE>
- 12 -
<PAGE> 1
EXHIBIT 99.15
Amended and Restated Employment Agreement dated June 23, 1983 with J. Erskine
Love, Jr.
<PAGE> 2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement") made and
entered into this 23 day of June, 1983, by and between PRINTPACK, INC., a
Georgia corporation (hereinafter referred to as "Printpack"), and J. ERSKINE
LOVE, JR., a resident of Atlanta, Georgia (hereinafter referred to as
"Employee"),
W I T N E S S E T H:
WHEREAS, Employee has been instrumental and essential in the development
of Printpack over the years and has provided the necessary management and
direction to make Printpack profitable; and
WHEREAS, Employee is presently employed as President and chief executive
officer of Printpack pursuant to an Employment Contract dated June 4, 1975; and
WHEREAS, Printpack desires to acknowledge the past contributions of
Employee to Printpack and to secure the continued services of Employee in
connection with Printpack's business;
NOW, THEREFORE, it is mutually agreed as follows:
1. Employment. Printpack agrees to employ Employee and Employee agrees to
continue in the employment of Printpack as an executive officer thereof for an
original term of five (5) years from June 20, 1983. This Agreement shall
automatically be renewed from year to year after the original term ending five
(5) years from the date of this Agreement, unless terminated pursuant to
Paragraph 9 below. The term of this Agreement shall be the foregoing period
plus any period of time in which the Disability Benefit or Death Benefit is
payable hereunder.
- 1 -
<PAGE> 3
2. Services. Employee shall initially be President and shall provide
over-all management of Printpack. Employee shall provide such services to
Printpack consistent with serving as chief executive officer as may from time
to time be directed by the Board of Directors.
3. Compensation.
(a) As compensation for his services, Employee shall be paid a base
salary of $6,000.00 per week, beginning June 20, 1983, plus such raises
and bonuses as may be approved by the Board of Directors of Printpack.
Any bonus shall be paid in accordance with the direction of the Board of
Directors and all other compensation shall be payable in accordance with
the standard procedure for the payment of salaries of other employees of
Printpack. Employee shall also be entitled to customary fringe benefits
available to the chief executive officer of Printpack.
(b) All wages, bonuses or other amounts which Printpack may pay
Employee pursuant hereto are payments made or to be made as wages and in
the event of a valid termination of Employee's employment, either by
Printpack or Employee, Employee shall be entitled only to such wages or
bonuses as are accrued and owing under this contract at the time of such
termination and no longer.
4. Exclusive Arrangement. While employed hereunder, Employee shall devote
his best efforts and skill to the responsibilities and duties assigned to him
in the business of Printpack, serving as President and chief executive officer
of Printpack, and shall perform any reasonable duties, functions and tasks
under any other titles assigned to him from time to time by the Board of
Directors of Printpack, shall in all respects do his
- 2 -
<PAGE> 4
utmost to enhance and develop the best interest of Printpack, and shall well
and truly perform the several duties which may be assigned to him while
employed pursuant to this Agreement.
5. Confidential Information. Employee shall not disclose confidential
information and procedures of Printpack either during or after termination of
employment and acknowledges that such confidential information known to
Employee shall have been disclosed in a way to create a trust relationship
between Employee and Printpack, which must not be violated.
6. Covenant Not to Compete.
(a) Employee does not as of the execution hereof have any connection
with any enterprise engaged in the conversion of flexible packaging
material, either directly or indirectly, as an individual, a partner, a
director, an officer, or agent, consultant or counsel, other than the
ownership of securities of publicly held businesses.
(b) Employee agrees and covenants that he will not for a period
beginning on the date hereof and ending twelve (12) months after the
expiration or termination of this Agreement, whether in the employment of
Printpack or not, directly or indirectly, (i) enter the employ of or
render any services to, give advice, counsel, aid or direction to any
other person, firm, partnership, association or corporation engaged in a
competing business, unless such activity, employment, services, advice,
counsel, or direction is directly related to services performed hereunder
by Employee for Printpack, and (ii) during such time engage in such
business as above limited and defined on his own account, or become
financially interested therein, directly or indirectly, as an individual,
partner, stockholder,
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<PAGE> 5
director, officer, clerk, principal, agent or employee, without first
obtaining in any of the foregoing instances the written consent of
Printpack, which shall not be unreasonably withheld, but this
limitation shall not apply to the ownership by Employee of the securities
of any competing publicly held business.
(c) A competing business shall be a business engaged in the
conversion of flexible packaging material in competition with Printpack
and located in whole or in part within a circle having a radius of 100
miles with the center at the principal business office of Printpack at
the time of the expiration or termination of this Agreement.
7. Death Benefits.
(a) If Employee dies while in the full-time employment of Printpack
pursuant to this Agreement (or while receiving the Disability Benefit
provided hereunder), Printpack shall pay to Employee's wife, GAY
McLAWHORN LOVE, in equal monthly installments, the Death Benefit
hereinafter defined for the life of Employee's wife beginning on the
first day of the month immediately following the date of death of
Employee. In the event that Employee shall have no wife living at the
time that any monthly payment hereunder becomes due and payable,
Printpack shall have no further obligation to pay the Death Benefit under
this Agreement.
(b) The Death Benefit payable hereunder shall be based on the
following percentages of Employee's average annual total compensation for
the 36 month period ending on the last day of the month preceding the
month in which Employee dies, including base pay and bonus but not
including any fringe benefits. The amount of Employee's average annual
total compensation as determined in accordance with the above directions
shall be adjusted by any annual Increase in Cost of Living or any
Decrease in Cost of Living as provided in subparagraph (d)
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<PAGE> 6
hereof as soon as possible after each calendar year but effective January
1 of each such calendar year:
(i) The remainder of the calendar year in which Employees
dies - 100%;
(ii) The first full calendar year in which payments are
made - 75%;
(iii) Each calendar year thereafter - 50%.
(c) Notwithstanding the foregoing provisions, in the event
Employee is receiving a Disability Benefit pursuant to Paragraph 8
hereof, then the Disability Benefit payable hereunder shall become the
Death Benefit and shall be computed and paid as provided in this
Paragraph 7 with the date of Permanent Disability being treated as the
date of death of Employee and with Printpack receiving credit against the
Death Benefit for Disability Benefits paid prior to Employee's actual
death.
(d) Adjustment to Death Benefit or Disability Benefit.
(i) As promptly as practicable after the end of each
calendar year beginning at the end of the calendar year following
the calendar year in which Employee dies or becomes permanently
disabled, Printpack shall compute the Increase or the Decrease in
Cost of Living, using as the basis of such computation the
Consumer Price Index, All Cities and Selected Areas, All Urban
Consumers (1967 = 100), hereinafter called the "Index", published
by the Bureau of Labor Statistics of the United States Department
of Labor.
(ii) The index number in the column for Atlanta, entitled
"All Items" for the month of December of the year in which
Employee dies or becomes permanently disabled shall be the base
index number ("BIN"); and
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<PAGE> 7
the corresponding index number for the month of December of the
year just ended shall be the current index number ("CIN").
(iii) The Increase or the Decrease in Cost of Living for each
year shall be determined by dividing the CIN by the BIN and
subtracting the integer one from the quotient, in accordance with
the following formula:
<TABLE>
<S> <C>
Increase or Decrease in Cost of Living = CIN -1
---
BIN
</TABLE>
(iv) The Increase or the Decrease in Cost of Living,
multiplied by employee's total compensation referred to in
subparagraph (b) above shall be the increase or the decrease
required to be determined by subparagraph (b). Any portion of any
increase in the Death Benefit or the Disability Benefit
retroactively due shall be payable within five (5) days after
computation hereunder has been made.
(v) Appropriate adjustment shall be promptly made in case
there is a published amendment of index figures upon which the
computation is based.
(vi) If publication of the consumer price index is
discontinued, the parties hereto shall accept comparable
statistics on the cost of living for the City of Atlanta as
computed and published by an agency of the United States or by a
responsible financial periodical of recognized authority then to
be selected by the parties.
8. Disability Benefit. In the event that Employee is permanently disabled
as defined in the group insurance policy carried by Printpack with reference to
disability benefits and is thereby unable to perform the services required
hereunder, then and thereafter the Employee shall be entitled to a Disability
Benefit which is equal to the Death Benefit, with such payments beginning on
the first month after a determination of such
- 6 -
<PAGE> 8
permanent disability has been made and continuing until Employee's death and
with the date of the determination of such permanent disability being treated
as if it were the date of death for purposes of computing the benefit payable
hereunder, including any adjustments based on the Cost of Living as provided in
Paragraph 7(d).
9. Termination. Either party may terminate Employee's employment
hereunder for cause by giving not less than sixty (60) days written notice to
the other party of the intention to terminate such employment at any time prior
to Employee's death or permanent disability. The parties hereto by mutual
written agreement may elect to change the Death Benefit or Disability Benefit
at any time or from time to time. Printpack may not alter the Death Benefit
payable hereunder without the written consent of Employee's wife after
Employee's death.
10. Remedies. Printpack and Employee agree that, in the event of a breach
or threatened breach, by Employee of Paragraph 5 or Paragraph 6 of this
Agreement, or both of them, Printpack shall be entitled to an injunction
against such breach, and Employee agrees not to raise the defense that
Printpack has an adequate remedy at law. However, no specification in this
Agreement of a legal or equitable remedy shall be construed as a waiver or
prohibition against the pursuing of other legal or equitable remedies in the
event of breach of Paragraph 5 or 6 or other provisions of this Agreement.
11. Notices. Any notice required hereunder may be given by hand delivery
or by certified mail addressed to the address hereinafter set out beside each
party's name or at such other address of which any party may give the other
party written notice at any time and from time to time. Such notice shall be
deemed given when delivered by hand or deposited in the United States Mail,
postage prepaid.
- 7 -
<PAGE> 9
12. Miscellaneous. This Agreement shall be construed according to Georgia
law, shall be binding on and inure to the benefit of the parties and their
respective heirs, successors and assigns, supersedes all prior employment
agreements with Employee, contains severable and separate restrictive
provisions as to Employee, and may not be changed other than as herein
provided, except by an amendment in writing signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
affixed their seals in duplicate as of the day and year first above written.
PRINTPACK, INC.
Address: By: /s/ R. Michael Hembree (Dir. of Finance)
-----------------------------------------
Authorized Officer
Printpack, Inc.
4335 Wendell Drive, S.W.
P.O. Box 43687 Attest: /s/ L. Neil Williams, Jr. (Secretary)
Atlanta, Georgia 30378 --------------------------------------
Authorized Officer
Address: /s/ J. Erskine Love, Jr.
----------------------------------------------
J. ERSKINE LOVE, JR.
1771 Garraux Road, N.W.
Atlanta, Georgia 30327
- 8 -
<PAGE> 10
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<PAGE> 11
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING OF COSTS AND AT END OF
DESCRIPTION PERIOD EXPENSES DEDUCTIONS PERIOD
(IN THOUSANDS)
<S> <C> <C> <C> <C>
PRINTPACK, INC.
Year ended June 25, 1994
Allowance for Doubtful Accounts.............. $ 304 $ 100 $ (73) $ 331
========= ======== ======== ========
Year ended June 24, 1995
Allowance for Doubtful Accounts.............. $ 331 $ 645 $ (748) $ 228
========= ======== ======== ========
Year ended June 29, 1996
Allowance for Doubtful Accounts.............. $ 228 $ 560 $ (502) $ 286
========= ======== ======== ========
THE FLEXIBLE PACKAGING GROUP OF
JAMES RIVER CORPORATION
Year ended December 26, 1993
Allowance for Doubtful Accounts............... $ 576 $ 480 $ (368) $ 688
========= ======== ======== ========
Year ended December 25, 1994
Allowance for Doubtful Accounts............... $ 688 $ 200 $ (249) $ 639
========= ======== ======== ========
Year ended December 31, 1995
Allowance for Doubtful Accounts............... $ 639 $ 120 $ (333) $ 426
========= ======== ======== ========
</TABLE>
The notes to the combined financial statments are an integral part of this
schedule.
