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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 21, 1997
Rock-Tenn Company
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(Exact name of registrant as specified in its charter)
Georgia 0-23340 62-0342590
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(State of incorporation) (Commission File Number) (IRS Employer
Identification No.)
504 Thrasher Street 30071
Norcross, Georgia ----------
----------------- (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (770) 448-2193
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 21, 1997, Rock-Tenn Company (the "Company"), a Georgia
corporation, acquired all of the outstanding capital stock of the parent of
Wabash Corporation ("Wabash"), a Delaware corporation (the "Acquisition").
Waldorf Corporation ("Waldorf"), a Delaware corporation, is a wholly owned
operating subsidiary of Wabash. The Acquisition was consummated pursuant to a
Stock Purchase Agreement dated January 21, 1997 by and among the Company and the
shareholders of Wabash. The Acquisition was accounted for under the purchase
method of accounting. The Acquisition did not include Waldorf's Canadian
subsidiary, which was disposed of by Wabash prior to consummation of the
Acquisition.
The aggregate purchase price paid by the Company for all of the
outstanding capital stock of Wabash was approximately $239.0 million. In
addition, in connection with the Acquisition, the Company (i) made certain
payments on the closing date aggregating $32.6 million relating to the
settlement of a contingent interest agreement with a former creditor and the
termination of Waldorf's Stock Appreciation Rights Plan and (ii) became
indirectly liable for an aggregate of $142.3 million of net long-term debt of
Waldorf outstanding on such date. The Acquisition was financed with available
cash and borrowings aggregating $240.0 million under a new $400 million
revolving credit facility with SunTrust Bank, Atlanta. The aggregate purchase
price paid in the Acquisition was determined through arm's length negotiations
among representatives of the Company and the shareholders of Wabash.
Neither the Company nor any of its affiliates had, nor to the knowledge of
the Company, did any director or executive officer of the Company or any
associate of any such director or executive officer have, any material
relationship with Waldorf, Wabash or any shareholder of Wabash prior to the
Acquisition.
Waldorf, which is based in Saint Paul, Minnesota, is a leading
manufacturer of folding cartons and recycled clay-coated paperboard, as well as
a manufacturer of recycled corrugating medium. Waldorf operates six folding
carton plants, two paperboard mills, one corrugating medium mill and four paper
recovery facilities. The Company currently intends to use such facilities for
the same purposes for which such facilities were used prior to consummation of
the Acquisition.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The following audited financial statements and notes thereto of
Waldorf Corporation, together with a manually signed independent
auditors' report thereon, are included in Exhibit 99.2:
(i) Independent Auditors' Report;
(ii) Balance Sheets as of June 30, 1996 and 1995;
(iii) Statements of Income for the years ended June 30,
1996, 1995 and 1994;
(iv) Statements of Stockholders'Equity (Deficit) for the
years ended June 30, 1996, 1995 and 1994;
(v) Statements of Cash Flows for the years ended June
30, 1996, 1995 and 1994;and
(vi) Notes to Financial Statements.
The following unaudited financial statements and notes thereto
of Waldorf Corporation are also included in Exhibit 99.2:
(i) Balance Sheet as of September 30, 1996;
(ii) Statements of Income for the three months ended
September 30, 1996 and 1995;
(iii) Statement of Stockholders' Equity (Deficit) for the
three months ended September 30, 1996;
(iv) Statements of Cash flows for the three months ended
September 30, 1996 and 1995; and
(v) Notes to Financial Statements.
(b) Pro Forma Financial Information.
The unaudited Pro Forma Combined Consolidated Financial
Statements of Rock-Tenn Company for the year ended September 30,
1996 and as of and for the three months ended December 31, 1996,
and the notes thereto, are included in Exhibit 99.3.
(c) Exhibits.
2.1 Stock Purchase Agreement by and among Rock-Tenn Company
and the Shareholders of Wabash Corporation dated January
21, 1997. The Exhibits and Schedules which are
referenced in the table of contents and elsewhere in the
Stock Purchase Agreement are hereby incorporated by
reference. Such Exhibits and Schedules have been omitted
for purposes of this filing, but will be furnished to
the Commission supplementally upon request.
4.1 Credit Agreement dated as of January 21, 1997 among
Rock-Tenn Company, the Lenders named therein and
SunTrust Bank, Atlanta, as Agent.
23.1 Consent of Price Waterhouse LLP.
99.1* Text of Press Release of Rock-Tenn Company, dated
December 20, 1996.
99.2 Financial Statements of Waldorf Corporation, as
described in Item 7(a) of this Form 8-K.
99.3 Unaudited Pro Forma Combined Consolidated Financial
Statements of Rock-Tenn Company, as described in Item
7(b) of this Form 8-K.
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* Incorporated by reference to the Current Report on Form 8-K of Rock-Tenn
Company dated December 20, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 4, 1997 ROCK-TENN COMPANY
By: /s/ David C. Nicholson
---------------------------------
David C. Nicholson
Senior Vice President, Chief
Financial Officer, Secretary
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EXHIBIT INDEX
Exhibit Sequentially
No. Exhibit Numbered Page
- -------- ------- -------------
2.1 Stock Purchase Agreement by and
among Rock-Tenn Company and
the Shareholders of Wabash
Corporation dated January 21, 1997
4.1 Credit Agreement dated as of
January 21, 1997 among Rock-Tenn
Company, the Lenders named
therein and SunTrust Bank, Atlanta,
as Agent
23.1 Consent of Price Waterhouse LLP
99.1 Text of Press Release of Rock-Tenn
Company, dated December 20,
1996 (Incorporated by reference to
the Company's Current Report on
Form 8-K dated December 20,
1996)
99.2 Financial Statements of Waldorf
Corporation
99.3 Unaudited Pro Forma Combined
Consolidated Financial Statements
of Rock-Tenn Company
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
by and among
ROCK-TENN COMPANY
and
THE SHAREHOLDERS OF WABASH CORPORATION
Dated January 21, 1997
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TABLE OF CONTENTS
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PAGE
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STOCK ..................................................................................7
Section 1. Purchase of Shares............................................2
1.1 Transfer of Shares............................................2
1.2 Purchase Price................................................2
Section 2. Instruments of Conveyance and Closing.........................3
2.1 Transfer of Shares............................................3
2.2 Parent Transfer...............................................3
2.3 Further Assurances............................................3
2.4 Closing.......................................................3
Section 3. Representations and Warranties of Nonprofit Shareholders......4
3.1 Execution and Enforceability..................................4
3.2 Absence of Restrictions and Conflicts.........................4
3.3 Ownership of Shares...........................................4
3.4 Consents and Approvals........................................4
3.5 Legal Proceedings.............................................4
3.6 Brokers, Finders and Investment Bankers.......................5
Section 4. Representations and Warranties of the Frey Shareholders.......5
4.1 Organization..................................................5
4.2 Execution and Enforceability..................................5
4.3 Absence of Restrictions and Conflicts.........................5
4.4 Capitalization of Waldorf Entities; Ownership of Shares.......6
4.5 Ownership of Assets and Related Matters.......................7
4.6 Financial Statements.........................................10
4.7 No Undisclosed Liabilities...................................11
4.8 Absence of Certain Changes...................................12
4.9 Legal Proceedings............................................14
4.10 Licenses, Permits and Compliance with Law....................14
4.11 Material Contracts...........................................15
4.12 Tax Returns; Taxes...........................................17
4.13 Officers, Directors and Employees............................19
4.14 Employee Benefit Plans.......................................19
4.15 Labor Relations..............................................22
4.16 Insurance....................................................23
4.17 Environmental Matters........................................23
4.18 Intellectual Property........................................24
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4.19 Transactions with Affiliates. ..............................25
4.20 Customer Relations. .........................................25
4.21 Nondisclosed Payments. .....................................26
4.22 Brokers, Finders and Investment Bankers. ...................26
4.23 Disclosure. ................................................26
4.24 Waldorf Canada Advances. ...................................26
4.25 HEI Development..............................................26
Section 5. Representations and Warranties of Purchaser..................27
5.1 Organization. ..............................................27
5.2 Execution and Enforceability. ..............................27
5.3 Absence of Restrictions and Conflicts. .....................27
5.4 Brokers, Finders and Investment Bankers. ...................27
5.5 Disclosure. ................................................28
Section 6. Covenants ...................................................28
6.1 Sale of Waldorf Canada.......................................28
6.2 Sale of Wabash Assets. .....................................29
6.3 Conduct of Business Prior to Closing Date. .................29
6.4 No Solicitation; Acquisition Proposals. ....................31
6.5 Executive Payments. ........................................32
6.6 Fees and Expenses. .........................................32
6.7 Reasonable Efforts; Further Assurances; Cooperation. .......33
6.8 Access. ....................................................33
6.9 Confidentiality. ...........................................34
6.10 Public Announcements. ......................................34
6.11 Financial Statements and Other Information. .................34
6.12 Environmental-Related Work. ................................34
6.13 Interest Amount..............................................35
6.14 HEI Development. ...........................................35
6.15 Shareholder Net GECC Payment. ..............................35
Section 7. Conditions to Obligations of All Parties.....................36
7.1 No Injunction. .............................................36
7.2 HSR Act. ...................................................36
Section 8. Conditions to Obligations of Purchaser.......................36
8.1 Representations and Warranties. ............................36
8.2 No Material Adverse Effects. ...............................36
8.3 Performance of Obligations of Waldorf Entities
and Shareholders. ..........................................36
8.4 Consents. ..................................................36
8.5 Compliance Certificates. ...................................37
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8.6 Material Contracts. ........................................37
8.7 Canada Sale. ...............................................37
8.8 Executive Rights. ..........................................37
8.9 Certain Agreements. .........................................37
8.10 Resignation Letters. .......................................37
8.11 Stock Certificates. ........................................37
8.12 Canadian Deficit. ..........................................37
8.13 Legal Opinion. .............................................37
8.14 Payment of Wabash Notes. ...................................37
8.15 Assumption Agreement. ......................................38
8.16 Guaranty. ..................................................38
Section 9. Conditions to Obligations of Shareholders....................38
9.1 Representations and Warranties. ............................38
9.2 Performance of Obligations of Purchaser. ...................38
9.3 Consents. ..................................................38
9.4 Certificates. ..............................................38
9.5 Consulting Agreement. ......................................38
9.6 Parent Transfer. ...........................................38
9.7 Legal Opinion. .............................................38
9.8 Canadian Deficit.............................................39
Section 10. Indemnification. ............................................39
10.1 Indemnification Obligations of the Frey Shareholders. ......39
10.2 Indemnification Obligations of Purchaser. ..................41
10.3 Indemnification Procedure....................................42
10.4 Claims Period................................................44
10.5 Liability Limits.............................................45
10.6 Investigations...............................................47
Section 11. Termination..................................................47
11.1 Termination..................................................47
11.2 Specific Performance and Other Remedies......................48
11.3 Effect of Termination........................................48
Section 12. Shareholder Representative...................................48
Section 13. Miscellaneous................................................50
13.1 Notices......................................................50
13.2 Attachments..................................................51
13.3 Assignment; Successors in Interest...........................51
13.4 Number; Gender...............................................51
13.5 Captions.....................................................51
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13.6 Controlling Law; Integration; Amendment......................52
13.7 Severability.................................................52
13.8 Counterparts.................................................52
13.9 Enforcement of Certain Rights................................52
13.10 Waiver.......................................................52
13.11 Material and Knowledge Defined...............................52
13.12 Arbitration; Legal Proceedings...............................53
EXHIBITS
Exhibit A - Parent Transfer Agreement
Exhibit B - Stock Transfer Agreement
Exhibit C - Consulting Agreement
Exhibit D-1 - Noncompetition Agreement for Eugene U. Frey
Exhibit D-2 - Noncompetition Agreement for John J. Frey
Exhibit E - Opinion of Leonard, Street and Deinard
Exhibit F - Assumption Agreement
Exhibit G - Guaranty
Exhibit H - Opinion of King & Spalding
Exhibit I - Form of Affidavit
ANNEX
Annex I - Environmental Reports
Annex II - List of Annexes, Schedules and Exhibits
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STOCK PURCHASE AGREEMENT
THIS AGREEMENT, dated as of the 21st day of January, 1997, by and
among ROCK-TENN COMPANY, a Georgia corporation ("Purchaser"); EUGENE U. FREY, an
individual resident of the State of Florida (the "Individual Shareholder");
EUGENE U. FREY, MARY F. FREY and CAROL F. WOLFE, as Trustees of The Carol F.
Wolfe 1987 Trust U/A dated December 30, 1987; EUGENE U. FREY, MARY F. FREY and
JAMES R. FREY, as Trustees of The James R. Frey 1987 Trust U/A dated December
30, 1987; EUGENE U. FREY, MARY F. FREY and JOHN J. FREY, as Trustees of the John
J. Frey Trust U/A dated December 30, 1987; and Norwest Bank South Dakota, N.A.,
as Trustee of The Alternate Distributions Trust for James R. Frey, The Alternate
Distributions Trust for John J. Frey and The Alternate Distributions Trust for
Carol F. Wolfe created under The Mary F. Frey Family Trust U/A dated July 2,
1985, with Mary F. Frey as Donor (collectively the "Trusts" and together with
the Individual Shareholder being hereinafter referred to individually as a "Frey
Shareholder" and collectively as the "Frey Shareholders"); THE ARCHDIOCESE OF
SAINT PAUL AND MINNEAPOLIS CATHOLIC COMMUNITY FOUNDATION and THE SAINT PAUL
FOUNDATION (each individually a "Nonprofit Shareholder" and collectively the
"Nonprofit Shareholders") (the Individual Shareholder, the Trusts and the
Nonprofit Shareholders sometimes being hereinafter referred to as a
"Shareholder" and collectively as "Shareholders");
W I T N E S S E T H:
WHEREAS, Shareholders own all of the issued and outstanding shares of
capital stock of Wabash Corporation, a Delaware corporation ("Wabash");
WHEREAS, Wabash owns all of the issued and outstanding shares of
capital stock of Waldorf Corporation, a Delaware corporation ("Waldorf");
WHEREAS, Waldorf owns all of the issued and outstanding shares of
capital stock of Waldorf Inc., a corporation formed under the laws of Ontario
("Waldorf Canada"), and Best Recycling, Inc., an Iowa corporation ("Best"), and,
with Wabash, owns all of the issued and outstanding shares of capital stock of
Waldorf Realty, Inc., a Delaware corporation ("Waldorf Realty") (Wabash,
Waldorf, Best and Waldorf Realty are hereinafter sometimes referred to
individually as a "Waldorf Entity" and collectively as "Waldorf Entities"); and
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WHEREAS, subject to the terms and conditions of this Agreement,
Shareholders desire to sell, and Purchaser desires to purchase, all of the
issued and outstanding shares of capital stock of Wabash.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
Section 1. Purchase of Shares.
1.1 Transfer of Shares. On the terms and subject to the conditions set
forth in this Agreement, Shareholders hereby agree to sell, assign, transfer and
deliver to Purchaser on the "Closing Date" (as hereinafter defined), and
Purchaser hereby agrees to purchase from Shareholders on the Closing Date, the
number of shares of common stock of Wabash set forth on Schedule 1.1 hereto (all
of such shares being sold hereunder being hereinafter referred to collectively
as the "Shares"), which Shares constitute all of the issued and outstanding
shares of capital stock of Wabash.
1.2 Purchase Price. On the terms and subject to the conditions set
forth in this Agreement, in consideration for all of the Shares:
(a) On the Closing Date, Purchaser shall pay to Shareholders, by wire
transfer of immediately available funds to the respective accounts
specified in Schedule 1.2(a) hereto, an amount (the "Cash Payment") equal
to (i) the sum of (A) Two Hundred Thirty-Eight Million, Nine Hundred
Forty-Two Thousand, Two Hundred Eighty Dollars ($238,942,280), (B) the
combined amounts of the "Wabash Cash" and "Wabash Notes" (as hereinafter
defined), (C) any payments (the "Canadian Proceeds") received by Waldorf on
the disposition of its shares in, and receivables from, Waldorf Canada and
(D) the amount of the "Tax Benefit" (as defined in Section 6.1(e)), less
(ii) an amount equal to the sum of (A) the "Canadian Deficit" (as
hereinafter defined), (B) the "Parent Transfer Taxes" (as defined in
Section 6.2), (C) the "Excess Amount" (as defined in Section 6.5) and (D)
the "Shareholder Net GECC Payment" (as defined in Section 6.15). The amount
to be received by each Shareholder shall be an amount equal to (1) the Cash
Payment multiplied by (2) the respective "Percentage Interest" of such
Shareholder specified in Schedule 1.1 hereto. As used herein, the term
"Canadian Deficit" shall mean an amount equal to (A) the sum of all funds,
if any (the "Advances"), advanced to Waldorf Canada by the Waldorf Entities
after October 31, 1996 (irrespective of whether such funds were advanced as
loans, contributions, accounts receivable, payments to third parties on
behalf of Waldorf Canada (including, without limitation, payments to
suppliers and employees), or otherwise) less (B) all repayments, if any,
made by Waldorf Canada to the Waldorf Entities after October 31, 1996 but
prior to the Closing Date of the Advances and other amounts advanced to or
invested in Waldorf Canada by the Waldorf Entities. If the Canadian Deficit
is a negative number (i.e., it is a surplus) it shall act as an increase to
the
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purchase price rather than as a reduction thereof. As used herein, the
term "Wabash Cash" shall mean any and all cash (exclusive of the Canadian
Proceeds) held by Wabash as of the Closing Date, and the term "Wabash
Notes" shall mean any and all notes or other receivables outstanding as of
the Closing Date which are payable by the Shareholders to Wabash and not
otherwise transferred to the "Shareholder Representative" (as hereinafter
defined) pursuant to Section 1.2(b).
(b) On or prior to the Closing Date, the parties shall cause Wabash to
transfer, convey and assign to the Shareholder Representative for the
benefit of the Frey Shareholders (or, at the written election of the Frey
Shareholders, to a third party designated by the Frey Shareholders) the
assets of Wabash identified in Schedule 1.2(b) (which will not include (i)
the Wabash Cash, (ii) the Wabash Notes, if any, (iii) the Canadian
Proceeds, (iv) the capital stock of Waldorf Realty, (v) the capital stock
of Waldorf, (vi) Wabash's rights pursuant to the "Champion Agreement" (as
hereinafter defined), the "Trident Agreement" (as hereinafter defined), and
the "Tax Escrow Agreement" (as hereinafter defined), (vii) the books and
records of Wabash and (viii) except as provided in Section 6.14, Wabash's
ownership interest in HEI Development, Inc., a Delaware corporation ("HEI
Development")) (all such assets identified in Schedule 1.2(b) being
hereinafter referred to as the "Ancillary Assets") (collectively, the
"Parent Transfer"), as more particularly described in the Transfer
Agreement attached hereto as Exhibit A (the "Parent Transfer Agreement").
Section 2. Instruments of Conveyance and Closing.
2.1 Transfer of Shares. On the Closing Date, Shareholders shall
deliver all stock certificates representing the Shares to Purchaser, duly
endorsed in blank.
2.2 Parent Transfer. On or prior to the Closing Date, Wabash and the
Frey Shareholders (or their designee) shall execute and deliver the Parent
Transfer Agreement to effect the transactions contemplated thereby.
2.3 Further Assurances. Each party hereto shall on the Closing Date
and from time to time thereafter at any other party's reasonable request and
without further consideration execute and deliver to such other party such
instruments of transfer, conveyance and assignment in addition to those
delivered pursuant to Section 2.1 or 2.2 as shall be reasonably requested to
transfer, convey and assign more effectively the Shares to Purchaser or the
Ancillary Assets to the Shareholder Representative.
2.4 Closing. The actions to be taken pursuant to Sections 2 and 6.1
hereof and the delivery of the other instruments, certificates and legal
opinions required under Sections 8 and 9 hereof (collectively, the "Closing"),
shall take place at the offices of King & Spalding, 191 Peachtree Street,
Atlanta, Georgia 30303. Subject to the satisfaction (or waiver) of all of the
conditions set forth in Sections 7, 8 and 9 and provided that this Agreement has
not otherwise
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been terminated in accordance with Section 11.1, the Closing shall occur on the
later of January 21, 1997 or the date which is three business days after the
date as of which all of the conditions set forth in Sections 7, 8, and 9 have
been satisfied (or waived) (the date and time of the closing hereunder being
referred to herein as the "Closing Date").
Section 3. Representations and Warranties of Nonprofit Shareholders
Each Nonprofit Shareholder, individually and not jointly (and only
with respect to that Nonprofit Shareholder), hereby represents and warrants to
Purchaser as follows:
3.1 Execution and Enforceability. This Agreement has been, and each
other certificate or instrument to be executed and delivered by the Nonprofit
Shareholders in connection with the transactions contemplated by this Agreement
will be as of the Closing Date, duly executed and delivered by the Nonprofit
Shareholders and this Agreement constitutes the valid and legally binding
agreement of the Nonprofit Shareholders, enforceable against each Nonprofit
Shareholder in accordance with its terms.
3.2 Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement, the consummation of the transactions contemplated
by this Agreement and the fulfillment of and compliance with the terms and
conditions of this Agreement do not, with or without the passing of time or the
giving of notice or both, violate or conflict with, constitute a breach of or
default under, result in the loss of any benefit under, or permit the
acceleration of any obligation under, (a) any term or provision of the charter
documents or bylaws of the Nonprofit Shareholders, (b) any judgment, decree or
order of any court or governmental authority or agency to which any of the
Nonprofit Shareholders is a party or by which any of the Nonprofit Shareholders
or any of their respective properties is bound or (c) any statute, law, rule or
regulation applicable to the Nonprofit Shareholders.
3.3 Ownership of Shares. Each Nonprofit Shareholder owns, beneficially
and of record, and has the right to transfer to Purchaser, all the shares set
forth opposite the Nonprofit Shareholders' name as set forth in Schedule 1.1,
free and clear of any liens (the shares transferred by the Nonprofit
Shareholders being referred to as the "Nonprofit Shares"). At the Closing the
Nonprofit Shareholders will transfer and convey, and Purchaser will acquire,
good, valid and marketable title to the Nonprofit Shares, free and clear of any
liens.
3.4 Consents and Approvals. Except as set forth on Schedule 3.4
hereto, wit respect to the sale of the Nonprofit Shares hereunder, no filing
with, and no permit, authorization, consent or approval of any authority or any
other person is necessary for the consummation by the Nonprofit Shareholders of
the transactions contemplated by this Agreement.
3.5 Legal Proceedings. With respect to the sale of the Nonprofit
Shares hereunder, there are no suits, actions, claims, proceedings or
investigations pending or, to the
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best knowledge of the Nonprofit Shareholders, threatened against, relating to or
involving the Nonprofit Shareholders or any of their officers, directors or
trustees, before any court, arbitrator or administrative or governmental body
affecting the sale of the Nonprofit Shares hereunder. None of the Nonprofit
Shareholders is subject to any judgment, decree, injunction, rule or order of
any court, arbitrator or administrative or governmental body affecting the sale
of the Nonprofit Shares hereunder. No action or proceeding has been instituted
against any of the Nonprofit Shareholders before any court or other governmental
body by any person or public authority seeking to restrain or prohibit the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
3.6 Brokers, Finders and Investment Bankers. None of the Nonprofit
Shareholders has employed any broker, finder, investment banker or other
intermediary or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees, finders' fees or other similar fees in
connection with the transactions contemplated herein.
Section 4. Representations and Warranties of the Frey Shareholders.
The Frey Shareholders hereby, jointly and severally, represent and
warrant to Purchaser as follows:
4.1 Organization. Except as disclosed in Schedule 4.1, each of the
Waldorf Entities is a corporation duly organized, validly existing and in good
standing under the laws under which it was formed and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Except as disclosed in Schedule 4.1, each of
the Waldorf Entities is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the character of
its activities requires such qualification. Waldorf has heretofore made
available to Purchaser correct and complete copies of the charter documents and
bylaws as currently in effect and the minute books and stock records of the
Waldorf Entities. Schedule 4.1 contains a correct and complete list of the
locations of incorporation and the jurisdictions in which the Waldorf Entities
are qualified to do business as foreign corporations.
4.2 Execution and Enforceability. This Agreement has been, and each
other certificate, agreement, document or instrument to be executed and
delivered by Shareholders, any Shareholder or Shareholder Representative (on
behalf of any Shareholder) in connection with the transactions contemplated by
this Agreement (the "Waldorf Ancillary Documents") will be as of the Closing
Date, duly executed and delivered by Shareholders, any Shareholder or
Shareholder Representative (on behalf of any Shareholder) and constitutes or
will constitute (as the case may be) the valid and legally binding agreement(s)
of such Shareholder, enforceable against each such Shareholder in accordance
with their respective terms.
4.3 Absence of Restrictions and Conflicts. Except as set forth in
Schedule 4.3, the execution, delivery and performance of this Agreement and the
Waldorf Ancillary
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Documents, the consummation of the transactions contemplated by this Agreement
and the Waldorf Ancillary Documents and the fulfillment of and compliance with
the terms and conditions of this Agreement and the Waldorf Ancillary Documents
do not and will not (as the case may be), with or without the passing of time or
the giving of notice or both, violate or conflict with, constitute a breach of
or default under, result in the loss of any benefit under, or permit the
acceleration of any obligation under, (a) any term or provision of the charter
documents or bylaws of the Waldorf Entities or Waldorf Canada, (b) any "Waldorf
Contract", "Real Property Lease" or "Personal Property Lease" (all as
hereinafter defined), (c) any judgment, decree or order of any court or
governmental authority or agency to which any of the Waldorf Entities is a party
or by which any of the Waldorf Entities or any of their respective properties is
bound or (d) any statute, law, rule or regulation applicable to the Waldorf
Entities. Except for compliance with the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency or public or regulatory
unit, agency, body or authority with respect to the Waldorf Entities is required
in connection with the execution, delivery or performance of this Agreement or
the Waldorf Ancillary Documents by Shareholders or the consummation of the
transactions contemplated by this Agreement or the Waldorf Ancillary Documents
by Shareholders.
4.4 Capitalization of Waldorf Entities; Ownership of Shares.
(a) The authorized capital stock of Wabash consists of 2,500 shares of
common stock, $1 par value per share ("Wabash Common Stock"). As of the
date hereof, there are 796.24 shares of Wabash Common Stock issued and
outstanding. Each share of Wabash Common Stock outstanding as of the date
hereof is duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights and is owned by Shareholders as set forth in
Schedule 1.1, and no such shares have been issued in violation of any
federal or state securities law. The authorized capital stock of Waldorf
consists of 12,500 shares of common stock, $1 par value per share ("Waldorf
Common Stock"). As of the date hereof, there are 10,000 shares of Waldorf
Common Stock issued and outstanding. Each share of Waldorf Common Stock
outstanding as of the date hereof is duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights, and is owned by Wabash,
and no such shares have been issued in violation of any federal or state
securities law. The authorized capital stock of Best consists of 100,000
shares of common stock, $10 par value per share ("Best Common Stock"). As
of the date hereof, there are 200 shares of Best Common Stock issued and
outstanding. Each share of Best Common Stock outstanding as of the date
hereof is duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights, and is owned by Waldorf, and no such shares have
been issued in violation of any federal or state securities law. The
authorized capital stock of Waldorf Realty consists of 2,500 shares of
common stock, $1 par value per share ("Waldorf Realty Common Stock"). As of
the date hereof, there are 1,000 shares of Waldorf Realty Common Stock
issued and outstanding. Each share of Waldorf Realty Common Stock
outstanding as of the date hereof is duly authorized, validly issued,
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fully paid, nonassessable and free of preemptive rights, and is owned
by Wabash and Waldorf as set forth in Schedule 4.4, and no such shares have
been issued in violation of any federal or state securities law. Except as
set forth in this Section 4.4 or in Schedule 4.4, there are no shares of
capital stock of the Waldorf Entities outstanding, and there are no
subscriptions, options, convertible securities, calls, puts, rights,
warrants or other agreements, claims or commitments of any nature
whatsoever obligating any of the Waldorf Entities to purchase, redeem,
issue, transfer, deliver or sell, or cause to be purchased, redeemed,
issued, transferred, delivered or sold, additional shares of the capital
stock or other securities of the Waldorf Entities or obligating the Waldorf
Entities to grant, extend or enter into any such agreement or commitment.
No prior offer, issue, redemption, call, purchase, sale, transfer,
negotiation or other transaction of any nature with respect to the capital
stock or equity interests of the Waldorf Entities has given or may give
rise to any claim or action by any person and no fact or circumstance
exists which could give rise to any such right, claim or action on behalf
of any person. Except as set forth in Schedule 4.4, no corporation or other
organization has been merged with or into any of the Waldorf Entities.
There are no dividends which have accrued or been declared but are unpaid
on the capital stock of any of the Waldorf Entities, and, except as set
forth on Schedule 4.4, there are no stock appreciation, phantom stock or
similar rights with respect to any of the Waldorf Entities. Except as set
forth in this Section 4.4 or in Schedule 4.4, none of the Waldorf Entities
has any direct or indirect equity interest (by stock ownership, partnership
interest, joint venture interest or otherwise) in any other corporation,
partnership, joint venture, firm, association or business enterprise.
(b) Each Frey Shareholder owns, beneficially and of record, and has
the right to transfer to Purchaser, all shares set forth opposite the Frey
Shareholder's name as set forth in Schedule 1.1, free and clear of any
liens. At the Closing the Shareholders will transfer and convey, and
Purchaser will acquire, good, valid and marketable title to the Shares,
free and clear of any liens.
4.5 Ownership of Assets and Related Matters.
(a) Real Property. Schedule 4.5(a) sets forth a true, correct and
complete list and legal description of all of the real property owned by
Waldorf or Waldorf Realty (the "Real Property"). Except as set forth in
Schedule 4.5(a), Waldorf or Waldorf Realty has good, marketable and
insurable title to the Real Property free and clear of all liens, pledges,
security interests, charges, claims, leasehold interests, tenancies,
restrictions and encumbrances of any nature whatsoever other than (i) liens
for taxes not yet due and payable, (ii) statutory liens of landlords and
liens of carriers, warehousemen, mechanics, materialmen and repairmen
incurred in the ordinary course of business and not yet delinquent, and
(iii) zoning, building or other restrictions, variances, covenants,
rights-of-way, encumbrances, encroachments, easements and other minor
irregularities in title, none of which, individually or in the aggregate,
(1) interfere with the present use or occupancy of any of the Real Property
by Waldorf or Waldorf Realty, (2) materially
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decrease the value thereof, or (3) would impair the ability of Waldorf
or Waldorf Realty to sell any such Real Property (the foregoing, together
with any matters identified in Schedule 4.5(a), are hereinafter referred to
collectively as "Permitted Liens"). Waldorf or Waldorf Realty is in
peaceful and undisturbed possession of all of the Real Property and all
buildings, structures, fixtures and improvements located thereon, and
Waldorf or Waldorf Realty has adequate rights of ingress and egress with
respect to such Real Property and the buildings, structures, fixtures and
improvements located thereon. Best owns no real property.
Waldorf has heretofore delivered to Purchaser correct and complete
copies of all deeds, mortgages, deeds of trust, title insurance policies,
surveys and similar documents (including all amendments thereof) in the
possession of the Waldorf Entities relating to the Real Property.
Except for Permitted Liens, no Real Property is subject to any
material rights-of way, building use restrictions, exceptions, variances,
reservations or limitations of any nature whatsoever, not of record.
(b) Leases. Schedule 4.5(b) sets forth a true, correct and complete
list of all leases and agreements granting Waldorf and Best possession of
or rights to real property (the "Real Property Leases") and all material
leases and agreements granting Waldorf and Best possession of or rights to
personal property (excluding leases for office equipment, telephones, fax
machines and copiers) (the "Personal Property Leases"). Waldorf has
heretofore delivered to Purchaser correct and complete copies of all of the
Real Property Leases and the Personal Property Leases. All of the Real
Property Leases and the Personal Property Leases are valid and enforceable
in accordance with their respective terms with respect to Waldorf and Best
and, to the best knowledge of Shareholders, each other party thereto
(except as enforcement may be limited by principles of equity, including
reasonableness, fair dealing and limitations on self-help). There are no
existing defaults of Waldorf Entities with respect to any Real Property
Leases or Personal Property Leases or, to the best knowledge of
Shareholders, of any of the other parties thereto (or events or conditions
which, with or without notice or lapse of time or both would constitute a
default). Except for matters set forth on Schedule 4.5(b) regarding Best,
Waldorf and Best have peaceful and undisturbed physical possession of all
real property, equipment and other assets which are covered by the Real
Property Leases and Personal Property Leases. Except for matters set forth
on Schedule 4.5(b) regarding Best, with respect to the real property
covered by the Real Property Leases and all buildings, structures, fixtures
and improvements located thereon, Waldorf and Best have adequate rights of
ingress and egress for the operation of the Business in the ordinary course
consistent with past practice. Except as set forth on Schedule 4.5(b), none
of the Real Property Leases or the Personal Property Leases is carried as
an asset on the books of the Waldorf Entities.
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(c) Personal Property. Except as disclosed in Schedule 4.5(c) and
except for personal property leased pursuant to the Personal Property
Leases and inventory disposed of in the ordinary course of business since
June 30, 1996, Waldorf or Best, as the case may be, has good and marketable
title to, and physical possession of, all of the tangible personal property
which is reflected on the June 30, 1996 balance sheet of Waldorf (the
"Waldorf Audited Balance Sheet") which is included in the "Audited
Financial Statements" (as hereinafter defined), free and clear of all
liens, pledges, security interests, charges, claims, restrictions and
encumbrances of any nature whatsoever. Waldorf or Best, as the case may be,
has physical possession of all personal property included in Schedule
4.5(c).
(d) Inventories. Except as disclosed in Schedule 4.5(d), the
inventories of Waldorf (i) are sufficient for the operation of Waldorf in
the ordinary course of business consistent with past practice, (ii) consist
of items which are good and merchantable within normal trade tolerances
(subject to reserves for such items shown on the Waldorf Audited Balance
Sheet), (iii) are of a quality and quantity presently usable or saleable in
the ordinary course of business of Waldorf (subject to reserves for such
items shown on the Waldorf Audited Balance Sheet), (iv) are valued on the
books and records of Waldorf at the lower of cost or market, with the cost
determined under FIFO inventory valuation method consistent with past
practice (except the LIFO inventory valuation method consistent with past
practice is used for all audited financial statement reporting purposes),
and (v) are free and clear of all liens, pledges, security interests,
charges, claims, restrictions and encumbrances of any nature whatsoever. No
previously sold inventory is subject to returns in excess of those
historically experienced by Waldorf.
(e) Accounts Receivable. Except as disclosed in Schedule 4.5(e), the
accounts receivable of Waldorf and Best arose from bona fide transactions
in the ordinary course of business, have been executed on terms consistent
with the past practice of Waldorf and Best, and, to the best knowledge of
Shareholders, except for the amount of any applicable existing reserves for
uncollectibility, counterclaims or setoffs shown on the Waldorf Audited
Balance Sheet, (i) are good and collectible at the recorded amounts
thereof, (ii) are not subject to any counterclaims or setoffs and (iii) are
not otherwise in dispute. Except as set forth in Schedule 4.5(e), no
accounts receivable have been factored, pledged, turned over for
collection, or assigned to any person or third party.
(f) No Third Party Options. Except as disclosed in Schedule 4.5(f) and
except for sales of inventory in the ordinary course of business, there are
no existing agreements, options, commitments or rights with, of or to any
person to acquire any assets, properties or rights of the Waldorf Entities
or any interest therein.
(g) Ownership. Except as disclosed in Schedule 4.5(g) and except for
assets leased under the Real Property Leases and the Personal Property
Leases, all assets used in the operation of the business of Waldorf and
Best (the "Business") are owned by Waldorf,
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Best and Waldorf Realty. Except as disclosed in Schedule 4.5(g), the
assets owned and leased by Waldorf, Best and Waldorf Realty constitute all
the assets and properties necessary to permit Waldorf and Best to conduct
the Business in the same manner as Waldorf and Best have conducted the
Business in the past.
(h) Condition of Certain Assets. Except as otherwise disclosed in
Schedule 4.5(h), the machinery, equipment and other tangible property owned
or leased by Waldorf, Waldorf Realty and Best and, to the best knowledge of
Shareholders, the buildings owned or leased by Waldorf and Best are in good
operating condition and good state of repair, subject to ordinary wear and
tear. Those public utilities (including water, gas, electricity, and storm
and sanitary sewage) required to operate the facilities of Waldorf and Best
are available to such facilities.
(i) No Condemnation or Expropriation. Neither the whole nor any
portion of the "Waldorf Property" (as hereinafter defined) is subject to
any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any public authority with or without
payment or compensation therefor. To the best knowledge of Shareholders, no
such condemnation, expropriation or taking has been proposed. The term
"Waldorf Property" means all real property owned or used by Waldorf, Best
or Waldorf Realty in any manner, including, without limitation, the Real
Property and the property leased pursuant to the Real Property Leases.
(j) Third Party Leases. Except as otherwise disclosed in Schedule
4.5(j) hereto, there are no leases, subleases, licenses, concessions,
options or other agreements, written or oral, under which any of the
Waldorf Entities grants to any other party or parties the right of use or
occupancy of any portion of the parcels of the Waldorf Property.
(k) List of Accounts. Schedule 4.5(k) contains a list of all bank and
securities accounts, and all safe deposit boxes, maintained by the Waldorf
Entities and a listing of the persons authorized to draw thereon or make
withdrawals therefrom or, in the case of safe deposit boxes, with access
thereto.
(l) Wabash Assets. Schedule 4.5(l) contains a current list of all
assets owned or leased by Wabash.
(m) Waldorf Realty. Except for the ownership of Real Property, Waldorf
Realty conducts no business activities, and Waldorf Realty neither owns nor
leases any assets (personal or real).
4.6 Financial Statements. Waldorf has delivered to Purchaser the
following:
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(a) the consolidated balance sheets and related consolidated annual
statements of income, shareholders' equity and cash flows of Waldorf,
Waldorf Canada, Best (for the year ended June 30, 1996) and Waldorf Realty
as of June 30, 1994, June 30, 1995 and June 30, 1996 and for the respective
twelve months then ended, which have been audited by Price Waterhouse (the
"Audited Financial Statements");
(b) the unaudited consolidated balance sheet of Waldorf, Best, Waldorf
Canada and Waldorf Realty as of September 30, 1996 (the "Interim Balance
Sheet") and the related consolidated unaudited statements of income,
shareholders' equity and cash flows for the three month period ended
September 30, 1996 (together with the Interim Balance Sheet, the "Interim
Financial Statements"); and
(c) the audited balance sheets and related audited statements of
income, shareholders' equity and cash flows as of June 30, 1995 and June
30, 1996 of Wabash, and the unaudited balance sheet and statement of income
of Wabash as of September 30, 1996 (the "Wabash Financial Statements") (the
Wabash Financial Statements, together with the Interim Financial Statements
and the Audited Financial Statements, being referred to collectively as the
"Financial Statements").
Copies of the Financial Statements are attached as Schedule 4.6. The
Financial Statements have been prepared from, and are in accordance with, the
books and records of the Waldorf Entities and Waldorf Canada, which books and
records are maintained in accordance with generally accepted accounting
principles, consistently applied. Each of the balance sheets included in the
Financial Statements (including any related notes and schedules) fairly presents
the financial position of the applicable Waldorf Entities and Waldorf Canada, as
of the date thereof, and each of the statements of income, shareholders' equity
and cash flows included in the Financial Statements (including any related notes
and schedules) fairly presents the results of operations and changes in
shareholders' equity and cash flows, as the case may be, of the applicable
Waldorf Entities and Waldorf Canada, for the periods set forth therein, in each
case in accordance with generally accepted accounting principles, consistently
applied during the periods involved.
4.7 No Undisclosed Liabilities.
(a) Except as disclosed in Schedule 4.7(a), Wabash does not have any
liabilities or obligations, whether accrued, absolute, contingent or
otherwise. Except as disclosed in Schedule 4.7(b), none of the Waldorf
Entities has any liabilities or obligations, whether accrued, absolute,
contingent or otherwise, of a type required to be reflected or provided for
in financial statements prepared in accordance with generally accepted
accounting principles, which are not adequately reflected or provided for
in the Financial Statements, except liabilities and obligations incurred
since the date of the Interim Financial Statements in the ordinary course
of business that will not have a "Material Adverse Effect". As used in this
Agreement, the term "Material Adverse
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Effect" means an adverse effect on the assets, liabilities, results of
operations, financial condition or business of the Waldorf Entities, taken
as a whole, which represents an amount that exceeds $500,000, excluding
matters reflected in the Interim Financial Statements and matters that have
occurred or may occur after September 30, 1996 as a result of general
industry conditions.
(b) Without limiting the foregoing, with respect to the "Loan and
Security Agreement," the "Settlement Agreement," and the other agreements,
documents and matters referred to in the Substitute Contingent Interest
Agreement, dated February 1, 1994 (the "GECC Agreement"), among Wabash,
Waldorf, the Frey Shareholders, General Electric Capital Corporation
("GECC") and certain other parties, prior to giving effect to the "Waldorf
Settlement Document" (as hereinafter defined), there is no liability or
obligation of any of the Waldorf Entities to GECC other than as expressly
provided for in the GECC Agreement.
(c) Except as disclosed in Schedule 4.11 with specific reference to
Waldorf Foundation, Waldorf Foundation does not have any liabilities or
obligations, whether accrued, absolute, contingent or otherwise.
4.8 Absence of Certain Changes.
(a) Except as set forth on Schedule 4.8(a), since June 30, 1996,
except for the "Canada Sale" (as hereinafter defined), there has not been
(i) any Material Adverse Effect, other than as reflected in the Interim
Financial Statements and other than as may occur after September 30, 1996
as a result of general industry conditions, (ii) any damage, destruction,
loss or casualty to property or assets of Waldorf or Best, whether or not
covered by insurance, which property or assets are material to the
Business, or any material deterioration in the condition of the property or
assets of Waldorf or Best, (iii) any declaration, setting aside or payment
of any dividend or distribution (whether in cash, stock or property) in
respect of the capital stock of any of the Waldorf Entities, any redemption
or other acquisition by any of the Waldorf Entities of any of the capital
stock of any of the Waldorf Entities or any split, combination or
reclassification of shares of capital stock declared or made by any of the
Waldorf Entities, (iv) any sale of assets, loan or contribution, or other
intercompany transaction, between or among the Waldorf Entities, other than
loans by Waldorf to Waldorf Canada or Best, repayments thereof and the sale
of wastepaper from Best to Waldorf or (v) any agreement to do any of the
foregoing. Since June 30, 1996, Waldorf and Best have (1) maintained
supplies and inventories at levels that are in the ordinary course of
business consistent with past practice, (2) extended credit to customers,
collected accounts receivable and paid accounts payable and similar
obligations in the ordinary course of business consistent with past
practice and (3) conducted the business in the ordinary course on a basis
consistent with past practice and not engaged in any new line of business
or entered into
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any agreement, transaction or activity or made any commitment except
those in the ordinary course of business.
(b) Except as set forth in Schedule 4.8(b) and in connection with the
Canada Sale, with respect to the Waldorf Entities, since June 30, 1996,
there have not been (i) any extraordinary losses suffered, (ii) any
incurrance, assumption or guarantee by any of the Waldorf Entities of any
indebtedness for borrowed money except in the ordinary course of business
consistent with past practice, (iii) any assets mortgaged, pledged or made
subject to any lien, charge or other encumbrance, (iv) any liability or
obligation (absolute, accrued or contingent) incurred except in the
ordinary course of business and consistent with past practice, (v) any
claims, liabilities or obligations (absolute, accrued or contingent) paid,
discharged or satisfied, other than in the ordinary course of business and
consistent with past practice, (vi) any notes, guaranteed checks or
accounts receivable which have been written off as uncollectible, except
write-offs in the ordinary course of business consistent with past
practice, (vii) any write-down of the value of any asset or investment on
the Waldorf Entities' books or records, except for depreciation and
amortization taken in the ordinary course of business consistent with past
practice and the Canada Sale, (viii) any cancellation of any debts or
waiver of any claims or rights of substantial value, or sale, transfer or
other disposition of any properties or assets (real, personal or mixed,
tangible or intangible) (exclusive, however, of inventory) of substantial
value, except, in each such case, in transactions in the ordinary course of
business consistent with past practice and which in any event do not exceed
$200,000 in the aggregate based on net book value, (ix) any increase in the
compensation of officers, directors or employees, whether now or hereafter
payable, other than in the ordinary course of business consistent with past
practice, (x) any change in the Waldorf Entities' relations with their
employees, suppliers or customers which individually or in the aggregate
have a Material Adverse Effect, (xi) any increase of any reserves for
contingent liabilities (excluding any adjustment to bad debt, workers
compensation or group insurance reserves in the ordinary course of business
consistent with past practice), (xii) any transactions entered into other
than in the ordinary course of business, (xiii) any agreements to do any of
the foregoing, (xiv) any change by the Waldorf Entities in any method of
accounting or keeping their books of account or accounting practices, or
(xv) any other events, developments or conditions of any character that
have had or are reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect.
(c) Schedule 4.8(c) sets forth a complete and correct list of all
capital expenditures in excess of $10,000 per project made from July 1,
1996 through December 31, 1996 and sets forth a complete and correct list
of all capital expenditures and commitments approved for fiscal year ending
June 30, 1997.
(d) Schedule 4.8(d) sets forth (i) the average price per ton for
boxboard manufactured by each Waldorf Entity by plant for each month from
July, 1996 through November, 1996, (ii) the average price per ton of medium
for Waldorf for each month
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from July, 1996 through November, 1996 and (iii) the average price per
ton and mechanism currently used to establish price changes for folding
cartons for Waldorf's top ten customers by dollar volume for each month
from July, 1996 through November, 1996 and the amount of any price
reductions for such customers from July, 1996 through November, 1996.
4.9 Legal Proceedings. Except as set forth in Schedule 4.9, and except
for collection actions pending in the ordinary course of business which do not
exceed, in any individual case, $250,000, there are no suits, actions, claims,
proceedings or investigations pending or, to the best knowledge of Shareholders,
threatened against, relating to or involving the Business or the Waldorf
Entities or any of their officers or directors, before any court, arbitrator or
administrative or governmental body. Except as set forth in Schedule 4.9, none
of such suits, actions, claims, proceedings or investigations, if finally
determined adversely, are reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. None of the Waldorf Entities is subject to
any judgment, decree, injunction, rule or order of any court, arbitrator or
administrative or governmental body. Except as set forth in Schedule 4.9, none
of the Waldorf Entities is subject to any governmental restriction which is
reasonably likely (a) to have a Material Adverse Effect or (b) to cause a
material limitation on Waldorf's or Best's ability to operate the Business after
the Closing in the same manner as heretofore conducted by the Waldorf Entities.
No action or proceeding has been instituted against any of the Shareholders or
the Waldorf Entities before any court or other governmental body by any person
or public authority seeking to restrain or prohibit the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
Without limiting the foregoing, Schedule 4.9 describes all claims, whether in
the past or currently pending, in respect of any rights to indemnification or
any breach of any covenant, representation or warranty involving a certain
Purchase and Sale Agreement, dated July 15, 1985, between Champion International
Corporation and Waldorf (the "Champion Agreement").
4.10 Licenses, Permits and Compliance with Law. The Waldorf Entities
have all material authorizations, approvals, licenses, permits and orders of and
from all governmental and regulatory offices and bodies necessary to carry on
the Business as it is currently being conducted, to own or hold under lease the
properties and assets it owns or holds under lease and to perform all of its
obligations under the agreements to which it is a party (collectively, the
"Licenses"). Except as set forth in Schedule 4.10, each Waldorf Entity is (and
has been during the past five years) in compliance in all material respects with
all applicable laws, regulations and administrative orders (including, without
limitation, laws relating to employment of labor or use or occupancy of
properties or any part thereof) of any country, state, province or municipality
or of any subdivision thereof to which it is subject. Schedule 4.10 sets forth a
correct and complete list of all Licenses. Except as set forth in Schedule 4.10,
none of the Waldorf Entities is presently charged with, has received any notice
(whether written or oral) of, or, to the best knowledge of Shareholders, is
under governmental investigation with respect to any actual or alleged violation
of any statute, ordinance, rule or regulation; and none of the Waldorf Entities
is presently a party in an adverse proceeding or has received any notice
(whether written or oral) of
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any threatened adverse proceeding, in either case by any regulatory authority
having jurisdiction over the Waldorf Entities or the Business. Waldorf has
previously delivered to Purchaser copies of all reports and filings made or
filed by the Waldorf Entities during the past five years pursuant to the
Occupational Safety and Health Act. Except as set forth in Schedule 4.10, the
Waldorf Entities are not presently in violation of or subject to any allegation
that any of them is in violation of or is failing to comply with, the
Occupational Safety and Health Act.
4.11 Material Contracts. Schedule 4.11 sets forth (a) a correct and
complete list of all "Material Contracts" (as hereinafter defined) (which,
together with the Waldorf Benefit Plans, but excluding the Real Property Leases
and the Personal Property Leases, are herein referred to as the "Waldorf
Contracts") and (b) a list of all consents or notices required to be obtained or
given under such Waldorf Contracts, the Real Property Leases and the Personal
Property Leases in connection with this Agreement. Except for Klicklok
Corporation leases entered into in the ordinary course of business, which leases
have been made available to Purchaser, correct and complete copies of all
Waldorf Contracts have been delivered to Purchaser. The Waldorf Contracts are
valid and enforceable in accordance with their respective terms with respect to
Waldorf Entities and, to the best knowledge of Shareholders, each other party
thereto. There are no existing defaults of the Waldorf Entities under any
Waldorf Contract or, to the best knowledge of Shareholders, of any of the other
parties thereto (or events or conditions which with or without notice or lapse
of time or both would constitute a default). For purposes of this Section 4.11,
Material Contracts include the following contracts, agreements, commitments,
arrangements, understandings, or other instruments (in each case whether oral or
written, but only to the extent legally binding) relating to the Business or of
which one or more of the Waldorf Entities is a party (including every amendment,
modification or supplement to the foregoing):
(a) Indentures, security agreements or other agreements and
instruments relating to the borrowing of money, the extension of credit or
the granting of liens or encumbrances;
(b) Management, employment or consulting agreements, or arrangements
or agreements related to temporary services of any kind that require
payments greater than $50,000 annually;
(c) Union or other collective bargaining agreements;
(d) Powers of attorney;
(e) Sales agency, manufacturer's representative and distributorship
agreements or other distribution or commission arrangements;
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(f) Licenses of patent, trademark, software (excluding software with
annual license payments less than $10,000), copyrights, know how and other
intellectual property rights;
(g) Agreements, orders or commitments, not made in the ordinary course
of business, for the purchase of services, raw materials, supplies or
finished products from any one supplier for an amount in excess of
$500,000;
(h) Agreements, orders or commitments, not made in the ordinary course
of business, for the sale of products or services for more than $500,000 to
any single purchaser;
(i) Any contract or option relating to the sale by any of the Waldorf
Entities of any asset, other than sales of inventory in the ordinary course
of business;
(j) Agreements for capital expenditures in excess of $1,000,000 for
any single project;
(k) Joint venture agreements;
(l) Agreements requiring the consent of any party thereto to the
consummation of the transactions contemplated by this Agreement;
(m) Lease agreements under which any of the Waldorf Entities is
lessor;
(n) Agreements, contracts or commitments for any charitable or
political contribution, including, without limitation, agreements,
contracts or commitments obligating any Waldorf Entity in any manner
relating to the Frey Family Foundation, a Minnesota nonprofit corporation,
or the Waldorf Foundation, a Minnesota nonprofit corporation;
(o) Agreements prohibiting, partially restricting, or otherwise
limiting any Waldorf Entity's ability to compete, solicit customers or
otherwise conduct any business anywhere in the world;
(p) Agreements between Waldorf Canada and one or more of the Waldorf
Entities or in which both Waldorf Canada and one or more of the Waldorf
Entities are parties;
(q) Agreements to which Waldorf Realty is a party;
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(r) Agreements relating to the acquisition or sale of any company,
business, division or other enterprise, whether in the form of stock
purchase, asset acquisition or otherwise;
(s) Agreements, contracts or commitments for the purchase or sale of
any goods or services at other than generally available rates or terms,
including, by way of example and not limitation, purchase or sale
commitments entered into in settlement of claims or prior obligations; or
(t) Other than as covered above, other agreements, contracts and
commitments that involve payments or receipts of more than $250,000 in any
single year, or that were entered into other than in the ordinary course of
business.
4.12 Tax Returns; Taxes.
(a) For purposes of this Agreement, "Tax" means any federal, state,
provincial, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental, customs duty, capital stock, franchise, profits,
withholding, social security, unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, whether
disputed or not; "Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto and any amendment thereof; and "Code"
means the Internal Revenue Code of 1986, as amended from time to time, and
any regulations or published ruling promulgated or issued thereunder.
(b) Each of the Waldorf Entities has filed all Tax Returns that it was
required to file and all such Tax Returns were correct and complete in all
respects. All Taxes owed by any of the Waldorf Entities and Waldorf
Foundation (whether or not shown on any Tax Return) which are due and
payable have been paid. Except as set forth on Schedule 4.12(b), none of
the Waldorf Entities currently is the beneficiary of any extension of time
within which to file any Tax Return. Except as set forth on Schedule
4.12(b), no taxing authority in a jurisdiction where a Waldorf Entity does
not file Tax Returns has claimed in writing that such Waldorf Entity is or
may be subject to taxation by that jurisdiction.
(c) Each of the Waldorf Entities has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or
other third party.
(d) Except as set forth on Schedule 4.12(d), there is no dispute or
claim concerning any Tax liability of any of the Waldorf Entities either
(i) claimed or raised by
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any taxing authority in writing or (ii) as to which any of the
Shareholders or any employee responsible for Tax matters of such Waldorf
Entity has knowledge based upon personal contact with any agent of such
authority. Schedule 4.12(d) lists all Tax Returns filed with respect to any
of the Waldorf Entities for taxable periods ended after December 31, 1990,
indicates those Tax Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. The Waldorf Entities have
delivered or made available to Purchaser correct and complete copies of all
federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any of the Waldorf Entities
for taxable years ended on or after June 30, 1989.
(e) Except as set forth in Schedule 4.12(e), none of the Waldorf
Entities has waived any statute of limitations with respect to Taxes or
agreed to any extension of time with respect to the assessment of Taxes.
(f) All accounting periods and methods used by the Waldorf Entities
for Tax purposes are permissible periods and methods, and no Waldorf Entity
is or will be required to make any adjustment to its income under Section
481 of the Code in connection with a change in accounting method used in
taxable years for which Tax Returns have been filed prior to the date
hereof. None of the Waldorf Entities has filed a consent under Section
341(f) of the Code concerning collapsible corporations. None of the Waldorf
Entities has made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under Section 280G of the
Code. Except as set forth in Schedule 4.12(f), none of the Waldorf Entities
is a party to any Tax allocation or sharing agreement. None of the Waldorf
Entities (i) has been a member of an affiliated group filing a consolidated
federal income Tax return (other than the group the common parent of which
is Wabash) in any taxable year ending after December 31, 1985 or (ii) has
any liability for the Taxes of any person other than one of the Waldorf
Entities under Treasury Regulation Section 1.1502-6 or any similar
provision of state, local or foreign law, as a transferee or successor, by
contract, or otherwise.
(g) Schedule 4.12(g) sets forth the following information with respect
to each of the Waldorf Entities: (i) the tax basis of such Waldorf Entity
in its assets as of June 30, 1996; (ii) the tax basis of Wabash in the
stock of Waldorf, the tax basis of Waldorf in the stock of Waldorf Canada
and Best, and the tax basis of Wabash and Waldorf in the stock of Waldorf
Realty; (iii) the amount of any net operating loss, net capital loss,
unused investment credit or other Tax credit, or excess charitable
contribution allocable to such Waldorf Entity; and (iv) the amount of any
deferred gain or loss allocable to the Waldorf Entity arising out of any
"deferred intercompany transaction" under the Treasury Regulations relating
to consolidated federal income tax returns.
(h) The unpaid Taxes of the Waldorf Entities did not, as of June 30,
1996, exceed the reserve for Taxes (excluding any reserve for deferred
taxes attributable to
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<PAGE> 24
differences between the timing of income or deductions for tax and
financial accounting purposes) set forth on the balance sheet (excluding
any notes thereto) contained in the Financial Statements.
4.13 Officers, Directors and Employees. Schedule 4.13 contains a
correct and complete list of (a) all of the officers of the Waldorf Entities
specifying their office and current annual rate of compensation, (b) all of the
officers and employees of the Waldorf Entities earning more than $100,000 on an
annual basis together with their current salary or hourly wage and an
appropriate notation next to the name of each officer and employee on such list
to whom any of the Waldorf Entities has made verbal or other commitments which
are binding on any of the Waldorf Entities, and (c) all former officers and all
former employees of any of the Waldorf Entities entitled to post-retirement
benefits or any other compensation or benefits from one or more of the Waldorf
Entities.
4.14 Employee Benefit Plans. Except as disclosed in Schedule 4.14:
(a) There are no plans, programs, policies or arrangements providing
compensation or benefits of any kind or description whatsoever (whether
current or deferred and whether paid in cash or in kind) to, or on behalf
of, any current or former officer, employee or director of any of the
Waldorf Entities or Waldorf Canada or any of their dependents under which
any of the Waldorf Entities has any liability, duty or obligation of any
kind or description to any such officer, employee or director of any
Waldorf Entity or Waldorf Canada or any of their dependents, including, but
not limited to, any such plan, program, practice, policy or arrangement
subject to ERISA (individually a "Waldorf Benefit Plan" and collectively
the "Waldorf Benefit Plans");
(b) None of the Waldorf Entities nor any ERISA Affiliate makes or has
any obligation to make, or has made or had any obligation to make, either
directly or indirectly (whether by reimbursing another employer or
otherwise), contributions to any plan, program or arrangement, including a
multiemployer plan, that is subject to Title IV of ERISA (a "Title IV
Plan");
(c) None of the Waldorf Entities is a party to or has any obligation
whatsoever under any oral or written contract or other arrangement under
which any of the Waldorf Entities have agreed to employ any person or to
compensate any person on a termination of employment (individually an
"Employment Contract" and collectively the "Employment Contracts");
(d) Waldorf has furnished or made available to Purchaser: (i) a
correct, complete and current copy of (A) each written Waldorf Benefit Plan
and Employment Contract and any amendments thereto together with any trust
agreements or other contracts or agreements which are a part of each such
plan or contract and (B) with respect to each Waldorf Benefit Plan, all
Internal Revenue Service, Department of Labor
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<PAGE> 25
or Pension Benefit Guaranty Corporation rulings or determinations,
annual reports, summary plan descriptions, actuarial and other financial
reports for all periods ending on or after December 31, 1993; and (ii) such
other documentation with respect to any Waldorf Benefit Plan or Employment
Contract as is reasonably requested by Purchaser (there being no unwritten
Waldorf Benefit Plans or unwritten Employment Contracts);
(e) No assets have been set aside in any trust or account (other than
an account which is part of a Waldorf Entity's general assets) to satisfy
any obligations under any Waldorf Benefit Plan, Employment Contract or
Title IV Plan;
(f) All of the assets which have been set aside in a trust or account
(other than an account which is part of a Waldorf Entity's general assets)
to satisfy any obligations under any Waldorf Benefit Plan, Employment
Contract or Title IV Plan are shown on the books and records of each such
trust and each such account at their current fair market value, and such
current fair market value as of June 30, 1996 is equal to or exceeds the
present value of any obligation under any Waldorf Benefit Plan, Employment
Contract or Title IV Plan;
(g) Each Waldorf Benefit Plan, Employment Contract and Title IV Plan
has been established, maintained and administered in material compliance
with all applicable laws;
(h) None of the Waldorf Entities has any obligation to indemnify or
hold harmless any person or entity in connection with any liability
attributable to any acts or omissions by such person or entity with respect
to any Waldorf Benefit Plan, Employment Contract or Title IV Plan;
(i) None of the Waldorf Entities has incurred (and no facts exist
which are reasonably likely to subject any of the Waldorf Entities to) any
liability for any tax, fine or penalty or funding or contribution
obligation as a result of a violation of the Code, ERISA or other
applicable law with respect to any Waldorf Benefit Plan, Employment
Contract, Title IV Plan or any plan of an ERISA Affiliate;
(j) None of the Waldorf Entities nor any ERISA Affiliate has (within
the last six years) terminated or withdrawn from or sought a funding waiver
for, and no facts exist which could reasonably be expected to result in a
termination or withdrawal from or a request for a funding waiver for, any
Title IV Plan;
(k) None of the Waldorf Entities has incurred, and no facts exist
which are reasonably likely to subject any of the Waldorf Entities to, any
liability as a result of a termination or withdrawal from or a funding
waiver for any Title IV Plan maintained by an ERISA Affiliate;
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<PAGE> 26
(l) There are no pending or threatened claims with respect to a
Waldorf Benefit Plan, Employment Contract or Title IV Plan (other than
routine and reasonable claims made in the ordinary course of plan or
contract operations) or with respect to the terms and conditions of
employment or termination of employment of any employee or former employee
of any of the Waldorf Entities, which claims could reasonably be expected
to result in liability to any of the Waldorf Entities, and no audit or
investigation by any domestic or foreign governmental or other law
enforcement agency is pending or has been proposed with respect to any
Waldorf Benefit Plan, Employment Contract or Title IV Plan;
(m) Each of the Waldorf Entities has the right pursuant to the terms
of each Waldorf Benefit Plan and all agreements related to such plan
unilaterally to terminate such plan (or its participation in such plan) or
to amend the terms of such plan at any time without triggering a penalty or
an obligation to make any additional contributions to such plan, and
Purchaser immediately after the Closing shall have exactly the same rights
as the Waldorf Entities unilaterally to take such action without triggering
any penalty or any obligation to make any additional contributions to such
plan;
(n) The transactions contemplated by this Agreement will not result in
any additional payments to, or increase the vested interest of, any current
or former officer, employee or director or their dependents under any
Waldorf Benefit Plan or Employment Contract;
(o) The transactions contemplated by this Agreement will not result in
any payments to any current or former officer, employee or director of any
of the Waldorf Entities which will be subject to Section 280G of the Code;
and
(p) Waldorf and Best have provided Purchaser with a copy of Waldorf's
and Best's policies for providing leaves of absence under the Family and
Medical Leave Act ("FMLA") and maintain records which have been made
available to Purchaser which identify (i) each employee who is eligible to
request FMLA leave; (ii) the amount of FMLA leave utilized by each such
employee during the current leave year; (iii) each employee who currently
is on FMLA leave and his or her job title and description, salary and
benefits; (iv) each employee who has requested FMLA leave to begin after
the date of this Agreement and a description of the leave requested; and
(v) a copy of all notices provided to such employee regarding such leave.
For purposes of this Section 4.14, "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended from time to time, and any
regulations or published rulings promulgated or issued thereunder; and "ERISA
Affiliate" means any trade or business (whether incorporated or unincorporated)
which is a member of a group described in Section 414(b), (c), (m) or (o) of the
Code, of which any Waldorf Entity is also a member.
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4.15 Labor Relations. Except as set forth in Schedule 4.15, (a) none
of the Waldorf Entities' employees are represented by a labor organization which
was either National Labor Relations Board ("NLRB") certified or voluntarily
recognized or recognized under foreign law; (b) none of the Waldorf Entities is
a signatory to a collective bargaining agreement with any labor organization;
(c) none of the Waldorf Entities is obligated, by any collective bargaining
agreement or other agreement, to contribute to any multiemployer pension or
welfare benefit plan covering employees, retirees and/or beneficiaries; (d) the
Waldorf Entities have not conducted negotiations with respect to any future
contract with or commitment to any labor union or association and, to the best
knowledge of Shareholders, there are no current or threatened attempts to
organize or establish any labor union or association, (e) no representation
election petition filed by employees of any of the Waldorf Entities is pending
with the NLRB and, to the best knowledge of Shareholders, no union organizing
campaign involving employees of any of the Waldorf Entities is in progress; (f)
no NLRB unfair labor practice claims are presently pending against any of the
Waldorf Entities or any labor organization representing their employees; (g) no
material grievance or arbitration demand, whether or not filed pursuant to a
collective bargaining agreement, is pending against any of the Waldorf Entities;
(h) no labor dispute, walkout, strike, slowdown, handbilling, picketing, work
stoppage (sympathetic or otherwise), or other "concerted action" involving the
employees of any of the Waldorf Entities is in progress; (i) no breach of
contract and/or denial of fair representation claim is pending against any of
the Waldorf Entities and/or, to the best knowledge of Shareholders, any labor
organization representing their employees; (j) no material claim for unpaid
wages or overtime or for child labor or record keeping violations is pending
under the Fair Labor Standards Act, Davis-Bacon Act, Walsh-Healey Act, or
Service Contract Act or any other Federal, state, local or foreign law,
regulation, or ordinance; (k) no discrimination and/or retaliation claim is
pending or, to the best knowledge of Shareholders, threatened against any of the
Waldorf Entities under the 1866, 1877, 1964 or 1991 Civil Rights Acts, the Equal
Pay Act, the Age Discrimination in Employment Act, as amended, the Americans
with Disabilities Act, the Family and Medical Leave Act, the Fair Labor
Standards Act, ERISA or any other Federal law or any comparable state fair
employment practices act or foreign law regulating discrimination in the
workplace and no wrongful discharge, liable, slander or other claim under any
state law is pending or threatened which arises out of the employment
relationship with respect to any person or the termination of any such
relationship; (l) if any Waldorf Entity is a Federal, state or provincial
contractor obligated to develop and maintain an affirmative action plan, no
discrimination claim, show cause notice, conciliation proceeding, sanctions or
debarment proceeding is pending with the Office of Federal Contract Compliance
Programs ("OFCCP") or any other Federal agency or any comparable state or
foreign agency or court and no desk audit or on-site review is in progress; (m)
no citation is pending before the Occupational Safety and Health Administration
("OSHA") against any of the Waldorf Entities, and no notice of contest or OSHA
administrative enforcement proceeding involving any of the Waldorf Entities is
pending; (n) no workers' compensation or retaliation claim is pending against
any of the Waldorf Entities in excess of $10,000; (o) no citation of any of the
Waldorf Entities is outstanding and no enforcement proceeding is pending under
Federal or foreign immigration law; (p) none of the Waldorf Entities has taken
any action that would constitute a "mass layoff" or "plant closing" within the
meaning of the Worker Adjustment and
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<PAGE> 28
Retraining Notification ("WARN") Act or would otherwise trigger notice
requirements or liability under any state, provincial, local or foreign plant
closing notice law, regulation or ordinance. The Waldorf Entities are in
material compliance with all federal, state, provincial, local and foreign laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and are not engaged in any unfair labor or unlawful
employment practice.
4.16 Insurance. Schedule 4.16 sets forth a correct and complete list
of the Waldorf Entities' current insurance policies and coverages, including
names of carriers, amounts of coverage and premiums therefor. Waldorf has
heretofore made available to Purchaser correct and complete copies of all such
insurance policies. All such policies are in full force and effect and all
premiums due and payable in respect thereof have been paid. Since the respective
dates of such policies, no notice of cancellation or non-renewal with respect to
any such policy has been received by the Waldorf Entities. Schedule 4.16 sets
forth a list of all material pending claims with respect to all such policies.
The Waldorf Entities will maintain their current insurance policies and
coverages at least through the Closing Date.
4.17 Environmental Matters. Except as expressly set forth in the
Conestoga-Rovers & Associates Phase I and Phase II Environmental Site
Assessments, dated December 17, 1996 (the "Environmental Reports")(which are
listed in Annex I) and in Schedule 4.17:
(a) To the best knowledge of Shareholders, the Waldorf Entities
possess, and are in material compliance with, all permits, licenses and
government authorizations and have filed all material notices that are
required under local, state and federal laws and regulations currently in
effect relating to protection of the environment, pollution control,
product registration or hazardous materials (as defined below)
("Environmental Laws"), and the Waldorf Entities are in material compliance
with all applicable limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained
in those laws or contained in any law, regulation, code, plan, order,
decree, judgment, notice, permit or demand letter issued, entered,
promulgated or approved thereunder;
(b) None of the Waldorf Entities have received notice of actual or
threatened liability under "CERCLA" (as hereinafter defined) or any similar
state or local statute or ordinance from any governmental agency or any
third party, and, to the best knowledge of Shareholders, there are no facts
or circumstances which would reasonably be expected to form the basis for
the assertion of any claim against any of the Waldorf Entities under any
Environmental Laws including, without limitation, the Federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or any
similar local, state or foreign law with respect to any on-site or off-site
location;
(c) None of the Waldorf Entities have entered into, agreed to or
contemplates entering into any consent decree or order, and none of the
Waldorf Entities are subject to
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any judgment, decree or judicial or administrative order relating to
compliance with, or the cleanup of hazardous materials under, any
applicable Environmental Laws;
(d) To the best knowledge of Shareholders, none of the Waldorf
Entities is subject to any, and none of the Waldorf Entities is alleged to
be in violation of any, administrative or judicial proceeding pursuant to
applicable Environmental Laws or regulations;
(e) To the best knowledge of Shareholders, none of the Waldorf
Entities are subject to any material claim, obligation, liability, loss,
damage or expense of whatever kind or nature, contingent or otherwise,
incurred or imposed or based upon any provision of any Environmental Law
and arising out of any act or omission of any of the Waldorf Entities or
their respective employees, agents or representatives or arising out of the
ownership, use, control or operation by any of the Waldorf Entities of any
plant, facility, site, area or property (including, without limitation, any
plant, facility, site, area or property currently or previously owned or
leased by any of the Waldorf Entities) from which any hazardous materials
were released into the environment (the term "release" meaning any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing into the environment,
and the term "environment" meaning any surface or ground water, drinking
water supply, soil, surface or subsurface strata or medium, or the ambient
air);
(f) The Waldorf Entities heretofore provided or made available to
Purchaser correct and complete copies of all files of the Waldorf Entities
relating to environmental matters (or an opportunity to review such files),
and Schedule 4.17(f) sets forth the amount of all fines, penalties or
assessments paid within the last five years by the Waldorf Entities with
respect to environmental matters, including the date of payment and the
basis for the assertions of liability; and
(g) To the best knowledge of Shareholders, neither the real property,
improvements or equipment included within the assets owned by the Waldorf
Entities contain any friable asbestos, PCBs or underground storage tanks.
As used in this Agreement, the term "hazardous materials" means any
waste, pollutant, substance, by-product or other material regulated under
CERCLA, Resource Conservation and Recovery Act or other federal environmental
law, rule or regulation (or similar state or local law, rule or regulation) as
well as any petroleum or petroleum-derived substance or waste.
4.18 Intellectual Property. Schedule 4.18 sets forth a correct and
complete list of: (a) all patents, technical documentation, trade secrets,
trademarks and trade names (including all federal, state and foreign
registrations pertaining thereto) and all copyright registrations owned by any
of the Waldorf Entities (collectively, the "Proprietary Intellectual Property");
and (b) all patents, trademarks, trade names, copyrights, technology and
processes (except for
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licenses of software requiring payments less than $10,000 per year) used by any
of the Waldorf Entities that are used pursuant to a license or other right
granted by a third party (collectively, the "Licensed Intellectual Property",
and together with the Proprietary Intellectual Property is referred to as
"Intellectual Property"). To the best knowledge of Shareholders, Waldorf owns,
or has the right to use pursuant to valid and enforceable agreements identified
in Schedule 4.18, all Intellectual Property and all software used in the
Business. No claims are pending against any of the Waldorf Entities by any
person with respect to the use of any Intellectual Property or any software or
challenging or questioning the validity or enforceability of any license or
agreement relating to the same, and, to the best knowledge of Shareholders, the
current use by the Waldorf Entities of the Intellectual Property and all
software used in the Business does not infringe on the rights of any third
party. Schedule 4.18 sets forth a list of all jurisdictions in which any of the
Waldorf Entities is operating the business under a trade name, and each
jurisdiction in which any such trade name is registered.
4.19 Transactions with Affiliates. Except as set forth in Schedule
4.19, no shareholder, officer or director of any of the Waldorf Entities, or any
person with whom any such shareholder, officer or director has any direct or
indirect relation by blood, marriage or adoption, or any entity in which any
such person, owns any beneficial interest (other than a publicly held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market and less than 5% of the stock of which is beneficially
owned by all such persons) or any Affiliate of any of the foregoing or any
current or former Affiliate of any of the Waldorf Entities has any interest in:
(a) any contract, arrangement or understanding with any of the Waldorf Entities
or relating to the Business (b) any loan, arrangement, understanding, agreement
or contract (hereinafter referred to as "Affiliate Debt") for or relating to
indebtedness of any of the Waldorf Entities; (c) any property (real, personal or
mixed), tangible or intangible, used or currently intended to be used in the
Business; or (d) any claim against any of the Waldorf Entities. Any accounts due
and payable from any of the Waldorf Entities to any Affiliate of any of the
Waldorf Entities are recorded on the books and records of the business at the
fair market value thereof. Since June 30, 1996, there has been no repayment,
forgiveness or other release of Affiliate Debt except as set forth in Schedule
4.19. For purposes of this Section 4.19, "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 Agreement, (i) "control", when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, (ii) "controlling" and "controlled" have meanings
correlative to the foregoing, and (iii) "Person" means any individual,
corporation, partnership, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
4.20 Customer Relations. Except as disclosed in Schedule 4.20, to the
best knowledge of Shareholders, none of the Waldorf Entities has received any
notice that (a) any single customer of the Waldorf Entities which accounted for
more than 5% of the total net sales of any of the Waldorf Entities for the
twelve-month period ending on June 30, 1996 or (b) any
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<PAGE> 31
current raw materials supplier of the Waldorf Entities that had total net sales
to any of the Waldorf Entities in excess of $500,000 for the twelve month period
ending June 30, 1996 is reasonably expected to terminate its business relations
with any of the Waldorf Entities.
4.21 Nondisclosed Payments. None of the Waldorf Entities nor any of
their officers or directors, nor anyone acting on behalf of any of them, has
made or received any material payments not correctly categorized and fully
disclosed in the books and records of the Waldorf Entities in connection with or
in any way relating to or affecting the Waldorf Entities or the Business.
4.22 Brokers, Finders and Investment Bankers. Except as disclosed in
Schedule 4.22, none of the Waldorf Entities nor any of the Shareholders has
employed any broker, finder, investment banker or other intermediary or incurred
any liability for any investment banking fees, financial advisory fees,
brokerage fees, finders' fees or other similar fees in connection with the
transactions contemplated herein.
4.23 Disclosure. No representation, warranty or covenant made by
Shareholders in this Agreement (including the Schedules hereto) contains an
untrue statement of a material fact or omits to state a material fact required
to be stated herein or therein or necessary to make the statements contained
herein or therein not misleading.
4.24 Waldorf Canada Advances. Schedule 4.24 sets forth a ledger of all
amounts advanced by the Waldorf Entities to Waldorf Canada since June 30, 1996
and on or before October 31, 1996, (irrespective of whether such funds were
advanced as loans, contributions, accounts receivable, payments to third parties
on behalf of Waldorf Canada (including, without limitation, payments to
suppliers and employees), or otherwise) and all repayments, if any, of such
advanced amounts made by Waldorf Canada since June 30, 1996 and on or before
October 31, 1996.
4.25 HEI Development. Schedule 4.25 sets forth a description of all
property held by HEI Development and a description of all matters that would be
set forth in Schedule 4.17 if HEI Development were included in the Waldorf
Entities for purposes of Section 4.17.
4.26 Waldorf Canada. Schedule 4.26 identifies all liabilities,
contracts or other obligations of the Waldorf Entities arising out of the
business of Waldorf Canada that are payable after the Closing Date.
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Section 5. Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to Shareholders as follows:
5.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws under which it was formed and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted. Purchaser is duly qualified to
transact business and is in good standing as a foreign corporation in each
jurisdiction where the character of its activities requires such qualification.
5.2 Execution and Enforceability. This Agreement has been, and any
other certificate, agreement, document or other instrument to be executed and
delivered by Purchaser in connection with the transactions contemplated by this
Agreement (the "Purchaser Ancillary Documents") will be as of the Closing Date,
duly executed and delivered by Purchaser and do or will (as the case may be)
constitute the valid and legally binding agreements of Purchaser, enforceable
against Purchaser in accordance with their respective terms.
5.3 Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement and the Purchaser Ancillary Documents, the
consummation of the transactions contemplated by this Agreement and the
Purchaser Ancillary Documents and the fulfillment of and compliance with the
terms and conditions of this Agreement and the Purchaser Ancillary Documents do
not or will not (as the case may be), with or without the passing of time or the
giving of notice or both, violate or conflict with, or constitute a breach of or
default under, (a) any term or provision of the articles of incorporation or
bylaws of Purchaser, (b) any judgment, decree or order of any court or
governmental authority or agency to which Purchaser is a party or by which
Purchaser or any of its properties is bound or (c) any statute, law, rule or
regulation applicable to Purchaser or the business engaged in by Purchaser.
Except for compliance with the applicable requirements of the HSR Act, the
Securities Exchange Act of 1934, and Nasdaq National Market and New York Stock
Exchange rules and requirements, no consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental agency or
public or regulatory unit, agency, body or authority with respect to Purchaser
is required in connection with the execution, delivery or performance of this
Agreement or the Purchaser Ancillary Documents by Purchaser or the consummation
of the transactions contemplated by this Agreement or the Purchaser Ancillary
Documents by Purchaser.
5.4 Brokers, Finders and Investment Bankers. Except as disclosed in
Schedule 5.4, Purchaser has not employed any broker, finder, investment banker
or other intermediary or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees, finders' fees or other similar fees in
connection with the transactions contem plated herein.
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5.5 Disclosure. No representation, warranty or covenant made by
Purchaser in this Agreement (including the Schedules hereto) contains an untrue
statement of a material fact or omits to state a material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein not misleading.
Section 6. Covenants
Each of the parties hereto shall, and the Frey Shareholders shall
cause Waldorf Entities and Waldorf Canada to, comply with the following
covenants to the extent applicable to such party (or in the case of
Shareholders, to the extent applicable to Shareholders or to any of the Waldorf
Entities or Waldorf Canada) (unless compliance is waived in advance in
accordance with this Agreement):
6.1 Sale of Waldorf Canada.
(a) Waldorf Canada shall take all action necessary or appropriate to
terminate all of Waldorf Canada's business, including the disposition of
all assets and properties of Waldorf Canada and the termination of all
operations related thereto, and payment and satisfaction of all liabilities
and obligations of Waldorf Canada. To the extent the foregoing actions have
not been completed prior to the Closing, the Frey Shareholders shall be
responsible for causing Waldorf Canada to complete such actions after the
Closing.
(b) On or before the Closing Waldorf shall sell all of the outstanding
capital stock and other securities of Waldorf Canada to an entity
designated by the Frey Shareholders, of which Shareholders hold less than
50% of the outstanding equity securities (the "Designee"), pursuant to and
in accordance with the stock transfer agreement attached as Exhibit B
hereto (the "Stock Transfer Agreement") (the transactions contemplated by
this Section 6.1 are hereinafter referred to collectively as the "Canada
Sale").
(c) Pursuant to the Stock Transfer Agreement, the Waldorf Entities
shall assign to the Designee all of the Waldorf Entities' receivables for
all loans or advances made by them to Waldorf Canada on or before October
31, 1996. Shareholders shall reimburse Waldorf Entities for an amount equal
to the Canadian Deficit. To the extent the Canadian Deficit has been
ascertained as of the Closing, it will reduce the Cash Payment otherwise
payable to Shareholders on the Closing Date as provided for in Section 1.2
hereof. To the extent any amount of the Canadian Deficit is not deducted
from the Cash Payment otherwise payable to Shareholders on the Closing
Date, the Frey Shareholders hereby jointly and severally agree to pay such
remaining balance within ten (10) days after receipt of a written request
for such payment from Purchaser or any of the Waldorf Entities.
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(d) The Frey Shareholders shall use, and shall cause the Waldorf
Entities and Waldorf Canada to use, their respective best efforts to induce
the customers of Waldorf Canada to establish (or continue, as the case may
be) business relationships with Waldorf similar in character and scope to
such customers' previous relationships with Waldorf Canada.
(e) If and to the extent any of the Waldorf Entities realize for U.S.
federal income tax purposes a loss resulting from the Canada Sale, and such
loss is utilized or utilizable to reduce the amount of U.S. federal and
state income Tax otherwise payable by any of the Waldorf Entities (whether
by carryback, carryforward or otherwise), then Purchaser shall pay to
Shareholders in cash as a part of the Cash Payment payable pursuant to
Section 1.2(a) hereof, an aggregate amount equal to the amount of such Tax
reduction (the "Tax Benefit"). The Tax Benefit shall be estimated as of the
Closing Date and paid to Shareholders as a part of the Cash Payment at that
time; and the Frey Shareholders, jointly and severally, agree to indemnify
Purchaser, in the manner prescribed in and subject to the requirements of
Section 10 hereof, from, against and in respect of any liability, costs and
expenses arising from any determination that any portion of the Tax Benefit
is not allowable to the Waldorf Entities.
6.2 Sale of Wabash Assets. On or prior to the Closing Date,
Shareholders shall cause Wabash to sell Ancillary Assets of Wabash pursuant to
the Parent Transfer Agreement. Shareholders shall be responsible for any
liability for Taxes of any Waldorf Entity arising from or relating to the Parent
Transfer (the "Parent Transfer Taxes"). The Parent Transfer Taxes shall, to the
full extent determinable, be estimated as of the Closing Date and shall reduce
the Cash Payment otherwise payable to Shareholders on the Closing Date; and the
Frey Shareholders, jointly and severally, agree to indemnify Purchaser, in the
manner prescribed in and subject to the requirements of Section 10 hereof, from,
against and in respect of any liability, costs and expenses arising from any
determination that the Parent Transfer Taxes exceed the amount thereof estimated
as of the Closing Date.
6.3 Conduct of Business Prior to Closing Date. From the date hereof
until and including the Closing Date, except as otherwise contemplated by the
terms of this Agreement or as shall hereafter be consented to in writing by
Purchaser, Frey Shareholders, jointly and severally, agree that each Waldorf
Entity shall:
(a) Carry on its respective businesses in the ordinary course in
substantially the same manner as heretofore conducted and not engage in any
new line of business or enter into any agreement, transaction or activity
or make any commitment except those in the ordinary course of business
which are not otherwise prohibited under this Section 6.3;
(b) Neither change nor amend its articles of incorporation or bylaws;
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(c) Not issue, sell or grant options, warrants or rights to purchase
or subscribe to, or enter into any arrangement or contract with respect to
the issuance or sale of any of the capital stock of any Waldorf Entity or
rights or obligations convertible into or exchangeable for any shares of
the capital stock of any Waldorf Entity and not make any changes (by
split-up, combination, reorganization or otherwise) in the capital
structure of any Waldorf Entity;
(d) Not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity securities of
any Waldorf Entity and not redeem, purchase or otherwise acquire any shares
of the capital stock or other securities of any Waldorf Entity or rights or
obligations convertible into or exchangeable for any shares of the capital
stock or other securities of any Waldorf Entity or obligations convertible
into such, or any options, warrants or other rights to purchase or
subscribe to any of the foregoing;
(e) Not acquire or enter into an agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business;
(f) Use its reasonable efforts to preserve intact its corporate
existence, goodwill and business organization, to keep its officers and
employees available to Purchaser and to preserve its relationships with
customers, suppliers and others having business relations with it;
(g) Except borrowings made in the ordinary course of business under
the current revolving credit facility of Waldorf, not (i) create, incur or
assume any long-term debt (including obligations in respect of capital
leases) which individually involve annual payments in excess of $25,000 or,
except in the ordinary course of business under existing lines of credit,
create, incur or assume any short-term debt for borrowed money, (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other Person (as hereinafter defined), except in the ordinary course of
business and consistent with past practice, (iii) make any loans or
advances to any other Person, except in the ordinary course of business and
consistent with past practice, (iv) make any capital contributions to, or
investments in, any Person, except in the ordinary course of business and
consistent with past practices with respect to investments, or (v) make any
capital expenditure involving in excess of $25,000 in the case of any
single expenditure or $100,000 in the case of all capital expenditures
(other than capital expenditures for items already approved and in
progress);
(h) Not enter into, modify or extend in any manner the terms of any
Waldorf Benefit Plan or Employment Contract nor grant any increase in the
compensation of officers, directors or employees, whether now or hereafter
payable, including any such
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increase pursuant to any option, bonus, stock purchase, pension,
profit-sharing, deferred compensation, retirement or other plan,
arrangement, contract or commitment;
(i) Not terminate any officer or employee if such termination would
result in the payment of any amounts pursuant to "change in control"
provisions of any employment agreement or arrangement;
(j) Perform in all material respects all of its obligations under all
of its contracts (except those being contested in good faith) and not enter
into, assume, amend or terminate any contract or commitment other than in
the ordinary course of business;
(k) Maintain in full force and effect and in the same amounts policies
of insurance comparable in amount and scope of coverage to that now
maintained by it or on its behalf;
(l) Use its reasonable efforts to continue to collect its accounts
receivable and pay its accounts payable in the ordinary course of business
and consistent with past practices;
(m) Prepare and file all Tax Returns and other Tax reports, filings
and amendments thereto required to be filed by it, and allow Purchaser, at
its request, to review all such Tax Returns at the offices of such Waldorf
Entity prior to the filing thereof, which review shall not interfere with
the timely filing of such returns; and
(n) Use its best efforts without the unreasonable expenditure of funds
to obtain the waiver, consent and approval of all Persons whose waiver,
consent or approval is required in order to permit such Waldorf Entity to
consummate the transactions contemplated hereby, including the Canada Sale
and the Parent Transfer.
In connection with the continued operation of the business of the
Waldorf Entities between the date hereof and the Closing Date, the Frey
Shareholders shall cause the Waldorf Entities to confer in good faith on a
regular and frequent basis with one or more representatives of Purchaser
designated in writing to report operational matters of materiality and the
general status of ongoing operations. Shareholders acknowledge that Purchaser
does not and will not waive any rights it may have under this Agreement as a
result of such consultations.
6.4 No Solicitation; Acquisition Proposals. Shareholders agree that
from the date hereof through the Closing Date or the date of termination of this
Agreement in accordance with Section 11.1, as the case may be, no Shareholder
will, directly or indirectly, through any officer, director, employee, partner,
stockholder, agent or affiliate or otherwise, except in furtherance of the
transactions contemplated by this Agreement (a) solicit, initiate or encourage
submission of proposals or offers from any person relating to any transactions
contemplated herein or to the direct or indirect purchase of a material amount
of the assets of, or any equity
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interest in, or any merger, consolidation or business combination with, either
Waldorf Entity (collectively, an "Acquisition Proposal"), (b) participate in any
discussions or negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with or assist,
facilitate or encourage, any Acquisition Proposal by any person, (c) enter into
any agreement, arrangement or understanding with respect to an Acquisition
Proposal, or (d) sell, transfer, or otherwise dispose of, or enter into any
agreement, arrangement or understanding with respect to, any interest in the
assets, capital stock or other equity interests of any Waldorf Entity.
6.5 Executive Payments. Schedule 6.5 hereto lists all stock option
rights, stock appreciation rights, phantom stock rights, equity-based bonus
rights or similar rights outstanding with respect to Waldorf Entities
(collectively, the "Executive Rights"). On or prior to the Closing Date, Frey
Shareholders shall cause Waldorf Entities to make all payments and to take all
other actions necessary to satisfy and to terminate in full all of the Executive
Rights. To the extent that the total amount of such payments exceeds Seven
Million Four Hundred Fifteen Thousand Five Hundred Twelve Dollars and Sixty-Two
Cents ($7,415,512.62), Frey Shareholders agree, jointly and severally, to (i)
reimburse Purchaser for such excess amount (the "Excess Amount"), and the cash
payment otherwise payable to Shareholders pursuant to Section 1.2 hereof shall
be reduced by the Excess Amount and (ii) indemnify Purchaser, in the manner
prescribed in and subject to the requirements of Section 10 hereof, from,
against and in respect of any liability, costs and expenses arising from (aa)
any failure to so satisfy and terminate in full the Executive Rights, (bb) any
claim based on securities law violations including, without limitation,
violations in connection with the Executive Rights or (cc) any claim based on
the redemption of stock by the Waldorf Entities including, without limitation,
the January, 1995 redemption of common stock disclosed in Schedule 4.4
(excluding payment of the promissory notes identified in Item 4.4.1).
6.6 Fees and Expenses. Schedule 6.6 sets forth all brokerage,
investment banking and similar costs and expenses incurred by Waldorf Entities
in connection with the transactions contemplated hereby (excluding, without
limitation, attorneys' and accountants' fees) on or before October 31, 1996.
Waldorf Entities will pay all costs and expenses incurred in connection with the
transactions contemplated hereby (including, without limitation, attorneys',
accountants' and investment banking fees and expenses) on or before October 31,
1996. Frey Shareholders shall pay all such costs and expenses incurred by
Waldorf Entities and Shareholders in connection with the transactions
contemplated hereby (including, without limitation, fees and expenses of
attorneys, accountants and investment bankers) after October 31, 1996, and Frey
Shareholders agree, jointly and severally, to reimburse Waldorf Entities upon
written demand for all such costs and expenses incurred by Waldorf Entities
after such date. Purchaser shall bear all such costs and expenses incurred by it
in connection with the transactions contemplated hereby. Notwithstanding the
foregoing, Waldorf Entities (and not Shareholders) shall pay all salaries and
other expenses of personnel of Waldorf Entities involved in the transactions
contemplated hereby and costs of Waldorf Entities in complying with Section 6.11
hereof and in providing information and access to Purchaser in connection with
its due diligence review. The Frey
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Shareholders hereby confirm to Purchaser that the total amount of attorneys'
and accountants' fees and expenses incurred by Waldorf Entities on or before
October 31, 1996 in connection with the transactions contemplated herein did
not exceed, in the aggregate, $75,000.
6.7 Reasonable Efforts; Further Assurances; Cooperation. Subject to
the other provisions of this Agreement, each party hereto shall each use such
party's reasonable, good faith efforts to perform such party's obligations
hereunder and to take, or cause to be taken or do, or cause to be done, all
things necessary, proper or advisable under applicable law to obtain all
regulatory approvals and satisfy all conditions to the obligations of the
parties under this Agreement and to cause the transactions contemplated hereby
to be effected on or prior to February 10, 1997 in accordance with the terms
hereof and shall cooperate fully with each other party and their respective
officers, directors, employees, agents, counsel, accountants and other designees
in connection with any steps required to be taken as a part of their respective
obligations under this Agreement, including without limitation:
(a) Each of the parties shall promptly make their respective filings
and submissions and shall take, or cause to be taken, all actions and do,
or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to obtain any required approval of any
federal, state, local or foreign governmental agency or regulatory body
with jurisdiction over the transactions contemplated hereby, including all
filings, submissions and other actions required by the HSR Act;
(b) In the event any claim, action, suit, investigation or other
proceeding by any governmental body or other Person is commenced which
questions the validity or legality of the transactions contemplated hereby
or seeks damages in connection therewith, the parties agree to cooperate
and use all reasonable efforts to defend against such claim, action, suit,
investigation or other proceeding and, if an injunction or other order is
issued in any such action, suit or other proceeding, to use all reasonable
efforts to have such injunction or other order lifted, and to cooperate
reasonably regarding any other impediment to the consummation of the
transactions contemplated hereby; and
(c) Each party shall give prompt written notice to the others of (i)
the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty of such
party contained in this Agreement or any agreement or document contemplated
hereby to be untrue or inaccurate at any time from the date hereof until
the Closing or that will or may result in the failure to satisfy any of the
conditions specified in Sections 7, 8 and 9 and (ii) any failure of any
party hereto or any Waldorf Entity, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder.
6.8 Access. Between the date hereof and the Closing, the Frey
Shareholders shall cause each Waldorf Entity to provide the Purchaser and its
accountants, counsel and other authorized representatives full access, during
reasonable business hours and under reasonable
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circumstances to any and all of the premises, properties, contracts,
commitments, books, records, accountants' work papers and other information
(including tax returns filed and those in preparation) of each Waldorf Entity
and to Price Waterhouse (as the accountants of the Waldorf Entities), and the
Frey Shareholders shall cause the respective officers of each Waldorf Entity to
furnish to the Purchaser and its authorized representatives any and all
financial, technical and operating data and other information pertaining to each
Waldorf Entity, as Purchaser shall from time to time reasonably request.
6.9 Confidentiality. Unless consented to by the other party, which
consent will not be withheld unreasonably, information obtained by any party
hereto or any of their representatives pursuant to this Agreement shall be
subject to the provisions of the Confidentiality Agreement between Purchaser and
Wabash dated September 17, 1996, which agreement remains in full force and
effect.
6.10 Public Announcements. The timing and content of all announcements
regarding any aspect of this Agreement or the transactions contemplated hereby
to the financial community, government agencies, employees or the general public
shall be mutually agreed upon in advance by Purchaser and Wabash (unless
Purchaser or Wabash is advised by counsel in writing that any such announcement
or other disclosure not mutually agreed upon in advance is required to be made
by law or applicable rule of the Nasdaq National Market or the New York Stock
Exchange and then only after consulting the other party and making a reasonable
attempt to comply with the provisions of this Section).
6.11 Financial Statements and Other Information. Prior to the Closing,
the Frey Shareholders shall cause Wabash to deliver to Purchaser, as soon as
available but in no event later than thirty (30) days after the end of each
month beginning October 1996, all monthly financial and operating reports that
are prepared in the ordinary course of business for review by Waldorf's senior
management, including, without limitation, balance sheets and statements of
income and cash flows on a plant-by-plant basis. Prior to the Closing, the Frey
Shareholders shall cause the Waldorf Entities to provide to Purchaser such
financial statements and other information relating to the Waldorf Entities as
Purchaser shall reasonably request in connection with any filings made by
Purchaser under the Securities Act (including any Registration Statements on
Form S-1 or S-3, Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K or
Current Reports on Form 8-K). Any such financial statements shall be prepared in
accordance with Regulation S-X under the Securities Act, and, to the extent such
financial statements are unaudited interim financial statements, shall have been
reviewed by Price Waterhouse, the independent auditors for the Waldorf Entities,
in accordance with SAS No. 71, Interim Financial Information.
6.12 Environmental-Related Work. Schedule 6.12 sets forth a list of
environmental-related matters for which Waldorf will have the right to conduct
and complete any work (the "Scheduled Work") required to comply with or satisfy
obligations arising under Environmental Laws and to be indemnified therefor in
accordance with Section 10.
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6.13 Interest Amount. [INTENTIONALLY OMITTED]
6.14 HEI Development. The Frey Shareholders will use commercially
reasonable efforts to cause the other persons having an ownership interest in
HEI Development to consent on or prior to the Closing Date to the transfer of
Wabash's ownership interest in HEI Development to the Shareholder
Representative, in which case Wabash's ownership interest in HEI Development
will be so transferred notwithstanding Section 1.2(b)(viii) to the contrary. In
the event Wabash retains its ownership interest in HEI Development, Purchaser
shall cause Wabash (i) to pay to the Shareholder Representative as additional
purchase price hereunder, all distributions received by Wabash in respect of its
ownership interest in HEI Development net of all Taxes or other costs paid or
incurred by Wabash in respect of such distributions and (ii) to vote and take
actions with respect to Wabash's interest in HEI Development only in accordance
with the consent and instructions of the Shareholder Representative. The Frey
Shareholders agree, jointly and severally, to reimburse Purchaser for all costs
and expenses of Purchaser incurred as a result of (i) Wabash's ownership
interest in HEI Development and to indemnify Purchaser, in the manner prescribed
in and subject to the requirements of Section 10 hereof, from, against and in
respect of any liability, costs and expenses arising in any manner in connection
with Wabash's ownership interest in HEI Development or (ii) complying with or
satisfying obligations arising under Environmental Laws in any way related to
property owned by HEI Development.
6.15 Shareholder Net GECC Payment. The "Shareholder Net GECC Payment"
shall be an amount equal to Seven Million Five Hundred Thousand Dollars
($7,500,000) (the "Shareholder Gross GECC Payment") less the aggregate amount of
the U.S. federal and state income tax benefits realized by the Waldorf Entities
(whether by carryback, carryforward or otherwise) (the "Shareholder GECC Tax
Benefit") which are attributable to Waldorf's deduction of an amount equal to
the Shareholder Gross GECC Payment under the GECC Agreement, as modified by the
Settlement Agreement (the "Waldorf Settlement Document"), dated December 18,
1996, among GECC, Wabash, Waldorf and Purchaser. The Shareholder GECC Tax
Benefit shall be estimated as of the Closing Date and such estimate shall be
used in calculating the Shareholder Net GECC Payment at that time. The Frey
Shareholders, jointly and severally, agree to indemnify Purchaser in the manner
described in and subject to the requirements of Section 10 hereof, from, against
and in respect of thirty percent (30%) of any liability (exclusive of costs and
expenses) arising from any determination that any portion of Waldorf's deduction
arising from the payment to GECC pursuant to the GECC Agreement, as modified by
the Waldorf Settlement Document, is not allowable for federal or state income
tax purposes; provided that the indemnification responsibility of the Frey
Shareholders under this Section 6.15 shall not exceed the Shareholder GECC Tax
Benefit.
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Section 7. Conditions to Obligations of All Parties.
The obligations of each party to consummate the Closing shall be
subject to the satisfaction (or waiver by such party) at or prior to the Closing
of each of the following conditions:
7.1 No Injunction. There shall be no injunction, writ or preliminary
restraining order or any order of any nature in effect, which has been issued by
a court or governmental agency of competent jurisdiction, to the effect that the
transactions contemplated hereby may not be consummated as herein provided; no
proceeding or lawsuit shall have been commenced by any governmental or
regulatory agency for the purpose of obtaining any such injunction, writ or
preliminary restraining order; and no written notice shall have been received
from any such agency indicating an intent to restrain, prevent, materially delay
or restructure the transactions contemplated by this Agreement.
7.2 HSR Act. All applicable waiting periods under the HSR Act shall
have expired or terminated.
Section 8. Conditions to Obligations of Purchaser
The obligations of Purchaser to consummate the Closing shall be
subject to the satisfaction (or waiver by Purchaser) at or prior to the Closing
of each of the following additional conditions:
8.1 Representations and Warranties. The representations and warranties
of Shareholders set forth in Sections 3 and 4 shall be true and correct as of
the date of this Agreement and as of the Closing Date (other than to the extent
that any facts giving rise to any inaccuracy would not have, individually or in
the aggregate, a Material Adverse Effect) as though made on and as of the
Closing Date.
8.2 No Material Adverse Effects. Without limiting the generality of
Section 8.1, none of the Waldorf Entities shall have suffered a Material Adverse
Effect from the date of this Agreement through the Closing Date.
8.3 Performance of Obligations of Waldorf Entities and Shareholders.
Each of the Waldorf Entities and Shareholders shall have performed in all
material respects all covenants and agreements required to be performed by any
one or more of them under this Agreement on or prior to Closing.
8.4 Consents. All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement and the transactions contemplated hereby by any
Waldorf Entity or Shareholder shall have been obtained or made.
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8.5 Compliance Certificates. The Shareholders and Wabash shall furnish
Purchaser with appropriate certificates as to compliance with the conditions set
forth in Sections 8.1 through 8.4.
8.6 Material Contracts. Purchaser shall have received the consents as
set forth in Schedule 8.6.
8.7 Canada Sale. The Canada Sale shall have occurred or shall occur
simultaneously with the Closing.
8.8 Executive Rights. The Executive Rights shall have been satisfied
and terminated in full, and all amounts payable by Waldorf Entities in
connection therewith shall have been paid in full. The Frey Shareholders shall
deliver a certificate to Purchaser at Closing detailing all amounts paid by
Waldorf Entities to satisfy and terminate in full the Executive Rights.
8.9 Certain Agreements. Eugene U. Frey shall have executed and
delivered to Purchaser a Consulting Agreement (the "Consulting Agreement") in
the form of Exhibit C attached, and Eugene U. Frey and John J. Frey shall have
executed and delivered to Purchaser, respectively, Noncompetition Agreements in
the form of Exhibits D-1 and D-2 attached.
8.10 Resignation Letters. Each of the elected officers and directors
of the Waldorf Entities shall have tendered to Purchaser letters of resignation
from such elected positions (but not as employees of Waldorf Entities) in form
and substance reasonably acceptable to Purchaser on or prior to the Closing
Date, such resignations to be effective immediately following the Closing.
8.11 Stock Certificates. Shareholders shall have delivered to
Purchaser certificates representing the Shares, endorsed in blank.
8.12 Canadian Deficit. The Frey Shareholders shall sign and deliver a
certificate which calculates the Canadian Deficit in reasonable detail (the
"Canadian Deficit Certificate").
8.13 Legal Opinion. Purchaser shall have received an opinion of
Leonard, Street & Deinard, dated the Closing Date, substantially in the form
attached hereto as Exhibit E.
8.14 Payment of Wabash Notes. The Frey Shareholders shall cause the
obligors under the Wabash Notes to pay the full amounts of the Wabash Notes by
wire transfer of immediately available funds to an account of Wabash designated
by Purchaser.
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8.15 Assumption Agreement. The Frey Shareholders shall have executed
and delivered an Assumption Agreement, dated the Closing Date, substantially in
the form of Exhibit F (pursuant to which the Frey Shareholders will assume any
and all liabilities of Wabash, including, without limitation, all tax
liabilities arising as a result of the Parent Transfer).
8.16 Guaranty. Mary F. Frey, Carol F. Wolfe, James R. Frey and John J.
Frey shall have executed and delivered a Guaranty, dated the Closing Date,
substantially in the form of Exhibit G (pursuant to which such persons will
guarantee the obligations of the Frey Shareholders under Section 10 hereof to
the extent any proceeds of the Purchase Price are hereafter transferred to
them).
Section 9. Conditions to Obligations of Shareholders.
The obligations of Shareholders to consummate the Closing shall be
subject to the satisfaction (or waiver by the Shareholder Representative) at or
prior to the Closing of each of the following additional conditions:
9.1 Representations and Warranties. The representations and warranties
of the Purchaser set forth in Section 5 shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date.
9.2 Performance of Obligations of Purchaser. Purchaser shall have
performed in all material respects all covenants and agreements required to be
performed by it under this Agreement on or prior to the Closing.
9.3 Consents. All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement by Purchaser shall have been obtained or made.
9.4 Certificates. Purchaser shall furnish Shareholders with a
certificate of appropriate Purchaser officers as to compliance with the
conditions set forth in Sections 9.1, 9.2 and 9.3.
9.5 Consulting Agreement. Purchaser shall have executed and delivered
to Eugene U. Frey the Consulting Agreement.
9.6 Parent Transfer. The Parent Transfer shall have occurred or shall
occur simultaneously with the Closing.
9.7 Legal Opinion. Shareholders shall have received an opinion of King
& Spalding, dated the Closing Date, substantially in the form attached hereto as
Exhibit H.
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9.8 Canadian Deficit. Purchaser shall sign and deliver the Canadian
Deficit Certificate.
Section 10. Indemnification.
10.1 Indemnification Obligations of the Frey Shareholders. The Frey
Shareholders shall, jointly and severally, indemnify, defend and hold harmless
Purchaser and Waldorf Entities, each of their respective officers, directors,
employees, affiliates, agents and representatives and each of the heirs,
beneficiaries, executors, successors and assigns of any of the foregoing
(collectively, the "Purchaser Indemnified Parties") from, against and in respect
of any and all claims, liabilities, obligations, losses, costs, expenses,
penalties, fines and other judgments (at equity or at law) and damages whenever
arising or incurred (including, without limitation, amounts paid in settlement,
costs of investigation and reasonable attorneys' fees and expenses), net of any
insurance proceeds actually received by the Waldorf Entities after the Closing
Date with respect thereto pursuant to any general casualty insurance policy or
title insurance policy maintained by the Waldorf Entities on or prior to the
Closing Date, arising out of or relating to:
(i) any breach or inaccuracy of any representation or warranty made
by any Shareholder in Sections 3 or 4 hereof;
(ii) any breach of any covenant, agreement or undertaking made by any
Shareholder or Waldorf Entity in Sections 6.1(a), 6.1(b), 6.1(c), 6.1(e),
6.2, 6.3(c), 6.3(d), 6.5 or 6.6 hereof (except for liabilities for Taxes
addressed in subsections 10.1(vi) hereof), provided that, in the case of a
breach by a Waldorf Entity, such breach shall have occurred at or prior to
the Closing;
(iii) any breach of any covenant, agreement or undertaking made by any
Shareholder or Waldorf Entity in this Agreement, any Schedule or Exhibit or
any other document contemplated hereby (other than in Sections 3 or 4
hereof or in any Schedule referred to therein and other than in the
Sections listed in Section 10.1(ii) hereof), provided that, in the case of
a breach by a Waldorf Entity, such breach shall have occurred at or prior
to the Closing;
(iv) (w) any violation of or noncompliance with, or alleged violation
of or noncompliance with, any Environmental Laws (including, without
limitation, with respect to any alleged nuisance or trespass or alleged
exposure to hazardous materials in the workplace) arising out of or
relating to the operation of any Waldorf Entity on or prior to the Closing
Date, (x) any claim arising under any Environmental Law resulting from the
ownership, use, control or operation at any time on or prior to the Closing
Date of any plant, facility, site, area or property now or previously used
in the business of the Waldorf Entities (whether currently or previously
owned, leased or used by the Waldorf Entities or by any prior owner, lessee
or user of such plant, facility, site, area or property), including,
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without limitation, arising from any release of any hazardous materials or
off-site shipment of any hazardous materials at or from any such plant,
facility, site, area or property (whether by any of the Waldorf Entities
or by any prior owner, lessee or user of such plant, facility, site, area
or property), (y) the cost of conducting and completing any Scheduled Work
(exclusive, however, of wages and salaries of employees of the Waldorf
Entities and Rock-Tenn related to their involvement with Scheduled Work)
or (z) any cost, expense, or liability arising out of the three No. 6 Fuel
Oil Tanks abandoned by Champion and filled with sand prior to July 15,
1985 and referenced at point D.1 of Schedule A to the Limited Release
between Waldorf Corporation and Champion International Corporation dated
August 9, 1990;
(v) other than matters subject to the Canadian Deficit Certificate,
any and all aspects of the existence, operations, assets, liabilities,
properties and business of Waldorf Canada, whether arising out of or
relating to the Canada Sale or other events or circumstances occurring or
existing prior to, at or after the Closing, including, without limitation,
any violation of or noncompliance with, or alleged violation of or
noncompliance with, local, provincial or federal laws and regulations in
Canada relating to protection of the environment, pollution control,
product registration or hazardous materials (including, without limitation,
with respect to any alleged nuisance or trespass or alleged exposure to
hazardous or toxic substances in the workplace), and all costs and expenses
incurred by the Waldorf Entities in connection with the Canada Sale, but
excluding all amounts invested by Waldorf Entities in Waldorf Canada prior
to October 31, 1996, whether by way of loan, capital contribution or
otherwise (the net amount of such investment being shown in Attachment A to
the Stock Transfer Agreement);
(vi) (w) any liability or obligation of Wabash existing as of the
Closing Date or arising thereafter as a result of matters in existence on
or prior to the Closing Date including, without limitation, any liability
arising from or relating to (a) the Parent Transfer Taxes to the extent not
accounted for in the determination of the Cash Payment under Section 1.2,
(b) any actual or proposed disallowance of the Tax Benefit, or (c) the
matters in issue in the pending litigation between Wabash and the U.S.
Internal Revenue Service (the "Wabash Tax Litigation"), but excluding any
intercompany liability owed by Wabash to a Waldorf Entity for Taxes
previously paid; (x) any failure of the Frey Shareholders to make any
payments required to be made by the Frey Shareholders under Section 6.15;
(y) any liability or obligation of any of the Waldorf Entities or HEI
Development existing as of the Closing Date or arising thereafter arising
from or relating to HEI Development including, without limitation,
Waldorf's ownership of its interest in HEI Development, any Taxes relating
to HEI Development, any actions taken by Waldorf in respect of HEI
Development, or any other matter set forth in Section 6.14; and (z) any
liability or obligation of the Waldorf Entities arising under (aa) the
agreements disclosed in Schedule 4.7(a) (which are identified therein as
being in the closing binder titled "Shareholder Agreement and Plan of
Reorganization by and among Eugene U. Frey and
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various Frey Family Trusts, Richard E. O'Leary, John E. Byrne, Anita
M. Bertelsen, H Enterprises International, Inc. and Trident Enterprises
International, Inc."), (bb) any other claim against any of the Waldorf
Entities by Richard O'Leary, Trident Enterprises International, Inc. or any
entity controlled by either or both of them arising out of any facts or
circumstances existing on or before the Closing Date, (cc) one-half of any
environmental indemnification obligation of Waldorf Realty relating to the
parcel located at West 40th Street and South Pulaski Road, Chicago,
Illinois disclosed to Purchaser as being sold to develop a Burger King
restaurant or (dd) any obligation to pay any Taxes or to reimburse anyone
for the payment of any Taxes attributable to the taxable status of any
trust which is a part of any Waldorf Benefit Plan ; and
(vii) any fraud, willful misconduct, bad faith or knowing breach of
any representation or warranty, covenant, agreement or undertaking made by
any Shareholder in this Agreement, any Schedule or Exhibit hereto or any
other document contemplated hereby (to the extent such breach is not
otherwise disclosed in writing to Purchaser pursuant to this Agreement
prior to the Closing).
The claims, liabilities, obligations, losses, costs, expenses, penalties, fines
and damages of the Purchaser Indemnified Parties described in this Section 10.1
as to which the Purchaser Indemnified Parties are entitled to indemnification
are hereinafter collectively referred to as "Purchaser Losses".
10.2 Indemnification Obligations of Purchaser. Purchaser shall
indemnify and hold harmless each Shareholder and trustee thereof, and each of
their respective heirs, beneficiaries, executors, successors and assigns
(collectively, the "Shareholder Indemnified Parties") from, against and in
respect of any and all claims, liabilities, obligations, losses, costs,
expenses, penalties, fines and other judgments (at equity or at law) and damages
whenever arising or incurred (including, without limitation, amounts paid in
settlement, costs of investigation and reasonable attorneys' fees and expenses)
arising out of or relating to:
(i) any breach or inaccuracy of any representation or warranty
made by Purchaser in Section 5;
(ii) any breach of any covenant, agreement or undertaking made
by Purchaser in this Agreement, any Exhibit or any other document
contemplated hereby; and
(iii) any fraud, willful misconduct, bad faith or knowing breach
of any representation, warranty, covenant, agreement or undertaking
made by Purchaser in this Agreement, any Schedule or Exhibit hereto or
any other document contemplated hereby (to the extent such breach is
not otherwise disclosed in writing to the Shareholder Indemnified
Parties pursuant to this Agreement prior to the Closing).
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The claims, liabilities, obligations, losses, costs, expenses, penalties, fines
and damages of the Shareholder Indemnified Parties described in this Section
10.2 as to which the Shareholder Indemnified Parties are entitled to
indemnification are hereinafter collectively referred to as "Shareholder
Losses."
10.3 Indemnification Procedure.
(a) Promptly after receipt by a Purchaser Indemnified Party or a
Shareholder Indemnified Party (hereinafter collectively referred to as an
"Indemnified Party") of notice by a third party of any complaint or the
commencement of any action or proceeding with respect to which such
Indemnified Party may be entitled to receive payment from the other party
for any Purchaser Losses or Shareholder Losses (as the case may be), such
Indemnified Party shall, within ten (10) days, notify Purchaser or the
Shareholder Representative, as the appropriate indemnifying party or
representative thereof (the "Indemnifying Party"), of such complaint or of
the commencement of such action or proceeding; provided, however, that the
failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from liability for such claim arising otherwise than
under this Agreement and such failure to so notify the Indemnifying Party
shall relieve the Indemnifying Party from liability under this Agreement
with respect to such claim only if, and only to the extent that, such
failure to notify the Indemnifying Party results in the forfeiture by the
Indemnifying Party of material rights and defenses otherwise available to
the Indemnifying Party with respect to such claim. The Indemnifying Party
shall have the right, upon written notice delivered to the Indemnified
Party within twenty (20) days thereafter, to assume the defense of such
action or proceeding, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of the fees and
disbursements of such counsel. In the event, however, that the Indemnifying
Party declines or fails to assume the defense of the action or proceeding
or to employ counsel reasonably satisfactory to the Indemnified Party, in
either case within such 20-day period, then such Indemnified Party may
employ counsel to represent or defend it in any such action or proceeding
and the Indemnifying Party shall pay the reasonable fees and disbursements
of such counsel as incurred; provided, however, that the Indemnifying Party
shall not be required to pay the fees and disbursements of more than one
counsel for all Indemnified Parties in any jurisdiction in any single
action or proceeding. In any action or proceeding with respect to which
indemnification is being sought hereunder, the Indemnified Party or the
Indemnifying Party, whichever is not assuming the defense of such action,
shall have the right to participate in such litigation and to retain its
own counsel at such party's own expense. The Indemnifying Party or the
Indemnified Party, as the case may be, shall at all times use reasonable
efforts to keep the Indemnifying Party or the Indemnified Party, as the
case may be, reasonably apprised of the status of the defense of any action
the defense of which it is maintaining and to cooperate in good faith with
each other with respect to the defense of any such action.
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(b) No Indemnified Party may settle or compromise any claim or consent
to the entry of any judgment with respect to which indemnification is being
sought hereunder without the prior written consent of the Indemnifying
Party, unless such settlement, compromise or consent includes an
unconditional release of the Indemnifying Party from all liability arising
out of such claim. An Indemnifying Party may not, without the prior written
consent of the Indemnified Party, settle or compromise any claim or consent
to the entry of any judgment with respect to which indemnification is being
sought hereunder unless (i) the Indemnifying Party shall pay or cause to be
paid all amounts arising out of such settlement or judgment concurrently
with the effectiveness thereof; (ii) the terms or effect of the settlement
shall not encumber any of the assets of any Indemnified Party or any
affiliate thereof, or contain or result in any restriction, interference or
condition that would apply to such Indemnified Party or its affiliates or
to the conduct of any of their respective businesses; and (iii) the
Indemnifying Party shall obtain, as a condition of such settlement, a
complete unconditional release of each Indemnified Party.
(c) In the event an Indemnified Party shall claim a right to payment
pursuant to this Agreement, such Indemnified Party shall send written
notice of such claim to the appropriate Indemnifying Party. Such notice
shall specify the basis for such claim. As promptly as possible after the
Indemnified Party has given such notice, such Indemnified Party and the
appropriate Indemnifying Party shall establish the merits and amount of
such claim (by mutual agreement, litigation, arbitration or otherwise) and,
within 5 business days of the final determination of the merits and amount
of such claim, the Indemnifying Party shall pay to the Indemnified Party
immediately available funds in an amount equal to such claim as determined
hereunder.
(d) Consistent with the foregoing, it is understood that the Frey
Shareholders shall, at their sole expense on behalf of Purchaser and the
Waldorf Entities, monitor and, to the extent necessary or desirable, take
such actions as the Frey Shareholders deem appropriate with respect to the
Wabash Tax Litigation in the manner provided in this Section 10.3. After
payment in full by the Frey Shareholders to Purchaser of all Purchaser
Losses arising with respect to the Wabash Tax Litigation, the Frey
Shareholders shall be entitled to pursue, on behalf of the Waldorf
Entities, any right of the Waldorf Entities to recover payments with
respect to such Purchaser Losses under the Trident Agreement and the Tax
Escrow Agreement. Purchaser will cooperate and will cause the Waldorf
Entities to cooperate with the Frey Shareholders in the Frey Shareholders'
pursuit of rights under the Trident Agreement and the Tax Escrow Agreement.
To the extent that any Waldorf Entity recovers from the Frey Shareholders
for any such Purchaser Losses and Purchaser or any Waldorf Entity
thereafter receives a payment for such Purchaser Losses under the Trident
Agreement or the Tax Escrow Agreement, Purchaser shall refund an amount
equal to such payment to the Frey Shareholders. As used herein, the
"Trident Agreement" means the Shareholder Agreement and Plan of
Reorganization, dated February 1, 1994, by and among the Frey
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Shareholders, Richard E. O'Leary, John E. Byrne, Anita M. Bertelsen, H
Enterprises International, Inc. (now Wabash), and Trident Enterprises
International, Inc., and the "Tax Escrow Agreement" means the Tax Escrow-
Split-Off, dated March 9, 1994, by and among the Frey Shareholders, Richard
E. O'Leary, John E. Byrne, Anita M. Bertelsen, H Enterprises International,
Inc. (now Wabash) and First Trust National Association.
10.4 Claims Period. For purposes of this Agreement, a "Claims Period"
shall be the period during which a claim for indemnification may be asserted
under this Agreement by an Indemnified Party, which period shall (i) begin on
the earlier of the Closing Date or the date of any termination of this Agreement
pursuant to Section 11, and (ii) terminate as follows:
(a) with respect to Purchaser Losses arising under Section 10.1(i) as
a result of a breach or inaccuracy of any representation or warranty
contained in Sections 3.1, 3.2(a), 3.2(b), 3.3, 4.1, 4.2, 4.3(a), 4.3(c),
4.4, 4.7(b), 4.12 or 4.22 hereof and under Sections 10.1(ii), (iv), (v),
(vi) and (vii) (collectively, the "Shareholder Surviving Matters"), the
Claims Period shall continue (1) until the expiration of the applicable
statute of limitations under federal and state Tax laws, in the case of
Purchaser Losses arising under Section 10.1(i) as a result of a breach or
inaccuracy of any representation or warranty contained in Section 4.12
hereof or arising under Section 10.1(ii) as a result of any Tax-related
indemnification obligation contained in Section 6 hereof; (2) until the
third anniversary of the Closing Date, in the case of other Purchaser
Losses arising under Section 10.1(ii), (3) until the fifth anniversary of
the Closing Date, in the case of Purchaser Losses arising under Section
10.1(iv) and (4) until the twentieth anniversary of the Closing Date in the
case of all other Shareholder Surviving Matters;
(b) with respect to all other Purchaser Losses, the Claims Period
shall terminate on the third anniversary of the Closing Date;
(c) with respect to Shareholder Losses arising under (i) Sections
10.2(i) as a result of a breach or inaccuracy of any representation or
warranty contained in Sections 5.1, 5.2, 5.3 or 5.4 hereof or (ii) Section
10.2(iii), the Claims Period shall terminate on the twentieth anniversary
of the Closing Date; and
(d) with respect to all other Shareholder Losses, the Claims Period
shall terminate on the third anniversary of the Closing Date.
Notwithstanding the foregoing, if prior to the close of business on
the last day of the applicable Claims Period, an Indemnifying Party shall have
been properly notified of a claim for indemnity hereunder and such claim shall
not have been finally resolved or disposed of at such date, such claim shall
continue to survive and shall remain a basis for indemnity hereunder until such
claim is finally resolved or disposed of in accordance with the terms hereof.
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10.5 Liability Limits. Notwithstanding anything to the contrary
set forth herein,
(a) The Frey Shareholders shall only be liable for Purchaser
Losses arising hereunder to the extent that any such Purchaser Losses
exceed, in the aggregate, One Million Dollars ($1,000,000) (the
"Shareholder Basket Amount") and such liability shall be only for
amounts which, in the aggregate, are in excess of the Shareholder
Basket Amount; provided, however, that Purchaser Losses arising under
or pursuant to any Shareholder Surviving Matters shall not be subject
to the Shareholder Basket Amount and there shall be no "threshold
amount" on the indemnification obligations of the Frey Shareholders
with respect to such Purchaser Losses;
(b) The Frey Shareholders' aggregate liability for all Purchaser
Losses shall not exceed One Hundred Million Dollars ($100,000,000)
(the "Shareholder Maximum Amount") provided, however, that Purchaser
Losses arising under or pursuant to Section 10.1(v), 10.1(vi) or
10.1(vii) shall not be subject to or considered in calculating the
Shareholder Maximum Amount;
(c) Purchaser Losses arising under or pursuant to Section
10.1(i) as a result of a breach or inaccuracy of any representation or
warranty contained in Section 4.17 hereof or under or pursuant to
Section 10.1(iv) shall be subject to the following provisions:
(i) In calculating such Purchaser Losses, such Purchaser
Losses shall be net of any reimbursements from governmental
entities received by any Waldorf Entity for performing work the
cost of which is otherwise included as Purchaser Losses
hereunder;
(ii) The first One Million Eight Hundred Fifty Thousand
Five Hundred Dollars ($1,850,500) of such Purchaser Losses shall
be paid by Purchaser without, any contribution from the Frey
Shareholders (the "Environmental Basket");
(iii) To the extent such Purchaser Losses, in total, exceed
One Million, Eight Hundred Fifty Thousand Five Hundred Dollars
($1,850,500) but are equal to or less than Twenty-One Million,
Eight Hundred Fifty Thousand Five Hundred Dollars ($21,850,500),
such Losses shall be paid one-half by the Frey Shareholders and
one-half by Purchaser;
(iv) To the extent such Purchaser Losses, in total, exceed
Twenty-One Million Eight Hundred Fifty Thousand Five Hundred
Dollars ($21,850,500), such Purchaser Losses shall be paid by
Purchaser without any contribution by the Frey Shareholders;
(v) Except for a claim, if any, under Section 10.1(vii)
hereof, the Frey Shareholders' maximum liability for Purchaser
Losses arising under or pursuant to
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Section 10.1(i) as a result of a breach or inaccuracy of any
representation or warranty contained in Section 4.17 hereof or
under or pursuant toSection 10.1(iv) shall be Ten Million Dollars
($10,000,000) as provided for in this Section 10.5(c);
(d) The Frey Shareholders shall not have any liability with
respect to Purchaser Losses to the extent that any Waldorf Entity
actually recovers from Champion International Corporation ("Champion")
pursuant to the Purchase and Sale Agreement (the "Champion
Agreement"), dated July 5, 1985, among Champion and Waldorf
Corporation, based on the matters giving rise to such Purchaser
Losses. To the extent of such recovery, such Purchaser Losses shall
not be considered as Purchaser Losses. Purchaser shall cause Wabash or
Waldorf to use commercially reasonable efforts to seek recovery from
Champion for any Purchaser Losses for which, in the opinion of
Purchaser's counsel, a Waldorf Entity is reasonably likely to be
entitled to recovery under the Champion Agreement. If Purchaser does
not seek recovery from Champion under the Champion Agreement with
respect to any Purchaser Losses for which the Frey Shareholders have
paid Purchaser, the Frey Shareholders shall be subrogated to any right
of Purchaser or the Waldorf Entities to seek recovery from Champion
under the Champion Agreement with respect to such Purchaser Losses. To
the extent that any Waldorf Entity recovers from the Frey Shareholders
for any Purchaser Losses and Purchaser thereafter receives a payment
for such Purchaser Losses from Champion with respect to such Purchaser
Losses, Purchaser shall refund an amount equal to such payment for
such Purchaser Losses to the Frey Shareholders;
(e) It is understood that the purchase price payable hereunder
has been determined, in part, based upon the past earnings of the
Waldorf Entities as reflected in the Financial Statements (the
"Reported Earnings"). If the Reported Earnings were in fact overstated
above the actual earnings of the Waldorf Entities, it is understood
that, subject to the terms of this Section 10, Purchaser might
otherwise have a claim under Section 10.1 for either or both of (i)
for the amount of assets which are not otherwise owned by the Waldorf
Entities (thus, for example, if the Reported Earnings for the year
ended June 30, 1996 were $10 million and the actual earnings were $9
million, Purchaser might have a claim for $1 million to reflect the
shortfall in earnings) and (ii) for some multiple of the shortfall in
earnings to reflect a diminution in value of the Waldorf Entities
(where value was determined, in part, as a multiple of Reported
Earnings) (a claim based upon a multiple of earnings being hereinafter
referred to as a "Earnings Multiple Claim"). The parties agree that,
with the exception of a claim under or pursuant to Section 10.1 (vii),
Purchaser Losses shall not be deemed to include an Earnings Multiple
Claim; and
(f) In calculating Purchaser Losses arising under or pursuant to
Section 10.1(i) as a result of a breach or inaccuracy of any
representation or warranty contained in Section 4.12 hereof, such
Purchaser Losses shall be net of any Tax refunds received by the
Waldorf Entities after the Closing Date with respect to taxable
periods ended on or before the Closing Date, excluding (i) any Tax
refunds which are treated as assets of
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the Waldorf Entities (or which reduce the amount of any liability for
Taxes) on the Financial Statements and (ii) any Tax refunds attributable to
or resulting from the Canada Sale or the payment to GECC pursuant to the
GECC Agreement, as modified by the Waldorf Settlement Document.
10.6 Investigations. The respective representations and warranties of
parties hereto contained herein, in any Schedule or Exhibit hereto or in any
other document contemplated hereby and the rights to indemnification set forth
in this Section 10 shall not be deemed waived or otherwise affected by any
investigation made by a party hereto. As of the date of this Agreement, and,
unless otherwise disclosed in writing to Shareholders, as of the Closing Date,
to the knowledge of Purchaser, no facts or circumstances exist (that are not
otherwise disclosed in this Agreement or the schedules and items attached
hereto) that would cause the representations and warranties of Shareholders set
forth in Sections 3 or 4 to be incorrect in any respect which would result in a
Material Adverse Effect. Notwithstanding anything contained in this Section 10.6
to the contrary, in the event Purchaser has knowledge of any facts or
circumstances that cause the representations and warranties of Shareholders set
forth in Sections 3 or 4 to be incorrect in any respect (to the extent not
otherwise disclosed in this Agreement or the schedules and items attached
hereto), and thereafter Purchaser proceeds with the Closing, Purchaser shall be
deemed to have waived its rights under this Agreement to the extent of Purchaser
Losses arising as a result of the breach of such representations and warranties
caused by such known facts or circumstances. As used herein, the terms
"knowledge of Purchaser" shall mean the knowledge of Bradley Currey, Jr., Chief
Executive Officer of Purchaser, Jay Shuster, President of Purchaser, David C.
Nicholson, Chief Financial Officer of Purchaser and Robert B. McIntosh, General
Counsel of Purchaser.
Section 11. Termination.
11.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(i) by mutual agreement of the Shareholder Representative and
Purchaser;
(ii) by the Shareholder Representative, if the conditions set forth in
Sections 7 and 9 hereof (to the extent compliance or performance thereunder
is not within the control of Shareholders) shall not have been complied
with or performed and such noncompliance or nonperformance shall not have
been cured or eliminated (or by its nature cannot be cured or eliminated)
by Purchaser on or before February 28, 1997; and
(iii) by Purchaser, if the conditions set forth in Sections 7 and 8
hereof (to the extent compliance or performance thereunder is not within
the control of Purchaser) shall not have been complied with or performed
and such noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) by Shareholders
on or before February 28, 1997.
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11.2 Specific Performance and Other Remedies. The parties hereto each
acknowledge that the rights of each party to consummate the transactions
contemplated hereby are special, unique and of extraordinary character, and
that, in the event that any party violates or fails or refuses to perform any
covenant or agreement made by it herein, the non-breaching party may be without
an adequate remedy at law. The parties each agree, therefore, that in the event
that either party violates or fails or refuses to perform any covenant or
agreement made by such party herein, the non-breaching party or parties may,
subject to the terms of this Agreement and in addition to any remedies at law
for damages or other relief, institute and prosecute an action in any court of
competent jurisdiction to enforce specific performance of such covenant or
agreement or seek any other equitable relief.
11.3 Effect of Termination. In the event of termination of this
Agreement pursuant to this Section 11, this Agreement shall forthwith become
void and there shall be no liability on the part of any party or its respective
officers, directors or shareholders. Notwithstanding the foregoing, nothing
contained herein shall relieve any party from liability for any breach of any
covenant or agreement in this Agreement.
Section 12. Shareholder Representative.
By the execution and delivery of this Agreement, including
counterparts hereof, each Shareholder hereby irrevocably constitutes and
appoints Eugene U. Frey (the "Shareholder Representative"), as the true and
lawful agent and attorney-in-fact of such Shareholder with full powers of
substitution to act in the name, place and stead of such Shareholder with
respect to the transfer of such Shareholder's Shares to Purchaser in accordance
with the terms and provisions of this Agreement, as the same may be from time to
time amended, and to do or refrain from doing all such further acts and things,
and to execute all such documents, as the Shareholder Representative shall deem
necessary or appropriate in connection with any of the transactions contemplated
hereby, including the power:
(i) to receive, hold, and deliver to Purchaser the certificates
evidencing the Shares accompanied by executed stock powers, signature
guarantees, and any other documents relating thereto on behalf of
Shareholders, including the power to endorse and present any such
certificate or stock power on behalf of any Shareholder;
(ii) to execute and deliver all ancillary agreements, certificates,
and documents which the Shareholder Representative deems necessary or
appropriate in connection with the consummation of the transactions
contemplated hereby;
(iii) to receive and receipt for all payments made by Purchaser to
Shareholders under this Agreement;
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(iv) to act for Shareholders with respect to all indemnification
matters referred to in this Agreement, including the right to compromise on
behalf of Shareholders any indemnification claim made by or against
Shareholders;
(v) to terminate, amend, or waive any provision of this Agreement;
provided that any such action, if material to the rights and obligations of
Shareholders in the reasonable judgment of the Shareholder Representative,
shall be taken in the same manner with respect to all Shareholders, unless
otherwise agreed by each Shareholder who is subject to any disparate
treatment of a potentially adverse nature;
(vi) to employ and obtain the advice of legal counsel, accountants
and other professional advisors as the Shareholder Representative, in his
sole discretion, deems necessary or advisable in the performance of his
duties as Shareholder Representative and to rely on their advice and
counsel;
(vii) to incur expenses of sale, including fees of brokers, attorneys
and accountants incurred pursuant to the transfer of the Shares, and any
other fees and expenses allocable or in any way relating to such
transaction or any indemnification claim, whether incurred prior or
subsequent to Closing (all of which are hereinafter referred to as
"Transaction Expenses"), to withhold from funds received on behalf of
Shareholders prior to their distribution to Shareholders any amount which
the Shareholder Representative deems necessary for payment of or as a
reserve against Transaction Expenses, and to pay such fees and expenses or
to deposit the same in a bank account established for such purpose;
(viii) to pay from funds received on behalf of Shareholders, prior to
their distribution, the Transaction Expenses; and
(ix) to do or refrain from doing any further act or deed on behalf
of Shareholders which the Shareholder Representative deems necessary or
appropriate in his sole discretion relating to the subject matter of this
Agreement as fully and completely as any of the Shareholders could do if
personally present and acting.
The appointment of the Shareholder Representative shall be deemed
coupled with an interest and shall be irrevocable, and the Purchaser and any
other Person may conclusively and absolutely rely, without inquiry, upon any
action of the Shareholder Representative as the act of Shareholders in all
matters referred to in this Agreement or any other document contemplated hereby.
Each of Shareholders hereby ratifies and confirms all that the Shareholder
Representative shall do or cause to be done by virtue of his appointment as
Shareholder Representative of such Shareholder. The Shareholder Representative
shall act for Shareholders on all of the matters set forth in this Agreement in
the manner the Shareholder Representative believes to be in the best interest
of Shareholders and consistent with their obligations under this Agreement and
the Waldorf Ancillary Documents, but the Shareholder Representative shall not
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be responsible to any Shareholder for any loss or damage any Shareholder may
suffer by reason of the performance by the Shareholder Representative of his
duties under this Agreement, other than loss or damage arising from willful
violation of law or gross negligence in the performance of his duties under
this Agreement.
Section 13. Miscellaneous.
13.1 Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by the party making the same, shall specify the
Section hereunder pursuant to which it is given or being made, and shall be
delivered personally or by telecopy transmission or sent by registered or
certified mail or by any express mail or courier delivery service (with postage
and other fees prepaid) as follows:
To Purchaser:
Rock-Tenn Company
504 Thrasher Street
Norcross, Georgia 30071
Attn: Chief Financial Officer
Telecopy No.: (770) 263-3582
with a copy to:
Rock-Tenn Company
504 Thrasher Street
Norcross, Georgia 30071
Attn: General Counsel
Telecopy No.: (770) 248-4402
To Shareholders:
Mr. Eugene U. Frey
4351 Gulf Shore Boulevard North
Unit No. 6, South
Naples, Florida 34103
Telecopy No.: (941) 434-2879
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<PAGE> 56
with a copy to:
Mr. Morris M. Sherman
Leonard, Street and Deinard
Suite 2300
150 South Fifth Street
Minneapolis, Minnesota 55402
Telecopy No.: (612) 335-1500
or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing. Such notice shall be
effective upon the date of delivery or refusal of delivery, if sent by personal
delivery, registered, certified or express mail or courier delivery, or upon
transmission by telecopy transmission, if immediately confirmed by telephone or
electronic means.
13.2 Attachments. Annex II hereto lists all Annex(es), Schedules and
Exhibits attached hereto, all of which are hereby incorporated into this
Agreement and are hereby made a part hereof as if set out in full in this
Agreement.
13.3 Assignment; Successors in Interest. No assignment or transfer by
any party of their respective rights and obligations hereunder prior to the
Closing shall be made except with the prior written consent of the other parties
hereto, which consent may be given by the Shareholder Representative on behalf
of Shareholders. In the case of any person who executes this Agreement or any
other agreement or document contemplated hereby in a fiduciary capacity,
including, but not limited to, as trustee, on behalf of any Shareholder, the
terms, conditions and obligations of this Agreement shall inure to the benefit
of and be binding upon such Shareholder and, if a trust, the trust estate and
beneficiaries thereof. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and in the case of Purchaser, its successors
and assigns and, in the case of Shareholders, their respective heirs,
beneficiaries and assigns, and any reference hereto shall also be a reference to
a permitted successor or assign.
13.4 Number; Gender. Whenever the context so requires, the singular
number shall include the plural and the plural shall include the singular, and
the gender of any pronoun shall include the other genders.
13.5 Captions. The titles, captions and table of contents contained in
this Agreement are inserted herein only as a matter of convenience and for
reference and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof. Unless otherwise specified to
the contrary, all references to Articles and Sections are references to Articles
and Sections of this Agreement and all references to Exhibits are references to
Exhibits to this Agreement.
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<PAGE> 57
13.6 Controlling Law; Integration; Amendment. This Agreement shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Minnesota without reference to Minnesota choice of law rules and
the parties hereto hereby agree; provided, however, that the right, power and
capacity of any Shareholder who is a fiduciary to execute, deliver and perform
this Agreement or any Exhibit and to consummate the contemplated transactions
shall be determined in accordance with and governed by the laws of the State
where the will, trust agreement or other document that established or created
the authority of such fiduciary to act was executed. This Agreement (and the
related written agreements to be entered into in connection with this Agreement)
supersedes all negotiations, agreements and understandings among the parties
with respect to the subject matter hereof and constitutes the entire agreement
among the parties hereto. This Agreement may not be amended, modified or
supplemented except by written agreement of Purchaser and the Shareholder
Representative.
13.7 Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, 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 will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
13.8 Counterparts. This Agreement may be executed in counterparts,
including the Shareholder Counterpart Signature Pages, each of which shall be
deemed an original and all of which together shall constitute one and the same
agreement.
13.9 Enforcement of Certain Rights. Except as otherwise provided in
Section 10, nothing expressed or implied in this Agreement is intended, or shall
be construed, to confer upon or give any person, firm or corporation other than
the parties hereto, and their successors or assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, or result in
such person, firm or corporation being deemed a third party beneficiary of this
Agreement.
13.10 Waiver. Any agreement on the part of a party hereto to any
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party, or as to any Shareholder, by the Shareholder
Representative. A waiver by one party of the performance of any covenant,
agreement, obligation, condition, representation or warranty shall not be
construed as a waiver of any other covenant, agreement, obligation, condition,
representation or warranty. A waiver by any party of the performance of any act
shall not constitute a waiver of the performance of any other act or an
identical act required to be performed at a later time.
13.11 Material and Knowledge Defined. The term "material" as used in
this Agreement with respect to any matter relating to any Waldorf Entity refers
to any circumstance
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<PAGE> 58
or condition that individually or in the aggregate would result in a cost,
penalty, reduction in value or other loss of any kind to the Waldorf Entities in
excess of $50,000. The terms "to the best knowledge of Shareholders" or any
similar phrase as used in any particular provision of this Agreement means the
knowledge of the Frey Shareholders after making appropriate inquiries of the
officers of the Waldorf Entities identified on Schedule 13.11 and based on
affidavits of such officers addressed to the Frey Shareholders and Purchaser in
the form of Exhibit I.
13.12 Arbitration; Legal Proceedings.
(a) The parties shall attempt in good faith to resolve any dispute
arising out of or relating to this Agreement, the breach, termination or
validity thereof (including, without limitation, any claim for
indemnification pursuant to Section 10 hereof) promptly by negotiation
between the Shareholder Representative and a representative of Purchaser
who has authority to settle the controversy. Either the Shareholder
Representative or Purchaser may give the other written notice that a
dispute exists (a "Notice of Dispute"). The Notice of Dispute shall include
a statement of such party's position and, in the case of Purchaser, the
name and title of the representative who will represent the Purchaser.
Within ten (10) days of the delivery of the Notice of Dispute, the
Shareholder Representative and the executive representing Purchaser shall
meet at a mutually acceptable time and place, and thereafter as long as
they reasonably deem necessary, to attempt to resolve the dispute. All
documents and other information or data on which each party relies
concerning the dispute shall be furnished or made available on reasonable
terms to the other party at or before the first meeting of the parties as
provided by this paragraph.
(b) Any controversy or claim arising out of or relating to this
Agreement, the breach, termination or validity thereof, or the transactions
contemplated herein (including, without limitation, any claims for
indemnification pursuant to Section 10 hereof), if not settled by
negotiation as provided in paragraph (a) of this Section 13.12, shall be
settled by arbitration in New York, New York, in accordance with the CPR
Rules for Non-Administered Arbitration of Business Disputes, by three
arbitrators. Either party may initiate arbitration twenty (20) days
following the delivery of a Notice of Dispute if the dispute has not then
been settled by negotiation, or sooner if the other party fails to
participate in negotiation in accordance with paragraph (a) above. The
three arbitrators shall be appointed as provided by CPR Rule 5, Selection
of Arbitrators by the parties. The arbitration procedure shall be governed
by the United States Arbitration Act, 9 U.S.C. ss.1-16, and the award
rendered by the arbitrator shall be final and binding on the parties and
may be entered in any court having jurisdiction thereof.
(c) Each party shall have discovery rights as provided by the Federal
Rules of Civil Procedure; provided, however, that all such discovery shall
be commenced and concluded within sixty (60) days of the initiation of
arbitration.
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<PAGE> 59
(d) It is the intent of the parties that any arbitration shall be
concluded as quickly as reasonably practicable. Unless the parties
otherwise agree, once commenced, the hearing on the disputed matters shall
be held four days a week until concluded, with each hearing date to begin
at 9:00 a.m. and to conclude at 5:00 p.m. The arbitrators shall use all
reasonable efforts to issue the final award or awards within a period of
five business days after closure of the proceedings. Failure of the
arbitrators to meet the time limits of this Section 13.12(d) shall not be a
basis for challenging the award.
(e) The arbitrators shall instruct the non-prevailing party to pay all
costs of the proceedings, including the fees and expenses of the
arbitrators and the reasonable attorneys' fees and expenses of the
prevailing party. If the arbitrators determine that there is not a
prevailing party, each party shall be instructed to bear its own costs and
to pay one-half of the fees and expenses of the arbitrators.
(f) Each party hereto hereby agrees that any legal proceeding
instituted to enforce an arbitration award hereunder will be brought in the
U.S. federal or state courts situated in New York, New York, and hereby
submits to personal jurisdiction therein and irrevocably waives any
objection as to venue therein, and further agrees not to plead or claim in
any such court that any such proceeding has been brought in an inconvenient
forum. Each Shareholder hereby designates, appoints and empowers Morris M.
Sherman, presently having offices at Leonard, Street and Deinard, Suite
2300, 150 South Fifth Street, Minneapolis, Minnesota 55402, as such
Person's true and lawful agent for service of process to receive and accept
on Shareholder's behalf service of process in any such proceeding brought
in any such courts. Purchaser hereby designates, appoints and empowers
Robert B. McIntosh, General Counsel, presently having offices at 504
Thrasher Street, Norcross, Georgia 30071, as such Purchaser's true and
lawful agent for service of process to receive and accept on Purchaser's
behalf service of process in any such proceeding brought in any such
courts. Each of the foregoing Persons agrees that the failure of the
process agent appointed by such Person to give notice of process to such
Person shall not impair or affect the validity of service upon such agent
or of any judgment based thereon, and each such Person irrevocably consents
to the service of process in any such proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to such Person's address for
notices under this Agreement. Nothing herein shall preclude any of the
parties hereto from serving process in any other manner or in any other
jurisdiction in connection with enforcing an arbitration award hereunder.
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<PAGE> 60
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date and year first above written.
ROCK-TENN COMPANY
By:________________________________
Bradley Currey, Jr.
Chief Executive Officer
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<PAGE> 61
THIS IS A SHAREHOLDER COUNTERPART SIGNATURE PAGE TO THE STOCK PURCHASE AGREEMENT
MADE AMONG ROCK-TENN COMPANY AND CERTAIN OTHER PARTIES DATED AS OF JANUARY 21,
1997.
SHAREHOLDERS:
______________________________________
Eugene U. Frey
THE CAROL F. WOLFE 1987 TRUST U/A
dated December 30, 1987
By: __________________________________
Eugene U. Frey, Trustee
By: __________________________________
Mary F. Frey, Trustee
By: __________________________________
Carol F. Wolfe, Trustee
THE JAMES R. FREY 1987 TRUST U/A
dated December 30, 1987
By: __________________________________
Eugene U. Frey, Trustee
By: __________________________________
Mary F. Frey, Trustee
By: __________________________________
James R. Frey, Trustee
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<PAGE> 62
THE JOHN J. FREY 1987 TRUST U/A
dated December 30, 1987
By: __________________________________
Eugene U. Frey, Trustee
By: __________________________________
Mary F. Frey, Trustee
By: __________________________________
John J. Frey, Trustee
NORWEST BANK SOUTH DAKOTA, N.A. as Trustee of
THE JAMES R. FREY ALTERNATE DISTRIBUTIONS
TRUST created under the Mary F. Frey Family Trust u/a
dated July 2, 1985, with Mary F. Frey as Donor
By: __________________________________
[_________________________]
Title:______________________________
NORWEST BANK SOUTH DAKOTA, N.A. as Trustee of
THE JOHN J. FREY ALTERNATE DISTRIBUTIONS
TRUST created under the Mary F. Frey Family Trust u/a
dated July 2, 1985, with Mary F. Frey as Donor
By: __________________________________
[_________________________]
Title:______________________________
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<PAGE> 63
NORWEST BANK SOUTH DAKOTA, N.A. as Trustee of
THE CAROL F. WOLFE ALTERNATE
DISTRIBUTIONS TRUST created under the Mary F. Frey
Family Trust u/a dated July 2, 1985, with Mary F. Frey as
Donor
By: __________________________________
[________________________]
Title:______________________________
THE ARCHDIOCESE OF SAINT PAUL
AND MINNEAPOLIS CATHOLIC COMMUNITY
FOUNDATION
By: __________________________________
[______________________]
Title: _________________________________
THE SAINT PAUL FOUNDATION
By: __________________________________
[______________________]
Title: _________________________________
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<PAGE> 64
ANNEX II
Schedules
<TABLE>
<S> <C>
Schedule 1.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Issued and Outstanding Shares of Wabash
Capital Stock
Schedule 1.2(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholders' Accounts for Wire Transfer
Schedule 1.2(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ancillary Assets
Schedule 3.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nonprofit Shareholders' Required Consents
and Approvals
Schedule 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Waldorf Entities Locations of
Incorporation and Where Qualified as
Foreign Corporations
Schedule 4.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restrictions and Conflicts
Schedule 4.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Waldorf Entities Capital Stock
Outstanding
Schedule 4.5 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . List and Legal Descriptions of all Real
Property Owned by Waldorf or Waldorf
Realty
Schedule 4.5 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Real and Personal Property Leases and
Agreements
Schedule 4.5 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personal Property
Schedule 4.5 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories
Schedule 4.5 (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounts Receivable
Schedule 4.5 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Third Party Options or Agreements to
Acquire Assets, Properties or Rights of
Waldorf
Schedule 4.5 (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets Owned by the Waldorf Entities
</TABLE>
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<PAGE> 65
<TABLE>
<S> <C>
Schedule 4.5 (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Condition of Certain Assets
Schedule 4.5 (j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Third Party Leases of the Waldorf Property
Schedule 4.5 (k) . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Waldorf Entities Bank and Securities
Accounts
Schedule 4.5 (l) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets Owned or Leased by Wabash
Schedule 4.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
Schedule 4.7 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities and Obligations of Wabash
Schedule 4.7 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities and Obligations of the Waldorf
Entities
Schedule 4.7(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities and Obligations of Waldorf
Foundation
Schedule 4.8 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certain Changes in the Waldorf Entities
since June 30, 1996
Schedule 4.8 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certain Changes in the Waldorf Entities
since June 30, 1996
Schedule 4.8 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital Expenditures Made From July 1,
1996 through December 15, 1996; Capital
Expenditures approved through June 30,
1997
Schedule 4.8 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Average Price Per Ton For Boxboard,
Medium and Folding Cartons Including
Mechanism Used to Establish Price Changes
Schedule 4.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal Proceedings
Schedule 4.10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Licenses and Permits
Schedule 4.11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Material Contracts
Schedule 4.12(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . Extensions of Time to File Tax Returns;
Claims by Taxing Authorities
</TABLE>
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<PAGE> 66
<TABLE>
<S> <C>
Schedule 4.12(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax Returns Filed and Disputes Concerning
Tax Liabilities
Schedule 4.12(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . Waiver of Statutes of Limitation and
Extensions for Tax Assessments
Schedule 4.12(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . The Waldorf Entities Tax Allocation or Tax
Sharing Agreements
Schedule 4.12(g). . . . . . . . . . . . . . . . . . . . . . . . . . . . Certain Tax Information
Schedule 4.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Officers and Employees of the Waldorf
Entities
Schedule 4.14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Employee Benefit Plans
Schedule 4.15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Labor Relations
Schedule 4.16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Insurance Policies, Coverages and Material
Pending Claims
Schedule 4.17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental Matters
Schedule 4.17(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental Fines, Penalties and
Assessments Paid Within the Last Five
Years
Schedule 4.18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intellectual Property
Schedule 4.19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transactions with Affiliates
Schedule 4.20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Significant Customers or Suppliers
Expected to Terminate Business Relations
with the Waldorf Entities
Schedule 4.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brokers, Finders, Investment Bankers or
Other Intermediaries Employed by the
Waldorf Entities
Schedule 4.24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Waldorf Canada Advances
Schedule 4.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HEI Development
</TABLE>
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<PAGE> 67
<TABLE>
<S> <C>
Schedule 4.26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contracts or Other Obligations to
Waldorf Canada
Schedule 5.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brokers, Finders, Investment Bankers or
Other Intermediaries Employed by Purchaser
Schedule 6.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Rights Outstanding
Schedule 6.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fees and Expenses Incurred by the Waldorf
Entities in Connection with this Transaction
Schedule 6.12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental-Related Work to be
Conducted and Completed by Waldorf
Schedule 8.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Required Consents for Material Contracts
Schedule 13.11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Officers of the Waldorf Entities Providing
Affidavits Regarding Shareholder
Representations and Warranties
Exhibits
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Parent Transfer Agreement
Exhibit B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stock Transfer Agreement
Exhibit C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consulting Agreement
Exhibit D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noncompetition Agreement for Eugene U. Frey
Exhibit D-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Noncompetition Agreement for John J. Frey
Exhibit E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Opinion of Leonard, Street & Deinard
Exhibit F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assumption Agreement
Exhibit G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Guaranty
Exhibit H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Opinion of King & Spalding
Exhibit I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Form of Affidavit
</TABLE>
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<PAGE> 68
Annex
<TABLE>
<S> <C>
Annex I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental Reports
Annex II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . List of Annexes, Schedules and Exhibits
</TABLE>
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<PAGE> 69
SCHEDULE 13.11
OFFICERS OF THE WALDORF ENTITIES PROVIDING
AFFIDAVITS REGARDING
SHAREHOLDER REPRESENTATIONS AND WARRANTIES
Richard VanDierendonck Vice President G/M
Anthony Volpe Vice President G/M
Leonard Brasch Group Vice President
James Currin Group Vice President
Dominick Adducci Vice President G/M
Christopher Bolin Vice President G/M
Thomas Cardinal Vice President Quality & Tech
Larry McVicker Chief Operating Officer
William Priesmeyer Chief Financial Officer
Larry Larsen Vice President Human Resources
Gary Vacek Vice President Sales & Marketing
Jack Greenshields Senior Vice President Mill
Thomas Lawson Vice President - Battle Creek
Gary Kaziukewicz Manager - Regulatory Compliance
Tom Mihalovich General Manager - Best Recycling
Mark Ridgway Assistant Treasurer
<PAGE> 1
Execution Copy
Exhibit 4.1
==========================================================
CREDIT AGREEMENT
dated as of January 21, 1997
among
ROCK-TENN COMPANY,
THE LENDERS LISTED HEREIN,
and
SUNTRUST BANK, ATLANTA
as Agent
==========================================================
<PAGE> 2
CONTENTS
ARTICLE 1. DEFINITIONS; CONSTRUCTION.................................... 1
Section 1.1. Definitions............................................. 1
Section 1.2. Accounting Terms and Determination...................... 19
Section 1.3. Other Definitional Terms................................ 19
Section 1.4. Exhibits and Schedules.................................. 19
ARTICLE 2. REVOLVING LOANS; COMPETITIVE BID LOANS....................... 20
Section 2.1. Commitment; Use of Proceeds............................. 20
Section 2.2. Revolving Credit Notes; Repayment of Principal.......... 20
Section 2.3. Reduction of Revolving Credit and Swing Line
Commitments; Mandatory Prepayment....................... 21
Section 2.4. Change In Control of the Borrower....................... 22
Section 2.5. Extension of Commitments................................ 22
Section 2.6. Competitive Bid Loans................................... 23
Section 2.7. Competitive Bid Notes; Repayment of Principal........... 26
Section 2.8. Limitation on the Amount of Bid Loans................... 26
Section 2.9. Pro Rata Payments....................................... 26
ARTICLE 3. SWING LINE FACILITY.......................................... 28
Section 3.1. Swing Line Facility; Use of Proceeds.................... 28
Section 3.2. Swing Line Note; Repayment of Principal................. 29
Section 3.3. Voluntary Reduction of Swing Line Commitment............ 29
Section 3.4. Refunding Swing Line Loans with Proceeds of
Mandatory Revolving Loans............................... 29
ARTICLE 4. GENERAL LOAN TERMS........................................... 31
Section 4.1. Funding Notices......................................... 31
Section 4.2. Disbursement of Funds................................... 33
Section 4.3. Interest................................................ 34
Section 4.4. Interest Periods; Maximum Number of Borrowings.......... 36
Section 4.5. Fees. ................................................. 37
Section 4.6. Effective Date for Adjustment to Facility Fee Percentage
and Applicable Margin................................... 38
Section 4.7. Voluntary Prepayments of Borrowings..................... 38
Section 4.8. Manner of Payment, Calculation of Interest, Taxes....... 39
Section 4.9. Interest Rate Not Ascertainable, etc.................... 42
Section 4.10. Illegality.............................................. 43
Section 4.11. Increased Costs......................................... 43
Section 4.12. Lending Offices......................................... 45
-i-
<PAGE> 3
Section 4.13. Funding Losses.......................................... 45
Section 4.14. Assumptions Concerning Funding of Eurodollar and
Competitive Bid Rate Advances........................... 46
Section 4.15. Apportionment of Payments............................... 46
Section 4.16. Sharing of Payments, Etc................................ 47
Section 4.17. Capital Adequacy........................................ 47
Section 4.18. Limitation on Certain Payment Obligations............... 48
ARTICLE 5. CONDITIONS TO BORROWINGS..................................... 49
Section 5.1. Conditions Precedent to Initial Loans................... 49
Section 5.2. Conditions to All Loans................................. 51
ARTICLE 6. REPRESENTATIONS AND WARRANTIES............................... 52
Section 6.1. Corporate Existence; Compliance with Law................ 52
Section 6.2. Corporate Power; Authorization.......................... 52
Section 6.3. Enforceable Obligations................................. 52
Section 6.4. No Legal Bar............................................ 53
Section 6.5. No Material Litigation.................................. 53
Section 6.6. Investment Company Act, Etc............................. 53
Section 6.7. Margin Regulations...................................... 53
Section 6.8. Compliance With Environmental Laws...................... 53
Section 6.9. Insurance............................................... 54
Section 6.10. No Default.............................................. 54
Section 6.11. No Burdensome Restrictions.............................. 54
Section 6.12. Taxes.
........................................................ 55
Section 6.13. Subsidiaries............................................ 55
Section 6.14. Financial Statements.................................... 55
Section 6.15. ERISA.
........................................................ 56
Section 6.16. Patents, Trademarks, Licenses, Etc...................... 57
Section 6.17. Ownership of Property; Liens............................ 57
Section 6.18. Indebtedness............................................ 57
Section 6.19. Financial Condition..................................... 58
Section 6.20. Labor Matters........................................... 58
Section 6.21. Payment or Dividend Restrictions........................ 58
Section 6.22. Disclosure.............................................. 59
ARTICLE 7. AFFIRMATIVE COVENANTS........................................ 60
Section 7.1. Corporate Existence, Etc................................ 60
Section 7.2. Compliance with Laws, Etc............................... 60
Section 7.3. Payment of Taxes and Claims, Etc........................ 60
Section 7.4. Keeping of Books........................................ 60
Section 7.5. Visitation, Inspection, Etc............................. 61
Section 7.6. Insurance; Maintenance of Properties.................... 61
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Section 7.7. Financial Reports....................................... 61
Section 7.8. Notices Under Certain Other Indebtedness................ 63
Section 7.9. Notice of Litigation.................................... 63
Section 7.10. Subsidiary Guarantees................................... 64
ARTICLE 8. NEGATIVE COVENANTS....................................... 65
Section 8.1. Financial Requirements.................................. 65
Section 8.2. Liens.
......................................................... 65
Section 8.3. Limitations on Funded Debt of Restricted Subsidiaries.... 67
Section 8.4. Merger and Sale of Assets................................ 67
Section 8.5. Transactions with Affiliates............................. 69
Section 8.6. Nature of Business....................................... 69
Section 8.7. Regulations G, T, U and X................................ 69
Section 8.8. ERISA Compliance......................................... 69
Section 8.9. Limitations on Subsidiaries which are not Restricted
Subsidiaries............................................. 69
ARTICLE 9. EVENTS OF DEFAULT............................................. 71
Section 9.1. Payments................................................. 71
Section 9.2. Covenants Without Notice................................. 71
Section 9.3. Other Covenants.......................................... 71
Section 9.4. Representations.......................................... 71
Section 9.5. Non-Payments of Other Indebtedness....................... 71
Section 9.6. Defaults Under Other Agreements.......................... 72
Section 9.7. Bankruptcy............................................... 72
Section 9.8. ERISA.
......................................................... 72
Section 9.9. Money Judgment........................................... 73
Section 9.10. Default Under Other Credit Documents..................... 74
ARTICLE 10. THE AGENT................................................ 75
Section 10.1. Appointment of Agent..................................... 75
Section 10.2. Authorization of Agent with Respect to the Security
Documents................................................ 75
Section 10.3. Nature of Duties of Agent................................ 76
Section 10.4. Lack of Reliance on the Agent............................ 76
Section 10.5. Certain Rights of the Agent.............................. 76
Section 10.6. Reliance by Agent........................................ 77
Section 10.7. Indemnification of Agent................................. 77
Section 10.8. The Agent in its Individual Capacity..................... 77
Section 10.9. Holders of Notes......................................... 78
Section 10.10. Successor Agent........................................ 78
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ARTICLE 11. MISCELLANEOUS................................................ 79
Section 11.1. Notices................................................ 79
Section 11.2. Amendments, Etc........................................ 79
Section 11.3. No Waiver; Remedies Cumulative......................... 79
Section 11.4. Payment of Expenses, Etc............................... 80
Section 11.5. Right of Setoff........................................ 82
Section 11.6. Benefit of Agreement; Assignments and Participations... 82
Section 11.7. Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial............................................. 85
Section 11.8. Independent Nature of Lenders' Rights.................. 85
Section 11.9. Counterparts........................................... 85
Section 11.10. Effectiveness; Survival................................ 86
Section 11.11. Severability........................................... 86
Section 11.12. Independence of Covenants.............................. 86
Section 11.13. Change in Accounting Principles, Fiscal Year or Tax
Laws................................................... 86
Section 11.14. Headings Descriptive; Entire Agreement................. 87
Section 11.15. Disclosure of Confidential Information................. 87
Section 11.16. Interest............................................... 88
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SCHEDULES
Schedule 6.1. Organization and Ownership of Subsidiaries
Schedule 6.5. Certain Pending and Threatened Litigation
Schedule 6.8. Environmental Compliance
Schedule 6.8. Environmental Notices
Schedule 6.8. Environmental Permits
Schedule 6.11. Burdensome Restrictions
Schedule 6.12. Employee Benefit Matters
Schedule 6.16. Patent, Trademark, License, and Other Intellectual Property
Matters
Schedule 6.17. Ownership of Properties
Schedule 6.18. Indebtedness; Liens
Schedule 6.20. Labor and Employment Matters
Schedule 6.21. Dividend Restrictions
TABLE OF EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Competitive Bid Note
Exhibit C Form of Swing Line Note
Exhibit D Form of Compliance Certificate
Exhibit E Form of Competitive Bid Request
Exhibit F Form of Notice of Competitive Bid Request
Exhibit G Form of Competitive Bid
Exhibit H Form of Competitive Bid Accept/Reject Letter
Exhibit I Closing Certificate
Exhibit J-1 Form of Opinion of Corporate Counsel
Exhibit J-2 Form of Opinion of King & Spalding
Exhibit K Form of Assignment and Acceptance Agreement
Exhibit L Form of Contribution Agreement
Exhibit M Form of Subsidiary Guarantee
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Table of Definitions
Acquired Company, 1
Adjusted LIBO Rate, 1
Advance, 2
Affiliate, 2
Agent, 1, 2
Agreement, 2
Applicable Commitment Percentage, 2
Applicable Margin, 3
Applicable Percentages, 38
Assignment and Acceptance, 3
Available Revolving Credit Commitment, 3
Bankruptcy Code, 3 Base Rate, 3 Base Rate Advance, 3 Borrower, 1, 3
Borrowing, 4 Business Day, 4 Calculation Date, 38 Capital Assets, 4
Capital Lease, 4
Capital Lease Obligation, 4
Change in Control, 4
Change in Control Provision, 4
Closing Date, 5
Commitment, 5
Competitive Bid, 5
Competitive Bid Accept/Reject Letter, 5
Competitive Bid Facility, 5
Competitive Bid Loan, 5
Competitive Bid Note, 5
Competitive Bid Rate, 5
Competitive Bid Rate Advance, 5
Competitive Bid Request, 5
Consenting Lenders, 22
Consolidated Companies, 6
Consolidated Funded Debt, 6
Consolidated Net Income, 6
Consolidated Net Income Available For Fixed Charges, 6
Consolidated Net Loss, 6
Consolidated Net Worth, 6
Continuing Lenders, 23
Contractual Obligation, 6
Contribution Agreement, 7
Cost of Funds Advance, 7
Cost of Funds Rate, 7
Credit Documents, 7
Default, 7
Dollar, 7
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EBITDA, 7
Environmental Laws, 7
Equity Offering, 8
ERISA, 8
ERISA Affiliate, 8
Eurodollar Advance, 8
Event of Default, 8
Executive Officer, 8
Existing Date, 22
Existing Swing Line Lender, 28
Facilities, 8
Facility, 8
Facility Fee, 8, 37
Facility Fee Percentage, 9
Federal Funds Rate, 9
Fee Letter, 9
Financial Officer, 9
Financial Report, 9
Fixed Charges, 10
Funded Debt, 10
GAAP, 10
Guaranty, 10
Hazardous Substances, 10
Income Taxes, 11
Indebtedness, 11
Indebtedness for Borrowed Money, 11
Interest Expense, 12
Interest Period, 12
Interest Rate Contract, 12
Lender, 12
Lenders, 1, 12
Lending Office, 12
LIBOR, 12
Lien, 13
Loans,13
Margin Regulations, 13
Material, 13
Materially Adverse Effect, 13
Maturity Date, 13
Moody's, 13
Multiemployer Plan, 13
Net Sale Proceeds, 13
New Lender, 23
New Swing Line Lender, 28
Non-Consenting Lenders, 22
Notes, 14
Notice of Borrowing, 14
Notice of Conversion/Continuation, 14
Notice of Conversion/Continuation of Swing Line Loans, 14
Notice of Swing Line Loan, 14
Obligations, 14
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Payment Office, 14
PBGC, 14
Person, 14
Plan, 14
Prior Agreements, 15
Purchase Agreement, 15
Purchase Money Indebtedness, 15
Rating Agency, 15
Reduction, 21
Refunded Swing Line Loans, 30
Regulation D, 15
Required Lenders, 15
Requirement of Law, 15
Restricted Investment, 15
Restricted Subsidiary, 16
Reuters Screen, 16
Revolving Credit Commitment, 16
Revolving Credit Notes, 17
Revolving Loans, 17
Security Documents, 17
Sonoco Joint Venture, 17
Standard & Poor's, 17
Subsidiary, 17
Subsidiary Guarantee, 17
Subsidiary Guarantor, 17
SunTrust, 1
Swing Line Commitment, 17
Swing Line Facility, 18
Swing Line Lender, 18
Swing Line Lender Replacement Date, 28
Swing Line Loans, 18
Swing Line Note, 18
Tax Code, 18
Taxes, 18
Telerate, 18
Total Capitalization, 18
Total Commitments, 18
Type, 18
U.S. Dollar, 7
Unrestricted Subsidiary, 18
Voting Stock, 19
Waldorf Credit Agreement, 19
Waldorf Debt, 67
Waldorf Indenture, 19
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<PAGE> 10
CREDIT AGREEMENT
THIS CREDIT AGREEMENT made and entered into as of January 21, 1997, by
and among ROCK-TENN COMPANY, a Georgia corporation (the "Borrower"), SUNTRUST
BANK, ATLANTA a banking corporation organized under the laws of the State of
Georgia ("SunTrust"), the other banks and lending institutions listed on the
signature pages hereof, and any assignees of SunTrust or such other banks and
lending institutions which become "Lenders" as provided herein (SunTrust, and
such other banks, lending institutions, and assignees referred to collectively
herein as ("Lenders"), and SUNTRUST BANK, ATLANTA in its capacity as agent for
the Lenders (together with any successor agent for such Lenders as may be
appointed from time to time pursuant to Article 10. hereof) (the "Agency");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make a revolving
credit facility and swing line facility available to the Borrower in an amount
not to exceed $400,000,000 at any one time outstanding the proceeds of which are
to be used for the repayment of certain existing indebtedness of Borrower, for
financing the acquisition of Wabash Corporation, a Delaware corporation (the
"Acquired Company"), for working capital and for other general corporate
purposes;
WHEREAS, the Lenders have agreed to make such a credit facility
available to the Borrower on the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Borrower, the Lenders and the Agent agree, upon the
terms and subject to the conditions set forth herein as follows:
ARTICLE 1. DEFINITIONS; CONSTRUCTION
SECTION 1.1. DEFINITIONS.
In addition to the other terms defined herein, the following terms used
herein shall have the meanings herein specified (to be equally applicable to
both the singular and plural forms of the terms defined):
"Adjusted LIBO Rate" shall mean, with respect to each Interest Period
for a Eurodollar Advance, the rate obtained by dividing (A) LIBOR for such
Interest Period by (B) a percentage equal to 1 minus the then stated maximum
rate (stated as a decimal) of all reserves requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves)
applicable to any member bank of the Federal
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Reserve System in respect of Eurocurrency liabilities as defined in Regulation D
(or against any successor category of liabilities as defined in Regulation D).
"Advance" shall mean any principal amount advanced and remaining
outstanding at any time under (i) the Revolving Loans, which Advances shall be
made or outstanding as Base Rate Advances or Eurodollar Advances, as the case
may be, (ii) the Swing Line Loans, which Advances shall be made or outstanding
as Base Rate Advances, Cost of Funds Advances or Eurodollar Advances, as the
case may be, or (iii) the Competitive Bid Loans, which Advances shall be made or
outstanding as Competitive Bid Rate Advances.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by, or under common control with, such Person, whether
through the ownership of voting securities, by contract or otherwise, excluding
the Borrower and its Restricted Subsidiaries. For purposes of this definition,
"control" (including with correlative meanings, the terms "controlling",
"controlled by", and "under common control with") as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person.
"Agent" shall mean SunTrust Bank, Atlanta, a Georgia banking
corporation, and any successor agent appointed pursuant to Section 10.10.
hereof.
"Agreement" shall mean this Credit Agreement, as hereafter amended,
restated, supplemented or otherwise modified from time to time.
"Applicable Commitment Percentage" shall mean, for each Lender, a
fraction, the numerator of which shall be the then amount of such Lender's
Commitment and the denominator of which shall be the aggregate amount of the
Commitments of all the Lenders, which Applicable Commitment Percentage for each
Lender as of the Closing Date is as set forth on the signature pages hereof
under the caption "Applicable Commitment Percentage".
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"Applicable Margin" shall mean the per annum rates set forth across
from the Ratio of Consolidated Funded Debt to Total Capitalization as calculated
as of the end of the preceding fiscal quarter determined by reference to the
table set forth below. Any changes to the Applicable Margin will be effective as
of the date specified in Section 4.6..
Ratio of Consolidated Applicable Margin
---------------------- -----------------
Funded Debt to Total Capitalization
-----------------------------------
>55% .500%
>50% but <=55% .425%
>45% but <=50% .325%
>35% but <=45% .275%
>25% but <=35% .225%
<=25% .175%
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and another financial institution in accordance with
the terms of this Agreement and substantially in the form of Exhibit K.
"Available Revolving Credit Commitment" shall mean at any time the
excess, if any, of the Total Commitments over (i) all outstanding Revolving
Loans, (ii) all outstanding Competitive Bid Rate Advances, and (iii) all
outstanding Swing Line Loans.
"Bankruptcy Code" shall mean the Bankruptcy Code of 1978, as amended
and in effect from time to time (11 U.S.C. ss.101 et seq.) and any successor
statute.
"Base Rate Advance" shall mean an Advance made or outstanding as a
Swing Line Loan or Revolving Loan, bearing interest based on the Base Rate.
"Base Rate" shall mean (with any change in the Base Rate to be
effective as of the date of change of either of the following rates) the higher
of (i) the rate which the Agent publicly announces from time to time as its
prime lending rate, as in effect from time to time, and (ii) the Federal Funds
Rate, as in effect from time to time, plus one-half of one percent (0.50%) per
annum. The Agent's prime lending rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to customers; the
Agent may make commercial loans or other loans at rates of interest at, above or
below the Agent's prime lending rate.
"Borrower" shall mean Rock-Tenn Company, a Georgia corporation, its
successors and permitted assigns.
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"Borrowing" shall mean the incurrence by Borrower under any Facility of
Advances of one Type concurrently having the same Interest Period or the
continuation or conversion of an existing Borrowing or Borrowings in whole or in
part.
"Business Day" shall mean any day excluding Saturday, Sunday and any
other day on which banks are required or authorized to close in Atlanta, Georgia
and, if the applicable Business Day relates to Eurodollar Advances, excluding
any day on which trading is not carried on by and between banks in deposits of
the applicable currency in the applicable interbank Eurocurrency market.
"Capital Assets" shall mean, collectively, for any Person, all fixed
assets, whether tangible or intangible.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder which would, in
accordance with GAAP, appear on a balance sheet of such lessee in respect of
such Capital Lease.
"Capital Lease" shall mean, as applied to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee which
would, in accordance with GAAP, be required to be classified and accounted for
as a capital lease on a balance sheet of such Person, other than, in the case of
Borrower or any of its Restricted Subsidiaries, any such lease under which
Borrower or a wholly-owned Restricted Subsidiary of Borrower is the lessor.
"Change in Control" shall mean, as applied to the Borrower, that,
during any period of twelve (12) consecutive calendar months (i) more than fifty
percent (50%) of the members of the Board of Directors of the Borrower who were
members on the first day of such period shall have resigned or been removed or
replaced, other than as a result of death, disability, or change in personal
circumstances, or (ii) any Person or "Group" (as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, but excluding (A) any employee
benefit or stock ownership plans of the Borrower, and (B) members of the Board
of Directors and executive officers of the Borrower as of the date of this
Agreement, members of the immediate families of such members and executive
officers, and family trusts and partnerships established by or for the benefit
of any of the foregoing individuals) shall have acquired more than fifty percent
(50%) of the combined voting power of all classes of common stock of the
Borrower, except that the Borrower's purchase of its common stock outstanding on
the date hereof which results in one or more of the Borrower's shareholders of
record as of the date of this Agreement controlling more than fifty percent
(50%) of the combined voting power of all classes of the common stock of the
Borrower shall not constitute an acquisition hereunder.
"Change in Control Provision" shall mean any term or provision
contained in any indenture, debenture, note, or other agreement or document
evidencing or governing Indebtedness of Borrower evidencing debt or a commitment
to extend credit in excess of $10,000,000 which requires, or permits the
holder(s) of such Indebtedness of Borrower to
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require that such Indebtedness of Borrower be redeemed, repurchased, defeased,
prepaid or repaid, either in whole or in part, or the maturity of such
Indebtedness of Borrower to be accelerated in any respect, as a result of a
change in ownership of the capital stock of Borrower or voting rights with
respect thereto.
"Closing Date" shall mean January 21, 1997 or such later date on which
the initial Loans are made and the conditions set forth in Section 5.1. and 5.2.
are satisfied or waived.
"Commitment" shall mean, for any Lender at any time, any of its
Revolving Credit Commitment, or in the case of the Swing Line Lender, the Swing
Line Commitment, as the context may indicate.
"Competitive Bid Accept/Reject Letter" shall mean a notification made
by the Borrower pursuant to Section 2.6. substantially in the form of Exhibit H.
"Competitive Bid Facility" shall mean the facility established pursuant
to Section 2.6.
"Competitive Bid Loan" shall mean a Loan made up of Advances by all of
those Lenders whose Competitive Bids have been accepted by the Borrower pursuant
to the same Competitive Bid Request under the bidding procedure described in
Section 2.6. for the same Interest Period and interest rate (with the
understanding that two Competitive Bid Loans may be made pursuant to a single
Competitive Bid Request).
"Competitive Bid Note" shall mean a promissory note of the Borrower
payable to the order of any Lender, in substantially the form of Exhibit B
hereto, evidencing the indebtedness of the Borrower to such Lender with respect
to outstanding Competitive Bid Rate Advances made by such Lender pursuant to
this Agreement, either as originally executed or as it may be from time to time
supplemented, modified, amended, renewed or extended.
"Competitive Bid Rate Advance" shall mean an Advance made by a Lender
to the Borrower pursuant to the bidding procedure described in Section 2.6.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by a
Lender pursuant to Section 2.6., the fixed rate of interest per annum offered by
the Lender making the Competitive Bid for the relevant Interest Period.
"Competitive Bid Request" shall mean a request made by the Borrower
pursuant to Section 2.6. substantially in the form of Exhibit E.
"Competitive Bid" shall mean an offer by a Lender to make a Competitive
Bid Loan pursuant to Section 2.6.
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"Consolidated Companies" shall mean, collectively, Borrower and all of
its Restricted Subsidiaries.
"Consolidated Funded Debt" shall mean the Funded Debt of the Borrower
and its Restricted Subsidiaries on a consolidated basis.
"Consolidated Net Income" shall mean the net income of the Borrower and
its Restricted Subsidiaries on a consolidated basis as defined according to GAAP
after excluding (to the extent included in net income) the sum of (i) any net
loss or any undistributed net income of any non-majority owned Subsidiary, (ii)
the net income or loss of any Restricted Subsidiary for any period prior to the
date it became a Restricted Subsidiary, (iii) the gain or loss (net of any tax
effect) resulting from the sale of any Capital Assets other than in the ordinary
course of business of the Borrower and its Restricted Subsidiaries, and (iv)
other extraordinary items, as defined by GAAP, of the Borrower and its
Restricted Subsidiaries.
"Consolidated Net Income Available For Fixed Charges" shall mean the
sum of (i) Consolidated Net Income (or Consolidated Net Loss, as the case may
be), (ii) the provision for Income Taxes of the Borrower and its Restricted
Subsidiaries, and (iii) Fixed Charges.
"Consolidated Net Loss" shall mean the net losses of the Borrower and
its Restricted Subsidiaries on a consolidated basis as defined according to GAAP
after excluding (to the extent included in net income) the sum of (i) any net
loss or any undistributed net income of any non-majority owned Subsidiary (ii)
the net income or loss of any Restricted Subsidiary for any period prior to the
date it became a Restricted Subsidiary, (iii) the gain or loss (net of any tax
effect) resulting from the sale of any Capital Assets other than in the ordinary
course of business of the Borrower and its Restricted Subsidiaries, and (iv)
other extraordinary items, as defined by GAAP, of the Borrower and its
Restricted Subsidiaries.
"Consolidated Net Worth" shall mean the stockholders' equity of the
Borrower and its Restricted Subsidiaries minus Restricted Investments but only
to the extent the Restricted Investments exceed in the aggregate ten percent
(10%) of stockholders' equity. For purposes of this definition, stockholders'
equity shall be determined on a consolidated basis in accordance with GAAP, as
applied on a consistent basis by the Borrower in the calculation of such amounts
in the Borrower's most recent Financial Reports.
"Contractural Obligation" of any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or undertaking
under which such Person is obligated or by which it or any of the property owned
by it is bound.
"Contribution Agreement" shall mean a Contribution Agreement
substantially in the form of Exhibit "L" executed and delivered by one or more
Subsidiary Guarantors in
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<PAGE> 16
favor of the Agent, for the ratable benefit of the Lenders, together with all
amendments and supplements thereto.
"Cost of Funds Advance" shall mean any Advance hereunder that bears
interest based on the Cost of Funds Rate provided, that, such Advances must have
an Interest Period of not more than thirty (30) days.
"Cost of Funds Rate" shall mean a rate of interest that the Swing Line
Lender may quote from time to time in accordance with Section 3.1. hereof that
the Swing Line Lender determines in its sole and absolute discretion is the cost
incurred by the Swing Line Lender in obtaining the funds to make an Advance
hereunder.
"Credit Documents" shall mean, collectively, this Agreement, the Notes,
the Fee Letter, the Subsidiary Guarantees, the Contribution Agreement, the
Security Documents and all other instruments, documents, certificates,
agreements and writings executed in connection herewith.
"Default" shall mean any event or condition the occurrence of which
constitutes or would, with the lapse of time or the giving of notice, or both,
constitute an Event of Default.
"Dollar and "U.S. Dollar" and the sign "$" shall mean lawful money of
the United States of America.
"EBITDA" shall mean for any fiscal period, Consolidated Net Income (or
Consolidated Net Loss, as the case may be) for such period plus (a) the
aggregate amount deducted in determining such Consolidated Net Income (Loss) in
respect of (i) Interest Expense, (ii) Income Taxes, and (iii) depreciation and
amortization expense of the Borrower and its Restricted Subsidiaries determined
in accordance with GAAP, in each case for the applicable fiscal period, and (b)
cash distributions of earnings of Unrestricted Subsidiaries made to a
Consolidated Company.
"Environmental Laws" shall mean all federal, state, local and foreign
statutes and codes or regulations, rules or ordinances issued, promulgated, or
approved thereunder, now or hereafter in effect (including, without limitation,
those with respect to asbestos or asbestos containing material or exposure to
asbestos or asbestos containing material), relating to pollution or protection
of the environment and relating to public health and safety, relating to (i)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial toxic or hazardous constituents,
substances or wastes, including without limitation, any Hazardous Substance,
petroleum including crude
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oil or any fraction thereof, any petroleum product or other waste, chemicals or
substances regulated by any Environmental Law into the environment (including,
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata), or (ii) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of any Hazardous
Substance, petroleum including crude oil or any fraction thereof, any petroleum
product or other waste, chemicals or substances regulated by any Environmental
Law, and (iii) underground storage tanks and related piping, and emissions,
discharges and releases or threatened releases therefrom. Such Environmental
Laws to include, without limitation (i) the Clean Air Act (42 U.S.C. ss. 7401 et
seq.), (ii) the Clean Water Act (33 U.S.C. ss. 1251 et seq.), (iii) the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), (iv) the Toxic
Substances Control Act (15 U.S.C. ss. 2601 et seq.), (v) the Comprehensive
Environmental Response Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act (42 U.S.C. ss. 9601 et seq.), and
(vi) all applicable national and local laws or regulations with respect to
environmental control.
"Equity Offering" means an underwritten public offering of any capital
stock of the Borrower, or any debt security convertible into or exchangeable for
capital stock of the Borrower, or any debt security issued with a warrant or
other instrument conferring upon its owner the right to purchase capital stock
of the Borrower, in each case pursuant to an effective registration statement
filed with the Securities and Exchange Commission in accordance with the
Securities Act of 1933, as amended.
"ERISA Affiliate" shall mean, with respect to any Person, each trade or
business (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control within the meaning of
the regulations promulgated under Section 414 of the Tax Code.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time.
"Eurodollar Advance" shall mean an Advance made or outstanding as a
Revolving Loan or a Swing Line Loan, as the case may be, bearing interest based
on the Adjusted LIBO Rate.
"Event of Default" shall have the meaning provided in Article 9.
"Executive Officer" shall mean with respect to any Person, the Chief
Executive Officer, President, Vice Presidents (if elected by the Board of
Directors of such Person), Chief Financial Officer, Treasurer, Secretary and any
Person holding comparable offices or duties (if elected by the Board of
Directors of such Person).
"Facility Fee" shall have the meaning ascribed to it in Section
4.5.(a).
"Facility" or "Facilities" shall mean the Revolving Credit Commitments,
the Swing Line Facility, or the Competitive Bid Facility, as the context may
indicate.
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"Facility Fee Percentage" shall mean the per annum rates set forth
across from the Ratio of Consolidated Funded Debt to Total Capitalization as
calculated as of the end of the preceding fiscal quarter determined by reference
to the table set forth below. Any changes to the Facility Fee Percentage will be
effective as of the date specified in Section 4.6.
Ratio of Consolidated Funded Facility Fee Percentage
---------------------------- -----------------------
Debt to Total Capitalization
----------------------------
>55% .250%
>50% but <=55% .200%
>45% but <=50% .150%
>35% but <=45% .125%
>25% but <=35% .100%
<=25% .075%
"Federal Funds Rate" shall mean with respect to any Base Rate Advance,
a fluctuating interest rate per annum equal for each day during which such
Advance is outstanding to the weighted average of the rates on overnight Federal
funds transactions with member banks of the Federal Reserve System arranged by
Federal funds brokers, as set forth for each day on Page 4833 of the Telerate at
9:00 a.m. (Atlanta, Georgia time) or if such reporting service is unavailable,
as published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of Atlanta, or, if such rate
is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by the Agent.
"Fee Letter"" means that certain letter agreement dated December 6,
1996 between the Borrower and the Agent relating to certain fees from time to
time payable by the Borrower to the Agent, together with all amendments and
supplements thereto.
"Financial Officer" means with respect to the Borrower, any of the
Chief Financial Officer, Vice President of Finance, and Treasurer.
"Financial Report" means at a specified date, the most recent financial
statements of the Borrower and its Restricted Subsidiaries delivered pursuant to
Section 7.7. of this Agreement.
"Fixed Charges" shall mean the sum of (i) Interest Expense of the
Borrower and its Restricted
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Subsidiaries, (ii) 100% of lease expense of the Borrower and its Restricted
Subsidiaries (excluding expenses incurred in respect of Capital Leases)
determined in accordance with GAAP, and (iii) preferred stock dividends, if any,
of the Borrower and its Restricted Subsidiaries excluding, however, any portion
of such dividend paid to the Borrower or a Restricted Subsidiary.
"Funded Debt" shall mean, with respect to any Person, without
duplication and excluding in the case of the Borrower and its Restricted
Subsidiaries intercorporate obligations solely among the Borrower and its
Restricted Subsidiaries, all (i) Indebtedness for Borrowed Money of such Person,
(ii) Capital Lease Obligations of such Person, and (iii) all obligations under
direct or indirect Guaranties in respect of obligations of others of the kinds
referred to in clauses (i) and (ii) above; provided, however, that "Funded Debt"
shall not include any obligations of the Borrower or its Restricted Subsidiaries
with respect to (w) undrawn commercial letters of credit used in the ordinary
course of business, (x) currency exchange agreements, (y) Interest Rate
Contracts or (z) any Indebtedness deemed to be extinguished under GAAP but for
which the Borrower or such Subsidiary remains legally liable.
"GAAP" shall mean 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 may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"Guaranty" shall mean any contractual obligation, contingent or
otherwise, of a Person with respect to any Indebtedness or other obligation or
liability of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed, 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 any agreement to provide
funds for 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 any
payment other than for value received. The amount of any Guaranty shall be
deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which guaranty is made or, if not so stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Hazardous Substances" shall have the meaning assigned to that term
in the Comprehensive Environmental Response Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Acts of 1986.
"Income Taxes" shall have the meaning given such term by GAAP.
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"Indebtedness" of any Person shall mean, without duplication (i) all
obligations of such Person which in accordance with GAAP would be shown on the
balance sheet of such Person as a liability (including, without limitation,
obligations for borrowed money and for the deferred purchase price of property
or services, and obligations evidenced by bonds, debentures, notes or other
similar instruments); (ii) all Capital Lease Obligations; (iii) all Guaranties
of such Person (including the stated amount of undrawn letters of credit); and
(iv) Indebtedness of others secured by any Lien upon property owned by such
Person, whether or not assumed. Notwithstanding the foregoing, in determining
the Indebtedness of any Person, (x) there shall be included all obligations of
such Person of the character referred to in clauses (i) through (iv) above
deemed to be extinguished under GAAP but for which such Person remains legally
liable and (y) any deferred obligations of such Person to make payments on any
agreement not to compete which was entered into by such Person in connection
with the acquisition of any business shall be reduced by the effective federal
and state corporate tax rate applicable to such Person in order to recognize the
deductibility of such payments and the resulting reduction of the cash actually
expended by the Person to satisfy such obligation.
"Indebtedness for Borrowed Money" shall mean, with respect to any
Person and without duplication:
(a) Indebtedness for money borrowed, including all revolving
and term Indebtedness and all other lines of credit; and
(b) Indebtedness which
(i) is represented by a note payable or drafts accepted,
that represent extensions of credit;
(ii) constitutes obligations evidenced by bonds,
debentures, notes or similar instruments; or
(iii) constitutes Purchase Money Indebtedness, conditional
sales contracts, title retention debt instruments or
other similar instruments upon which interest charges
are customarily paid or that are issued or assumed as
full or partial payment for property; and
(c) Indebtedness that constitutes a Capital Lease
Obligation; and
(d) all reimbursement obligations under any acceptances or any
letters of credit issued in support of Indebtedness of the character described
in clauses (a) through (c) above; and
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(e) all Indebtedness of others of the character described in
clauses (a) through (d) above, but only to the extent that such Indebtedness is
subject to a Guaranty of such Person.
"Interest Expense" shall mean interest expense of the Borrower and its
Restricted Subsidiaries determined on a consolidated basis, according to GAAP.
"Interest Period" shall mean (i) as to any Eurodollar Advances, the
interest period selected by the Borrower pursuant to Section 4.4.(a) hereof,
(ii) as to any Competitive Bid Rate Advances, the interest period requested by
the Borrower and agreed to by the participating Lenders pursuant to Section 2.6.
hereof in conformity with Section 4.4.(b) hereof; and (iii) as to any Cost of
Funds Advances, the interest period requested by the Borrower and agreed to by
the Swing Line Lender pursuant to Section 3.1. hereof in conformity with Section
4.4.(c) hereof.
"Interest Rate Contract" shall mean all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance and other agreements and arrangements designed to provide protection
against fluctuations in interest rates, in each case as the same may be from
time to time amended, restated, renewed, supplemented or otherwise modified.
"Lender" or "Lenders" shall mean SunTrust, the other banks and lending
institutions listed on the signature pages hereof, including, without
limitation, the Swing Line Lender, and each assignee thereof, if any, pursuant
to Section 11.6.(c), together with their corporate successors.
"Lending Office" shall mean for each Lender, the office such Lender may
designate in writing from time to time to Borrower and the Agent with respect to
each Type of Loan.
"LIBOR" shall mean, for any Interest Period, with respect to Eurodollar
Advances the offered rate for deposits in U.S. Dollars, for a period comparable
to the Interest Period and in an amount comparable to the Agent's portion of
such Advances, appearing on the Reuters Screen LIBO Page as of 11:00 A.M.
(London, England time) on the day that is two Business Days prior to the first
day of the Interest Period. If two or more of such rates appear on the Reuters
Screen LIBO Page, the rate for that Interest Period shall be the arithmetic mean
of such rates. If the foregoing rate is unavailable from the Reuters Screen for
any reason, then such rate shall be determined by the Agent from Telerate Page
3750 or, if such rate is also unavailable on such service, then on any other
interest rate reporting service of recognized standing designated in writing by
the Agent to Borrower and the other Lenders; in any such case rounded, if
necessary, to the next higher 1/100 of 1.0%, if the rate is not such a multiple.
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"Lien" means any security interest, mortgage, pledge, lien, claim,
charge, encumbrance, title retention agreement, lessor's interest under a
Capital Lease or analogous instrument, in, of or on any property.
"Loans" shall mean, collectively, the Revolving Loans, the Swing Line
Loans, and the Competitive Bid Loans.
"Margin Regulations" shall mean Regulation G, Regulation T, Regulation
U and Regulation X of the Board of Governors of the Federal Reserve System, as
the same may be in effect from time to time.
"Material" (or words derived therefrom) as used in this Agreement,
means the measure of a matter of significance which shall be determined as being
an amount equal to the greater of (i) Ten Million Dollars ($10,000,000) or (ii)
five percent (5%) of the Consolidated Net Worth.
"Materially Adverse Effect" shall mean any Material adverse change in
(i) the business, operations, financial condition or assets of the Consolidated
Companies, taken as a whole, (ii) the ability of Borrower to perform its
obligations under this Agreement, or (iii) the ability of the Consolidated
Companies (taken as a whole) to perform their respective obligations, if any,
under the Credit Documents.
"Maturity Date" shall mean the earlier of (i) January 21, 2002, and
(ii) the date on which all amounts outstanding under this Agreement have been
declared or have automatically become due and payable pursuant to the provisions
of Article 9.; provided, however, that the date listed in subsection (i) above
may be extended as provided in Section 2.5.
"Moody's" shall mean Moody's Investors Services, Inc. and each of its
successors.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Sale Proceeds" means the aggregate cash proceeds received by any
Consolidated Company in respect of any Equity Offering (including, without
limitation, any cash received upon the sale or other disposition of any noncash
consideration received in any Equity Offering), net of the direct costs relating
to such Equity Offering (including, without limitation, legal, accounting and
investment banking fees, printing, sales and distribution costs and expenses,
and sales commissions), taxes paid or payable as a result thereof.
"Notes" shall mean, collectively, the Revolving Credit Notes, the Swing
Line Note and the Competitive Bid Notes.
"Notice of Borrowing" shall have the meaning provided in Section
4.1.(a)(i).
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"Notice of Conversion/Continuation of Swing Line Loans" shall have the
meaning provided in Section 4.1.(b)(ii).
"Notice of Conversion/Continuation" shall have the meaning provided in
Section 4.1.(b)(i).
"Notice of Swing Line Loan" shall have the meaning provided in Section
4.1.(a)(ii).
"Obligations" shall mean all amounts owing to the Agent or any Lender
pursuant to the terms of this Agreement or any other Credit Document, including,
without limitation, all Loans (including all principal and interest payments due
thereunder), fees, expenses, indemnification and reimbursement payments,
indebtedness, liabilities, and obligations of the Consolidated Companies, direct
or indirect, absolute or contingent, liquidated or unliquidated, now existing or
hereafter arising, together with all renewals, extensions, modifications or
refinancings thereof.
"Payment Office" shall mean with respect to payments of principal,
interest, fees or other amounts relating to the Revolving Loans, the Swing Line
Loans, the Competitive Bid Loans and all other Obligations, the office specified
as the "Payment Office" for the Agent and in the case of the Swing Line Loans,
the Swing Line Lender, on the signature page of the Agent and the Swing Line
Lender, or such other location as to which the Agent or the Swing Line Lender
shall have given written notice to the Borrower.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Person" shall mean any individual, partnership, firm, corporation,
association, joint venture, trust, limited liability company, limited liability
partnership, or other entity, or any government or political subdivision or
agency, department or instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as defined in Section
3(3) of ERISA), including, but not limited to, any defined benefit pension plan,
profit sharing plan, money purchase pension plan, savings or thrift plan, stock
bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan,
fund, program, arrangement or practice providing for medical (including
post-retirement medical), hospitalization, accident, sickness, disability, or
life insurance benefits.
"Prior Agreements" shall mean, collectively, (i) that certain Revolving
Credit Agreement dated as of January 15, 1995 by and between the Borrower and
SunTrust and (ii) that certain Revolving Credit Agreement dated as of January
15, 1995 by and between the Borrower and Wachovia Bank of Georgia, N.A.
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"Purchase Agreement" means that certain Stock Purchase Agreement by and
among Borrower and the shareholders of the Acquired Company, dated as of January
21, 1997, as it may be amended on or prior to the Closing Date in accordance
with Section 5.1(h) hereof.
"Purchase Money Indebtedness" shall mean Indebtedness incurred or
assumed for the purpose of financing all or any part of the acquisition cost of
any property (excluding trade payables incurred in the ordinary course of
business) and any refinancing thereof, in each case entered into in compliance
with this Agreement.
"Rating Agency" shall mean either Moody's or Standard & Poor's.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time.
"Required Lenders" shall mean at any time, the Lenders holding at least
66 2/3% of the amount of the Total Commitments, whether or not advanced or,
following the termination of all of the Commitments, the Lenders holding at
least 66 2/3% of the aggregate outstanding Advances at such time.
"Requirement of Law" for any Person shall mean any law, treaty, rule or
regulation, or determination of an arbitrator or a court or other governmental
authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Restricted Investment" means all investments (in cash or by delivery
of property) made, directly or indirectly in any Person, whether by acquisition
of shares of capital stock, indebtedness or other obligations or securities or
by loan, advance, guaranty, capital contribution or otherwise (including,
without limitation, the net actual liability of such Person under an Interest
Rate Contract not entered into in respect of outstanding Funded Debt of such
Person); provided, however, that Restricted Investments shall not mean or
include: (i) investments in property to be used or consumed in the ordinary
course of business, (ii) investments by the Borrower or its Restricted
Subsidiaries in and to Restricted Subsidiaries, including any investment in a
corporation which, after giving effect to such investment, will immediately
become a Restricted Subsidiary, (iii) investments in commercial paper or other
short-term security maturing in 270 days or less from the date of issuance,
which at the time of acquisition by the Borrower or its Subsidiary, is accorded
the rating of A-2 or better by Standard & Poor's or P-2 or better by Moody's,
(iv) investments in direct obligations of the United States of America or any
agency or instrumentality of the United States of America, the payment or
guarantee of which constitutes a full faith and credit obligation of the United
States of America, in either case maturing in three years or less from the date
of acquisition thereof, (v) loans or advances in the usual and ordinary course
of business to officers, directors and employees for expenses (including moving
expenses related to a transfer) incidental to carrying on the business of the
Borrower or any Restricted Subsidiary, (vi) receivables arising from the
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sale of goods and services in the ordinary course of business of the Borrower
and its Restricted Subsidiaries, (vii) municipal bonds maturing in three (3)
years or less from the date of acquisition thereof and accorded either a
long-term or short-term rating no lower than the highest rating category by
Standard & Poor's or Moody's, (viii) variable rate preferred stock issued by
United States or United Kingdom corporations which are accorded a rating no
lower than the third highest rating category by Standard & Poor's or Moody's,
(ix) variable rate demand obligations, tax-free preferred stock of United States
corporations and other tax exempt investments which mature in three (3) years or
less or have variable rate features and are accorded a rating no lower than the
third highest rating category by Standard & Poor's or Moody's, (x) certificates
of deposit of or drafts accepted by a commercial bank (a) that is organized
under the laws of the United States of America or any state thereof, and (b)
whose long-term unsecured debt obligations (or the long-term debt obligations of
the bank holding company owning all of the capital stock of such bank) shall be
rated A2 or better by Moody's or A or better by Standard & Poor's, and (c) that
has capital, surplus and undivided profits aggregating in excess of
$100,000,000, and (xi) the initial investments made by the Borrower and its
Subsidiaries in the Sonoco Joint Venture through the contribution of those
assets forming a part of their solid fiber partition business.
"Restricted Subsidiary" means (i) any Subsidiary of the Borrower
identified as such on Schedule I hereto, (ii) the Acquired Company and any
Subsidiaries it owns at the time of the closing of the transaction evidenced by
this Agreement, and (iii) any Subsidiary of the Borrower created or acquired
after the date of this Agreement other than a Subsidiary which, at the option of
the Borrower, is designated in writing by the Borrower to the Agent as being an
Unrestricted Subsidiary.
"Reuters Screen" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuter Monitor
Money Rates Service (or such other page as may replace that page on that service
for the purpose of displaying rates comparable to LIBOR).
"Revolving Credit Commitment" shall mean, at any time for any Lender,
the amount of such commitment set forth opposite such Lender's name on the
signature pages hereof, as the same may be increased or decreased from time to
time as a result of any reduction thereof pursuant to Section 2.3., any
assignment thereof pursuant to Section 11.6., or any amendment thereof pursuant
to Section 11.2.
"Revolving Credit Notes" shall mean, collectively, the promissory notes
evidencing the Revolving Loans in the form attached hereto as Exhibit A, either
as originally executed or as hereafter amended, modified or supplemented.
"Revolving Loans" shall mean, collectively, the revolving loans made to
the Borrower by the Lenders pursuant to Section 2.1.
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"Security Documents" shall mean, collectively, each guaranty agreement,
mortgage, deed of trust, security agreement, pledge agreement, or other security
or collateral document, if any, guaranteeing or securing the Obligations, as the
same may be amended, restated, supplemented or otherwise modified from time to
time.
"Sonoco Joint Venture" shall mean the Delaware limited liability
company to be formed by the Subsidiaries of the Borrower and Sonoco Products
Company, respectively, to engage in the solid fiber partition business
previously conducted separately by the Borrower and Sonoco Products Company.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc. and its successors.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other entity (including, without limitation, limited liability companies,
partnerships, joint ventures, limited liability companies, and associations)
regardless of its jurisdiction of organization or formation, at least a majority
of the total combined voting power of all classes of Voting Stock or other
ownership interests of which shall, at the time as of which any determination is
being made, be owned by such Person, either directly or indirectly through one
or more other Subsidiaries.
"Subsidiary Guarantee" shall mean a Subsidiary Guarantee substantially
in the form of Exhibit "M" executed and delivered by one or more Subsidiary
Guarantors in favor of the Agent, for the ratable benefit of the Lenders,
together with all amendments and supplements thereto.
"Subsidiary Guarantor" shall mean a Restricted Subsidiary which will
execute a Subsidiary Guarantee pursuant to Section 7.10.
"Swing Line Commitment" shall mean, at any time for the Swing Line
Lender, an amount equal to the Swing Line Commitment set forth on the signature
page of the Swing Line Lender, as the same may be increased or decreased from
time to time as a result of any assignment thereof pursuant to Section 11.6., or
any amendment thereof pursuant to Section 11.2. The Swing Line Commitment shall
be part of, subsumed within, and not in addition to the Revolving Credit
Commitment of the Swing Line Lender until such Revolving Credit Commitment is
reduced to or below $90,000,000, at which time the Swing Line Commitment shall
become an independent Commitment hereunder in the amount specified in the
preceding sentence.
"Swing Line Facility" shall mean, at any time, the Swing Line
Commitment, which amount shall not exceed $20,000,000.
"Swing Line Lender" shall mean SunTrust and any successor or assignee
thereof.
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"Swing Line Loans" shall mean, collectively, loans made by the Swing
Line Lender to the Borrower pursuant to the Swing Line Facility.
"Swing Line Note" shall mean a promissory note of the Borrower payable
to the order of the Swing Line Lender, in substantially the form of Exhibit C
hereto, evidencing the maximum aggregate principal indebtedness of the Borrower
to such Swing Line Lender with respect to the Swing Line Commitment, either as
originally executed or as it may be from time to time supplemented, modified,
amended, renewed or extended.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended
and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of
whatever nature, including without limitation, income, receipts, excise,
property, sales, transfer, license, payroll, withholding, social security and
franchise taxes now or hereafter imposed or levied by the United States, or
any state, local or foreign government or by any department, agency or other
political subdivision or taxing authority thereof or therein and all interest,
penalties, additions to tax and similar liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any designated page
and LIBOR or the Federal Funds Rate, the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying rates comparable to LIBOR or the Federal
Funds Rate).
"Total Capitalization" shall mean for the Borrower and its Restricted
Subsidiaries on a consolidated basis, the sum of their: (i) Funded Debt and (ii)
Consolidated Net Worth.
"Total Commitments" shall mean the sum of the Revolving Credit
Commitments of all Lenders.
"Type" of Borrowing shall mean a Borrowing consisting of Base Rate
Advances, Eurodollar Advances, Competitive Bid Rate Advances, or Cost of Funds
Advances.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Borrower
that is not a Restricted Subsidiary.
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"Voting Stock" shall mean stock of a corporation of a class or classes
having general voting power under ordinary circumstances to elect a majority of
the board of directors, managers or trustees of such corporation (irrespective
of whether or not at the time stock of any other class or classes shall have or
might have voting power by the reason of the happening of any contingency).
"Waldorf Credit Agreement" shall mean that certain Credit Agreement
dated as of July 5, 1995 among Waldorf Corporation, the banks party thereto and
The Chase Manhattan Bank, as administrative agent, as amended and supplemented
from time to time.
"Waldorf Indenture" shall mean the agreement pursuant to which the
Waldorf Debt is issued.
SECTION 1.2. ACCOUNTING TERMS AND DETERMINATION.
Unless otherwise defined or specified herein, all accounting terms
shall be construed herein, all accounting determinations hereunder shall be
made, all financial statements required to be delivered hereunder shall be
prepared, and all financial records shall be maintained, in accordance with
GAAP. In the event of a change in GAAP that is applicable to the Borrower and
its Subsidiaries, compliance with the financial covenants contained herein shall
continue to be determined in accordance with GAAP as in effect prior to such
change; provided, however, that the Borrower and the Required Lenders will
thereafter negotiate in good faith to revise such covenants to the extent
necessary to conform such covenants to GAAP as then in effect.
SECTION 1.3. OTHER DEFINITIONAL TERMS.
The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Article, Section,
Schedule, Exhibit and like references are to this Agreement unless otherwise
specified.
SECTION 1.4. EXHIBITS AND SCHEDULES.
All Exhibits and Schedules attached hereto are by reference made a part
hereof.
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ARTICLE 2. REVOLVING LOANS; COMPETITIVE BID LOANS
SECTION 2.1. COMMITMENT; USE OF PROCEEDS.
(a) Subject to and upon the terms and conditions herein set forth, each
Lender severally agrees to make to Borrower from time to time on and after the
Closing Date, but prior to the Maturity Date, Revolving Loans; provided that,
immediately after each such Revolving Loan is made, (i) the aggregate principal
amount of all Advances comprising Revolving Loans made by such Lender shall not
exceed such Lender's Revolving Credit Commitment, and (ii) the aggregate
principal amount of all outstanding Revolving Loans plus the aggregate principal
amount of all Competitive Bid Rate Advances plus the aggregate principal amount
of all outstanding Swing Line Loans, shall not exceed the Total Commitments.
(b) Each Revolving Loan shall, at the option of Borrower, be made or
continued as, or converted into, part of one or more Borrowings that shall
consist entirely of Base Rate Advances or Eurodollar Advances. The aggregate
principal amount of each Borrowing of Revolving Loans comprised of Eurodollar
Advances shall be not less than $5,000,000 or a greater integral multiple of
$1,000,000, and the aggregate principal amount of each Borrowing of Revolving
Loans comprised of Base Rate Advances shall be not less than $1,000,000 or a
greater integral multiple of $100,000.
(c) The proceeds of Revolving Loans shall be used solely for the
following purposes:
(i) Initially, to repay the Indebtedness outstanding
pursuant to the Prior Agreements on the Closing Date;
and
(ii) All other amounts shall be used by the Borrower and
its Subsidiaries for acquisitions, capital
expenditures and as working capital and for other
general corporate purposes.
SECTION 2.2. REVOLVING CREDIT NOTES; REPAYMENT OF PRINCIPAL.
(a) The Borrower's obligations to pay the principal of, and interest
on, the Revolving Loans to each Lender shall be evidenced by the records of the
Agent and such Lender and by the Revolving Credit Note payable to such Lender
(or the assignor of such Lender) completed in conformity with this Agreement.
(b) All Borrowings outstanding under the Revolving Credit Commitments
shall be due and payable in full on the Maturity Date.
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SECTION 2.3. REDUCTION OF REVOLVING CREDIT AND SWING LINE COMMITMENTS;
MANDATORY PREPAYMENT.
(a) Upon at least three (3) Business Days' prior telephonic notice
(promptly confirmed in writing) to the Agent, Borrower shall have the right,
without premium or penalty, to terminate the Revolving Credit Commitments, in
part or in whole, provided that any partial termination of the Revolving Credit
Commitments pursuant to this Section 2.3. shall be in an amount of at least
$1,000,000 and integral multiples of $1,000,000.
(b) The Revolving Credit Commitments shall be automatically and
permanently reduced in connection with the consummation of any Equity Offering
by an amount equal to the lesser of (i) 100% of the Net Sale Proceeds received
by the Borrower in respect of any Equity Offering and (ii) an amount necessary
to reduce the Total Commitments to $300,000,000 (the "Reduction").
(c) Any reduction of Revolving Credit Commitments pursuant to
subsections (a) and (b) of this Section 2.3. shall apply to proportionately,
automatically and permanently reduce the Revolving Credit Commitments of each of
the Lenders based upon each Lender's Applicable Commitment Percentage.
(d) If at any time the aggregate outstanding Competitive Bid Loans,
Revolving Loans and, so long as the Swing Line Commitment is part of the Swing
Line Lender's Revolving Credit Commitment, Swing Line Loans exceed the Total
Commitments, the Borrower shall immediately cause an amount equal to such excess
to be applied as follows in the order of priority indicated:
First, so long as the Swing Line Commitment is part of the
Swing Line Lender's Revolving Credit Commitment, to the prepayment of
outstanding Swing Line Loans;
Second, to the prepayment of outstanding Revolving Loans; and
Third, to the prepayment of outstanding Competitive Bid Loans,
such prepayment to be applied to such Loans as designated by the
Borrower and, in the event the Borrower fails to designate a Loan, to such Loans
with the earliest maturity dates, based upon the remaining terms of their
respective Interest Periods, and with respect to Loans with the same Interest
Period, pro rata to the Lenders extending such Loans.
Any prepayment of Swing Line Loans, Revolving Loans and Competitive Bid Loans
pursuant to this Section 2.3. shall be made, insofar as is possible, in such a
way as to avoid any funding losses pursuant to Section 4.13.
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SECTION 2.4. CHANGE IN CONTROL OF THE BORROWER.
If (i) any Change in Control occurs hereunder or (ii) any event or
condition shall occur or exist which, pursuant to the terms of any Change in
Control Provision (other than a Change in Control Provision in the Waldorf
Indenture and the Waldorf Credit Agreement) requires or permits the holder(s) of
the Indebtedness subject to such Change in Control Provision to require that
such Indebtedness be redeemed, repurchased, defeased, prepaid or repaid, in
whole or in part, or the maturity of such Indebtedness to be accelerated,
then, upon the occurrence of the events described in (i) or (ii) above, the
Borrower shall provide notice of the occurrence thereof to the Agent and the
Lenders promptly after such occurrence and, on the ninetieth (90th) day after
such occurrence, unless the Lenders shall have elected otherwise (such election
to be made in their sole and absolute discretion), there shall be an automatic
reduction of the Revolving Credit Commitments and the Swing Line Commitments and
the Borrower shall repay in full all outstanding Loans, together with all
accrued and unpaid interest thereon and Facility Fees due hereunder, and all
other amounts owing to the Lenders hereunder.
SECTION 2.5. EXTENSION OF COMMITMENTS.
(a) The Borrower may, by written notice to the Agent (which shall
promptly deliver a copy to each of the Lenders), given not more than sixty (60)
days nor less than thirty (30) days prior to any anniversary of the Closing Date
while the Revolving Credit Commitments are in effect, request that the Lenders
extend the then scheduled Maturity Date (the "Existing Date") for an additional
one-year period. Each Lender shall, by notice to the Borrower and the Agent
given within fifteen (15) Business Days after the Borrower gives such notice,
advise the Borrower and the Agent whether or not such Lender consents to the
extension request (and any Lender which does not respond during such
15-Business-Day period shall be deemed to have advised the Borrower that it will
not agree to such extension).
(b) In the event that, on the 15th Business Day after Borrower gives
the notice described in subsection (a) above, not all of the Lenders shall have
agreed to extend their Revolving Credit Commitments, the Borrower shall notify
each of the consenting Lenders ("Consenting Lenders") of the amount of the
Revolving Credit Commitments of the non-extending Lenders ("Non-Consenting
Lenders") and each of such Consenting Lenders shall, by notice to the Borrower
and the Agent given within ten (10) Business Days after receipt of such notice,
advise the Agent and Borrower whether or not such Lender wishes to purchase all
or a portion of the Revolving Credit Commitments of the Non-Consenting Lenders
(and any Lender which does not respond during such 10-Business-Day period shall
be deemed to have rejected such offer). In the event that more than one
Consenting Lender agrees to purchase all or a portion of such Revolving Credit
Commitments, the Borrower and the Agent shall allocate such Revolving Credit
Commitments among such Consenting Lenders so as to preserve, to the extent
possible,
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the relative pro rata shares of the Consenting Lenders of the Revolving Credit
Commitments prior to such extension request. If Consenting Lenders do not elect
to assume all of the Revolving Credit Commitments of the Non-Consenting Lenders,
the Borrower shall have the right to arrange for one or more banks or other
lending institutions (any such bank or lending institution being called a "New
Lender"), to purchase the Revolving Credit Commitment of any Non-Consenting
Lender. Each Non-Consenting Lender shall assign its Revolving Credit Commitment
and the Loans outstanding hereunder to the Consenting Lender or New Lender
purchasing such Revolving Credit Commitment in accordance with Section 11.6., in
return for payment in full of all principal, interest and other amounts owing to
such Non-Consenting Lender hereunder, on or before the Existing Date and, as of
the effective date of such assignment, shall no longer be a party hereto,
provided that each New Lender shall be subject to the approval of the Agent
(which approval shall not be unreasonably withheld). If (and only if) Lenders
(including New Lenders) holding Revolving Credit Commitments representing at
least 60% of the aggregate Revolving Credit Commitments on the date of such
extension request shall have agreed in accordance with the terms hereof to such
extension (the "Continuing Lenders"), then (i) the Maturity Date shall be
extended for one additional year from the Existing Date and (ii) the Commitment
of any Non-Consenting Lender which has not been assigned to a Consenting Lender
or a New Lender shall terminate (with the result that the amount of the Total
Commitments shall be decreased by the amount of such Revolving Credit
Commitment), and all Loans of such Non-Consenting Lender shall become due and
payable, together with all interest accrued thereon and all other amounts owed
to such Non-Consenting Lender hereunder, on the Existing Date applicable to such
Lender without giving effect to any extension of the Maturity Date.
(c) The effective date of any extension of the Maturity Date shall be
the date on which 60% of the Continuing Lenders have agreed to such extension in
accordance with the terms of Section 2.5(b).
(d) The extension by the Swing Line Lender of its Revolving Credit
Commitment pursuant to this Section 2.5. shall automatically extend the Swing
Line Commitment.
SECTION 2.6. COMPETITIVE BID LOANS
(a) In addition to making Revolving Loans pursuant to the Revolving
Credit Commitments pursuant to Section 2.1. above, the Lenders may, in their
sole discretion and at the request of the Borrower, make Competitive Bid Rate
Advances to the Borrower in an amount not to exceed the Available Revolving
Credit Commitment.
(b) In order to request Competitive Bids, the Borrower shall telecopy
to the Agent a duly completed Competitive Bid Request in the form of Exhibit E
attached hereto (which may request not more than two Competitive Bids), to be
received by the Agent not later than 10:00 a.m. (Atlanta, Georgia) time, four
(4) Business Days prior to the proposed Competitive Bid Loan or Loans. A
Competitive Bid Request that does not
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conform substantially to the format of Exhibit E may be rejected in the Agent's
sole discretion, and the Agent shall notify the Borrower of such rejection by
telecopy not later than 12:00 noon (Atlanta, Georgia time) on the date of
receipt. Such request shall in each case refer to this Agreement and specify (i)
the date of such Borrowing or Borrowings (which shall be a Business Day) and
(ii) the aggregate principal amount thereof which shall be in a minimum
principal amount of $5,000,000 and in an integral multiple of $1,000,000, and
(iii) the Interest Period requested with respect thereto. Promptly after its
receipt of a Competitive Bid Request that is not rejected as aforesaid, the
Agent shall invite by telecopy (substantially in the form set forth in Exhibit F
attached hereto) the Lenders to bid, subject to the terms and conditions of this
Agreement, to make Competitive Bid Rate Advances pursuant to the Competitive Bid
Request.
(c) Each Lender may, in its sole discretion, make one or more
Competitive Bids (but not more than two) to the Borrower responsive to a
Competitive Bid Request. Each Competitive Bid by a Lender must be received by
the Agent via telecopy, substantially in the form of Exhibit G attached hereto,
not later than 11:00 a.m. (Atlanta, Georgia time) on the Business Day of the
proposed Competitive Bid Loan. Multiple bids (not to exceed two per Lender) will
be accepted by the Agent. Competitive Bids that do not conform substantially to
the format of Exhibit G may be rejected by the Agent acting in consultation with
the Borrower, and the Agent shall notify the Lender making such nonconforming
bid of such rejection as soon as practicable. Each Competitive Bid shall refer
to this Agreement and specify (i) the principal amount (which shall be in a
minimum principal amount of $5,000,000 and in an integral multiple of
$1,000,000) of the Competitive Bid Rate Advance or Advances that the Lender is
willing to make to the Borrower, (ii) the Competitive Bid Rate or Rates at which
the Lender is prepared to make the Competitive Bid Rate Advance or Advances, and
(iii) the Interest Period and the last day thereof. If any Lender shall elect
not to make a Competitive Bid, such Lender shall so notify the Agent via
telecopy by the time specified above for submitting a Competitive Bid; provided,
however, that failure by any Lender to give such notice shall not cause such
Lender to be obligated to make any Competitive Bid Rate Advance as part of such
Competitive Bid Loan. A Competitive Bid submitted by a Lender pursuant to this
paragraph (c) shall be irrevocable (absent manifest error).
(d) The Agent shall promptly notify the Borrower by telecopy of all the
Competitive Bids made, the Competitive Bid Rate and the principal amount of each
Competitive Bid Rate Advance in respect of which a Competitive Bid was made and
the identity of the Lender that made each bid. The Agent shall send a copy of
all Competitive Bids to the Borrower for its records as soon as practicable
after completion of the bidding process set forth in this Section 2.6.
(e) The Borrower may, in its sole and absolute discretion, subject only
to the provisions of this paragraph (e), accept or reject any Competitive Bid
referred to in paragraph (d) above. The Borrower shall notify the Agent by
telephone, confirmed by telecopy in the form of a Competitive Bid Accept/Reject
Letter, whether and to what extent it
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has decided to accept or reject any of or all the bids referred to in paragraph
(d) above not later than 12:30 p.m. (Atlanta, Georgia time) on the Business Day
of the proposed Competitive Bid Loan; provided, however, that (i) the failure by
the Borrower to give such notice shall be deemed to be a rejection of all the
bids referred to in paragraph (d) above, (ii) the Borrower shall not accept a
bid made at a particular Competitive Bid Rate if the Borrower has decided to
reject a bid made at a lower Competitive Bid Rate with respect to the same
requested Advance, (iii) the aggregate amount of the Competitive Bids accepted
by the Borrower shall not exceed the principal amount specified in the
Competitive Bid Request, (iv) if the Borrower shall accept a bid or bids made at
a particular Competitive Bid Rate but the amount of such bid or bids shall cause
the total amount of bids to be accepted by the Borrower to exceed the amount
specified in the Competitive Bid Request, then the Borrower shall accept a
portion of such bid or bids in an amount equal to the amount specified in the
Competitive Bid Request less the amount of all other Competitive Bids accepted
with respect to such Competitive Bid Request, which acceptance, in the case of
multiple bids at the same Competitive Bid Rate, shall be made pro rata in
accordance with the amount of each such bid at such Competitive Bid Rate, and
(v) except pursuant to clause (iv) above, no bid shall be accepted for a
Competitive Bid Loan unless such Competitive Bid Loan is in a minimum principal
amount of $5,000,000 and an integral multiple of $1,000,000; provided further,
however, that if a Competitive Bid Loan must be in an amount less than
$5,000,000 because of the provisions of clause (iv) above, such Competitive Bid
Loan may be for a minimum of $1,000,000 or any integral multiple thereof, and in
calculating the pro rata allocation of acceptances of portions of multiple bids
at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall
be rounded to integral multiples of $1,000,000 in a manner which shall be in the
discretion of the Borrower. A notice given by the Borrower pursuant to this
paragraph (e) shall be irrevocable.
(f) The Agent shall promptly notify each bidding Lender whether or not
its Competitive Bid has been accepted (and if so, in what amount and at what
Competitive Bid Rate) by telecopy sent by the Agent, and each successful bidder
will thereupon become bound, subject to the other applicable conditions hereof,
to make the Competitive Bid Loan in respect of which its bid has been accepted.
(g) A Competitive Bid Request shall not be made within five (5)
Business Days after the date of any previous Competitive Bid Request.
(h) If the Agent shall elect to submit a Competitive Bid in its
capacity as a Lender, it shall submit such bid directly to the Borrower one half
of an hour earlier than the time at which the other Lenders are required to
submit their bids to the Agent pursuant to paragraph (c) above.
(i) Each Lender participating in any Competitive Bid Loan shall make
its Competitive Bid Rate Advance available to the Agent on the date specified
in the Bid
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Request at the time and in the manner and subject to the provisions specified
in Section 4.2..
(j) The proceeds of each of the Competitive Bid Loans shall be used by
the Borrower and its Subsidiaries for acquisitions, capital expenditures and as
working capital and for other general corporate purposes.
SECTION 2.7. COMPETITIVE BID NOTES; REPAYMENT OF PRINCIPAL.
(a) The Borrower's obligations to pay the principal of, and interest
on, the Competitive Bid Loans to each Lender shall be evidenced by the records
of the Agent and such Lender and by the Competitive Bid Note payable to such
Lender (or the assignor of such Lender) completed in conformity with this
Agreement.
(b) A Competitive Bid Loan shall be due and payable in full on the
earlier of (i) the expiration of the applicable Interest Period or (ii) the
Maturity Date.
SECTION 2.8. LIMITATION ON THE AMOUNT OF BID LOANS.
The aggregate outstanding principal amount of all Revolving Loans, all
Swing Line Loans and all Competitive Bid Loans at any time shall not exceed the
Total Commitments at such time.
SECTION 2.9. PRO RATA PAYMENTS.
Except as otherwise provided herein, (a) each payment on account of the
principal of and interest on the Revolving Loans and fees (other than the fees
payable under the Fee Letter, which shall be retained by the Agent) described in
this Agreement shall be made to the Agent for the account of the Lenders pro
rata based on their Applicable Commitment Percentages, (b) each payment on
account of principal of and interest on a Competitive Bid Loan shall be made to
the Agent for the account of the Lender making such Competitive Bid Loan, (c)
all payments to be made by the Borrower for the account of each of the Lenders
on account of principal, interest and fees, shall be made without set-off or
counterclaim, and (d) the Agent will promptly distribute payments received by it
to the Lenders. If a payment is received by the Agent before 10:00 a.m.,
Atlanta, Georgia time on a Business Day, the Agent shall distribute each
Lender's share of the payment to such Lender before 2:00 p.m., Atlanta, Georgia
time on the same day; or if a payment is received by the Agent after 10:00 a.m.
Atlanta, Georgia time on a Business Day or is received on a day other than a
Business Day, the Agent shall distribute each Lender's share of the payment to
such Lender before 2:00 p.m., Atlanta, Georgia time on the next Business Day.
If, for any reason, the Agent makes any distribution to any Lender prior to
receiving the corresponding payment from the Borrower, and the Borrower's
payment is not received by the Agent within three Business Days after payment by
the Agent to the Lender, the Lender will, upon written request from the Agent,
return the payment to the Agent with interest at the interest rate per annum for
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overnight borrowing by the Agent from the Federal Reserve Bank for the period
commencing on the date the Lender received such payment and ending on, but
excluding, the date of its repayment to the Agent. If the Agent advises any
Lender of any miscalculation of the amount of such Lender's share that has
resulted in an excess payment to such Lender, promptly upon request by the Agent
such Lender shall return the excess amount to the Agent with interest calculated
as set forth above. Similarly, if a Lender advises the Agent of any
miscalculation that has resulted in an insufficient payment to such Lender,
promptly upon written request by such Lender the Agent shall pay the additional
amount to such Lender with interest calculated as set forth above. In the event
the Agent is required to return any amount of principal, interest or fees or
other sums received by the Agent after the Agent has paid over to any Lender its
share of such amount, such Lender shall, promptly upon demand by the Agent,
return to the Agent such share, together with applicable interest on such share.
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ARTICLE 3. SWING LINE FACILITY
SECTION 3.1. SWING LINE FACILITY; USE OF PROCEEDS.
(a) Subject to and upon the terms and conditions herein set forth, the
Swing Line Lender, from on and after the Closing Date, but prior to the Maturity
Date, hereby agrees to make available to the Borrower from time to time, Swing
Line Loans which shall not exceed in aggregate principal amount at any time
outstanding the Swing Line Commitment.
(b) Amount and Terms of Swing Line Loans. Each Swing Line Loan shall,
at the option of Borrower, be made or continued as, or converted into, Base Rate
Advances, Eurodollar Advances or, to the extent available, Cost of Funds
Advances. The aggregate principal amount of each Swing Line Loan comprised of
Eurodollar Advances shall be not less than $500,000 or a greater integral
multiple of $100,000, and the aggregate principal amount of each Swing Line Loan
comprised of Base Rate Advances or Cost of Funds Advances shall be not less than
$500,000 or greater integral multiples of $100,000.
(c) Use of Proceeds. The proceeds of Swing Line Loans shall be used by
the Borrower and its Subsidiaries for acquisitions, capital expenditures and as
working capital and for other general corporate purposes.
(d) Notification of Availability of Cost of Funds Advance and Cost of
Funds Rate. The Swing Line Lender shall have no obligation to make a Cost of
Funds Advance. If the Swing Line Lender elects to make a Cost of Funds Advance,
it shall notify the Borrower thereof and of the Cost of Funds Rate being offered
prior to 11:00 a.m. (Atlanta time) on the Business Day of such requested
Advance. If the Borrower does not notify the Swing Line Lender of its acceptance
of such Cost of Funds Advance prior to 12:00 noon (Atlanta time) on the date of
such requested Advance, the Borrower will be deemed to have rejected the same.
(e) Swing Line Lender. If the existing Swing Line Lender (the "Existing
Swing Line Lender") is unable or unwilling to make Cost of Funds Advances to the
Borrower, the Borrower may, upon the satisfaction of the following conditions,
designate a new Swing Line Lender to replace the Existing Swing Line Lender:
(i) the Borrower shall provide written notice to the Agent and the
Lenders, including the Existing Swing Line Lender, of its intention to proceed
under this paragraph (e), which notice shall include (i) the identity of the
lending institution selected by the Borrower to be the new Swing Line Lender
(the "New Swing Line Lender") and (ii) the date upon which the Borrower intends
to effect the replacement of the Existing Swing Line Lender (the "New Swing Line
Lender Replacement Date") ; and
(ii) the Borrower shall, on or prior to the Swing Line Lender
Replacement Date, repay in full all outstanding Swing Line Loans, together with
all ac-
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crued and unpaid interest thereon, and all other amounts owing to the Existing
Swing Line Lender hereunder relating to its Swing Line Loans.
Upon the satisfaction of the foregoing conditions and upon the consummation of
the amendment to this Agreement referred to in the next sentence, (x) the Swing
Line Commitment shall terminate as to the Existing Swing Line Lender; (y) the
Existing Swing Line Lender shall cancel the outstanding Swing Line Note and
return it to the Borrower and (z) the New Swing Line Lender shall replace and
become vested with all the rights, powers, privileges and duties of the existing
Swing Line Lender under this Agreement. Before the new Swing Line Commitment can
become effective, it will be necessary to amend the provisions of this Agreement
relating to the relationship of the Swing Line Commitment to the Revolving
Credit Commitment of the Existing Swing Line Lender as well as Sections 2.3. and
2.4. The Lenders and the Borrower covenant and agree to negotiate such amendment
in good faith.
SECTION 3.2. SWING LINE NOTE; REPAYMENT OF PRINCIPAL.
(a) The Borrower's obligations to pay the principal of, and interest
on, the Swing Line Loans to the Swing Line Lender shall be evidenced by the
records of the Swing Line Lender and by the Swing Line Note payable to the Swing
Line Lender in the amount of the Swing Line Facility.
(b) All Borrowings outstanding under the Swing Line Note shall be due
and payable in full on the earlier of (i) the expiration of the applicable
Interest Period or (ii) on the Maturity Date.
SECTION 3.3. VOLUNTARY REDUCTION OF SWING LINE COMMITMENT
Upon at least three (3) Business Days' prior telephonic notice
(promptly confirmed in writing) to SunTrust and the Agent, Borrower shall have
the right, without premium or penalty, to terminate the unutilized portion of
the Swing Line Commitment, in part or in whole, provided that any partial
termination pursuant to this Section 3.3. shall be in an amount of at least
$1,000,000 and integral multiples of $100,000.
SECTION 3.4. REFUNDING SWING LINE LOANS WITH PROCEEDS OF
MANDATORY REVOLVING LOANS.
If (i) any Swing Line Loan shall be outstanding upon the occurrence of
an Event of Default, or (ii) after giving effect to any request for a Swing Line
Loan or a Revolving Loan, the aggregate principal amount of the Revolving Loans
and Swing Line Loans outstanding to the Swing Line Lender would exceed the Swing
Line Lender's Revolving Credit Commitment, then each Lender hereby agrees, upon
request from the Swing Line Lender, to make a Revolving Loan (which shall be
initially funded as a Base Rate Advance) in an amount equal to such Lender's
Applicable Commitment Percentage of the outstanding principal amount of the
Swing Line Loans (the "Refunded Swing Line
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Loans") outstanding on the date such notice is given. On or before 11:00 a.m.
(local time for the Agent) on the first Business Day following receipt by each
Lender of a request to make Revolving Loans as provided in the preceding
sentence, each such Lender (other than the Swing Line Lender) shall deposit in
an account specified by the Agent to the Lenders from time to time the amount so
requested in same day funds, whereupon such funds shall be immediately delivered
to the Swing Line Lender (and not the Borrower) and applied to repay the
Refunded Swing Line Loans. On the day such Revolving Loans are made, the Swing
Line Lender's pro rata share of the Refunded Swing Line Loans shall be deemed to
be paid with the proceeds of the Revolving Loans made by the Swing Line Lender.
Upon the making of any Revolving Loan pursuant to this clause, the amount so
funded shall become due under such Lender's Revolving Credit Note and shall no
longer be owed under the Swing Line Note. Each Lender's obligation to make the
Revolving Loans referred to in this clause shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
(i) any setoff, counterclaim, recoupment, defense or other right which such
Lender may have against the Swing Line Lender, the Borrower or any other Person
for any reason whatsoever; (ii) the occurrence or continuance of any Default or
Event of Default; (iii) any adverse change in the condition (financial or
otherwise) of the Borrower or any other Consolidated Company; (iv) the
acceleration or maturity of any Loans or the termination of the Revolving Credit
Commitments after the making of any Swing Line Loan; (v) any breach of this
Agreement by the Borrower or any other Lender; or (vi) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
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ARTICLE 4. GENERAL LOAN TERMS
SECTION 4.1. FUNDING NOTICES.
(a) (i) Whenever Borrower desires to make a Borrowing of Revolving
Loans with respect to the Revolving Credit Commitments (other than one resulting
from a conversion or continuation pursuant to Section 4.1.(b)), it shall give
the Agent prior written notice (or telephonic notice promptly confirmed in
writing) of such Borrowing (a "Notice of Borrowing"), such Notice of Borrowing
to be given at Agent's Payment Office (x) prior to 11:00 A.M. (local time for
the Agent) on the Business Day which is the requested date of such Borrowing in
the case of Base Rate Advances, and (y) prior to 12:00 noon (local time for the
Agent) three Business Days prior to the requested date of such Borrowing in the
case of Eurodollar Advances. Notices received after 12:00 noon shall be deemed
received on the next Business Day. Each Notice of Borrowing shall be irrevocable
and shall specify the aggregate principal amount of the Borrowing, the date of
Borrowing (which shall be a Business Day), and whether the Borrowing is to
consist of Base Rate Advances or Eurodollar Advances and (in the case of
Eurodollar Advances) the Interest Period to be applicable thereto.
(ii) Whenever Borrower desires to obtain a Swing Line Loan under
the Swing Line Facility (other than one resulting from a conversion or
continuation pursuant to Section 4.1.(b)), it shall give the Swing Line Lender
prior written notice (or telephonic notice promptly confirmed in writing) of
such Swing Line Loan (a "Notice of Swing Line Loan"), such Notice of Swing Line
Loan to be given at its Payment Office (x) prior to 12:00 Noon (local time for
the Swing Line Lender) on the Business Day which is the requested date of such
Swing Line Loan in the case of Base Rate Advances, (y) prior to 10:00 a.m.
(local time for the Swing Line Lender) on the Business Day which is the
requested date of such Swing Line Loan in the case of Cost of Funds Advances,
and (y) prior to 12:00 noon (local time for the Swing Line Lender) two Business
Days prior to the requested date of such Swing Line Loan in the case of
Eurodollar Advances. Notices received after 12:00 noon shall be deemed received
on the next Business Day. Each Notice of Swing Line Loan shall be irrevocable
and shall specify the aggregate principal amount of the Swing Line Loan, the
date of Swing Line Loan (which shall be a Business Day), and whether the Swing
Line Loan is to consist of Base Rate Advances, Cost of Funds Advances or
Eurodollar Advances and (in the case of Eurodollar Advances and Cost of Funds
Advances) the Interest Period to be applicable thereto.
(iii) Whenever Borrower desires to receive Competitive Bids, it
shall follow the procedure set forth in Section 2.6.
(b) (i) Whenever Borrower desires to convert all or a portion of an
outstanding Borrowing under the Revolving Credit Commitments consisting of Base
Rate Advances into a Borrowing consisting of Eurodollar Advances, or to continue
outstanding a Borrowing consisting of Eurodollar Advances for a new Interest
Period, it shall give the Agent at least three Business Days' prior written
notice (or telephonic
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notice promptly confirmed in writing) of each such Borrowing to be converted
into or continued as Eurodollar Advances. Such notice (a "Notice of
Conversion/Continuation") shall be given prior to 12:00 noon (local time for the
Agent) on the date specified at the Payment Office of the Agent. Each such
Notice of Conversion/Continuation shall be irrevocable and shall specify the
aggregate principal amount of the Advances to be converted or continued, the
date of such conversion or continuation and the Interest Period to be applicable
thereto. If, upon the expiration of any Interest Period in respect of any
Borrowing consisting of Eurodollar Advances, Borrower shall have failed to
deliver the Notice of Conversion/Continuation, Borrower shall be deemed to have
elected to convert or continue such Borrowing to a Borrowing consisting of Base
Rate Advances. So long as any Executive Officer of Borrower has knowledge that
any Default or Event of Default shall have occurred and be continuing, no
Borrowing may be converted into or continued as (upon expiration of the current
Interest Period) Eurodollar Advances unless the Agent and each of the Lenders
shall have otherwise consented in writing. No conversion of any Borrowing of
Eurodollar Advances shall be permitted except on the last day of the Interest
Period in respect thereof.
(ii) Whenever Borrower desires to convert all or a portion of
an outstanding Swing Line Loan consisting of Base Rate Advances into a Swing
Line Loan consisting of Eurodollar Advances or Cost of Funds Advances, or to
continue outstanding a Swing Line Loan consisting of Eurodollar Advances or Cost
of Funds Advances for a new Interest Period, it shall give the Swing Line Lender
prior written notice (or telephonic notice promptly confirmed in writing) of
each such Swing Line Loan to be converted into or continued as Eurodollar
Advances or Cost of Funds Advances, such notice to be given at least two
Business Days in advance thereof, in the case of Eurodollar Advances, or on the
same day, in the case of Cost of Funds Advances. Such notice (a "Notice of
Conversion/Continuation of Swing Line Loans") shall be given prior to 12:00 noon
in the case of Eurodollar Advances, or 10:00 a.m. in the case of Cost of Funds
Advances (local time for the Swing Line Lender) on the date specified at the
Payment Office of the Swing Line Lender. Each such Notice of
Conversion/Continuation of Swing Line Loans shall be irrevocable and shall
specify the aggregate principal amount of the Advances to be converted or
continued, the date of such conversion or continuation and the Interest Period
to be applicable thereto. If, upon the expiration of any Interest Period in
respect of any Swing Line Loan consisting of Eurodollar Advances or Cost of
Funds Advances, Borrower shall have failed to deliver the Notice of
Conversion/Continuation of Swing Line Loans, Borrower shall be deemed to have
elected to convert or continue such Swing Line Loan to a Swing Line Loan
consisting of Base Rate Advances. So long as any Executive Officer of Borrower
has knowledge that any Default or Event of Default shall have occurred and be
continuing, no Swing Line Loan may be converted into or continued as (upon
expiration of the current Interest Period) Eurodollar Advances or Cost of Funds
Advances unless the Swing Line Lender shall have otherwise consented in writing.
No continuation or conversion of any Swing Line Loan of Eurodollar Advances or
Cost of Funds Advances shall be permitted except on the last day of the Interest
Period in respect thereof.
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(c) Without in any way limiting Borrower's obligation to confirm in
writing any telephonic notice, the Agent and the Swing Line Lender may act
without liability upon the basis of telephonic notice believed by the Agent or
the Swing Line Lender, as the case may be, in good faith to be from Borrower
prior to receipt of written confirmation. In each such case, Borrower hereby
waives the right to dispute the Agent's or the Swing Line Lender's, as the case
may be, record of the terms of such telephonic notice.
(d) The Agent shall promptly (and in any event by the same time on the
next succeeding Business Day as such notice is received) give each Lender notice
by telephone (confirmed in writing) or by telex, telecopy or facsimile
transmission of the matters covered by the notices given to the Agent pursuant
to this Section 4.1. with respect to the Revolving Credit Commitments.
SECTION 4.2. DISBURSEMENT OF FUNDS.
(a) No later than 12:00 noon (local time for the Agent) in the case of
a Borrowing consisting of Eurodollar Advances and no later than 2:00 p.m. (local
time for the Agent) in the case of a Borrowing consisting of Base Rate Advances
on the date of each Borrowing pursuant to the Revolving Credit Commitments
(other than one resulting from a conversion or continuation pursuant to Section
4.1.(b)(i)), each Lender will make available its Applicable Commitment
Percentage of the amount of such Borrowing in immediately available funds at the
Payment Office of the Agent. The Agent will make available to Borrower the
aggregate of the amounts (if any) so made available by the Lenders to the Agent
in a timely manner by crediting such amounts to Borrower's demand deposit
account maintained with the Agent or at Borrower's option, by effecting a wire
transfer of such amounts to Borrower's account specified by the Borrower, by the
close of business on such Business Day. In the event that the Lenders do not
make such amounts available to the Agent by the time prescribed above, but such
amount is received later that day, such amount may be credited to Borrower in
the manner described in the preceding sentence on the next Business Day (with
interest on such amount to begin accruing hereunder on such next Business Day).
(b) No later than 2:00 p.m. (local time for the Swing Line Lender) on
the date of each Swing Line Loan, the Swing Line Lender shall make available to
Borrower the requested Swing Line Loan by crediting such amounts to Borrower's
demand deposit account maintained with the Agent or at Borrower's option, by
effecting a wire transfer of such amounts to Borrower's account specified by the
Borrower, by the close of business on such Business Day.
(c) No later than 3:00 p.m. (local time for the Agent) on the date of
each Competitive Bid Loan, each Lender participating in such Competitive Bid
Loan will make available its pro rata share of the amount of such Competitive
Bid Loan in immediately available funds at the Payment Office of the Agent. The
Agent will make available to Borrower the aggregate of the amounts (if any) so
made available by the
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Lenders to the Agent in a timely manner by crediting such amount to Borrower's
demand deposit account maintained with the Agent or at the Borrower's option by
effecting a wire transfer of such amounts to Borrower's account specified by the
Borrower by the close of business on such Business Day. In the event that
Lenders do not make such amounts available to the Agent by the time prescribed
above but such amount is received later that day, such amount may be credited to
the Borrower in the manner described in the preceding sentence on the next
Business Day (with interest on such amount to begin accruing hereunder on such
next Business Day).
(d) Unless the Agent shall have been notified by any Lender prior to
the date of a Borrowing that such Lender does not intend to make available to
the Agent such Lender's portion of the Borrowing to be made on such date, the
Agent may assume that such Lender has made such amount available to the Agent on
such date and the Agent may make available to Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the Agent by such
Lender on the date of Borrowing, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest at the
Federal Funds Rate. If such Lender does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall promptly notify
Borrower, and Borrower shall immediately pay such corresponding amount to the
Agent together with interest at the rate specified for the Borrowing which
includes such amount paid and any amounts due under Section 4.13. hereof.
Nothing in this subsection shall be deemed to relieve any Lender from its
obligation to fund its Commitments hereunder or to prejudice any rights which
Borrower may have against any Lender as a result of any default by such Lender
hereunder.
(e) All Borrowings under the Revolving Credit Commitments shall be
loaned by the Lenders on the basis of their Applicable Commitment Percentage on
the date of such Borrowing. No Lender shall be responsible for any default by
any other Lender in its obligations hereunder, and each Lender shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fund its Commitment hereunder.
SECTION 4.3. INTEREST.
(a) Borrower agrees to pay interest in respect of all unpaid principal
amounts of the Revolving Loans from the respective dates such principal amounts
were advanced to maturity (whether by acceleration, notice of prepayment or
otherwise) at rates per annum equal to the applicable rates indicated below:
(i) For Base Rate Advances--The Base Rate in effect from time to
time; and
(ii) For Eurodollar Advances--The relevant Adjusted LIBO Rate plus
the Applicable Margin.
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(b) Borrower agrees to pay interest in respect of all unpaid principal
amounts of the Swing Line Loans made to Borrower from the respective dates such
principal amounts were advanced to maturity (whether by acceleration, notice of
prepayment or otherwise) at rates per annum equal to the applicable rates
indicated below:
(i) For Base Rate Advances--The Base Rate in effect on each day
that the Swing Line Loan is outstanding;
(ii) For Eurodollar Advances--The relevant Adjusted LIBO Rate plus
the Applicable Margin; and
(iii) For Cost of Funds Advances--The relevant Cost of Funds Rate
plus the Applicable Margin.
(c) Borrower agrees to pay interest in respect of all unpaid principal
amounts of the Competitive Bid Loans made to Borrower from the respective dates
such principal amounts were advanced to maturity (whether by acceleration,
notice of prepayment or otherwise) at the Competitive Bid Rate or Rates agreed
to by the Borrower and the Lender(s) participating therein for each Competitive
Bid Loan.
(d) Overdue principal and, to the extent not prohibited by applicable
law, overdue interest, in respect of the Revolving Loans, Swing Line Loans and
Competitive Bid Loans, and all other overdue amounts owing hereunder, shall bear
interest from each date that such amounts are overdue:
(i) in the case of overdue principal and interest with respect to
all Loans outstanding as Eurodollar Advances, at the greater
of (A) the rate otherwise applicable for the then-current
Interest Period plus an additional two percent (2.0%) per
annum or (B) the rate in effect for Base Rate Advances plus an
additional two percent (2.0%) per annum; and
(ii) in the case of overdue principal and interest with respect to
all other Loans outstanding as Base Rate Advances, or Cost of
Funds Advances or Competitive Bid Rate Advances, and all other
Obligations hereunder (other than Loans), at a rate equal to
the Base Rate plus an additional two percent (2.0%) per annum.
(e) Interest on each Loan shall accrue from and including the date of
such Loan to but excluding the date of any repayment thereof; provided that, if
a Loan is repaid on the same day made, one day's interest shall be paid on such
Loan. Interest on all outstanding Base Rate Advances shall be payable quarterly
in arrears on the last day of each calendar quarter, commencing on March 31,
1997. Interest on all outstanding Eurodollar Advances
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and Competitive Bid Rate Advances shall be payable on the last day of each
Interest Period applicable thereto, and, in the case of Eurodollar Advances and
Competitive Bid Rate Advances having an Interest Period in excess of three
months, on each three month anniversary of the initial date of such Interest
Period. Interest on all outstanding Cost of Funds Advances shall be payable
monthly in arrears on the last day of each Interest Period applicable thereto.
Interest on all Loans shall be payable on any conversion of any Advances
comprising such Loans into Advances of another Type (other than in connection
with the conversion from a Base Rate Loan), prepayment (on the amount prepaid),
at maturity (whether by acceleration, notice of prepayment or otherwise) and,
after maturity, on demand.
(f) The Agent shall promptly notify the Borrower and the other Lenders
by telephone (confirmed in writing) or in writing, upon determining the Adjusted
LIBO Rate for any Interest Period. Any such determination shall, absent manifest
error, be final, conclusive and binding for all purposes.
SECTION 4.4. INTEREST PERIODS; MAXIMUM NUMBER OF BORROWINGS.
(a) In connection with the making or continuation of, or conversion
into, each Borrowing of Eurodollar Advances, Borrower shall select an Interest
Period to be applicable to such Eurodollar Advances, which Interest Period shall
be either a 1, 2, 3 or 6 month period.
(b) In connection with the submission of each Competitive Bid Request,
the Borrower may select an Interest Period to be applicable to such Competitive
Bid Loan not to exceed 24 months.
(c) In connection with the submission of each request for a Cost of
Funds Advance, the Borrower may select an Interest Period to be applicable to
such Cost of Funds Advance not to exceed 30 days.
(d) Notwithstanding paragraphs (a), (b) and (c) of this Section 4.4.:
(i) The initial Interest Period for any Borrowing of Eurodollar
Advances, Cost of Funds Advances or Competitive Bid Rate
Advances shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing
consisting of Base Rate Advances) and each Interest Period
occurring thereafter in respect of such Borrowing shall
commence on the day on which the next preceding Interest
Period expires;
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(ii) If any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day, provided that if any
Interest Period in respect of Eurodollar Advances would
otherwise expire on a day that is not a Business Day but is a
day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next
preceding Business Day;
(iii) Any Interest Period in respect of Eurodollar Advances which
begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period shall, subject to part (iv) below, expire on
the last Business Day of such calendar month; and
(iv) No Interest Period with respect to the Loans shall extend
beyond the Maturity Date.
(e) At no time shall the combined number of Borrowings outstanding
under Articles 2. and 3. exceed eight (8); provided that, for the purpose of
determining the number of Borrowings outstanding and the minimum amount for
Borrowings resulting from conversions or continuations, all Swing Line Loans
comprised of Base Rate Advances shall be considered as one Borrowing, all Swing
Line Loans comprised of Cost of Funds Advances shall be considered as one
Borrowing, and all Revolving Loans comprised of Base Rate Advances shall be
considered as one Borrowing; further provided that, at no time shall more than
two (2) Swing Line Loans consisting of Eurodollar Advances be outstanding.
SECTION 4.5. FEES.
(a) Borrower shall pay to the Agent, for the ratable benefit of each
Lender based upon its respective Applicable Commitment Percentage of the Total
Commitments, a facility fee (the "Facility Fee") for the period commencing on
the Closing Date to and including the Maturity Date, payable e quarterly in
arrears on the last day of each calendar quarter, commencing on March 31, 1997,
and on the Maturity Date, equal to the Facility Fee Percentage multiplied by the
average daily amount of the Revolving Credit Commitments, whether or not
utilized.
(b) Borrower shall pay to the Agent the amounts and on the dates agreed
to in the Fee Letter.
SECTION 4.6. EFFECTIVE DATE FOR ADJUSTMENT TO FACILITY FEE PERCENTAGE
AND APPLICABLE MARGIN.
The Facility Fee Percentage and Applicable Margin (collectively
"Applicable Percentages" shall be determined and adjusted quarterly on the date
by which the
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Borrower is required to provide the officer's certificate in accordance with the
provisions of Section 7.7.(d) (each a "Calculation Date"); provided, however
that (i) the initial Applicable Percentages shall assume that the Ratio of
Consolidated Funded Debt to Total Capitalization shall be 60% and shall remain
at such level until the first Calculation Date subsequent to December 31, 1996,
and, thereafter, such level shall be determined by the then current Ratio of
Consolidated Funded Debt to Total Capitalization, and (ii) if the Borrower fails
to provide the officer's certificate to the Agent by each Calculation Date, the
Applicable Percentages from such Calculation Date shall be based on maximum
percentage until such time as an appropriate officer's certificate is provided,
whereupon the level shall be determined by the then current Ratio of
Consolidated Funded Debt to Total Capitalization. Except as set forth above,
each Applicable Percentage shall be effective from one Calculation Date until
the next Calculation Date.
SECTION 4.7. VOLUNTARY PREPAYMENTS OF BORROWINGS.
(a) Borrower may, at its option, prepay Borrowings consisting of Base
Rate Advances at any time in whole, or from time to time in part, in amounts
aggregating $1,000,000 or any greater integral multiple of $100,000, by paying
the principal amount to be prepaid together with interest accrued and unpaid
thereon to the date of prepayment. Borrowings consisting of Eurodollar Advances
or Competitive Bid Rate Advances may be prepaid, at Borrower's option, in whole,
or from time to time in part, in amounts aggregating $1,000,000 or an integral
multiple of $1,000,000 (except that no partial prepayment may be made if the
remaining principal amount outstanding of such Eurodollar Advance which
comprises a Revolving Loan or Competitive Bid Rate Advance would be less than
$5,000,000), by paying the principal amount to be prepaid, together with
interest accrued and unpaid thereon to the date of prepayment, and all
compensation payments pursuant to Section 4.13. if such prepayment is made on a
date other than the last day of an Interest Period applicable thereto. Each such
optional prepayment shall be applied in accordance with Section 4.7.(c) below.
(b) Borrower shall give written notice (or telephonic notice confirmed
in writing) to the Agent or the Swing Line Lender, as applicable, of any
intended prepayment of the Revolving Loans (i) by 11:00 A.M. (local time for the
Agent) on the Business Day of any prepayment of Base Rate Advances or Cost of
Funds Advances and (ii) not less than three Business Days prior to any
prepayment of Eurodollar Advances or Competitive Bid Rate Advances. Such notice,
once given, shall be irrevocable. Upon receipt of such notice of prepayment
pursuant to the first sentence of this paragraph (b) with respect to any
prepayment of Revolving Loans or Competitive Bid Loans, the Agent shall promptly
(and in any event by the same time on the next succeeding Business Day as such
notice is received) notify each Lender of the contents of such notice and of
such Lender's Applicable Commitment Percentage of each Revolving Loan and its
pro rata share of each Competitive Bid Loan subject to such prepayment.
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(c) Borrower, when providing notice of prepayment pursuant to Section
4.7.(b), may designate the Types of Advances and the specific Borrowing or
Borrowings which are to be prepaid, provided that (i) if any prepayment of
Eurodollar Advances made pursuant to a single Borrowing of the Revolving Loans
shall reduce the outstanding Advances made pursuant to such Borrowing to an
amount less than $5,000,000, such Borrowing shall immediately be converted into
Base Rate Advances; and (ii) each prepayment made pursuant to a single Borrowing
shall be applied pro rata among the Loans comprising such Borrowing. In the
absence of a designation by Borrower, the Agent or, with respect to the Swing
Line Loans, the Swing Line Lender, shall, subject to the foregoing, make such
designation in its discretion but using reasonable efforts to avoid funding
losses to the Lenders pursuant to Section 4.13. and subject to the last sentence
of Section 4.16. All voluntary prepayments shall be applied to the payment of
interest then due and owing before application to principal.
SECTION 4.8. MANNER OF PAYMENT, CALCULATION OF INTEREST, TAXES
(a) (i) Except as otherwise specifically provided herein, all payments
under this Agreement and the other Credit Documents, other than the payments
specified in clause (ii) below, shall be made without defense, set-off or
counterclaim to the Agent not later than 12:00 noon (local time for the Agent)
on the date when due and shall be made in Dollars in immediately available funds
at the Agent's Payment Office.
(ii) All payments under this Agreement with respect to the Swing Line
Loans, including the Swing Line Facility Fee, shall be made without defense,
set-off or counterclaim to the Swing Line Lender not later than 12:00 noon
(local time for the Swing Line Lender) on the date when due and shall be made in
Dollars in immediately available funds at the Swing Line Lender's Payment
Office.
(b) (i) All such payments shall be made free and clear of and without
deduction or withholding for any Taxes in respect of this Agreement, the Notes
or other Credit Documents, or any payments of principal, interest, fees or other
amounts payable hereunder or thereunder (but excluding, except as provided in
paragraph (iii) hereof, in the case of each Lender, taxes imposed on or measured
by its net income, and franchise taxes and branch profit taxes imposed on it (A)
by the jurisdiction under the laws of which such Lender is organized or any
political subdivision thereof and, in the case of each Lender, taxes imposed on
or measured by its net income, and franchise taxes and branch profit taxes
imposed in it, by the jurisdiction of such Lender's appropriate Lending Office
or any political subdivision thereof, and (B) by a jurisdiction in which any
payments are to be made by any Borrower hereunder, other than the United States
of America, or any political subdivision of any thereof, and that would not have
been imposed but for the existence of a connection between such Lender and the
jurisdiction imposing such taxes (other than a connection arising as a result of
this Agreement or the transactions contemplated by this Agreement), except in
the case of taxes described in this clause (B), to the extent such taxes are
imposed as a result of a change in the law or regulations of any
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jurisdiction or any applicable treaty or regulations or in the official
interpretation of any such law, treaty or regulations by any government
authority charged with the interpretation or administration thereof after the
date of this Agreement. If any such Taxes are so levied or imposed, Borrower
agrees (A) to pay the full amount of such Taxes, and such additional amounts as
may be necessary so that every net payment of all amounts due hereunder and
under the Notes and other Credit Documents, after withholding or deduction for
or on account of any such Taxes (including additional sums payable under this
Section 4.8.), will not be less than the full amount provided for herein had no
such deduction or withholding been required, (B) to make such withholding or
deduction and (C) to pay the full amount deducted to the relevant authority in
accordance with applicable law. Borrower will furnish to the Agent and each
Lender, within 30 days after the date the payment of any Taxes is due pursuant
to applicable law, certified copies of tax receipts evidencing such payment by
Borrower. Borrower will indemnify and hold harmless the Agent and each Lender
and reimburse the Agent and each Lender upon written request for the amount of
any such Taxes so levied or imposed and paid by the Agent or Lender and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or illegally asserted.
A certificate as to the amount of such payment by such Lender or the Agent,
absent manifest error, shall be final, conclusive and binding for all purposes.
(ii) Each Lender that is organized under the laws of any jurisdiction
other than the United States of America or any State thereof (including the
District of Columbia) agrees to furnish to Borrower and the Agent, prior to the
time it becomes a Lender hereunder, two copies of either U.S. Internal Revenue
Service Form 4224 or U.S. Internal Revenue Service Form 1001 or any successor
forms thereto (wherein such Lender claims entitlement to complete exemption from
U.S. Federal withholding tax on interest paid by Borrower hereunder) and to
provide to Borrower and the Agent a new Form 4224 or Form 1001 or any successor
forms thereto if any previously delivered form is found to be incomplete or
incorrect in any material respect or upon the obsolescence of any previously
delivered form; provided, however, that no Lender shall be required to furnish a
form under this paragraph (ii) after the date that it becomes a Lender hereunder
if it is not entitled to claim an exemption from withholding under applicable
law.
(iii) Borrower shall also reimburse the Agent and each Lender, upon
written request, for any Taxes imposed (including, without limitation, Taxes
imposed on the overall net income of the Agent or Lender or its applicable
Lending Office pursuant to the laws of the jurisdiction in which the principal
executive office or the applicable Lending Office of the Agent or Lender is
located) as the Agent or Lender shall determine are payable by the Agent or
Lender in respect of amounts paid by or on behalf of Borrower to or on behalf of
the Agent or Lender pursuant to paragraph (i) hereof.
(iv) In addition to the documents to be furnished pursuant to Section
4.8(b)(ii), each Lender shall, promptly upon the reasonable written request of
the Borrower to that effect, deliver to the Borrower such other accurate and
complete forms or similar docu-
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mentation as such Lender is legally able to provide and as may be required from
time to time by any applicable law, treaty, rule or regulation or any
jurisdiction in order to establish such Lender's tax status for withholding
purposed or as may otherwise be appropriate to eliminate or minimize any Taxes
on payments under this Agreement or the Notes.
(v) The Borrower shall not be required to pay any amounts pursuant to
Section 4.8(b)(i) or (iii) to any Lender for the account of any Lending Officer
of such Lender in respect of any United States withholding taxes payable
hereunder (and the Borrower, if required by law to do so, shall be entitled to
withhold such amounts and pays such amounts to the United States Government) if
the obligation to pay such additional amounts would not have arisen but for a
failure by such Lender to comply with its obligations under Section 4.8(b)(ii),
and such Lender shall not be entitled to exemption from deduction or withholding
of United Stated Federal income tax in respect of the payment of such sum by the
Borrower hereunder for the account of such Lending Office for, in each case, any
reason other than a change in United States law or regulations by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the date such Lender became a
Lender hereunder.
(vi) Within sixty (60) days of the written request of the Borrower,
each Lender shall execute and deliver such certificates, forms or other
documents, which can be reasonably furnished consistent with the facts and which
are reasonably necessary to assist in applying for refunds of Taxes remitted
hereunder.
(vii) To the extent that the payment of any Lender's Taxes by the
Borrower gives rise from time to time to a Tax Benefit (as hereinafter defined)
to such Lender in any jurisdiction other than the jurisdiction which imposed
such Taxes, such Lender shall pay to the Borrower the amount of each such Tax
Benefit so recognized or received. The amount of each Tax Benefit and,
therefore, payment to the Borrower will be determined from time to time by the
relevant Lender in its sole discretion, which determination shall be binding and
conclusive on all parties hereto. Each such payment will be due and payable by
such Lender to the Borrower within a reasonable time after the filing of the
income tax return in which such Tax Benefit is recognized or, in the case of any
tax refund, after the refund is received; provided, however, if at any time
thereafter such Lender is required to rescind such Tax Benefit or such Tax
Benefit is otherwise disallowed or nullified, the Borrower shall promptly, after
notice thereof from such Lender, repay to Lender the amount of such Tax Benefit
previously paid to the Borrower and rescinded, disallowed or nullified. For
purposed of this section, "Tax Benefit" shall mean the amount by which any
Lender's income tax liability for the taxable period in question is reduced
below what would have been payable had the Borrower not been required to pay the
Lender's Taxes. In case of any dispute with respect to the amount of any payment
the Borrower shall have no right to any offset or withholding of payments with
respect to future payments due to any Lender under this Agreement or the Notes.
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(c) Subject to Section 4.4.(c)(ii), whenever any payment to be made
hereunder or under any Note shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest thereon shall
be payable at the applicable rate during such extension.
(d) All computations of interest and fees shall be made on the basis of
a year of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or fees
are payable (to the extent computed on the basis of days elapsed). Interest on
Base Rate Advances shall be calculated based on the Base Rate from and including
the date of such Loan to but excluding the date of the repayment or conversion
thereof. Interest on Eurodollar Advances, Cost of Funds Advances and Competitive
Bid Rate Advances shall be calculated as to each Interest Period from and
including the first day thereof to but excluding the last day thereof. Each
determination by the Agent of an interest rate or fee hereunder shall be made in
good faith and, except for manifest error, shall be final, conclusive and
binding for all purposes.
(e) Payment by the Borrower to the Agent in accordance with the terms
of this Agreement shall, as to the Borrower, constitute payment to the Lenders
under this Agreement.
SECTION 4.9. INTEREST RATE NOT ASCERTAINABLE, ETC.
In the event that the Agent shall have determined (which determination
shall be made in good faith and, absent manifest error, shall be final,
conclusive and binding upon all parties) that on any date for determining the
Adjusted LIBO Rate for any Interest Period, by reason of any changes arising
after the date of this Agreement affecting the London interbank market, or the
Agent's position in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of Adjusted LIBO Rate, then, and in any such event, the Agent shall
forthwith give notice (by telephone confirmed in writing) to Borrower and to the
Lenders, of such determination and a summary of the basis for such
determination. Until the Agent notifies Borrower that the circumstances giving
rise to the suspension described herein no longer exist, the obligations of the
Lenders to make or permit portions of the Revolving Loans and the Swing Line
Loans to remain outstanding past the last day of the then current Interest
Periods as Eurodollar Advances shall be suspended, and such affected Advances
shall bear the same interest as Base Rate Advances. Nothing set forth in this
Section 4.9. shall prohibit the Borrower from utilizing the provisions herein
relating to Competitive Bid Rate Advances or Cost of Funds Advances.
SECTION 4.10. ILLEGALITY.
(a) In the event that any Lender or the Swing Line Lender shall have
determined (which determination shall be made in good faith and, absent
manifest error, shall
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be final, conclusive and binding upon all parties) at any time that the making
or continuance of any Eurodollar Advance or Competitive Bid Rate Advance has
become unlawful by compliance by such Lender in good faith with any applicable
law, governmental rule, regulation, guideline or order (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful), then, in any such event, the Lender shall give prompt notice (by
telephone confirmed in writing) to Borrower and to the Agent of such
determination and a summary of the basis for such determination (which notice
the Agent shall promptly transmit to the other Lenders).
(b) Upon the giving of the notice to Borrower referred to in subsection
(a) above, (i) Borrower's right to request and such Lender's obligation to make
Eurodollar Advances or Competitive Bid Rate Advances shall be immediately
suspended, and such Lender shall make an Advance as part of the requested
Borrowing of Eurodollar Advances as a Base Rate Advance, which Base Rate
Advance, as the case may be, shall, for all other purposes, be considered part
of such Borrowing, and (ii) if the affected Eurodollar Advance or Advances are
then outstanding, Borrower shall immediately, or if permitted by applicable law,
no later than the date permitted thereby, upon at least one Business Day's
written notice to the Agent and the affected Lender, convert each such Advance
into a Base Rate Advance or Advances, provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated the same
pursuant to this Section 4.10.(b).
SECTION 4.11. INCREASED COSTS.
(a) If, by reason of (x) after the date hereof, the introduction of or
any change (including, without limitation, any change by way of imposition or
increase of reserve requirements) in or in the interpretation of any law or
regulation, or (y) the compliance with any guideline or request from any central
bank or other governmental authority or quasi-governmental authority exercising
control over banks or financial institutions generally (whether or not having
the force of law):
(i) any Lender (or its applicable Lending Office) shall be subject
to any tax, duty or other charge with respect to its
Eurodollar Advances or Competitive Bid Rate Advances, or its
obligation to make such Advances, or the basis of taxation of
payments to any Lender of the principal of or interest on its
Eurodollar Advances or Competitive Bid Rate Advances or its
obligation to make Eurodollar Advances shall have changed
(except for changes in the tax on the overall net income of
such Lender or its applicable Lending Office imposed by the
jurisdiction in which such Lender's principal executive office
or applicable Lending Office is located); or
(ii) any reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), special
de-
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posit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Lender's
applicable Lending Office shall be imposed or deemed
applicable or any other condition affecting its Eurodollar
Advances or Competitive Bid Rate Advances or its obligation to
make Eurodollar Advances or Competitive Bid Rate Advances
shall be imposed on any Lender or its applicable Lending
Office or the London interbank market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Eurodollar Advances
(except to the extent already included in the determination of the applicable
Adjusted LIBO Rate for Eurodollar Advances) or Competitive Bid Rate Advances or
its obligation to make Eurodollar Advances, or there shall be a reduction in the
amount received or receivable by such Lender or its applicable Lending Office,
then Borrower shall from time to time (subject, in the case of certain Taxes, to
the applicable provisions of Section 4.8.(b)), upon written notice from and
demand by such Lender to Borrower (with a copy of such notice and demand to the
Agent), pay to the Agent for the account of such Lender within ten (10) Business
Days after the date of such notice and demand, additional amounts sufficient to
indemnify such Lender against such increased cost. A certificate as to the
amount of such increased cost, submitted to Borrower and the Agent by such
Lender in good faith and accompanied by a statement prepared by such Lender
describing in reasonable detail the basis for and calculation of such increased
cost, shall, except for manifest error, be final, conclusive and binding for all
purposes.
(b) If any Lender shall advise the Agent that at any time, because of
the circumstances described in clauses (x) or (y) in Section 4.11.(a) or any
other circumstances beyond such Lender's reasonable control arising after the
date of this Agreement affecting such Lender or the London interbank market or
such Lender's position in such market, the Adjusted LIBO Rate as determined by
the Agent will not adequately and fairly reflect the cost to such Lender of
funding its Eurodollar Advances or, if applicable, Competitive Bid Rate
Advances, then, and in any such event:
(i) the Agent shall forthwith give notice (by telephone confirmed
in writing) to Borrower and to the other Lenders of such
advice;
(ii) Borrower's right to request and such Lender's obligation to
make or permit portions of the Loans to remain outstanding
past the last day of the then current Interest Periods as
Eurodollar Advances or Competitive Bid Rate Advances shall be
immediately suspended;
(iii) in the event the affected Loan is a Revolving Loan, such
Lender shall make a Loan as part of the requested Borrowing
under the Revolving Loan Commitments of Eurodollar Advances as
a Base Rate Advance, which such Base Rate Advance shall, for
all other purposes, be considered part of such Borrowing; and
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(iv) in the event the affected Loan is a Swing Line Loan, the Swing
Line Lender shall make a Loan as part of the requested
Borrowing under the Swing Line Commitment of Eurodollar
Advances as a Base Rate Advance, which such Base Rate Advance
shall, for all other purposes, be considered part of such
Borrowing. Nothing set forth in this clause (iv) shall
prohibit the Borrower from requesting Cost of Funds Advances
from the Swing Line Lender.
SECTION 4.12. LENDING OFFICES.
(a) Each Lender agrees that, if requested by Borrower, it will use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate an alternate Lending Office with respect to any of its Eurodollar
Advances or Competitive Bid Rate Advance, as the case may be, affected by the
matters or circumstances described in Sections 4.8.(b), 4.9., 4.10., 4.11. or
4.17. to reduce the liability of Borrower or avoid the results provided
thereunder, so long as such designation is not disadvantageous to such Lender as
reasonably determined by such Lender, which determination shall be conclusive
and binding on all parties hereto. Nothing in this Section 4.12. shall affect or
postpone any of the obligations of Borrower or any right of any Lender provided
hereunder.
(b) If any Lender that is organized under the laws of any jurisdiction
other than the United States of America or any State thereof (including the
District of Columbia) issues a public announcement with respect to the closing
of its lending offices in the United States such that any withholdings or
deductions and additional payments with respect to Taxes may be required to be
made by Borrower thereafter pursuant to Section 4.8.(b), such Lender shall use
reasonable efforts to furnish Borrower notice thereof as soon as practicable
thereafter; provided, however, that no delay or failure to furnish such notice
shall in any event release or discharge Borrower from its obligations to such
Lender pursuant to Section 4.8.(b) or otherwise result in any liability of such
Lender.
SECTION 4.13. FUNDING LOSSES.
Borrower shall compensate each Lender, upon its written request to
Borrower (which request shall set forth the basis for requesting such amounts in
reasonable detail and which request shall be made in good faith and, absent
manifest error, shall be final, conclusive and binding upon all of the parties
hereto), for all actual losses, expenses and liabilities (including, without
limitation, any interest paid by such Lender to lenders of funds borrowed by it
to make or carry its Eurodollar Advances or Competitive Bid Rate Advances, in
either case to the extent not recovered by such Lender in connection with the
re-employment of such funds but excluding loss of anticipated profits), which
the Lender may sustain: (i) if for any reason (other than a default by such
Lender) a borrowing of, or conversion to or continuation of, Eurodollar Advances
or Competitive Bid Rate Advances to Borrower does not occur on the date
specified therefor in a Notice
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of Borrowing, Notice of Swing Line Loan, Competitive Bid Accept/Reject Letter,
Notice of Conversion/Continuation or Notice of Conversion/Continuation of Swing
Line Loans (whether or not withdrawn), (ii) if any repayment (including
mandatory prepayments and any conversions pursuant to Section 4.10.(b)) of any
Eurodollar Advances to Borrower occurs on a date which is not the last day of an
Interest Period applicable thereto, or (iii), if, for any reason, Borrower
defaults in its obligation to repay its Eurodollar Advances when required by the
terms of this Agreement.
SECTION 4.14. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR AND COMPETITIVE
BID RATE ADVANCES.
Calculation of all amounts payable to a Lender under this Article 4.
shall be made as though that Lender had actually funded its relevant Eurodollar
Advances or Competitive Bid Rate Advances through the purchase of deposits in
the relevant market bearing interest at the rate applicable to such Eurodollar
Advances or Competitive Bid Rate Advance in an amount equal to the amount of the
Eurodollar Advances or Competitive Bid Rate Advance and having a maturity
comparable to the relevant Interest Period and through the transfer of such
Eurodollar Advances or Competitive Bid Rate Advance from an offshore office of
that Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Advances or
Competitive Bid Rate Advances in any manner it sees fit and the foregoing
assumption shall be used only for calculation of amounts payable under this
Article 4.
SECTION 4.15. APPORTIONMENT OF PAYMENTS.
Aggregate principal and interest payments in respect of Loans and
payments in respect of facility fees shall be apportioned among all outstanding
Commitments and Loans to which such payments relate, proportionately to the
Lenders' respective pro rata portions of such Commitments and outstanding Loans.
The Agent shall promptly distribute to each Lender at its payment office
specified by any Lender its share of all such payments received by the Agent on
the same Business Day as such payment is deemed to be received by the Agent.
SECTION 4.16. SHARING OF PAYMENTS, ETC.
If any Lender shall obtain any payment or reduction (including, without
limitation, any amounts received as adequate protection of a deposit treated as
cash collateral under the Bankruptcy Code) of the Obligations (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Applicable Commitment Percentage of payments or
reductions on account of such obligations obtained by all the Lenders (other
than payments of principal, interest and fees with respect to the Competitive
Bid Loans which are payable solely to the Lenders participating therein), such
Lender shall forthwith (i) notify each of the other Lenders and Agent of such
receipt, and (ii) purchase from the other Lenders such participations in the
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affected obligations as shall be necessary to cause such purchasing Lender to
share the excess payment or reduction, net of costs incurred in connection
therewith, ratably with each of them, provided that if all or any portion of
such excess payment or reduction is thereafter recovered from such purchasing
Lender or additional costs are incurred, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery or such additional costs,
but without interest unless the Lender obligated to return such funds is
required to pay interest on such funds. Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 4.16.
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of Borrower in the amount of such
participation. Any payment received by the Agent or any Lender following the
occurrence and during the continuation of an Event of Default shall be
distributed pro rata amongst the Lenders based upon the percentage obtained by
dividing the Obligations owing to each Lender by the total amount of Obligations
on the date of receipt of such payment, with such amounts to be applied to the
outstanding Obligations in accordance with the terms of this Agreement.
SECTION 4.17. CAPITAL ADEQUACY.
Without limiting any other provision of this Agreement, in the event
that any Lender shall have determined that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy not currently in effect or fully applicable as of the Closing Date, or
any change therein or in the interpretation or application thereof after the
Closing Date, or compliance by such Lender with any request or directive
regarding capital adequacy not currently in effect or fully applicable as of the
Closing Date (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from a central bank or governmental
authority or body having jurisdiction, does or shall have the effect of reducing
the rate of return on such Lender's capital as a consequence of its obligations
hereunder to a level below that which such Lender could have achieved but for
such law, treaty, rule, regulation, guideline or order, or such change or
compliance (taking into consideration such Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then within
ten (10) Business Days after written notice and demand by such Lender (with
copies thereof to the Agent), Borrower shall from time to time pay to such
Lender additional amounts sufficient to compensate such Lender for such
reduction (but, in the case of outstanding Base Rate Advances, without
duplication of any amounts already recovered by such Lender by reason of an
adjustment in the applicable Base Rate). Each certificate as to the amount
payable under this Section 4.17. (which certificate shall set forth the basis
for requesting such amounts in reasonable detail), submitted to Borrower by any
Lender in good faith, shall, absent manifest error, be final, conclusive and
binding for all purposes.
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SECTION 4.18. LIMITATION ON CERTAIN PAYMENT OBLIGATIONS.
(a) Each Lender or the Agent shall make written demand on the Borrower
for indemnification or compensation pursuant to Section 4.8.(b) no later than
six months after the earlier of (i) on the date on which Lender or the Agent
makes payment of any such Taxes and (ii) the date on which the relevant taxing
authority or other governmental authority makes written demand upon such Lender
or Agent for the payment of such Taxes.
(b) Each Lender or Agent shall make written demand on the Borrower for
indemnification or compensation pursuant to Section 4.13. no later than six
months after the event giving rise to the claim for indemnification or
compensation occurs.
(c) Each Lender or the Agent shall make written demand on the Borrower
for indemnification or compensation pursuant to Section 4.11. or Section 4.17.
no later than six months after such Lender or Agent receives actual notice or
obtains actual knowledge of the promulgation of a law, rule, order,
interpretation or occurrence of another event giving rise to a claim pursuant to
such provisions.
(d) In the event that the Lenders or Agent fail to give the Borrower
notice within the time limitations set forth above, the Borrower shall not have
any obligation to pay amounts with respect to such claims accrued prior to six
months preceding any written demand therefor.
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ARTICLE 5. CONDITIONS TO BORROWINGS
The obligation of each Lender to make Advances to Borrower is subject
to the satisfaction of the following conditions:
SECTION 5.1. CONDITIONS PRECEDENT TO INITIAL LOANS.
At the time of the making of the initial Loans hereunder on the Closing
Date, all obligations of Borrower hereunder incurred prior to the initial Loans
(including, without limitation, Borrower's obligations to reimburse the
reasonable fees and expenses of counsel to the Agent and any fees and expenses
payable to the Agent as previously agreed with Borrower), shall have been paid
in full, and the Agent shall have received the following, in form and substance
reasonably satisfactory in all respects to the Agent:
(a) the duly executed counterparts of this Agreement;
(b) the duly completed Revolving Credit Notes evidencing the Revolving
Credit Commitments, the duly completed Swing Note evidencing the Swing
Line Commitment and the duly executed Competitive Bid Notes evidencing
the Competitive Bid Facility;
(c) receipt by the Agent of evidence that all governmental, shareholder and
material third-party consents (including Hart-Scott-Rodino clearance)
and approvals required in connection with the acquisition of the
Acquired Company and the other transactions contemplated hereby and
expiration of all applicable waiting periods without any action being
taken by any authority that could reasonably be likely to restrain,
prevent or impose any material adverse conditions on the acquisition of
the Acquired Company or such other transactions or that could
reasonably be likely to seek or threaten any of the foregoing, and no
law or regulation shall be applicable which in the judgment of the
Agent could reasonably be likely to have such effect;
(d) certificates of the Secretary or Assistant Secretary of the Borrower
attaching and certifying copies of the resolutions of the board of
directors of the Borrower, authorizing as applicable the execution,
delivery and performance of the Credit Documents;
(e) certificates of the Secretary or an Assistant Secretary of the Borrower
certifying (i) the name, title and true signature of each officer of
the Borrower executing the Credit Documents, and (ii) the bylaws of the
Borrower;
(f) certified copies of the certificate or articles of incorporation of the
Borrower and each of its Subsidiaries certified by the Secretary of
State and by the Secretary or Assistant Secretary of the Borrower or
such Subsidiaries, as appropriate, together with certificates of good
standing or existence, as may be available from the
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Secretary of State of the jurisdiction of incorporation or organization
of the Borrower and each of its Subsidiaries, and each other
jurisdiction where the ownership of property or the conduct of its
business require the Borrower or its Subsidiaries to be qualified,
except where a failure to be so qualified would not have a Materially
Adverse Effect;
(g) certificate of Borrower in substantially the form of Exhibit I attached
hereto and appropriately completed;
(h) there shall not have been any Material modification, amendment,
supplement or waiver to the Purchase Agreement without the prior
written consent of the Agent, including, but not limited to, any
Material modification, amendment, supplement or waiver relating to the
amount or type of consideration to be paid in connection with the
acquisition of the Acquired Company and the contents of all disclosure
schedules and exhibits, the acquisition of the Acquired Company shall
have been consummated substantially in accordance with the terms of the
Purchase Agreement; and Agent shall have received a copy of the final
Purchase Agreement, together with all exhibits and schedules thereto,
certified by an Executive Officer of the Borrower;
(i) the favorable opinion of (a) Robert McIntosh, Esquire, corporate
counsel to the Borrower and its Subsidiaries as to certain corporate
matters, and (b) King & Spalding, counsel to the Borrower and its
Subsidiaries as to certain matters, in the form of Exhibits J-1 and
J-2, respectively, in each case addressed to the Agent and each of the
Lenders;
(j) copies of all documents and instruments, including all consents,
authorizations and filings, required under the articles or certificate
of incorporation and bylaws or other organizational or governing
documents, under any Requirement of Law or by any material Contractual
Obligation of the Borrower and its Subsidiaries, in connection with the
execution, delivery, performance, validity and enforceability of the
Credit Documents and the other documents to be executed and delivered
hereunder, and such consents, authorizations, filings and orders shall
be in full force and effect and all applicable waiting periods shall
have expired; and
(k) any other document, opinion or certificate reasonably requested by the
Agent and the Lenders assuring the Agent and the Lenders that all
corporate proceedings and all other legal matters in connection with
the authorization, legality, validity and enforceability of the Credit
Documents are in form and substance satisfactory to the Lenders.
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SECTION 5.2. CONDITIONS TO ALL LOANS.
At the time of the making of all Loans, including the initial Loans
hereunder, (before as well as after giving effect to such Loans and to the
proposed use of the proceeds thereof), the following conditions shall have been
satisfied or shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by Borrower contained herein shall
be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of
the date of such Loans except to the extent they expressly relate to an
earlier date or have been updated to the extent permitted herein;
(c) since the date of the most recent financial statements of the
Consolidated Companies described in Section 6.14., there shall have
been no change which has had or is reasonably likely to have a
Materially Adverse Effect (whether or not any notice with respect to
such change has been furnished to the Lenders pursuant to Section
7.7.);
(d) there shall be no action or proceeding instituted or pending before any
court or other governmental authority or, to the knowledge of Borrower,
threatened (i) which is reasonably likely to have a Materially Adverse
Effect, or (ii) seeking to prohibit or restrict one or more of the
Consolidated Companies right to own or operate any portion of its
business or assets, or to compel one or more of the Borrower and its
Consolidated Companies to dispose of or hold separate all or any
portion of its businesses or assets, where such portion or portions of
such business(es) or assets, as the case may be, constitute a Material
portion of the total businesses or assets of the Consolidated
Companies;
(e) the Loans to be made and the use of proceeds thereof shall not
contravene, violate or conflict with, or involve the Agent or any
Lender in a violation of, any law, rule, injunction, or regulation, or
determination of any court of law or other governmental authority
applicable to Borrower; and
(f) the Agent shall have received such other documents or legal opinions as
the Agent or any Lender may reasonably request, all in form and
substance reasonably satisfactory to the Agent.
Each request for a Borrowing or Competitive Bid Request and the acceptance by
Borrower of the proceeds thereof shall constitute a representation and warranty
by Borrower, as of the date of the Loans comprising such Borrowing, that the
applicable conditions specified in Sections 5.1. and 5.2. have been satisfied.
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ARTICLE 6. REPRESENTATIONS AND WARRANTIES
Borrower (as to itself and all other Consolidated Companies) represents
and warrants as follows:
SECTION 6.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW.
Each of the Consolidated Companies is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Consolidated Companies (i) has the corporate power
and authority and the legal right to own and operate its property and to conduct
its business, (ii) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership of property or
the conduct of its business requires such qualification, and (iii) is in
compliance with all Requirements of Law, where (a) the failure to have such
power, authority and legal right as set forth in clause (i), (b) the failure to
be so qualified or in good standing as set forth in clause (ii), or (c) the
failure to comply with Requirements of Law as set forth in clause (iii), is
reasonably likely, in the aggregate, to have a Materially Adverse Effect. The
jurisdiction of incorporation or organization, and the ownership of all issued
and outstanding capital stock, for each Subsidiary as of the date of this
Agreement is accurately described on Schedule 6.1. Schedule 6.1. may be updated
from time to time by the Borrower by giving written notice thereof to the Agent.
SECTION 6.2. CORPORATE POWER; AUTHORIZATION.
Each of the Borrower and its Subsidiaries has the corporate power and
authority to make, deliver and perform the Credit Documents to which it is a
party and has taken all necessary corporate action to authorize the execution,
delivery and performance of such Credit Documents. No consent or authorization
of, or filing with, any Person (including, without limitation, any governmental
authority), is required in connection with the execution, delivery or
performance by the Borrower or its Subsidiaries, or the validity or
enforceability against the Borrower or its Subsidiaries, of the Credit
Documents, other than such consents, authorizations or filings which have been
made or obtained.
SECTION 6.3. ENFORCEABLE OBLIGATIONS.
This Agreement has been duly executed and delivered, and each other
Credit Document will be duly executed and delivered, by the respective
Consolidated Companies, as applicable, and this Agreement constitutes, and each
other Credit Document when executed and delivered will constitute, legal, valid
and binding obligations of the Consolidated Companies executing the same,
enforceable against such Consolidated Companies in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
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SECTION 6.4. NO LEGAL BAR.
The execution, delivery and performance by the Consolidated Companies
of the Credit Documents will not violate their articles or certificate of
incorporation, bylaws or other organizational or governing documents or any
Requirement of Law or cause a breach or default under any of their respective
Material Contractual Obligations.
SECTION 6.5. NO MATERIAL LITIGATION.
Except as set forth on Schedule 6.5., no litigation, investigation or
proceeding of or before any court, tribunal, arbitrator or governmental
authority is pending or, to the knowledge of any Executive Officer of the
Borrower, threatened by or against any of the Consolidated Companies, or against
any of their respective properties or revenues, existing or future (a) with
respect to any Credit Document, or any of the transactions contemplated hereby
or thereby, or (b) which, if adversely determined, is reasonably likely to have
a Materially Adverse Effect.
SECTION 6.6. INVESTMENT COMPANY ACT, ETC.
Neither the Company nor any of its Subsidiaries is an "investment
company" or a company "controlled" by an "investment company" (as each of the
quoted terms is defined or used in the Investment Company Act of 1940, as
amended). Neither the Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any foreign, federal or local statute or regulation limiting its
ability to incur indebtedness for money borrowed, guarantee such indebtedness,
or pledge its assets to secure such indebtedness, as contemplated hereby or by
any other Credit Document.
SECTION 6.7. MARGIN REGULATIONS.
No part of the proceeds of any of the Loans will be used for any
purpose which violates, or which would be inconsistent or not in compliance
with, the provisions of the applicable Margin Regulations.
SECTION 6.8. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) The Consolidated Companies have received no notices of claims or
potential liability under, and are in compliance with, all applicable
Environmental Laws, where such claims and liabilities under, and failures to
comply with, such statutes, regulations, rules, ordinances, laws or licenses, is
reasonably likely to result in penalties, fines, claims or other liabilities to
the Consolidated Companies in amounts that would have a Materially Adverse
Effect, either individually or in the aggregate (including any such penalties,
fines, claims, or liabilities relating to the matters set forth on Schedule
6.8.), except as set forth on Schedule 6.8.).
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(b) Except as set forth on Schedule 6.8.(b), none of the Consolidated
Companies has received any notice of violation, or notice of any action, either
judicial or administrative, from any governmental authority (whether United
States or foreign) relating to the actual or alleged violation of any
Environmental Law, including, without limitation, any notice of any actual or
alleged spill, leak, or other release of any Hazardous Substance, waste or
hazardous waste by any Consolidated Company or its employees or agents, or as to
the existence of any contamination on any properties owned by any Consolidated
Company, where any such violation, spill, leak, release or contamination is
reasonably likely to result in penalties, fines, claims or other liabilities to
the Consolidated Companies in amounts that would have a Materially Adverse
Effect, either individually or in the aggregate.
(c) Except as set forth on Schedule 6.8.(c), the Consolidated Companies
have obtained all necessary governmental permits, licenses and approvals for the
operations conducted on their respective properties, including without
limitation, all required material permits, licenses and approvals for (i) the
emission of air pollutants or contaminants, (ii) the treatment or pretreatment
and discharge of waste water or storm water, (iii) the treatment, storage,
disposal or generation of hazardous wastes, (iv) the withdrawal and usage of
ground water or surface water, and (v) the disposal of solid wastes, in any such
case where the failure to have such license, permit or approval is reasonably
likely to have a Materially Adverse Effect.
SECTION 6.9. INSURANCE.
The Consolidated Companies currently maintain insurance with respect to
their respective properties and businesses, with financially sound and reputable
insurers, having coverages against losses or damages of the kinds customarily
insured against by reputable companies in the same or similar businesses, such
insurance being in amounts no less than those amounts which are customary for
such companies under similar circumstances. The Consolidated Companies have paid
all material amounts of insurance premiums now due and owing with respect to
such insurance policies and coverages, and such policies and coverages are in
full force and effect.
SECTION 6.10. NO DEFAULT.
None of the Consolidated Companies is in default under or with respect
to any Contractual Obligation in any respect which has had or is reasonably
likely to have a Materially Adverse Effect.
SECTION 6.11. NO BURDENSOME RESTRICTIONS.
Except as set forth on Schedule 6.11., none of the Consolidated
Companies is a party to or bound by any Contractual Obligation or Requirement of
Law or any provision of its articles or certificate of incorporation, bylaws or
other organizational or governing documents which has had or is reasonably
likely to have a Materially Adverse Effect.
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SECTION 6.12. TAXES.
The Borrower and its Subsidiaries have filed all Federal tax returns
and, to the knowledge of the Executive Officers of the Borrower, the Borrower
and its Subsidiaries have filed all other tax returns which are required to have
been filed in any jurisdiction; the Borrower and its Subsidiaries have paid all
taxes shown to be due and payable on such Federal returns and other returns and
all other taxes, assessments, fees and other charges payable by them, in each
case, to the extent the same have become due and payable and before they have
become delinquent, except for the filing of any such returns or the payment of
any taxes, assessments, fees and other charges the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Borrower or a Subsidiary, as the case
may be, has set aside on its books reserves (segregated to the extent required
by GAAP) deemed by it in good faith to be adequate. The Borrower has not
received written notice of any proposed Material tax assessment with respect to
Federal income taxes against the Borrower or any Subsidiary nor does any
Executive Officer of the Borrower know of any Material Federal income tax
liability on the part of the Borrower or any Subsidiary other than any such
assessment or liability which is adequately provided for on the books of the
Borrower and its Subsidiaries.
SECTION 6.13. SUBSIDIARIES.
Except as disclosed on Schedule 6.13., Borrower has no Subsidiaries and
neither Borrower nor any Subsidiary is a joint venture partner or general
partner in any partnership. Schedule 6.13. indicates which Subsidiaries are
Restricted Subsidiaries and which Subsidiaries are Unrestricted Subsidiaries.
Schedule 6.13. may be updated from time to time by the Borrower by giving
written notice thereof to the Agent.
SECTION 6.14. FINANCIAL STATEMENTS.
Borrower has furnished to the Agent and the Lenders (i) the audited
consolidated balance sheets as of September 30, 1996, 1995, and 1994 of Borrower
and the related consolidated statements of income, shareholders' equity and cash
flows for the fiscal years then ended, including in each case the related notes.
The foregoing financial statements fairly present in all material respects the
consolidated financial condition of Borrower as at the dates thereof and results
of operations for such periods in conformity with GAAP consistently applied
(subject, in the case of the quarterly financial statements, to normal year-end
audit adjustments and the absence of certain notes). The Consolidated Companies
taken as a whole did not have any material contingent obligations, contingent
liabilities, or material liabilities for known taxes, long-term leases or
unusual forward or long-term commitments required to be reflected in the
foregoing financial statements or the notes thereto that are not so reflected.
Since September 30, 1996, there have been no changes with respect to the
Consolidated Companies which has had or is reasonably likely to have a
Materially Adverse Effect.
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SECTION 6.15. ERISA.
Except as disclosed on Schedule 6.15.:
(1) Identification of Plans. None of the Consolidated Companies nor any
of their respective ERISA Affiliates maintains or contributes to, or has during
the past seven years maintained or contributed to, any Plan that is subject to
Title IV of ERISA;
(2) Compliance. Each Plan maintained by the Consolidated Companies have
at all times been maintained, by their terms and in operation, in compliance
with all applicable laws, and the Consolidated Companies are subject to no tax
or penalty with respect to any Plan of such Consolidated Company or any ERISA
Affiliate thereof, including without limitation, any tax or penalty under Title
I or Title IV of ERISA or under Chapter 43 of the Tax Code, or any tax or
penalty resulting from a loss of deduction under Sections 162, 404, or 419 of
the Tax Code, where the failure to comply with such laws, and such taxes and
penalties, together with all other liabilities referred to in this Section 6.15.
(taken as a whole), would in the aggregate have a Materially Adverse Effect;
(3) Liabilities. The Consolidated Companies are subject to no
liabilities (including withdrawal liabilities) with respect to any Plans of such
Consolidated Companies or any of their ERISA Affiliates, including without
limitation, any liabilities arising from Titles I or IV of ERISA, other than
obligations to fund benefits under an ongoing Plan and to pay current
contributions, expenses and premiums with respect to such Plans, where such
liabilities, together with all other liabilities referred to in this Section
6.15. (taken as a whole), would in the aggregate have a Materially Adverse
Effect;
(4) Funding. The Consolidated Companies and, with respect to any Plan
which is subject to Title IV of ERISA, each of their respective ERISA
Affiliates, have made full and timely payment of all amounts (A) required to be
contributed under the terms of each Plan and applicable law, and (B) required to
be paid as expenses (including PBGC or other premiums) of each Plan, where the
failure to pay such amounts (when taken as a whole, including any penalties
attributable to such amounts) would have a Materially Adverse Effect. No Plan
subject to Title IV of ERISA has an "amount of unfunded benefit liabilities" (as
defined in Section 4001(a)(18) of ERISA), determined as if such Plan terminated
on any date on which this representation and warranty is deemed made, in any
amount which, together with all other liabilities referred to in this Section
6.15. (taken as a whole), would have a Materially Adverse Effect if such amount
were then due and payable. The Consolidated Companies are subject to no
liabilities with respect to post-retirement medical benefits in any amounts
which, together with all other liabilities referred to in this Section 6.15.
(taken as a whole), would have a Materially Adverse Effect if such amounts were
then due and payable.
Schedule 6.15., as it applies to paragraph (1) above, may be updated
from time to time by the Borrower by giving written notice thereof to the Agent.
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SECTION 6.16. PATENTS, TRADEMARKS, LICENSES, ETC.
Except as set forth on Schedule 6.16., (i) the Consolidated Companies
have obtained and hold in full force and effect all material patents,
trademarks, service marks, trade names, copyrights, licenses and other such
rights, free from burdensome restrictions, which are necessary for the operation
of their respective businesses as presently conducted, and (ii) to the best of
Borrower's knowledge, no product, process, method, service or other item
presently sold by or employed by any Consolidated Company in connection with
such business infringes any patents, trademark, service mark, trade name,
copyright, license or other right owned by any other person and there is not
presently pending, or to the knowledge of Borrower, threatened, any claim or
litigation against or affecting any Consolidated Company contesting such
Person's right to sell or use any such product, process, method, substance or
other item where the result of such failure to obtain and hold such benefits or
such infringement would have a Materially Adverse Effect.
SECTION 6.17. OWNERSHIP OF PROPERTY; LIENS.
(a) Except as set forth on Schedule 6.17., (i) each Consolidated
Company has good and marketable fee simple title to or a valid leasehold
interest in all of its real property and good title to, or a valid leasehold
interest in, all of its other property, as such properties are reflected in the
consolidated balance sheet of the Consolidated Companies as of September 30,
1996 except where the failure to hold such title, leasehold interest or
possession would not have a Materially Adverse Effect, referred to in Section
6.14., other than properties disposed of in the ordinary course of business
since such date or as otherwise permitted by the terms of this Agreement,
subject to no Lien or title defect of any kind, except Liens permitted by
Section 8.2. and (ii) the Consolidated Companies enjoy peaceful and undisturbed
possession under all of their respective leases.
(b) As of the date of this Agreement, the property and assets owned by
each Consolidated Company are not subject to any Lien securing any Indebtedness
or other obligation of such Consolidated Company in excess of $5,000,000
individually other than as described on Schedule 6.18 hereof.
SECTION 6.18. INDEBTEDNESS.
Except for the Indebtedness outstanding pursuant to the Prior
Agreements to be refinanced on the Closing Date and as set forth on Schedule
6.18. for each Consolidated Company, as of the date hereof none of the
Consolidated Companies is an obligor in respect of any Indebtedness for Borrowed
Money in excess of $5,000,000 individually, or any commitment to create or incur
any Indebtedness for Borrowed Money in excess of $5,000,000 individually.
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SECTION 6.19. FINANCIAL CONDITION.
On the Closing Date and after giving effect to the transactions
contemplated by this Agreement and the other Credit Documents, including without
limitation, the use of the proceeds of the Loans as provided in Articles 2. and
3. (i) the assets of each Consolidated Company at fair valuation and based on
their present fair saleable value will exceed such Consolidated Company's debts,
including contingent liabilities, (ii) the remaining capital of such
Consolidated Company will not be unreasonably small to conduct such Consolidated
Company's business, and (iii) such Consolidated Company will not have incurred
debts, or have intended to incur debts, beyond the Consolidated Company's
ability to pay such debts as they mature. For purposes of this Section 6.19.,
"debt" means any liability on a claim, and "claim" means (a) the right to
payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, or (b) the right to an equitable remedy
for breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
SECTION 6.20. LABOR MATTERS.
Except as set forth in Schedule 6.20., the Consolidated Companies have
experienced no strikes, labor disputes, slow downs or work stoppages due to
labor disagreements which is reasonably likely to have, a Materially Adverse
Effect, and, to the best knowledge of the Executive Officers of the Borrower,
there are no such strikes, disputes, slow downs or work stoppages threatened
against any Consolidated Company except as disclosed in writing to the Agent.
The hours worked and payment made to employees of the Consolidated Companies
have not been in violation in any material respect of the Fair Labor Standards
Act or any other applicable law dealing with such matters, and all payments due
from the Consolidated Companies, or for which any claim may be made against the
Consolidated Companies, on account of wages and employee health and welfare
insurance and other benefits have been paid or accrued as liabilities on the
books of the Consolidated Companies, in each case where the failure to comply
with such laws or to pay or accrue such liabilities is reasonably likely to have
a Materially Adverse Effect.
SECTION 6.21. PAYMENT OR DIVIDEND RESTRICTIONS.
Except as described on Schedule 6.21., none of the Consolidated
Companies is party to or subject to any agreement or understanding restricting
or limiting the payment of any dividends or other distributions by any such
Consolidated Company.
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SECTION 6.22. DISCLOSURE.
(a) Neither this Agreement nor any financial statements delivered to
the Lenders nor in the most recent version of any other document, certificate or
written statement furnished to the Lenders by or on behalf of any Consolidated
Company in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained therein or herein not misleading, it
being understood that the representation set forth in this Section 6.22.(a)
shall not apply to any financial projections or other pro forma financial
information.
(b) The financial projections and other pro forma financial information
contained in the information referred to in subsection (a) above were based on
good faith estimates and assumptions believed by the applicable Consolidated
Companies to be reasonable at the time made and at the time furnished to the
Agent and/or any Lender, it being recognized by the Lenders that such
projections and other pro forma financial information as to future events such
projections and other pro forma financial information may differ from the
projected results for such period or periods.
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ARTICLE 7. AFFIRMATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any Note shall
remain unpaid, Borrower will:
SECTION 7.1. CORPORATE EXISTENCE, ETC.
Preserve and maintain, and cause each of the Restricted Subsidiaries to
preserve and maintain, its corporate existence (except as otherwise permitted
pursuant to Section 8.4.), its material rights, franchises, and licenses, and
its material patents and copyrights (for the scheduled duration thereof),
trademarks, trade names, and service marks, necessary or desirable in the normal
conduct of its business, and its qualification to do business as a foreign
corporation in all jurisdictions where it conducts business or other activities
making such qualification necessary, where the failure to be so qualified is
reasonably likely to have a Materially Adverse Effect.
SECTION 7.2. COMPLIANCE WITH LAWS, ETC.
Comply, and cause each of its Subsidiaries to comply with all
Requirements of Law (including, without limitation, the Environmental Laws
subject to the exceptions set forth in Section 6.8. where the penalties, claims,
fines, and other liabilities resulting from noncompliance with such
Environmental Laws do not involve amounts Material in the aggregate) and
Contractual Obligations applicable to or binding on any of them where the
failure to comply with such Requirements of Law and Contractual Obligations is
reasonably likely to have a Materially Adverse Effect.
SECTION 7.3. PAYMENT OF TAXES AND CLAIMS, ETC.
File and cause each Subsidiary to file all Federal, state,
local and foreign tax returns that are required to be filed by each of them and
will pay or make provision for the payment of all taxes that have become due
pursuant to such returns or pursuant to any assessment in respect thereof
received by the Borrower or any Subsidiary, and the Borrower and each Subsidiary
will pay or cause to be paid all other taxes, assessments, fees and other
governmental charges and levies which, to the knowledge of the Executive
Officers of the Borrower or any Subsidiary, are due and payable before the same
become delinquent, except only such taxes and assessments as are being contested
in good faith by appropriate and timely proceedings and as to which adequate
reserves have been established in accordance with GAAP.
SECTION 7.4. KEEPING OF BOOKS.
Keep, and cause each of its Subsidiaries to keep, proper books of
record and account, containing complete and accurate entries of all their
respective financial and business transactions.
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SECTION 7.5. VISITATION, INSPECTION, ETC.
Permit, and cause each of its Subsidiaries to permit, any
representative of the Agent or any Lender, at the Agent's or such Lender's
expense, to visit and inspect any of its property, to examine its books and
records and to make copies and take extracts therefrom, and to discuss its
affairs, finances and accounts with its officers, all at such reasonable times
and as often as the Agent or such Lender may reasonably request after reasonable
prior notice to Borrower; provided, however, that at any time following the
occurrence and during the continuance of a Default or an Event of Default, no
prior notice to Borrower shall be required.
SECTION 7.6. INSURANCE; MAINTENANCE OF PROPERTIES.
(a) Maintain or cause to be maintained with financially sound and
reputable insurers, insurance with respect to its properties and business, and
the properties and business of its Subsidiaries, against loss or damage of the
kinds customarily insured against by reputable companies in the same or similar
businesses, such insurance to be of such types and in such amounts and subject
to such deductibles and self-insurance programs as the Borrower in its judgment
deems reasonable; provided, however, that in any event Borrower shall use its
best efforts to maintain, or cause to be maintained, insurance in amounts and
with coverages not materially less favorable to any Consolidated Company as in
effect on the date of this Agreement, except where the costs of maintaining such
insurance would, in the judgment of the Borrower, be excessive.
(b) Cause, and cause each of the Consolidated Companies to cause, all
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, settlements and improvements thereof, all as in the judgment of
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 shall prevent Borrower from discontinuing
the operation or maintenance of any such properties if such discontinuance is,
in the judgment of Borrower, desirable in the conduct of its business or the
business of any Consolidated Company.
(c) Cause a summary, set forth in format and detail reasonably
acceptable to the Agent, of the types and amounts of insurance (property and
liability) maintained by the Consolidated Companies to be delivered to the Agent
on or before thirty (30) days after the Closing Date.
SECTION 7.7. FINANCIAL REPORTS.
The Borrower will furnish to the Agent and each Lender:
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(a) within sixty (60) days after the end of each of the first three
quarter-annual periods of each of its fiscal years (and, in any event, in each
case as soon as prepared), the quarterly Financial Report of the Borrower as at
the end of that period, prepared on a consolidated basis an accompanied by a
certificate, dated the date of furnishing, signed by a Financial Officer of the
Borrower to the effect that such Financial Report accurately presents in all
material respects the consolidated financial condition of the Borrower and its
consolidated Subsidiaries and that such Financial Report has been prepared in
accordance with GAAP consistently applied (subject to year end adjustments),
except that such Financial Report need not be accompanied by notes;
(b) within one hundred twenty (120) days after the end of each of its
fiscal years (and, in any event, as soon as available), the annual Financial
Report of the Borrower for that year prepared on a consolidated basis (which
Financial Report shall be reported on by the Borrower's independent certified
public accountants, such report to state that such Financial Report fairly
presents in all material respects the consolidated financial condition and
results of operation of the Borrower and its consolidated Subsidiaries in
accordance with GAAP and to be without any material qualifications or
exceptions); provided, however, during any period that the Borrower has
consolidated Subsidiaries which are not Restricted Subsidiaries, the Borrower
shall also provide such financial information in a form sufficient to enable the
Agent and the Lenders to determine the compliance of the Borrower with the terms
of this Agreement with respect to the Borrower and its Restricted Subsidiaries;
(c) within sixty (60) days after the end of each of its first three
quarterly accounting periods and within one hundred twenty (120) days after the
end of its annual accounting period, a statement certified as true and correct
by a Financial Officer of the Borrower, substantially in the form of Exhibit D
hereto, reflecting compliance with Sections 8.1., 8.2., 8.3. and 8.4. hereof,
with back-up material setting forth in reasonable detail such calculations
attached thereto and stating whether any Event of Default has occurred and is
continuing;
(d) within sixty (60) days after the end of each of its quarterly
accounting periods, a statement certified as true and correct by a Financial
Officer of the Borrower setting forth the Consolidated Funded Debt to Total
Capitalization ratio as of the last day of such quarterly accounting period;
(e) promptly upon the filing thereof or otherwise becoming available,
copies of all financial statements, annual, quarterly and special reports, proxy
statements and notices sent or made available generally by Borrower to its
public security holders, of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by any of them with any
securities exchange or with the Securities and Exchange Commission, and of all
press releases and other statements made available generally to the public
containing Material developments in the business or financial condition of
Borrower and the other Consolidated Companies;
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(f) promptly upon receipt thereof, copies of all financial statements
of, and all reports submitted by, independent public accountants to Borrower in
connection with each annual, interim, or special audit of Borrower's financial
statements, including without limitation, the comment letter submitted by such
accountants to management in connection with their annual audit;
(g) as soon possible and in any event within thirty (30) days after the
Borrower or any Subsidiary knows or has reason to know that any "Reportable
Event" (as defined in Section 4043(b) of ERISA) with respect to any Plan has
occurred (other than such a Reportable Event for which the PBGC has waived the
30-day notice requirement under Section 4043(a) of ERISA) and such Reportable
Event involves a matter that has had, or is reasonably likely to have, a
Materially Adverse Effect, a statement of a Financial Officer of the Borrower or
such Subsidiary setting forth details as to such Reportable Event and the action
which the Borrower or such Subsidiary proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event given to the PBGC if
a copy of such notice is available to the Borrower or such Subsidiary; and
(h) with reasonable promptness, such other information relating to the
Borrower's performance of this Agreement or its financial condition as may
reasonably be requested from time to time by the Agent.
SECTION 7.8. NOTICES UNDER CERTAIN OTHER INDEBTEDNESS.
Immediately upon its receipt thereof, Borrower shall furnish the Agent
a copy of any notice received by it or any other Consolidated Company from the
holder(s) of Indebtedness (or from any trustee, agent, attorney, or other party
acting on behalf of such holder(s)) in an amount which, in the aggregate,
exceeds $10,000,000, where such notice states or claims (i) the existence or
occurrence of any default or event of default with respect to such Indebtedness
under the terms of any indenture, loan or credit agreement, debenture, note, or
other document evidencing or governing such Indebtedness, or (ii) the existence
or occurrence of any event or condition which requires or permits holder(s) of
any Indebtedness of the Consolidated Companies to exercise rights under any
Change in Control Provision.
SECTION 7.9. NOTICE OF LITIGATION.
The Borrower shall notify the Agent of any actions, suits or
proceedings instituted by any Person against it or any Subsidiary where the
uninsured portion of the money damages sought (which shall include any
deductible amount to be paid by the Borrower or such Subsidiary) is in excess of
$10,000,000 or which is reasonably likely to have a Materially Adverse Effect.
Said notice is to be given along with the quarterly and annual reports required
by Section 7.7. hereof, and is to specify the amount of damages being claimed or
other relief being sought, the nature of the claim, the Person instituting the
action, suit or proceeding, and any other significant features of the claim.
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SECTION 7.10. SUBSIDIARY GUARANTEES.
(a) Subject to subsection (c) below, the Borrower shall cause all of
its Restricted Subsidiaries existing as of the Closing Date to execute and
deliver a Subsidiary Guarantee and a counterpart Contribution Agreement in
substantially the same form as set forth, respectively, in Exhibits "L" and "M",
on or before April 21, 1997. The delivery of such documents shall be accompanied
by such other documents as the Agent may reasonably request (e.g., certificates
of incorporation, articles of incorporation and bylaws, membership operating
agreements, opinion letters and appropriate resolutions of the Board of
Directors of any such Subsidiary Guarantor).
(b) Subject to subsection (c) below, the Borrower shall cause all of
its Restricted Subsidiaries not existing as of the Closing Date to execute and
deliver Subsidiary Guarantees and a counterpart Contribution Agreement in
substantially the same form as set forth, respectively, in Exhibits "L" and "M",
within thirty (30) days of the creation or acquisition of any such Restricted
Subsidiary by the Borrower or other Restricted Subsidiary. The delivery of such
documents shall be accompanied by such other documents as the Agent may
reasonably request (e.g., certificates of incorporation, articles of
incorporation and bylaws, membership operating agreements, opinion letters and
appropriate resolutions of the Board of Directors of any such Subsidiary
Guarantor).
(c) Notwithstanding the foregoing subsections (a) and (b), the Borrower
shall not be required to cause any Restricted Subsidiary to deliver a Subsidiary
Guarantee and a counterpart Contribution Agreement if (i) such Restricted
Subsidiary is incorporated under any jurisdiction outside of the United States
of America (or any of its territories); (ii) the delivery of such documents
would cause such Restricted Subsidiary to violate any Requirement of Law; or
(iii) the delivery of such documents would result in any Rating Agency
downgrading the rating of the Borrower.
(d) In the event that the Borrower or any Restricted Subsidiary sells
any Subsidiary Guarantor as permitted by Section 8.4 hereof, then such
Subsidiary Guarantor shall be released from all obligations under the Subsidiary
Guarantee and Contribution Agreement which it had previously delivered to the
Agent. Such release shall occur upon the consummation of the sale and the Agent
shall execute and deliver any releases or other documents reasonably requested
by the Borrower to effectuate such release.
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ARTICLE 8. NEGATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any Note shall
remain unpaid:
SECTION 8.1. FINANCIAL REQUIREMENTS.
The Borrower shall not:
(i) Fixed Charges. Suffer or permit, as of the last day of any
fiscal quarter, the ratio of (a) Consolidated Net Income
Available for Fixed Charges to (b) Fixed Charges to be less
than 2.5:1.0, as calculated for a period consisting of the
four preceding fiscal quarters.
(ii) Consolidated Funded Debt to EBITDA. Permit, as of the last day
of any fiscal quarter, the ratio of (a) Consolidated Funded
Debt to (b) EBITDA to be greater than 4.0:1.0 for fiscal
quarters ending on or before June 30, 1997, and 3.0:1.0 for
fiscal quarters ending on or after September 30, 1997, as
calculated for the four preceding fiscal quarters ending as of
such day.
(iii) Consolidated Funded Debt to Total Capitalization. Permit the
ratio of Consolidated Funded Debt to Total Capitalization as
of the last day of each fiscal quarter ending during the
periods set forth below, to exceed the ratio set forth
opposite such period
- ----------------------------------- ----------------------------------
PERIOD RATIO
- ----------------------------------- ----------------------------------
- ----------------------------------- ----------------------------------
Closing Date thru .65:1
June 30, 1997
- ----------------------------------- ----------------------------------
- ----------------------------------- ----------------------------------
September 30, 1997 thru June 30, .60:1
1998
- ----------------------------------- ----------------------------------
- ----------------------------------- ----------------------------------
September 30, 1998 thru Maturity .55:1
Date
- ----------------------------------- ----------------------------------
SECTION 8.2. LIENS.
The Borrower will not, and will not permit any Restricted Subsidiary
to, create, assume or suffer to exist any Lien upon any of their respective
properties or assets (hereinafter "Properties") whether now owned or hereafter
acquired; provided, however, that this Section 8.2. shall not apply to the
following:
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(a) any Lien for taxes not yet due or taxes or assessments or other
governmental charges which are being actively contested in good faith by
appropriate proceedings;
(b) any Liens, pledges or deposits in connection with worker's
compensation or social security, assessments or other similar charges or
deposits incidental to the conduct of the business of the Borrower or any
Restricted Subsidiary or the ownership of any of their Properties which were not
incurred in connection with the borrowing of money or the obtaining of advances
or credit and which do not in the aggregate Materially detract from the value of
their Properties or Materially impair the use thereof in the operation of their
businesses;
(c) any Lien existing on any properties of any corporation at the time
it becomes a Restricted Subsidiary, or existing prior to the time of acquisition
upon any Properties acquired by the Borrower or any Restricted Subsidiary
through purchase, merger, consolidation or otherwise, whether or not assumed by
the Borrower or such Restricted Subsidiary;
(d) any Lien placed upon any asset at the time of its acquisition (or
within 60 days thereafter) by the Borrower or any Restricted Subsidiary to
secure all or a portion of (or to secure indebtedness incurred prior to or at
the time of the acquisition of such asset for the purpose of financing all or a
portion of) the purchase price thereof; provided, however, that any such Lien
shall not encumber any other properties of the Borrower or such Restricted
Subsidiary;
(e) statutory Liens of carriers, warehousemen, mechanics, materialmen
and other 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;
(f) pledges or deposits for the purpose of securing a stay or discharge
in the course of any legal proceeding provided that the aggregate amount of such
pledges or deposits outstanding at any one time does not exceed five percent
(5%) of Consolidated Net Worth, unless such excess amount is otherwise permitted
pursuant to this Section 8.2;
(g) Liens consisting of encumbrances in the nature of zoning
restrictions, easements, rights and restrictions of record on the use of real
property on the date of the acquisition thereof and statutory Liens of landlords
and lessors which in any case do not Materially detract from the value of such
property or impair the use thereof;
(h) any Lien in favor of the United States of America or any department
or agency thereof, or in favor of any state government or political subdivision
thereof, or in favor of a prime contractor under a government contract of the
United States, or of any state government or any political subdivision thereof,
and, in each case, resulting from acceptance of partial, progress, advance or
other payments in the ordinary course of business under government contracts of
the United States, or of any state government or any political subdivision
thereof, or subcontracts thereunder;
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(i) any Lien existing on the date hereof;
(j) any Lien securing Funded Debt of a Restricted Subsidiary to the
Borrower;
(k) any Lien renewing, extending, refinancing or refunding any Lien
permitted by clauses (c), (d), (e), (f), (g), (h), (i), or (j) above; provided,
however, that the principal amount secured is not increased, and the Lien is not
extended to other Properties; and
(l) any Lien other than those permitted by clauses (a) through (k)
above; provided, however, that the aggregate amount of all outstanding
obligations secured by Liens permitted by this clause (l) shall not at any time
exceed ten percent (10%) of the Consolidated Net Worth, and when combined
(without duplication) with outstanding Funded Debt of the Restricted
Subsidiaries, such total shall not exceed 20% of Total Capitalization.
SECTION 8.3. LIMITATIONS ON FUNDED DEBT OF RESTRICTED
SUBSIDIARIES.
The Borrower will not permit any Restricted Subsidiary to incur or
suffer to exist Funded Debt other than:
(a) Funded Debt of the Restricted Subsidiaries existing on the date of
this Agreement and any renewal, extension, refunding, or refinancing thereof;
(b) additional unsecured or secured (to the extent permitted by Section
8.2. above) Funded Debt which, when aggregated (without duplication) with the
outstanding Funded Debt of all the Restricted Subsidiaries, does not exceed 20%
of the Total Capitalization at the end of each fiscal quarter;
(c) Funded Debt of Waldorf Corporation in the aggregate principal
amount of $100,000,000 evidenced by its 7.42% Senior Notes due June 30, 2005
(the "Waldorf Debt"), provided, that such Funded Debt shall cease to be
permitted under this Section 8.3.(c) on and after June 30, 1997; and
(d) Funded Debt of Waldorf Corporation under the Waldorf Credit
Agreement in the amount and type described in Schedule 6.18 , provided that such
Funded Debt shall cease to be permitted under this Section 8.3(d) on or after
April 21, 1997.
SECTION 8.4. MERGER AND SALE OF ASSETS.
The Borrower will not, without the prior written consent of the
Required Lenders, merge or consolidate with any other corporation or sell, lease
or transfer or otherwise dispose of all or, during any twelve-month period, a
substantial part of its assets (for purposes of this Section 8.4., substantial
means assets sold, leased, transferred or otherwise disposed of other than in
the ordinary course of business with a book value aggregating
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an amount greater than 15% of Consolidated Net Worth, determined by reference to
the most recent audited Financial Report), to any person or entity other than in
the ordinary course of business, nor will the Borrower permit any Restricted
Subsidiary to take any of the above actions; provided that notwithstanding any
of the foregoing limitations, if no Event of Default shall then exist or
immediately thereafter will begin to exist, the Borrower and the Restricted
Subsidiaries may take the following actions (none of which shall be included in
calculating the percentage in the immediately preceding parenthetical):
(a) Any Restricted Subsidiary may merge with (i) the Borrower (provided
that the Borrower shall be the continuing or surviving corporation) or (ii) any
one or more other Subsidiaries provided that either the continuing or surviving
corporation shall be a Restricted Subsidiary or after giving effect to any
merger pursuant to this Section 8.4., the Borrower and/or one or more Restricted
Subsidiaries shall own not less than the same percentage of the outstanding
Voting Stock of the continuing or surviving corporation as the Borrower and/or
one or more Restricted Subsidiaries owned of the merged Restricted Subsidiary
immediately prior to such merger;
(b) Any Restricted Subsidiary may sell, lease, transfer or otherwise
dispose of any of its assets to (i) the Borrower, (ii) any Restricted Subsidiary
or (iii) any Subsidiary of which the Borrower and/or one or more Restricted
Subsidiaries shall own not less than the same percentage of Voting Stock as the
Borrower and/or one or more Restricted Subsidiaries then own of the Restricted
Subsidiary making such sale, lease, transfer or other disposition;
(c) The Borrower may sell, lease, transfer or otherwise dispose of a
substantial part of its assets to any Subsidiary, provided (i) that upon
completion of a transaction described in this Section 8.4.(c), there shall exist
no Default or Event of Default and (ii) that upon completion of a transaction
described in this Section 8.4.(c), the Subsidiary to which the Borrower's assets
are sold, leased, transferred or otherwise disposed shall be a Restricted
Subsidiary;
(d) The Borrower may merge with any other corporation, provided that
the Borrower shall be the surviving corporation and shall be able to incur at
least $1.00 of Funded Debt under the provisions of this Agreement;
(e) The Borrower or any of its Restricted Subsidiaries may sell assets
to any Person provided that the Borrower or such Restricted Subsidiary is
obligated to lease such assets from such Person within one hundred and eighty
(180) days provided, however, that the aggregate book value of such assets,
together with the aggregate book value of all other assets sold in all such
transactions during the then previous twelve-month period shall not exceed an
aggregate amount greater than 15% of Consolidated Net Worth determined by
reference to the then most recent audited Financial Report; and
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(f) The Borrower and its Subsidiaries may transfer the assets which
constitute their solid fiber partition division to the Sonoco Joint Venture.
SECTION 8.5. TRANSACTIONS WITH AFFILIATES.
The Borrower will not, and will not permit any Restricted Subsidiary
to, enter into or be a party to any transaction or arrangement with any
Affiliate (including without limitation, the purchase from, sale to or exchange
of property with, or the rendering of any service by or for, any Affiliates),
except in the ordinary course of and pursuant to the reasonable requirements of
the Borrower's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to the Borrower or such Subsidiary than such party would
obtain in a comparable arm's-length transaction with a Person other than an
Affiliate.
SECTION 8.6. NATURE OF BUSINESS.
Neither the Borrower nor any Restricted Subsidiary will engage in any
business if, as a result, the general nature of the business, taken on a
consolidated basis, which would then be engaged in by the Borrower and its
Restricted Subsidiaries would be fundamentally changed from the general nature
of the business engaged in by the Borrower and its Restricted Subsidiaries on
the date of this Agreement, which the parties agree is the manufacture and sale
of paperboard, paperboard and plastic products, other types of packaging
material and similar products and services connected or incidental thereto.
SECTION 8.7. REGULATIONS G, T, U AND X.
The Borrower will not nor will it permit any Subsidiary to take any
action that would result in any non-compliance of the Advances made hereunder
with Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System.
SECTION 8.8. ERISA COMPLIANCE.
Neither the Borrower nor any Subsidiary will incur any Material
"accumulated funding deficiency" within the meaning of Section 302(a)(2) of
ERISA, or any Material liability under Section 4062 of ERISA to the Pension
Benefit Guaranty Corporation ("PBGC") established thereunder in connection with
any Plan.
SECTION 8.9. LIMITATIONS ON SUBSIDIARIES WHICH ARE NOT RESTRICTED
SUBSIDIARIES.
The Borrower will not allow any Unrestricted Subsidiary:
(a) to own any capital stock or right or option to acquire capital
stock of a Consolidated Company, or own or hold any Lien on any property of any
Consolidated Company; and
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(b) to create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to, or suffer to exist any
Indebtedness pursuant to which the lender has recourse to any Consolidated
Company or to any of the assets of any Consolidated Company ("Recourse Debt")
other than Recourse Debt which, when aggregated (without duplication) with the
outstanding Recourse Debt of all the Unrestricted Subsidiaries, does not exceed
15% of the Total Capitalization at the end of each fiscal quarter.
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ARTICLE 9. EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
specified events (each an "Event of Default"):
SECTION 9.1. PAYMENTS.
Borrower shall fail to make promptly when due (including, without
limitation, by mandatory prepayment) any principal payment with respect to the
Loans, or Borrower shall fail to make any payment of interest, fee or other
amount payable hereunder within three (3) Business Days of the due date thereof;
SECTION 9.2. COVENANTS WITHOUT NOTICE.
Borrower shall fail to observe or perform any covenant or agreement
contained in Sections 7.7.(a), (b), (c) and (d), Section 7.10 or Article 8.;
SECTION 9.3. OTHER COVENANTS.
Borrower shall fail to observe or perform any covenant or agreement
contained in this Agreement, other than those referred to in Sections 9.1. and
9.2., and such failure shall remain unremedied for 30 days after the earlier of
(i) an Executive Officer of the Borrower obtaining knowledge thereof, or (ii)
written notice thereof shall have been given to Borrower by Agent or any Lender;
SECTION 9.4. REPRESENTATIONS.
Any representation or warranty made or deemed to be made by Borrower or
any other Consolidated Company or by any of its officers under this Agreement or
any other Credit Document (including the Schedules attached thereto), or any
certificate or other document submitted to the Agent or the Lenders by any such
Person pursuant to the terms of this Agreement or any other Credit Document,
shall be incorrect in any material respect when made or deemed to be made or
submitted;
SECTION 9.5. NON-PAYMENTS OF OTHER INDEBTEDNESS.
Any Consolidated Company shall fail to make when due (whether at stated
maturity, by acceleration, on demand or otherwise, and after giving effect to
any applicable grace period) any payment of principal of or interest on any
Indebtedness (other than the Obligations) exceeding $10,000,000 individually or
in the aggregate;
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SECTION 9.6. DEFAULTS UNDER OTHER AGREEMENTS.
Any Consolidated Company shall fail to observe or perform within any
applicable grace period any covenants or agreements contained in any agreements
or instruments relating to any of its Indebtedness exceeding $10,000,000
individually or in the aggregate, or any other event shall occur if the effect
of such failure or other event is to accelerate, or to permit the holder of such
Indebtedness or any other Person to accelerate, the maturity of such
Indebtedness; or any such Indebtedness shall be required to be prepaid (other
than by a regularly scheduled required prepayment) in whole or in part prior to
its stated maturity;
SECTION 9.7. BANKRUPTCY.
Borrower or any other Consolidated Company shall commence a voluntary
case concerning itself under the Bankruptcy Code or applicable foreign
bankruptcy laws; or an involuntary case for bankruptcy is commenced against any
Consolidated Company and the petition is not controverted within 30 days, or is
not dismissed within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) or similar official under applicable foreign
bankruptcy laws is appointed for, or takes charge of, all or any substantial
part of the property of any Consolidated Company; or any Consolidated Company
commences proceedings of its own bankruptcy or to be granted a suspension of
payments or any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction, whether now or hereafter in effect, relating to
any Consolidated Company or there is commenced against any Consolidated Company
any such proceeding which remains undismissed for a period of 60 days; or any
Consolidated Company is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or any
Consolidated Company suffers any appointment of any custodian or the like for it
or any substantial part of its property to continue undischarged or unstayed for
a period of 60 days; or any Consolidated Company makes a general assignment for
the benefit of creditors; or any Consolidated Company shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or any Consolidated Company shall call a meeting
of its creditors with a view to arranging a composition or adjustment of its
debts; or any Consolidated Company shall by any act or failure to act indicate
its consent to, approval of or acquiescence in any of the foregoing; or any
corporate action is taken by any Consolidated Company for the purpose of
effecting any of the foregoing;
SECTION 9.8. ERISA.
A Plan of a Consolidated Company or a Plan subject to Title IV of ERISA
of any of its ERISA Affiliates
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(i) shall fail to be funded in accordance with the minimum funding
standard required by applicable law, the terms of such Plan,
Section 412 of the Tax Code or Section 302 of ERISA for any
plan year or a waiver of such standard is sought or granted
with respect to such Plan under applicable law, the terms of
such Plan or Section 412 of the Tax Code or Section 303 of
ERISA; or
(ii) is being, or has been, terminated or the subject of
termination proceedings under applicable law or the terms of
such Plan; or
(iii) shall require a Consolidated Company to provide security under
applicable law, the terms of such Plan, Section 401 or 412 of
the Tax Code or Section 306 or 307 of ERISA; or
(iv) results in a liability to a Consolidated Company under
applicable law, the terms of such Plan, or Title IV of ERISA;
and there shall result from any such failure, waiver, termination or other event
a liability to the PBGC or a Plan that would have a Materially Adverse Effect.
SECTION 9.9. MONEY JUDGMENT.
Judgments or orders for the payment of money in excess of $10,000,000
individually or in the aggregate or otherwise having a Materially Adverse Effect
shall be rendered against Borrower or any other Consolidated Company and such
judgment or order shall continue unsatisfied (in the case of a money judgment)
and in effect for a period of 30 days during which execution shall not be
effectively stayed or deferred (whether by action of a court, by agreement or
otherwise);
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SECTION 9.10. DEFAULT UNDER OTHER CREDIT DOCUMENTS.
There shall exist or occur any "Event of Default" as provided under the
terms of any Credit Document, or any Credit Document ceases to be in full force
and effect or the validity or enforceability thereof is disaffirmed by or on
behalf of Borrower or any other Consolidated Company, or at any time it is or
becomes unlawful for Borrower or any other Consolidated Company to perform or
comply with its obligations under any Credit Document, or the obligations of
Borrower or any other Consolidated Company under any Credit Document are not or
cease to be legal, valid and binding on Borrower or any such Consolidated
Company;
then, and in any such event, and at any time thereafter if any Event of Default
shall then be continuing, the Agent may, and upon the written or telex request
of the Required Lenders, shall, by written notice to Borrower, take any or all
of the following actions, without prejudice to the rights of the Agent, any
Lender or the holder of any Note to enforce its claims against Borrower or any
other Consolidated Company: (i) declare all Commitments terminated, whereupon
the Commitments of each Lender shall terminate immediately and any facility fee
shall forthwith become due and payable without any other notice of any kind;
(ii) declare the principal of and any accrued interest on the Loans, and all
other Obligations owing hereunder to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; provided, that, if
an Event of Default specified in Section 9.7. shall occur, the result which
would occur upon the giving of written notice by the Agent to any Consolidated
Company, as specified in clauses (i) and (ii) above, shall occur automatically
without the giving of any such notice, and (iii) may exercise any other rights
or remedies available under the Credit Documents, at law or in equity.
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ARTICLE 10. THE AGENT
SECTION 10.1. APPOINTMENT OF AGENT.
Each Lender hereby designates SunTrust as Agent to administer all
matters concerning the Loans and to act as herein specified. Each Lender hereby
irrevocably authorizes, and each holder of any Note by the acceptance of a Note
shall be deemed irrevocably to authorize, the Agent to take such actions on its
behalf under the provisions of this Agreement, the other Credit Documents, and
all other instruments and agreements referred to herein or therein, and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder by or through its agents or employees.
SECTION 10.2. AUTHORIZATION OF AGENT WITH RESPECT TO THE SECURITY
DOCUMENTS.
(a) Each Lender hereby authorizes the Agent to enter into any Security
Documents, and to take all action contemplated thereby. All rights and remedies
under any Security Documents may be exercised by the Agent for the benefit of
the Agent and the Lenders and the other beneficiaries thereof upon the terms
thereof. The Lenders further agree that the Agent may assign its rights and
obligations under any of the Security Documents to any affiliate of the Agent or
to any trustee, if necessary or appropriate under applicable law, which assignee
in each such case shall (subject to compliance with any requirements of
applicable law governing the assignment of such Security Documents) be entitled
to all the rights of the Agent under and with respect to any applicable Security
Document.
(b) In each circumstance where, under any provision of any Security
Document, the Agent shall have the right to grant or withhold any consent,
exercise any remedy, make any determination or direct any action by the Agent
under such Security Document, the Agent shall act in respect of such consent,
exercise of remedies, determination or action, as the case may be, with the
consent of and at the direction of the Required Lenders; provided, however, that
no such consent of the Required Lenders shall be required with respect to any
consent, determination or other matter that is, in the Agent's judgment,
ministerial or administrative in nature. In each circumstance where any consent
of or direction from the Required Lenders is required, the Agent shall send to
the Lenders a notice setting forth a description in reasonable detail of the
matter as to which consent or direction is requested and the Agent's proposed
course of action with respect thereto. In the event the Agent shall not have
received a response from any Lender within five (5) Business Days after such
Lender's receipt of such notice, such Lender shall be deemed to have agreed to
the course of action proposed by the Agent.
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SECTION 10.3. NATURE OF DUTIES OF AGENT.
The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other Credit Documents. None of
the Agent nor any of its respective officers, directors, employees or agents
shall be liable for any action taken or omitted by it as such hereunder or in
connection herewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Agent shall be ministerial and administrative in
nature; the Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, express or
implied, is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement or the other Credit Documents except as
expressly set forth herein.
SECTION 10.4. LACK OF RELIANCE ON THE AGENT.
(a) Independently and without reliance upon the Agent, each Lender, to
the extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the
Consolidated Companies in connection with the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
the Consolidated Companies, and, except as expressly provided in this Agreement,
the Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the Notes, or any
other documents contemplated hereby or thereby, or the financial condition of
the Consolidated Companies, or be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement, the Notes, or the other documents contemplated hereby or
thereby, or the financial condition of the Consolidated Companies, or the
existence or possible existence of any Default or Event of Default.
SECTION 10.5. CERTAIN RIGHTS OF THE AGENT.
If the Agent shall request instructions from the Required Lenders with
respect to any action or actions (including the failure to act) in connection
with this Agreement, the Agent shall be entitled to refrain from such act or
taking such act, unless and until the Agent shall have received instructions
from the Required Lenders; and the Agent shall not incur liability in any Person
by reason of so refraining. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against the Agent as a
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result of the Agent acting or refraining from acting hereunder in accordance
with the instructions of the Required Lenders.
SECTION 10.6. RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cable gram, radiogram, order or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person. The
Agent may consult with legal counsel (including counsel for any Consolidated
Company), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
SECTION 10.7. INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by the
Consolidated Companies, each Lender will reimburse and indemnify the Agent,
ratably according to the respective amounts of the Loans outstanding under all
Facilities (or if no amounts are outstanding, ratably in accordance with the
Total Commitments), in either case, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees and disbursements) or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
the Agent in performing its duties hereunder, in any way relating to or arising
out of this Agreement or the other Credit Documents; provided that no Lender
shall be liable to the Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct.
SECTION 10.8. THE AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Agreement, the Loans
made by it and the Notes issued to it, the Agent shall have the same rights and
powers hereunder as any other Lender or holder of a Note and may exercise the
same as though it were not performing the duties specified herein; and the terms
"Lenders", "Required Lenders", "holders of Notes", or any similar terms shall,
unless the context clearly 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 banking, trust, financial advisory or other
business with the Consolidated Companies or any Affiliate of the Consolidated
Companies as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Consolidated Companies for services
in connection with this Agreement and otherwise without having to account for
the same to the Lenders.
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SECTION 10.9. HOLDERS OF NOTES.
The Agent may deem and treat the payee of any Note as the owner thereof
for all purposes hereof unless and until a written notice of the assignment or
transfer thereof shall have been filed with the Agent. 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 conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
SECTION 10.10. SUCCESSOR AGENT.
(a) The Agent may resign at any time by giving written notice thereof
to the Lenders and Borrower and may be removed at any time with or without cause
by the Required Lenders; provided, however, the Agent may not resign or be
removed until a successor Agent has been appointed and shall have accepted such
appointment. Upon any such resignation or removal, the Required Lenders shall
have the right to appoint a successor Agent subject to Borrower's prior written
approval. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent subject to Borrower's prior written approval,
which shall be a bank which maintains an office in the United States, or a
commercial bank organized under the laws of the United States of America or any
State thereof, or any Affiliate of such bank, having a combined capital and
surplus of at least $100,000,000. In the event that the Agent is no longer a
Lender hereunder, the Agent shall promptly resign as Agent.
(b) 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 under
this Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article 10. shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Agent under this
Agreement.
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ARTICLE 11. MISCELLANEOUS
SECTION 11.1. NOTICES.
All notices, requests and other communications to any party hereunder
shall be in writing (including bank wire, telex, telecopy or similar
teletransmission or writing) and shall be given to such party at its address or
applicable teletransmission number set forth on the signature pages hereof, or
such other address or applicable teletransmission number as such party may
hereafter specify by notice to the Agent and Borrower. Each such notice, request
or other communication shall be effective (i) if given by telex, when such telex
is transmitted to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, three Business Days after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, (iii) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section and the appropriate
confirmation is received, or (iv) if given by any other means (including,
without limitation, by air courier), when delivered or received at the address
specified in this Section; provided that notices to the Agent shall not be
effective until received.
SECTION 11.2. AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement or the other
Credit Documents, nor consent to any departure by any Consolidated Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided that no amendment, waiver or consent shall, unless in writing
and signed by all the Lenders do any of the following: (i) waive any of the
conditions specified in Section 5.1. or 5.2., (ii) increase the Commitments or
other contractual obligations to Borrower under this Agreement, (iii) reduce the
principal of, or interest on, the Notes or any fees hereunder, (iv) postpone any
date fixed for the payment in respect of principal of, or interest on, the Notes
or any fees hereunder, (v) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number or identity of
Lenders which shall be required for the Lenders or any of them to take any
action hereunder, (vi) modify the definition of "Required Lenders," (vii) reduce
any obligation owed under or release any Subsidiary Guarantee (except as
required under Section 7.10(d). or (viii) modify this Section 11.2.
Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Lenders required hereinabove
to take such action, affect the rights or duties of the Agent under this
Agreement or under any other Credit Document.
SECTION 11.3. NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent, any Lender or any holder
of a Note in exercising any right or remedy hereunder or under any other Credit
Document, and no
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course of dealing between any Consolidated Company and the Agent, any Lender or
the holder of any Note shall operate as a waiver thereof, nor shall any single
or partial exercise of any right or remedy hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right or remedy hereunder or thereunder. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies
which the Agent, any Lender or the holder of any Note would otherwise have. No
notice to or demand on any Consolidated Company not required hereunder or under
any other Credit Document in any case shall entitle any Consolidated Company to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent, the Lenders or the holder of any
Note to any other or further action in any circumstances without notice or
demand.
SECTION 11.4. PAYMENT OF EXPENSES, ETC.
Borrower shall:
(i) whether or not the transactions hereby contemplated are
consummated, pay all reasonable, out-of-pocket costs and
expenses of the Agent in connection with the preparation,
execution and delivery of, preservation of rights under,
enforcement of, and, after a Default or Event of Default or,
upon the request of the Borrower, refinancing, renegotiation
or restructuring of, this Agreement and the other Credit
Documents and the documents and instruments referred to
therein, and any amendment, waiver or consent relating thereto
(including, without limitation, the reasonable fees actually
incurred and disbursements of counsel for the Agent), and in
the case of enforcement of this Agreement or any Credit
Document after an Event of Default, all such reasonable,
out-of-pocket costs and expenses (including, without
limitation, the reasonable fees actually incurred and
reasonable disbursements and charges of counsel), for any of
the Lenders;
(ii) subject, in the case of certain Taxes, to the applicable
provisions of Section 4.8.(b), pay and hold each of the
Lenders harmless from and against any and all present and
future stamp, documentary, and other similar Taxes with
respect to this Agreement, the Notes and any other Credit
Documents, any collateral described therein, or any payments
due thereunder, and save each Lender harmless from and against
any and all liabilities with respect to or resulting from any
delay or omission to pay such Taxes; and
(iii) indemnify the Agent and each Lender, and their respective
officers, directors, employees, representatives and agents
from, and hold each of them harmless against, any and all
costs, losses, liabilities,
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claims, damages or expenses incurred by any of them (whether
or not any of them is designated a party thereto) (an
"Indemnitee") arising out of or by reason of any
investigation, litigation or other proceeding related to any
actual or proposed use of the proceeds of any of the Loans or
any Consolidated Company entering into and performing of the
Agreement, the Notes, or the other Credit Documents,
including, without limitation, the reasonable fees actually
incurred and disbursements of counsel incurred in connection
with any such investigation, litigation or other proceeding;
provided, however, Borrower shall not be -------- -------
obligated to indemnify any Indemnitee for any of the foregoing
arising out of such Indemnitee's gross negligence or willful
misconduct;
(iv) without limiting the indemnities set forth in subsection (iii)
above, indemnify each Indemnitee for any and all expenses and
costs (including without limitation, remedial, removal,
response, abatement, cleanup, investigative, closure and
monitoring costs), losses, claims (including claims for
contribution or indemnity and including the cost of
investigating or defending any claim and whether or not such
claim is ultimately defeated, and whether such claim arose
before, during or after any Consolidated Company's ownership,
operation, possession or control of its business, property or
facilities or before, on or after the date hereof, and
including also any amounts paid incidental to any compromise
or settlement by the Indemnitee or Indemnitees to the holders
of any such claim), lawsuits, liabilities, obligations,
actions, judgments, suits, disbursements, encumbrances, liens,
damages (including without limitation damages for
contamination or destruction of natural resources), penalties
and fines of any kind or nature whatsoever (including without
limitation in all cases the reasonable fees actually incurred,
other charges and disbursements of counsel in connection
therewith) incurred, suffered or sustained by that Indemnitee
based upon, arising under or relating to Environmental Laws
based on, arising out of or relating to in whole or in part,
the existence or exercise of any rights or remedies by any
Indemnitee under this Agreement, any other Credit Document or
any related documents.
If and to the extent that the obligations of Borrower under this
Section 11.4. are unenforceable for any reason, Borrower hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
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SECTION 11.5. RIGHT OF SETOFF.
In addition to and not in limitation of all rights of offset that any
Lender or other holder of a Note may have under applicable law, each Lender or
other holder of a Note shall, upon the occurrence and during the continuation of
any Event of Default and whether or not such Lender or such holder has made any
demand or any Consolidated Company's obligations have matured, have the right to
appropriate and apply to the payment of any Consolidated Company's obligations
hereunder and under the other Credit Documents, all deposits of any Consolidated
Company (general or special, time or demand, provisional or final) then or
thereafter held by and other indebtedness or property then or thereafter owing
by such Lender or other holder to any Consolidated Company, whether or not
related to this Agreement or any transaction hereunder.
SECTION 11.6. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS.
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto, provided that Borrower may not assign or transfer any of its interest
hereunder without the prior written consent of the Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Lender.
(c) Each Lender may assign all or a portion of its interests, rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it and the Notes held by it) to
any financial institution; provided, however, that (i) the Agent and, except
during the continuance of a Default or Event of Default, the Borrower must give
their prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed) unless such assignment is to an Affiliate of
the assigning Lender, (ii) the amount of the Commitments of the assigning Lender
subject to each assignment (determined as of the date the assignment and
acceptance with respect to such assignment is delivered to the Agent) shall not
be less than an amount equal to $10,000,000 or greater integral multiplies
thereof, and (iii) the parties to each such assignment shall execute and deliver
to the Agent an Assignment and Acceptance, together with the Note or Notes
subject to such assignment and, unless such assignment is to an Affiliate of
such Lender, a processing and recordation fee of $2,500. Borrower shall not be
responsible for such processing and recordation fee or any costs or expenses
incurred by any Lender or the Agent in connection with such assignment. From and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, the assignee thereunder shall be a party hereto and to the extent of
the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement. Within five (5) Business Days
after receipt of the notice and the Assignment and Acceptance, Borrower, at its
own expense, shall execute and deliver to the Agent, in exchange for the
surrendered Note or Notes, a new Note or Notes to the order of such as-
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signee in a principal amount equal to the applicable Commitments assumed by it
pursuant to such Assignment and Acceptance and new Note or Notes to the
assigning Lender in the amount of its retained Commitment or Commitments. Such
new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
date of the surrendered Note or Notes which they replace, and shall otherwise be
in substantially the form attached hereto.
(d) Each Lender may sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments in the Loans owing to it and the
Notes held by it), provided, however, that (i) no Lender may sell a
participation in its aggregate Commitments (after giving effect to any permitted
assignment hereof) in an amount in excess of fifty percent (50%) of such
aggregate Commitments, provided, however, sales of participations to an
Affiliate of such Lender shall not be included in such calculation and shall not
require the consent of the Borrower; provided, however, no such maximum amount
shall be applicable to any such participation sold at any time there exists an
Event of Default hereunder, (ii) such Lender's obligations under this Agreement
shall remain unchanged, (iii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, and (iv) the
participating bank or other entity shall not be entitled to the benefit (except
through its selling Lender) of the cost protection provisions contained in
Article 4. of this Agreement, and (v) Borrower and the Agent and other Lenders
shall continue to deal solely and directly with each Lender in connection with
such Lender's rights and obligations under this Agreement and the other Credit
Documents, and such Lender shall retain the sole right to enforce the
obligations of Borrower relating to the Loans and to approve any amendment,
modification or waiver of any provisions of this Agreement.
(e) Any Lender or participant may, in connection with the assignment or
participation or proposed assignment or participation, pursuant to this Section,
disclose to the assignee or participant or proposed assignee or participant any
information relating to Borrower or the other Consolidated Companies furnished
to such Lender by or on behalf of Borrower or any other Consolidated Company.
With respect to any disclosure of confidential, non-public, proprietary
information, such proposed assignee or participant shall agree to use the
information only for the purpose of making any necessary credit judgments with
respect to this credit facility and not to use the information in any manner
prohibited by any law, including without limitation, the securities laws of the
United States. The proposed participant or assignee shall agree not to disclose
any of such information except as permitted by Section 11.15. hereof. The
proposed participant or assignee shall further agree to return all documents or
other written material and copies thereof received from any Lender, the Agent or
Borrower relating to such confidential information unless otherwise properly
disposed of by such entity.
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(f) Any Lender may at any time assign all or any portion of its rights
in this Agreement and the Notes issued to it to a Federal Reserve Bank; provided
that no such assignment shall release the Lender from any of its obligations
hereunder.
(g) If (i) any Taxes referred to in Section 4.8.(b) have been levied or
imposed so as to require withholdings and reductions by the Borrower and payment
by the Borrower of additional amounts to any Lender as a result thereof or any
Lender shall make demand for payment of any material additional amounts as
compensation for increased costs pursuant to Section 4.11., then and in such
event, upon request from the Borrower delivered to such Lender and the Agent,
such Lender shall assign, in accordance with the provisions of Section 11.6.(c),
all of its rights and obligations under this Agreement and the other Credit
Documents to another Lender or other financial institution selected by the
Borrower and consented to by the Agent in consideration for the payment by such
assignee to the Lender of the principal of and interest on the outstanding Loans
accrued to the date of such assignment and the assumption of such Lender's
Revolving Credit Commitment, together with any and all other amounts owing to
such Lender under any provisions of this Agreement or the other Credit Documents
accrued to the date of such assignment.
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SECTION 11.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF) OF THE STATE OF GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE
NOTES OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE SUPERIOR COURT OF
FULTON COUNTY, GEORGIA, OR ANY OTHER COURT OF THE STATE OF GEORGIA OR OF THE
UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, BORROWER HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS.
(c) THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND
BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(d) Nothing herein shall affect the right of the Agent, any Lender, any
holder of a Note or any Consolidated Company to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against Borrower in any other jurisdiction.
SECTION 11.8. INDEPENDENT NATURE OF LENDERS' RIGHTS.
The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and
enforce its rights pursuant to this Agreement and its Notes, and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
SECTION 11.9. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
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SECTION 11.10. EFFECTIVENESS; SURVIVAL.
(a) This Agreement shall become effective on the date (the "Effective
Date") on which all of the parties hereto shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same to the
Agent pursuant to Section 11.1. or, in the case of the Lenders, shall have given
to the Agent written (which may be delivered by facsimile) or telex notice
(actually received) that the same has been signed and mailed to them.
(b) The obligations of Borrower under Sections 4.8.(b), 4.11., 4.13.,
4.14., 4.17. and 11.4. hereof shall survive the payment in full of the Notes
after the Maturity Date. All representations and warranties made herein, in the
certificates, reports, notices, and other documents delivered pursuant to this
Agreement shall survive the execution and delivery of this Agreement, the other
Credit Documents, and such other agreements and documents, the making of the
Loans hereunder, and the execution and delivery of the Notes.
SECTION 11.11. SEVERABILITY.
In case any provision in or obligation under this Agreement or the
other Credit Documents shall be invalid, illegal or unenforceable, in whole or
in part, in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in any
other jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 11.12. INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant, shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists.
SECTION 11.13. CHANGE IN ACCOUNTING PRINCIPLES, FISCAL YEAR OR
TAX LAWS.
If (i) any preparation of the financial statements referred to in
Section 7.7. hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accounts (or successors
thereto or agencies with similar functions) result in a material change in the
method of calculation of financial covenants, standards or terms found in this
Agreement, (ii) there is any change in Borrower's fiscal quarter or fiscal year,
or (iii) there is a material change in federal tax laws which materially affects
any of the Consolidated Companies' ability to comply with the financial
covenants, standards or terms found in this Agreement, Borrower and the Required
Lenders agree to enter into negotiations in order to amend such provisions so as
to equitably reflect such
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changes with the desired result that the criteria for evaluating any of the
Consolidated Companies' financial condition shall be the same after such changes
as if such changes had not been made. Unless and until such provisions have been
so amended, the provisions of this Agreement shall govern.
SECTION 11.14. HEADINGS DESCRIPTIVE; ENTIRE AGREEMENT.
The headings of the several sections and subsections of this Agreement
are inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement. This Agreement, the other
Credit Documents, and the agreements and documents required to be delivered
pursuant to the terms of this Agreement constitute the entire agreement among
the parties hereto and thereto regarding the subject matters hereof and thereof
and supersede all prior agreements, representations and understandings related
to such subject matters.
SECTION 11.15. DISCLOSURE OF CONFIDENTIAL INFORMATION.
The Agent and the Lenders agree to use their best efforts to hold in
confidence and not disclose any written information (other than information (i)
which was publicly known from a source other than the Borrower or a Subsidiary,
at the time of disclosure (except pursuant to disclosure in connection with this
Agreement), (ii) which subsequently becomes publicly known through no act or
omission by them, or (iii) which otherwise becomes known to them, other than
through disclosure by the Borrower or a Subsidiary or by any other Person whom
the Agent or such Lender has reason to believe disclosed such information in
violation of or contrary to the confidentiality requirements or policies of the
Borrower or a Subsidiary) delivered or made available by or on behalf of the
Borrower or any Subsidiary to them (including without limitation any non-public
information obtained pursuant to Section 7.5. or 7.7.) in connection with or
pursuant to this Agreement which is proprietary in nature and clearly marked or
labeled as being confidential information, provided that nothing herein shall
prevent the Agent or any Lender from delivering copies of any financial
statements and other documents delivered to the Agent or such Lender, and
disclosing any other information disclosed to the Agent or such Lender, by or on
behalf of the Borrower or any Subsidiary in connection with or pursuant to this
Agreement to (i) the Agent's or such Lender's directors, officers, employees,
agents and professional consultants, (ii) any other Lender, (iii) any Person to
which such Lender offers to assign its Notes or Commitments or any part thereof
(which Person agrees to be bound by the provisions of this Section 11.15), (iv)
any Person to which such Lender sells or offers to sell a participation in all
or any part of its Notes or Commitments (which Person agrees to be bound by the
provisions of this Section 11.15), (v) any federal or state regulatory authority
having jurisdiction over the Agent or such Lender, and (vi) any other Person to
which such delivery or disclosure may be necessary (a) to effect compliance with
any law, rule, regulation or order applicable to the Agent or such Lender, (b)
in response to any subpoena or other legal process, (c) in connection with any
litigation to which the Agent or such Lender is a party or (d) in order to
protect such Lender's investment in its Notes.
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SECTION 11.16. INTEREST.
In no event shall the amount of interest, and all charges, amounts or
fees contracted for, charged or collected pursuant to this Agreement, the Notes
or the other Credit Documents and deemed to be interest under applicable law
(collectively, "Interest") exceed the highest rate of interest allowed by
applicable law (the "Maximum Rate"), and in the event any such payment is
inadvertently received by any Lender, then the excess sum (the "Excess") shall
be credited as a payment of principal, unless the Borrower shall notify such
Lender in writing that it elects to have the Excess returned forthwith. It is
the express intent hereof that the Borrower not pay and the Lenders not receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may legally be paid by the Borrower under applicable law. The right to
accelerate maturity of any of the Loans does not include the right to accelerate
any interest that has not otherwise accrued on the date of such acceleration,
and the Agent and the Lenders do not intend to collect any unearned interest in
the event of any such acceleration. All monies paid to the Agent or the Lenders
hereunder or under any of the Notes or the other Credit Documents, whether at
maturity or by prepayment, shall be subject to rebate of unearned interest as
and to the extent required by applicable law. By the execution of this
Agreement, the Borrower covenants, to the fullest extent permitted by law, that
(i) the credit or return of any Excess shall constitute the acceptance by the
Borrower of such Excess, and (ii) the Borrower shall not seek or pursue any
other remedy, legal or equitable, against the Agent or any Lender, based in
whole or in part upon contracting for charging or receiving any Interest in
excess of the Maximum Rate. For the purpose of determining whether or not any
Excess has been contracted for, charged or received by the Agent or any Lender,
all interest at any time contracted for, charged or received from the Borrower
in connection with this Agreement, the Notes or any of the other Credit
Documents shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread in equal parts throughout the full term of the
Commitments. The Borrower, the Agent and each Lender shall, to the maximum
extent permitted under applicable law, (i) characterize any non-principal
payment as an expense, fee or premium rather than as Interest and (ii) exclude
voluntary prepayments and the effects thereof. The provisions of this Section
shall be deemed to be incorporated into each Note and each of the other Credit
Documents (whether or not any provision of this Section is referred to therein).
All such Credit Documents and communications relating to any Interest owed by
the Borrower and all figures set forth therein shall, for the sole purpose of
computing the extent of obligations hereunder and under the Notes and the other
Credit Documents be automatically recomputed by the Borrower, and by any court
considering the same, to give effect to the adjustments or credits required by
this Section.
[Signatures on Next page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Atlanta, Georgia, by their duly authorized
officers as of the day and year first above written.
ROCK-TENN COMPANY
(CORPORATE SEAL) By:__________________________________
Title:____________________________
Attest:
By:____________________
Title:
Address for notice:
Rock-Tenn Company
P.O. Box 4098
Norcross, Georgia 30091
Attention: Chief Financial Officer
[Signatures Continued on Next Page]
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SUNTRUST BANK, ATLANTA, AS AGENT
By:______________________________________
Title:________________________________
(BANK SEAL)
By:______________________________________
Title:________________________________
Address for notice:
SunTrust Bank Atlanta
25 Park Place
Atlanta, Georgia 30303
Attention: Jenna Hale
[Signatures Continued on Next Page]
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SUNTRUST BANK, ATLANTA, AS LENDER
By:_______________________________________
Title:_________________________________
(BANK SEAL)
By:_______________________________________
Title:_________________________________
Address for notice:
SunTrust Bank Atlanta
25 Park Place
Atlanta, Georgia 30303
Attention: Jenna Hale
Telecopy No.: 404/827-6270
Payment Office:
25 Park Place, N.E.
23rd Floor
Atlanta, Georgia 30303
<TABLE>
<S> <C>
REVOLVING CREDIT COMMITMENT $400,000,000
APPLICABLE COMMITMENT PERCENTAGE 100%
SWING LINE COMMITMENT $ 20,000,000
</TABLE>
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EXHIBIT A
FORM OF REVOLVING CREDIT NOTE
U.S. $__________ January __, 1997
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned ROCK-TENN COMPANY, a Georgia
corporation (herein called the "Borrower"), hereby promises to pay to the order
of ____________________, a ____________________ (herein together with any
subsequent holder hereof, called the "Lender"), for the account of its
applicable Lending Office, the lesser of (i) the principal sum of ______________
AND NO/100 UNITED STATES DOLLARS ($__________) and (ii) the outstanding
principal amount of the Advances made by the Lender to the Borrower as Revolving
Loans pursuant to the terms of the Credit Agreement referred to below on the
Maturity Date (as defined in the Credit Agreement). The Borrower likewise
promises to pay interest on the outstanding principal amount of each such
Advance, at such interest rates, payable at such times, and computed in such
manner, as are specified for such Advance in the Credit Agreement in strict
accordance with the terms thereof.
The Lender shall record all Advances made pursuant to its Revolving Credit
Commitment (other than Competitive Bid Rate Advances and Advances evidencing
Swing Line Loans) under the Credit Agreement and all payments of principal of
such Advances and, prior to any transfer hereof, shall endorse such Advances
and payments on the schedule annexed hereto and made a part hereof, or on any
continuation thereof which shall be attached hereto and made a part hereof or
on the books and records of the Lender, which endorsement shall constitute
prima facie evidence of the accuracy of the information so endorsed; provided,
however, that delay or failure of the Lender to make any such endorsement or
recordation shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement with respect to the Advances evidenced hereby.
Any principal or, to the extent not prohibited by applicable law, interest
due under this Revolving Credit Note that is not paid on the due date therefor,
whether on the Maturity Date, whether or not resulting from the acceleration of
maturity upon the occurrence of an Event of Default, shall bear interest from
the date due to payment in full at the rate as provided in Section 4.3(d) of
the Credit Agreement.
All payments of principal and interest shall be made in lawful money of
the United States of America in immediately available funds at the Payment
Office of the Agent specified in the Credit Agreement.
This Revolving Credit Note is issued pursuant to, and is one of the
Revolving Credit Notes referred to in, the Credit Agreement dated as of January
__, 1997 among the
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Borrower, SunTrust Bank, Atlanta, individually and as Agent, and the other
lenders set forth on the signature pages thereof (as the same may hereafter be
amended, modified or supplemented from time to time, the "Credit Agreement") and
each assignee thereof becoming a "Lender" as provided therein, and the Lender is
and shall be entitled to all benefits thereof and all Security Documents
executed and delivered to the Lenders or the Agent in connection therewith.
Terms defined in the Credit Agreement are used herein with the same meanings.
The Credit Agreement, among other things, contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events.
The Borrower agrees to make payments of principal on the Advances
outstanding hereunder as Revolving Loans on the dates and in the amounts
specified in the Credit Agreement for such Advances in strict accordance with
the terms thereof.
This Revolving Credit Note may be prepaid in whole or in part in accordance
with the terms and conditions of the Credit Agreement.
In case an Event of Default shall occur and be continuing, the principal of
and all accrued interest on this Revolving Credit Note may automatically become,
or be declared, due and payable in the manner and with the effect provided in
the Credit Agreement. The Borrower agrees to pay, and save the Lender harmless
against any liability for the payment of, all reasonable out-of-pocket costs and
expenses, including reasonable attorneys' fees actually incurred, arising in
connection with the enforcement by the Lender of any of its rights under this
Revolving Credit Note or the Credit Agreement.
THIS REVOLVING CREDIT NOTE HAS BEEN EXECUTED AND DELIVERED IN GEORGIA AND
THE RIGHTS AND OBLIGATIONS OF THE LENDER AND THE BORROWER HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.
The Borrower expressly waives any presentment, demand, protest or notice in
connection with this Revolving Credit Note, now or hereafter required by
applicable law. TIME IS OF THE ESSENCE OF THIS REVOLVING CREDIT NOTE.
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<PAGE> 103
IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note to
be executed and delivered under seal by its duly authorized officers as of the
date first above written.
ROCK-TENN COMPANY
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Attest:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
[CORPORATE SEAL]
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<PAGE> 104
Revolving Credit Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Last Day of
Amount Amount of Applicable
of Interest Principal Interest Notation
Date Advance Rate Prepaid Period Made By
---- ------- -------- --------- ----------- --------
<S> <C> <C> <C> <C> <C>
__________ __________ __________ __________ __________ __________
</TABLE>
A-4
<PAGE> 105
EXHIBIT B
FORM OF COMPETITIVE BID NOTE
$__________ January __, 1997
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, ROCK-TENN COMPANY, a Georgia
corporation ("Borrower"), promises to pay to the order of ____________________,
a ____________________ ("Lender"), for the account of its applicable lending
office, all Competitive Bid Rate Advances made and outstanding pursuant to the
terms of the Credit Agreement referred to below on the Maturity Date (as defined
in the Credit Agreement) or such earlier date as specified in the Credit
Agreement. The Borrower likewise promises to pay interest on the outstanding
principal amount of such Competitive Bid Rate Advances at the Competitive Bid
Rate applicable to such Advances, at such times, and computed in such manner, as
are specified for such Advances in the Credit Agreement in strict accordance
with the terms thereof.
The Lender shall record all Competitive Bid Rate Advances made pursuant to
the Credit Agreement and all payments of principal of such Advances and, prior
to any transfer hereof, shall endorse such Advances and payments on the schedule
annexed hereto and made a part hereof, or on any continuation thereof which
shall be attached hereto and made a part hereof or on the books and records of
the Lender, which endorsement shall constitute prima facie evidence of the
accuracy of the information so endorsed; provided, however, that delay or
failure of the Lender to make any such endorsement or recordation shall not
affect the obligations of the Borrower hereunder or under the Credit Agreement
with respect to the Advances evidenced hereby.
Any principal or, to the extent not prohibited by applicable law, interest
due under this Competitive Bid Note that is not paid on the due date therefor,
whether on the Maturity Date, whether or not resulting from the acceleration of
maturity upon the occurrence of an Event of Default, shall bear interest from
the date due to payment in full at the rate as provided in Section 4.3(d) of
the Credit Agreement.
All payments of principal and interest shall be made in lawful money of
the United States of America in immediately available funds at the Payment
Office of the Agent specified in the Credit Agreement.
This Competitive Bid Note is issued pursuant to, and is one of the
Competitive Bid Notes referred to in, the Credit Agreement dated as of January
__, 1997 among the Borrower, SunTrust Bank, Atlanta, individually and as Agent,
and the other lenders set forth on the signature pages thereof (as the same may
hereafter be amended, modified or supplemented from time to time, the "Credit
Agreement") and each assignee thereof
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<PAGE> 106
becoming a "Lender" as provided therein, and the Lender is and shall be entitled
to all benefits thereof and all Security Documents executed and delivered to the
Lenders or the Agent in connection therewith. Terms defined in the Credit
Agreement are used herein with the same meanings. The Credit Agreement, among
other things, contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events.
The Borrower agrees to make payments of principal on the Competitive Bid
Rate Advances outstanding hereunder on the dates and in the amounts specified in
the Credit Agreement for such Advances in strict accordance with the terms
thereof.
This Competitive Bid Note may be prepaid in whole or in part in accordance
with the terms and conditions of the Credit Agreement.
In case an Event of Default shall occur and be continuing, the principal of
and all accrued interest on this Competitive Bid Note may automatically become,
or be declared, due and payable in the manner and with the effect provided in
the Credit Agreement. The Borrower agrees to pay, and save the Lender harmless
against any liability for the payment of, all reasonable out-of-pocket costs and
expenses, including reasonable attorneys, fees actually incurred, arising in
connection with the enforcement by the Lender of any of its rights under this
Competitive Bid Note or the Credit Agreement.
THIS COMPETITIVE BID NOTE HAS BEEN EXECUTED AND DELIVERED IN GEORGIA AND
THE RIGHTS AND OBLIGATIONS OF THE LENDER AND THE BORROWER HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.
The Borrower expressly waives any presentment, demand, protest or notice
in connection with this Competitive Bid Note, now or hereafter required by
applicable law. TIME IS OF THE ESSENCE OF THIS COMPETITIVE BID NOTE.
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<PAGE> 107
IN WITNESS WHEREOF, the Borrower has caused this Competitive Bid Note to
be executed and delivered under seal by its duly authorized officers as of the
date first above written.
ROCK-TENN COMPANY
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Attest:
--------------------------------
Name:
---------------------------
Title:
---------------------------
[CORPORATE SEAL]
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<PAGE> 108
Competitive Bid Note (cont'd)
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Last Day of
Amount Amount of Applicable
of Interest Principal Interest Notation
Date Advance Rate Prepaid Period Made By
---- ------- -------- --------- ----------- --------
<S> <C> <C> <C> <C> <C>
__________ __________ __________ __________ __________ __________
</TABLE>
B-4
<PAGE> 109
EXHIBIT C
FORM OF SWING LINE NOTE
U.S. $20,000,000 January __, 1997
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned ROCK-TENN COMPANY, a Georgia
corporation (herein called the "Borrower"), hereby promises to pay to the order
of SUNTRUST BANK, ATLANTA, a Georgia banking corporation (herein, together with
any subsequent holder hereof, called the "Swing Line Lender"), for the account
of its applicable Lending Office, the lesser of (i) the principal sum of TWENTY
MILLION AND NO/100 UNITED STATES DOLLARS ($20,000,000) and (ii) the outstanding
principal amount of the Advances made by the Swing Line Lender to the Borrower
as Swing Line Loans pursuant to the terms of the Credit Agreement referred to
below on the Maturity Date (as defined in the Credit Agreement). The Borrower
likewise promises to pay interest on the outstanding principal amount of each
such Advance, at such interest rates, payable at such times, and computed in
such manner, as are specified for such Advance in the Credit Agreement in strict
accordance with the terms thereof.
The Swing Line Lender shall record all Advances made pursuant to its Swing
Line Commitment under the Credit Agreement and all payments of principal of such
Advances and, prior to any transfer hereof, shall endorse such Advances and
payments on the schedule annexed hereto and made a part hereof, or on any
continuation thereof which shall be attached hereto and made a part hereof or on
the books and records of the Swing Line Lender, which endorsement shall
constitute prima facie evidence of the accuracy of the information so endorsed;
provided, however, that delay or failure of the Swing Line Lender to make any
such endorsement or recordation shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement with respect to the Advances evidenced
hereby.
Any principal or, to the extent not prohibited by applicable law, interest
due under this Swing Line Note that is not paid on the due date therefor,
whether on the Maturity Date, whether or not resulting from the acceleration of
maturity upon the occurrence of an Event of Default, shall bear interest from
the date due to payment in full at the rate as provided in Section 4.3(d) of
the Credit Agreement.
All payments of principal and interest shall be made in lawful money of the
United States of America in immediately available funds at the Payment Office of
the Swing Line Lender specified in the Credit Agreement.
This Swing Line Note is issued pursuant to, and is the Swing Line Note
referred to in, the Credit Agreement dated as of January __, 1997 among the
Borrower, SunTrust
C-1
<PAGE> 110
Bank, Atlanta, individually and as Agent, and the other lenders set forth on the
signature pages thereof (as the same may hereafter be amended, modified or
supplemented from time to time, the "Credit Agreement") and each assignee
thereof becoming a "Lender" as provided therein, and the Swing Line Lender is
and shall be entitled to all benefits thereof and all Security Documents
executed and delivered to the Lenders or the Agent in connection therewith.
Terms defined in the Credit Agreement are used herein with the same meanings.
The Credit Agreement, among other things, contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events.
The Borrower agrees to make payments of principal on the Advances
outstanding hereunder on the dates and in the amounts specified in the Credit
Agreement for such Advances in strict accordance with the terms thereof.
This Swing Line Note may be prepaid in whole or in part in accordance with
the terms and conditions of the Credit Agreement.
In case an Event of Default shall occur and be continuing, the principal of
and all accrued interest on this Swing Line Note may automatically become, or be
declared, due and payable in the manner and with the effect provided in the
Credit Agreement. The Borrower agrees to pay, and save the Swing Line Lender
harmless against any liability for the payment of, all reasonable out-of-pocket
costs and expenses, including reasonable attorneys, fees actually incurred,
arising in connection with the enforcement by the Swing Line Lender of any of
its rights under this Swing Line Note or the Credit Agreement.
THIS SWING LINE NOTE HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF
GEORGIA AND THE RIGHTS AND OBLIGATIONS OF THE SWING LINE LENDER AND THE BORROWER
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE
OF GEORGIA.
The Borrower expressly waives any presentment, demand, protest or notice in
connection with this Swing Line Note, now or hereafter required by applicable
law. TIME IS OF THE ESSENCE OF THIS SWING LINE NOTE.
C-2
<PAGE> 111
IN WITNESS WHEREOF, the Borrower has caused this Swing Line Note to be
executed and delivered under seal by its duly authorized officers as of the
date first above written.
ROCK-TENN COMPANY
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Attest:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
[CORPORATE SEAL]
C-3
<PAGE> 112
EXHIBIT D
[FORM OF] COMPLIANCE CERTIFICATE
[DATE]
SunTrust Bank, Atlanta
25 Park Place
Atlanta, Georgia 30303
Ladies and Gentlemen:
The undersigned, ROCK-TENN COMPANY (the "Borrower"), refers to the Credit
Agreement dated as of January __, 1997 (as amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Borrower, the
financial institutions party thereto as Lenders and SunTrust Bank, Atlanta, as
Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meaning's assigned to such terms in the Credit Agreement.
Pursuant to Section 7.7 of the Credit Agreement, the Borrower hereby
certifies that the computations set forth in the Attachment to Compliance
Certificate attached hereto are true and accurate computations of the ratios and
other items required to be so computed pursuant to the Credit Agreement.
The Borrower further certifies that (i) the Borrower is in compliance with
such covenants, (ii) that no Default or Event of Default has occurred and is
continuing, (iii) the representations and warranties set forth in Article 6 of
the Credit Agreement are true and correct in all material respects as of the
date hereof and (iv) no change has occurred in the financial condition of the
Borrower and its Subsidiaries, taken as a whole, since the Closing Date which
has had or is reasonably likely to have a Materially Adverse Effect.
ROCK-TENN COMPANY
By:
------------------------------
Title:
---------------------------
D-1
<PAGE> 113
ATTACHMENT TO COMPLIANCE CERTIFICATE
This Attachment to Compliance Certificate is made with respect to the
Borrower's quarterly accounting period ended _____________.
All capitalized terms used herein and not defined herein have the
respective meanings specified in the Credit Agreement.
The undersigned, being a Financial Officer of the Borrower, hereby
certifies to the Agent and the Lenders that set forth below are the computations
necessary to determine that the Borrower and its Restricted Subsidiaries are in
compliance with Sections 8.1, 8.2, 8.3 and 8.4 of the Credit Agreement:
A. SECTION 8.1(I)/FIXED CHARGES. The following amounts shall be determined
as of the end of the Borrower's fiscal quarter based upon a period consisting of
the four preceding fiscal quarters then ended:
<TABLE>
<S> <C> <C>
(1) Consolidated Net Income (loss) $_________________
(2) Interest Expense $__________________
(3) Income Taxes $__________________
(4) Lease expense with respect to $___________________
operating leases
(5) Preferred stock dividends $___________________
(6) Consolidated Net Income $__________________
Available For Fixed Charges (the sum
of items (1) through (5))
(7) Interest Expense $___________________
(8) Lease Expense with respect to $___________________
operating leases
(9) Preferred stock dividends $___________________
(10) Fixed Charges (the sum of items (7)- $____________________
through (9))
(11) Fixed Charge Coverage Ratio ____________________
</TABLE>
D-2
<PAGE> 114
<TABLE>
<S> <C> <C>
(item (6) divided by item (10))
(12) Minimum Fixed Charge Coverage Ratio 2.5:1.0
pursuant to Section 8.1(i)
</TABLE>
B. SECTION 8.1(II)/CONSOLIDATED FUNDED DEBT TO EBITDA RATIO. The
following amounts shall be determined as of the end of the Borrower's fiscal
quarter based upon a period consisting of the four preceding fiscal quarters
then ended:
<TABLE>
<S> <C> <C>
(1) Indebtedness for Money Borrowed $________________
of Borrower and Restricted Subsidiaries
(2) Capital Lease Obligations $________________
of Borrower and Restricted Subsidiaries
(3) Guarantees of the Indebtedness of others $________________
of Borrower and Restricted Subsidiaries
(4) Consolidated Funded Debt $_________________
(the sum of items (1) through (3))
(5) Consolidated Net Income (loss) $_________________
(6) Interest Expense $__________________
(7) Income Taxes $__________________
(8) Depreciation and amortization expense $__________________
(9) EBITDA (the sum of items (5) through $__________________
(8))
(10) Funded Debt to EBITDA Ratio __________________
(item (4) divided by item (9))
(11) Maximum Funded Debt to EBITDA Ratio 4.0:1.0(1)
pursuant to Section 8.1(ii) 3.0:1.0(2)
</TABLE>
- -----------------------
1 For fiscal quarters ending or before June 30, 1997.
2 For fiscal quarters ending on or after September 30, 1997.
D-3
<PAGE> 115
C. SECTION 8.1(III)/FUNDED DEBT TO TOTAL CAPITALIZATION RATIO. The
following amounts shall be determined as of the end of the Borrower's fiscal
quarter.
<TABLE>
<S> <C> <C>
(1) Consolidated Funded Debt $________________
(item (B)(4) above)
(2) Consolidated Net Worth $________________
(3) Total Capitalization (sum of $________________
items (1) and (2) above)
(4) Funded Debt to Total Capitalization __________________
Ratio (item (1) divided by item (3))
(5) Maximum Funded Debt to Total
Capitalization Ratio pursuant .65:1.0(3)
to Section 8.1(iii) .60:1.0(4)
.55:1.0(5)
</TABLE>
D. SECTION 8.2/LIENS. During the fiscal quarter, except for Liens
permitted pursuant to Sections 8.2(a) through (k), the Borrower and/or its
Restricted Subsidiaries did not create, incur, or suffer to exist any Liens
other than the following Liens permitted by Section 8.2(1):
<TABLE>
<S> <C> <C>
(1) The total amount of obligations $________________
that are secured by Liens not permitted
under Sections 8.2(a) through (k)
(2) Consolidated Net Worth $________________
(3) Funded Debt of Restricted Subsidiaries $________________6
(4) Total Capitalization (item C(3) above) $_________________
(5) Net Worth Basket (item (1) divided ___%
</TABLE>
________________________
3 For fiscal quarters ending or before June 30, 1997.
4 For fiscal quarters ending on or after September 30, 1997 and through
June 30, 1998.
5 For fiscal quarters ending on or after September 30, 1998.
6 Excluding the Waldorf Debt through June 30, 1997 and Indebtedness arising
under the Waldorf Credit Agreement through April 21, 1997.
D-4
<PAGE> 116
<TABLE>
<S> <C> <C>
by item (2) expressed as a percentage)
(6) Maximum Net Worth Basket CANNOT EXCEED 10%
(7) Total Capitalization Basket (the sum of ___%
items (1) and (3) divided by item (4)
expressed as a percentage)
(8) Maximum Total Capitalization Basket CANNOT EXCEED 20%
</TABLE>
E. SECTION 8.3/FUNDED DEBT OF RESTRICTED SUBSIDIARIES. During the
fiscal quarter, except for Funded Debt permitted pursuant to Section 8.3(a),
none of the Restricted Subsidiaries created, incurred, or suffered to exist any
Funded Debt other than the following Funded Debt:
<TABLE>
<S> <C> <C>
(1) Funded Debt of Restricted Subsidiaries $________________
(item D(3) above)
(2) Total Capitalization (item D(4) above) $_________________
(3) Basket (item (1) divided by item ___%
(2) expressed as a percentage)
(4) Maximum Basket CANNOT EXCEED 20%
</TABLE>
F. SECTION 8.4(A)/SALE OF ASSETS. During the fiscal quarter, neither
the Borrower nor any of the Restricted Subsidiaries sold or disposed of any
assets outside of the ordinary course of business except as follows:
<TABLE>
<S> <C> <C>
(1) The total book value of assets sold or $________________7
otherwise disposed of (outside ordinary
course of business) in preceding 12 months
(2) Consolidated Net Worth (item D(2) above) $________________
(3) Basket (item (1) divided by item ___%
(2) expressed as a percentage)
(4) Maximum Basket CANNOT EXCEED 15%
</TABLE>
______________________
7 Excluding assets contributing to the Sonoco Joint Venture.
D-5
<PAGE> 117
G. SECTION 8.4(E)/SALE-LEASEBACKS. During the fiscal quarter,
neither the Borrower nor any of the Restricted Subsidiaries engaged in any
sale/leaseback transactions except as follows:
<TABLE>
<S> <C> <C>
(1) The total book value of assets sold $________________
pursuant to sale/leasebacks in
preceding 12 months
(2) Consolidated Net Worth (item F(2) above) $________________
(3) Basket (item (1) divided by item ___%
(2) expressed as a percentage)
(4) Maximum Basket CANNOT EXCEED 15%
</TABLE>
H. SECTION 8.9/LIMITATIONS ON SUBSIDIARIES WHICH ARE NOT RESTRICTED
SUBSIDIARIES. During the fiscal quarter, none of the Unrestricted Subsidiaries
created, incurred, issued, assumed, guaranteed or otherwise became directly or
indirectly liable with respect to, or suffered to exist any Indebtedness
pursuant to which the lender has recourse to any Consolidated Company or to any
of the assets of any Consolidated Company ("Recourse Debt") except as follows:
<TABLE>
<S> <C> <C>
(1) Amount of Recourse Debt incurred by all
Unrestricted Subsidiaries during the fiscal
quarter $_____________________
(2) Total amount of other incurred and
outstanding Recourse Debt of all
Unrestricted Subsidiaries $_____________________
(3) Total Capitalization (item E(2) above) $_____________________
(4) Basket (aggregate sum of items (1)
and (2) divided by item (3) expressed
as a percentage) ___%
(5) Maximum Basket CANNOT EXCEED 15%
</TABLE>
IN WITNESS WHEREOF, this Attachment to Compliance Certificate is duly
executed and delivered this ___________ day of ________________, _____.
_________________________________
Title:
Rock-Tenn Company
D-6
<PAGE> 118
EXHIBIT E
[FORM OF] COMPETITIVE BID REQUEST
[Date]
SunTrust Bank, Atlanta,
as Agent for the Lenders referred to below
25 Park Place
Atlanta, Georgia 30303
Attention: ____________________
Ladies and Gentlemen:
The undersigned, ROCK-TENN COMPANY (the "Borrower"), refers to the Credit
Agreement dated as of January __, 1997 (as amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Borrower, the
financial institutions party thereto as Lenders and SunTrust Bank, Atlanta, as
Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meaning's assigned to such terms in the Credit Agreement. The Borrower
hereby gives you notice pursuant to Section 2.6 of the Credit Agreement that it
requests a Competitive Bid Loan or Competitive Bid Loans (not to exceed two)
under the Credit Agreement, and in that connection sets forth below the terms on
which such Competitive Bid Loan or Competitive Bid Loans is or are requested to
be made:
<TABLE>
<S> <C> <C> <C>
(A) Date of Competitive Bid Loan
(which is a Business Day) __________ __________
(B) Interest Period and the last day thereof1/ __________ __________
(C) Principal Amount of Competitive Bid Loan2/ __________ __________
</TABLE>
____________________
1/ Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date.
2/ Not less than $5,000,000 (and in integral multiples of $1,000,000).
E-1
<PAGE> 119
Upon acceptance of any or all of the Competitive Bid Rate Advances offered
by the Lenders in response to this request, the Borrower shall be deemed to
have represented and warranted that the conditions to lending specified in
Section 5.2 of the Credit Agreement have been satisfied.
Very truly yours,
ROCK-TENN COMPANY
By: _____________________________
Name: _____________________
Title: [Executive Officer]
E-2
<PAGE> 120
EXHIBIT F
[FORM OF] NOTICE OF COMPETITIVE BID REQUEST
[Date]
[Name of Lender]
[Address]
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of January __, 1997 (as
it may be amended, modified, extended or restated from time to time, the "Credit
Agreement"), among ROCK-TENN COMPANY (the "Borrower"), the financial
institutions party thereto as Lenders and SunTrust Bank, Atlanta, as Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower made a
Competitive Bid Request on __________, ____, pursuant to Section 2.6(b) of the
Credit Agreement, and in that connection you are invited to submit a Competitive
Bid or Competitive Bids by [Date]/[Time].1/ Each of your Competitive Bids must
comply with Section 2.6(c) of the Credit Agreement and the terms set forth below
on which the Competitive Bid Request was made:
<TABLE>
<S> <C> <C> <C>
(A) Date of Competitive Loan
(which is a Business Day) __________ __________
(B) Interest Period and the last day thereof __________ __________
(C) Principal Amount of Competitive Bid Loan $__________ $__________
</TABLE>
Very truly yours,
SUNTRUST BANK, ATLANTA
as Agent
By:______________________________________
Title:
___________________
1/ Each Competitive Bid must be received by the Agent not later than 11:00
a.m., Atlanta, Georgia time, on the Business Day of a proposed Competitive
Bid Loan.
F-1
<PAGE> 121
EXHIBIT G
[FORM OF] COMPETITIVE BID
[Date]
SunTrust Bank, Atlanta,
as Agent for the Lenders referred to below
25 Park Place
Atlanta, Georgia 30303
Attention: ____________________
Ladies and Gentlemen:
The undersigned, [Name of Lender], refers to the Credit Agreement dated as
of January __, 1997 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), among ROCK-TENN COMPANY
(the "Borrower"), the financial institutions party thereto as Lenders and
SunTrust Bank, Atlanta, as Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement. The undersigned hereby makes a Competitive Bid or Competitive
Bids, as the case may be, pursuant to Section 2.6(c) of the Credit Agreement, in
response to the Competitive Bid Request made by the Borrower on __________,
____, and in that connection sets forth below the terms on which such
Competitive Bid or Competitive Bids is or are made:
<TABLE>
<S> <C> <C> <C>
(A) Interest Period and last day thereof __________ __________
(B) Principal Amount1/ $__________ $__________
(C) Competitive Bid Rate __________ __________
</TABLE>
[In the event bids are accepted for more than one Interest Period in
respect of which bids are set forth above, the aggregate principal amount of
Competitive Bid Rate Advances made pursuant to Competitive Bids submitted
hereby shall not exceed $__________2/].
____________________
1/ Not less than $1,000,000 or greater than the requested Competitive Loan
and in integral multiples of $500,000. Multiple bids will be accepted by
the Agent not to exceed two.
2/ Not less than $1,000,000 and in integral multiples of $500,000.
G-1
<PAGE> 122
The undersigned hereby confirms that it is prepared, subject to the
conditions set forth in the Credit Agreement to extend credit to the Borrower
upon acceptance by the Borrower of this bid in accordance with Section 2.6(e)
of the Credit Agreement.
Very truly yours,
[NAME OF LENDER]
By:
-----------------------------
Title:
---------------------
G-2
<PAGE> 123
EXHIBIT H
[FORM OF] COMPETITIVE BID ACCEPT/REJECT LETTER
[Date]
SunTrust Bank, Atlanta,
as Agent for the Lenders referred to below
25 Park Place
Atlanta, Georgia 30303
Attention: ____________________
Ladies and Gentlemen:
The undersigned, ROCK-TENN COMPANY (the "Borrower"), refers to the Credit
Agreement dated as of January __, 1997 (as it may hereafter be amended,
modified, extended or restated from time to time, the "Credit Agreement"), among
the Borrower, the financial institutions party thereto as Lenders and SunTrust
Bank, Atlanta, as Agent. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
In accordance with Section 2.6(d) of the Credit Agreement, we have
received a summary of bids in connection with our Competitive Bid Request dated
________, ______ and in accordance with Section 2.6(e) of the Credit Agreement,
we hereby accept the following bids for the Interest Periods specified below:
1. Interest Period ending [date]
Aggregate Principal Amount of Competitive Bids Accepted, if in excess of
Aggregate-Amount Requested in Competitive Bid Request, is $__________.1/
Accepted Bids:
<TABLE>
<CAPTION>
Principal Amount Interest Rate Lender
---------------- ------------- -----
<S> <C> <C>
$__________ [_____%]
$__________
</TABLE>
- --------------------
1/ Must be prorated amongst Lenders as provided in Section 2.6(e).
H-1
<PAGE> 124
[2. Interest Period ending [date]
Aggregate Principal Amount of Bids Accepted, if in Excess of Aggregate
Amount Requested in Competitive Bid Request, is $__________.1/
Accepted Bids:
<TABLE>
<CAPTION>
Principal Amount Interest Rate Lender
---------------- ------------- ------
<S> <C> <C>
$__________ [_____%]
$__________]
</TABLE>
All Competitive Bids received but not listed above as accepted are hereby
deemed rejected.
[Insert special instructions, if any, with respect to the apportionment
of the Borrower's acceptance among bids by a Lender for different Interest
Periods]
Very truly yours,
ROCK-TENN COMPANY
By:
--------------------------
Name:
-------------------
Title: [Executive Officer]
H-2
<PAGE> 125
EXHIBIT I
CLOSING CERTIFICATE
The undersigned, being the ____________________ of ROCK-TENN COMPANY, a
Georgia corporation (the "Borrower"), hereby gives this certificate to induce
SUNTRUST BANK, ATLANTA, a Georgia banking corporation, as agent for itself and
the other Lenders (in such capacity, the "Agent") and each of the other Lenders,
to consummate certain financial accommodations with the Borrower pursuant to the
terms of the Credit Agreement dated as of even date herewith (the "Credit
Agreement"). Capitalized terms used herein and not defined herein have the same
meanings assigned to them in the Credit Agreement:
The undersigned hereby certifies to the Agent and the Lenders that:
1. In his/her aforesaid capacity as the ____________________ of the
Borrower, [s]he has knowledge of the business and financial affairs of the
Borrower sufficient to issue this certificate and is authorized and empowered to
issue this certificate for and on behalf of the Borrower.
2. All representations and warranties contained in the Credit
Agreement are true and correct in all material respects on and as of the date
hereof.
3. After giving effect to the Loans to be made to the Borrower
pursuant to the Credit Agreement on the date hereof, no Default or Event of
Default has occurred and is continuing.
4. Since the date of the audited financial statements of the
Consolidated Companies described in Section 6.14 of the Credit Agreement, there
has been no change which has had or is reasonably likely to have a Materially
Adverse Effect.
5. Except as may be described on Schedule 6.5 of the Credit
Agreement, no action or proceeding has been instituted or is pending before any
court or other governmental authority, or, to the knowledge of any of the
Consolidated Companies, threatened (i) which is reasonably likely to have a
Materially Adverse Effect, or (ii) seeking to prohibit or restrict one or more
Consolidated Companies' ownership or operation of any portion of its businesses
or assets, where such portion or portions of such businesses or assets, as the
case may be, constitute a Material portion of the total businesses or assets of
the Consolidated Companies.
6. The Advances to be made on the date hereof are being used solely
for the purposes provided in the Credit Agreement, and such Advances and use of
proceeds thereof will not contravene, violate or conflict with, or involve the
Agent or any Lender in a violation of, any law, rule, injunction, or regulation,
or determination of any court of
J-2-1
<PAGE> 126
law or other governmental authority, applicable to the Borrower or any of the
Consolidated Companies.
7. The conditions precedent set forth in Sections 5.1 and 5.2 of the
Credit Agreement have been or will be satisfied (or have been waived pursuant to
the terms of the Credit Agreement) prior to or concurrently with the making of
the Loans under the Credit Agreement on the date hereof.
8. The execution, delivery and performance by any of the Consolidated
Companies of the Credit Documents will not violate any Requirement of Law or
cause a breach or default under any of their respective Contractual Obligations.
9. The Borrower has the corporate power and authority to make,
deliver and perform the Credit Documents to which it is a party and has taken
all necessary corporate action to authorize the execution, delivery and
performance of such Credit Documents. No consents or authorization of, or
filing with, any Person (including, without limitation, any governmental
authority), is required in connection with the execution, delivery or
performance by the Borrower, or the validity or enforceability against any the
Borrower, of the Credit Documents, other than such consents, authorizations or
filings which have been made or obtained.
IN WITNESS WHEREOF, the undersigned has executed this certificate in
his/her aforesaid capacity as of this ____ day of January, 1997.
-----------------------------------------
Title:
-----------------------------------
J-2-2
<PAGE> 127
EXHIBIT K
ASSIGNMENT AND ACCEPTANCE AGREEMENT
ASSIGNMENT AND ACCEPTANCE AGREEMENT (the "Assignment Agreement") dated as
of __________, ____ between ____________________ "Assignor") and _______________
("Assignee"). All capitalized terms used herein and not otherwise defined shall
have the respective meanings provided such terms in the Credit Agreement
referred to below.
W I T N E S S E T H :
WHEREAS, Assignor is a party to a Credit Agreement, dated as of January
__, 1997 (as amended to the date hereof, the "Credit Agreement"), among
Rock-Tenn Company (the "Borrower"), various financial institutions (including
Assignor, the "Lenders") and SunTrust Bank, Atlanta, as Agent (the "Agent");
and
WHEREAS, Assignor has a Revolving Credit Commitment of $__________ under
the Credit Agreement pursuant to which it has made outstanding Advances of
$__________ and has outstanding Competitive Bid Rate Advances of $__________;
and
WHEREAS, Assignor and Assignee wish Assignor to assign to Assignee its
rights under the Credit Agreement with respect to a portion of its Revolving
Credit Commitment and of its outstanding Advances thereunder; and
WHEREAS, Assignor and Assignee wish Assignee to assume the obligations of
Assignor under the Credit Agreement to the extent of the rights so assigned;
NOW THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
1. Assignment. Assignor hereby assigns to Assignee, without
recourse, or representation or warranty (other than expressly provided herein)
and subject to Section 4(b) hereof, _____% as the "Assignee's Share"
("Assignee's Share") of all of Assignor's rights, title and interest arising
under the Credit Agreement relating to Assignor's Revolving Credit Commitment,
including with respect to Assignee's Pro Rata Share (as defined in clause (ii)
of such definition) of each of the Advances, including the Competitive Bid Rate
Advances as heretofore made by the Assignor under the Credit Agreement pursuant
thereto, as set forth as Exhibit A attached hereto. The dollar amount of
Assignee's Share of Assignor's Revolving Credit Commitment is $__________ and
the dollar amount of Assignee's Pro Rata Share of Assignor's outstanding
Advances including the Competitive Bid Rate Advances is $__________. The
Assignor's Pro Rata Share of each of such Advances is set forth in Exhibit A.
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<PAGE> 128
2. Assumption. Assignee hereby assumes from Assignor all of
Assignor's obligations arising under the Credit Agreement relating to Assignee's
Share of Assignor's Revolving Credit Commitment and of the Advances. It is the
intent of the parties hereto that Assignor shall be released from all of its
obligations under the Credit Agreement relating to Assignee's Share.
3. Assignments; Participations. Assignee may assign all or any part
of the rights granted to it hereunder, and Assignee may sell or grant
participations in all or any part of the rights granted to it hereunder, in
accordance with the provisions of Section 11.6 of the Credit Agreement.
4. Payment of Interest and Fees to Assignee.
(a) As of the date hereof interest is payable by the Borrower in
respect of Assignee's Share of the Eurodollar Advances at a rate equal to _____%
per annum above the Adjusted LIBO Rate, interest is payable on each of the
Competitive Bid Rate Advances at the rates set forth as Exhibit A, and a
Facility Fee equal to _____% per annum on the Assignee's Share of the Revolving
Credit Commitments.
(b) Notwithstanding anything to the contrary contained in this
Assignment Agreement, if and when Assignor receives or collects any payment of
interest on any Advance attributable to Assignee's Share or any payment of the
Facility Fee or other fee attributable to Assignee's Share which, in any such
case, are required to be paid to Assignee pursuant to clause (a) above, Assignor
shall distribute to Assignee such payment but only to the extent such interest
or fee accrued after the Assignment Effective Date (as hereinafter defined).
(c) Notwithstanding anything to the contrary contained in this
Assignment Agreement, if and when Assignee receives or collects any payment of
interest on any Advance or any payment of the Facility Fee which, in any such
case, is required to be paid to Assignor pursuant to clause (a) above, Assignee
shall distribute to Assignor such payment.
5. Payments on Assignment Effective Date. In consideration of the
assignment by Assignor to Assignee of Assignee's Share of Assignor's Revolving
Credit Commitment and Advances as set forth above, Assignee agrees to pay to
Assignor on or prior to the Assignment Effective Date an amount specified by
Assignor in writing on or prior to the Assignment Effective Date which
represents Assignee's Share of the principal amount of the respective Advances
made by Assignor pursuant to the Credit Agreement and outstanding on the
Assignment Effective Date.
6. Effectiveness.
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(a) This Assignment Agreement shall become effective on the date (the
"Assignment Effective Date") (which is at least five days after the date hereof)
on which (i) Assignor and Assignee shall have signed a copy hereof (whether the
same or different copies) and, in the case of Assignee, shall have delivered
same to Assignor, (ii) the Borrower shall have consented hereto, (iii) a copy of
the fully executed Assignment, a fee of $2,500 and the Note evidencing the
Revolving Credit Commitment and the Note evidencing the Competitive Bid Facility
assigned hereby shall have been delivered to the Agent, and (iv) Assignee shall
have paid to Assignor the amount set forth in Section 5.
(b) It is agreed that all interest on any Advance attributable to
Assignee's Share and all other fees and Facility Fees attributable to Assignee's
Share, which, in each case, accrues on and after the Assignment Effective Date
shall be paid directly to the Assignee in accordance with the Credit Agreement.
7. Amendment of Credit Agreement. On the Assignment Effective Date
the Credit Agreement shall be amended by deeming the signature of Assignee
herein as a signature to the Credit Agreement. The Assignee shall be deemed a
"Lender" for all purposes under the Credit Agreement and shall be subject to and
shall benefit from all of the rights and obligations of a Lender under the
Credit Agreement. The address of the Assignee for notice purposes shall be as
set forth below, and the Credit Agreement shall be amended by deeming such
signature page and address to be included thereon. Without limiting the
generality of the foregoing, Assignee agrees that it will perform its
obligations as a Lender under the Credit Agreement as required by the terms
thereof and Assignee appoints and authorizes the Agent to take such actions as
Agent on its behalf and exercise such powers under the Credit Agreement and the
other Credit Documents as are delegated to the Agent by the terms of the Credit
Agreement and the other credit documents, together with such powers as are
reasonably incidental thereto.
8. Representations and Warranties. Each of the Assignor and the
Assignee represents and warrants to the other party as follows:
(a) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment Agreement and to fulfill its
obligations under, and to consummate the transactions contemplated by, this
Assignment Agreement;
(b) the making and performance by it of this Assignment Agreement and
all documents required to be executed and delivered by it hereunder do not and
will not violate any law or regulation of the jurisdiction of its incorporation
or any other law or regulation applicable to it;
(c) this Assignment Agreement has been duly executed and delivered by
it and constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms; and
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(d) all consents, licenses, approvals, authorizations, exemptions,
registrations, filings, opinions and declarations from or with any agency,
department, administrative authority, statutory corporation or judicial entity
necessary for the validity or enforceability of its obligations under this
Assignment Agreement have been obtained, and no governmental authorizations
other than any already obtained are required in connection with its execution,
delivery and performance of this Assignment Agreement.
9. Expenses. The Assignor and the Assignee agree that each party
shall bear its own expenses in connection with the preparation and execution of
this Assignment Agreement.
10. Miscellaneous.
(a) Assignor shall not be responsible to Assignee for the execution
(by any party other than the Assignor), effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of the Credit Agreement, the Notes
or any other Credit Document or for any representations, warranties, recitals or
statements made therein or in any written or oral statement or in any financial
or other statements, instruments, reports, certificates or any other documents
made or furnished or made available by Assignor to Assignee or by or on behalf
of the Borrower or the Consolidated Companies to Assignor or Assignee in
connection with the Credit Agreement, the Notes or any other Credit Document and
the transactions contemplated thereby. Assignor shall not be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in the Credit
Agreement, the Notes or any other Credit Document or as to the use of the
proceeds of the Advances or as to the existence or possible existence of any
event which constitutes an Event of Default or which with the giving of notice
or the passage of time or both would constitute an Event of Default.
(b) Assignee represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Borrower
and the Consolidated Companies in connection with the making of the Advances and
the assignment of Assignee's Share of Assignor's Revolving Credit Commitment and
of Assignor's Advances to Assignee hereunder and has made and shall continue to
make its own appraisal of the creditworthiness of the Borrower and the
Consolidated Companies. Assignor shall have no duty or responsibility either
initially or on a continuing basis to make any such investigation or any such
appraisal on behalf of Assignee or to provide Assignee with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Advances or at any time or times thereafter and shall further have
no responsibility with respect to the accuracy of, or the completeness of, any
information provided to Assignee, whether by Assignor or by or on behalf of
either the Borrower or the Consolidated Companies.
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(c) THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS ASSIGNMENT
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF GEORGIA.
(d) No term or provision of this Assignment Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by both parties.
(e) This Assignment Agreement may be executed in one or more
counterparts, each of which shall be an original but all of which, taken
together, shall constitute one and the same instrument.
(f) The Assignor may at any time or from time to time grant to others
assignments or participations in its Revolving Credit Commitment or the Advances
in accordance with Section 11.6 of the Credit Agreement but not in the portions
thereof assigned to Assignee pursuant to this Assignment Agreement. The Assignor
represents and warrants that it has not at any time prior to the Assignment
Effective Date encumbered or assigned the portion of its Revolving Credit
Commitment or Advances being assigned hereunder.
(g) All payments hereunder or in connection herewith shall be made in
Dollars and in immediately available funds, if payable to the Assignor, to the
account of the Assignor at its address as designated in the Credit Agreement,
and, if payable to the Assignee, to the account of the Assignee's address, as
designated on the signature page hereof.
(h) This Assignment Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Neither of the parties hereto may assign or transfer any of its rights or
obligations under this Assignment Agreement without the prior consent of the
other party.
(i) All representations and warranties made herein and indemnities
provided for herein shall survive the consummation of the transaction
contemplated hereby.
(j) The Assignee acknowledges receipt of copies of the documents
received in connection with the transactions contemplated by the Credit
Agreement, the Notes and this Assignment Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement as of the date first above written.
[NAME OF ASSIGNOR]
By:_________________________________
Title:___________________________
Assignee's Share [NAME OF ASSIGNEE]
of Commitment:
$__________ By:
________________________________
Title:__________________________
Address:
___________________________________
___________________________________
___________________________________
Telephone No.: ____________________
Fax No.: _________________________
CONSENTED TO AS OF THE
DATE SET FORTH ABOVE:
ROCK-TENN COMPANY
By:____________________________________
Title:______________________________
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Exhibit A
Advances
<TABLE>
<CAPTION>
Type of Advance Amount Applicable Interest Rate Pro Rata Share
- --------------- ------ ------------------- -------------------
<S> <C> <C> <C>
</TABLE>
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EXHIBIT L
FORM OF CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of
____________, 19__ by and among ROCK-TENN COMPANY a Georgia corporation (the
"Borrower"), and each of the undersigned parties (other than the Borrower)
respectively organized or formed under the laws of the states set forth on the
signature pages below their names (each a "Subsidiary", and collectively, the
"Subsidiaries"). The Borrower and each of the Subsidiaries are sometimes
hereinafter referred to individually as a "Contributing Party" and collectively
as the "Contributing Parties").
WITNESSETH:
WHEREAS, pursuant to that certain Credit Agreement dated as of January __,
1997, among the Borrower, each of the Lenders listed therein and SunTrust Bank,
Atlanta, as Agent, (such Credit Agreement, as the same may have been or may
hereafter from time to time be amended, modified, restated or extended, being
hereinafter referred to as the "Credit Agreement"), the Lenders have agreed to
extend financial accommodations to the Borrower;
WHEREAS, as a condition, among others, to the Lenders' willingness to
enter into the Credit Agreement, the Lenders have required that each Subsidiary
execute and deliver a Subsidiary Guarantee (each such agreement, as the same
may from time to time be amended, modified, restated or extended, being
hereinafter referred to as a "Guarantee"), pursuant to which, among other
things, the Subsidiaries have agreed to guarantee the Borrower's Loans and
other amounts owing to the Lenders under and as defined in the Credit
Agreement, , including, without limitation, the Borrower's obligations to repay
the "Loans" (as defined in the Credit Agreement) it owes to the Lenders; and
WHEREAS, each Subsidiary is a wholly-owned direct or indirect subsidiary
of the Borrower and is engaged in businesses related to those of the Borrower
and each other Subsidiary, and each of the Subsidiaries will derive direct or
indirect economic benefit from the effectiveness and existence of the Credit
Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce each Subsidiary to enter into a Guarantee,
it is agreed as follows:
To the extent that any Subsidiary shall, under a Guarantee, make a payment
(a "Subsidiary Payment") of a portion of the "Guaranteed Obligations" (as
defined in the Guarantee), then such Subsidiary shall be entitled to
contribution and indemnification from, and be reimbursed by, each of the other
Contributing Parties in an amount, for each
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such Contributing Party, equal to a fraction of such Subsidiary Payment, the
numerator of which fraction is such Contributing Party's Allocable Amount and
the denominator of which is the sum of the Allocable Amounts of all of the
Contributing Parties.
As of any date of determination, the "Allocable Amount" of each
Contributing Party shall be equal to the maximum amount of liability which could
be asserted against such Contributing Party hereunder with respect to the
applicable Subsidiary Payment without (i) rendering such Contributing Party
"insolvent" within the meaning of Section 101(32) of the Federal Bankruptcy Code
(the "Bankruptcy Code") or Section 2 of either the Uniform Fraudulent Transfer
Act (the "UFTA") or the Uniform Fraudulent Conveyance Act (the "UFCA"), (ii)
leaving such Contributing Party with unreasonably small capital, within the
meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA or
Section 5 of the UFCA, or (iii) leaving such Contributing Party unable to pay
its debts as they become due within the meaning of Section 548 of the Bankruptcy
Code or Section 4 of the UFTA or Section 6 of the UFCA.
This Agreement is intended only to define the relative rights of the
Contributing Parties, and nothing set forth in this Agreement is intended to or
shall impair the obligations of the Subsidiaries, jointly and severally, to pay
any amounts, as and when the same shall become due and payable in accordance
with the terms of the Guarantee.
The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets in favor of each Subsidiary
to which such contribution and indemnification is owing.
This Agreement shall become effective upon its execution by each of the
Contributing Parties and shall continue in full force and effect and may not be
terminated or otherwise revoked by any Contributing Party until all of the
Obligations under and as defined in the Credit Agreement shall have been
indefeasibly paid in full (in lawful money of the United States of America) and
discharged and the Credit Agreement and financing arrangements evidenced and
governed by the Credit Agreement. shall have been terminated. Each Contributing
Party agrees that if, notwithstanding the foregoing, such Contributing Party
shall have any right under applicable law to terminate or revoke this Agreement,
and such Contributing Party shall attempt to exercise such right, then such.
termination or revocation shall not be effective until a written notice of such
revocation or termination, specifically referring hereto and signed by such
Contributing Party, is actually received by each of the other Contributing
Parties and by the Agent at its notice address set forth in the Credit
Agreement. Such notice shall not affect the right or power of any Contributing
Party to enforce rights arising prior to receipt of such written notice by each
of the other Contributing Parties and the Agent. If any Lender grants
additional loans to the Borrower or takes other action giving rise to additional
Obligations after any Contributing Party has exercised any right to terminate or
revoke this Agreement but before the Agent receives such written notice, the
rights of each other Contributing Party to contribution and indemnification
hereunder in connection with any
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Subsidiary Payments made with respect to such loans or Obligations shall be the
same as if such termination or revocation had not occurred.
IN WITNESS WHEREOF, each Contributing Party has executed and delivered
this Agreement as of the date first above written.
ROCK-TENN COMPANY
By:
Title:
Attest
Title:
Address:
Attention:
Telecopier No.
[ SUBSIDIARY], a
_____________ corporation
By:
Title:
Attest
Title:
Address:
Attention:
Telecopier No.
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<PAGE> 137
EXHIBIT M
FORM OF SUBSIDIARY GUARANTEE
THIS SUBSIDIARY GUARANTEE (this "Guarantee") is made as of the __ day of
_____________, 199_, by [_____________] (collectively, the "Subsidiary
Guarantors") in favor of the Agent, for the ratable benefit of the Lenders,
under the Credit Agreement referred to below;
WITNESSETH:
WHEREAS, Rock-Tenn Company, a Georgia corporation (the "Borrower") the
lenders listed therein (the "Lenders") and SunTrust Bank, Atlanta, as Agent
(the "Agent"), have entered into that certain Credit Agreement dated as of
January 21, 1997 (as the same may have been or may hereafter be amended or
supplemented from time to time, the "Credit Agreement") providing, subject to
the terms and conditions thereof, for extensions of credit to be made by the
Lenders to the Borrower;
WHEREAS, it is a requirement of Section 7.10 of the Credit Agreement that
the Subsidiary Guarantors execute and deliver this Guarantee whereby the
Subsidiary Guarantors shall guarantee the payment when due of all principal,
interest and other amounts that shall be at any time payable by the Borrower
under the Credit Agreement, the Notes and the other Credit Documents; and
WHEREAS, in consideration of the financial and other support that the
Borrower has provided, and such financial and other support as the Borrower may
in the future provide, to the Subsidiary Guarantors, the Subsidiary Guarantors
are willing to guarantee the obligations of the principal under the Credit
Agreement, the Notes, and the other Credit Documents.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.
SECTION 2.01 Representations and Warranties. Each Subsidiary Guarantor
represents and warrants (which representations and warranties shall be deemed
to have been renewed upon each Borrowing under the Credit Agreement) that:
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(a) It (i) is a [CORPORATION] [LIMITED LIABILITY COMPANY] [LIMITED
PARTNERSHIP] [OTHER] duly organized or formed, validly existing and in good
standing under the laws of its jurisdiction of organization or formation; (ii)
has all requisite power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (iii) is qualified
to do business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify would have a Materially Adverse Effect.
(b) It has all necessary power and authority to execute, deliver and
perform its obligations under this Guarantee; the execution, delivery and
performance of this Guarantee have been duly authorized by all necessary
organizational action; and this Guarantee has been duly and validly executed and
delivered by it and constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, or moratorium or other
similar laws relating to the enforcement of creditors' rights generally and by
general equitable principles.
(c) Neither the execution and delivery by it of this Guarantee nor
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, organizational documents or any
material applicable law or regulation, or any order, writ, injunction or decree
of any court or governmental authority or agency, or any Material Contractual
Obligation to which it is a party or by which it is bound or to which it is
subject. or constitute a default under any such Material Contractual Obligation,
or result in the creation or imposition of any Lien upon any of its revenues or
assets pursuant to the terms of any such Material Contractual Obligation.
SECTION 2.02 Covenants. Each Subsidiary Guarantor covenants that, so
long as any Lender has any Commitment outstanding under the Credit Agreement or
any amount payable under the Credit Agreement or any Note shall remain unpaid,
that it will, and, if necessary, will enable the Borrower to fully comply with
those covenants and agreements set forth in the Credit Agreement (including,
without limitation, Articles 7 and 8 thereof).
SECTION 3. The Guarantee. Each Subsidiary Guarantor hereby
unconditionally guarantees, jointly and severally, the full and punctual payment
(whether at stated maturity, upon acceleration or otherwise) of the principal of
and interest on each Note issued by the Borrower pursuant to the Credit
Agreement, and the full and punctual payment of all other amounts payable by the
Borrower under the Credit Agreement and the other Credit Documents including,
without limitation, the Obligations (all of the foregoing, including without
limitation, interest accruing or that would have accrued after the filing of a
petition in bankruptcy or other insolvency proceeding, being referred to
collectively as the "Guaranteed Obligations"). Upon failure by the Borrower to
pay punctually any such amount, each Subsidiary Guarantor agrees that it shall
forthwith on demand pay the amount not so paid at the place and in the manner
specified in the Credit Agreement, the Note or the relevant Credit Document, as
the case may be. Each
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Subsidiary Guarantor acknowledges and agrees that this is a guarantee of payment
when due, and not of collection, and that this Guarantee may be enforced up to
the full amount of the Guaranteed Obligations without proceeding against the
Borrower, any security for the Guaranteed Obligations, or against any other
party that may have liability on all or any portion of the Guaranteed
Obligations.
SECTION 4. Guarantee Unconditional. The obligations of each Subsidiary
Guarantor hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under the Credit
Agreement, any Note, or any other Credit Document, by operation of law or
otherwise or any obligation of any other guarantor of any of the
Obligations;
(ii) any modification or amendment of or supplement to the
Credit Agreement, any Note, or any other Credit Document;
(iii) any release, nonperfection or invalidity of any direct or
indirect security for any obligation of the Borrower under the Credit
Agreement, any Note, any Credit Document, or any obligations of any other
guarantor of any of the Obligations;
(iv) any change in the existence, structure or ownership of the
Borrower or any other guarantor of any of the Obligations, or any
insolvency, bankruptcy, reorganization or other similar proceeding
affecting the Borrower, or any other guarantor of the Obligations, or its
assets or any resulting release or discharge of any obligation of the
Borrower, or any other guarantor of any of the Obligations;
(v) the existence of any claim, setoff or other rights which
any Subsidiary Guarantor may have at any time against the Borrower, any
other guarantor of any of the Obligations, the Agent, any Lender or any
other Person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion of
any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Borrower, or any other guarantor of any of the Obligations, for any
reason related to the Credit Agreement, any other Credit Document, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Borrower, or any other guarantor of the Obligations, of the
Borrower of or interest on any Note or any other amount payable by the
Borrower under the Credit Agreement, the Notes, or any other Credit
Document; or
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(vii) any other act or omission to act or delay of any kind by
the Borrower, any other guarantor of the Obligations, the Agent, any
Lender or any other Person or any other circumstance whatsoever which
might, but for the provisions of this paragraph. constitute a legal or
equitable discharge of any Subsidiary Guarantor's obligation s hereunder.
SECTION 5. Discharge Only Upon Pavement In Full, Reinstatement In Certain
Circumstances. Each Subsidiary Guarantor's obligations hereunder shall remain
in full force and effect until all Guaranteed Obligations shall have been paid
in full and the Commitments under the Credit Agreement shall have terminated or
expired. If at any time any payment of the principal of or interest on any Note
or any other amount payable by the Borrower or any other party under the Credit
Agreement or any other Credit Document is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, each Subsidiary Guarantor's obligations hereunder with
respect to such payment shall be reinstated as though such payment had been due
but not made at such time.
SECTION 6. Waiver of Notice. Each Subsidiary Guarantor irrevocably
waives acceptance hereof, presentment, demand, protest and, to the fullest
extent permitted by law, any notice not provided for herein, as well as any
requirement that at any time any action be taken by any Person against the
Borrower, any other guarantor of the Obligations, or any other Person.
SECTION 7. Judgment Currency.
(a) Each Subsidiary Guarantor shall pay all amounts due hereunder in
U.S. dollars, and such obligations hereunder to make payments in U.S. dollars
shall not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any currency other than U.S. dollars,
except to the extent that such tender or recovery results in the effective
receipt by the Lenders and the Agent of the full amount of U.S. dollars
expressed to be payable under this Guarantee or the Credit Agreement. If for
the purpose of obtaining or enforcing judgment against a Subsidiary Guarantor in
any court or in any jurisdiction, it becomes necessary to convert into or from
any currency other than U.S. dollars (such other currency being hereinafter
referred to as the "Judgment Currency") an amount due in U.S. dollars, the
conversion shall be made, and the currency equivalent determined, in each case,
as on the day immediately preceding the day on which the judgment is given (such
Business Day being hereinafter referred to as the "Judgment Currency Conversion
Date").
(b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amounts due, the applicable Subsidiary Guarantor covenants and agrees to pay, or
cause to be paid, such additional amounts, if any (but in any event not a lesser
amount), as may be necessary to insure that the amount paid in the Judgment
Currency, when converted at the rate of exchange prevailing on the date of
payment, will produce the amount of U.S.
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dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial award at the rate of exchange prevailing
on the Judgment Currency Conversion Date.
(c) For purposes of determining the currency equivalent for this
Section, such amounts shall include any premium and costs payable in connection
with the purchase of U.S. dollars.
(d) The currency equivalent of U.S. dollars shall mean, with
respect to any monetary amount in a currency other than U.S. dollars, at any
time for the determination thereof, the amount of U.S. dollars obtained by
converting such foreign currency involved in such computation into U.S. dollars
at the spot rate for the purchase of U.S. dollars with the applicable foreign
currency as quoted by the Agent at approximately 11:00 a.m. (Chicago, Illinois
time) on the date of determination thereof specified herein or, if the date of
determination thereof is not otherwise specified herein, on the date two (2)
Business Days prior to such determination.
SECTION 8. Stay of Acceleration. If acceleration of the time for payment
of any amount payable by the Borrower under the Credit Agreement, any Note or
any other Credit Document is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, any Note or any other
Credit Document shall nonetheless be payable by each Subsidiary Guarantor
hereunder forthwith on demand by the Agent made at the request of the Required
Lenders.
SECTION 9. Maximum Guaranteed Obligations.
(a) It is the intent of each Subsidiary Guarantor and the Lenders
and Agent that each Subsidiary Guarantor's maximum obligations hereunder shall
be in, but not in excess of:
(i) in a case or proceeding commenced by or against such
Subsidiary Guarantor under the Bankruptcy Code on or within one year from
the date on which any of the Guaranteed Obligations are incurred, the
maximum amount which would not otherwise cause the Guaranteed Obligations
(or any other obligations of such Subsidiary Guarantor to the Lenders and
the Agent) to be avoidable or unenforceable against such Subsidiary
Guarantor under (A) Section 548 of the Bankruptcy Code or (B) any state
fraudulent transfer or fraudulent conveyance act or statute applied in
such case or proceeding by virtue of Section 544 of the Bankruptcy Code;
or
(ii) in a case or proceeding commenced by or against such
Subsidiary Guarantor under the Bankruptcy Code subsequent to one year from
the date on which any of the Guaranteed Obligations are incurred, the
maximum amount which would not otherwise cause the Guaranteed Obligations
(or any other
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obligations of such Subsidiary Guarantor to the Lenders and the Agent) to
be avoidable or unenforceable against such Subsidiary Guarantor under any
state fraudulent transfer or fraudulent conveyance act or statute applied
in any such case or proceeding by virtue of Section 544 of the Bankruptcy
Code; or
(iii) in a case or proceeding commenced by or against such
Subsidiary Guarantor under any law, statute or regulation other than the
Bankruptcy Code (including, without limitation, any other bankruptcy,
reorganization, arrangement, moratorium, readjustment of debt,
dissolution, liquidation or similar debtor relief laws), the maximum
amount which would not otherwise cause the Guaranteed Obligations (or any
other obligations of such Subsidiary Guarantor to the Lenders and the
Agent) to be avoidable or unenforceable against such Subsidiary Guarantor
under such law, statute or regulation, including without limitation, any
state fraudulent transfer or fraudulent conveyance act or statute applied
in any such case or proceeding.
(The substantive laws under which the possible avoidance or unenforceability of
the Guaranteed Obligations (or any other obligations of such Subsidiary
Guarantor to the Lenders and the Agent) shall be determined in any such case or
proceeding shall hereinafter be referred to as the "Avoidance Provisions").
(b) To the end set forth in Section 9(a), but only to the extent
that the Guaranteed Obligations would otherwise be subject to avoidance under
the Avoidance Provisions, if such Subsidiary Guarantor is not deemed to have
received valuable consideration, fair value or reasonably equivalent value for
the Guaranteed Obligations, or if the Guaranteed Obligations would render such
Subsidiary Guarantor insolvent, or leave such Subsidiary Guarantor with an
unreasonably small capital to conduct its business, or cause such Subsidiary
Guarantor to have incurred debts (or to have intended to have incurred debts)
beyond its ability to pay such debts as they mature, in each case as of the time
any of the Guaranteed Obligations are deemed to have been incurred under the
Avoidance Provisions and after giving effect to contribution as among other
guarantors, the maximum Guaranteed Obligations for which such Subsidiary
Guarantor shall be liable hereunder shall be reduced to that amount which, after
giving effect thereto, would not cause the Guaranteed Obligations (or any other
obligations of such Subsidiary Guarantor to the Lenders and the Agent), as so
reduced, to be subject to avoidance under the Avoidance Provisions. This
Section 9(b) is intended solely to preserve the rights of the Lenders and the
Agent hereunder to the maximum extent that would not cause the Guaranteed
Obligations of such Subsidiary Guarantor to be subject to avoidance under the
Avoidance Provisions, and neither such Subsidiary Guarantor nor any other Person
shall have any right or claim under this Section 9 as against the Lenders and
the Agent that would not otherwise be available to such Person under the
Avoidance Provisions.
SECTION 10. Notices. All notices, requests and other communications to
any party hereunder shall be given or made by telecopier or other writing and
telecopied, or mailed or delivered to the intended recipient at its address or
telecopier number set forth
M-6
<PAGE> 143
on the signature pages hereof or such other address or telecopy number as such
party may hereafter specify for such purpose by notice to the Agent in
accordance with the provisions of Section 11.1 of the Credit Agreement. Except
as otherwise provided in this Guarantee, all such communications shall be deemed
to have been duly given when transmitted by telecopier, or personally delivered
or, in the case of a mailed notice sent by certified mail return-receipt
requested, on the date set forth on the receipt (provided, that any refusal to
accept any such notice shall be deemed to be notice thereof as of the time of
any such refusal), in each case given or addressed as aforesaid.
SECTION 11. No Waivers. No failure or delay by the Agent or any Lenders
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Guarantee, the Credit Agreement, the
Notes, and the other Credit Documents shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 12. Successors and Assigns. This Guarantee is for the benefit of
the Agent and the Lenders and their respective successors and permitted assigns
and in the event of an assignment of any amounts payable under the Credit
Agreement, the Notes, or the other Credit Documents, the rights hereunder, to
the extent applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Guarantee shall be binding upon each Subsidiary
Guarantor and its successors and permitted assigns.
SECTION 13. Changes in Writing. Neither this Guarantee nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by each Subsidiary Guarantor and the Agent with the consent of
the Required Lenders.
SECTION 14. GOVERNING LAW: SUBMISSION TO JURISDICTION, WAIVER OF JURY
TRIAL. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED TN ACCORDANCE WITH THE
LAW OF THE STATE OF GEORGIA. EACH SUBSIDIARY GUARANTOR HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF GEORGIA AND OF ANY GEORGIA STATE COURT SITTING IN ATLANTA, GEORGIA
AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTEE (INCLUDING, WITHOUT LIMITATION, ANY OF THE OTHER CREDIT DOCUMENTS) OR
THE TRANSACTIONS CONTEMPLATED HEREBY. EACH SUBSIDIARY GUARANTOR IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH SUBSIDIARY GUARANTOR, AND THE
M-7
<PAGE> 144
AGENT AND THE LENDERS ACCEPTING THIS GUARANTEE, HEREBY IRREVOCABLY WAIVE ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 15. Taxes, etc. All payments required to be made by each
Subsidiary Guarantor hereunder shall be made without setoff or counterclaim and
free and clear of and without deduction or withholding for or on account of, any
present or future taxes, levies, imposts, duties or other charges of whatsoever
nature imposed by any government or any political or taxing authority thereof,
provided, however, that if a Subsidiary Guarantor is required by law to make
such deduction or withholding, such Subsidiary Guarantor shall forthwith pay to
the Agent or any Lender, as applicable, such additional amount as results in the
net amount received by the Agent or any Lender, as applicable, equaling the full
amount which would have been received by the Agent or any Lender, as applicable,
had no such deduction or withholding been made.
[Signatures on Next Page]
M-8
<PAGE> 145
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this Guarantee to
be duly executed by its authorized officers as of the day and year first above
written.
[SUBSIDIARY GUARANTOR]
By:
Title:
Attest:
Title:
ADDRESS FOR NOTICES:
Telecopier No.:
M-9
<PAGE> 146
[SUBSIDIARY GUARANTOR]
By:
Title:
Attest:
Title:
ADDRESS FOR NOTICES:
Telecopier No.:
M-10
<PAGE> 1
EXHIBIT 23.1
We hereby consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-83304) pertaining to the Rock-Tenn Company 1993
Employee Stock Option Plan, the Rock-Tenn Company 1993 Employee Stock Purchase
Plan, the Rock-Tenn Company Incentive Stock Option Plan, the Rock-Tenn Company
1989 Stock Option Plan, and the Rock-Tenn Company 1987 Stock Option Plan, and in
the Registration Statement (Form S-3 No. 33-93934) of Rock-Tenn Company and in
the related Prospectus pertaining to debt securities, of our report dated August
9, 1996, except as to Note 15 which is as of January 21, 1997, with respect to
the consolidated financial statements of Waldorf Corporation included in this
Current Report on Form 8-K dated January 21, 1997.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Minneapolis, Minnesota
February 3, 1997
<PAGE> 1
EXHIBIT 99.2
WALDORF CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
<PAGE> 2
REPORT OF INDEPENDENT ACCOUNTANTS
August 9, 1996, except as to
Note 15 which is as of
January 21, 1997
To the Board of Directors and Stockholder
of Waldorf Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, stockholder's equity (deficit) and of cash
flows present fairly, in all material respects, the financial position of
Waldorf Corporation (a wholly-owned subsidiary of Wabash Corporation) and its
subsidiary at June 30, 1996 and 1995, and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 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 described in Note 15, on January 21, 1997, Rock-Tenn Company purchased all of
the issued and outstanding shares of Wabash Corporation, the Company's parent.
Price Waterhouse LLP
Minneapolis, Minnesota
<PAGE> 3
WALDORF CORPORATION
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
<TABLE>
<CAPTION>
June 30,
September 30, -------------------
1996 1996 1995
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,185 $ 1,617 $ 1,628
Accounts receivable, less allowance for doubtful accounts
of $442, $453 and $530, respectively 25,848 25,244 30,324
Inventories 22,736 24,759 25,363
Prepaid items and other assets 4,365 4,543 5,057
Deferred income taxes 4,236 4,186 4,126
Prepaid income taxes 79 1,301
--------- --------- ---------
Total current assets 61,449 60,349 67,799
Property, plant and equipment:
Land and buildings 31,363 31,756 30,741
Machinery and equipment 184,213 182,262 160,098
--------- --------- ---------
215,576 214,018 190,839
Less - accumulated depreciation (84,065) (80,736) (67,886)
--------- --------- ---------
131,511 133,282 122,953
Other assets 2,693 3,267 5,463
--------- --------- ---------
Total assets $ 195,653 $ 196,898 $ 196,215
========= ========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt $ 2,405 $ 2,699 $ 21,811
Accounts payable 19,866 21,497 27,666
Accrued liabilities 23,654 27,894 25,640
Accrued income taxes 2,159 2,815
--------- --------- ---------
Total current liabilities 48,084 54,905 75,117
Long-term debt 146,500 143,081 142,018
Deferred income taxes 21,279 20,829 18,452
--------- --------- ---------
Total liabilities 215,863 218,815 235,587
Commitments and contingencies (Note 11)
Stockholder's equity (deficit):
Common stock, $1 par value; 12,500 shares authorized;
10,000, 10,000 and 10,892 shares issued, respectively;
10,000 outstanding 10 10 11
Treasury stock (13,966)
Capital in excess of par 11,238
Accumulated deficit (19,426) (21,124) (35,769)
Cumulative translation adjustment (794) (803) (886)
--------- --------- ---------
Total stockholder's equity (deficit) (20,210) (21,917) (39,372)
--------- --------- ---------
Total liabilities and stockholder's equity (deficit) $ 195,653 $ 196,898 $ 196,215
========= ========= =========
</TABLE>
(See accompanying notes to the consolidated financial statements)
<PAGE> 4
WALDORF CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended For the Years Ended
September 30, June 30,
----------------------- -----------------------------------
1996 1995 1996 1995 1994
---- ---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Net sales $ 86,980 $ 99,413 $ 377,069 $ 371,215 $ 343,479
Costs and expenses:
Cost of goods sold 75,672 81,979 309,685 309,361 274,593
Selling, general and administrative 5,605 7,105 24,565 27,366 23,988
Other (income) expenses, net (472) (320) (3,267) (633) 2,531
--------- --------- --------- --------- ---------
80,805 88,764 330,983 336,094 301,112
--------- --------- --------- --------- ---------
Income before interest and taxes 6,175 10,649 46,086 35,121 42,367
Interest expense 3,063 4,713 14,215 13,122 7,776
--------- --------- --------- --------- ---------
Income before taxes 3,112 5,936 31,871 21,999 34,591
Provision for income taxes 1,414 2,675 14,499 9,853 14,145
--------- --------- --------- --------- ---------
Net income $ 1,698 $ 3,261 $ 17,372 $ 12,146 $ 20,446
========= ========= ========= ========= =========
</TABLE>
(See accompanying notes to the consolidated financial statements)
<PAGE> 5
WALDORF CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended For the Years Ended
September 30, June 30,
------------------------- -------------------------------
1996 1995 1996 1995 1994
---- ---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flow from operating activities:
Net income $ 1,698 $ 3,261 $ 17,372 $ 12,146 $ 20,446
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 3,509 2,967 15,379 13,218 14,280
Deferred income taxes 400 500 2,317 1,442 1,441
Net changes in assets and liabilities:
Accounts receivable (604) (3,633) 5,094 (7,023) 552
Inventories 2,023 (1,931) 650 (2,564) 2,841
Prepaid items and other assets 513 492 (388)
Other assets 562 (1,338) (389) (1,517) (1,862)
Accounts payable (1,631) (4,082) (6,188) 4,049 644
Accrued liabilities (4,240) 1,404 2,134 453 784
Accrued/prepaid income taxes (657) 1,362 4,237 (2,534) (2,782)
--------- --------- --------- --------- ---------
Net cash provided (used) by
operating activities 1,060 (1,490) 41,119 18,162 166,543
Cash flows from investing activities:
Capital expenditures (1,617) (8,849) (23,256) (27,200) (11,283)
Proceeds from sale of equipment 53 291 1,371
--------- --------- --------- --------- ---------
Net cash used in investing activities (1,617) (8,849) (23,203) (26,909) (9,912)
Cash flows from financing activities:
Proceeds from borrowings 3,478 166,543 166,543 27,236 131,000
Payments on long-term debt (353) (156,369) (184,456) (10,889) (77,322)
Proceeds from issuance of common
stock 536
Dividend to parent company (80,000)
Redemption of common stock (7,841) (1,785)
--------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities 3,125 10,174 (17,913) 8,506 (27,571)
Effect of exchange rate on cash balances (14) (12) (14)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and
cash equivalents 2,568 (165) (11) (253) (1,541)
Cash and cash equivalents at beginning
of year 1,617 1,628 1,628 1,881 3,422
--------- --------- --------- --------- ---------
Cash and cash equivalents at end
of year $ 4,185 $ 1,463 $ 1,617 $ 1,628 $ 1,881
========= ========= ========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 10,651 $ 12,890 $ 7,732
Cash paid for income taxes $ 75,000 $ 10,700 $ 15,000
</TABLE>
(See accompanying notes to the consolidated financial statements)
<PAGE> 6
WALDORF CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)
(dollars in thousands)
<TABLE>
<CAPTION>
Total
Capital Cumulative Stockholder's
Common Treasury in Excess Accumulated Translation Equity
Stock Stock of Par Deficit Adjustment (Deficit)
----- ----- ------ ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1993 $ 11 $ (1,663) $ 10,702 $ 11,639 $ (442) $ 20,247
Net income 20,446 20,446
Dividend to parent company (80,000) (80,000)
Issuance of 53 shares of common stock 536 536
Repurchase of 181 shares of common stock (1,785) (1,785)
Foreign currency translation adjustment (492) (492)
------ -------- -------- -------- ------ --------
Balance at June 30, 1994 11 (3,448) 11,238 (47,915) (934) (41,048)
Net income 12,146 12,146
Repurchase of 892 shares of common stock (10,518) (10,518)
Foreign currency trnslation adjustment 48 48
------ -------- -------- -------- ------ --------
Balance at June 30, 1995 11 (13,966) 11,238 (35,769) (886) (39,372)
Retirement of treasury stock (1) 13,966 (11,238) (2,727)
Net income 17,372 17,372
Foreign currency translation adjustment 83 83
------ -------- -------- -------- ------ --------
Balance at June 30, 1996 10 (21,124) (803) (21,917)
Net income (unaudited) 1,698 1,698
Foreign currency translation adjustment (unaudited) 9 9
------ -------- -------- -------- ------ --------
Balance at September 30, 1996 (unaudited) $ 10 $ $ $(19,426) $ (794) $(20,210)
====== ======== ======== ======== ====== ========
</TABLE>
(See accompanying notes to the consolidated financial statements)
<PAGE> 7
WALDORF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollar amounts in thousands, except as otherwise noted)
NOTE 1 - ORGANIZATION AND OPERATIONS
Waldorf Corporation, ("Waldorf" or the "Company"), a wholly-owned subsidiary of
Wabash Corporation ("Wabash"), is a manufacturer of recycled coated paperboard,
recycled corrugated medium, and folding cartons used in consumer packaging.
NOTE 2 - ACCOUNTING POLICIES
A. Principles of Consolidation - The consolidated financial statements include
the accounts of Waldorf Corporation and its Canadian subsidiary, WALDORF
INC. All intercompany accounts and transactions have been eliminated.
B. Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates.
C. Revenue Recognition - Revenue is recognized when product is shipped to the
customer.
D. Cash and Cash Equivalents - Cash and cash equivalents include investments
with original maturities of less than 90 days.
E. Inventories - Inventories are valued at the lower of cost or market. Cost
is determined by the last-in, first-out (LIFO) method for inventories held
by U.S. operations and by the first-in, first-out (FIFO) method for
inventories held by the Company's Canadian subsidiary. Substantially all
inventories are purchased or manufactured subject to customer purchase
orders.
F. Property, Plant, and Equipment - Property, plant and equipment are stated
at cost and depreciated for financial reporting purposes over estimated
useful lives using the straight-line method. Gains or losses on the
disposition of assets are recorded in current income. Maintenance and
repairs are charged to operations and improvements are capitalized.
G. Income Taxes - Deferred income taxes are provided using the liability
method. Under this method, deferred tax assets and liabilities are measured
using the tax rates expected to be in effect when the assets are realized
or liabilities settled. Deferred income taxes arise primarily due to
differences in the treatment of depreciation and certain accrued
liabilities for financial statement and income tax purposes.
H. Pensions - Pension costs are determined on an actuarial basis. The
Company's funding policy is to contribute annually the maximum amount that
can be deducted for federal income tax purposes. Benefits are determined
using a career-pay formula.
I. Treasury Stock - Treasury stock is recorded at cost. During fiscal 1996,
the Company's Board of Directors authorized the retirement of all stock
held in treasury.
J. Foreign Currency Translation - Foreign currency transactions and financial
statements are translated into U.S. dollars at current rates, except that
revenues, costs and expenses are translated at average rates during the
reporting period. Gains and losses resulting from foreign currency
transactions are included in income currently, while those resulting from
translation of financial statements are excluded from the statement of
income and are credited or charged directly to a separate component of
stockholder's equity.
K. Financial Instruments - Interest rate swaps and collars are used to hedge
financial risk caused by fluctuating interest rates. The differential to be
paid or received is accrued and included in interest expense.
<PAGE> 8
L. Fair Value Disclosure of Financial Instruments - The carrying amounts of
the cash, short-term trade receivables and payables approximate fair market
value. Additionally, the fair value of the senior notes is determined using
discounted cash flows based on the Company's estimated current interest
rate for similar types of borrowings. The carrying values of other
long-term debt approximate their fair value. The fair value of the interest
rate swap and collar agreements is estimated based upon current settlement
prices.
M. Unaudited Interim Financial Statements - The interim financial data as of
and for the three months ended September 30, 1996 and 1995 is unaudited;
however, in the opinion of management, the interim data includes all
adjustments, consisting only of normal recurring adjustments, necessary for
a fair statement of the results for the interim periods.
NOTE 3 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
June 30,
September 30, --------------------------
1996 1996 1995
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
Raw materials $ 5,548 $ 5,724 $ 10,446
Work-in-process 4,875 4,730 3,692
Finished goods 12,313 14,305 11,225
----------- ----------- -----------
Total inventories $ 22,736 $ 24,759 $ 25,363
=========== =========== ===========
</TABLE>
Inventories valued using the LIFO method comprised approximately 86% and 83% of
consolidated inventories at June 30, 1996 and 1995, respectively. LIFO
inventories are valued at less than current cost by $12,055, $11,805 and $17,473
at September 30, 1996, June 30, 1996 and 1995, respectively.
NOTE 4 - ACCRUED LIABILITIES
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
June 30,
September 30, ---------------------------
1996 1996 1995
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
Employee benefits $ 12,450 $ 11,951 $ 12,774
Insurance 2,228 3,493 3,089
Property taxes 1,289 1,336 2,302
Salaries and wages 2,504 2,166 2,506
Interest 2,064 4,187 623
Customer deposits 448 508
Other expenses 3,119 4,313 3,838
----------- ----------- -----------
Total accrued liabilities $ 23,654 $ 27,894 $ 25,640
=========== =========== ===========
</TABLE>
<PAGE> 9
NOTE 5 - EMPLOYEE BENEFITS
The Company provides all qualified U.S. employees participation in the Waldorf
Employees' Pension Plan. Pension expense under this plan for the years ended
June 30, 1996, 1995 and 1994, was $2,241, $2,373 and $2,416, respectively.
The components of net periodic pension cost under the U.S. plan are:
<TABLE>
<CAPTION>
June 30,
-----------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 2,262 $ 2,234 $ 2,183
Interest cost on projected benefit obligation 2,251 1,890 1,781
Actual return on plan assets (4,058) (2,335) (343)
Net amortization and deferral 1,786 584 (1,205)
--------- --------- ---------
$ 2,241 $ 2,373 $ 2,416
========= ========= =========
</TABLE>
The following table sets forth the funded status of the U.S. plan:
<TABLE>
<CAPTION>
June 30,
----------------------
1996 1995
---- ----
<S> <C> <C>
Actuarial present value of accumulated benefit obligation:
Vested benefits $ 24,398 $ 22,021
Nonvested benefits 1,285 1,214
--------- ---------
Total accumulated benefit obligation $ 25,683 $ 23,235
Projected benefit obligation $ 30,547 $ 26,835
Market value of plan assets 31,063 27,000
--------- ---------
Overfunded pension obligation 516 165
Unrecognized net loss (gain) (1,912) (37)
Unrecognized prior service cost 21 24
--------- ---------
Prepaid pension cost (pension liability) $ (1,375) $ 152
========= =========
</TABLE>
The weighted-average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligation under the U.S. plan were 7.5% and 4.5% for 1996, 7.5% and 4.0% for
1995, and 7.5% and 4.0% for 1994. The expected long-term rate of return on
assets for the U.S. plan was 8.5%, 7.5% and 7.5% for 1996, 1995 and 1994,
respectively.
The Company also offers all full-time U.S. employees with 1,000 hours of
qualified service participation in the Capital Accumulation Plan. The Plan is a
defined contribution employee retirement savings plan which provides a Company
matching of employees' contributions. The Plan also includes a profit sharing
feature which provides an additional Company contribution based on the Company's
performance. The Company's contributions to the Plan for the years ended June
30, 1996, 1995 and 1994, were $3,137, $3,839 and $3,166, respectively.
Canadian employees are offered similar benefits, except as otherwise dictated by
existing collective bargaining agreements or Canadian legislation, under
separate pension and Capital Accumulation plans. Pension expense under the
Canadian plans was $203, $45 and $165 during the years ended June 30, 1996, 1995
and 1994, respectively.
<PAGE> 10
NOTE 6 - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
June 30,
------------------------------
1996
------------------- 1995
Carrying Fair Carrying
Amount Value Amount
------ ----- ------
<S> <C> <C> <C>
Senior notes $100,000 $ 99,067
Term loan $120,715
U.S revolving loan 1,000
U.S. bankers' acceptances, net of unamortized interest
of $131 and $26 38,869 38,869 26,974
Term loan on equipment 3,223 3,223 4,402
Canadian Loans 7,680
Other debt 3,688 3,688 3,058
-------- -------- --------
Total long-term debt $145,780 $144,847 $163,829
======== ======== ========
</TABLE>
At June 30, 1995, the Company was party to a credit facility comprised of a Term
Loan in the original amount of $130,000 and a Revolving Loan not to exceed
$50,000. At June 30, 1995, the Company's Canadian subsidiary had a loan
agreement with Toronto Dominion Bank comprised of a Canadian $8,250 Term loan
and a revolving Loan not to exceed Canadian $10,000.
In July 1995, the Company refinanced the U.S. and Canadian loan facilities with
7.42% fixed rate $100,000 Senior Unsecured Notes and a floating rate $110,000
Unsecured Syndicated Revolving Loan Facility. The Senior notes mature on June
30, 2005 with annual repayments of $14,286 beginning on June 30, 1999. The
Revolving Loan Commitment expires on June 30, 2000. The Company has $39,000 of
domestic bankers' acceptances outstanding at June 30, 1996, which have a
weighted average interest rate of 5.75%. The bankers' acceptances have been
classified as long-term debt in accordance with the Company's intention and
ability to refinance such obligations on a long-term basis. At June 30, 1996,
the Company had outstanding letters of credit totaling $5,756. A facility fee
ranging from .2% to .375% is charged on the entire Revolving Loan facility based
on quarterly leverage ratios. As a result of the refinancing, unamortized fees
of $1,523 related to the prior credit agreement were expensed in July 1995.
The Company has entered into several contracts to hedge against fluctuation in
interest rates. The agreements, which expire on February 28, 2000 and 2001, vary
from interest rate swaps, whereby the Company makes payments based on fixed
rates of interest and receives payments based on floating interest rate indices,
to interest rate collars, whereby exposure is protected within a range of rates.
The fair value of the contracts, which have an aggregate notional amount of
$80,000, was approximately $2,773 at June 30, 1996. This represents the
estimated amount the Company would pay to terminate the agreements, taking into
consideration the current interest rate and market conditions. The Company does
not hold or issue financial instruments for trading purposes.
In December 1990, the Company entered into a $9,704, seven-year note secured by
certain capital equipment. The note bears interest at 9.7% and is payable in
monthly principal installments of $98 plus interest with a balloon payment of
$1,554 in December 1997.
Scheduled maturities of the Company's long-term debt for fiscal years ending
June 30 are as follows:
<TABLE>
<S> <C>
1997 $ 2,699
1998 3,209
1999 14,559
2000 53,430
2001 14,563
Thereafter 57,320
---------
$ 145,780
=========
</TABLE>
<PAGE> 11
NOTE 7 - LONG-TERM LEASES
The Company and its Canadian subsidiary lease equipment and a facility under
long-term operating leases. Minimum annual lease commitments under the lease are
as follows:
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------
<S> <C>
1997 $ 1,368
1998 1,368
1999 1,368
2000 1,368
2001 1,563
Thereafter 13,753
---------
$ 20,788
=========
</TABLE>
Rent expense for the years ended June 30, 1996, 1995 and 1994 was $1,285,
$1,111, and $1,318, respectively.
NOTE 8 - INCOME TAXES
The Company is included in the consolidated federal and certain state income tax
returns of Wabash and is party to a tax allocation agreement with Wabash which
allocates taxes to the Company as if it filed a separate tax return.
The provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
For the Years Ended June 30,
-------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ 9,836 $ 7,057 $ 10,679
State 2,346 1,354 2,025
----------- ----------- -----------
12,182 8,411 12,704
Deferred:
Federal 2,027 1,262 1,260
State 290 180 181
----------- ----------- -----------
$ 14,499 $ 9,853 $ 14,145
=========== =========== ===========
</TABLE>
The Company's effective tax rate differs from the federal statutory rate as
follows:
<TABLE>
<CAPTION>
For the Years Ended June 30,
----------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% 35.0%
Increase in taxes resulting from:
State taxes, net of federal benefit 4.5% 4.8% 4.6%
Canadian subsidiary net operating loss 4.9% 4.5%
Other 1.1% .5% 1.3%
---- ---- ----
45.5% 44.8% 40.9%
==== ==== ====
</TABLE>
<PAGE> 12
Domestic deferred tax assets and (liabilities) are comprised of the following at
June 30:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Tax over book depreciation $ (20,511) $ (18,557)
Vacation accrual 2,026 1,883
Workers' compensation accrual 891 990
Other, net 951 1,358
--------- ---------
Net deferred tax liability $ (16,643) $ (14,326)
========= =========
</TABLE>
The Company's Canadian subsidiary has a net operating loss available for
carryforward as follows:
<TABLE>
<CAPTION>
Canadian $s
-----------
<S> <C>
Tax loss carryforwards through June 30, 1996 $ 13,000
Temporary differences, primarily depreciation (3,200)
---------
Book loss carryforward at June 30, 1996 9,800
Less valuation reserve (9,800)
---------
Net asset recorded $ 0
=========
</TABLE>
If not utilized, $400 of the carryforward will expire in 1998, $2,600 in 1999,
$1,000 in 2000, $4,500 in 2001, and $4,500 in 2002.
The Internal Revenue Service has examined the 1989, 1990, and 1991 consolidated
federal income tax returns of Wabash and issued a deficiency notice in March,
1993. Several issues have been settled with the IRS, but Wabash is currently
petitioning one remaining issue in U. S. Tax Court. Management believes that
resolution of this matter will not have a material adverse impact on the results
of operations, cash flows or financial position of Wabash or the Company.
NOTE 9 - FOREIGN OPERATIONS
The Company owns a Canadian subsidiary, WALDORF INC, which is a manufacturer of
folding cartons. WALDORF INC's assets and liabilities totaled $14,040 and
$4,767, at June 30, 1996 and $15,345 and $11,930 at June 30, 1995. WALDORF INC's
net sales were $27,663, $25,625 and $31,004 during the years ended June 30,
1996, 1995 and 1994, respectively. WALDORF INC's net income (loss) for the years
ended June 30, 1996, 1995 and 1994 was ($4,446), ($2,833) and $109,
respectively.
NOTE 10 - STOCKHOLDER'S EQUITY
During fiscal year 1995, the Company repurchased 892 shares of common stock held
by management employees at a defined book value per share of $11,829 (not in
thousands).
NOTE 11 - COMMITMENTS AND CONTINGENCIES
In the normal course of its operations, the Company is party to a long-term
contract for energy supply at its paper mill operations.
The Company is party to a contingent interest agreement which requires the
Company, Wabash, or the stockholders of Wabash, in the event of "disposition",
as defined, of the Company, to pay a former creditor a percentage of the net
proceeds received from such disposition (see Note 15).
<PAGE> 13
NOTE 12 - STOCK APPRECIATION RIGHTS
During fiscal year 1995, the Company adopted a Stock Appreciation Rights (SAR)
Plan to provide incentives to certain executives. SAR units are granted at the
discretion of the Company's Board of Directors at reference share values
generally at or above fair market value at the date of grant. Granted SAR units
have varying vesting provisions and vested SAR units may be exercised at any
time during the SAR holder's employment, but only after the fifth anniversary of
the SAR grant date. An eligible employee may not exercise more than one third of
their vested SAR units in any calendar year. Additionally, a portion of certain
executives' bonuses are distributed in SARs which vest on the distribution date.
Upon exercise, SAR holders are entitled to receive payment equal to the
difference between the reference share value as of the exercise date and the
reference share value as of the grant date. Additionally, in the event of a
change in control of the Company, as defined, on or before December 31, 1999,
certain SAR holders are entitled to an additional payment as determined by the
Board of Directors (see Note 15). Compensation expense is recognized ratably
over the SAR vesting periods for increases in the reference share value, as
determined annually by an independent appraiser. During the years ended June 30,
1996 and 1995, the Company recorded approximately $329 and $215 of compensation
expense related to the SAR Plan. At June 30, 1996, the reference share value was
$26 (not in thousands) and approximately 422,000 (not in thousands) purchased
and granted SAR units were outstanding.
NOTE 13 - MAJOR CUSTOMERS
For the years ended June 30, 1996, 1995 and 1994, one customer represented 15%,
16% and 18%, respectively, of the Company's total net sales. A second customer
represented 11%, 11% and 8%, respectively, of the Company's net sales during
fiscal 1996, 1995 and 1994. No other customer represented more than 10% of net
sales.
NOTE 14 - SEGMENT INFORMATION
The Company operates principally in two business segments. The converted
products segment is comprised of facilities that produce folding cartons,
corrugated containers and partitions, and laminated paperboard products. The
paperboard segment consists of facilities that manufacture 100% recycled
paperboard and corrugated medium and that recover recycled fiber. Intersegment
sales are accounted for at prices which approximate market prices.
Following is a tabulation of business segment information for each of the past
three fiscal years:
<TABLE>
<CAPTION>
For the Years Ended June 30,
-----------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net sales (aggregate):
Converted products $ 257,160 $ 242,717 $ 244,188
Paperboard 192,101 195,599 161,521
--------- --------- ---------
449,261 438,316 405,709
Less net sales (intersegment):
Converted products
Paperboard (72,192) (67,101) (62,230)
--------- --------- ---------
Net sales (unaffiliated customers) $ 377,069 $ 371,215 $ 343,479
========= ========= =========
Net sales (unaffiliated customers):
Converted products $ 257,160 $ 242,717 $ 244,188
Paperboard 119,909 128,479 99,291
--------- --------- ---------
$ 377,069 $ 371,215 $ 343,479
========= ========= =========
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
For the Years Ended June 30,
-----------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Operating income (expense):
Converted products $ (2,846) $ 5,656 $ 6,292
Paperboard 53,827 37,067 42,019
--------- --------- ---------
50,981 42,723 48,311
Less: Corporate expense (4,895) (7,602) (5,944)
Interest expense (14,215) (13,122) (7,776)
--------- --------- ---------
Income before income taxes $ 31,871 $ 21,999 $ 34,591
========= ========= =========
Identifiable assets:
Converted products $ 102,424 $ 106,646 $ 99,055
Paperboard 84,748 79,668 58,862
Corporate 9,676 9,901 8,681
--------- --------- ---------
Total $ 196,898 $ 196,215 $ 166,598
========= ========= =========
Capital expenditures:
Converted products $ 10,306 $ 5,043 $ 5,062
Paperboard 11,894 21,179 5,929
Corporate 1,056 978 292
--------- --------- ---------
Total $ 23,256 $ 27,200 $ 11,283
========= ========= =========
Depreciation and amortization:
Converted products $ 7,851 $ 7,626 $ 7,237
Paperboard 5,361 4,496 4,685
Corporate 2,167 1,096 2,358
--------- --------- ---------
Total $ 15,379 $ 13,218 $ 14,280
========= ========= =========
</TABLE>
NOTE 15 - SUBSEQUENT EVENTS
On January 21, 1997, Rock-Tenn Company ("Rock-Tenn") purchased all of the
outstanding common stock of Wabash, the Company's parent. The sale of Wabash's
common stock effected a "change in control" as defined by the Company's SAR Plan
and coincident with the closing of the stock sale the Company paid an aggregate
of approximately $7 million to certain SAR holders. Additionally, in settlement
of the contingent interest agreement described in Note 11, the Company paid a
former creditor $25 million. The accompanying financial statements do not
reflect any adjustments to reflect Rock-Tenn's cost basis in Wabash or the
Company.
In December 1996, management announced its intentions to discontinue or dispose
of the operations of WALDORF INC. Coincident with the stock sale, the stock of
WALDORF INC. was sold to an entity in which certain Wabash shareholders hold a
non-controlling interest. The Company incurred a pre-tax loss of approximately
$9 million related to the discontinuance of operations at and disposal of
WALDORF INC.
<PAGE> 1
EXHIBIT 99.3
PRO FORMA FINANCIAL INFORMATION
On January 21, 1997, the Company acquired all of the outstanding
capital stock of the parent of Waldorf Corporation ("Waldorf") for approximately
$239.0 million in cash (the "Waldorf Acquisition"). In addition, in connection
with the Waldorf Acquisition, the Company (i) made certain payments on the
closing date aggregating $32.6 million relating to the settlement of a
contingent interest agreement with a former creditor of Waldorf and the
termination of Waldorf's Stock Appreciation Rights Plan and (ii) became
indirectly liable for approximately $142.3 million of net long-term debt of
Waldorf outstanding on such date. The Waldorf Acquisition did not include
Waldorf's Canadian subsidiary, which was disposed of by Waldorf's parent prior
to consummation of the Waldorf Acquisition. The Waldorf Acquisition was financed
with available cash and borrowings aggregating $240.0 million under a new $400.0
million revolving credit facility.
The unaudited Pro Forma Combined Consolidated Statements of Income for
the year ended September 30, 1996 and the three months ended December 31, 1996
give effect to the Waldorf Acquisition as if it had occurred on October 1, 1995.
The unaudited Pro Forma Combined Balance Sheet as of December 31, 1996 gives
effect to the Waldorf Acquisition as if it had occurred on December 31, 1996.
The unaudited (i) Pro Forma Combined Consolidated Statement of Income
for the year ended September 30, 1996 is based on the Company's audited
Consolidated Statement of Income for the year ended September 30, 1996 and
Waldorf's audited Consolidated Statement of Income for the year ended June 30,
1996, (ii) Pro Forma Combined Consolidated Statement of Income for the three
months ended December 31, 1996 is based on the Company's unaudited Consolidated
Statement of Income for the three months ended December 31, 1996 and Waldorf's
unaudited Consolidated Statement of Income for the three months ended September
30, 1996, and (iii) Pro Forma Combined Consolidated Balance Sheet as of December
31, 1996 is based on the Company's unaudited Consolidated Balance Sheet as of
December 31, 1996 and Waldorf's unaudited Consolidated Balance Sheet as of
September 30, 1996.
The Waldorf Acquisition has been accounted for under the purchase
method of accounting. The total estimated purchase price for the Waldorf
Acquisition has been allocated on a preliminary basis to assets and liabilities
based on management's estimates of their fair values with the excess of cost
over net assets acquired allocated to goodwill. Each of such allocations is
subject to revision when additional information concerning asset and liability
valuation is obtained. This allocation is subject to change pending a final
analysis of the value of the assets acquired and liabilities assumed. The impact
of such changes could be material. The estimated allocation of the purchase
price to the assets acquired and liabilities assumed is as follows (in
thousands):
Net working capital....................... $ 20,886
Property, plant, equipment and other...... 138,249
Goodwill.................................. 278,381
Other intangible assets................... 6,309
Deferred tax liabilities.................. (29,925)
-------
Net assets................................ $413,900
=======
The pro forma financial information does not purport to represent what
the Company's results of operations or financial position would actually have
been had the Waldorf Acquisition actually occurred on any of the dates set forth
above or to project the Company's results of operations or financial position
for any future period or as of any date, respectively. The pro forma information
set forth below should be read in conjunction with the Consolidated Financial
Statements and the related Notes thereto of the Company and Waldorf.
<PAGE> 2
PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
YEAR ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CANADIAN
SUBSIDIARY
THE NOT
COMPANY WALDORF(A) ACQUIRED(B) ADJUSTMENTS PRO FORMA
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET SALES ....................... $ 876,111 $ 377,069 $ (27,663) $ -- $ 1,225,517
COST OF GOODS SOLD .............. 632,202 306,418 (29,404) 3,998 (C) 913,214
----------- ----------- ----------- ----------- -----------
GROSS PROFIT .................... 243,909 70,651 1,741 (3,998) 312,303
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES ...... 151,752 24,565 (2,597) 7,960 (D) 181,680
----------- ----------- ----------- ----------- -----------
INCOME FROM OPERATIONS .......... 92,157 46,086 4,338 (11,958) 130,623
INTEREST INCOME ................. 1,290 -- -- (1,290)(E) --
INTEREST EXPENSE ................ (10,978) (14,215) 93 (10,606)(F) (35,706)
----------- ----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES ...... 82,469 31,871 4,431 (23,854) 94,917
PROVISION FOR INCOME TAXES ...... 31,344 14,499 (15) (6,481)(G) 39,347
----------- ----------- ----------- ----------- -----------
NET INCOME ...................... $ 51,125 $ 17,372 $ 4,446 $ (17,373) $ 55,570
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 34,014 34,014
----------- -----------
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE .... $ 1.50 $ 1.63
=========== ===========
</TABLE>
- -----------
(a) Reflects waldorf's results of operations for the twelve months ended
June 30, 1996.
(b) Reflects elimination of Waldorf's Canadian subsidiary, which was not
acquired in the Waldorf Acquisition.
(c) Reflects (i) a $5,024 adjustment to properly reflect the LIFO inventory
method assuming the Waldorf Acquisition occurred on October 1, 1995 and
(ii) a $1,026 reduction in depreciation expense, which gives effect to
a change in the Company's depreciation method for machinery and
equipment to the straight-line method, which was effective October 1,
1996 for new machinery and equipment purchased subsequent to September
30, 1996, as if such change in depreciation method had been made as of
October 1, 1995.
(d) Reflects primarily the amortization of goodwill arising from the
Waldorf Acquisition (under the straight-line method based on an
estimated life of forty years) of $7,236 and the amortization of
deferred costs of $500 associated with noncompete agreements.
(e) Reflects the elimination of interest income earned on cash and cash
equivalents used to finance, in part, the purchase price for the
Waldorf Acquisition.
(f) Reflects increased interest expense relating to borrowings incurred
under the Company's new revolving credit facility to finance, in part,
the purchase price for the Waldorf Acquisition at an estimated annual
2
<PAGE> 3
interest rate of LIBOR plus 0.5% In addition to a $1,000 annual
facility fee, which is offset by the elimination of interest expense on
substantially all of the long-term debt of Waldorf to be repaid in
connection with the Waldorf Acquisition. The impact of a 1/8% change in
the assumed interest rate on borrowings outstanding under the Company's
new revolving credit facility is approximately $500 for the twelve
months ended September 30, 1996.
(g) Reflects the income tax effect of the pro forma adjustments at an
assumed effective tax rate of 39.0% and the impact of goodwill
amortization associated with the Waldorf Acquisition, none of which is
deductible for federal income tax purposes.
3
<PAGE> 4
PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Canadian
Dubsidiary
The Not
Company Waldorf(a) Acquired(b) Adjustments Pro Forma
--------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales ......................... $ 208,318 $ 86,980 $(5,611 $ -- $ 289,687
Cost of goods sold ................ 154,925 75,200 (5,486) (161)(C) 224,478
--------- --------- --------- --------- ---------
Gross profit ...................... 53,393 11,780 (125) 161 65,209
Selling, general and administrative
expenses ..................... 39,311 5,605 (420) 1,990 (D) 46,486
--------- --------- --------- --------- ---------
Income from operations ............ 14,082 6,175 295 (1,829) 18,723
Interest income ................... 496 -- -- (496)(E) --
Interest expense .................. (2,442) (3,063) 21 (2,799)(F) (8,283)
--------- --------- --------- --------- ---------
Income before income taxes ........ 12,136 3,112 316 (5,124) 10,440
Provision for income taxes ........ 4,737 1,414 (12) (1,293)(G) 4,846
--------- --------- --------- --------- ---------
Net income ........................ $ 7,399 $ 1,698 $ 328 $ (3,831) $ 5,594
========= ========= ========= ========= =========
Weighted average number of common
and common equivalent shares
outstanding .................. 34,075 34,075
--------- ---------
Earnings per common and common
equivalent share ............. $ 0.22 $ 0.16
========= =========
</TABLE>
- --------------------------
(a) Reflects Waldorf's results of operations for the three months ended
September 30, 1996.
(b) Reflects elimination of Waldorf's Canadian subsidiary, which was not
acquired in the Waldorf Acquisition.
(c) Reflects a $161 adjustment to properly reflect the LIFO inventory
method assuming the Waldorf Acquisition occurred on October 1, 1995.
(d) Reflects primarily the amortization of goodwill arising from the
Waldorf Acquisition (under the straight-line method based on an
estimated life of forty years) of $1,809 and the amortization of
deferred costs of $125 associated with noncompete agreements.
(e) Reflects the elimination of interest income earned on cash and cash
equivalents used to finance, in part, the purchase price for the
Waldorf Acquisition.
(f) Reflects increased interest expense relating to borrowings incurred
under the company's new revolving credit facility to finance, in part,
the purchase price for the Waldorf Acquisition at an estimated annual
interest rate of LIBORr plus 0.5% In addition to a $250 quarterly
facility fee, which is offset by the
4
<PAGE> 5
elimination of interest expense on substantially all of the long-term
debt of Waldorf to be repaid in connection with the Waldorf Acquisition
(which bore interest at a weighted average interest rate of % per
annum at the date of closing). The impact of a 1/8% change in the
assumed interest rate on borrowings outstanding under the company's new
revolving credit facility is approximately $125 for the three months
ended December 31, 1996.
(g) Reflects the income tax effect of the pro forma adjustments at an
assumed effective tax rate of 39.0% and the impact of goodwill
amortization associated with the Waldorf Acquisition, none of which is
deductible for federal income tax purposes.
5
<PAGE> 6
PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
Canadian
Subsidiary
The Not
Company Waldorf(a) Acquired(b) Adjustments Pro Forma
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents ....... $ 44,080 $ 4,185 $ (503) $ (47,762)(c) $ --
Accounts receivable (net of
allowances) ................ 68,034 25,848 (2,282) -- 91,600
Inventories ..................... 59,598 22,736 (3,518) 12,055(d) 90,871
Other current assets ............ 1,640 8,680 (207) 16,706(e) 26,819
----------- ----------- ----------- ----------- -----------
Total current assets ....... 173,352 61,449 (6,510) (19,001) 209,290
Net property, plant and equipment 345,039 131,511 (6,464) 18,202(f) 488,288
Goodwill ........................ 48,082 1,019 -- 277,362(g) 326,463
Other assets .................... 9,998 1,674 (7) 4,642(h) 16,307
----------- ----------- ----------- ----------- -----------
$ 576,471 $ 195,653 $ (12,981) $ 281,205 $ 1,040,348
=========== =========== =========== =========== ===========
Accounts payable ................ $ 21,281 $ 19,866 $ (767) $ -- $ 40,380
Income taxes payable ............ 1,731 2,159 (15) -- 3,875
Accrued compensation and benefits 18,322 14,954 (517) 13,088(i) 45,847
Other current liabilities ....... 12,659 8,700 (162) -- 21,197
Current maturities of long-term
debt ......................... 7,293 2,405 -- -- 9,698
----------- ----------- ----------- ----------- -----------
Total current liabilities .. 61,286 48,084 (1,461) 13,088 120,997
Long-term debt due after one year 135,741 146,500 (2,565) 230,306(j) 509,982
Deferred income taxes ........... 23,095 21,279 -- 8,646(k) 53,020
Other liabilities ............... 1,945 -- 1,945
Shareholders' equity ............ 354,404 (20,210) (8,955) 29,165(l) 354,404
----------- ----------- ----------- ----------- -----------
$ 576,471 $ 195,653 $ (12,981) $ 281,205 $ 1,040,348
=========== =========== =========== =========== ===========
</TABLE>
- ------------
(a) Reflects Waldorf's financial position as of September 30,1996.
(b) Reflects elimination of Waldorf's Canadian subsidiary, which was not
acquired in the Waldorf Acquisition.
6
<PAGE> 7
(c) Reflects the elimination of cash and cash equivalents of the Company
and Waldorf, which were used to finance a portion of the purchase price
for the Waldorf Acquisition.
(d) Reflects the elimination of Waldorf's LIFO reserve and valuation of
such inventory at its estimated fair value, less a reasonable profit
margin for finished goods, and replacement cost for raw materials.
(e) Reflects the estimated refundable income taxes relating to certain
costs incurred in the Waldorf Acquisition that are currently
deductible.
(f) Reflects the estimated adjustment to fair value of property, plant and
equipment acquired.
(g) Reflects the excess of the purchase price for the Waldorf Acquisition
over the estimated fair value of the net assets acquired, net of the
elimination of goodwill recorded on Waldorf's historical financial
statements.
(h) Reflects the recognition of the estimated value of intangible assets
consisting of $5,000 relating to noncompete agreements entered into in
connection with the Waldorf Acquisition as well as $500 of financing
costs incurred in connection with the Waldorf Acquisition, offset by
the elimination of Waldorf deferred financing costs of $858.
(i) Reflects the recognition of an estimated obligation relating to
severance and other exit costs, net of an adjustment to fair value
relating to Waldorf's pension plan obligations.
(j) Reflects borrowings incurred under the Company's new revolving credit
facility to (i) finance a portion of the purchase price for the Waldorf
Acquisition and (ii) to refinance substantially all of the long-term
debt of Waldorf outstanding on the date of acquisition, net of a $2,565
settlement of indebtedness of Waldorf's Canadian subsidiary owed to
Waldorf.
(k) Reflects the recognition of deferred income tax obligations on certain
pro forma adjustments.
(l) Reflects the elimination of the equity of Waldorf.
7
